Federal Register, Volume 89 Issue 92 (Friday, May 10, 2024)

[Federal Register Volume 89, Number 92 (Friday, May 10, 2024)]
[Rules and Regulations]
[Pages 40542-40874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-08363]

[[Page 40541]]

Vol. 89

Friday,

No. 92

May 10, 2024

Part II

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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42 CFR Parts 431, 438, 441, et al.

Medicaid Program; Ensuring Access to Medicaid Services; Final Rule

Federal Register / Vol. 89, No. 92 / Friday, May 10, 2024 / Rules and
Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 431, 438, 441, and 447

[CMS-2442-F]
RIN 0938-AU68

Medicaid Program; Ensuring Access to Medicaid Services

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

ACTION: Final rule.

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SUMMARY: This final rule takes a comprehensive approach to improving
access to care, quality and health outcomes, and better addressing
health equity issues in the Medicaid program across fee-for-service
(FFS), managed care delivery systems, and in home and community-based
services (HCBS) programs. These improvements increase transparency and
accountability, standardize data and monitoring, and create
opportunities for States to promote active beneficiary engagement in
their Medicaid programs, with the goal of improving access to care.

DATES: These regulations are effective on July 9, 2024.

FOR FURTHER INFORMATION CONTACT:
Karen LLanos, (410) 786-9071, for Medicaid Advisory Committee.
Jennifer Bowdoin, (410) 786-8551, for Home and Community-Based
Services.
Jeremy Silanskis, (410) 786-1592, for Fee-for-Service Payment.

SUPPLEMENTARY INFORMATION:

I. Background

A. Overview

Title XIX of the Social Security Act (the Act) established the
Medicaid program as a joint Federal and State program to provide
medical assistance to eligible individuals, including many with low
incomes. Under the Medicaid program, each State that chooses to
participate in the program and receive Federal financial participation
(FFP) for program expenditures must establish eligibility standards,
benefits packages, and payment rates, and undertake program
administration in accordance with Federal statutory and regulatory
requirements. The provisions of each State's Medicaid program are
described in the Medicaid ``State plan'' and, as applicable, related
authorities, such as demonstration projects and waivers of State plan
requirements. Among other responsibilities, CMS approves State plans,
State plan amendments (SPAs), demonstration projects authorized under
section 1115 of the Act, and waivers authorized under section 1915 of
the Act; and reviews expenditures for compliance with Federal Medicaid
law, including the requirements of section 1902(a)(30)(A) of the Act
relating to efficiency, economy, quality of care, and access to ensure
that all applicable Federal requirements are met.
The Medicaid program provides essential health coverage to tens of
millions of people, covering a broad array of health benefits and
services critical to underserved populations,\1\ including low-income
adults, children, parents, pregnant individuals, older adults, and
people with disabilities. For example, Medicaid pays for approximately
41 percent of all births in the U.S.\2\ and is the largest payer of
long-term services and supports (LTSS),\3\ the largest, single payer of
services to treat substance use disorders,\4\ and services to prevent
and treat the Human Immunodeficiency Virus.\5\
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\1\ Executive Order 13985: 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/.
\2\ National Center for Health Statistics. Key Birth Statistics.
Accessed at https://www.cdc.gov/nchs/nvss/births.htm.
\3\ Colello, Kirsten J. Who Pays for Long-Term Services and
Supports? Congressional Research Service. Updated September 2023.
Accessed at https://crsreports.congress.gov/product/pdf/IF/IF10343.
\4\ Soni, Anita. Health Care Expenditures for Treatment of
Mental Disorders: Estimates for Adults Ages 18 and Older, U.S.
Civilian Noninstitutionalized Population, 2019. Statistical Brief
#539, pg 12. February 2022. Agency for Healthcare Research and
Quality, Rockville, MD. Accessed at https://meps.ahrq.gov/data_files/publications/st539/stat539.pdf.
\5\ Dawson, L. and Kates, J. Insurance Coverage and Viral
Suppression Among People with HIV, 2018. September 2020. Kaiser
Family Foundation. Accessed at https://www.kff.org/hivaids/issue-brief/insurance-coverage-and-viral-suppression-among-people-with-hiv-2018/.
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On January 28, 2021, the President signed Executive Order (E.O.)
14009,\6\ ``Strengthening Medicaid and the Affordable Care Act,'' which
established the policy objective to protect and strengthen Medicaid and
the Affordable Care Act and to make high-quality health care accessible
and affordable for every American. The E.O. also directed executive
departments and agencies to review existing regulations, orders,
guidance documents, and policies to determine whether such agency
actions are inconsistent with this policy. On April 5, 2022, E.O.
14070,\7\ ``Continuing To Strengthen Americans' Access to Affordable,
Quality Health Coverage,'' directed Federal agencies with
responsibilities related to Americans' access to health coverage to
review agency actions to identify ways to continue to expand the
availability of affordable health coverage, to improve the quality of
coverage, to strengthen benefits, and to help more Americans enroll in
quality health coverage. Consistent with CMS' authorities under the
Act, this final rule implements E.O.s 14009 and 14070 by helping States
to strengthen Medicaid and improve access to and quality of care
provided.
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\6\ Executive Order 14009: https://www.federalregister.gov/documents/2021/02/02/2021-02252/strengthening-medicaid-and-the-affordable-care-act.
\7\ Executive Order 14070: https://www.federalregister.gov/documents/2022/04/08/2022-07716/continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage.
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Ensuring that beneficiaries can access covered services is
necessary to the basic operation of the Medicaid program. Depending on
the State and its Medicaid program structure, beneficiaries access
their health care services using a variety of care delivery systems
(for example, FFS, fully-capitated managed care, partially capitated
managed care, etc.), including through demonstrations and waiver
programs. The volume of Medicaid beneficiaries enrolled in a managed
care program in Medicaid has grown from 81 percent in 2016 to 85
percent in 2021, with 74.6 percent of Medicaid beneficiaries enrolled
in comprehensive managed care organizations.^{8 9} The
remaining individuals received all of their care or some services that
have been carved out of managed care through FFS.
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\8\ Medicaid Managed Care Enrollment Report. https://www.medicaid.gov/medicaid/managed-care/enrollment-report/index.html.
\9\ Throughout this document, the use of the term ``managed care
plan'' includes managed care organizations (MCOs), prepaid inpatient
health plans (PIHPs), and prepaid ambulatory health plans (PAHPs)
[as defined in 42 CFR 438.2] and is used only when the provision
under discussion applies to all three arrangements. An explicit
reference is used in the preamble if the provision applies to
primary care case managers (PCCMs) or primary care case management
entities (PCCM entities).
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Current access regulations are neither comprehensive nor consistent
across delivery systems or coverage authority (for example, State plan
and demonstration authority). For example, regulations at 42 CFR
447.203 and 447.204 relating to access to care, service payment rates,
and Medicaid provider participation in rate setting apply only to
Medicaid FFS delivery systems and focus on ensuring that payment rates
are consistent with the statutory requirements in section
1902(a)(30)(A) of the Act. The regulations do not apply to services

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delivered under managed care. These regulations are also largely
procedural in nature and rely heavily on States to form an analysis and
reach conclusions on the sufficiency of their own payment rates.
With a program as large and complex as Medicaid, access regulations
need to be multi-factorial to promote consistent access to health care
for all beneficiaries across all types of care delivery systems in
accordance with statutory requirements. Strategies to enhance access to
health care services should reflect how people move through and
interact with the health care system. We view the continuum of health
care access across three dimensions of a person-centered framework: (1)
enrollment in coverage; (2) maintenance of coverage; and (3) access to
services and supports. Within each of these dimensions, accompanying
regulatory, monitoring, and/or compliance actions may be needed to
ensure access to health care is achieved and maintained.
In the spring of 2022, we released a request for information (RFI)
\10\ to collect feedback on a broad range of questions that examined
topics such as: challenges with eligibility and enrollment; ways we can
use data available to measure, monitor, and support improvement efforts
related to access to services; strategies we can implement to support
equitable and timely access to providers and services; and
opportunities to use existing and new access standards to help ensure
that Medicaid and Children's Health Insurance Program (CHIP) payments
are sufficient to enlist enough providers.
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\10\ CMS Request for Information: Access to Coverage and Care in
Medicaid & CHIP. February 2022. For a full list of question from the
RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
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Some of the most common feedback we received through the RFI
related to ways that we can promote health equity through cultural
competency. Commenters shared the importance that cultural competency
plays in how beneficiaries access health care and in the quality of
health services received by beneficiaries. The RFI respondents shared
examples of actions that we could take, including collecting and
analyzing health outcomes data by sociodemographic categories;
establishing minimum standards for how States serve communities in ways
that address cultural competency and language preferences; and reducing
barriers to enrollment and retention for racial and ethnic minority
groups.
In addition to the topic of cultural competency, commenters also
commonly shared that they viewed reimbursement rates as a key driver of
provider participation in Medicaid and CHIP programs. Further,
commenters noted that aligning payment approaches and setting minimum
standards for payment regulations and compliance across Medicaid and
CHIP delivery systems, services, and benefits could help ensure that
beneficiaries' access to services is as similar as possible across
beneficiary groups, delivery systems, and programs.
As mentioned previously in this final rule, the first dimension of
access focuses on ensuring that eligible people are able to enroll in
the Medicaid program. Access to Medicaid enrollment requires that a
potential beneficiary know if they are or may be eligible for Medicaid,
be aware of Medicaid coverage options, and be able to easily apply for
and enroll in coverage. The second dimension of access in this
continuum relates to maintaining coverage once the beneficiary is
enrolled in the Medicaid program initially. Maintaining coverage
requires that eligible beneficiaries are able to stay enrolled in the
program without interruption, or that they know how to and can smoothly
transition to other health coverage, such as CHIP, Exchange coverage,
or Medicare, when they are no longer eligible for Medicaid coverage but
have become eligible for other health coverage programs. In September
2022, we published a proposed rule, Streamlining the Medicaid,
Children's Health Insurance Program, and Basic Health Program
Application, Eligibility, Determination, Enrollment, and Renewal
Processes to simplify the processes for eligible individuals to enroll
and retain eligibility in Medicaid, CHIP, and the Basic Health Program
(BHP) (87 FR 54760). This proposed rule was finalized in two parts, the
Streamlining Medicaid; Medicare Savings Program Eligibility
Determination and Enrollment Final Rule (88 FR 65230) and the
Streamlining Eligibility & Enrollment final rule (89 FR 22780).
The third dimension, which is the focus of this final rule, is
access to services and supports. This rule addresses additional
critical elements of access: (1) potential access, which refers to a
beneficiary's access to providers and services, whether or not the
providers or services are used; (2) beneficiary utilization, which
refers to beneficiaries' actual use of the providers and services
available to them; and (3) beneficiaries' perceptions and experiences
with the care they did or were not able to receive. These terms and
definitions build upon previous efforts to examine how best to monitor
access.\11\
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\11\ Kenney, Genevieve M., Kathy Gifford, Jane Wishner, Vanessa
Forsberg, Amanda I. Napoles, and Danielle Pavliv. ``Proposed
Medicaid Access Measurement and Monitoring Plan.'' Washington, DC:
The Urban Institute. August 2016. Accessed at https://www.urban.org/sites/default/files/publication/88081/2001143-medicaid-access-measurement-and-monitoring-plan_0.pdf.
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We completed an array of regulatory activities, including three
rules: the aforementioned Streamlining Eligibility & Enrollment final
rules and a final rule entitled Medicaid and Children's Health
Insurance Program (CHIP) Managed Care Access, Finance, and Quality (as
published elsewhere in this issue of the Federal Register, Managed Care
final rule), on managed care including matters of access, and this
final rule on access. Additionally, we are taking non-regulatory
actions to improve beneficiary access to care (for example, best
practices toolkits and technical assistance to States) to improve
access to health care services across Medicaid delivery systems.
As noted earlier, we issued the Streamlining Eligibility &
Enrollment final rules to address the first two dimensions of access to
health care: (1) enrollment in coverage and (2) maintenance of
coverage. Through those final rules, we streamline Medicaid, CHIP and
BHP eligibility and enrollment processes, reduce administrative burden
on States and applicants/enrollees toward a more seamless eligibility
and enrollment process, and increase the enrollment and retention of
eligible individuals.
The Managed Care final rule improves access to care and quality
outcomes for Medicaid and CHIP beneficiaries enrolled in managed care
by: creating standards for timely access to care and States' monitoring
and enforcement efforts; reducing burden for some State directed
payments and certain quality reporting requirements; adding new
standards that will apply when States use in lieu of services and
settings (ILOSs) to promote effective utilization, and specifying the
scope and nature of ILOS; specifying medical loss ratio (MLR)
requirements, and establishing a quality rating system for Medicaid and
CHIP managed care plans.
Through the Managed Care final rule and this final rule (Ensuring
Access to Medicaid Services), we finalize additional requirements to
address the third dimension of the health care access continuum: access
to services. The requirements outlined later in this section focus on
improving access to services in Medicaid by utilizing tools such as FFS
rate transparency,

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standardized reporting for HCBS, and improving the process for
interested parties, especially Medicaid beneficiaries, to provide
feedback to State Medicaid agencies and for Medicaid agencies to
respond to the feedback (also known as a feedback loop).
Through a combination of these four final rules, we address a range
of access-related challenges that impact how beneficiaries are served
by Medicaid across all of its delivery systems. FFP will be available
for expenditures that are necessary to implement the activities States
will need to undertake to comply with the provisions of these final
rules.
Finally, we also believe it is important to acknowledge the role of
health equity within this final rule. Medicaid plays a
disproportionately large role in covering health care for people from
underserved communities in this country.\12\ Consistent with E.O. 13985
on ``Advancing Racial Equity and Support for Underserved Communities
Through the Federal Government (January 20, 2021),'' \13\ which calls
for advancing equity for underserved populations, we are working to
ensure our programs consistently provide high-quality care to all
beneficiaries, and thus advance health equity, consistent with the
goals and objectives we have outlined in the CMS Framework for Health
Equity 2022-2032 \14\ and the HHS Equity Action Plan.\15\ That effort
includes increasing our understanding of the needs of those we serve to
ensure that all individuals have access to equitable coverage and care.
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\12\ Guth, M and Artiga, S. Medicaid and Racial Health Equity
March 2022. Accessed at https://www.kff.org/medicaid/issue-brief/medicaid-and-racial-health-equity/.
\13\ Executive Order 13985: 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/.
\14\ CMS Framework for Health Equity 2022-2032: https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
\15\ HHS Equity Action Plan. April 2022. Accessed at https://www.hhs.gov/sites/default/files/hhs-equity-action-plan.pdf.
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We recognize that each State faces a unique set of challenges
related to the resumption of its normal program activities after the
end of the COVID-19 public health emergency (PHE). More specifically,
the expiration of the Medicaid continuous enrollment condition
authorized by the Families First Coronavirus Response Act (FFCRA)
presents the single largest health coverage transition event since the
first open enrollment period of the Affordable Care Act. As a condition
of receiving a temporary 6.2 percentage point Federal Medical
Assistance Percentage (FMAP) increase under the FFCRA, States were
required to maintain enrollment of nearly all Medicaid enrollees. This
continuous enrollment condition expired on March 31, 2023, after which
States began completing renewals for all individuals enrolled in
Medicaid, CHIP, and the BHP. Additionally, many other temporary
authorities adopted by States during the COVID-19 PHE expired at the
end of the PHE, and States are returning to regular operations across
their programs. The resumption of normal Medicaid operations is
generally referred to as ``unwinding'' and the period for States to
initiate all outstanding eligibility actions that were delayed because
of the FFCRA continuous enrollment condition is called the ``unwinding
period.'' We considered States' unwinding responsibilities when
finalizing the dates for States to begin complying with the
requirements being finalized in this rule, but, as noted in the
Ensuring Access to Medicaid Services proposed rule, we solicited State
feedback on whether our proposals struck the correct balance.
We considered adopting an effective date of 60 days following
publication of this final rule and separate compliance dates for
various provisions, which we note where relevant in our discussion of
specific proposals in this final rule. We solicited comment on whether
an effective date of 60 days following publication would be appropriate
when combined with later dates for compliance for some provisions.
We also solicited comment on the timeframe that would be most
achievable and appropriate for compliance with each proposed provision
and whether the compliance date should vary by provision.

B. Medical Care Advisory Committees (MCAC)

We obtained feedback during various public engagement activities
conducted with States and other interested parties, which supports
research findings that the beneficiary perspective and lived Medicaid
experience \16\ should be considered when making policy decisions
related to Medicaid programs.^{17 18} A 2022 report from the
HHS Assistant Secretary of Planning and Evaluation (ASPE) noted that
including people with lived experience in the policy-making process can
lead to a deeper understanding of the conditions affecting certain
populations, facilitate identification of possible solutions, and avoid
unintended consequences of potential policy or program changes that
could negatively impact the people the program aims to serve.\19\ We
have concluded that beneficiary perspectives need to be central to
operating a high-quality health coverage program that consistently
meets the needs of all its beneficiaries.
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\16\ Lived experience refers to ``representation and
understanding of an individual's human experiences, choices, and
options and how those factors influence one's perception of
knowledge'' based on one's own life. In this context, we refer to
people who have been enrolled in Medicaid currently or in the past.
Accessed at https://aspe.hhs.gov/lived-
experience#:~:text=In%20the%20context%20of%20ASPE%E2%80%99s%20researc
h%2C%20people%20with,programs%20that%20aim%20to%20address%20the%20iss
ue%20%28s%29.
\17\ Zhu JM, Rowland R, Gunn R, Gollust S, Grande DT. Engaging
Consumers in Medicaid Program Design: Strategies from the States.
Milbank Q. 2021 Mar;99(1):99-125. doi: 10.1111/1468-0009.12492. Epub
2020 Dec 15. PMID: 33320389; PMCID: PMC7984666. Accessed at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7984666/.
\18\ Key Findings from the Medicaid MCO Learning Hub Discussion
Group Series and Roundtable--Focus on Member Engagement and the
Consumer Voice. NORC at the University of Chicago. Jan 2021.
Accessed at https://www.norc.org/PDFs/Medicaid%20Managed%20Care%20Organization%20Learning%20Hub/MMCOLearningHub_MemberEngagement.pdf.
\19\ Syreeta Skelton-Wilson et al., ``Methods and Emerging
Strategies to Engage People with Lived Experience,'' Office of the
Assistant Secretary for Planning and Evaluation (ASPE), U.S.
Department of Health and Human Services, January 4, 2022, https://aspe.hhs.gov/reports/lived-experience-brief.
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However, effective community engagement is not as simple as
planning a meeting and requesting feedback. To create opportunities
that facilitate true engagement, it is important to understand and
honor strengths and assets that exist within communities; recognize and
solicit the inclusion of diverse voices; dedicate resources to ensuring
that engagement is done in culturally meaningful ways; ensure
timelines, planning processes, and resources that support equitable
participation; and follow up with communities to let them know how
their input was utilized. Ensuring optimal health outcomes for all
beneficiaries served by a program through the design, implementation,
and operationalization of policies and programs requires intentional
and continuous effort to engage people who have historically been
excluded from the process.
Section 1902(a)(4) of the Act is a longstanding statutory provision
that, as implemented in part in regulations currently codified at 42
CFR 431.12,\20\ requires States to have a Medical Care

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Advisory Committee (MCAC) in place to advise the State Medicaid agency
about health and medical care services. Under section 1903(a)(7) of the
Act, expenditures made by the State agency to operate the MCAC are
eligible for Federal administrative match.
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\20\ The regulatory provision was originally established in 36
FR 3793 at 3870.
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The current MCAC regulations at Sec. 431.12 require States to
establish such a committee and describe high-level requirements related
to the composition of the committee, the scope of topics to be
discussed, and the support the Committee can receive from the State in
its administration. Due to the lack of specificity in the current
regulations, these regulations have not been consistently implemented
across States. For example, there is no mention of how States should
approach meeting periodicity or meeting structure in ways that are
conducive to including a variety of Medicaid interested parties. There
is also no mention in the regulations about how States can build
accountability through transparency with their interested parties by
publicly sharing meeting dates, membership lists, and the outcomes of
these meetings. The regulations also limit the required MCAC
discussions to topics about health and medical care services--which in
turn limits the benefits of using the MCAC as a vehicle that can
provide States with varied ideas, suggestions, and experiences on a
range of issues related to the effective administration of the Medicaid
program.
As such, we have determined the requirements governing MCACs need
to be more robust to ensure all States are using these committees
optimally to realize a more effective and efficient Medicaid program
that is informed by the experiences of beneficiaries, their caretakers,
and other interested parties. The current regulations have been in
place without change for over 40 years.\21\ Over the last four decades,
we have learned that the current MCAC requirements are insufficient in
ensuring that the beneficiary perspective is meaningfully represented
on the MCAC. Recent research regarding soliciting input from
individuals with lived experience, including our recent discussions
with States about their MCAC, provide a unique opportunity to re-
examine the purpose of this committee and update the policies to
reflect four decades of program experience.
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\21\ 43 FR 45091 at 45189.
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In 2022, we gathered feedback from various public engagement
activities conducted with States, other interested parties, and
directly from a subset of State Medicaid agencies that described a wide
variation in how States are operating MCACs today. The feedback
suggested that some MCACs operate simply to meet the broad Federal
requirements. As discussed previously in this section, we have
discovered that our current regulations do not further the statutory
goal of meaningfully engaging Medicaid beneficiaries and other low-
income people in matters related to the operation of the Medicaid
program. Meaningful engagement can help develop relationships and
establish trust between the communities served and the Medicaid agency
to ensure States receive important information concerning how to best
provide health coverage to their beneficiary populations. The current
MCAC regulations establish the importance of broad feedback from
interested parties, but they lack the specificity that can ensure
States use MCACs in ways that facilitate that feedback.
The current regulations require that MCACs must include Medicaid
beneficiaries as committee members. However, the regulations do not
mention or account for the reality that other interested parties can
stifle beneficiary contribution in a group setting. For example, when
there are a small number of beneficiary representatives in large
committees with providers, health plans, and professional advocates, it
can be uncomfortable and intimidating for beneficiaries to share their
perspective and experience. Based on these reasons, several States
already use beneficiary-only groups that feed into larger MCACs.
Improvements to the MCACs are critical to ensuring a robust and
accurate understanding of beneficiaries' challenges to health care
access. The current regulations value State Medicaid agencies having a
way to get feedback from interested parties on issues related to the
Medicaid program. However, the current regulations lack specificity
related to how MCACs can be used to benefit the Medicaid program more
expressly by more fully promoting the beneficiary voice. MCACs need to
provide a forum for beneficiaries and people with lived experience with
the Medicaid program to share their experiences and challenges with
accessing health care, and to assist States in understanding and better
addressing those challenges. These committees also represent unique
opportunities for States to include representation by members that
reflect the demographics of their Medicaid program to ensure that the
program is best serving the needs of all beneficiaries, but not all
States are utilizing that opportunity.
This final rule strikes a balance that reflects how States
currently use advisory committees (such as MCACs or standalone
beneficiary groups). We know that some States approach these committees
as a way to meet a Federal requirement while other States are using
them in much more innovative ways. As a middle ground, this final rule
seeks to: (1) address the gaps in the current regulations described
previously in this section; and (2) establish requirements to implement
more effective advisory committees. States will select members in a way
that reflects a wide range of Medicaid interested parties (covering a
diverse set of populations and interests relevant to the Medicaid
program), place a special emphasis on the inclusion of the beneficiary
perspective, and create a meeting environment where each voice is
empowered to participate equally.
The changes we are making in this rule are rooted in best practices
learned from States' experiences implementing the existing MCAC
provisions and from other State examples of community engagement that
support getting the type of feedback and experiences from
beneficiaries, their caretakers, providers, and other interested
parties that can then be used to positively impact care delivered
through the Medicaid program.
Accordingly, this final rule includes changes that will support the
implementation of the principles of bi-directional feedback,
transparency, and accountability. We are making changes to the features
of the new committee that can most effectively ensure member
engagement, including the staff and logistical support that is required
for beneficiaries and individuals representing beneficiaries to
meaningfully participate in these committees. We are also making
changes to expand the scope of topics to be addressed by the committee,
address committee membership composition, prescribe the features of
administration of the committee, establish requirements of an annual
report, and underscore the importance of beneficiary engagement through
the addition of a related beneficiary-only group.

C. Home and Community-Based Services (HCBS)

While Medicaid programs are required to provide medically necessary
nursing facility services for most eligible individuals age 21 or
older, coverage for

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HCBS is a State option.\22\ As a result of this ``institutional bias''
in the statute, Medicaid reimbursement for LTSS was primarily spent on
institutional care, historically, with very little spending for
HCBS.\23\ However, over the past several decades, States have used
several Medicaid authorities,\24\ as well as CMS-funded grant
programs,\25\ to develop a broad range of HCBS to provide alternatives
to institutionalization for eligible Medicaid beneficiaries and to
advance person-centered care. Consistent with many beneficiaries'
preferences for where they would like to receive their care, HCBS have
become a critical component of the Medicaid program and are part of a
larger framework of progress toward community integration of older
adults and people with disabilities that spans efforts across the
Federal government. In fact, total Medicaid HCBS expenditures surpassed
the long-standing benchmark of 50 percent of LTSS expenditures in FY
2013 and has remained higher than 50 percent since then, reaching 55.4
percent in FY 2017 and 62.5 percent in FY 2020.\26\ A total of 35
States spent at least 50 percent of Medicaid LTSS expenditures on HCBS
in FY 2020.
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\22\ Murray, Caitlin, Alena Tourtellotte, Debra Lipson, and
Andrea Wysocki. ``Medicaid Long Term Services and Supports Annual
Expenditures Report: Federal Fiscal Year 2019.'' Chicago, IL:
Mathematica, December 2021. Accessed at https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures2019.pdf.
\23\ Centers for Medicare and Medicaid Services. November 2020.
Long-Term Services and Supports Rebalancing Toolkit. Accessed at
https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf.
\24\ These authorities include Medicaid State plan personal care
services and Social Security Act (the Act) section 1915(c) waivers,
section 1915(i) State plan HCBS, section 1915(j) self-directed
personal assistant services, and section 1915(k) Community First
Choice. See https://www.medicaid.gov/medicaid/home-community-based-services/home-community-based-services-authorities/index.html for
more information on these authorities. Some States also use
demonstration authority under section 1115(a) of the Act to cover
and test home and community-based service strategies. See https://www.medicaid.gov/medicaid/section-1115-demonstrations/index.html for
more information.
\25\ Federally funded grant programs include the Money Follows
the Person (MFP) demonstration program, which was initially
authorized by the Deficit Reduction Act of 2005 (Pub. L. 109-171).
The MFP program was recently extended under the Consolidated
Appropriations Act, 2021 (Pub. L. 116-260), which allowed new States
to join the demonstration and made statutory changes affecting MFP
participant eligibility criteria, allowing grantees to provide
community transition services under MFP earlier in an eligible
individual's inpatient stay.
\26\ Murray, Caitlin, Michelle Eckstein, Debra Lipson, and
Andrea Wysocki. ``Medicaid Long Term Services and Supports Annual
Expenditures Report: Federal Fiscal Year 2020.'' Chicago, IL:
Mathematica, December 9, 2021. Accessed at https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures2020.pdf.
---------------------------------------------------------------------------

Furthermore, HCBS play an important role in States' efforts to
achieve compliance with Title II of the Americans with Disabilities Act
(ADA) of 1990, section 504 of the Rehabilitation Act of 1973 (section
504),\27\ section 1557 of the Affordable Care Act, and the Supreme
Court's decision in Olmstead v. L.C.,\28\ in which the Court held that
unjustified segregation of persons with disabilities is a form of
unlawful discrimination under the ADA \29\ and States must ensure that
persons with disabilities are served in the most integrated setting
appropriate to their needs.\30\ Section 9817 of the American Rescue
Plan Act of 2021 (ARP) (Pub. L. 117-2) recently made a historic
investment in Medicaid HCBS by providing qualifying States with a
temporary 10 percentage point increase to the FMAP for certain Medicaid
expenditures for HCBS that States must use to implement or supplement
the implementation of one or more activities to enhance, expand, or
strengthen HCBS under the Medicaid program.\31\
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\27\ HHS interprets section 504 and Title II of the ADA
similarly regarding the integration mandate and the Department of
Justice generally interprets the requirements under section 504
consistently with those under Title II of the ADA.
\28\ 527 U.S. 581 (1999).
\29\ Medicaid and the Olmstead Decision. Accessed at https://www.medicaid.gov/about-us/program-history/medicaid-50th-anniversary/entry/47688.
\30\ Medicaid and the Olmstead Decision. Accessed at https://www.medicaid.gov/about-us/program-history/medicaid-50th-anniversary/entry/47688.
\31\ Information on State activities to expand, enhance, or
strengthen HCBS under ARP section 9817 can be found on Medicaid.gov
at https://www.medicaid.gov/medicaid/home-community-based-services/guidance/strengthening-and-investing-home-and-community-based-services-for-medicaid-beneficiaries-american-rescue-plan-act-of-2021-section-9817/index.html.
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Medicaid coverage of HCBS varies by State and can include a
combination of medical and non-medical services, such as case
management, homemaker, personal care, adult day health, habilitation
(both day and residential), and respite care services. HCBS programs
serve a variety of targeted population groups, such as older adults,
and children and adults with intellectual or developmental
disabilities, physical disabilities, mental health/substance use
disorders, and complex medical needs. HCBS programs provide
opportunities for Medicaid beneficiaries to receive services in their
own homes and communities rather than in institutions.
CMS and States have worked for decades to support the increased
availability and provision of high-quality HCBS for Medicaid
beneficiaries. While there are quality and reporting requirements for
Medicaid HCBS, the requirements vary across authorities and are often
inadequate to provide the necessary information for ensuring that HCBS
are provided in a high-quality manner that best protects the health and
welfare of beneficiaries. Consequently, quality measurement and
reporting expectations are not consistent across and within services,
but instead vary depending on the authorities under which States are
delivering services. Additionally, States have flexibility to determine
the quality measures they use in their HCBS programs. While we support
State flexibility, a lack of standardization has resulted in thousands
of metrics and measures currently in use across States, with different
metrics and measures often used for different HCBS programs within the
same State. As a result, CMS and States are limited in the ability to
compare HCBS quality and outcomes within and across States or to
compare the performance of HCBS programs for different populations.
In addition, although there are differences in rates of disability
among demographic groups, there are very limited data currently
available to assess disparities in HCBS access, utilization, quality,
and outcomes. Few States have the data infrastructure to systematically
or routinely report data that can be used to assess whether disparities
exist in HCBS programs. This lack of available data also prevents CMS
and States from implementing interventions to make improvements in HCBS
programs designed to consistently meet the needs of all beneficiaries.
Compounding these concerns have been notable and high-profile instances
of abuse and neglect in recent years, which have been shown to result
from poor quality care and inadequate oversight of HCBS in Medicaid.
For example, a 2018 report, ``Ensuring Beneficiary Health and Safety in
Group Homes Through State Implementation of Comprehensive Compliance
Oversight,'' \32\ (``Joint Report''), which was jointly developed by
the U.S. Department of Health Human Services' Administration for
Community Living (ACL), Office for Civil Rights (OCR), and the Office
of

[[Page 40547]]

Inspector General (OIG), found systemic problems with health and safety
policies and procedures being followed in group homes and that failure
to comply with these policies and procedures left beneficiaries in
group homes at risk of serious harm. In addition, while existing
regulations provide safeguards for all Medicaid beneficiaries in the
event of a denial of Medicaid eligibility or an adverse benefit
determination by the State Medicaid agency and, where applicable, by
the beneficiary's managed care plan, there are no safeguards related to
other issues that HCBS beneficiaries may experience, such as the
failure of a provider to comply with the HCBS settings requirements or
difficulty accessing the services in the person-centered service plan
unless the individual is receiving those services through a Medicaid
managed care arrangement.
---------------------------------------------------------------------------

\32\ Ensuring Beneficiary Health and Safety in Group Homes
Through State Implementation of Comprehensive Compliance Oversight.
US Department of Health and Human Services, Office of the Inspector
General, Administration for Community Living, and Office for Civil
Rights. January 2018. Accessed at https://oig.hhs.gov/reports-and-publications/featured-topics/group-homes/group-homes-joint-report.pdf.
---------------------------------------------------------------------------

Finally, through our regular interactions with State Medicaid
agencies, provider groups, and beneficiary advocates, we observed that
all these interested parties routinely cite a shortage of direct care
workers and high rates of turnover in direct care workers among the
greatest challenges in ensuring access to high-quality, cost-effective
HCBS for people with disabilities and older adults. Some States have
also indicated that a lack of direct care workers is preventing them
from transitioning individuals from institutions to home and community-
based settings. While workforce shortages have existed for years, they
have been exacerbated by the COVID-19 pandemic, which has resulted in
higher rates of direct care worker turnover (for instance, due to
higher rates of worker-reported stress), an inability of some direct
care workers to return to their positions prior to the pandemic (for
instance, due to difficulty accessing child care or concerns about
contracting COVID-19 for people with higher risk of severe illness),
workforce shortages across the health care sector, and wage increases
in types of retail and other jobs that tend to draw from the same pool
of workers.^{33 34 35}
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\33\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\34\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\35\ American Network of Community Options and Resources
(ANCOR). 2021. The state of America's direct support workforce 2021.
Alexandria, VA: ANCOR. Accessed at https://www.ancor.org/sites/default/files/the_state_of_americas_direct_support_workforce_crisis_2021.pdf.
---------------------------------------------------------------------------

To address the list of challenges outlined in this section, we
proposed Federal requirements to improve access to care, quality of
care, and health and quality of life outcomes; promote health equity
for people receiving Medicaid-covered HCBS; and ensure that there are
safeguards in place for beneficiaries who receive HCBS through FFS
delivery systems. We solicited comment on other areas for rulemaking
consideration. The requirements we are finalizing in this rule are
intended, individually and as a whole, to promote public transparency
related to the administration of Medicaid HCBS programs.

D. Fee-For-Service (FFS) Payment

Section 1902(a)(30)(A) of the Act requires States to ``assure that
payments are consistent with efficiency, economy, and quality of care
and are sufficient to enlist enough providers so that care and services
are available under the plan at least to the extent that such care and
services are available to the general population in the geographic
area.'' Regulations at Sec. 447.203 require States to develop and
submit to CMS an access monitoring review plan (AMRP) for a core set of
services. Currently, the regulations rely on available State data to
support a determination that the State's payment rates are sufficient
to ensure access to care in Medicaid FFS that is at least as great for
beneficiaries as is generally available to the general population in
the geographic area, as required under section 1902(a)(30)(A) of the
Act.
In the May 6, 2011, Federal Register, we published the Medicaid
Program; Methods for Assuring Access to Covered Medicaid Services
proposed rule (76 FR 26341; hereinafter ``2011 proposed rule''), which
outlined a data-driven process for States with Medicaid services paid
through a State plan under FFS to follow in order to document their
compliance with section 1902(a)(30)(A) of the Act. We finalized the
2011 proposed rule in the November 2, 2015, Federal Register when we
published the ``Medicaid Program; Methods for Assuring Access to
Covered Medicaid Services'' final rule with comment period (80 FR
67576; hereinafter ``2015 final rule with comment period''). Among
other requirements, the 2015 final rule with comment period required
States to develop and submit to CMS an AMRP for certain Medicaid
services that is updated at least every 3 years. Additionally, the rule
required that when States submit a SPA to reduce or restructure
provider payment rates, they must consider the data collected through
the AMRP and undertake a public process that solicits input on the
potential impact of the proposed reduction or restructuring of Medicaid
FFS payment rates on beneficiary access to care. We published the
``Medicaid Program; Deadline for Access Monitoring Review Plan
Submissions'' final rule in the April 12, 2016 Federal Register (81 FR
21479; hereinafter ``2016 final rule'') with a revised deadline for
States' AMRPs to be submitted to us.
Following the implementation of the AMRP process, numerous States
have expressed concern regarding the administrative burden associated
with the 2015 final rule with comment period requirements, especially
those States with high rates of beneficiary enrollment in managed care.
In an attempt to address some of the States' concerns regarding
unnecessary administrative burden, we issued a State Medicaid Director
letter (SMDL) on November 16, 2017 (SMDL #17-004), which clarified the
circumstances in which provider payment reductions or restructurings
would likely not result in diminished access to care, and therefore,
would not require additional analysis and monitoring procedures
described in the 2015 final rule with comment period.\36\ Subsequently,
in the March 23, 2018 Federal Register, we published the ``Medicaid
Program; Methods for Assuring Access to Covered Medicaid Services-
Exemptions for States With High Managed Care Penetration Rates and Rate
Reduction Threshold'' proposed rule (83 FR 12696; hereinafter ``2018
proposed rule''), which would have exempted States from requirements to
analyze certain data or monitor access when the vast majority of their
covered beneficiaries receive services through managed care plans. That
proposed rule, if it had been finalized, would have provided similar
flexibility to all States when they make nominal rate reductions or
restructurings to FFS payment rates. Based on the responses received
during the public comment period, we decided not to finalize the
proposed exemptions.
---------------------------------------------------------------------------

\36\ State Medicaid Director Letter #17-0004 Re: Medicaid Access
to Care Implementation Guidance. Accessed at https://www.medicaid.gov/federal-policy-guidance/downloads/smd17004.pdf
(November 2017).
---------------------------------------------------------------------------

In the July 15, 2019, Federal Register, we published the ``Medicaid
Program; Methods for Assuring Access to Covered Medicaid Services-
Rescission'' proposed rule (84 FR 33722; hereinafter ``2019 proposed
rule'') to rescind the regulatory access requirements at Sec. Sec.
447.203(b) and 447.204, and

[[Page 40548]]

concurrently issued a CMCS Informational Bulletin (CIB) \37\ stating
the agency's intention to establish a new access strategy. Based on the
responses we received during the public comment period, we decided not
to finalize the 2019 proposed rule, and instead continue our efforts
and commitment to develop a data-driven strategy to understand access
to care in the Medicaid program.
---------------------------------------------------------------------------

\37\ CMCS Informational Bulletin: Comprehensive Strategy for
Monitoring Access in Medicaid, Accessed at https://www.medicaid.gov/federal-policy-guidance/downloads/CIB071119.pdf (July 2019).
---------------------------------------------------------------------------

States have continued to question whether the AMRP process is the
most effective or accurate reflection of access to care in a State's
Medicaid program, and requested we provide additional clarity on the
data necessary to support compliance with section 1902(a)(30)(A) of the
Act. In reviewing the information that States presented through the
AMRPs, we also have questioned whether the data and analysis
consistently address the primary access-related question posed by
section 1902(a)(30)(A) of the Act--namely, whether rates are sufficient
to ensure access to care at least as great as that enjoyed by the
general population in geographic areas. The unstandardized nature of
the AMRPs, which largely defer to States to determine appropriate data
measures to review and monitor when documenting access to care, have
made it difficult to assess whether any single State's analysis
demonstrates compliance with section 1902(a)(30)(A) of the Act.
While the AMRPs were intended to be a useful guide to States in the
overall process to monitor beneficiary access, they are generally
limited to access in FFS delivery systems and focus on targeted payment
rate changes rather than the availability of care more generally or
population health outcomes (which may be indicative of the population's
ability to access care). Moreover, the AMRP processes are largely
procedural in nature and not targeted to specific services for which
access may be of particular concern, requiring States to engage in
triennial reviews of access to care for certain broad categories of
Medicaid services--primary care services, physician specialist
services, behavioral health services, pre- and post-natal obstetric
services, and home health services. Although the 2016 final rule
discussed that the selected service categories were intended to be
indicators for available access in the overall Medicaid FFS system,
these categories do not directly translate to the services authorized
under section 1905(a) of the Act, granting States deference as to how
broadly or narrowly to apply the AMRP analysis to services within their
programs. For example, the category ``primary care services'' could
encompass several of the Medicaid service categories described within
section 1905(a) of the Act and, without clear guidance on which section
1905(a) services categories, qualified providers, or procedures we
intended States to include within the AMRP analyses, States were left
to make their own interpretations in analyzing access to care under the
2016 final rule.
Similarly, a number of the AMRP data elements, both required and
suggested within the 2016 final rule, may be overly broad, subject to
interpretation, or difficult to obtain. Specifically, under the 2016
final rule provisions, States are required to review: the extent to
which beneficiary needs are fully met; the availability of care through
enrolled providers to beneficiaries in each geographic area, by
provider type and site of service; changes in beneficiary utilization
of covered services in each geographic area; the characteristics of the
beneficiary population (including considerations for care, service and
payment variations for pediatric and adult populations and for
individuals with disabilities); and actual or estimated levels of
provider payment available from other payers, including other public
and private payers, by provider type and site of service. Although
service utilization and provider participation are relatively easy
measures to source and track using existing Medicaid program data, an
analysis of whether beneficiary needs are fully met is at least
somewhat subjective and could require States to engage in a survey
process to complete. Additionally, while most Medicaid services have
some level of equivalent payment data that can be compared to other
available public payer data, such as Medicare, private payer
information may be proprietary and difficult to obtain. Therefore, many
States struggled to meet the regulatory requirement to compare Medicaid
program rates to private payer rates because of their inability to
obtain private payer data.
Due to these issues, States produced varied AMRPs through the
triennial process that were, as a whole, difficult to interpret or to
use in assessing compliance with section 1902(a)(30)(A) of the Act. In
isolation, a State's specific AMRP most often presented data that could
be meaningful as a benchmark against changes within a State's Medicaid
program, but did not present a case for Medicaid access consistent with
the general population in geographic areas. Frequently, the data and
information within the AMRPs were presented without a formal
determination or attestation from the State that the information
presented established compliance with section 1902(a)(30)(A) of the
Act. Because the States' AMRPs generally varied to such a great degree,
there was also little to glean in making State-to-State comparisons of
performance on access measures, even for States with geographic and
demographic similarities.
Based on results of the triennial AMRPs, we were uncertain of how
to make use of the information presented within them other than to make
them publicly available. We published the AMRPs on Medicaid.gov but had
little engagement with States on the content or results of the AMRPs
since much of the information within the plans could not meaningfully
answer whether access in Medicaid programs satisfied the requirements
of section 1902(a)(30)(A) of the Act. Additionally, we received little
feedback from providers, beneficiaries, or advocates on whether or how
interested parties made use of the triennial AMRPs. However, portions
of the 2016 final rule related to public awareness and feedback on
changes to Medicaid payment rates and the analysis that we received
from individual States proposing to make rate changes was of great
benefit in determining approvals of State payment change proposals.
Specifically, the portion of the AMRP process where States update their
plans to describe data and measures to serve as a baseline against
which they monitor after reducing or restructuring Medicaid payments
allows States to document consistency with section 1902(a)(30)(A) of
the Act at the time of SPA submission, usually as an assessment of how
closely rates align with Medicare rates, and to understand the impact
of reductions through data monitoring after SPA approval.
Under this final rule, we balance elimination of unnecessary
Federal and State administrative burden with robust implementation of
the Federal and State shared obligation to ensure that Medicaid payment
rates are set at levels sufficient to ensure access to care for
beneficiaries consistent with section 1902(a)(30)(A) of the Act. The
provisions of this final rule, as discussed in more detail later, will
better achieve this balance through improved transparency of Medicaid
FFS payment rates, through publication of a comparative payment rate
analysis to Medicare and payment rate disclosures,

[[Page 40549]]

and through a more targeted and defined approach to evaluating data and
information when States propose to reduce or restructure their Medicaid
payment rates. Payment rate transparency is a critical component of
assessing compliance with section 1902(a)(30)(A) of the Act. In
addition, payment rate transparency helps to ensure that interested
parties have basic information available to them to understand Medicaid
payment levels and the associated effects of payment rates on access to
care so that they may raise concerns to State Medicaid agencies via the
various forms of public processes discussed within this final rule.
Along with improved payment rate transparency and disclosures as well
as comparative payment rate analyses, we are finalizing a more
efficient process for States to undertake when submitting rate
reduction or restructuring SPAs to CMS for review. As we move toward
aligning our Medicaid access to care strategy across FFS and managed
care delivery systems, we will consider additional rulemaking to help
ensure that Medicaid payment rate information is appropriately
transparent and rates are fully consistent with broad access to care
across delivery systems, so that interested parties have a more
complete understanding of Medicaid payment rate levels and resulting
access to care for beneficiaries.

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

We received 2,123 public comments from individuals and
organizations, including, but not limited to, individuals, State
government agencies, non-profit health care organizations, advocacy
groups, associations, law firms, managed care plans, academic groups,
and tribal organizations. We thank and appreciate the commenters for
their consideration of the proposed requirements for ensuring access to
care, quality and health outcomes, and better addressing health equity
issues in the Medicaid program across FFS and managed care delivery
systems, and in HCBS programs. In general, commenters supported the
proposed rule. In this section, arranged by subject area, we summarize
the proposed provisions, the public comments received, and our
responses. For a complete and full description of the proposed
requirements, see the 2023 proposed rule, ``Medicaid Program; Ensuring
Access to Medicaid Services'' (88 FR 27960, May 5, 2023) hereafter
referred to as the ``proposed rule.''
We also received a number of out-of-scope comments that are not
addressed in this final rule. In addition, we received some comments
which were s solely applicable to the Managed Care proposed rule.
Please see the Managed Care final rule for a for a summary of the
comments CMS received pertaining to that proposed rule.
We are clarifying and emphasizing our intent that 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, or stayed pending further
action, it shall be severable from this final rule, and from rules and
regulations currently in effect, and not affect the remainder thereof
or the application of the provision to other persons not similarly
situated or to other, dissimilar circumstances. If any provision is
held to be invalid or unenforceable, the remaining provisions which
could function independently, should take effect and be given the
maximum effect permitted by law. Through this rule, we adopt provisions
that are intended to and will operate independently of each other, even
if each serves the same general purpose or policy goal. Where a
provision is necessarily dependent on another, the context generally
makes that clear.
Finally, we note that we are finalizing with modification several
of the dates for when we expect States to begin complying with the
requirements being finalized in this rule, instead of what we proposed.
Generally, we are finalizing that this rule, including the proposals
being finalized herein, will be effective 60 days after publication of
this final rule. However, we are finalizing that States are not
required to begin compliance with most requirements being finalized in
this rule until a specified applicability date, which we have specified
for each such individual proposal being finalized. We discuss in detail
the applicability date we are finalizing for each proposal being
finalized in this rule in the respective section of this preamble. We
encourage States, providers, and interested parties to confirm the
applicability dates indicated in this final rule for any changes from
the proposed. To assist, we are including Table 1 with the provisions
and relevant timing information and dates.
BILLING CODE 4120-01-P

[[Page 40550]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.023

BILLING CODE 4120-01-C

[[Page 40551]]

A. Medicaid Advisory Committee and Beneficiary Advisory Council (Sec.
431.12)

The current regulations at Sec. 431.12 require States to have a
Medical Care Advisory Committee (MCAC) to advise the State Medicaid
agency about health and medical care services. The regulations are
intended to ensure that State Medicaid agencies had a way to receive
feedback regarding health and medical care services from interested
parties. However, these regulations lacked specificity related to how
these committees can be used to ensure the proper and efficient
administration of the Medicaid program more expressly by more fully
promoting beneficiary perspectives.
Under the authority of section 1902(a)(4) of the Act, section
1902(a)(19) of the Act, and our general rulemaking authority in section
1102 of the Act, we are finalizing proposals to Sec. 431.12 to replace
the current MCAC requirements with a committee framework designed to
ensure the proper and efficient administration of the Medicaid program
and to better ensure that services under the Medicaid program will be
provided in a manner consistent with the best interests of the
beneficiaries. States will be required to establish and operate the
newly named Medicaid Advisory Committee (MAC) and a Beneficiary
Advisory Council (BAC). Please note that in the proposed rule, the BAC
was referred to as the Beneficiary Advisory Group, or BAG. The MAC and
its corresponding BAC will serve as vehicles for bi-directional
feedback between interested parties and the State on matters related to
the effective administration of the Medicaid program as determined by
the State and MAC. With the changes in this final rule FFP, or Federal
match, for Medicaid administrative activities will remain available to
States for expenditures related to MAC and BAC activities in the same
manner as the former MCAC.
The proposed and finalized requirements of the MAC amend previous
and add new Federal requirements to: (1) expand the scope and use of
States' MACs; (2) rename the Medicaid Advisory Committee, which will
advise the State on a range of issues including medical and non-medical
services; (3) require States to establish a BAC; (4) establish minimum
requirements for Medicaid beneficiary representation on the MAC,
membership, meetings materials, and attendance; and (5) promote
transparency and accountability between the State and interested
parties by making information on the MAC and BAC activities publicly
available. The finalized requirements aimed at promoting transparency
and accountability also include a requirement for States to create and
publicly post an annual report summarizing the MAC and BAC activities.
We note that some commenters expressed general support for all of
the provisions in section II.A. of this rule, as well as for this rule
in its entirety. In response to commenters who supported some, but not
all, of the policies and regulations we proposed in the proposed rule,
we are clarifying and emphasizing our intent that each final policy and
regulation is distinct and severable to the extent it does not rely on
another final policy or regulation that we proposed.
While the provisions in section II.A. of this final rule are
intended to present a comprehensive approach to implementing Medicaid
Advisory Committees and Beneficiary Advisory Councils, and these
provisions complement the goals expressed and policies and regulations
being finalized in sections II.B. (Home and Community-Based Services)
and II.C.(Documentation of Access to Care and Service Payment Rates) of
this final rule, we intend that each of them is a distinct, severable
provision, as finalized. Unless otherwise noted in this rule, each
policy and regulation being finalized under this section II.A is
distinct and severable from other final policies and regulations being
finalized in this section or in sections II.B. or II.C of this final
rule, as well as from rules and regulations currently in effect.
Consistent with our previous discussion earlier in section II. of
this final rule regarding severability, we are clarifying and
emphasizing our intent that 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, or stayed pending further State action, it
shall be severable from this final rule, and from rules and regulations
currently in effect, and not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other, dissimilar circumstances. For example, we intend that the
policies and regulations we are finalizing related to the State Plan
requirement (section II.A.2 of this final rule) are distinct and
severable from the policies and regulations we are finalizing related
to the MAC Membership and Composition requirement and the Annual Report
requirement (sections II.A.4 and II.A.9 of this final rule, which we
further intend are severable from each other).
1. Basis and Purpose (Sec. 431.12(a))
Under Sec. 431.12 of the current regulation, paragraph (a) Basis
and Purpose, sets forth a State plan requirement for the establishment
of a committee (Medical Care Advisory Committee) to advise the Medicaid
agency about health and medical care services. In the proposed rule, we
proposed to amend the title of Sec. 431.12 and paragraph (a) to update
the name of the existing MCAC to the Medicaid Advisory Committee (MAC),
and to add the requirement for States to establish and operate a
dedicated advisory council comprised of Medicaid beneficiaries, the
Beneficiary Advisory Group. In this final rule, we are changing the
name from the Beneficiary Advisory Group to the Beneficiary Advisory
Committee (BAC).
In the proposed rule, we stated that our goal was for the committee
and its corresponding advisory council to serve in an advisory role to
the State on issues related to health and medical services, as the MCAC
did, as well as on other matters related to policy development and to
the effective administration of the Medicaid program consistent with
the language of section 1902(a)(4)(B) of the Act, which requires a
State plan to meaningfully engage Medicaid beneficiaries and other low-
income people in the administration of the plan.\38\ The Medicaid
program covers medical services and is increasingly also covering
services designed to address beneficiaries' social determinants of
health and their health-related social needs more generally. Therefore,
we believe that the MAC should discuss topics directly related to
covered services as well as the potential need for the coverage of
additional services that may be necessary to ensure that beneficiaries
are able to meaningfully access these services. Expanding the scope of
the current committee is necessary in order to align with the expanding
scope of the Medicaid program. These changes are consistent with
section 1902(a)(4)(B) of the Act because the MAC creates a formalized
way for interested parties and beneficiary representatives to provide
feedback to the State about issues related to the Medicaid program and
the services it covers. The feedback from the MAC and BAC will be used
by the State to ensure that the program operates efficiently and as it
was designed to operate.
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\38\ Medicaid Program; Ensuring Access to Medicaid Services,''
(88 FR 27967).
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We received public comments on these proposals. The following is a

[[Page 40552]]

summary of the comments we received and our responses.
Comment: We received a large number of comments in support of the
proposed changes to the MCAC regulation and structure as proposed in
Sec. 431.12(a). The commenters expressed broad support for creation of
the dual structure of the MAC and BAC. They noted that the creation of
the BAC was a positive and welcome step to better capturing the lived
experiences of people enrolled in Medicaid. Commenters also noted that
having the BAC advise the MAC on policy development was a way to
prioritize beneficiaries' perspectives. Commenters noted that the
improvements proposed to the existing MCAC structure had the potential
to be transformative and make the State more attuned to the needs and
priorities of Medicaid beneficiaries.
Response: We thank commenters for their support of our overhaul of
the MCAC. We are finalizing as proposed, with minor technical changes,
the creation of the MAC and BAC.
Comment: We also received comments in opposition to the creation of
a BAC. Generally, opposing commenters wanted CMS to be less
prescriptive and allow States to engage Medicaid beneficiaries in other
ways (for example, using existing State committees to serve as the BAC,
conducting focus groups, and fielding surveys). Other commenters noted
that States would need resources to implement the BAC, citing the
additional administrative burden and layering of meetings for certain
members.
Response: We encourage States to engage with their Medicaid
beneficiaries in a variety of ways, and we understand that many States
may already operate groups or committees comprised of Medicaid
beneficiaries. However, having a formalized structure to work directly
with Medicaid beneficiaries will help to ensure a level and manner of
engagement across all State programs. For the commenters concerned with
the BAC adding administrative burden, we acknowledge that implementing
these changes will create administrative burden. We discuss
administrative burden to States in the Regulatory Impact Analysis
section of this rule. However, in an effort to minimize administrative
burden for States, we note that existing committees can be used to
fulfill the BAC requirement as long as the committees meet the
membership requirements specified in Sec. 431.12(e). Later in this
section, we also note that States do not have to use the same BAC
members to join all MAC meetings. While it may not be an ideal way to
create long-term consistency of the MAC membership, States could, in an
effort to lessen the time commitment of BAC members, choose to rotate
which members attend the quarterly MAC meetings.
Comment: We received several comments asking for the BAG name to be
changed. The commenters cited potentially negative connotations that
could be associated with the acronym BAG. Additionally, a few
commenters requested that States with existing beneficiary groups be
able to maintain their names.
Response: We have changed the name of the BAG to the BAC, as noted
earlier in this final rule. For commenters concerned with duplicative
efforts, we noted in the proposed rule that States with existing BAC-
like committees can use those committees to fulfil the BAC requirement
as long as they meet the membership requirements specified Sec.
431.12(e). States are not required to change their existing group names
to match the BAC name as long as interested parties understand what
existing group or committee is being used to fulfill regulatory
requirement of the BAC. To clarify this for interested parties, States
must note in their publicly posted by-laws (Sec. 431.12 (f)(1)) that
the group is being used to fulfill the regulatory requirements of Sec.
431.12.
Comment: Several commenters asked CMS to clarify the role of the
MAC and BAC, citing that in the proposals, the language varies from
``advisory'' to ``providing feedback.'' Other commenters expressed that
they do not want the MAC and BACs to be approval bodies that lack the
ability to make decisions.
Response: The primary role of the MAC and BAC is to advise the
State Medicaid agency on policy development and on matters related to
the effective administration of the Medicaid program. It is our
intention that the MAC and BAC serve in an advisory capacity to the
State. However, serving in an advisory capacity does not preclude the
MAC and BAC members from sharing experiential feedback. We did not
propose to give the MAC or BAC a decision-making role because we want
to allow States the freedom to administer their Medicaid programs in
the manner they see fit, but be guided by these two entities'
recommendations and experiences with the Medicaid program.
Comment: We received a comment asking CMS to require that the MAC
and BAC not be used to take the place of a State's tribal consultation
requirements.
Response: We do not anticipate that the MAC or BAC could be used to
fulfill tribal consultation requirements under section 1902(a)(73) of
the Act. For States with one or more Indian Health Programs or Urban
Indian Organizations that furnish health care services, the State must
consult with such Programs and Organizations on a regular, ongoing
basis. While the statute specifically permits representatives of such
Programs and Organizations to be included on the MCAC [now known as the
MAC], this alone would not meet the requirement to consult on any State
plan amendments (SPAs), waiver requests, and proposals for
demonstration projects likely to have a direct effect on Indians,
Indian Health Programs, or Urban Indian Organizations prior to
submission.
Comment: We received a few comments requesting that CMS conduct a
study to assess which States already have MCACs or BACs to ensure they
are no duplicative efforts. Another commenter asked CMS to solicit
feedback from existing MCAC members to see how it can be improved
before making beneficiary groups a requirement.
Response: We clarify that MCACs are currently required of all
States so conducting an assessment to see which States already have
MCACs would not necessarily result in a lot of new information.
However, we agree that understanding which States already have BAC-like
committees in place would be helpful. In fact, when developing the
proposed rule, we engaged with interested parties, both from State
Medicaid agencies and the wider Medicaid community, to determine what
improvements were needed to the MCACs to allow States and beneficiaries
to obtain the most benefit from their work. For commenters concerned
with duplicative BAC activities, we note again that States with an
existing beneficiary group or beneficiary committee that meets the
requirement of the BAC, as finalized in this rule at Sec. 431.12(e),
do not need to set up a second beneficiary committee.
Comment: We received a few comments asking CMS to require the MAC
and BAC to coordinate with other State advisory committees.
Response: States will vary in how they run their advisory
committees. Some States may choose to coordinate across their different
advisory committees, while other States may have reasons for keeping
their advisory committees and their processes separate. We do not want
to add more administrative burden by adding a requirement to Sec.
431.12 for States to coordinate across State advisory committees.
However, if coordinating

[[Page 40553]]

across these committees in some manner would be advantageous for the
Medicaid program, then we encourage the State to do so.
After consideration of public comments, we are finalizing Sec.
431.12(a) as proposed with the following change:
Language modifications to reflect the new name of the ``Beneficiary
Advisory Council (BAC).''
2. State Plan Requirement (Sec. 431.12(b))
Under Sec. 431.12 of the current regulation, paragraph (b) State
Plan Requirement, calls for a State plan to provide for a MCAC to
advise the Medicaid agency director about health and medical care
services.
We proposed conforming updates to paragraph (b) regarding the State
plan requirements, to reflect the addition of the BAC and the expanded
scope.
The Interested Parties Advisory Group, described in a later section
of this final rule (Interested Parties Advisory Group Sec.
447.203(b)(6)), is designed to advise States on rate setting and other
matters for certain HCBS and is not related to the MAC or BAC specified
here. In section II.C.2.c. of this final rule, under Sec.
447.203(b)(6), we explain that States will have the option to use its
MAC and BAC to provide recommendations for payment rates, thereby
satisfying the requirements of Sec. 447.203(b)(6). However, the MAC
and BAC requirements finalized here are wholly separate from the
Interested Parties Advisory Group.
We did not receive public comments on Sec. 431.12(b). However, we
are making one conforming edit to this paragraph based on a language
change identified in Sec. 431.12(c) to replace the term State Medicaid
Director. We are finalizing as proposed with the following changes:
Language modifications to reflect the new name of the
``Beneficiary Advisory Council (BAC).''
Replacing the term Medicaid Agency Director with the term,
``director of the single State Agency for the Medicaid program.''
3. Selection of Members (Sec. 431.12(c))
Under Sec. 431.12 of the current regulation, paragraph (c)
Appointment of members, the agency director, or a higher State
authority, must appoint members to the advisory committee on a rotating
and continuous basis.
We proposed to revise paragraph (c) to specify that the members of
the MAC and BAC must be appointed by the agency director or a higher
State authority on a rotating and continuous basis. We also proposed to
require the State to create a process for the recruitment and
appointment of members of the MAC and BAC. Additionally, we proposed to
require the State to post this information on the State's website. As
discussed in the proposed rule,\39\ the website page where this
information is located would be required to be easily accessible by the
public. These proposed updates align with how some States' existing
MCACs are already run, which will facilitate the transition of these
MCACs into MAC/BACs. Additionally, the proposed changes are designed to
provide additional details to support States' operation of the MAC and
BAC. Further, we believe these proposed updates will facilitate
transparency, improving the current regulations, which did not mention
nor promote transparency of information related to the MCAC with the
public. We also believe that transparency of information can lead to
enhanced accountability on the part of the State in making its MAC and
BAC as effective as possible.
---------------------------------------------------------------------------

\39\ Medicaid Program; Ensuring Access to Medicaid Services,''
(88 FR 27960, 27968).
---------------------------------------------------------------------------

We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: We received several comments regarding the terms used to
describe who should be given the authority to appoint members to the
MAC and BAC. Many commenters supported the proposal of having the State
Medicaid Director appoint the members. A few commenters suggested that
we make clarifications to the proposed regulation language so that only
the State Medicaid Director and not ``a higher State authority'' is
referenced, since the work of the MAC and BAC is to advise the State
Medicaid Director. Others noted that the correct term to use in the
regulation when referring to the State Medicaid Director is the
director of the single State agency for the Medicaid program. There was
another category of commenters that did not believe the authority to
select MAC and BAC members should sit with either the State Medicaid
Director or a higher State Authority. These commenters instead stated
it would be more equitable if prospective MAC and BAC members were
selected by an outside company, a computer, at random, or by a lottery
system. They noted that in their experiences sometimes parents or
family members are excluded from selection processes. Finally, other
commenters noted that the term ``appointed'' implied that the State did
not use any kind of a ``selection process'' to choose its MAC and BAC
members. These commenters may have felt that the term ``appoint'' means
that the State can simply pick whomever it wants to serve as a member
rather than ``selecting'' members from a pool of people who submitted
applications to serve as MAC or BAC members.
Response: We appreciate the comments provided on this section and
acknowledge the complicated work that comes with selecting MAC and BAC
members. Since the MAC and BAC serve in an advisory role to the
Medicaid program, we believe strongly that the authority to select
should lie with the director of the State Medicaid agency. We know that
Medicaid agencies' names may vary from State to State, and thus, agree
that language in the regulation can be changed to more clearly reflect
a more commonly used term for the Medicaid agency (that is, the single
State Agency for the Medicaid Program). For commenters that expressed
concern that parents or family members are excluded from the selection
processes, we note that the BAC regulations require both Medicaid
beneficiaries and individuals with direct experience supporting
Medicaid beneficiaries, such as family members to be selected. Finally,
we agree that the word ``appoint'' in the proposed rule does not
accurately reflect the intention of the regulation and could be
misinterpreted to mean that the State did not use a selection process
where interested parties submit an application and then the State
reviews those applications before selecting its MAC and BAC members.
Based on the comments we received, we now understand that the term
``appoint'' can be taken to mean that a selection process did not
occur. We want to avoid any confusion that the requirements are asking
the State to appoint members without using a selection process, which
was not our intention. For clarity, we are also amending the regulatory
language in Sec. 431.12(c) to now state that the ``director of the
single State Agency for the Medicaid program,'' must ``select'' members
for the MAC and BAC.
Comment: We received comments on the proposed changes to Sec.
431.12(c) related to term limits of the MAC and BAC members. The
commenters were generally divided across wanting CMS to require States
to have set term limits for members, not wanting any term limits, and
not wanting short term limits. Commenters who expressed support for set
term limits noted that setting term limits ensured that new
perspectives would be added on a regular basis while others noted that
setting term limits allowed members to

[[Page 40554]]

share recommendations or constructive criticism without fear of
retaliation. The commenters who opposed term limits noted that finding
people with Medicaid expertise may be difficult in some geographic
areas and, as a result, the State would benefit from having the same
members serve without term limits. Other commenters noted that it takes
time for members to build their expertise and understanding of the
Medicaid program and setting short term limits may not take into
account the time needed to accumulate enough knowledge to contribute
fully to the MAC and BAC. These commenters suggested term limits with
lengths ranging from 2 to 6 years.
Response: States have the ability to determine the tenure of
members, as States are best situated to assess their members' ability
to participate in and meaningfully contribute to the MAC and BAC and
for what length of time. In the proposed rule, we described the
requirement for States to determine the length of terms for committee
and council members. For clarity, we are amending the regulatory
language in Sec. 431.12(c) to reflect this information as well, to now
state ``. . . members to the MAC and BAC for a term of a length
determined by the State, which may not be followed immediately by a
consecutive term for the same member, on a rotating and continuous
basis.'' We proposed this type of term because we believe there is
value in ensuring new voices and perspectives are introduced to the
committee and council. We further clarify that once a MAC or BAC
member's term has been completed, the State will select a new member,
thus ensuring that MAC and BAC memberships rotate continuously. Setting
memberships as continuously rotating means that the State must seek to
recruit members to fill open seats on the MAC and BAC on an ongoing
basis. States can also select members to serve multiple non-consecutive
terms.
After consideration of public comments, we are finalizing Sec.
431.12(c) with the following changes:
Language modifications to reflect the new name of the BAC.
Replacing the term agency director or higher authority
with the term, ``director of the single State Agency for the Medicaid
program.''
Replacing the word ``appoint'' with ``select'' in various
places.
Adding language to the regulation to reflect that ``the
term of length for MAC and BAC members will be term of a length
determined by the State, which may not be followed immediately by a
consecutive term for the same member, on a rotating and continuous
basis.''
4. MAC Membership and Composition (Sec. 431.12(d))
Under Sec. 431.12 of the current regulation, paragraph (d),
Committee Membership, States are required to select three types of
committee members: (1) Board-certified physicians and other
representatives of the health professions who are familiar with the
medical needs of low-income population groups and with the resources
available and required for their care; (2) Members of consumers'
groups, including Medicaid beneficiaries, and consumer organizations
such as labor unions, cooperatives, consumer-sponsored prepaid group
practice plans, and others; and (3) the director of the public welfare
department or the public health department, whichever does not head the
Medicaid agency.
In the proposed rule, paragraph (d) of Sec. 431.12, MAC membership
and composition, we proposed in (d)(1) to require that a minimum of 25
percent of the MAC must be individuals with lived Medicaid beneficiary
experience from the BAC. The BAC, which is defined later in Sec.
431.12(e), is comprised of people who: (1) are currently or have been
Medicaid beneficiaries, and (2) individuals with direct experience
supporting Medicaid beneficiaries (family members or caregivers of
those enrolled in Medicaid).
We proposed 25 percent as the minimum threshold requirement for
(d)(1) to reflect the importance of including the beneficiary
perspective in the administration of the Medicaid program and to ensure
that the beneficiary perspective has meaningful representation in the
feedback provided by the MAC. We did not propose a higher percentage
because we acknowledge that States will benefit from a MAC that
includes representation from a diverse set of interested parties who
work in areas related to Medicaid but are not beneficiaries, their
family members, or their caregivers.
In terms of the required representation from the remaining MAC
members, as specified in the proposed rule, paragraph (d)(2), we
proposed that a State must include at least one from each category: (A)
State or local consumer advocacy groups or other community-based
organizations that represent the interests of, or provide direct
service, to Medicaid beneficiaries; (B) clinical providers or
administrators who are familiar with the health and social needs of
Medicaid beneficiaries and with the resources available and required
for their care; (C) participating Medicaid managed care organizations
or the State health plan association representing such organizations,
as applicable; and (D) other State agencies serving Medicaid
beneficiaries, as ex-officio members.
We believe that advisory committees and councils can be most
effective when they represent a wide range of perspectives and
experiences. Since we know that each State environment is different, we
aimed to provide the State with discretion on how large the MAC and BAC
should be. In the proposed changes we did, however, specify the types
of categories of Committee members that can best reflect the needs of a
Medicaid program. We believe that diversely populated MACs and BACs can
provide States with access to a broad range of perspectives, and
importantly, beneficiaries' perspective, which can positively impact
the administration of the Medicaid program. This approach is consistent
with the language of section 1902(a)(4)(B) of the Act, which requires a
State plan to meaningfully engage Medicaid beneficiaries and other low-
income people in the administration of the plan. The changes in
membership we proposed and are finalizing will support States to set up
MACs that align with section 1902(a)(4)(B) since States will now have
to select the membership composition to reflect the community members
who represent the interests of Medicaid beneficiaries. The State also
benefits from having a way to hear how the Medicaid program can be
responsive to its beneficiaries' and the wider Medicaid community's
needs.
We also noted in the proposed rule that we encourage States to take
into consideration, as part of their member selection process, the
demographics of the Medicaid population in their State. Keeping diverse
representation in mind as a goal for the MAC membership can be a way
for States to help ensure that specific populations and those receiving
critically important services are appropriately represented on the MAC.
For example, in making MAC membership selections, the State may want to
balance the representation of the MAC according to geographic areas of
the State with the demographics and health care needs of the Medicaid
program of the State. The State will want to consider geographical
diversity (for example, urban and rural areas) when making its
membership selections. We noted in the proposed rule, that a State
could also consider demographic representation of its membership by
including members representing or serving Medicaid beneficiaries who
receive services in the

[[Page 40555]]

following categories: (1) pediatric health care; (2) behavioral health
services; (3) preventive care and reproductive health services; (4)
health or service issues pertaining specifically to people over age 65;
and (5) health or service issues pertaining specifically to people with
disabilities. By offering these considerations, we seek to support
States in their efforts to eliminate differences in health care access
and outcomes experienced by diverse populations enrolled in Medicaid.
We intend that the MAC and the BAC can support several of the
priorities for operationalizing health equity across CMS programs as
outlined in the CMS Framework for Health Equity (2022-2032) and the HHS
Equity Action Plan which is consistent with E.O. 13985, which calls for
advancing equity for underserved communities.
Rather than prescribing specific percentages for the other (non-
BAC) categories in the proposed rule, we only required representation
from each category as part of the MAC. The specific percentage of each
of category (other than the BAC members) relative to the whole
committee can be determined by each State. This approach will provide
States with the flexibility to determine how to best represent the
unique landscape of each State's Medicaid program. We solicited comment
on what should be the minimum percentage requirement that MAC members
be current/past Medicaid beneficiaries or individuals with direct
experience supporting Medicaid beneficiaries (such as family members or
caregivers of those enrolled in Medicaid). In addition to hearing
directly from beneficiaries, the State can gain insights into how to
effectively administer its program from other members of the Medicaid
community.
States will determine which types of providers to include under the
clinical providers or administrators category, and we recommend they
consider a wide range of providers or administrators that are
experienced with the Medicaid program including, but not limited to:
(1) primary care providers (internal or family medicine physicians or
nurse practitioners or physician assistants that practice primary
care); (2) behavioral health providers (that is, mental health and
substance use disorder providers); (3) reproductive health service
providers, including maternal health providers; (4) pediatric
providers; (5) dental and oral health providers; (6) community health,
rural health clinic or Federally Qualified Health Center (FQHC)
administrators; (7) individuals providing long-term care services and
supports; and (8) direct care workers \40\ who can be individuals with
direct experience supporting Medicaid beneficiaries (such as family
members or caregivers).
---------------------------------------------------------------------------

\40\ As finalized in Sec. 441.302(k) of this final rule, CMS
defines as Direct care worker as any of the following individuals
who may be employed by a Medicaid provider, State agency, or third
party; contracted with a Medicaid provider, State agency, or third
party; or delivering services under a self-directed service model:
(A) A registered nurse, licensed practical nurse, nurse
practitioner, or clinical nurse specialist who provides nursing
services to Medicaid beneficiaries receiving home and community-
based services available under this subpart; (B) A licensed or
certified nursing assistant who provides such services under the
supervision of a registered nurse, licensed practical nurse, nurse
practitioner, or clinical nurse specialist; (C) A direct support
professional; (D) A personal care attendant; (E) A home health aide;
or (F) Other individuals who are paid to provide services to address
activities of daily living or instrumental activities of daily
living, behavioral supports, employment supports, or other services
to promote community integration directly to Medicaid beneficiaries
receiving home and community-based services available under this
subpart, including nurses and other staff providing clinical
supervision.
---------------------------------------------------------------------------

We have also identified managed care plans, including Primary Care
Case Management (PCCM) entities and Primary Care Case Managers
(PCCMs),\41\ as an important contributor to the MAC, but we acknowledge
that not all States have managed care delivery systems. We know many
Medicaid managed care plans administer similar committees and thus
allow for States to tailor managed care plan representation based on
its delivery system and the experience and expertise of managed care
plans in the State. For example, States, if applicable, can fulfill
this category with only one or with multiple managed care plans
operating in the State. In addition, we also give States the
flexibility to meet the managed care plan representation requirements
with either participating Medicaid managed care plans or a health plan
association representing more than one such organization.
---------------------------------------------------------------------------

\41\ Throughout this document, the use of the term ``managed
care plan'' includes managed care organizations (MCOs), prepaid
inpatient health plans (PIHPs), and prepaid ambulatory health plans
(PAHPs) [as defined in 42 CFR 438.2] and is used only when the
provision under discussion applies to all three arrangements. An
explicit reference is used in the preamble if the provision applies
to primary care case managers (PCCMs) or primary care case
management entities (PCCM entities).
---------------------------------------------------------------------------

The language in paragraph (d)(2)(D) broadens the previous MCAC
requirement to allow for additional types of representatives from other
State agencies to be on the committee. Specifically, the previous MCAC
regulation requires membership by ``the director of the public welfare
department or the public health department, whichever does not head the
Medicaid agency.'' In the proposed rule, we expanded the requirement
for external agency representation to be broader than the welfare or
public health department, which would give States more flexibility in
representing the Medicaid program's interests based on States' unique
circumstances and organizational structure. States can work with sister
State agencies to determine who should participate in the MAC (for
example, foster care agency, mental health agency, department of public
health). We also proposed that these representatives be part of the
committee as ex-officio members, meaning that they hold the position
because they work for the relevant State agency. In finalizing the
proposals, we reviewed this requirement closer. While we believe it
will be essential to have these State-interested parties present for
program coordination and information-sharing, we intended to reflect in
the proposed rule that the formal representation of the MAC should be
comprised of beneficiaries, advocates, community organizations, and
providers that serve Medicaid beneficiaries. Therefore, we clarify in
this final rule that while these ex-officio members will sit on the
MAC, they will not be voting members of the MAC. Therefore, on matters
that the MAC decides by vote, including but not necessarily limited to
finalizing the MAC's recommendations to the State, the ex-officio
members will not participate in voting.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: We received many comments about the proposed requirement
of having some BAC members serving on the MAC. Commenters either agreed
with the importance of having a subset of Medicaid beneficiaries serve
on both the BAC and the MAC, or they noted that having a subset of BAC
members on both committees could lead to undue burden for these members
based on the number of meetings they would have to attend. One
commenter suggested a phased-in approach where the BAC members meet
only as the BAC for a time (for example, a year) and then transition to
serving on the MAC only.
Response: We understand the concerns raised by the commenters about
putting undue burden on a subset of BAC members. We believe it is vital
for the success of both the BAC and MAC that there is a point of
integration via the crossover membership requirement since this is the
way to ensure that the Medicaid beneficiary perspective is included in
both groups.

[[Page 40556]]

We created this crossover requirement to reflect the importance of
including the beneficiary perspective in the administration of the
Medicaid program and to ensure that the beneficiary perspective has
meaningful representation in the feedback provided by the MAC. For
commenters that are concerned with undue burden of having a subset of
BAC members also attend MAC meetings, in Sec. 431.12(f)(3), we note
that MACs and BACs are only required to meet once per quarter. While
the regulation does not state that the subset of BAC members that join
each MAC meeting has to be the same, we recognize that it would be more
effective to have consistency in the BAC members that attend the MAC
meetings in many cases. However, if States or the BAC are concerned
with overburdening its BAC members, a potentially less efficient but
workable alternative could be to rotate which BAC members attend the
MAC in an effort to further reduce the number of meetings attended for
a given BAC member. Nevertheless, the suggestion of having a member
transition from solely being on the BAC to solely being on the MAC
might not always promote the crossover concept we are seeking with the
requirement that the MAC membership consist of 10 to 25 percent members
from the BAC, since we are striving for inclusion of the Medicaid
beneficiary perspective in both groups via the BAC members.
Comment: In response to our solicitation about having 25 percent as
the minimum threshold of BAC membership crossover on the MAC, the
majority of the commenters stated that a minimum 25 percent was the
appropriate amount of crossover members. They noted that 25 percent
crossover membership would help to center and amplify beneficiary
voices on the MAC. A few commenters stated that the percentage should
be lower (for example 10 or 15 percent). These commenters cited several
reasons why having a lower threshold number would be better. Some
commenters noted that having a smaller number of BAC members would
allow States to better support or train their members so they could
fully participate in the MAC. Other commenters stated that having a
smaller number of BAC members could lessen the burden on States of
finding and recruiting members to participate. Another group of
commenters wanted the percentage of BAC crossover to be higher than 25
percent (for example 33, 50, 51, or 75 percent). These commenters
sought a higher BAC crossover in order to: safeguard against
marginalization of beneficiary members on the MAC; amplify diverse
voices through a higher crossover number; and rectify any power
imbalances that may exist. There were also a few commenters who noted
that States should have the ability to determine their own percentages
for the BAC crossover. Finally, we received comments asking CMS to
consider allowing States to use a graduated approach to reach the 25
percent minimum requirement of BAC crossover on the MAC.
Response: We thank the commenters who agreed with our proposed
threshold of the requirement for a minimum of 25 percent BAC crossover
on the MAC. For commenters who thought the percentage should be lower,
we understand States may face challenges with finding, recruiting, and
training beneficiary members to serve on the BAC. To account for these
challenges, we are extending the timeframe for implementation of this
requirement in this final rule so that States have 2 years to achieve
the 25 percent minimum threshold requirement of MAC members that come
from the BAC. Instead of the 25 percent minimum threshold coming into
effect right away, we are revising this final rule to provide in Sec.
431.12(d)(1) that, for the period from July 9, 2024 through July 9,
2025, 10 percent of the MAC members must come from the BAC; for the
period from July 10, 2025 through July 9, 2026 20 percent of MAC
members must come from the BAC; and thereafter, 25 percent of MAC
members must come from the BAC.
For commenters who expressed the need for a percentage higher than
25 for the BAC member crossover, we note that the policy we proposed
and are finalizing establishes a minimum percentage threshold for
States to meet. If a State so chooses, it can select a percentage
higher than the minimum of 25 percent, provided the MAC membership also
satisfies the requirements of Sec. 431.12(d)(2) of this final rule.
For commenters who raised the issue of providing training for BAC
members, we have a comment/response on this topic under Sec.
431.12(h)(3).
Comment: The majority of comments received on Sec. 431.12(d) were
about Sec. 431.12(d)(2), MAC composition categories. We received
comments that fell into four groups. The first group of commenters
shared their broad support for the MAC committee member categories that
we proposed and also urged CMS to ensure that States select members
that represented the Medicaid community and who were geographically as
well as racially/ethnically diverse. The second group of commenters
asked for the MAC to include representation from members who would
qualify for the BAC (for example, Medicaid beneficiaries, their
families, and caregivers). It is unclear from the comments if these
commenters were asking for an additional group of Medicaid
beneficiaries be added to the MAC (in addition to the 25 percent of MAC
we proposed to require be from the BAC) or if they did not understand
that the MAC composition already includes a category which accounts for
this category of members. The third group of commenters asked that
specific types of interested parties be required to be represented on
the MAC categories (for example, specific provider types, unions, HCBS
provider agencies, hospitals, protection and advocacy programs, legal
professionals, and medical billing professionals). The fourth group of
commenters suggested ideas for types of MAC members that States could
use to meet categories specified in the proposed rule (for example add
a State Ombudsman to the ex-officio category). We also received a few
suggestions to add specific member categories (for example, a member
category for FFS members, a member category for people with behavioral
health conditions, and a youth member category).
Response: We appreciate the wide range of comments that were
submitted about the MAC membership composition. We developed the MAC
composition framework in the proposed rule by creating broad membership
categories that captured a range of interested parties who are members
of the Medicaid community while giving States as much flexibility as
possible to build their MACs in ways that account for the unique
features of the State's environment. All of the membership categories,
as currently written, are broad enough to accommodate the types of
members described by the commenters. For example, a State Ombudsman can
be used to fulfil the State agency category; a State with both managed
care and FFS could chose to select two members (one for each type of
delivery system) for the MAC; a person with behavioral health
condition(s) could be suitable for multiple categories depending on
whether they are a Medicaid beneficiary (current or former) or
represent a consumer advocacy or community-based organization. Finally,
for the commenter asking for a specific youth member category, we will
note that there are no Federal requirements or limitations concerning
youth participation on the MAC or BAC, and this is in the State's
discretion. The

[[Page 40557]]

State could select a youth member to fulfill a MAC or BAC member
category as long as that person meets the requirements of that
membership category.
We also want to clarify for commenters that Medicaid beneficiaries,
their families, and caregivers have their own MAC category in the
regulation, because the BAC is listed in the final regulation as one of
the categories of MAC members at Sec. 431.12(d)(1).
After consideration of public comments, for Sec. 431.12(d), we are
finalizing as proposed with:
Language modifications to reflect the new name of the BAC;
Replacing the language at Sec. 431.12 (d)(1) to clarify
the timeframe for States to reach 25 percent of MAC members coming from
the BAC. The new sentence will now read, ``For the period from July 9,
2024 through July 9, 2025, 10 percent of the MAC members must come from
the BAC; for the period from July 10, 2025 through July 10, 2026 20
percent of MAC members must come from the BAC; and thereafter, 25
percent of MAC members must come from the BAC.''
Language modifications to Sec. 431.12 (d)(2)(C) to
replace ``managed care plan'' with ``MCOs, PIHPs, PAHPs, PCCM entities
or PCCMs as defined in Sec. 438.2''; and
Adding the word ``non-voting'' to ex-officio members at
the end of Sec. 431.12 (d)(2)(D).
5. Beneficiary Advisory Council (Sec. 431.12(e))
The current requirements governing MCACs require the presence of
beneficiaries in committee membership but do little else to ensure
their contributions are considered or their voices heard. For example,
in the current regulations of Sec. 431.12, paragraph (e) Committee
participation, only briefly mentions the participation of beneficiary
members. The current requirement provides little guidance about how to
approach the participation of beneficiary members on the committee.
We proposed to add new paragraph Sec. 431.12(e). The proposed rule
noted that in the new paragraph, (e) Beneficiary Advisory Council,
States would be required to create a BAC, a dedicated Beneficiary
Advisory Council, that will meet separately from the MAC on a regular
basis and in advance of each MAC meeting.
Specifically, at new paragraph (e)(1), we proposed to require that
the MAC members described in paragraph (d)(1) must also be members of
the BAC. This requirement will facilitate the bi-directional
communication essential to effective beneficiary engagement and allow
for meaningful representation of diverse voices across the MAC and BAC.
In paragraph (e)(2), we proposed to require that the BAC meetings occur
in advance of each MAC meeting to ensure BAC member preparation for
each MAC discussion. BAC meetings will also be subject to requirements
in paragraph (f)(5), described later in this section, that the BAC
meetings must occur virtually, in-person, or through a hybrid option to
maximize member attendance. We plan to expound on best practices for
engaging beneficiary participation in committees like the MAC in a
future toolkit.
We proposed the addition of the BAC because we believe that it will
result in providing States with increased access to beneficiary
perspectives. The creation of a separate beneficiary-only advisory
council also aligns with what we have learned from multiple interviews
with State Medicaid agencies and other Medicaid interested parties (for
example, Medicaid researchers, former Medicaid officials) conducted
over the course of 2022 on the operation of the existing MCACs. These
interested parties described the importance of having a comfortable,
supportive, and trusting environment that facilitates beneficiaries'
ability to speak freely on matters most important to them. Further, we
believe that the crossover structure for the MAC and BAC proposed in
Sec. 431.12(d) allows for the beneficiary-only group to meet
separately while still having a formal connection to the broader, over-
arching MAC. It is important the MAC members can directly engage with
the beneficiaries and hear from their experience. We noted earlier that
some States may already have highly effective BAC-type councils
operating as part of their Medicaid program. These existing councils
may represent specific constituencies such as children with complex
medical needs or older adults or may be participants receiving services
under a specific waiver. In these instances, States may use these
councils to satisfy the requirements of this rule, as long as the pre-
existing BAC-type council membership includes the type of members
required in the proposed paragraph of Sec. 431.12(e).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: We received many comments in support of the BAC as
specified in the newly proposed Sec. 431.12(e). Commenters noted that
the BAC would provide a necessary and less-intimidating venue where
Medicaid beneficiaries along with their families and caregivers can
share first-person experiences and feedback to the State. While many
commenters stated the BAC was needed and a welcomed improvement, a few
commenters cautioned that States would need more than just to set up a
BAC; they will also need to invest in creating opportunities for
meaningful engagement.
Response: We agree that the BAC must be supported and used by the
State in ways that create opportunities for BAC members to be actively
involved and have their contributions considered.
Comment: A few commenters asked CMS to clarify how existing
community groups or advisory councils could be used to satisfy the
requirements of the BAC. One commenter asked if the BAC would meet a
State's inclusive Community First Choice (CFC) requirements.
Response: The proposed new paragraph (e) requires that States form
a BAC, but notes that the State can use an existing beneficiary group.
Prior to rulemaking, CMS spoke to several States and researchers to
understand how States were implementing the MCAC requirements. From the
information gathered, we know that many States already have active
Medicaid beneficiary groups that could fill these requirements and can
function as their BACs. In these instances, it is not our intention to
ask a State to create a second Medicaid beneficiary group to meet the
BAC requirements. If a State wants to use an existing group to satisfy
the BAC requirements, they will need to ensure that the existing
committee's membership meets the membership requirements of the BAC and
that the existing committee's bylaws are developed or updated, and
published, to explain that the committee functions to meet the BAC
requirements.
Regarding the ability to use the BAC to meet CFC requirements of
the State, CMS notes in the ``Medicaid Program; State Plan Home and
Community-Based Services, 5-Year Period for Waivers, Provider Payment
Reassignment, and Home and Community-Based Setting Requirements for
Community FirstChoice and Home and Community Based Services (HCBS)
Waivers'' final rule,\42\ that States may utilize existing

[[Page 40558]]

advisory bodies in the implementation of CFC, as long as the statutory
requirements as specified in Sec. 441.715 for the Development and
Implementation Council are met. We acknowledge the benefits of the
Implementation Council coordinating with related interested parties
councils and commissions and encourage States to do so. States may also
choose to leverage these councils and/or include members from these
councils to meet the requirements for CFC.
---------------------------------------------------------------------------

\42\ ``Medicaid Program; State Plan Home and Community-Based
Services, 5-Year Period for Waivers, Provider Payment Reassignment,
and Home and Community-Based Setting Requirements for Community
FirstChoice and Home and Community Based Services (HCBS) Waivers
https://www.medicaid.gov/sites/default/files/2019-12/cfc-final-settings.pdf,'' (79 FR 2948, 2982).
---------------------------------------------------------------------------

Comment: The majority of the comments received related to the newly
proposed Sec. 431.12(e) were commenters providing recommendations on
which groups of people should also be required to be included as BAC
members. We received a range of suggestions such as: HCBS
beneficiaries, individuals with specific chronic diseases and
disabilities, individuals using long term care services and supports
(LTSS), individuals who are receiving perinatal health services,
individuals who have lived experience with behavioral health
conditions, and Medicaid beneficiaries who are deaf, hard of hearing,
or deaf blind. Commenters also requested that the BAC members represent
a cross-section of Medicaid beneficiaries that can also be regarded as
demographically and geographically diverse.
Response: We agree with commenters that the States should select
the types of BAC members that can provide them with representative
views of the experience of Medicaid beneficiaries in their State. The
regulatory language provides States with the flexibility to make those
determinations based on the characteristics of their individual State
Medicaid program. It can be challenging to find beneficiaries available
to serve on a council, particularly if the requirements of membership
are very specific. By keeping our regulations broad for what types of
beneficiaries should be selected for the BAC, we seek to ensure States
are able to recruit members with fewer challenges.
Comment: A few commenters asked for CMS to clarify or further
define a few terms used in newly proposed Sec. 431.12(e).
Specifically, a couple of commenters asked CMS to clarify the phrase
``individuals with direct care experience supporting Medicaid
beneficiaries.'' Another commenter asked if CMS could define whether
the term ``caregivers'' included paid caregivers.
Response: In the proposed and in this final rule, we have described
individuals with direct experience supporting Medicaid beneficiaries as
``family members or caregivers of those enrolled in Medicaid.'' In the
proposed rule's preamble,\43\ we state that caregivers can be paid or
unpaid caregivers. To better clarify these definitions, we are adding
the words ``paid or unpaid'' before the word caregiver to the proposed
regulatory language at new paragraph Sec. 431.12(e) so that the phrase
reads, ``. . . individuals who are currently or have been Medicaid
beneficiaries and individuals with direct experience supporting
Medicaid beneficiaries (family members and paid or unpaid caregivers of
those enrolled in Medicaid), to advise the State. . . .''
---------------------------------------------------------------------------

\43\ ``Medicaid Program; Ensuring Access to Medicaid Services,''
(88 FR 27960, 27968).
---------------------------------------------------------------------------

Comment: As noted in an earlier section, several commenters asked
CMS to clarify the role of the BAC, citing that in the proposals, the
language varies from ``advisory'' to ``providing feedback.''
Response: The primary role of the BAC is to advise the State
Medicaid agency on policy development and on matters related to the
effective administration of the Medicaid program. To better clarify the
BAC's advisory role, we are removing from the proposed regulatory
language at new paragraph Sec. 431.12(e) the words and to ``provide
input to.'' The phrase now reads ``. . . to advise the State regarding
their experience with the Medicaid program, on matters of concern
related to policy development and matters related to the effective
administration of the Medicaid program.''
Comment: A few commenters shared suggestions related to the BAC
meetings described in new paragraph Sec. 431.12(e)(2). One commenter
asked CMS to encourage States to hold BAC and MAC meetings on the same
day, with the BAC meeting occurring first in an effort to minimize
travel. Other commenters asked CMS for additional meetings for the BAC
to be required to attend (for example, meetings with the State Medicaid
Director and meetings with CMS regional administrators).
Response: The meeting structure specified in the BAC proposal is
focused on the interplay between the BAC and MAC meetings. In new
paragraph Sec. 431.12(e)(2), we are requiring that the BAC meetings be
held separate from the MAC and in advance of the MAC, so that the BAC
members have the opportunity to prepare and hold an internal discussion
among themselves. Holding MAC and BAC meetings in the same day could be
in line with the meeting requirements. States may wish to hold
additional BAC meetings with other parties, as needed.
Comment: Some commenters asked CMS to create a Federal-level BAC to
ensure consistency across States.
Response: A Federal-level BAC would not further the goal of
providing States with beneficiary input into their programs because it
would not focus on the particular features of each individual State's
Medicaid program or beneficiary and provider communities. Such a group
is beyond the scope of this rulemaking.
After consideration of public comments, we are finalizing new Sec.
431.12(e) as proposed, with changes to:
Language modifications to reflect the new name of the BAC;
Adding language that caregivers on the BAC can be ``paid
or unpaid.'' Section 431.12 (e) will now state, ``. . . individuals who
are currently or have been Medicaid beneficiaries and individuals with
direct experience supporting Medicaid beneficiaries (family members and
paid or unpaid caregivers of those enrolled in Medicaid) . . . .''
Deleting the phrase ``. . . and provide input to . . . .''
Section 431.12(e) will now state ``. . . to advise the State regarding
their experience with the Medicaid program, on matters of concern
related to policy development and matters related to the effective
administration of the Medicaid program.''
6. MAC and BAC Administration (Sec. 431.12(f))
We proposed to add new paragraph Sec. 431.12(f), MAC and BAC
administration, to provide an administrative framework for the MAC and
BAC that ensures transparency and a meaningful feedback loop to the
public and among the members of the committee and council.\44\
---------------------------------------------------------------------------

\44\ ``Medicaid Program; Ensuring Access to Medicaid Services,''
(88 FR 27960, 27920).
---------------------------------------------------------------------------

Specifically, in new paragraph (f)(1), we proposed that State
agencies would be required to develop and post publicly on their
website bylaws for governance of the MAC and BAC, current lists of MAC
and BAC memberships, and past meeting minutes for both the committee
and council. In paragraph (f)(2), we proposed that State agencies would
be required to develop and post publicly a process for MAC and BAC
member recruitment and selection along with a process for the selection
of MAC and BAC leadership. In paragraph (f)(3), we proposed that State
agencies would be required to develop, publicly post, and implement a
regular meeting schedule for the MAC and BAC. The proposed

[[Page 40559]]

requirement specified that the MAC and BAC must each meet at least once
per quarter and hold off-cycle meetings as needed. In paragraph (f)(4),
we proposed requiring that that at least two MAC meetings per year must
be opened to the public. For the MAC meetings that are open to the
public, the meeting agenda would be required to include a dedicated
time for public comment to be heard by the MAC. None of the BAC
meetings were required to be open to the public unless the State's BAC
members decided otherwise. We also proposed that the State ensure that
the public is provided adequate notice of the date, location, and time
of each public MAC meeting and any public BAC meeting at least 30
calendar days in advance. We solicited comment on this approach. In
paragraph (f)(5), we proposed that States would be required to offer
in-person, virtual, and hybrid attendance options including, at a
minimum telephone dial-in options at the MAC and BAC meetings for its
members to maximize member participation at MAC and BAC meetings. If
the MAC or BAC meeting was deemed open to the public, then the State
must offer at a minimum a telephone dial-in option for members of the
public.
With respect to in-person meetings, we proposed in paragraph (f)(6)
that States would be required to ensure that meeting times and
locations for MAC and BAC meetings were selected to maximize
participant attendance, which may vary by meeting. For example, States
may determine, by consulting with their MAC and BAC members, that
holding meetings in various locations throughout the State may result
in better attendance. In addition, States may ask the committee and
council members about which times and days may be more favorable than
others and hold meetings at those times accordingly. We also proposed
that States use the publicly posted meeting minutes, which lists
attendance by members, as a way to gauge which meeting times and
locations garner maximum participate attendance.
Finally, in paragraph (f)(7), we proposed that State agencies were
required to facilitate participation of beneficiaries by ensuring that
meetings are accessible to people with disabilities, that reasonable
modifications are provided when necessary to ensure access and enable
meaningful participation, that communication with individuals with
disabilities is as effective as with others, that reasonable steps are
taken to provide meaningful access to individuals with Limited English
Proficiency, and that meetings comply with the requirements at Sec.
435.905(b) and applicable regulations implementing the ADA, section 504
of the Rehabilitation Act, and section 1557 of the Affordable Care Act
at 28 CFR part 35 and 45 CFR parts 84 and 92.
Interested parties' feedback and recent reports ^{45 46}
published on meaningful beneficiary engagement illuminate the need for
more transparent and standardized processes across States to drive
participation from key interested parties and to facilitate the
opportunity for participation from a diverse set of members and the
community. Further, we believe that in order for the State to comply
with the language of section 1902(a)(4)(B) of the Act, which requires a
State plan to meaningfully engage Medicaid beneficiaries and other low-
income people in the administration of the plan, it needs to be
responsive to the needs of its beneficiaries. To be responsive to the
needs of its beneficiaries, the State needs to be able to gather
feedback from a variety of people that touch the Medicaid program, and
the MAC and BAC will serve as a vehicle through which States can obtain
this feedback.
---------------------------------------------------------------------------

\45\ Resources for Integrated Care and Community Catalyst,
``Listening to the Voices of Dually Eligible Beneficiaries:
Successful Member Advisory Councils'', 2019. Retrieved from https://www.resourcesforintegratedcare.com/listening_to_voices_of_dually_eligible_beneficiaries/.
\46\ Centers for Medicare & Medicaid Services, Person & Family
Engagement Strategy: Sharing with Our Partners. Retrieved from:
https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/QualityInitiativesGenInfo/Downloads/Person-and-Family-
Engagement-Strategic-Plan-12-12-
16.pdf#:~:text=person%E2%80%99s%20priorities%2C%20goals%2C%20needs%20
and%20values.%E2%80%9D%20Using%20these,to%20guide%20all%20clinical%20
decisions%20and%20drives%20genuine.
---------------------------------------------------------------------------

We acknowledge that interested parties may face a range of
technological and internet accessibility limitations, and proposed
requiring that, at a minimum, States provide a telephone dial-in option
for MAC and BAC meetings. While we understand that in-person
interaction can sometimes assist in building trusted relationships, we
also recognize that accommodations for members and the public to
participate virtually is important, particularly since the beginning of
the COVID-19 pandemic. We solicited comment on ways to best strike this
balance.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: We received many comments expressing broad support of
Sec. 431.12(f)(1) proposals requiring States to post publicly
information on the MAC and BAC (bylaws, meeting minutes). The
commenters noted that transparency plays an important role in promoting
multi-directional accountability and could also help ensure the success
of the MAC and BAC. While commenters were supportive, they also
recommended that States consider their Medicaid communities'
communication access needs, including cultural competency and
linguistic needs, when posting these materials to their websites.
Response: We agree with commenters that States should take steps to
ensure that any publicly posted materials are accessible to the various
interested parties that comprise their Medicaid community.
Comment: We received a few comments asking us to reconsider the
requirement of having States to post their BAC membership list on their
websites. Several commenters suggested that States should give BAC
members the choice of being publicly identified.
Response: We thank commenters for raising this issue, as we want to
avoid any situation where a Medicaid beneficiary, family member or
caregiver, does not want to be publicly identified. In response to
these comments, we are updating and finalizing the proposed regulations
to permit BAC members to choose whether to be publicly identified in
materials such as membership lists and meeting minutes. If BAC members
choose not to be identified in public materials, they can be referred
to as BAC member 1, BAC member 2 and so on. Specifically, we are
updating and finalizing the proposed language under new paragraph Sec.
431.12(f)(1) to state, ``Develop and publish by posting publicly on its
website, bylaws for governance of the MAC and BAC along with a current
list of members . . . States will give BAC members the option to
include their names on the membership list and meeting minutes that
will be posted publicly.''
Comment: We received comments supporting the Sec. 431.12(f)(2)
requirement of having States publicly post their process for
recruitment and selection. Commenters emphasized that these processes
must be inclusive and reflect the diversity of their State's Medicaid
community and beneficiaries. Other commenters asked for CMS to provide
guidance or best practices on how to recruit members, as well as
marketing best practices and the preferred format for print and audio
materials.
Response: We agree that States should develop recruitment
strategies that will result in identifying members that are

[[Page 40560]]

representative of a State's Medicaid community and beneficiaries.
However, we have kept the requirements flexible to be cognizant of the
fact that States can experience challenges in recruiting Medicaid
beneficiaries to serve on the BAC. We also encourage States to examine
best practices from entities that specialize in marketing, recruitment,
and the accessibility of published materials as outlined on
Digital.gov.\47\
---------------------------------------------------------------------------

\47\ https://digital.gov/resources/an-introduction-to-accessibility/?dg.
---------------------------------------------------------------------------

Comment: We received some comments asking that States have a
process for identifying conflicts of interest when making member
selections.
Response: We agree that avoiding conflicts of interest is
important, and we encourage States to establish conflict of interest
policies, to be documented in the MAC/BAC bylaws or other organizing
documents that govern the membership and operations of the MAC/BAC, and
to ensure these policies are respected when selecting MAC/BAC members.
Since MAC and BAC membership represent a variety of backgrounds and
interest relevant to Medicaid, we also believe that building in a time
for conflict-of-interest disclosure into each meeting's agenda is
important. Specifically, under new Sec. 431.12(f)(3) we are now adding
that each MAC and BAC meeting agenda should have time set aside for
members to disclose any matters that are not incompatible with their
participation on the MAC and/or BAC under the State's conflict of
interest policy, but which nevertheless could give rise to a perceived
or actual conflict of interest and therefore should be disclosed. We
also believe our requirements for MAC and BAC meetings, including the
posting of meeting minutes and membership lists, will provide the
public and States with the transparency needed to know if a conflict of
interest (perceived, apparent, or actual) occurred during a meeting.
Comment: We received comments regarding the requirement in Sec.
431.12(f)(3) for both the MAC and BAC to each meet at a minimum of once
quarterly. Commenters noted the number of meetings could pose a burden
to the States and members. Several commenters suggested that CMS allow
Medicaid agencies to hold meetings in a way that matches their
administrative resources and goals.
Response: We selected a quarterly meeting versus a monthly meeting
schedule for the MAC and BAC because we believe it will provide States
with more flexibility in determining when to meet. For example, rather
than having the MAC and BAC members meeting every month (12 times
annually), we reduce the time commitment for members by having the
State select which month per quarter works best for the MAC and BAC
members (4 times annually). Further, the goal of the MAC and BAC is to
advise the State on matters related to policy development and to the
effective administration of the Medicaid program. We believe that
holding a quarterly meeting, as a minimum, allows States to integrate
their Medicaid community's voice into the effective administration of
the Medicaid program in a way that is timely and meaningful. Further,
we believe that holding quarterly meetings would result in the least
amount of burden for States. Holding more meetings per year would
likely result in additional strain of time and resources for the State
and its members. Holding meetings less frequently than quarterly would
not assist the timely integration of the community voice into the
administration of the Medicaid program. We also strive to further
reduce the burden to MAC and BAC members by structuring the meeting
requirements in a way that allows States to select non-traditional
meeting times and to use different telecommunications options (for
example, online meetings) for its meetings which would eliminate
members' commuting times to meetings.
Comment: We received several comments about new Sec. 431.12(f)(4)
in support of the requirement that each MAC meeting must have a public
comment period, citing the importance of all interested parties to be
able to share feedback. Additionally, a few commenters asked that
States also have a process to accept input from interested parties
while developing MAC agendas.
Response: States will have the flexibility to develop the MAC
agendas in accordance with their own processes and procedures. We
encourage commenters to work with their State regarding those
processes.
Comment: A couple of commenters suggested that all MAC and BAC
meetings be open to the public.
Response: We place great importance on meeting transparency, but we
also believe that States may need the flexibility to keep closed some
of their meetings each year. The proposed requirement in Sec.
431.12(f)(4) related to BAC meetings notes that BAC meetings are not
required to be open to the public unless the State and the BAC members
decide otherwise. It is important for States to create a dedicated
space for this group of Medicaid beneficiaries and people with lived
Medicaid experience to share their interactions with and perceptions of
the Medicaid program. Having a comfortable, supportive, and trusting
environment will encourage members to speak freely on matters most
important to them. We note that in order to support overall
transparency, we proposed that the meeting minutes of the BAC meetings
be required to be posted online and MAC members who are also on the BAC
will share input from the BAC with the broader MAC.
Comment: We received comments in response to our request for
comments about in-person and virtual attendance options for the MAC and
BAC meetings. The comments emphasized the need for States to offer both
in-person and virtual attendance options. One commenter questioned if
the proposed requirement meant that offering an in-person attendance
option was a requirement for each meeting.
Response: We thank commenters for responding to our request for
comments. In response to those comments, we are updating new Sec.
431.12(f)(5) to list the different types of meeting options.
Specifically, Sec. 431.12(f)(5) states, ``Offer a rotating, variety of
meeting attendance options. These meeting options are: all in-person
attendance, all virtual attendance, and hybrid (in-person and virtual)
attendance options. Regardless of which attendance type of meeting it
is, States are required to always have, a minimum, telephone dial-in
option at the MAC and BAC meetings for its members.'' For the commenter
who questioned if States had to always provide in-person attendance
options, we are clarifying that if the meeting is designated as a
virtual-only meeting, States do not need to have in-person attendance.
Comment: One commenter suggested we add a requirement for meetings
to be held both during and after work hours.
Response: In new Sec. 431.12(f)(6), we require that States ensure
that the meeting times selected for MAC and BAC meetings maximize
member attendance. We encourage States to consider working hours and
the impact on their MAC and BAC membership, as appropriate.
Comment: Several commenters expressed broad support for the
proposal to ensure that MAC and BAC meetings are accessible by people
with disabilities and Limited English Proficiency (LEP). Commenters
also provided suggestions to better ensure meaningful participation,
such as making sure States have available: interpreter services,
American Sign Language translation services, closed captioning for
virtual meeting, and

[[Page 40561]]

making materials available in plain language.
Response: As reflected in Sec. 431.12(f)(7), we agree that MAC and
BAC members with disabilities and LEP should have access to the types
of supports needed to meaningfully engage in meetings. We have updated
the relevant Federal requirements for States to meet in this final
rule.
Comment: One commenter requested that CMS clarify what is meant by
the phrase, ``that reasonable steps are taken to provide meaningful
access to individuals with Limited English Proficiency . . . .''
Response: Title VI of the Civil Rights Act requires recipients of
Federal financial assistance, including State Medicaid programs, to
take reasonable steps to provide meaningful access to their programs or
activities for individuals with Limited English Proficiency.\48\
Section 1557 of the Affordable Care Act similarly requires recipients
of Federal financial assistance to take reasonable steps to provide
meaningful access to their health programs or activities for
individuals with Limited English Proficiency, and the implementing
regulation requires the provision of interpreting services and
translations when it is a reasonable step to provide meaningful
access.\49\
---------------------------------------------------------------------------

\48\ Lau v. Nichols, 414 U.S. 563, 566 (1974) (interpreting
Title VI and its implementing regulations to require a school
district with students of Chinese origin with limited English
proficiency to take affirmative steps to provide the students with a
meaningful opportunity to participate in federally funded
educational programs).
\49\ 45 CFR 92.101; see alsohttps://www.hhs.gov/civil-rights/for-providers/laws-regulations-guidance/guidance-federal-financial-assistance-title-vi/index.html.
---------------------------------------------------------------------------

After consideration of public comments, we are finalizing Sec.
[thinsp]431.12(f) as proposed with:
Language modifications to reflect the new name of the BAC.
Updates to Sec. 431.12(f)(1) to now state, ``States will
also post publicly the past meeting minutes of the MAC and BAC
meetings, including a list of meeting attendees. States will give BAC
members the option to include their names in the membership list and
meeting minutes that will be posted publicly.''
Updates to Sec. 431.12(f)(3) to state, ``Each MAC and BAC
meeting agenda must include a time for members and the public (if
applicable) to disclose conflicts of interest.''
Updates to Sec. 431.12(f)(4) to move one sentence up to
be the new second sentence and the deletion of a repetitive sentence so
that third sentence now reads as, ``The public must be adequately
notified of the date, location, and time of each public MAC meeting and
any public BAC meeting at least 30 calendar days in advance of the date
of the meeting.''
Updates to Sec. 431.12(f)(5) to state, ``Offer a
rotating, variety of meeting attendance options. These meeting options
are: all in-person attendance, all virtual attendance, and hybrid (in-
person and virtual) attendance options. Regardless of which attendance
type of meeting it is, States are required to always have at a minimum,
telephone dial-in option at the MAC and BAC meetings for its members.''
Updates to paragraph (f)(7) to reflect additional Federal
requirements (adding reference to the Title VI of the Civil Rights Act
of 1964). The sentence will now state, ``. . . that reasonable steps
are taken to provide meaningful access to individuals with Limited
English Proficiency, and that meetings comply with the requirements at
Sec. 435.905(b) of this chapter and applicable regulations
implementing the ADA, Title VI of the Civil Rights Act of 1964, section
504 of the Rehabilitation Act, and section 1557 of the Affordable Care
Act at 28 CFR part 35 and 45 CFR parts 80, 84 and 92, respectively.''
7. MAC and BAC Participation and Scope (Sec. 431.12(g))
We proposed to replace former paragraph (e) Committee
participation, with new paragraph (g) MAC and BAC Participation and
Scope. The original paragraph (e), Committee participation, required
that the MCAC must have opportunity for participation in policy
development and program administration, including furthering the
participation of beneficiary members in the agency program.
In new paragraph Sec. 431.12(g), we proposed and are finalizing
the expansion of the types of topics which provide the MAC and BAC
should advise to the State. The list of topics we proposed included at
a minimum topics related to: (1) addition and changes to services; (2)
coordination of care; (3) quality of services; (4) eligibility,
enrollment, and renewal processes; (5) beneficiary and provider
communications by State Medicaid agency and Medicaid managed care
plans; (6) cultural competency, language access, health equity and
disparities and biases in the Medicaid program; or (7) other issues
that impact the provision or outcomes of health and medical services in
the Medicaid program as identified by the MAC, BAC or State.
In researching States' MCACs, we know that some already use the
MCACs advice on a variety of topics relating to the effective and
efficient administration of the Medicaid program. With these changes,
we aim to strike a balance that reflects some States' current practices
without putting strict limitations on specific topics for discussion in
a manner that would constrict flexibility for all States. Broadening
the scope of the topics that the MAC and BAC discuss will benefit the
State by giving greater insight into how it is currently delivering
coverage and care for its beneficiaries and thereby assist in
identifying ways to improve the way the Medicaid program is
administered.
The State will use this engagement with the MAC and BAC to ensure
that beneficiaries' and other interested parties' voices are considered
and to allow the opportunity to adjust course based on the advice
provided by the committee and council members. The State will base
topics of discussion on State need and will determine the topics in
collaboration with the MAC and BAC to address matters related to policy
development and matters related to the effective administration of the
Medicaid program. In finalizing the proposals, we reviewed the wording
for this requirement closer. When listing the types of topics on which
the MAC and BAC should advise to the State, we used the term ``or''.
However, using the term ``or'' does not represent the intention behind
the regulation. The MAC or BAC should not be limited to advising the
State on one topic at a time. Our intent is that the MAC and BAC, in
collaboration with the State, should be able to provide recommendations
on all or any of the subset of the topics listed. We clarify this
intention in this final rule by making a technical change to replace
the word ``and'' with the word ``or'' in the list of the types of
topics on which the MAC and BAC should advise the State.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: As noted in other sections, we received a few comments
asking CMS to clarify the advisory authority of the MAC and BAC, noting
that language fluctuated between advisory and experiential feedback.
Response: As discussed earlier with respect to Sec. 431.12(a), the
role of the MAC and BAC is to advise the State Medicaid agency. In
reviewing the language proposed in Sec. 431.12(g), we see similar
opportunities where CMS can refine its wording to make clear the
advisory roles that the MAC and BAC hold. The primary role of the MAC
and BAC is to advise the State Medicaid agency on policy development
and on

[[Page 40562]]

matters related to the effective administration of the Medicaid
program. By replacing the wording in Sec. 431.12(g) from ``provide
recommendations'' to ``advise'' we are being consistent with the
wording used in similar updates made in this final rule and also making
clear that our intention is for the MAC and BAC to serve in an advisory
capacity to the State.
Comment: All commenters who addressed Sec. 431.12(g) supported the
change in the MAC and BAC scope. The majority of those commenters also
suggested additional topics for which the MAC and BAC should advise the
State. These topics include getting feedback on Secret Shopper studies,
external quality organization reports, consumer facing materials,
enrollment materials, implementation of integrated programs for dually
eligible individuals, rate reviews, and annual medical loss ratio
report. We also received a comment noting the importance of access to
services with a request that it be added it to the list of topics.
Response: We appreciate the support to the proposed changes. We
clarify that the categories of topics we named in this section were
selected as examples because they represented far-reaching parameters
related to the effective administration of the Medicaid program. We
believe that the proposal we are finalizing in this final rule allows
for a broad interpretation of the topics that are within scope while
leaving the ultimate decision on which topics the MAC and BAC will
advise on to the MAC, BAC, and State. We encourage commenters to work
with their States to define the topics that will be discussed at the
MAC and BAC. Finally, we agree that specifically mentioning access to
services is important, as it represents a key topic area of this
regulation. Therefore, we are redesignating the proposed Sec.
431.12(g)(7) as (g)(8) and adding a new Sec. 431.12(g)(7), access to
services.
After consideration of public comments, we are finalizing Sec.
431.12(g) as proposed with:
Language modifications to reflect the new name of the BAC.
Replacing the wording at Sec. 431.12(g) ``to participate
in and provide recommendations'' with ``advise'' so as to clarify the
advisory role of the MAC and BAC.
Conforming edits to replacing the term State Medicaid
Director at Sec. 431.12(g) with the term, ``director of the single
State Agency for the Medicaid program.''
Language modifications to Sec. 431.12(g)(5) to replace ``managed
care plan'' with ``MCOs, PIHPs, PAHPs, PCCM entities or PCCMs as
defined in Sec. 438.2.''
Redesignating and finalizing proposed Sec. 431.12(g)(7)
as (g)(8) and adding a new Sec. 431.12(g)(7), ``access to services.''
Replacing the word ``or'' with the word ``and'' after
431.12(g)(7), access to services.
8. State Agency Staff Assistance, Participation, and Financial Help
(Sec. 431.12(h))
Under Sec. 431.12 of the current regulation, paragraph (f)
Committee staff assistance and financial help, the State was required
to provide the committee with--(1) Staff assistance from the agency and
independent technical assistance as needed to enable it to make
effective recommendations; and (2) Financial arrangements, if
necessary, to make possible the participation of beneficiary members.
In the proposed rule, we proposed to redesignate previous paragraph
Sec. 431.12(f) to new paragraph (h) and expand upon existing State
responsibilities for managing the MAC and BAC regarding staff
assistance, participation, and financial support. The changes we
proposed and are finalizing to new paragraph (h) are for the State to
provide staff to support planning and execution of the MAC and the BAC
to include: (1) Recruitment of MAC and BAC members; (2) Planning and
execution of all MAC and BAC meetings; and (3) The provision of
appropriate support and preparation (providing research or other
information needed) to the MAC and BAC members who are Medicaid
beneficiaries to ensure meaningful participation. These tasks include:
(i) Providing staff whose responsibilities are to facilitate MAC and
BAC member engagement; (ii) Providing financial support, if necessary,
to facilitate Medicaid beneficiary engagement in the MAC and the BAC;
and (iii) Attendance by at least one staff member from the State
agency's executive staff at all MAC and BAC meetings.
The overlap of the current regulation with our proposed changes
will mean much of the work to implement is already occurring. We are
not changing the existing financial support requirements. We understand
from States and other interested parties that many States already
provide staffing and financial support to their MCACs in ways that meet
or go beyond what we require through our updated requirements. We
believe that expanding upon the current standards regarding State
responsibility for planning and executing the functions of the MAC and
BAC will ensure consistent and ongoing standards to further
beneficiaries' and other interested parties' engagement. For example,
we know that when any kind of interested parties council meets, all
members of that council need to fully understand the topics being
discussed in order to meaningfully engage in that discussion. This is
particularly relevant when the topics of discussion are complex or
based in specific terminology as Medicaid related issues often can be.
We believe that when States provide their MACs and BACs with
additional staffing support that can explain, provide background
materials, and meet with the members in preparation for the larger
discussions, the members have a greater chance to provide more
meaningful feedback and be adequately prepared to engage in these
discussions. The proposed changes to the existing requirements seek to
create environments that support meaningful engagement by the members
of the MAC and the BAC, whose feedback can then be used by States to
support the efficient administration of their Medicaid program. We
anticipate providing additional guidance on model practices,
recruitment strategies, and ways to facilitate beneficiary
participation, and we solicited comments on effective strategies to
ensure meaningful interested parties' engagement that in turn can
facilitate full beneficiary participation.
Further, the proposed changes to the requirement for beneficiary
support, including financial support, are similar to the original MCAC
requirements. For example, using dedicated staff to support beneficiary
attendance at both the MAC and BAC meetings and providing financial
assistance to facilitate meeting attendance by beneficiary members are
similar to the current regulations. Staff may support beneficiary
attendance through outreach to the Medicaid beneficiary MAC and BAC
members throughout the membership period to provide information and
answer questions; identify barriers and supports needed to facilitate
attendance at MAC and BAC meetings; and facilitate access to those
supports.
In the proposed rule, we proposed to add a new requirement that at
least one member of the State agency's executive staff attend all MAC
and BAC meetings to provide an opportunity for beneficiaries and
representatives of the State's leadership to interact directly.
We received public comments on these proposals. The following is a

[[Page 40563]]

summary of the comments we received and our responses.
Comment: Many commenters supported the modifications proposed at
Sec. 431.12(h), but they emphasized the importance of requiring States
to appropriately compensate members that are beneficiaries for their
participation. The comments noted that there should be financial
compensation to beneficiary members for the time spent on BAC
activities, as well as financial reimbursement for any travel, lodging,
meals, and childcare associated with their participation in the BAC
and/or MAC. Commenters also asked CMS to exclude the value of any
financial compensation paid to members for their participation in the
MAC and/or BAC from consideration in determining eligibility for
Medicaid. A few commenters expressed that the term ``if necessary''
should be dropped from the regulatory language, noting that States
should offer reimbursement to all participating Medicaid beneficiaries.
Response: Under the policies we are finalizing at Sec.
431.12(h)(3)(ii), States will have the ability to reimburse all
beneficiaries to facilitate Medicaid beneficiary engagement in the MAC
and the BAC. This can include, at the State's discretion, reimbursement
for travel, lodging, meals, and childcare. We did not remove the words
``if necessary'' to account for Medicaid beneficiaries who may not need
financial support to engage in the MAC and BAC activities.
We are also clarifying the circumstances in which compensation
provided to beneficiary members would be considered income for Medicaid
eligibility purposes. For both MAGI and non-MAGI methodologies,
reimbursements (such as for meals eaten away from home, mileage, and
lodging) do not count as income, but other compensation (such as a
daily stipend) for participating in an advisory council is countable
income under applicable financial methodologies. For non-MAGI
methodologies, the State could submit a SPA to CMS to disregard such
stipends or other countable income under section 1902(r)(2) of the Act.
Other means tested programs may have other rules for counting income,
and we encourage States to assess those rules and advise Medicaid
beneficiary members of the MAC and BAC accordingly.
Comment: Many commenters in support of the proposed requirements in
Sec. 431.12(h)(3) noted how critical it will be for States to provide
appropriate technical support and preparation to MAC and BAC members
who are also Medicaid beneficiaries in order to ensure their full and
active participation in discussions. Commenters shared a variety of
suggestions for the type of support that can help prepare these members
to feel comfortable fully and meaningfully engaging in the process. The
suggestions made by the commenters included specific areas to be
addressed in the trainings and materials that the State agency staff
provides, such as providing background materials in plain language,
implementing techniques to empower members to participate successfully
and equally in MAC and BAC discussions, supporting health literacy
needs, and training members on digital access to meetings/technology.
Additionally, some commenters suggested that States be required to
provide MAC and BAC members with a mentor and training on the Medicaid
program throughout the length of their membership term. Several
commenters suggested that States be required to select an independent
(outside of the Medicaid agency) policy advisor or technical expert to
provide BAC members with support in understanding Medicaid topics and
policy.
Response: We appreciate the support for our proposals and
understand the interest in ensuring support for beneficiary members of
the MAC and BAC. The underpinning of meaningful member engagement is
that members have a substantial understanding of the topics to be
discussed. We agree with commenters' suggestions in general, but given
the differences in States' structures and resources, we believe there
is a benefit in leaving the decision of how best to provide training
and support to the MAC and BAC members to the States. As we noted
earlier in the preamble, CMS will post publicly a MAC best practices
toolkit.
Comment: We received a couple of comments asking CMS to clarify the
role of the State Medicaid agency staff attending the MAC and BAC
meetings.
Response: The purpose of requiring a member from the State Medicaid
agency's executive staff to attend MAC and BAC meetings is to provide
an opportunity for beneficiaries and representatives of the State's
Medicaid agency leadership to interact directly. The role of the
executive staff person is not to be a MAC/BAC co-chair, nor to
facilitate these meetings. The executive staff person's role is to hear
directly from and interact with Medicaid beneficiaries and with the
wider Medicaid community in that State. The person attending generally
will be expected to share take-aways from these meetings with State's
Medicaid agency leadership.
After consideration of public comments, we are finalizing Sec.
431.12(h) as proposed with:
Language modifications to reflect the new name of the BAC.
Conforming edits to replace the word ``State Agency'' with
the ``single State agency for the Medicaid program'' in several places
across Sec. 431.12(h).
Language modifications to Sec. 431.12(h)(3) to state, ``. . . MAC
and BAC members who are Medicaid beneficiaries . . .''
9. Annual Report (Sec. 431.12(i)).
In the spirit of transparency and to ensure compliance with the
updated regulations, we added in the proposed rule \50\ and are
finalizing new paragraph Sec. 431.12(i) to require that the MAC, with
support from the State and in accordance with the requirements updated
at this section, must submit an annual report to the State. The State
must review the report and include responses to the recommended
actions. The State must also: (1) provide MAC members with final review
of the report; (2) ensure that the annual report of the MAC includes a
section describing the activities, topics discussed, and
recommendations of the BAC, as well as the State's responses to the
recommendations; and (3) post the report to the State's website. In the
proposed rule, we noted that States had one year to implement the
annual report requirement and we sought comment on that timeline. In
finalizing the proposals, we reviewed these requirements closer. It is
our intention that the MAC is required to submit an annual report to
the State. We clarify this intention in this final rule by making a
technical change to add the word ``must'' which was unintentionally
omitted in the proposed rule.
---------------------------------------------------------------------------

\50\ ``Medicaid Program; Ensuring Access to Medicaid Services,''
(88 FR 27960, 27971).
---------------------------------------------------------------------------

The proposed requirements of this paragraph seek to ensure
transparency while also facilitating a feedback loop and view into the
impact of the MAC and BAC's recommendations. We solicited comment on
additional ways to ensure that the State can create a feedback loop
with the MAC and BAC.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the proposed requirements in
new Sec. 431.12(i), of having States submit an annual report that
describes activities of the MAC and BAC, including the topics discussed
and their

[[Page 40564]]

recommendations. Commenters noted that requiring these reports is
critical to building trust as well as ensuring transparency and
accountability among the State, MAC, and BAC members. In addition,
several commenters agreed with the annual report requirement, but they
also wanted CMS to stipulate the contents of the annual report. One
commenter suggested that States' annual reports include results from
anonymous surveys of MAC and BAC members indicating whether these
members felt they have been listened to and if they felt the State used
members' feedback.
Response: We appreciate the support for the proposed regulations.
We carefully considered the benefits of national uniformity of the
contents of an annual report. However, due to the differences in how
States may approach setting priorities, creating their MAC and BACs,
and the varying level of resources, we believe that States should have
the flexibility to adopt an approach to the content of the annual
report that works best within their State.
Comment: A few commenters asked CMS to either further require that
the BAC issue its own set of reports and recommendations independently
or as part of the MAC report.
Response: While we fully understand and agree with the importance
of the BAC and ensuring that their voices are heard, we believe that
requiring States to create a second BAC-only annual report would add
administrative burden. The proposed regulatory language requires that
States create an annual report that reflects the activities of both the
MAC and BAC. Since the annual report is required to contain the
priorities and activities of both the MAC and BAC, there is no need for
a separate BAC-only report.
Comment: There were a handful of commenters that wanted CMS to
reconsider the report requirement because they thought the resource
burden was too great to develop an annual report, the reporting
requirement lacked meaning, or they wanted CMS to allow Medicaid
agencies to set their own cadence to the reports.
Response: We understand the concerns of the commenters, but we have
written the annual report requirement broadly to ensure maximal
flexibility for States to meet this requirement. It is critical that
States document the work and key outcomes of the MAC and BAC. Further,
we believe the annual report requirement supports the implementation of
the principles of bi-directional feedback, transparency, and
accountability on the part of the State, MAC, and BAC. In response to
comments about burden to States, we have adjusted the proposed
applicability date for this requirement of 1 year and are now
finalizing it as, States have 2 years from July 9, 2024 to finalize the
first annual MAC report. After the report has been finalized, States
will have 30 days to post the annual report.
Comment: A few commenters asked CMS to require States to conduct
additional activities related to monitoring the MAC and BAC, in
addition to the annual report. The commenters' suggestions included:
implementing a corrective action plan for States that failed to meet
the MAC requirements; requiring process evaluations on the experiences
of the MAC and BAC members be conducted and the findings be made
public; and requiring States to engage in program improvement
activities in response to the recommendations made by the MAC that
appear in the annual report.
Response: We carefully considered the benefits of requiring
additional studies and activities to be captured by States and included
in the annual report. However, we want to keep the parameters of our
expectations on the content of a State's annual report to be as broad
as possible to give each State the ability to create a report that will
help them best document the interested parties' engagement with the MAC
and the BAC and serve as a tool for helping advance programmatic goals
over time.
Comment: A couple of commenters requested CMS publish the annual
reports on its website.
Response: We thank the commenters for this suggestion. Currently,
we believe each respective State Medicaid agency's website to be the
most appropriate place for the annual reports to be published. However,
we will consider whether the needs of interested parties would be
better served with CMS collecting and publishing annual reports as
well.
Comment: A few commenters inquired about how CMS would provide
oversight on compliance with activities such as the annual report and
number of meetings requirements.
Response: We thank commenters for these questions. We are currently
assessing the most effective strategies with which to provide
oversight. As these requirements implement State plan requirements in
section 1902(a)(4) and (a)(19) of the Act, noncompliance with the
provisions of this final rule could result in a State plan compliance
action in accordance with Sec. 430.35.
After consideration of public comments, we are finalizing Sec.
431.12(i) as proposed with:
Language modifications to reflect the new name of the BAC.
Additional sentences at the end of Sec. 431.12(i)(3),
``States have 2 years from July 9, 2024 to finalize the first annual
MAC report. After the report has been finalized, States will have 30
days to post the annual report.''
10. Federal Financial Participation (Sec. 431.12(j))
In the current regulation, paragraph (g) Federal financial
participation, noted that FFP is available at 50 percent in
expenditures for the committee's activities. As noted in the proposed
rule, we are not making changes to, and thus are maintaining, the
current regulatory language on FFP from previous paragraph (g) to
support committee activities, to appear in new paragraph (j) with
conforming edits for the new MAC and BAC names.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: We received a few comments about the newly proposed Sec.
431.12(j), encouraging CMS to offer a higher FFP than 50 percent. One
commenter suggested that 90 percent FFP would be ideal.
Response: For Medicaid, all States receive a statutory 50 percent
Federal matching rate for general administrative activities. States may
also receive higher Federal matching rates for certain administrative
activities, such as design, development, installation, and operation of
certain qualifying systems. Federal matching rates are established by
Congress, and CMS does not have the authority to change or increase
them.
After consideration of public comments, we are finalizing new
paragraph Sec. 431.12(j) as proposed with:
Language modifications to reflect the new name of the BAC.
11. Applicability Dates Sec. 431.12(k)
For this final rule, we are adding new paragraph Sec. 431.12 (k)
Applicability dates. In the proposed rule, we noted that the
requirements of Sec. 431.12 would be effective 60 days after the
publication date of the final rule, although we established different
applicability dates by which States must implement certain provisions.
We then solicited comment on whether 1 year was too much or not enough
time for States to implement the updates in this regulation in an
effective manner. We understand that States may need to modify their
existing MCACs to reflect the finalized requirements for MACs and may
also need to create the BAC and recruit members to participate

[[Page 40565]]

if they do not already have a similar entity already in place.
We received public comments on proposed implementation timeline.
The following is a summary of the comments we received and our
responses.
Comment: We received several comments related to the implementation
timeframes specified in the MAC and BAC provisions of the proposed
rule. The majority of comments fell into two categories: commenters who
noted that 1 year should be sufficient to implement the required
changes; and commenters who suggested that CMS provide at least 2 years
for implementation. Other commenters suggested that CMS consider a
graduated approach that would allow States to demonstrate compliance
with the minimum 25 percent BAC crossover requirement over a period of
time. The commenters who requested additional time shared concerns
about States' many other ongoing priorities, workforce shortages, the
amount of time and resources it would take to set up the MAC and BAC,
and having enough time to submit budget requests to their legislature
so they can get the resources to support the required activities.
Response: We have carefully considered the comments received and
acknowledge that additional time for implementation of the requirements
could be beneficial for States given competing priorities, budgeting
and other challenges States may encounter. Additionally, we weighed the
request for a graduated approach to demonstrate compliance with a 25
percent BAC crossover requirement, and we agree that a graduated
approach will allow States a longer ramp-up time to modify their
current MCACs, as well as to set up the BAC and recruit members to
participate.
In the proposed rule, we proposed that States have 1 year from the
effective date of the final rule to recruit members, set up their MAC
and BAC, hold meetings, and submit their first annual report. Based on
public comment, we understand that 1 year is not enough time to
complete all of these activities. As a result, we are adding and
finalizing in this final rule a second implementation year. Based on
these changes, States would now recruit members and set up their MACs
and BACs during the first year implementation year. In the second
implementation year, States would hold the required MAC and BAC
meetings. At the end of that second implementation year, States would
summarize the information from the MAC and BAC activities and use that
information to complete an annual report. States would then fulfill the
annual report requirement by finalizing the report and posting the
annual report to their websites. This annual report would need to be
posted by States within 30 days of the report being completed.
Additionally, as noted in section II.A.4., and in response to
public comment asking for States to have a more graduated approach to
reach the requirement of having 25 percent of MAC members be from the
BAC, we are finalizing in this rule an extended implementation timeline
for this requirement. The finalized provision at Sec. 431.12(d)(1)
will require that, for the period from July 9, 2024 through July 9,
2025, 10 percent of the MAC members must come from the BAC; for the
period from July 10, 2025 through July 9, 2026, 20 percent of MAC
members must come from the BAC; and thereafter, 25 percent of MAC
members must come from the BAC. We developed this approach based on the
comments we received about competing State priorities and the time and
resources that a State would need to meet the new requirements.
Additionally, we understand States may face challenges with finding,
recruiting, and training beneficiary members to serve on the BAC.
Based on the comments received, we are changing two applicability
dates. We note in this new paragraph Applicability dates Sec.
431.12(k), that except as noted in paragraphs (d)(1) and (i)(3) of this
section, the requirements in paragraphs (a) through (j) are applicable
July 9, 2025.

B. Home and Community-Based Services (HCBS)

To address several challenges that we described in the proposed
rule (88 FR 27964 and 27965), we proposed both to amend and add new
Federal HCBS requirements to improve access to care, quality of care,
and beneficiary health and quality of life outcomes, while consistently
meeting the needs of all beneficiaries receiving Medicaid-covered HCBS.
The preamble of the proposed rule (88 FR 27971 through 27996) outlined
our proposed changes in the context of current law.
As we noted in the proposed rule (88 FR 27971), we have previously
received questions from States about the applicability of HCBS
regulatory requirements to demonstration projects approved under
section 1115 of the Act that include HCBS. As a result, we proposed
that, consistent with the applicability of other HCBS regulatory
requirements to such demonstration projects, the requirements for
section 1915(c) waiver programs and section 1915(i), (j), and (k) State
plan services included in the proposed rule would apply to such
services included in approved section 1115 demonstration projects,
unless we explicitly waive one or more of the requirements as part of
the approval of the demonstration project.
We proposed not to apply the requirements for section 1915(c)
waiver programs and section 1915(i), (j), and (k) State plan services
that we proposed in the proposed rule to the Program of All-Inclusive
Care of the Elderly (PACE) authorized under sections 1894 and 1934 of
the Act, as the existing requirements for PACE either already address
or exceed the requirements outlined in the proposed rule, or are
substantially different from those for section 1915(c) waiver programs
and section 1915(i), (j), and (k) State plan services.
We received public comments on these proposals for HCBS under the
Medicaid program. The following is a summary of the comments we
received and our responses. We discuss the comments we received related
to specific proposals, and our responses, in further detail throughout
the sections in this portion of the final rule (section II.B.).
Comment: Many commenters expressed general support for our efforts
to increase transparency and accountability in HCBS programs, and
ultimately improve access to Medicaid services. Commenters in
particular noted general support for our proposed provisions in this
section that are designed to support HCBS delivery systems through
improvements in data collection around waiting lists and service
delivery, enhancements to person-centered planning, standardization of
critical incident investigation and grievance process requirements, and
establishment of defined quality measures. While overall reaction to
the payment adequacy minimum performance level (discussed in section
II.B.5. of the proposed rule and this final rule) was mixed, many
commenters agreed that HCBS programs are facing shortages of direct
care workers that pose obstacles to beneficiaries' access to high-
quality HCBS.
Commenters also shared several ideas for ways we could improve
beneficiaries' access to, or the overall quality of, HCBS beyond the
provisions presented in the proposed rule.
Some commenters expressed concerns that the HCBS provisions we
proposed, when taken together, could present significant administrative
costs to States and, in some cases, to providers.

[[Page 40566]]

Response: We thank commenters for their support. Comments on
specific provisions that we proposed are summarized below, along with
our responses. We also appreciate the many thoughtful suggestions made
by commenters for other ways they believe HCBS could be improved beyond
what we proposed in the proposed rule. While comments that are outside
the scope of what we proposed in the proposed rule and not relevant are
not summarized in this final rule, we will take these recommendations
under consideration for potential future rulemaking.
We recognize that we must balance our desire to stimulate ongoing
improvements in HCBS programs with the need to give States, managed
care plans, and providers sufficient time to make adjustments and
allocate resources in support of these changes. After consideration of
comments we received, we are finalizing many of our proposals, some
with modifications. These modifications are discussed in this section
(section II.B.) of the final rule.
We also note that some commenters expressed general support for all
of the provisions in section II.B. of this rule, as well as for this
rule in its entirety. In response to commenters who supported some, but
not all, of the policies and regulations we proposed in the proposed
rule (particularly in section II.B related to HCBS), we are clarifying
and emphasizing our intent that each final policy and regulation is
distinct and severable to the extent it does not rely on another final
policy or regulation that we proposed.
While the provisions in section II.B. of this final rule are
intended to present a comprehensive approach to improving HCBS and
complement the goals expressed and policies and regulations being
finalized in sections II.A. (Medicaid Advisory Committee and
Beneficiary Advisory Group) and II.C. (Documentation of Access to Care
and Service Payment Rates) of this final rule, we intend that each of
them is a distinct, severable provision, as finalized. Unless otherwise
noted in this rule, each policy and regulation being finalized under
this section II.B is distinct and severable from other final policies
and regulations being finalized in this section or in sections II.A. or
II.C of this final rule, as well as from rules and regulations
currently in effect.
Consistent with our previous discussion earlier in section II. of
this final rule regarding severability, we are clarifying and
emphasizing our intent that 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, or stayed pending further action, it shall be
severable from this final rule, and from rules and regulations
currently in effect, and not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other, dissimilar circumstances. For example, we intend that the
policies and regulations we are finalizing related to person-centered
planning and related reporting requirements (sections II.B.1 and
II.B.7. of this final rule) are distinct and severable from the
policies and regulations we are finalizing related to grievance system
(section II.B.2. of this final rule), and incident management system
and related reporting requirements (sections II.B.3 and II.B.7. of this
final rule). The standalone nature of the finalized provisions is
further discussed in their respective sections in this rule.
Comment: Several commenters addressed the relationship between the
proposed HCBS requirements and HCBS authorized under a section 1115
demonstration project. A few commenters requested clarification about
the application of the proposed HCBS requirements in this section to
services delivered under section 1115 authority. A few commenters
expressed concern about what they perceived was the exclusion of
services provided through a managed care delivery system under section
1115 demonstration authority. One commenter recommended only applying
the finalized rules to new section 1115 demonstration programs; in the
alternative, if applying the finalized requirements to current section
1115 demonstration programs, the commenter recommended that States
develop transition plans and be given a reasonable timeframe for
bringing their programs into compliance. A few commenters recommended
that we add a specific reference to section 1115 demonstration
authority of the Act in our proposed HCBS requirements (if finalized),
including at Sec. 438.72(b) (applying various finalized requirements
to managed care programs) and Sec. 441.302(k) (applying new payment
adequacy requirements to section 1915(c) waiver programs).
Response: We are confirming that, consistent with the applicability
of other HCBS regulatory requirements to such demonstration projects,
the requirements for section 1915(c) waiver programs and section
1915(i), (j), and (k) State plan services included in this final rule,
apply to such services included in approved section 1115 demonstration
projects, unless we explicitly waive one or more of the requirements as
part of the approval of the demonstration project. Further, we have not
identified a compelling reason to treat States operating section 1115
demonstration projects differently from States operating other HCBS
programs in terms of implementation, such as by requiring States with
section 1115 demonstration programs to develop transition plans (as was
recommended by one commenter). We also believe that the timeframes that
are finalized in this rule are reasonable and sufficient to allow all
States operating programs under all relevant authorities to come into
compliance. If States have specific questions or concerns regarding
compliance with the finalized requirements, we will provide assistance
as needed.
We note that we have already included references to managed care
delivery systems implemented under section 1115(a) of the Act in the
implementation requirements at Sec. Sec. 441.301(c)(3)(iii)
(implementing the person-centered planning process minimum performance
requirements), 441.302(a)(6)(iii) (implementing the critical incident
management system minimum performance requirements), 441.302(k)(8)
(implementing the payment adequacy minimum performance requirement),
441.311(f) (implementing reporting requirements), and 441.313(c)
(implementing the website transparency provision). We decline
commenters' recommendations that we include additional references to
section 1115 of the Act, as we believe doing so would be duplicative.
We will ensure that the approved standard terms and conditions of
States' section 1115 demonstration projects are clear that the States
must comply with all applicable HCBS requirements that we are
finalizing in this rule.
We did not receive any comments on our proposal not to extend HCBS
requirements that we are finalizing in this rule to PACE. We are
finalizing our proposal to not apply the requirements we are finalizing
in this rule for section 1915(c) waiver programs and section 1915(i),
(j), and (k) State plan services to PACE authorized under sections 1894
and 1934 of the Act.
1. Person-Centered Service Plans (Sec. Sec. 441.301(c), 441.450(c),
441.540(c), and 441.725(c))
Section 1915(c)(1) of the Act requires that services provided
through section 1915(c) waiver programs be provided under a written
plan of care (hereinafter referred to as person-centered service plans
or service plans). Existing Federal regulations at Sec. 441.301(c)
address the person-centered planning process and

[[Page 40567]]

include a requirement at Sec. 441.301(c)(3) that the person-centered
service plan be reviewed and revised, upon reassessment of functional
need, at least every 12 months, when the individual's circumstances or
needs change significantly, or at the request of the individual.
In 2014, we released guidance for section 1915(c) waiver programs
\51\ (hereinafter the 2014 guidance) that included expectations for
State reporting of State-developed performance measures to demonstrate
compliance with section 1915(c) of the Act and the implementing
regulations in 42 CFR part 441, subpart G through six assurances,
including assurances related to person-centered service plans. The 2014
guidance indicated that States should conduct systemic remediation and
implement a Quality Improvement Project when they score below an 86
percent threshold on any of their performance measures. We refer
readers to section II.B.1. of the proposed rule (88 FR 27972) for a
detailed discussion of the six assurances identified in the 2014
guidance.
---------------------------------------------------------------------------

\51\ Modifications to Quality Measures and Reporting in Sec.
1915(c) Home and Community-Based Waivers. March 2014. Accessed at
https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_2.pdf.
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In the proposed rule (88 FR 27972 through 27975), we proposed a
different approach for States to demonstrate that they meet the
statutory requirements in section 1915(c) of the Act and the regulatory
requirements in 42 CFR part 441, subpart G, including the requirements
regarding assurances around service plans. We proposed this approach
based on feedback CMS obtained during various public engagement
activities conducted with States and other interested parties over the
past several years about the reporting discussed in the 2014 guidance,
as well as feedback received through a request for information (RFI)
\52\ we released in the spring of 2022. Through this feedback, many
States and interested parties expressed, and we identified, that there
is a need to standardize reporting and set minimum standards for HCBS.
We proposed HCBS requirements to establish a new strategy for
oversight, monitoring, quality assurance, and quality improvement for
section 1915(c) waiver programs, including minimum performance
requirements and reporting requirements for section 1915(c) waiver
programs. Further, as is discussed later in this section (section
II.B.1. of the rule), to ensure consistency and alignment across HCBS
authorities, we proposed to apply the proposed requirements for section
1915(c) waiver programs to section 1915(i), (j), and (k) State plan
services, as appropriate.
---------------------------------------------------------------------------

\52\ CMS Request for Information: Access to Coverage and Care in
Medicaid & CHIP. February 2022. For a full list of question from the
RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
---------------------------------------------------------------------------

As support for our proposals, we noted that under section
1902(a)(19) of the Act, States must provide safeguards to assure that
eligibility for Medicaid-covered care and services are determined and
provided in a manner that is consistent with simplicity of
administration and that is in the best interest of Medicaid
beneficiaries. While the needs of some individuals who receive HCBS may
be relatively stable over some time periods, individuals who receive
HCBS experience changes in their functional needs and individual
circumstances, such as the availability of natural supports or a desire
to choose a different provider, that necessitate revisions to the
person-centered service plan to remain as independent as possible or to
prevent adverse outcomes. Thus, the requirements to reassess functional
need and to update the person-centered service plan based on the
results of the reassessment, when circumstances or needs change
significantly or at the request of the individual, are important
safeguards that are in the best interest of beneficiaries because they
ensure that an individual's section 1915(c) waiver program services
change to meet the beneficiary's needs most appropriately as those
needs change.
We also noted that effective State implementation of the person-
centered planning process is integral to ensuring compliance with
section 2402 of the of the Patient Protection and Affordable Care Act
(Affordable Care Act) (Pub. L. 111-148, March 23, 2010). Section 2402
of the Affordable Care Act requires the Secretary of HHS to ensure that
all States receiving Federal funds for HCBS, including Medicaid,
develop HCBS systems that are responsive to the needs and choices of
beneficiaries receiving HCBS, maximize independence and self-direction,
provide support and coordination to facilitate the participant's full
engagement in community life, and achieve a more consistent and
coordinated approach to the administration of policies and procedures
across public programs providing HCBS.\53\
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\53\ Section 2402(a) of the Affordable Care Act--Guidance for
Implementing Standards for Person-Centered Planning and Self-
Direction in Home and Community-Based Services Programs. Accessed at
https://acl.gov/sites/default/files/news%202016-10/2402-a-Guidance.pdf.
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Finally, we noted that since the release of the 2014 guidance, we
have received feedback from States, the HHS Office of Inspector General
(OIG), Administration for Community Living (ACL), and Office for Civil
Rights (OCR), and other interested parties on how crucial person-
centered planning is in the delivery of care and the significance of
the person-centered service plan for the assurance of health and
welfare for section 1915(c) waiver program participants that
underscored the need for the proposals.\54\
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\54\ Ensuring Beneficiary Health and Safety in Group Homes
Through State Implementation of Comprehensive Compliance Oversight.
U.S. Department of Health and Human Services, Office of the
Inspector General, Administration for Community Living, and Office
for Civil Rights. January 2018. Accessed at https://oig.hhs.gov/reports-and-publications/featured-topics/group-homes/group-homes-joint-report.pdf.
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To ensure a more consistent application of person-centered service
plan requirements across States and to protect the health and welfare
of section 1915(c) waiver participants, under our authority at sections
1915(c)(1) and 1902(a)(19) of the Act and section 2402(a)(1) and (2) of
the Affordable Care Act, we proposed several changes to our person-
centered service plan requirements in section II.B.1 of the proposed
rule (88 FR 27972 through 27975), as discussed in more detail in this
section of the final rule. First, we proposed revisions to Sec.
401.301(c)(3)(i) to clarify that: (1) States are required to ensure
person-centered service plans are reviewed and revised in compliance
with requirements set forth therein; and (2) changes to the person-
centered service plans are not required if the reassessment does not
indicate a need for changes. Second, we proposed to establish a minimum
performance level for States to demonstrate they meet the requirements
at Sec. 441.301(c)(3). Specifically, at Sec. 441.301(c)(3)(ii)(A), we
proposed to require that States demonstrate that a reassessment of
functional need was conducted at least annually for at least 90 percent
of individuals continuously enrolled in the waiver for at least 365
days. At Sec. 441.301(c)(3)(ii)(B) we proposed to require that States
demonstrate that they reviewed the person-centered service plan, and
revised the plan as appropriate, based on the results of the required
reassessment of functional need at least every 12 months for at least
90 percent of individuals continuously enrolled in the waiver for at
least 365 days. Finally, we proposed to apply the requirements at Sec.
441.301(c)(3) to section 1915(j), (k), and (i) State plan

[[Page 40568]]

services at Sec. Sec. 441.450(c), 441.540(c), and 441.725(c),
respectively.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: One commenter questioned whether States would continue to
be required to demonstrate compliance with the six assurances and the
related subassurances, including those related to person-centered
service plans described in the 2014 guidance, or whether the minimum
performance requirements and reporting requirements that we proposed in
the proposed rule for the section 1915(c) waiver program, if finalized
in the final rule, supersede these six assurances and related
subassurances.
Response: We noted in the proposed rule (88 FR 27972), and
reiterate here, that States must demonstrate that they meet the
statutory requirements in section 1915(c) of the Act and the regulatory
requirements in part 441, subpart G, including the requirements
regarding assurances around person-centered service plans.
We proposed new minimum performance requirements and new reporting
requirements for section 1915(c) waiver programs that are intended to
supersede and fully replace the reporting requirements and the 86
percent performance level threshold for performance measures described
in the 2014 guidance. Further, to ensure consistency and alignment
across HCBS authorities, we proposed to apply the proposed requirements
for section 1915(c) waiver programs to section 1915(i), (j), and (k)
State plan services as appropriate.
We confirm that the section 1915(c) six assurances and the related
subassurances,\55\ including those related to person-centered service
plans, continue to apply. The requirements proposed at Sec.
441.301(c)(3)(ii)(A) and (B) (discussed in the next section, II.B.1.b.
of this rule) assess State performance with the requirements at Sec.
441.301(c)(3) and we did not intend to suggest that they would fully
supersede the section 1915(c) six assurances and the related
subassurances in the 2014 guidance. Further, as finalized later in this
rule, States will be required to report on the minimum performance
levels at Sec. 441.301(c)(3)(ii)(A) and (B). To reduce unnecessary
burden and to avoid duplicative or conflicting reporting requirements,
we plan to work with States to phase-out the reporting requirements and
the 86 percent performance level threshold for performance measures
described in the 2014 guidance as they implement these requirements in
the final rule.
---------------------------------------------------------------------------

\55\ Modifications to Quality Measures and Reporting in Sec.
1915(c) Home and Community-Based Waivers. March 2014. Accessed at
https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_2.pdf.
---------------------------------------------------------------------------

Comment: A commenter requested we clarify what the impacts would be
to the existing section 1915(c) waiver reporting tools as defined in
the Version 3.6 HCBS Waiver Application if we finalize our proposals.
Response: We expect to implement new reporting forms for the new
reporting requirements that we are finalizing in this final rule.
However, some components of the existing reporting forms may remain in
effect to the extent that they cover other requirements that remain
unchanged by the requirements that we are finalizing in this final
rule. States and interested parties will have an opportunity to comment
on the new reporting forms and the revised forms through the Paperwork
Reduction Act notice and comment process.
a. Finalization of Amended Requirement for Review of the Person-
Centered Service Plan (Sec. 441.301(c)(3)(i))
At Sec. 441.301(c)(3), we proposed to revise the regulatory text
so that it is clearer that the State is the required actor under Sec.
441.301(c)(3), and that changes to the person-centered service plan are
not required if the reassessment does not indicate a need for changes.
In the proposed rule (88 FR 27973), we noted that, with this revision
to the regulatory text, the State could, for instance, meet the
requirement that the person-centered service plan was reviewed, and
revised as appropriate, based on the results of the required
reassessment of functional need by documenting that there were no
changes in functional needs or the individual's circumstances upon
reassessment that necessitated changes to the service plan. However,
the State would still be expected to review the service plan to confirm
that no revisions are needed, even if the reassessment identified no
changes in functional needs or the individual's circumstances.
Specifically, we proposed to move the sentence at Sec.
441.301(c)(3) beginning with ``The person-centered service plan must be
reviewed. . .'' to a new paragraph at Sec. 441.301(c)(3)(i) and
reposition the regulatory text under the proposed title, Requirement.
In addition, we proposed to revise the regulatory text at the
renumbered paragraph to clarify that the person-centered service plan
must be reviewed, and revised as appropriate, based on the reassessment
of functional need as required by Sec. 441.365(e), at least every 12
months, when the individual's circumstances or needs change
significantly, or at the request of the individual.
We received public comment on this proposal. Below is the summary
of the comment and our response.
Comment: Commenters did not raise specific concerns about the
proposal at Sec. 441.301(c)(3)(i). However, one commenter raised
concerns about the impact the minimum performance requirement proposed
at Sec. 441.301(c)(3)(ii) (discussed in greater detail in the next
section) would have on the requirement at Sec. 441.301(c)(3)(i). The
commenter expressed concern that States may interpret the 90 percent
minimum performance levels proposed at Sec. 441.301(c)(3)(ii)(A) and
(B) as meaning they are only required to conduct the reassessments and
updates to person-centered service plans as required by Sec.
441.301(c)(3)(i) for 90 percent of beneficiaries, not for 100 percent
of beneficiaries receiving HCBS. This commenter also suggested that CMS
clarify that States should conduct functional assessments and person-
centered plan updates for every individual to make sure that the
requirement at Sec. 441.301(c)(3)(i) is not open to interpretation.
Response: We intend that the 90 percent minimum performance
requirements proposed at Sec. 441.301(c)(3)(ii) would assess States'
minimum performance of the requirements at Sec. 441.301(c)(3)(i); we
do not suggest that reassessments of functional need and reviews, and
revisions as appropriate, of the person-centered service plan, based on
the results of the required reassessment of functional need, are
required for only 90 percent of individuals enrolled in the waiver
program. The minimum performance requirements at Sec.
441.301(c)(3)(ii) (and the associated reporting requirements at Sec.
441.311(b)(3), discussed in section II.B.7. of this final rule), while
important for aiding in our oversight and States' accountability for
complying with Sec. 441.301(c)(3)(i), are distinct and severable
requirements from Sec. 441.301(c)(3)(i). In other words, States would
be expected to comply fully with Sec. 441.301(c)(3)(i) even had we not
also proposed the specific minimum performance requirement at Sec.
441.301(c)(3)(ii). Thus, the minimum performance of 90 percent proposed
in Sec. 441.301(c)(3)(ii) notwithstanding, it is our intent to require
at Sec. 441.301(c)(3)(i) that States ensure that the person-

[[Page 40569]]

centered service plan for every individual is reviewed, and revised as
appropriate, at least every 12 months, when the individual's
circumstances or needs change significantly, or at the request of the
individual. To ensure that this expectation is clear in the
requirement, we are finalizing Sec. 441.301(c)(3)(i) with a
modification to specify that the requirement at Sec. 441.301(c)(3)(i)
applies to every individual.
Upon further review, we also determined that retaining the
reference to Sec. 441.301(c)(3) in Sec. 441.365(e), governing the
frequency of functional assessments for section 1915(d) waiver
programs, at the redesignated Sec. 441.301(c)(3)(i), is both obsolete
and unnecessary. Section 441.365(e) was a standard used by section
1915(d) waiver programs, which were time-limited programs that are no
longer in effect, to establish the frequency of functional assessments.
The requirements at Sec. 441.301(c)(3) establish the frequency of
functional assessments for section 1915(c) programs, thus referencing
Sec. 441.365(e), which is obsolete, is unnecessary.
Accordingly, we are finalizing Sec. 441.301(c)(3)(i) with the
previously noted modifications to specify that the requirement applies
to every individual and removing reference to Sec. 441.365(e), as well
as a minor technical modification to remove an extraneous comma after
the word ``revised.'' As finalized, Sec. 441.301(c)(3)(i) specifies
that the State must ensure that the person-centered service plan for
every individual is reviewed, and revised as appropriate, based upon
the reassessment of functional need at least every 12 months, when the
individual's circumstances or needs change significantly, or at the
request of the individual.
b. Minimum Performance Level (Sec. 441.301(c)(3)(ii))
To ensure a more consistent application of person-centered service
plan requirements across States and to protect the health and welfare
of section 1915(c) waiver participants, under our authority at sections
1915(c)(1) and 1902(a)(19) of the Act and section 2402(a)(1) and (2) of
the Affordable Care Act, we proposed to codify a minimum performance
level to demonstrate that States meet the requirements at Sec.
441.301(c)(3) (88 FR 27973).
Specifically, at new Sec. 441.301(c)(3)(ii)(A), we proposed to
require that States demonstrate that a reassessment of functional need
was conducted at least annually for at least 90 percent of individuals
continuously enrolled in the waiver for at least 365 days. We also
proposed, at new Sec. 441.301(c)(3)(ii)(B), to require that States
demonstrate that they reviewed the person-centered service plan and
revised the plan as appropriate based on the results of the required
reassessment of functional need at least every 12 months for at least
90 percent of individuals continuously enrolled in the waiver for at
least 365 days.
We intended that these proposed minimum performance levels would
strengthen person-centered planning reporting requirements while taking
into account that there may be legitimate reasons why assessment and
care planning processes occasionally are not completed timely in all
instances. We also considered whether to propose allowing good cause
exceptions to the minimum performance level in the event of a natural
disaster, public health emergency, or other event that would negatively
impact a State's ability to achieve a minimum 90 percent performance
level. In the end, we decided not to propose good cause exceptions
because the minimum 90 percent performance level is intended to account
for various scenarios that might impact a State's ability to achieve
these minimum performance levels. Further, we noted that there are
existing disaster authorities that States could utilize to request a
waiver of these requirements in the event of a public health emergency
or a disaster (88 FR 27973).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Many commenters supported our proposals to codify at Sec.
441.301(c)(3)(ii)(A) and (B) minimum performance levels for States to
demonstrate that they meet the requirements at Sec. 441.301(c)(3)(i).
These commenters noted that, by CMS establishing minimum performance
levels for the person-centered planning requirements, beneficiaries who
receive HCBS may be more empowered to actively participate in decision-
making processes related to their care and services.
Response: We appreciate the support for our proposals.
Comment: One commenter suggested we specify that a beneficiary's
services should not be reduced, suspended, or terminated because the
reassessment of functional need or person-centered service plan update
did not occur within the specified timeframe.
Response: The proposed requirements to reassess functional need and
to update the person-centered service plan based on the results of the
reassessment, when circumstances or needs change significantly, or at
the request of the individual, are important safeguards that are in the
best interest of beneficiaries because they ensure that an individual's
section 1915(c) waiver program services are reassessed to ensure they
continue meeting the beneficiary's needs most appropriately as those
needs change. Any changes in the services and supports included in the
person-centered service plan for beneficiaries should be based on
changes in circumstances or needs or preferences of the individual;
they should not result from a failure by the State or managed care plan
to conduct required assessment and service planning processes timely.
Further, States should not reduce, suspend, or terminate a
beneficiary's services solely to reach the minimum performance level
required at Sec. 441.301(c)(3)(ii)(A) and (B).
Comment: A couple of commenters suggested we clarify whether States
would be required to implement corrective action for noncompliance with
the 90 percent performance level if the same beneficiaries do not
receive timely reassessments or updated person-centered plans
repeatedly. One commenter questioned whether a 90 percent performance
level provides an acceptable margin of error (10 percent) and requested
clarification on whether States will be expected to remediate through
corrective action if this threshold is not met.
Response: Corrective actions or other enforcement actions will be
determined on a case-by-case basis, using our standard enforcement
authority, for States that are determined to not be compliant with the
requirements at Sec. 441.301(c)(3)(ii)(A) and (B). We will take this
feedback into account as we plan technical assistance and develop
guidance for States.
Comment: One commenter stated that the person-centered planning
requirements are essential to ensure choice and access to appropriate
service and suggested that, although the proposed approach meets
compliance oversight and monitoring objectives, a quality improvement
strategy to address improving outcomes with the person-centered
planning requirements is needed.
Response: We note that the proposed requirements at Sec.
441.301(c)(3)(ii)(A) and (B) were intended to strengthen person-
centered planning reporting requirements by codifying a minimum
performance level to demonstrate that States meet the requirements at
Sec. 441.301(c)(3). We encourage States to consider implementing
quality

[[Page 40570]]

improvement processes to strengthen and improve person-centered
planning in their HCBS programs. Further, as discussed in section
II.B.8. of this final rule, we are finalizing the HCBS Quality Measure
Set reporting requirements to include requirements for States to
implement quality improvement strategies in their HCBS programs; while
the HCBS Quality Measure Set is distinct from the person-centered
planning requirements being finalized at Sec. 441.301(c)(3), we
believe the HCBS Quality Measure Set requirements support the quality
improvement objectives described by this commenter.
Comment: A few commenters suggested CMS include a good cause
exception for States that do not meet the minimum performance level to
take into account certain instances that fall outside of the specified
performance standards for appropriate reasons, such as for resource
challenges in rural areas, or for beneficiary-related events that could
delay the ability to complete the assessment, such as medical
emergencies/hospitalizations. Alternatively, a few commenters supported
our proposal to not allow good cause exceptions to the performance
level, observing that the 90 percent minimum performance level already
gives States leeway for unexpected occurrences.
Response: We believe that the 90 percent minimum performance level
proposed at Sec. 441.301(c)(3)(ii)(A) and (B) sets a realistic and
achievable threshold.
As we noted in the proposed rule (88 FR 27973), we decided to not
propose any good cause exceptions because the minimum 90 percent
performance level accounts for various scenarios that might impact the
State's ability to achieve these performance levels, and there are
existing disaster authorities, such as the waiver authority under
section 1135 of the Act, that States could utilize to request a waiver
of these requirements in the event of a public health emergency or a
disaster. We decline to include good cause exceptions in the minimum
performance level in this final rule.
After consideration of public comments, we are finalizing our
proposals at Sec. 441.301(c)(3)(ii) with minor modifications to
clarify that the State must ensure that the minimum performance levels
specified at Sec. 441.301(c)(3)(ii)(A) and (B) are met (since States
typically have person-centered planning requirements carried out by
entities such as case managers or providers, rather than directly by
the State). We are also finalizing Sec. 441.301(c)(3)(ii)(B) with
minor technical modifications to make the same punctuation correction
as the modification finalized in Sec. 441.301(c)(3)(i).
c. Application to Managed Care and Fee-for-Service (Sec.
441.301(c)(3))
To ensure consistency in person-centered service plan requirements
between FFS and managed care delivery systems, we proposed to add the
requirements for services delivered under FFS at Sec. 441.301(c)(3) to
services delivered under managed care delivery systems. Section
2402(a)(3)(A) of the Affordable Care Act requires States to improve
coordination among, and the regulation of, all providers of Federally
and State-funded HCBS programs to achieve a more consistent
administration of policies and procedures across HCBS programs. In the
context of Medicaid coverage of HCBS, it should not matter whether the
services are covered directly on a FFS basis or by a managed care plan
to its enrollees. Therefore, we proposed that a State must ensure
compliance with the requirements in Sec. 441.301(c)(3) with respect to
HCBS delivered both under FFS and managed care delivery systems.
We note that in the proposed rule at 88 FR 27974, we made the
statement that to ensure consistency in person-centered service plan
requirements between FFS and managed care delivery systems, we propose
to add the requirements at Sec. 441.301(c)(3) to 42 CFR 438.208(c).
This statement was published in error, and we did not intend to propose
this specific regulation text include reference to Sec. 438.208(c). We
note that Sec. 438.208(c)(3)(v) already requires that managed care
plans comply with Sec. 441.301(c)(3), generally, so we believe that
referencing Sec. 438.208(c) is not necessary. We also note that Sec.
438.208(c)(3)(ii) requires compliance with the other person-centered
planning requirements at Sec. 441.301(c)(1) and (2). Thus, also
referring to Sec. 438.208(c) would be unnecessary.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Commenters expressed support for the proposed requirements
at Sec. 441.301(c)(3) to be applied to managed care delivery systems
as well, noting that States must ensure compliance with respect to HCBS
delivered both in FFS and managed care delivery systems. Commenters
also noted that the process of conducting reassessments and making
updates to a person-centered service plan is agnostic to whether a
provider is paid by a managed care plan or through a FFS delivery
system.
Response: We appreciate the support for our proposal.
After consideration of public comments received, we are finalizing
our proposed policy to require that the person-centered planning
requirements at Sec. 441.301(c)(3) finalized in this section are
applied to HCBS delivered under both managed care and FFS delivery
systems. As noted above, we are not finalizing a new reference to Sec.
441.301(c)(3) at Sec. 438.208(c), as Sec. 438.208(c) already requires
that managed care plans comply with Sec. 441.301(c)(1) through (c)(3),
which includes the requirements being finalized in this rule at Sec.
441.301(c)(3)(i) and (ii). Additionally, as is discussed in section
II.B.11. of this rule, we are finalizing our proposal at Sec.
438.72(b) to direct States to comply with the requirements finalized in
this final rule, including the revised person-centered centered
planning requirements at Sec. 441.301(c)(1) through (c)(3), for
services authorized under HCBS authorities and provided under managed
care delivery systems.
d. Person-Centered Planning--Definition of Individual (Sec.
441.301(c)(1))
We also proposed updates to existing language describing the
person-centered planning process specific to section 1915(c) waivers.
Current language describes the role of an individual's authorized
representative as if every waiver participant will require an
authorized representative, which is not the case. This language has
been a source of confusion for States and providers. We proposed to
amend the regulation text at Sec. 441.301(c)(1) to better reflect that
the individual, or if applicable, the individual and the individual's
authorized representative, will lead the person-centered planning
process. When the term individual is used throughout this section, it
includes the individual's authorized representative will lead the
person-centered planning process if applicable. We note that, in the
proposed rule, we described our proposal as removing extraneous
language and not as an amendment of Sec. 441.301(c)(1) (88 FR 27974).
Upon further consideration, we believe characterizing this proposal as
an amendment is more accurate. We intend that this proposed language as
finalized will bring the section 1915(c) waiver regulatory text in line
with person-centered planning process language in both the section
1915(j) and (k) State plan options.
We did not receive public comments on this proposal. However, after
further

[[Page 40571]]

consideration of the proposed requirement, we are finalizing Sec.
441.301(c)(1) with a technical modification to clarify that the
language contained in Sec. 441.301(c)(1), as finalized, applies to the
person-centered planning requirements throughout Sec. 441.301(c)(1)
through (3). (New language identified in bold.) This modification
expresses our intent that Sec. 441.301(c)(1) applies to the person-
centered planning requirements in Sec. 441.301(c)(1) through (3),
rather than Sec. 441.301(c) in its entirety.
e. Applicability Date (Sec. 441.301(c)(3)(iii))
We proposed at Sec. 441.301(c)(3)(iii) to make the performance
levels under Sec. 441.301(c)(3)(ii) effective 3 years after the
effective date of Sec. 441.301(c)(3) (in other words, 3 years after
the effective date of the final rule) in FFS delivery systems. For
States that implement a managed care delivery system under the
authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act
and include HCBS in the managed care organization's (MCO's), prepaid
inpatient health plan's (PIHP's), or prepaid ambulatory health plan's
(PAHP's) contract, we proposed to provide States until the first rating
period with the MCO, PIHP, or PAHP, beginning on or after 3 years after
the effective date of the final rule to implement these requirements.
We solicited comment on whether the timeframe to implement the proposed
regulations is sufficient, whether we should require a shorter
timeframe or longer timeframe to implement these provisions, and, if an
alternate timeframe is recommended, the rationale for that alternate
timeframe.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Most commenters supported the 3-year timeframe for the
effective date as defined at Sec. 441.301(c)(3)(iii). A few commenters
expressed concerns about the overall burden they believe will be
associated with the final rule, due to competing priorities, and the
effect it may have on States' ability to implement the proposed person-
centered planning provisions at Sec. 441.301(c)(3)(ii) within 3 years
following the effective date of the final rule. A few commenters
expressed that the performance levels under Sec. 441.301(c)(3)(ii) may
require States to have a longer runway to implement and operationalize
State regulation changes and processes, revise policies, and hire
critical staff. A few commenters also requested we consider alternative
effective dates for the person-centered planning minimum performance
requirements, ranging from 18 months to 4 years.
Response: We noted, in the proposed rule (88 FR 27974), that we
recognize many States may need time to implement the proposed HCBS
requirements we are finalizing in the final rule. We acknowledge that
States will have to expend resources in addressing the person-centered
planning minimum performance requirements, including needing time to
amend provider agreements, make State regulatory or policy changes,
implement process or procedural changes, update information systems for
data collection and reporting, or conduct other activities to implement
these person-centered planning requirements.
We believe that 3 years for States to ensure compliance with the
person-centered planning minimum performance requirements being
finalized at Sec. 441.301(c)(3)(ii) is realistic and achievable for
States. We also note that the minimum performance requirements measure
performance of the requirements at Sec. 441.301(c)(3)(i), which
substantively reflect activities States are currently expected to
perform under existing Sec. 441.301(c)(3). For States implementing a
managed care delivery system under the authority of sections 1915(a),
1915(b), 1932(a), or 1115(a) of the Act and include HCBS in the in the
MCO's, PIHP's, or PAHP's contract, we similarly believe it is realistic
and achievable to provide States with a date to comply that is until
the first rating period with the MCO, PIHP, or PAHP, beginning on or
after 3 years after the effective date of this final rule to implement
these requirements. We will provide technical assistance to States as
needed with meeting the timeframe for compliance.
After consideration of the comments received, we are finalizing the
substance of Sec. Sec. 441.301(c)(3)(iii) as proposed, but with minor
modifications to correct erroneous uses of the word ``effective'' and
to make technical modifications to the language pertaining to managed
care delivery systems to improve accuracy and alignment with common
phrasing in managed care contracting policy. We are retitling the
requirement at Sec. 441.301(c)(3)(iii) as Applicability date (rather
than Effective date). We are also modifying the language at Sec.
441.301(c)(3)(iii) to specify that States must comply with the
requirements at Sec. 441.301(c)(3)(ii) beginning 3 years from the
effective date of this final rule (rather than stating that the
performance levels described in Sec. 441.301(c)(3)(ii) are effective 3
years after the date of enactment of the final rule); and in the case
of the State that implements a managed care delivery system under the
authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act
and includes HCBS in the MCO's, PIHP's, or PAHP's contract, the first
rating period for contracts with the MCO, PIHP, or PAHP beginning on or
after the date that is 3 years after the effective date of this final
rule. (New language identified in bold.).
f. Application to Other Authorities
Section 2402(a)(3)(A) of the Affordable Care Act requires States to
improve coordination among, and the regulation of, all providers of
Federally and State-funded HCBS programs to achieve a more consistent
administration of policies and procedures across HCBS programs. In
accordance with the requirement of section 2402(a)(3)(A) of the
Affordable Care Act and because HCBS State plan options have similar
person-centered planning and service plan requirements, we proposed to
include the proposed requirements at Sec. 441.301(c)(3) in section
1915(j), (k), and (i) State plan services, at Sec. Sec. 441.450(c),
441.540(c), and 441.725(c), respectively. Consistent with our proposal
for section 1915(c) waivers, we proposed these requirements under
section 1902(a)(19) of the Act, which authorizes safeguards necessary
to assure that eligibility for care and services under the Medicaid
program will be determined, and such care and services will be
provided, in a manner consistent with the best interest of
beneficiaries. We believe these same reasons for proposing these
requirements for section 1915(c) waivers are equally applicable for
these other HCBS authorities.
We considered whether to apply the proposed person-centered plan
requirements at Sec. 441.301(c)(3) to section 1905(a) ``medical
assistance'' State plan personal care services, home health services,
and case management services. However, we did not propose that these
requirements apply to any section 1905(a) State plan services at this
time. First, States do not have the same data collection and reporting
capabilities for these services as they do for other HCBS at section
1915(c), (i), (j), and (k). Second, person-centered planning and
service plan requirements are not required by Medicaid for section
1905(a) services, although we recommend that States implement person-
centered planning processes for all HCBS. We note that the vast
majority of HCBS is delivered under section 1915(c), (i), (j), and (k)
authorities, while only a small percentage of HCBS

[[Page 40572]]

nationally is delivered under section 1905(a) State plan authorities.
However, the small overall percentage includes large numbers of people
with mental health needs who receive case management.
We solicited comment on whether we should establish similar person-
centered planning and service plan requirements for section 1905(a)
State plan personal care services, home health services and case
management services.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters expressed support for applying the proposed
person-centered planning and person-centered plan requirements at Sec.
441.301(c)(3) to section 1915(j), (k), and (i) State plan services.
Response: We appreciate the support for our proposal. As noted
earlier, we are finalizing modifications to Sec. 441.301(c)(3)(i) to
specify that the requirement applies to every individual and to make a
technical correction to remove an extraneous comma. We are finalizing
corresponding edits for section 1915(k) in Sec. 441.540(c) and section
1915(i) in Sec. 441.725(c). The revised language for both Sec.
441.540(c) and Sec. 441.725(c) will specify that the State must ensure
that the person-centered service plan for every individual is reviewed,
and revised as appropriate, based upon the reassessment of functional
need, at least every 12 months, when the individual's circumstances or
needs change significantly, and at the request of the individual.
States must adhere to the requirements of Sec. 441.301(c)(3).
Comment: A few commenters responded to our request for comment on
whether we should establish similar health and welfare requirements for
section 1905(a) State plan personal care services, home health
services, and case management services. Several commenters supported
that we decided not to propose to extend the person-centered plan
requirements at Sec. 441.301(c)(3) to section 1905(a) services. These
commenters expressed concern that applying these requirements to these
State plan benefits could pose critical challenges for State Medicaid
and other operating agencies, due to varying levels of HCBS provided
and different data reporting infrastructure States have for section
1905(a) services. A few commenters recommended that CMS apply the
person-centered planning requirements to mental health rehabilitative
services delivered under section 1905(a) State plan authority. A couple
of other commenters suggested that mental health rehabilitative
services are considered HCBS under the broader definition enacted by
Congress in the American Rescue Plan Act of 2021 (Pub. L. 117-2, March
11, 2021), suggesting that CMS should consider including these services
in the person-centered plan requirements at Sec. 441.301(c)(3).
Response: At this time and as noted in the proposed rule (88 FR
27974 and 27975), we are not applying the person-centered service plan
requirements at Sec. 441.301(c)(3) to section 1905(a) services, due to
the statutory and regulatory differences between services authorized
under sections 1905(a) and 1915 of the Act. For example, there are no
statutory provisions in section 1905(a) of the Act that attach State-
level reporting requirements to any section 1905(a) service. Relatedly,
States do not have the same data collection and reporting capabilities
for these services as they do for HCBS at section 1915(c), (i), (j),
and (k).
Additionally, we note that section 1905(a) services do not have the
same person-centered planning requirements at Sec. 441.301(c)(1)
through (6). Formal person-centered service planning requirements are
established for section 1915(j) services in Sec. 441.468, for section
1915(k) services in Sec. 441.540, and for section 1915(i) services at
Sec. 441.725. While service planning might be part of some specific
1905(a) services, it is not a required component of all section 1905(a)
services.
We acknowledge that many beneficiaries, particularly those
receiving mental health services, are served by section 1905(a)
services, and encourage States to implement effective person-centered
planning processes that are based on individual preferences and
personal goals and support full engagement in community for Medicaid
beneficiaries receiving section 1905(a) State plan personal care
services, home health services, case management services, and
rehabilitative services. We thank commenters for their feedback on this
request for comment, which we may consider in future rulemaking.
After consideration of public comments, we are finalizing the
application of Sec. 441.301(c)(3), as finalized in this rule, to
section 1915(j), (k), and (i) State plan services by finalizing
relevant requirements at Sec. Sec. 441.450(c), 441.540(c), and
441.725(c), respectively. We are finalizing Sec. Sec. 441.450(c),
441.540(c), and 441.725(c), with a technical modification to clarify
that service plans must meet the requirements of Sec. 441.301(c)(3),
but that references therein to section 1915(c) of the Act are instead
references to section 1915(j), 1915(k), and 1915(i) of the Act,
respectively. We are finalizing the requirements at Sec. Sec.
441.540(c) and 441.725(c) with minor modifications. To maintain
consistency with modifications finalized in Sec. 441.301(c)(3)(i), we
are finalizing Sec. Sec. 441.540(c) and 441.725(c) with modifications
to specify that the requirements apply to every individual and to
remove an extraneous comma.
g. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
proposals at Sec. Sec. 441.301(c)(1), 441.301(c)(3), 441.450(c),
441.540(c), and 441.725(c) as follows:
We are finalizing the requirement at Sec. 441.301(c)(1)
with a technical modification to clarify that Sec. 441.301(c)(1)
applies to paragraphs (c)(1) through (3) of this section.
We are finalizing Sec. 441.301(c)(3)(i) with
modifications to specify that the requirement applies to every
individual and to remove the reference to Sec. 441.365(e), as well as
finalizing a minor technical change to remove an extraneous comma.
We are finalizing our proposals at Sec. 441.301(c)(3)(ii)
with minor modifications to clarify that the State must ensure that the
minimum performance levels specified at Sec. 441.301(c)(3)(ii)(A) and
(B) are met. We are also finalizing Sec. 441.301(c)(3)(ii)(B) with
minor technical modifications to correct the punctuation (consistent
with the change finalized in Sec. 441.301(c)(3)(i)).
We are finalizing the applicability date requirement at
Sec. 441.301(c)(3)(iii), with a technical modification to the language
to improve accuracy and alignment with common phrasing in managed care
contracting policy. We also are finalizing Sec. 441.301(c)(3)(iii) to
specify that States must comply with the performance levels described
in paragraph (c)(3)(ii) of this section beginning 3 years after July 9,
2024; and in the case of the State that implements a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's,
or PAHP's contract, the first rating period for contracts with the MCO,
PIHP, or PAHP beginning on or after the date that is 3 years after July
9, 2024.
We are finalizing Sec. Sec. 441.450(c), 441.540(c), and
441.725(c), with a technical modification to clarify that service plans
must meet the requirements of Sec. 441.301(c)(3), but that references
therein to section 1915(c) of

[[Page 40573]]

the Act are instead references to section 1915(j), 1915(k), and 1915(i)
of the Act, respectively.
We are finalizing Sec. Sec. 441.540(c) and 441.725(c),
consistent with modifications finalized in Sec. 441.301(c)(3)(i), with
a modification to specify that the requirements apply to every
individual, and with technical modification to correct the punctuation.
2. Grievance System (Sec. 441.301(c)(7); Proposed at Sec.
441.464(d)(2)(v), Being Finalized at Sec. 441.464(d)(5); Proposed at
Sec. 441.555(b)(2)(iv), Being Finalized at Sec. 441.555(e); and Sec.
441.745(a)(1)(iii))
a. Scope of Grievance System and Definitions (Sec. 441.301(c)(7)(i)
and Sec. 441.301(c)(7)(ii))
Section 2402(a) of the Affordable Care Act requires the Secretary
of HHS to ensure that all States receiving Federal funds for HCBS,
including Medicaid HCBS, develop HCBS systems that are responsive to
the needs and choices of beneficiaries receiving HCBS, maximize
independence and self-direction, provide support and coordination to
assist with a community-supported life, and achieve a more consistent
and coordinated approach to the administration of policies and
procedures across public programs providing HCBS.\56\ Among other
things, section 2402(a)(3)(B)(ii) of the Affordable Care Act requires
development and monitoring of an HCBS complaint system. Further,
section 1902(a)(19) of the Act requires States to provide safeguards to
assure that eligibility for Medicaid-covered care and services will be
determined and provided in a manner that is consistent with simplicity
of administration and the best interest of Medicaid beneficiaries.
---------------------------------------------------------------------------

\56\ Section 2402(a) of the Affordable Care Act--Guidance for
Implementing Standards for Person-Centered Planning and Self-
Direction in Home and Community-Based Services Programs. Accessed at
https://acl.gov/sites/default/files/news%202016-10/2402-a-Guidance.pdf.
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Federal regulations at 42 CFR part 431, subpart E, require States
to provide Medicaid applicants and beneficiaries with an opportunity
for a fair hearing before the State Medicaid agency in certain
circumstances, including for a denial, termination, suspension, or
reduction of Medicaid eligibility, or for a denial, termination,
suspension, or reduction in benefits or services. These fair hearing
rights apply to all Medicaid applicants and beneficiaries, including
those receiving HCBS regardless of the delivery system. Under 42 CFR
part 438, subpart F, Medicaid managed care plans must have in place an
appeal system that allows a Medicaid managed care enrollee to request
an appeal, which is a review by the Medicaid managed care plan of an
adverse benefit determination issued by the plan; and a grievance
system, which allows a Medicaid managed care enrollee to file an
expression of dissatisfaction with the plan about any matter other than
an adverse benefit determination. Currently, our regulations do not
provide for a venue to raise concerns about issues that HCBS
beneficiaries in an FFS delivery system may experience which are not
subject to the fair hearing process, such as the failure of a provider
to comply with the HCBS settings requirements at Sec. 441.301(c)(4)
(which are issues that a managed care enrollee could file a grievance
with their plan).
Under our authority at section 1902(a)(19) of the Act and section
2402(a)(3)(B)(ii) of the Affordable Care Act, we proposed to require
that States establish grievance procedures for Medicaid beneficiaries
receiving services under section 1915(c), (i), (j) and (k) authorities
through a FFS delivery system. Specifically, for section 1915(c) HCBS
waivers, we proposed at Sec. 441.301(c)(7) that States must establish
a procedure under which a beneficiary can file a grievance related to
the State's or a provider's compliance with the person-centered
planning and service plan requirements at Sec. Sec. 441.301(c)(1)
through (3) and the HCBS settings requirements at Sec. Sec.
441.301(c)(4) through (6). This proposal was based on feedback obtained
during various public engagement activities conducted with interested
parties over the past several years about the need for beneficiary
grievance processes in section 1915(c) waiver programs related to these
requirements. We also proposed to apply this requirement to section
1915(i), (j) and (k) authorities, which are discussed below in section
II.B.2.h. of this final rule.
To avoid duplication with the grievance requirements at part 438,
subpart F, we proposed not to apply this requirement to establish a
grievance procedure to managed care delivery systems. We note, though,
that the requirements in this section are similar to requirements for
managed care grievance requirements found at part 438, subpart F, with
any differences reflecting changes appropriate for FFS delivery
systems. The proposed requirements included at Sec. 441.301(c)(7) in
the proposed rule (88 FR 27975) were focused specifically on grievance
systems and did not establish new fair hearing system requirements, as
appeals of adverse eligibility, benefit, or service determinations are
addressed by existing fair hearing requirements at 42 CFR part 431,
subpart E. We solicited comments on any additional changes we should
consider in this section with respect to a grievance system.
As discussed earlier in this section II.B.2. of this final rule,
section 2402(a)(3)(B)(ii) of the Affordable Care Act requires
development and monitoring of an HCBS complaint system. In addition,
section 2402(a)(3)(A) of the Affordable Care Act requires the Secretary
of HHS to ensure that all States receiving Federal funds for HCBS,
including Medicaid HCBS, develop HCBS systems that achieve a more
consistent and coordinated approach to the administration of policies
and procedures across public programs providing HCBS. As such, we
believe the proposed requirement for States to establish grievance
procedures for Medicaid beneficiaries receiving HCBS through a FFS
delivery system is necessary to comply with the HCBS complaint system
requirements at section 2402(a)(3)(B)(ii) of the Affordable Care Act
and to ensure consistency in the administration of HCBS between managed
care and FFS delivery systems. Further, in the absence of a grievance
system requirement for FFS HCBS programs, States may not have
established processes and systems for people receiving HCBS through FFS
delivery systems to express dissatisfaction with or voice concerns
related to States' compliance with the person-centered planning and
service plan requirements at Sec. 441.301(c)(1) through (3) and the
HCBS settings requirements at Sec. 441.301(c)(4) through (6), as such
concerns are not subject to the existing fair hearing process at 42 CFR
part 431 subpart E. As a result, we believe the proposal for a
grievance system for FFS HCBS programs is necessary to assure that care
and services will be provided in a manner that is in the best interests
of the beneficiaries, as required by section 1902(a)(19) of the Act.
We specifically focused our proposed grievance system requirement
on States' and providers' compliance with the person-centered service
plan requirements at Sec. 441.301(c)(1) through (3) and the HCBS
settings requirements at Sec. 441.301(c)(4) through (6) because of the
critical role that person-centered planning and service plans play in
appropriate care delivery for people receiving HCBS. Additionally, we
focused the grievance system requirements on the HCBS settings
requirements because of the importance of the HCBS settings
requirements to ensuring that HCBS beneficiaries have full access to
the benefits of community

[[Page 40574]]

living and are able to receive services in the most integrated setting
appropriate to their needs. Beneficiary advocates and other interested
parties indicated to us that these are especially important areas for
which to ensure that grievance processes are in place for all Medicaid
beneficiaries receiving HCBS. Further, focusing the grievance systems
requirements on the person-centered service plan requirements at Sec.
441.301(c)(1) through (3) and the HCBS settings requirements at Sec.
441.301(c)(4) through (6) helps to ensure that the proposed grievance
requirements do not duplicate or conflict with existing fair hearing
requirements at part 431, subpart E, as HCBS settings requirements and
person-centered planning requirements are outside the scope of the fair
hearing requirements.
At Sec. 441.301(c)(7)(ii), we proposed to define a grievance as an
expression of dissatisfaction or complaint related to the State's or a
provider's compliance with the person-centered service plan
requirements at Sec. 441.301(c)(1) through (3) and the HCBS settings
requirements at Sec. 441.301(c)(4) through (6), regardless of whether
the beneficiary requests that remedial action be taken to address the
area of dissatisfaction or complaint. Also, at Sec. 441.301(a)(7)(ii),
we proposed to define the grievance system as the processes the State
implements to handle grievances, as well as the processes to collect
and track information about them.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Many commenters expressed support for our proposal to
require that States establish a procedure under which a beneficiary can
file a grievance related to the State's or a provider's compliance with
the person-centered service plan requirements at Sec. Sec.
441.301(c)(1) through (3) and the HCBS settings requirements at
Sec. Sec. 441.301(c)(4) through (6). In general, commenters believed
that clear, transparent, and accessible grievance processes are
critical to ensuring that beneficiaries can address violations of their
rights, provide feedback on their experiences in HCBS, and more fully
participate in HCBS programs. One commenter noted that a Federal
requirement will help establish national best practices.
Some commenters connected a strong grievance process with improved
safety and service quality in HCBS programs. For instance, one
commenter noted that a grievance process can complement other quality
mechanisms (such as performance measures) because a grievance system
can address problems as they happen, thus preventing harm before it can
occur. Another commenter suggested that preventing or remediating poor
service delivery has the potential of improving the HCBS workforce by
promoting professionalism and improving the public perception of HCBS
providers, which could aid providers' worker recruitment and retention
efforts; this commenter noted that a strong workforce would promote
quality in HCBS.
Other commenters noted that a grievance system would allow
beneficiaries to state their rights and provide a fair and unbiased
review of beneficiaries' concerns. Several commenters were specifically
supportive of the proposal's potential to collect and track
standardized information about service system issues, including
obstacles to informed choice and person-centered planning.
A few commenters also described frustrations with current State or
provider grievance processes that they have found difficult to access,
unresponsive, ineffective, or opaque. One commenter described our
proposal as ``overdue,'' but also expressed concerns about whether
providers will comply with requirements moving forward. In this vein, a
few commenters suggested that CMS involvement and oversight may be
critical to ensuring that existing or newly created grievance processes
are effective. One commenter expressed the hope that beneficiaries
would be able to contact CMS if they believe the State is not complying
with grievance process obligations.
Response: We thank commenters for their support. We believe the
personal experiences with grievance systems that commenters shared
underscore the need for national standards. Additionally, while States
will have a great deal of responsibility for developing and monitoring
their own systems, having Federal requirements for grievance systems
will facilitate our ability to engage in oversight. We note that
members of the public are able to share concerns with us about their
State's Medicaid activities, which would include the grievance system,
once implemented.\57\ We also note that in addition to the grievance
process finalized under this rule, individuals who believe they have
been discriminated against in HCBS programs, including the right to be
served in the most integrated setting, may file a civil rights
complaint with the HHS Office for Civil Rights at https://www.hhs.gov/civil-rights/filing-a-complaint/index.html.
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\57\ Specific questions or concerns regarding the application or
implementation of the regulations finalized in section II.B. of this
rule may be directed to [email protected].
---------------------------------------------------------------------------

Comment: Several commenters expressed opposition to the proposal,
suggesting that it was too prescriptive and would result in unnecessary
information technology (IT) systems changes in States that already have
grievance systems in place. Several commenters also noted concerns that
the proposal would place administrative burdens on providers.
Additionally, several commenters noted that this requirement could be
administratively burdensome for States with a small percentage of their
population enrolled in FFS. One commenter suggested that we provide an
exceptions process in these circumstances.
Response: We address specific concerns from commenters--including
concerns about potential duplication, burden, and provider
involvement--in more detail in subsequent responses. As described
below, we are seeking to balance State flexibility with the need for
accountability and consistency among State systems. We also do not
believe that this proposal should place excessive burdens on providers,
as we are requiring that States, and not providers, bear the primary
responsibility of managing the grievance system. Finally, as part of
our goal of establishing national standards, we do not intend to exempt
States from these requirements based on the size of their FFS
populations.
Comment: One commenter requested clarification on whether the State
or CMS is ``in charge'' of the grievance process.
Response: We have proposed and, as discussed further below, we are
finalizing Federal requirements that States operate and maintain a
grievance system. The State is responsible for this system. However, we
will monitor the States' compliance with these requirements.
Comment: A few commenters raised concerns or expressed confusion
about how the proposed grievance system requirement will affect dually
eligible beneficiaries who are enrolled in managed care plans that
already have grievance processes. One commenter raised concerns about
the possibility of multiple investigations being conducted parallel to
one another. Other commenters inquired if Medicare Advantage care
navigators could be required to help beneficiaries file grievances, or
if the proposed grievance system requirements can be made part of dual
eligible special needs plan (D-

[[Page 40575]]

SNP) contracts. One commenter noted that it is critical for dually
eligible beneficiaries to have one place to file grievances about both
Medicare and Medicaid services. Another commenter requested
clarification on how the grievance systems should work for dually
eligible beneficiaries who have, as described by the commenter,
``multiple, perhaps conflicting plans of care.''
Response: We plan to provide States with technical assistance to
help address issues specific to dually eligible beneficiaries. We note
that we proposed that the grievance system requirements at Sec.
441.301(c)(7), and as finalized in this rule, apply only to
beneficiaries receiving services under section 1915(c), (i), (j), and
(k) authorities through FFS delivery systems, and to issues arising
with these services. The new grievance system requirement would not
affect, for instance, dually eligible beneficiaries who receive
services under section 1915(c), (i), (j), or (k) authorities through
fully integrated dual eligible special needs plans (FIDE SNP), highly
integrated dual eligible special needs plans (HIDE SNP), or D-SNPs
otherwise affiliated with MLTSS plans, as those beneficiaries receive
their HCBS through managed care and not through FFS. We also note that
some dually eligible beneficiaries may be enrolled in managed care
plans known as applicable integrated plans (AIP), which are subject to
the integrated grievance requirements at Sec. 422.630. AIPs must
resolve and notify enrollees within required timeframes for integrated
grievances filed for Medicare and Medicaid services. We will provide
technical assistance as needed regarding the application of the
requirements finalized at Sec. 441.301(c)(7) to beneficiaries in
different categories of dual eligibility.
Comment: One commenter recommended continuity across grievance
systems in FFS and managed care delivery systems to ensure consistent
and equitable processes for addressing enrollee concerns.
Response: We agree that such continuity is important. In drafting
the proposed requirements at Sec. 441.301(c)(7) for FFS grievance
systems, which we are finalizing as described in this section II.B.2 of
the final rule, we attempted to mirror the requirements for managed
care grievance processes in part 438, subpart F, as much as possible in
order to promote consistency between the two systems.
Comment: A few commenters requested that we allow States to arrange
for the operations of the grievance procedures to be performed by a
vendor, local agencies, or other contracted entity. Conversely, a few
other commenters raised concerns about the possibility of the grievance
process being administered by providers. Some of these commenters
expressed concerns that the requirement might be burdensome for local
and regional entities to administer, and one commenter raised concerns
that administration of the grievance process by local agencies might
cause problems in terms of oversight and conflict of interest.
A few commenters also noted that, unlike in managed care where care
is managed under one plan, some FFS delivery systems involve multiple
State agencies or agency divisions operating different programs. The
commenters requested more clarification about which agency or
department is responsible for oversight of the system and coordination
in these circumstances.
Response: The requirements proposed, and being finalized, in Sec.
441.301(c)(7) are applied to the State, by which we refer (as we do in
many of our regulations) to the single State agency as described in
Sec. 431.10(b). However, we believe that some States may find it more
efficient or effective to have the operations of the grievance system
performed by other government agencies or contractors, depending on how
a State's systems are organized. Allowing such contracting may also
help preserve existing State grievance processes; we address additional
comments about preservation of existing grievance systems later in this
section II.B.2. of the final rule. However, the single State agency
must retain ultimate responsibility for ensuring compliance with the
requirements set forth in Sec. 441.301(c)(7). We expect that States
are familiar with their local resources (including the capacity of
local agencies) and would only have the operations of the grievance
system performed by an entity that had the necessary infrastructure and
resources to operate a system that would comply with the requirements
in Sec. 441.301(c)(7). To ensure that the responsibility of the single
State agency is clear, we are finalizing Sec. 441.301(c)(7)(i) with a
modification to specify that the State may contract with contractors or
other government entities to perform activities described in Sec.
441.301(c)(7) provided however that the State retains responsibility
for ensuring performance of and compliance with these provisions.
We also note that we intend that the proposed requirements at Sec.
441.301(c)(7)(iii)(C)(3), which we are finalizing as discussed in
detail later in this section II.B.2. of the final rule, promote an
unbiased review of grievances because they prohibit someone who has
previously made decisions related to the grievance from reviewing the
grievance. While we do not intend to specify any additional
restrictions on the entities operating the grievance system in this
final rule, we believe that it would be difficult to envision scenarios
in which it would be appropriate for the State to contract with a
provider (or local agencies that act as providers) to operate the
grievance system. For example, an employee of a provider who signed off
on the provider's actions that gave rise to the grievance would be
someone who was involved with making a decision about the grievance and
thus neither that employee (nor their subordinates) would be
appropriate decisionmakers in the grievance process. If a State
believed it necessary to arrange for the operations of the grievance
system to be performed by a local agency that also provided services,
firewalls would have to be put in place to ensure that grievances were
reviewed by a neutral decisionmaker within that agency.
Comment: Several commenters supported the definition of grievance
we proposed at Sec. 441.301(c)(7)(ii). Overall, these commenters
supported the focus on compliance with the person-centered planning
process and the HCBS settings rule. One of these commenters observed
that issues with these requirements are often at the core of challenges
experienced by beneficiaries. One commenter, however, questioned the
inclusion of concerns about the HCBS settings requirements, noting that
if a setting violates the HCBS settings requirements, the individual
has the choice of moving to a different setting.
Response: We appreciate commenters' support for the definition of
grievances. We specifically included noncompliance with the HCBS
settings requirements as one of the bases for grievances so that
beneficiaries do not have the burden of addressing violations of their
rights by having to change providers, which could result in some
circumstances in having to move out of their home. We do not believe
that beneficiaries should have to choose between their rights or their
homes. As a practical matter, switching residences can be disruptive,
emotionally and physically demanding, costly, and time-intensive, not
to mention particularly difficult in areas that lack plentiful
affordable and accessible housing options. We also believe that
requiring States to address these issues related to

[[Page 40576]]

compliance with HCBS settings requirements in the context of a
grievance system may encourage States and providers to prevent similar
issues from occurring with other beneficiaries.
Comment: One commenter stated that the definition of grievance was
too broad and requested that CMS narrow the scope of allowable
grievances. The commenter stated that although the proposed
requirements limit the grievance system to person-centered planning,
service plan requirements, and HCBS settings requirements, they would
still allow a beneficiary to file a grievance on nearly every aspect of
their HCBS experience, which would in turn create the potential for an
unreasonably high volume of grievances to which States would be
required to respond.
A few commenters stated that the definition of grievance was
subjective, and asked for general clarification on what is meant by an
``expression of dissatisfaction.'' Conversely, a few commenters stated
the definition of grievance was not broad enough. One commenter stated
that the reference to Sec. Sec. 441.301(c)(1) through (3) would only
allow for the filing of grievances in relation to the person-centered
planning process but would not allow for grievances in relation to
beneficiaries' dissatisfaction with the delivery of the services in the
plan. The commenter provided examples, such as a care provider handling
an HCBS beneficiary roughly, failing to assist the beneficiary with
certain activities of daily living or perform other services in the
care plan, being slow to respond to the beneficiary's requests for
assistance in residential settings, improper administration of chemical
restraints, or general poor care that leads to injuries such as bed
sores. The commenter recommended that the regulatory language be
revised to include the right to file a grievance to protect beneficiary
health and welfare.
One commenter suggested that we specify that grievances may include
issues regarding timeliness, quality, and effectiveness of services, in
addition to the HCBS setting, person-centered planning, and service
plan requirements. The commenter noted that, in the commenter's State,
beneficiaries have had to wait for long periods of time for the
initiation of services after being approved for the services.
Finally, another commenter noted that they believed that the
managed care regulations' grievance definition includes an expression
of dissatisfaction about any matter other than an adverse benefit
determination and recommended adding clarifying language to the
definition of a grievance to ensure that beneficiaries do not
mistakenly file grievances about issues that are adverse benefit
decisions and that entitle them to a fair hearing.
Response: We disagree with commenters that the proposed definition
is overly broad. The definition of grievance proposed at Sec.
441.301(c)(7)(ii) was crafted to strike a balance between providing
beneficiaries with broad, but not unlimited, bases for filing a
grievance. We believe that the requirements in Sec. Sec. 441.301(c)(1)
through (6) provide a clear list of activities that the States and
providers must perform to ensure that HCBS beneficiaries receive
appropriate person-centered planning, receive the services described in
the person-centered service plan to support the individual in the
community, and have full access to the benefits of community living and
are able to receive services in the most integrated setting appropriate
to their needs.\58\ We note that some specific examples of when a
beneficiary may express dissatisfaction by filing a grievance are
discussed further in this section.
---------------------------------------------------------------------------

\58\ We note that compliance with CMS regulations and reporting
requirements does not imply that a State has complied with the
integration mandate of Title II of the ADA, as interpreted by the
Supreme Court in the Olmstead Decision.
---------------------------------------------------------------------------

We also disagree that the scope of the definition is too narrow. We
proposed that the definition of grievance include an expression of
dissatisfaction or complaint related to the State's or provider's
compliance with the person-centered service planning process, required
in Sec. Sec. 441.301(c)(1) through (3). We note that some issues
regarding the timeliness, quality, or effectiveness of services may
need to be addressed as part of the person-centered service planning
process itself. For instance, if a beneficiary believes the service is
not effective, the beneficiary may request revision to the person-
centered service plan, as required at Sec. 441.301(c)(3), to identify
either a more effective service or a more effective provider; non-
responsiveness on the part of the entity responsible for updating the
service plan could be a reason to file a grievance.
Additionally, Sec. 441.301(c)(4) requires that home and community-
based settings must meet certain requirements enumerated therein,
including (but not limited to): being integrated in and supporting full
access of individuals to community life; ensuring that an individual
has rights to privacy, dignity and respect, and freedom from coercion
and restraint; optimizing an individual's initiative, autonomy, and
independence in daily activities and the physical environment; and
facilitating an individual's choice in services and supports, as well
as who provides them. If, for instance, a beneficiary believes that a
worker has not treated the beneficiary with respect, or the worker is
chronically late, and the provider has failed to address the worker's
behavior or provide a different worker at the beneficiary's request, it
would be reasonable for a beneficiary to file a grievance, as the
provider is not ensuring that all of the qualities of a home and
community-based setting (as described by Sec. 441.301(c)(4)) are being
met. Accordingly, we believe that the activities set forth in
Sec. Sec. 441.301(c)(1) through (6) (both currently and as are being
amended in this final rule) generally describe the actions of both
providers and States that are necessary to uphold and promote high-
quality service delivery that promotes respect for beneficiaries'
rights.
While we believe the scope of grievances that may be considered
under the grievance system that we proposed, and are finalizing,
appropriately captures activities that promote delivery of quality HCBS
and respect for beneficiaries' rights, we do believe further clarity is
warranted. We believe it is more appropriate and precise to say
grievances may be filed regarding the State's or a provider's
performance of (rather than compliance with) the requirements described
in Sec. Sec. 441.301(c)(1) through (6). We note that the activities
described in Sec. 441.301(c)(1) through (6) must, as required at Sec.
441.301(c), be included in a State's waiver application; we want to
make it clear that grievances may be filed when a State or provider
fails to perform these activities (not solely if the State fails to
include these items in a waiver application). To clarify this point, we
are finalizing the scope of grievances that may be filed under the
grievance system we proposed to set forth at Sec. 441.301(c)(7) with
modification, by revising the language in Sec. 441.301(c)(7)(i) to
specify that beneficiaries may file grievances regarding a State's or
provider's performance of (rather than compliance with) the activities
described in Sec. Sec. 441.301(c)(1) through (6). We are finalizing a
conforming modification to the definition of grievance at Sec.
441.301(c)(7)(ii).
We observe that most of the examples provided by commenters, as
described above, included instances in which a beneficiary experienced
abuse or harm during the performance (or lack thereof) of services in
the person-centered service plan. These types of complaints

[[Page 40577]]

may be more appropriately addressed under the critical incident system
being finalized at Sec. 441.302(a)(6). As discussed in II.B.3. of this
rule, we believe the critical incident system proposed at Sec.
441.302(a)(6) is the appropriate mechanism for investigating harms to
beneficiaries' health and safety. As we discuss in II.B.3 of this rule,
we proposed additional performance measures and reporting requirements
for the critical incident system (beyond what is proposed for the
grievance system) to ensure more formal oversight of the investigations
and resolutions of threats to beneficiary health and safety. We do not
believe a grievance system is an appropriate mechanism for
investigating threats to the beneficiary's health and welfare.
Therefore, we decline to broaden the definition of grievances that may
be addressed under the grievance system we are finalizing at Sec.
441.301(c)(7) in such a way that would suggest that the grievance
system is intended for complaints regarding health and safety. We
believe doing so would create duplicative system requirements for the
grievance process and critical incident system and potentially cause
States to resolve threats to health and safety in the grievance system
that should have been investigated and addressed within the critical
incident system.
We also disagree with the commenter that suggested we align the
definition of grievance we proposed at Sec. 441.301(c)(7)(ii) with the
definition of grievance for managed care grievance processes at Sec.
438.400(b). We believe that, for the purposes of a FFS grievance system
intended to address specific concerns with HCBS, using the same or
similar definition of grievance for managed care grievance processes
would be overly broad and will not diminish confusion about whether an
issue is appropriate to be filed as a grievance, a critical incident,
or a fair hearing. We plan to provide technical assistance to States as
needed on this topic.
We refer readers to section II.B.2.b. of this final rule where we
also address more specific concerns related to ensuring matters are
filed with the correct system in our discussion of Sec.
441.301(c)(7)(iii).
Comment: One commenter suggested that we broaden the definition of
grievance to specify that beneficiaries can file grievances when their
rights are violated, and suggested that the following be included in
the definition of rights:
Right to work and fair pay;
Right to control one's own money;
Right of possessions and ownership;
Right to privacy, dignity, and respect;
Freedom of choice and decision-making;
Right to leisure activities;
Freedom to marry and have children;
Right to food, shelter, and clothing;
Freedom of movement;
Freedom of religion;
Freedom of speech and expression;
Free association and assembly;
Freedom from harm;
Access to health care;
Right to citizenship and right to vote;
Right to equal education;
Right to equal access; and
Due process.
Response: We believe that some of the consumer rights listed by the
commenter are addressed in or mirrored by components of the existing
HCBS settings rule requirements at Sec. 441.301(c)(4), such as:
ensuring that the individuals have access to the greater community,
including engagement in community life, opportunities for employment in
competitive integrated settings, and control over personal resources
(Sec. 441.301(c)(4)(i)); the right to privacy, dignity and respect,
and freedom from coercion and restraint (Sec. 441.301(c)(4)(ii));
allowing for individuals to choose their activities and set their own
schedules (Sec. 441.301(c)(4)(iv) and (vi)(C)); the ability to
determine with whom the individual will interact, as well as to have
visitors of the individual's choosing at any time (Sec.
441.301(c)(4)(iv) and (vi)(D)); and control over the individual's own
physical environment, living and sleeping space, and access to food
(Sec. 441.301(c)(4)(iv), (v)(B), and (vi)(C)).
We note that many of the other rights suggested by the commenter
are either addressed by other systems (such as access to health care
which, if related to an adverse benefit determination made by the State
Medicaid agency, may be subject to the fair hearings process or are out
of scope of the State Medicaid agency's authority) or by other
authorities (such as fair wages, equal access to education, or
violations of constitutional rights).
Comment: Several commenters requested that the grievance process
include issues such as authorization disputes and the provision of
services.
Response: We are not certain if the commenters are referring to
using the grievance system to allow beneficiaries or providers to
challenge denials of services. We are also uncertain if disputes over
``provision of services'' refers to the quantity or quality of
services. We note that the fair hearings process at 42 CFR part 431,
subpart E, sets out the parameters that allow beneficiaries to
challenge an adverse action by the State Medicaid agency. For the
purposes of a fair hearing, an ``action'' is defined at Sec. 431.201
in part, as the termination, suspension of, or reduction in covered
benefits or services, or a termination, suspension of, or reduction in
Medicaid eligibility. A State must provide an individual the
opportunity for a fair hearing in the circumstances described in Sec.
431.220(a), which include when the Medicaid agency has denied
eligibility, services, or benefits, and when the claim for medical
assistance has not been acted on with reasonable promptness. In most
circumstances, a refusal of a State Medicaid agency to authorize a
particular service for a beneficiary, or to authorize the quantity of
services the beneficiary believes is necessary, would be addressed in
the fair hearings process. In contrast, the grievance process we have
proposed is intended to allow beneficiaries to raise concerns about
specific aspects of their services that have been authorized.
Comment: Several commenters who supported this proposal did so
because they agreed that, currently, concerns regarding person-centered
planning and HCBS settings requirements are not subject to the existing
fair hearings process at 42 CFR part 431 subpart E. One commenter,
however, suggested that, rather than create a grievance process to hear
complaints about person-centered service plans and the HCBS settings
requirements, we should require that concerns about person-centered
service plans or the HCBS settings requirements be added to fair
hearings processes. The commenter stated the belief that fair hearings
permit an unbiased third-party Administrative Law Judge (ALJ) to
consider the facts and render an objective decision. By contrast, the
commenter believed that, in their State, the current State grievance
process did not permit unbiased or effective review.
Response: We agree that it is important to provide beneficiaries
with the opportunity to raise concerns about the person-centered
service plans and planning process and the HCBS settings requirements.
We do not, however, believe that these are necessarily appropriate
matters for the fair hearings process. The authority for the fair
hearings process comes from section 1902(a)(3) of the Act, which
requires that States provide beneficiaries and

[[Page 40578]]

applicants an opportunity for a fair hearing before the State agency to
any individual whose claim for medical assistance is denied or is not
acted upon with reasonable promptness.
While beneficiaries can request a fair hearing to address concerns
about service denials (including partial denials) and other concerns
described under Sec. 431.220(a), we believe that an individual's
concerns about person-centered service plans, the planning process, and
HCBS settings are outside the scope of issues for which the statute
requires that a fair hearing be provided, and therefore we cannot
require States to provide an opportunity for a fair hearing to address
such issues. We note, however, that States have discretion to decide
whether integrating their grievance processes with other State systems,
including their fair hearings systems, is feasible and appropriate, and
that the requirements for both systems may still be met.
Separate from the fair hearing requirement at section 1902(a)(3) of
the Act, section 2402(a)(3)(B)(ii) of the Affordable Care Act requires
the development and monitoring of an HCBS complaint system. To address
this statutory requirement, we proposed that the grievance system
address matters that do not arise from a denial of Medicaid eligibility
or denial of services, or failure to act upon the individual's claim
for medical assistance with reasonable promptness, which are addressed
separately under the required fair hearing process. We expect the
grievance system will help beneficiaries resolve concerns about the
quality of the services they are receiving. We also note that the
purpose of our proposals in this section II.B.2. is to require that
States create, implement, and maintain grievance systems that, while
not necessarily as formal as a fair hearings process in all cases, will
nevertheless result in unbiased and effective reviews of grievances.
We note that, while States may choose to use ALJs as hearing
officers to conduct a Medicaid fair hearing, hearing officers are not
required to be ALJs. Medicaid regulations at Sec. 431.240(a)(3)
require that all fair hearings be conducted by one or more impartial
officials or other individuals who were not directly involved in the
initial determination in question. We also note that the proposed
requirements at Sec. 441.301(c)(7)(iii)(C)(3), which we are finalizing
as discussed in detail later in this section II.B.2. of the final rule,
are intended to promote an unbiased review of grievances because they
prohibit someone who has previously made decisions related to the
grievance from reviewing the grievance.
Comment: A few commenters expressed concerns that, in States that
already have grievance systems, the proposed requirements could result
in duplication of processes and confusion for beneficiaries about where
and how to report grievances. Several of these commenters requested we
allow States to use existing grievance systems to meet the Federal
requirement. One commenter also suggested that if the State's existing
system meets our proposed criteria, the State should be considered in
compliance with the requirements. Another commenter suggested that
providers or States with existing grievance systems should not have to
modify their systems.
Commenters were especially concerned about the impact on States
that already had multiple grievance systems for different programs,
administered by different operating agencies. These commenters
requested that we allow States flexibility to design grievance systems
and processes to fit their unique program and systems structures and
implement multiple grievance systems or processes tailored to their
programs. One commenter raised specific concerns about having to
consolidate current grievance systems into a single electronic system.
One commenter, however, requested that we require States to have a
single grievance system; the commenter stated that having multiple
grievance processes can be confusing and burdensome for beneficiaries.
Response: We acknowledge that many States already have grievance
processes in place for HCBS, and it is not our intent for States to
abandon these systems or create additional systems. We agree with the
suggestion that, if a State already has a grievance process in place
that meets the requirements that we are finalizing in this rule, that
State will be considered in compliance with these requirements.
However, we disagree that States with existing grievance systems should
be allowed to maintain the system without modification where their
systems do not meet Federal requirements. While we encourage States to
economize by maintaining current systems as much as possible, we do
expect that States will make any needed adjustments to bring their
systems into compliance with the requirements we are finalizing in this
rule. We believe that having Federal requirements for grievance systems
will promote consistency and accountability across the country.
Additionally, we note that the definition of grievance system that
we proposed referred to ``processes,'' suggesting that a grievance
system may be made up of one or more processes (88 FR 28080). If a
State wishes to maintain multiple grievance processes, and each of
these processes comply with the Federal requirements we are finalizing
in this rule, the State will be considered in compliance.
We did not propose a requirement for a State to maintain a single
electronic system for their grievance system and, as discussed above,
believe it would be acceptable to maintain multiple grievance
processes. However, we also emphasize that part of the definition of
grievance system we proposed, and are finalizing, in Sec.
441.307(c)(7)(ii) is that the system allows States to collect and track
information about grievances. If States choose to maintain separate
systems, including separate electronic systems, they must develop ways
to ensure that they are able to track trends across systems in
meaningful ways. We refer readers to section II.B.2.f of this final
rule, where we discuss our proposals related to recordkeeping
requirements for the required grievance system.
Although not required, we encourage States to implement a single
integrated system across their HCBS programs, as we echo one
commenter's concerns that a single integrated system would likely
reduce confusion for beneficiaries and facilitate their ability to
access the system. We also believe that a single system would best
permit States to track trends across their HCBS programs and use the
data and information generated by the grievance system to address
systemic issues in their HCBS programs. Additionally, a single
integrated system may be more cost-effective for States to operate once
implemented.
Comment: One commenter requested clarification on whether there is
a difference between a complaint and a grievance, as well as what would
elevate a complaint to the level of a grievance.
One commenter asked for clarification on the role of conflict-free
case managers in the grievance system.
Response: While section 2402(a)(3)(B)(ii) requires that we
promulgate regulations to ensure that all States develop service
systems that include development and monitoring of a complaint system,
the Affordable Care Act does not define the terms complaint or
complaint system. In developing our proposal to implement this
requirement from the Affordable Care Act, we have chosen to use the
term grievance, instead of complaint, and proposed to define grievance
and grievance system at Sec. 441.301(c)(7)(ii). If a State has
implemented a system it calls a

[[Page 40579]]

complaint system that meets the requirements we proposed, and are
finalizing, at Sec. 441.301(c)(7), it is possible that this system
could satisfy the requirement for a State to have a grievance system.
We do not understand the specific nature of the comment regarding
conflict-free case managers. We note, in general, that we will provide
technical assistance to States to assist in adapting their HCBS
programs and any associated existing grievance processes to comply with
the requirements finalized at Sec. 441.301(c)(7).
Comment: Several commenters observed that some States currently
require providers to have policies and procedures in place related to
service-delivery complaints. One commenter requested that we provide
clarification, either in the final rule or subregulatory guidance,
regarding the inclusion of the proposed grievance system requirements
in existing provider-level complaint and grievance processes.
Commenters stated that additional guidance is needed to help all
interested parties understand when beneficiaries should file a
grievance with their provider and when they should file with the State.
One commenter recommended that beneficiaries be required to exhaust
these processes at the provider level before a complaint is submitted
to the State agency for investigation or intervention.
Response: Our goal for proposing uniform requirements for grievance
systems applicable to all States providing HCBS under section 1915(c)
waiver program authority, and other HCBS authorities as discussed in
section II.B.2.h of this final rule, is to ensure consistent processes
are available for Medicaid beneficiaries receiving such services. We
decline to require in this final rule that beneficiaries exhaust their
provider-level complaint process prior to accessing the State grievance
system. We believe that such a Federal requirement would be
inapplicable or confusing in States that do not have provider-level
complaint process requirements, do not require all providers to have
them, or do not require that providers have uniform complaint
processes. We have attempted to provide States with as much flexibility
as possible in the design of their grievance system. Additionally, we
have concerns that such an exhaustion requirement would be a barrier,
or would cause unnecessary delay, for beneficiaries where the
relationship between the beneficiary and the provider is contentious,
or where the provider does not have an effective or efficient complaint
process.
Comment: Commenters requested that grievance processes be developed
with input from providers, beneficiaries, families, and advocacy groups
to create a grievance system that is accessible, practical, and sets
realistic expectations for its users.
Response: We have attempted to provide States with as much
flexibility as possible in the design of their grievance system and
decline to add a specific requirement on this point in this final rule.
We encourage States to include input from interested parties when
developing their grievance system policies and procedures to comply
with the requirements we are finalizing in this rule.
Comment: Several commenters suggested that the grievance system be
integrated with the critical incident system. One commenter stated that
States should be required to enter the grievance information and data
into a State database with standardized fields that is either part of,
or integrated with an incident management system, so that grievance
data can be compared to data on relevant individuals, providers, and
incidents (both reported and unreported). Similarly, a few commenters
suggested that the grievance system should be integrated with the fair
hearings system in States.
Response: While we agree that States may find it useful to have a
single, integrated system for grievances, critical incidents, and fair
hearings, we are not requiring in this final rule that States do so. We
believe it is important for States to have flexibility in how they
design their grievance systems so that they may expand on
infrastructures and processes they already have in place and tailor the
grievance systems to meet their programmatic and operational needs,
even as they are held to standardized Federal grievance system
requirements.
After consideration of the comments received, we are finalizing the
language at Sec. 441.301(c)(7)(i) and (ii) with modifications. For the
reasons discussed above, we are modifying Sec. 441.301(c)(7)(i) to
include language specifying the State may have activities described in
paragraph (c)(7) of this section performed by contractors or other
government entities, provided, however, that the State retains
responsibility for ensuring performance of and compliance with these
provisions. Additionally, we are finalizing Sec. 441.301(c)(7)(i) and
the definition of grievance in Sec. 441.301(c)(7)(ii) with the
modification that States must establish a procedure under which a
beneficiary can file a grievance related to the State's or a provider's
performance of (rather than compliance with) the person-centered
planning and service plan requirements at Sec. Sec. 441.301(c)(1)
through (3) and the HCBS settings requirements at Sec. Sec.
441.301(c)(4) through (6). We are otherwise finalizing the definition
of grievance system at Sec. 441.301(c)(7)(ii) as proposed.
b. Grievance Process Requirements (Sec. 441.301(c)(7)(iii))
At Sec. 441.301(c)(7)(iii)(A) through (C), we proposed new general
requirements for States' grievance procedures for section 1915(c) HCBS
waiver programs and other HCBS authorities as discussed in section
II.B.2.h of this final rule. Specifically, at Sec.
441.301(c)(7)(iii)(A), we proposed to require that a beneficiary or
authorized representative be permitted to file a grievance under the
section 1915(c) HCBS waiver program. As discussed below in section
II.B.2.h. of this final rule, we also proposed to apply these same
requirements to section 1915(i), (j) and (k) HCBS programs. Under the
proposal, another individual or entity may file a grievance on a
beneficiary's behalf, so long as the beneficiary or authorized
representative provides written consent. We noted that our proposal
would not permit a provider to file a grievance that would violate
conflict of interest guidelines, which States are required to have in
place under Sec. 441.540(a)(5). At Sec. 441.301(c)(7)(iii)(A), we
also proposed to specify that all references to beneficiary in the
regulatory text of this section includes the beneficiary's
representative, if applicable.
At Sec. 441.301(c)(7)(iii)(B)(1) through (7), we proposed to
require States to:
Have written policies and procedures for their grievance
processes that at a minimum meet the requirements of this proposed
section and serve as the basis for the State's grievance process;
Provide beneficiaries with reasonable assistance in
completing the forms and procedural steps related to grievances and to
ensure that the grievance system is consistent with the availability
and accessibility requirements at Sec. 435.905(b);
Ensure that punitive action is not threatened or taken
against an individual filing a grievance;
Accept grievances, requests for expedited resolution of
grievances, and requests for extensions of timeframes from
beneficiaries;
Provide beneficiaries with notices and other information
related to the grievance system, including information on their rights
under the grievance

[[Page 40580]]

system and on how to file grievance, and ensure that such information
is accessible for individuals with disabilities and individuals who are
limited English proficient in accordance with Sec. 435.905(b);
Review grievance resolutions with which beneficiaries are
dissatisfied; and
Provide information on the grievance system to providers
and subcontractors approved to deliver services under section 1915(c)
of the Act.
At Sec. 441.301(c)(7)(iii)(C)(1) through (6),\59\ we proposed to
require that the processes for handling grievances must:
---------------------------------------------------------------------------

\59\ At 88 FR 27976, we incorrectly stated that we were
proposing these requirements at Sec. 441.301(c)(7)(iii)(C)(1)
through (5), rather than (1) through (6). This typo has been
corrected.
---------------------------------------------------------------------------

Allow beneficiaries to file a grievance either orally or
in writing;
Acknowledge receipt of each grievance;
Ensure that decisions on grievances are not made by anyone
previously involved in review or decision-making related to the problem
or issue for which the beneficiary has filed a grievance or a
subordinate of such an individual, are made by individuals with
appropriate expertise, and are made by individuals who consider all of
the information submitted by the beneficiary related to the grievance;
Provide beneficiaries with a reasonable opportunity, face-
to-face (including through the use of audio or video technology) and in
writing, to present evidence and testimony and make legal and factual
arguments related to their grievance;
Provide beneficiaries, free of charge and in advance of
resolution timeframes, with their own case files and any new or
additional evidence used or generated by the State related to the
grievance; and
Provide beneficiaries, free of charge, with language
services, including written translation and interpreter services in
accordance with Sec. 435.905(b), to support their participation in
grievance processes and their use of the grievance system.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the proposal at Sec.
441.301(c)(7)(iii)(A) to require that a beneficiary or the
beneficiary's authorized representative be permitted to file a
grievance, including allowing another individual or entity to file a
grievance on a beneficiary's behalf, with written consent from the
beneficiary or the beneficiary's authorized representative.
However, several commenters raised concerns about the proposed
requirement that beneficiaries or their authorized representatives must
provide written consent to another individual or entity to file a
grievance on the beneficiary's behalf. A few commenters noted that some
beneficiaries may not be able to give written consent, or that waiting
for written consent to be obtained could create unnecessary delays in
grievance filings and investigations. One commenter suggested that we
either remove the word ``written'' or specify that consent may be
verbal or written. Another commenter, using their State as an example,
suggested that a grievance could be filed with verbal consent from the
beneficiary or authorized representative, with written consent obtained
later. One commenter suggested an agency could obtain a beneficiary or
authorized representative's consent over the phone to allow another
individual or entity to file a grievance on the beneficiary's behalf.
Response: As discussed further herein, we are finalizing the
requirement that consent must be written as proposed. We modelled the
proposed requirement and language at Sec. 441.301(c)(7)(iii)(A) on
requirements for the managed care grievance process at Sec.
438.402(c)(1)(ii), which provides that, if State law permits and with
the written consent of the enrollee, a provider or an authorized
representative may request an appeal or file a grievance, or request a
State fair hearing, on behalf of a managed care enrollee. Our general
intent is to align the FFS grievance system and managed care grievance
process to the greatest extent possible. We also believe it is
important to ensure that there is some documentation demonstrating that
beneficiaries or their authorized representatives have provided consent
for a grievance to be filed on the beneficiary's behalf, especially as
the investigation of a grievance may involve reviewing records
pertaining to the beneficiary's care.
We note that written consent may be broadly interpreted to include
electronic signatures, voice signatures, or other methods that provide
reasonable accommodations to individuals who might face challenges
providing traditional written signatures. States will have flexibility
in determining how written consent is obtained and verified, so long as
the system States develop ensures that the process presents as few
administrative barriers as possible for a beneficiary or authorized
representative to provide the necessary consent.
Comment: Several commenters recommended that we clarify that
beneficiaries be able to choose who represents them throughout the
grievance process. One commenter recommended that the grievance process
should provide the beneficiary with the opportunity to indicate who
they want to assist them in the process, and this should serve as a
type of release.
Response: It was our intent that beneficiaries and their authorized
representatives be able to involve other individuals or entities of
their choosing to assist them throughout the grievance process, in
addition to filing a grievance. We believe that it is logical to assume
that if a beneficiary or their authorized representative needs
assistance filing a grievance, they may also need assistance with other
parts of the process (such as requesting and reviewing their case file,
or presenting information to support their concerns at a hearing). We
also note that while States are required at Sec.
441.301(c)(7)(iii)(B)(2) to provide beneficiaries with reasonable
assistance in completing forms and taking other procedural steps
related to a grievance, beneficiaries may prefer to get this assistance
from an individual or entity of their own choosing, particularly in
situations where the beneficiary has filed a grievance against the
State. To clarify this intent, we are finalizing Sec.
441.301(c)(7)(iii)(A)(1) with a modification to specify that another
individual or entity may file a grievance on behalf of the beneficiary,
or provide the beneficiary with assistance or representation throughout
the grievance process, with the written consent of the beneficiary or
authorized representative. We note that we expect that, as part of
ensuring the process is person-centered, beneficiaries or their
authorized representatives will be able to withdraw consent for this
third-party representation at any time, and that beneficiaries can
generally terminate the grievance process at any time.
We are finalizing Sec. 441.301(c)(7)(iii)(B)(1) with a
modification to correct an erroneous reference to subchapter in the
regulatory language and replace subchapter with paragraph (c)(7).
Comment: Several commenters requested clarifications or made
suggestions regarding our proposal at Sec. 441.301(c)(7)(iii)(B)(2) to
require that States provide beneficiaries reasonable assistance in
completing forms and taking other procedural steps related to a
grievance. One commenter

[[Page 40581]]

recommended that we set minimum criteria for reasonable assistance in
filing a grievance, including but not limited to the State making
someone available to meet with the beneficiary in person. Another
commenter observed that many individuals who receive section 1915(c)
waiver services, for example, have significant intellectual and
developmental disabilities and as a result may need substantially more
assistance than other beneficiaries to complete forms and procedural
steps. The commenter requested clarification as to whether, in these
circumstances, the reasonable threshold is determined by the needs of
the beneficiary or the burden is on the State to determine how to
provide reasonable assistance.
Response: We disagree that the term reasonable assistance that we
proposed at Sec. 441.301(c)(7)(iii)(B)(2) is unclear. We intentionally
proposed language that would require States to determine, on a case-by-
case basis, what constitutes reasonable assistance for beneficiaries
utilizing the grievance system. Reasonable assistance may vary among
beneficiaries and thus we intended to provide States with flexibility
in determining what assistance is reasonable to provide. We decline to
include additional formal definitions or criteria for the term
reasonable assistance in this final rule lest we inadvertently set
rigid standards that would, counterproductively, inhibit States from
modifying processes for beneficiaries. For instance, if we were to
require that States make someone available to meet with the beneficiary
in person, we would not want this misinterpreted as a requirement that
grievances may only be filed in person, which could pose significant
barriers to individuals who lack transportation or live far from the
physical locations in which grievances could be filed, even though we
recognize that some beneficiaries may prefer to file a grievance in
person.
We agree with the commenter that some beneficiaries may need more
assistance, or different types of assistance, than other beneficiaries.
We decline, however, to weigh in on what would be the threshold for
determining reasonableness, as this appears to be a request for an
opinion on hypothetical situations. We note that the concept of
reasonableness is central to many areas of law and bodies of guidance
regarding reasonableness are well-developed. We also note that the
grievance system in general, by virtue of being administered by State
Medicaid programs, will be subject to Title II of the Americans with
Disabilities Act (ADA) of 1990, and section 504 of the Rehabilitation
Act of 1973 (section 504), which may provide some specific guidance for
what may be considered a reasonable modification in a government
service.
Comment: A number of commenters advocated for the creation of a
requirement for an HCBS Ombudsman program, similar to those required by
the Older Americans Act. Many commenters noted an independent ombuds
program could provide more effective assistance to individuals in
filing grievances, helping them navigate the process, and representing
them during the proceedings, rather than relying on assistance provided
by the State.
Response: We thank commenters for their interest in this issue. As
commenters noted, Title VII of the Older American Act authorizes and
provides Federal funding for the national Long-Term Care Ombudsman
Program, which is administered at the State level. These programs
provide advocacy on behalf of residents of long-term care facilities.
While there is no similar Federal statutory requirement for States to
create an HCBS ombuds program, States may create such a program or
similar programs at their own discretion to assist during grievance
processes or to provide other advocacy supports.
Comment: Several commenters expressed concerns that it will be
challenging for beneficiaries to understand when and how to file
grievances. Several commenters noted the possibility that beneficiaries
will be confused by the grievance and fair hearings processes and will
file grievances or appeals with the wrong entities. One commenter
suggested that beneficiaries enrolled in managed care for some medical
services but receive FFS HCBS may be confused when presented with
multiple grievance processes.
A number of commenters recommended that the grievance system should
be set up with a ``no wrong door'' process so that, for example, a
managed care plan receiving a grievance related to a FFS service would
be responsible for forwarding the grievance to the appropriate entity.
Similarly, another commenter suggested that if an enrollee mistakenly
files a grievance about an adverse benefit determination, we require
that this submission be treated as a fair hearing request unless the
beneficiary objects. One commenter cautioned that, based on the
commenter's experience, creating a ``no wrong door'' approach to
grievances can be complicated and resource intensive. Another commenter
requested that, if setting up a ``no wrong door'' approach, we ensure
that the burden does not fall entirely on local entities, such as local
Area Agencies on Aging.
One commenter requested clarification on whether appropriate
referral of a grievance to the critical incident management process
will count as a successful resolution of the grievance.
Response: We take very seriously the concerns raised by commenters
regarding potential confusion among beneficiaries about which matters
should be filed with which system. Our understanding of the commenters'
suggestions is that such system should be coordinated for accepting
grievances, fair hearing requests, and reports of critical incidents,
among other engagements with beneficiaries, and ensure that each
grievance, fair hearing request, or report of a critical incident is
appropriately and seamlessly processed once it has been received by
that system. However, we are not adding a formal ``no wrong door''
requirement in this final rule. Rather, we are finalizing the grievance
system requirements we proposed with modifications as described below.
We understand that, despite efforts to provide beneficiaries and
interested parties with information and to make systems as user-
friendly as possible, there will be instances in which beneficiaries
attempt to access the ``wrong'' system. Additionally, there may be some
matters where it is not immediately clear to the beneficiary if the
problem, for instance, is a matter for the grievance system, critical
incident investigation, or the fair hearings process. We also note that
the beneficiary (or someone on their behalf) may report a critical
incident (as defined at Sec. 441.302(a)(6) of this final rule), or
file an appeal under the fair hearings process that may not, as a
whole, meet the definition of a grievance, but may contain elements
that are more appropriate for consideration under the grievance system,
while the remaining elements should still proceed as a critical
incident investigation or in the fair hearing process. (We note that
additional concerns about perceived overlap between grievances and
critical incidents are addressed more fully later in this section.)
Further, we agree that something akin to a ``no wrong door'' approach
may be a good solution, to ensure that matters that are brought to the
grievance system are not rejected because they are really a matter for
a fair hearing or critical incident investigation. We encourage States
to create a ``no wrong door'' policy and system or integrate grievance
filings with existing ``no wrong door'' systems,

[[Page 40582]]

if feasible. We believe that such a system would help ensure that
matters are filed correctly, which could reduce administrative burden
on the grievance system.
However, we did not propose, nor are we requiring, that States
create a ``no wrong door'' system. We note that some States may already
have ``no wrong door'' systems that could be used to support
beneficiary filings in the grievance system. While we encourage States
that do not have such ``no wrong door'' systems to consider developing
them, we recognize that there is variety among State systems and we do
not wish to create a potentially rigid requirement that misaligns with
States' existing infrastructures. We also want to ensure that the
grievance process requirements finalized in this section focus on
standardizing the grievance process itself, and are concerned that an
attempt to further standardize ancillary processes would distract from
this intention. We will take commenters' suggestions regarding ``no
wrong door'' systems under consideration for potential future policy
development or rulemaking.
While we are not requiring States develop a ``no wrong door''
system, we do take seriously commenters' concerns that beneficiaries
may attempt to file grievances with other systems operated by the
State. We proposed a requirement at Sec. 441.301(c)(7)(iii)(B)(2) that
States must provide reasonable assistance to beneficiaries both with
filing grievances and completing other procedural steps; we believe it
is logical to expect that if a beneficiary needs reasonable assistance
from the State for the procedural steps, then they may need assistance
with determining where to file their grievance in the first place. To
better address the concern about potential beneficiary confusion about
the grievance, incident management, fair hearings, and managed care
grievance and appeal systems, we are modifying the language in Sec.
441.301(c)(7)(iii)(B)(2) to indicate more clearly that States must
provide reasonable assistance to ensure that grievances are
appropriately filed with the grievance system (in other words, that
States help beneficiaries identify whether their concern should be
filed in the grievance system and, to the greatest extent possible,
redirect grievances filed with other State systems to the grievance
system).
Additionally, we note that the disposition of matters that are not
grievances is outside the scope of the grievance process requirements
at Sec. 441.301(c)(7) finalized in this section regarding the
grievance system; however, we strongly encourage States to ensure that
grievances filed with the grievance system that contain matters that
are appropriate for other systems, including the critical incident
system (as finalized in section II.B.3. of this rule), the fair
hearings system (as described in part 431, subpart E), or the managed
care grievance or appeal system (as described in part 438, subpart F)
are also considered filings with the appropriate system or systems in
accordance with the requirements and timeframes for those systems.
We also remind States that States have the option under current
regulations to assist beneficiaries with filing fair hearing requests
(as described in part 431, subpart E). Section 431.221(c) provides that
State Medicaid agencies may assist applicants or beneficiaries in
submitting fair hearings requests and section 2901.3 of the State
Medicaid Manual instructs States to make every effort to assist
applicants and beneficiaries to exercise their appeal rights.
Additionally, section 2902.1 of the State Medicaid Manual states that
oral inquiries about the opportunity to appeal should be treated as an
appeal for purposes of establishing the earliest possible date for an
appeal. Thus, if a beneficiary submits a matter to the grievance system
which the State recognizes as a matter more appropriate for a fair
hearing, the State should treat this matter in accordance with the
requirements of Sec. 431.221(c) and the State Medicaid Manual by
assisting the beneficiary with filing a fair hearing request and using
the grievance submission date to establish the earliest possible
submission date for the fair hearing requests. States also have the
option to establish procedures that treat the request made to the
grievance system as a submission of a fair hearing request described at
Sec. 431.221(a) when the matter raised in the grievance filing is more
appropriate for a fair hearing.
Finally, we clarify that matters that are mistakenly filed with the
grievance system but are appropriately referred to another system may
be considered ``resolved grievances'' unless the State determines that
the matter also contains separate grounds for a grievance review. We
note that should a matter be resolved through referral to another
system, this matter would still be subject to the requirements at Sec.
441.301(c)(7)(v) and (vi) (notifying the beneficiary of the resolution
of a grievance) and Sec. 441.301(c)(7)(iii)(B)(6) (review of grievance
resolutions with which the beneficiary is dissatisfied), which are
being finalized in this section II.B.2. of the final rule.
Comment: A few commenters provided support for our proposal at
Sec. 441.301(c)(7)(iii)(B)(2) that the reasonable assistance provided
by the State includes, but is not limited to, ensuring the grievance
system is accessible to individuals with disabilities and individuals
with Limited English Proficiency. These commenters noted the importance
of providing accessible information to beneficiaries, to ensure
beneficiaries have full participation in the process.
Some commenters suggested modifications or additions to the
accessibility requirements, including:
Replacing the term, interpreter services, with the term,
linguistic accommodations, noting this would better capture the need
for trans creative supports that addresses differences in cultural
norms and understandings;
Requiring plain language explanations of the grievance
procedures; and
Adding mention of the regulations implementing section
1557 of the Affordable Care Act, particularly to reflect Sec. Sec.
92.201-92.205 of the 2022 Nondiscrimination in Health Programs and
Activities proposed rule (87 FR 47824).
Response: As discussed further herein, we are not making
modifications to Sec. 441.301(c)(7)(iii)(B)(2) in response to these
comments. While it may be a term of art used in some fields, there is
no Federal guidance or definition of the term, linguistic
accommodations. We retain the term, interpreter services, as defined at
Sec. 441.301(c)(7)(iii)(B)(2), in this final rule to remain consistent
with other Federal requirements. We thank the commenter for bringing
the term linguistic accommodations to our attention, and we will take
it into consideration for future technical assistance related to this
provision.
We note that the proposed requirement at Sec.
441.301(c)(7)(iii)(B)(2) already included a mention of existing
accessibility requirements at Sec. 435.905(b). Section 435.905(b)
includes a requirement that communications be provided in plain
language. We believe it would be duplicative to add a specific
requirement that information be provided in plain language.
We also decline to add specific reference to section 1557 of the
Affordable Care Act or its implementing regulations, as we find such an
addition to be unnecessary. State Medicaid agencies must comply with
all relevant requirements in section 1557 in all aspects of their
programs, including the grievance process.

[[Page 40583]]

Upon review, we are finalizing Sec. 441.307(c)(7)(iii)(B)(2) with
some modifications to better align the provision with other
regulations. We are finalizing a modification to revise the term
``individuals who are limited English proficient'' to ``individuals
with Limited English Proficiency.'' This modification conforms with the
language being finalized in Sec. 431.12(f)(7) (discussed in section
II.A. of this final rule). We are finalizing a modification to clarify
that auxiliary aids and services are to be available where necessary to
ensure effective communication (instead of upon request as originally
proposed), which we believe better conforms to access standards such as
those set forth in the ADA and section 504.
Comment: One commenter noted that the repeated references to the
regulation at Sec. 435.905(b) (in the proposed requirements at Sec.
441.301(c)(7)(iii)(B)(2), (c)(7)(iii)(C)(6), and (c)(7)(vi)(A)) may
suggest that these accessibility services are not necessary outside of
the specific provisions for which they are listed. The commenter
suggested we create a separate provision related to language and
disability access under the general requirements for the grievance
system and specify that it applies to all components of the grievance
system.
Response: We disagree that a separate, standalone accessibility
requirement would add clarity to States' accessibility requirements. We
also do not believe that we have overlooked a part of the process that
must be accessible and note that the entire grievance system is subject
to other accessibility requirements, including the ADA and section 504,
by virtue of being administered by government agencies. As discussed
further herein, we are finalizing the references to Sec. 435.905(b)
included in the provisions in Sec. 441.301(c)(7) as proposed, as we
believe that it is helpful to reiterate the importance of compliance
with Sec. 435.905(b) in the various steps of the grievance process.
Comment: One commenter recommended that we mandate that States
accept electronic grievances with fill-in forms that could be completed
by someone using a smart phone. Another commenter also requested that
we require that the grievance system be web-based. One commenter,
however, expressed concerns about a grievance system that is only
accessible electronically, noting that some people may not have access
to or be able to use computers.
Another commenter suggested that we specify that States must
maintain a toll-free number, a regularly monitored email address for
receiving grievances from Medicaid HCBS beneficiaries, and multiple
modes of submitting a grievance, including a request for assistance
with articulating and submitting a grievance as a reasonable
accommodation.
Response: We appreciate commenters' many thoughtful suggestions on
how to ensure that the grievance process system is accessible and user-
friendly. At this time, we are not making changes in this final rule at
Sec. 441.301(c)(7) to include specific regulatory requirements for
exactly how States should implement an electronic system for filing
grievances. We believe that the diversity of comments on this issue
demonstrates that beneficiaries will likely need the ability to access
the grievance filing process through multiple modalities. We encourage
States to consider user access (in addition to legally required
accessibility considerations) and engage the interested parties within
the HCBS community regarding the construction of a user-friendly
grievance filing process that accommodates beneficiaries' different
communication and technology needs.
Comment: A few commenters expressed support for our proposal to
prohibit punitive actions against individuals who file grievances. One
commenter noted that, in their State, beneficiaries are reluctant to
complain about care due to fear of retaliation. Another commenter
requested that CMS clarify that the requirement applies to punitive
actions taken by either the State or a provider. The commenter also
requested that CMS clarify that States must investigate punitive
actions from providers. One commenter requested that CMS clarify that
punitive action includes implying that an individual or family might
lose services if they access the grievance process. Another commenter
stated that the State should provide operational definitions of
punitive actions and provide easily understood guidance to providers
and State entities as to what types of actions would be considered
punitive.
Several commenters offered specific suggestions for revising the
proposed requirement at Sec. 441.301(c)(7)(iii)(B)(3). One commenter
suggested we revise the language to read ``retaliatory action'' or
``retaliatory or punitive action.'' Another commenter suggested that we
amend the proposed regulatory text to define such action as ``any
negative action following a grievance, complaint, and appeal or
reporting of any issue to any regulatory body.''
Response: We clarify that this requirement is intended to prohibit
punitive actions from either the State or providers. We do expect that,
as part of ensuring that beneficiaries (as well as authorized
representatives or other individuals who have filed a grievance on the
beneficiary's behalf) are protected from punitive action, States will
have a system for both identifying and investigating allegations of
punitive action. We agree with the commenter that verbal threats from a
provider directed at the beneficiary, or the beneficiary's family,
would be the type of punitive action contemplated by this provision
that would merit investigation. We also agree that providing additional
definitions and examples of punitive actions will be an important part
of States' grievance system policies.
To better clarify who is protected from punitive actions (both
beneficiaries and those filing grievances on their behalf), we are
finalizing a modification to Sec. 441.301(c)(7)(iii)(B)(3) to clarify
that prohibited actions are neither threatened nor taken against an
individual filing a grievance or who has had a grievance filed on their
behalf. As discussed in this section (section II.B.2.b.), we are
finalizing our proposal at Sec. 441.301(c)(7)(iii)(A)(1) to allow
beneficiaries to have another individual or entity file a grievance on
their behalf with written consent. We intend to make it clear that
punitive action may not be taken against a beneficiary, whether the
beneficiary personally filed the grievance or received assistance
filing the grievance. We also want to ensure that authorized
representatives or other individuals (including family members or other
beneficiaries) are protected from punitive action when helping
beneficiaries file grievances.
We agree that amending the regulatory language to ``punitive or
retaliatory actions'' would further clarify the intent of the
requirement, as ``retaliation'' is a common term associated with
prohibited behavior in other types of complaints systems. While there
is overlap in the connotations of ``punitive'' and ``retaliatory''
actions, we also believe that some actions that could be taken against
individuals in response to the filing of a grievance could be perceived
as ``retaliatory'' rather than ``punitive.'' We believe that the word
``retaliatory'' may particularly capture threats or actions that could
negatively affect a beneficiary's access to services, whether or not
the threat or negative outcome actually materializes. For instance, if
a provider noted negative things to other providers about a beneficiary
or the beneficiary's authorized representative and discouraged other
providers from accepting that beneficiary as client after a grievance
was filed against the

[[Page 40584]]

provider, this action could be perceived as ``retaliatory'' rather than
``punitive,'' particularly if this did not ultimately result in a
reduction or alteration of the beneficiary's services. Therefore, we
are finalizing Sec. 441.301(c)(7)(iii)(B)(3) with modification in this
final rule to specify that States must ensure that punitive or
retaliatory action is neither threatened nor taken against an
individual filing a grievance or who has had a grievance filed on their
behalf.
We decline to make the other modifications that commenters
suggested. We believe the requirement we proposed at Sec.
441.301(c)(7)(iii)(B)(3), as modified herein, is sufficiently broad and
clear to address the essential concerns raised by commenters. We
believe including language prohibiting ``any negative action'' may be
ambiguous and overly broad. Additionally, we do not believe the
grievance system regulations should be used to prohibit punitive or
retaliatory actions in response to actions performed outside of the
grievance process. However, we note that, if a beneficiary believes
they are experiencing poor treatment from a provider because the
beneficiary has filed a complaint about the provider in a system other
than the grievance system, the beneficiary may have grounds to file a
grievance on the basis of the poor treatment.
Comment: Several commenters recommended the addition of more
specific provisions to protect against punitive or retaliatory action,
including a post-grievance follow-up with the beneficiary and assessing
fines or other penalties against a provider who has taken retaliatory
action. One commenter also requested that CMS require States to make
the results of investigations into allegations of punitive behavior
available to the public.
Response: We decline to make modifications to Sec.
441.301(c)(7)(iii)(B)(3) based on these commenters' suggestions because
we believe that the proposed regulation text at Sec.
441.301(c)(7)(iii)(B)(3), which we are finalizing with modification as
discussed herein, is sufficient. To comply with the requirement that
States ensure that punitive or retaliatory actions are neither
threatened nor taken against individuals who have filed a grievance or
have had a grievance filed on their behalf, we expect that States will
develop a system for identifying, investigating, and deterring punitive
or retaliatory actions. We believe creating more regulatory
requirements as commenters suggested would not provide States with
flexibility in how they comply with this requirement. Instead, States
may develop processes in accordance with their grievance system's
structure and other relevant considerations, such as provider
agreements and State laws.
Comment: We received a few comments on the requirement we proposed
at Sec. 441.301(c)(7)(iii)(B)(4) that States must accept grievances,
requests for expedited resolution of grievances, and requests for
extensions of timeframes from beneficiaries. One commenter recommended
that Sec. 441.301(c)(7)(iii)(B)(4) be revised to specify that no
``magic language'' is needed to initiate the grievance process. The
commenter noted that a ``demonstrated intent'' to obtain assistance
with an HCBS-related problem should be accepted as a grievance.
Response: We are concerned that the language proposed by the
commenter is overly broad. We agree that States should make filing a
grievance as simple and accessible as possible for beneficiaries, their
authorized representatives, and other individuals or entities filing on
a beneficiary's behalf. For example, we believe that it would be
inappropriate for a State to create a complex grievance filing form and
then refuse to review a grievance because the form was not filled out
completely or properly. We note that this scenario would also be a
plausible illustration of a State's failure to provide reasonable
assistance and accessibility as required at Sec.
441.301(c)(7)(iii)(B)(2). We also believe it is critical that States
make every effort to ensure that beneficiaries and their advocates know
that a grievance system exists and how to access it. We do not,
however, expect that every expression of dissatisfaction, in any
context, must be treated as a presumptive grievance filing. We believe
it is acceptable for States to develop a grievance filing process that
requires a clear intent to file a grievance. Further, we do not want to
encourage situations in which grievances are pursued on the
beneficiary's behalf without the beneficiaries' knowledge or consent.
Comment: We received a number of comments regarding the requirement
we proposed at Sec. 441.301(c)(7)(iii)(B)(5) that States provide
beneficiaries with notices and other information related to the
grievance system, including information on their rights under the
grievance system and on how to file grievances. One commenter expressed
particular support for this requirement. Other commenters provided
several suggestions for additional requirements to ensure that
beneficiaries receive information regarding the grievance process,
including:
Requiring that States add an explanation of grievance
rights in any HCBS-related communication from the State to the
beneficiary;
Requiring that providers include an explanation of
grievance rights in the person-centered service planning process;
Requiring that information on grievance procedures be
posted in each group home or other provider owned or controlled
residential setting, along with a toll-free number and email address
for filing grievances; and
Including common examples of grievances in the information
given to beneficiaries, so that beneficiaries are better able to
understand the potential utility of the process.
A few commenters noted that, regardless of where or how the
information was shared, the information should be in accessible plain
language and large print formats.
Response: We do not intend to add additional requirements in this
final rule regarding how States must inform beneficiaries about the
grievance system, as we believe it is important for States to retain
flexibility in how they communicate with beneficiaries. We believe the
ideas shared by commenters are great examples of what could be done. We
note that there is a lot of diversity among beneficiaries receiving
HCBS, States' existing communication pathways, and HCBS program
design--all factors that will affect the methods of informing
beneficiaries about the grievance process. Therefore, we believe it may
be necessary for the information about the grievance system to be
presented in multiple ways and through multiple modalities. We
encourage States to engage with interested parties to determine the
most effective ways to inform beneficiaries. We will also work with
States to identify effective ways to inform beneficiaries about the
State's grievance system.
We also highlight that our proposed text at Sec.
441.301(c)(7)(iii)(B)(5) requires that information provided to
beneficiaries must comply with Sec. 435.905(b), which does require
that materials use plain language. In addition, States generally must
comply with the ADA and section 504, and their implementing
regulations. We are finalizing Sec. 441.301(c)(7)(iii)(B)(5) largely
as proposed, although with a modification to change mention of
individuals who are limited English proficient to individuals with
Limited English Proficiency, consistent with the change to Sec.
441.301(c)(7)(iii)(B)(2) discussed previously in this section.
Comment: One commenter requested clarification whether States have
an

[[Page 40585]]

ongoing obligation to provide this notice and information to
beneficiaries, including to people who begin HCBS after the effective
date of the grievance system requirements that we proposed at Sec.
441.301(c)(7).
Response: We agree and clarify that States will have an ongoing
responsibility to ensure that both new and current beneficiaries
receive information about the grievance system to comply with Sec.
441.301(c)(7)(iii)(B)(5), which we are finalizing as described in this
section (section II.B.2. of the final rule).
Comment: One commenter noted that our proposal at Sec.
441.301(c)(7)(iii)(B)(6), requiring the State to review any grievance
resolution with which the beneficiary is dissatisfied, is too vague.
This commenter suggested that the regulations should specify that the
reviewer be someone not involved in the original determination, and the
beneficiary should have a process to submit information as to why the
original resolution was insufficient. The commenter also suggested that
we specify that the beneficiary must request review, believing that
otherwise the expectation appears to be that the State must decide
whether the beneficiary is dissatisfied. Finally, the commenter
suggested that the notice of the original resolution should inform the
beneficiary of this review process and how to initiate it.
One commenter also requested clarification on how beneficiaries
should express dissatisfaction with a resolution for the purpose of
seeking review of a resolution under Sec. 441.301(c)(7)(iii)(B)(6).
Response: We believe that the requirements at Sec.
441.301(c)(7)(iii)(C)(3), which we are finalizing as described in this
section II.B.2, address several of the commenter's concerns. We clarify
that the requirements at Sec. 441.301(c)(7)(ii)(C)(3) apply to
initially filed grievances and review of grievances under Sec.
441.301(c)(7)(iii)(B)(6). We note that Sec.
441.301(c)(7)(iii)(C)(3)(i) requires that the individual making a
decision on a grievance is an individual who was neither involved in
any previous level of review or decision-making related to the
grievance nor a subordinate of any such individual. Section
441.301(c)(7)(iii)(C)(3)(iii) specifies that the individual must
consider all comments, documents, records, and other information
submitted by the beneficiary without regard to whether such information
was submitted to or considered previously by the State.
We expect that beneficiaries would express dissatisfaction by
affirmatively requesting review of a grievance resolution. We agree
that beneficiaries have the responsibility of requesting the review,
and expect that States will include, as part of their written policies,
the method for how beneficiaries may request review and how
beneficiaries will be notified of this right.
Comment: We did not receive comments on the requirement we proposed
at Sec. 441.301(c)(7)(iii)(B)(7) that States must provide information
on the grievance system to providers and subcontractors. However, one
commenter requested that we require States to give providers 14 days'
notice if the provider is a party to the grievance.
Response: We believe that whether, and how, a State chooses to
involve providers in individual grievances filed pursuant to Sec.
441.301(c)(7) will vary on a case-by-case basis and, thus, a
standardized notification requirement may not be appropriate. For
instance, some grievances may be resolvable without the provider's
involvement, and in some cases, the beneficiary may not want the
provider to know the beneficiary's identity. If the beneficiary and the
State believe it is necessary to have the provider involved in the
investigation, including appearing at the resolution meeting, we expect
that States will give the provider reasonable notice and ensure that
the provider is able to participate in the process. Therefore, we
intend to provide States with flexibility in determining their
grievance system policies in this respect.
Comment: One commenter supported the requirement we proposed at
Sec. 441.301(c)(7)(iii)(C)(1) to allow beneficiaries to file
grievances orally but recommended that we revise the requirement to
specify that States must follow up with a written summary of the oral
grievance so the beneficiary can ensure accuracy. Another commenter
suggested that we revise the requirement at Sec.
441.301(c)(7)(iii)(C)(2) to specify that acknowledgement of the receipt
of a grievance must be in writing.
Response: We appreciate the comments and believe it is a best
practice for States to provide a summary of the grievance to the
beneficiary for accuracy. However, we decline to mandate that States
provide a written summary, as we intend to allow flexibility for States
to decide their own policies to operationalize this requirement. We
believe that part of acknowledging the grievance, as required at Sec.
441.301(c)(7)(iii)(C)(2), involves developing an appropriate system for
providing beneficiaries with confirmation of their grievance.
Comment: One commenter requested that we specify whether all
grievances filed must receive a full resolution or whether there are
instances in which the acknowledgement of the grievance is sufficient.
The commenter anticipated that because of the current direct care
workforce crisis, many grievances may be filed related to provider
shortages. While acknowledging that understaffing is a serious problem,
the commenter believed that the grievance process is unlikely to be
able to address the problem to the beneficiary's satisfaction.
Response: We note that the definition of grievance that we are
finalizing at Sec. 441.301(c)(7)(ii) indicates that a beneficiary may
file a grievance regardless of whether remedial action is requested. We
agree that, in instances in which the beneficiary does not wish to
pursue remedial action and indicates they are not interested in
presenting and debating their grievance as we proposed at Sec.
441.301(c)(7)(iii)(C)(4), acknowledging the grievance may be considered
resolving the complaint (rather than conducting additional inquiry). We
note that should a matter be resolved with an acknowledgment, this
matter would still be subject to the requirements at Sec.
441.301(c)(7)(v) and (vi) (notifying the beneficiary of the resolution
of a grievance) and Sec. 441.301(c)(7)(iii)(B)(6) (review of grievance
resolutions with which the beneficiary is dissatisfied).
Comment: A few commenters commented on our proposal at Sec.
441.301(c)(7)(iii)(C)(3), establishing requirements for decisionmakers
reviewing grievances considered under the grievance system. Several of
these commenters supported our efforts to require a system that would
provide a fair and unbiased review of beneficiaries' concerns. However,
one commenter noted that the requirement at Sec.
441.301(c)(7)(iii)(C)(3) would require a separate set of personnel to
respond to and investigate grievances than the staff that is currently
allocated for program management, administration, and support, and
expressed concern that this would require additional resources.
Response: We note that the requirement we proposed at Sec.
441.301(c)(7)(iii)(C)(3) requires that individuals reviewing and making
decisions about grievances are not the same individuals, nor
subordinates of individuals, who made the original decision or action
that has given rise to the grievance. This would require that the
provider that made the decision or performed the action giving rise to
the

[[Page 40586]]

grievance would not be able to be the decisionmaker for the grievance.
However, this would not preclude State Medicaid agency personnel from
reviewing a grievance filed against a provider. Additionally, even for
grievances filed about the State's performance, the requirement does
not necessarily require review from separate departments or entities.
With firewalls as needed, reviewers may be from the same department (or
a different department) so long as the necessary expertise and
independence standards are met, and the reviewer takes into account the
information described in Sec. 441.301(c)(7)(iii)(C)(3)(ii). We are not
making modifications to Sec. 441.301(c)(7)(iii)(C)(3) based on these
comments.
Comment: One commenter questioned if the intent of the requirement
we proposed at Sec. 441.301(c)(7)(iii)(C)(3)(iii) is to require a ``de
novo'' review of the grievances.
Response: De novo review typically refers to a standard of review
of a matter on appeal after a trial court or administrative body has
reached a determination. If a matter is being reviewed de novo, the
reviewer is reviewing the whole matter as if it is freshly presented to
them, without regard for what the prior decisionmaker determined, or
their rationale supporting that determination. We did not specify in
the regulation text (either proposed or finalized) whether this process
is intended as a de novo review of grievances, as reference to de novo
review would have been inapplicable. The general intent of the
grievance system we proposed at Sec. 441.301(c)(7) is not to address
specific determinations that are being appealed, as would be the case
in the fair hearing process. The grievance system is intended to
address a beneficiary's dissatisfaction or complaint related to the
State's or provider's performance of person-centered planning or HCBS
settings requirements. We expect that the grievance system will
typically represent the first opportunity a beneficiary has had to
present their concerns directly to the State. Because there likely has
not been an initial determination to consider and possibly affirm or
reverse, we do not believe de novo review is applicable.
For example, consider two scenarios in which a provider fails to
send a personal care assistant to two beneficiary's homes. For
Beneficiary A, the failure was because the provider forgot to ensure a
worker was scheduled to deliver the services. For Beneficiary B, the
provider decided, unilaterally, that Beneficiary B had been authorized
more personal care services than the provider believed was necessary
and thus refused to send a personal care assistant to Beneficiary B's
home. In both scenarios, Beneficiary A and Beneficiary B could file
grievances about the provider's failure to provide services as outlined
in the person-centered care plan or attempt to change the service plan
without going through the process required in Sec. 441.301(c)(1)
through (3). The proper focus in both cases would be on whether the
provider provided services in accordance with the current person-
centered care plan. We would not expect in Beneficiary B's situation
that the State would treat the provider's actions as a formal
determination requiring de novo review (such as reviewing whether the
provider's objections to the number of service hours in the service
plan were valid, or making the beneficiary prove that the service hours
were needed). Further, even if there has been an initial decision by a
provider or State that the beneficiary disputes, we did not intend the
grievance system to operate like a formal legal proceeding (that is, an
administrative hearing or trial) and, again therefore, we do not
believe the concept of de novo review is applicable.
Comment: One commenter suggested that we amend the definition of
``skilled professional medical personnel'' to allow the designation to
apply to staff administering the grievance process, which would make
the activity eligible for a 75 percent Federal matching rate.
Response: We are not amending the definition of skilled
professional medical personnel in this final rule. The term ``skilled
professional medical personnel'' is defined at Sec. 432.2 as
physicians, dentists, nurses, and other specialized personnel who have
professional education and training in the field of medical care or
appropriate medical practice and who are in an employer-employee
relationship with the Medicaid agency. The term explicitly does not
include other, nonmedical health professionals such as public
administrators, medical analysts, lobbyists, senior managers, or
administrators of public assistance programs of the Medicaid program.
Per Sec. 432.50, the FFP rate for skilled professional medical
personnel and directly supporting staff of the Medicaid agency is 75
percent. We do not intend to require that the administrative activities
required for grievance process must be administered by personnel with
specialized medical education and training. Even for those who meet the
criteria to be considered skilled professional medical personnel, only
the portion of their activities that require their advanced skills and
expertise would be eligible for the enhanced matching rate. If similar
functions are performed by non-skilled professional medical personnel,
then the activities themselves would not qualify for the higher
matching rate.
Comment: One commenter requested clarification as to whether a
telephonic communication would satisfy the proposed requirement at
Sec. 441.301(c)(7)(iii)(C)(4) that the State provide a beneficiary
with a reasonable opportunity face-to-face, including through the use
of audio or video technology.
Response: We believe that audio-only telephone calls, when
requested by the beneficiary and with the inclusion of any necessary
accommodations, satisfy this requirement.
Comment: One commenter recommended that we revise proposed Sec.
441.301(c)(7)(iii)(C)(4) by removing the word ``limited'' from before
``time available,'' as the commenter believed the inclusion of the word
``limited'' was unnecessary.
Response: We disagree with the commenter's statement that the word
``limited'' is unnecessary. The language in this requirement was
intended to mirror similar language in the managed care grievance
process requirements at Sec. 438.406(b)(4). Further, we believe it is
important that beneficiaries understand the timeframes associated with
the grievance resolutions and understand that it is intended, for their
benefit, to be a time-limited process.
Comment: One commenter recommended that we mandate a minimum number
of days afforded to a beneficiary to review their record and submit
additional germane evidence and testimony to the State agency before
resolution. The commenter noted that the proposed regulation merely
requires that the State agency provide the beneficiary with ``a
reasonable opportunity.'' The commenter regarded this as a vague
standard and was concerned that States would not grant beneficiaries
sufficient time. The commenter noted that beneficiaries with
disabilities or complex medical issues may need additional time and
supports to prepare evidence and testimony. The commenter suggested
that granting beneficiaries a minimum of 21 days to prepare their
evidence and testimony after receipt of the agency record would ensure
that the State provided the record well in advance of the resolution
deadline and would protect beneficiaries from the imposition of
unreasonable timeframes to prepare.
Response: We note that Sec. 441.301(c)(7)(iii)(C)(4) requires that

[[Page 40587]]

the State provide the beneficiary a reasonable opportunity to present
evidence and testimony and make legal and factual arguments related to
their grievance, while Sec. 441.301(c)(7)(iii)(C)(5) requires the
State to provide the beneficiary with their case file and other records
sufficiently in advance of the resolution timeframe for grievances. We
are unclear on which provision the commenter is recommending we modify.
We decline to modify either provision by prescribing specific deadlines
within the overall resolution timeframe, to allow States to develop
flexible processes to accommodate beneficiaries. We expect that States
will develop appropriate processes to allow beneficiaries to request
postponements or rescheduling of any face-to-face hearings that they
have requested if they find they need more time to prepare, or other
situations arise that would prevent a beneficiary from being able to
participate in the hearing.
We also note that we are finalizing a requirement at Sec.
441.301(c)(7)(v)(C) to allow beneficiaries to have the option of
requesting 14-day extensions if (for any reason) a beneficiary requires
additional time beyond the 90-day resolution timeframe we are
finalizing at Sec. 441.301(c)(7)(v)(B).
Comment: Several commenters expressed concern about legal
representation during the process. One commenter stated that
beneficiaries should get access to State-provided legal assistance.
Another commenter requested that, if a beneficiary is unable to afford
an attorney, the opposing party not be allowed an attorney.
Response: As discussed in a prior response, beneficiaries have
flexibility in determining who will assist them throughout the
grievance process--which could, if the beneficiary chose, include
assistance from a legal professional. We believe that the grievance
system should be easy to navigate and largely non-adversarial, such
that beneficiaries would not be required, nor feel pressured, to have
legal representation. We also believe that at least some portion of
grievances filed will be for minor issues that do not require a formal
inquiry. We agree with commenters that it is preferable that hearings
neither be, nor have the appearance of being, imbalanced in terms of
support for the beneficiary. We encourage States, as they develop their
policies, to consider what level of assistance beneficiaries will need
during face-to-face meetings and ensure that reasonable assistance is
provided.
Comment: One commenter stated that Sec. 441.301(c)(7)(iii)(C)(5)
should be revised to expand the documents beyond the beneficiary's
``case file.'' The commenter recommended that the regulations require
that the State obtain relevant files and other information held by the
provider and then provide that information to the beneficiary. The
commenter stated that, particularly in cases involving residential
providers, provider-maintained information will be relevant and often
pivotal.
Response: We disagree and believe adding this language is
unnecessary. We believe that the term, case file, could have several
meanings, depending on the circumstances, and could include the records
related to the beneficiary's services maintained by the provider that
would be obtained by the State as part of review of the grievance. We
also note that proposed Sec. 441.301(c)(7)(iii)(C)(5) already requires
beneficiaries to receive other documents and records, as well as new
and current evidence considered or relied upon by the State related to
the grievance. We believe relevant records from providers could fall
into these categories, depending on the record and the circumstances by
which the State obtained it. We do not intend our requirement at Sec.
441.301(c)(7)(iii)(C)(5), as proposed and being finalized in this rule,
to amend any existing obligations for confidentiality of certain
records and we expect States to comply with applicable Federal and
State laws and regulations governing confidentiality of those records
in determining what records to provide to the beneficiary related to
their grievance in compliance with Sec. 441.301(c)(7)(iii)(C)(5). We
decline to make modifications to Sec. 441.301(c)(7)(iii)(C)(5) as
requested by the commenter.
Comment: One commenter suggested that we require that the grievance
system be compliant with the Health Insurance Portability and
Accountability Act of 1996 (HIPAA).
Response: We had proposed at Sec. 441.301(c)(7)(iii)(C)(5) that
medical records being used as part of a grievance be handled in
compliance with 45 CFR 164.510(b) (a provision of the HIPAA Privacy
Rule), to ensure that protected health information (PHI) used during
the grievance review are obtained and used with beneficiaries'
authorization. In general, whenever a beneficiary's PHI may be
obtained, maintained, or disclosed by a State agency that is a covered
entity as defined in 45 CFR 160.103 (such as a State Medicaid agency),
States are responsible for ensuring compliance with the requirements of
HIPAA and its implementing regulations, as well as any other applicable
Federal or State privacy laws governing confidentiality of a
beneficiary's records. We also note that 45 CFR 164.510(b) is just one
provision of the HIPAA Privacy Rule that permits the disclosure of PHI,
and other provisions may also permit the disclosure of PHI (such as
disclosure of PHI to personal representatives under 45 CFR 164.502(g));
other permissions may also apply in addition to what is cited here and
included in the regulatory text of this final rule. Upon further
review, we have determined that, given that a number of requirements of
the HIPAA Privacy Rule may apply to the obtaining and sharing of
beneficiaries' information, we are finalizing Sec.
441.301(c)(7)(iii)(C)(5) with a modification to change the citation of
45 CFR 164.510(b) to a broader reference to the HIPAA Privacy Rule (45
CFR part 160 and part 164 subparts A and E).
Finally, we also note that individuals who believe their health
information privacy has been violated may file a complaint with the HHS
Office for Civil Rights at https://www.hhs.gov/hipaa/filing-a-complaint/index.html.
After consideration of public comments, we are finalizing Sec.
441.301(c)(7)(iii)(A) as proposed, with the following modification. We
are finalizing Sec. 441.301(c)(7)(iii)(A)(1) with modification to
specify that another individual or entity may file a grievance on
behalf of the beneficiary or provide the beneficiary with assistance or
representation throughout the grievance process with the written
consent of the beneficiary or authorized representative. We are
finalizing Sec. 441.301(c)(7)(iii)(A)(2) as proposed.
We are finalizing requirements at Sec. 441.301(c)(7)(iii)(B) as
proposed, with the following modifications. We are finalizing Sec.
441.301(c)(7)(iii)(B)(1) with a modification to correct an erroneous
reference to subchapter by replacing subchapter with paragraph (c)(7).
We are finalizing Sec. 441.301(c)(7)(iii)(B)(2) with modifications by:
(1) adding to States' obligation the requirement that States must
provide beneficiaries reasonable assistance in ensuring grievances are
appropriately filed with the grievance system; (2) modifying language
to refer to individuals with Limited English Proficiency; and (3)
clarifying that auxiliary aids and services must be made available
where necessary to ensure effective communication. We are finalizing
Sec. 441.301(c)(7)(iii)(B)(3) with modifications to require that
States ensure that punitive or retaliatory actions (rather than just
punitive actions) are neither threatened nor taken. We are also adding
language to specify that the punitive or retaliatory actions cannot be
threatened or taken

[[Page 40588]]

against an individual filing a grievance or who has had a grievance
filed on their behalf. (New language identified in bold.)
For reasons we discuss in greater detail in the next section
(section II.B.2.c. of this rule) we are finalizing Sec.
441.301(c)(7)(iii)(B)(4) with a modification to remove the reference to
expedited grievances. We are finalizing Sec. 441.301(c)(7)(iii)(B)(5)
with a modification to change the language to refer to individuals with
Limited English Proficiency. We are finalizing Sec.
441.301(c)(7)(iii)(B)(6) and (7) as proposed.
We are finalizing Sec. 441.301(c)(7)(iii)(C)(1) through (5) with
minor technical modifications. We are replacing the periods at the end
of each paragraph with semi-colons and adding the word and at the end
of Sec. 441.301(c)(7)(iii)(C)(5) to accurately reflect that Sec.
441.301(c)(7)(iii)(C)(1) through (6) are elements of a list, not
separate declarative statements. Additionally, for reasons we discuss
in greater detail in a later section (section II.B.2.d.) because we are
not finalizing the expedited resolution timeframe at Sec.
441.301(c)(7)(v)(B)(2), we are finalizing Sec.
441.301(c)(7)(iii)(C)(5) with modifications to remove references to
Sec. 441.301(c)(7)(v)(B)(1) and (2) and add a reference to Sec.
441.301(c)(7)(v). We are also finalizing Sec. 441.301(c)(7)(iii)(C)(5)
with a modification to change the citation of 45 CFR 164.510(b) to a
broader reference to the HIPAA Privacy Rule (45 CFR part 160 and part
164 subparts A and E).
c. Filing Timeframe (Sec. 441.301(c)(7)(iv))
At Sec. 441.301(c)(7)(iv)(A), we proposed to require that the
beneficiary be able to file a grievance at any time. At Sec.
441.301(c)(7)(iv)(B), we proposed to require that beneficiaries be
permitted to request expedited resolution of a grievance, whenever
there is a substantial risk that resolution within standard timeframes
will adversely affect the beneficiary's health, safety, or welfare,
such as if, for example, a beneficiary cannot access personal care
services authorized in the person-centered service plan.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters made suggestions or submitted clarifying
questions about our proposal at Sec. 441.301(c)(7)(iv)(A) that
beneficiaries be able to file a grievance at any time. One commenter
requested clarification on whether our intent was to prohibit limits on
the timeframe between the occurrence of the subject of the grievance
and the date when the individual files a grievance. Another commenter
noted that there should be a 90-day time limit on when beneficiaries
can file grievances.
Response: We do not intend for beneficiaries' ability to file
grievances to be time-limited. We appreciate commenters' concerns
regarding this issue; however, we defer to the rationale we used when
declining to add a timeframe cap in the managed care grievance filing
process (81 FR 27511). In the managed care grievance process, Sec.
438.402(c)(2)(i) specifies that enrollees may file a grievance with
their managed care plan at any time. As we previously noted, grievances
do not progress to the level of a State fair hearing, which is a time-
sensitive process; therefore, we found it unnecessary to include filing
limits because grievances are resolved without having to consider the
time limits of other processes (81 FR 27511).
We understand that States may be concerned about revisiting
grievance issues that occurred in the past, but we believe this is a
normal part of providing services and that beneficiaries should be
permitted to file a grievance at any time. We also note, that, as
discussed in more detail below, States believe that educating
beneficiaries about the grievance process will take time; therefore, we
do not want to prevent beneficiaries from filing grievances in cases
where the delay in filing was because the beneficiary was not initially
aware of their ability to file a grievance.
Comment: A few commenters supported the proposal at Sec.
441.301(c)(7)(iv)(B) to create a pathway for expedited resolutions when
there is a substantial risk that resolution within standard timeframes
will adversely affect the beneficiary's health, safety, or welfare.
Several commenters, however, believed that the proposal at Sec.
441.301(c)(7)(iv)(B) to create a pathway for an expedited resolution
was unclear or overly broad and requested additional clarification as
to what would constitute a grievance warranting expedited resolution.
Some of these commenters stated that technical assistance would be
needed to help States identify the criteria for determining whether a
resolution should be expedited, and how to proceed if a beneficiary
disagrees with the State's determination that a grievance request
should be expedited or resolved in the standard timeframe. One
commenter raised the concern that if a beneficiary's request for an
expedited resolution was denied, they may follow up with submitting
another grievance or file a fair hearing request. Another commenter
suggested that expedited resolutions should be defined as being
contingent on the timely receipt of information from the beneficiary.
Some commenters noted that the expedited resolution process's focus
on health, safety, and welfare could lead to duplication with other
systems, including the critical incident system. They expressed the
belief that there are separate channels to address health and safety
concerns. For this reason, a few commenters suggested that there should
only be one standard grievance resolution and notice timeline of 90
calendar days. A few commenters also suggested that we should not have
an expedited resolution process in the FFS grievance system because
there is not such a process in the managed care grievance system (as
described in 42 CFR part 438, subpart F).
One commenter stated that, in their experience, few grievances were
about issues affecting beneficiaries' health and safety, and thus it
would not be appropriate to create a requirement for an expedited
process as it was defined in proposed Sec. 441.301(c)(7)(iv)(B). The
commenter offered examples of typical grievances, based on the
commenter's experience with operating a State grievance system. The
commenter noted that many grievances involve education about the HCBS
program (for example, additional services and limitations), information
about available providers in their area as an alternative to their
current provider, dissatisfaction with their paid caregiver, and
frustrations with provider workforce shortages.
Response: We are persuaded by commenters' feedback summarized here,
as well as comments summarized later in this section regarding the
expedited resolution timeframe. After consideration of public comments,
as discussed here in section II.B.2, we are not finalizing Sec.
441.301(c)(7)(iv)(B) and are removing other references to the expedited
resolution process where it appears in Sec. 441.301(c)(7) in this
final rule.
In particular, we are persuaded by the concern that the expedited
resolution process as proposed could create overlap with the critical
incident system, which is described in section II.B.3 of this final
rule. We believe that the critical incident system is the most
appropriate mechanism for investigating situations when a beneficiary
has experienced actual harm or substantial risks to their health and
safety. We do not want there to be a delay in the investigation of a
critical incident

[[Page 40589]]

because it was incorrectly filed as a grievance, nor do we want matters
that should be investigated as critical incidents resolved only in the
grievance process.
In addition, as some commenters correctly noted, the managed care
requirements at 42 CFR part 438, subpart F, do not include an expedited
grievance resolution process. We have not identified a compelling
reason why beneficiaries receiving HCBS through FFS systems should need
an expedited resolution process for grievances when no similar process
has, as yet, been deemed necessary in the managed care system. After
reexamining these requirements in light of comments received, we do not
wish to create misalignment between managed care and FFS systems'
grievance resolution processes.
In general, we agree with the commenter that it is likely that many
grievances filed would not meet the standard we proposed for expedited
resolution (and, as noted above, if they did meet the standard, they
are likely candidates for the critical incident or fair hearings
systems). However, we envision that there remains the potential for
some grievances to require immediate attention and intervention, even
if they do not rise to the level of a critical incident (as defined in
Sec. 441.302(a)(6)(i)(A)) or do not qualify for a fair hearing (as set
out in part 431, subpart E). Therefore, we encourage States to include
in their grievance system a system for identifying, triaging, and
expediting resolution of grievances that require, according to the
State's criteria, prioritization and prompt resolution.
After consideration of the comments received about Sec.
441.301(c)(7)(iv), we are finalizing our proposal at Sec.
441.301(c)(7)(iv) with modification by removing the expedited
resolution requirement at Sec. 441.301(c)(7)(iv)(B) and redesignating
Sec. 441.301(c)(7)(iv)(A) as Sec. 441.301(c)(7)(iv). Additionally, we
are removing references to the expedited resolution process in Sec.
441.301(c)(7)(iii)(B)(4). We are also removing requirements related to
the expedited resolution process in Sec. 441.301(c)(7)(v). These
changes are discussed in their respective sections below.
d. Resolution and Notification (Sec. 441.301(c)(7)(v))
At Sec. 441.301(c)(7)(v), we proposed resolution and notification
requirements for grievances. Specifically, at Sec.
441.301(c)(7)(v)(A), we proposed to require that States resolve and
provide notice of resolution related to each grievance as quickly as
the beneficiary's health, safety, and welfare requires and within
State-established timeframes that do not exceed the standard and
expedited timeframes proposed in Sec. 441.301(c)(7)(v)(B). At Sec.
441.301(c)(7)(v)(B)(1), we proposed to require that standard resolution
of a grievance and notice to affected parties must occur within 90
calendar days of receipt of the grievance. At Sec.
441.301(c)(7)(v)(B)(2), we proposed to require that expedited
resolution of a grievance and notice must occur within 14 calendar days
of receipt of the grievance.
At Sec. 441.301(c)(7)(v)(C), we proposed that States be permitted
to extend the timeframes for the standard resolution and expedited
resolution of grievances by up to 14 calendar days if the beneficiary
requests the extension, or the State documents that there is need for
additional information and how the delay is in the beneficiary's
interest. At Sec. 441.301(c)(7)(v)(D), we proposed to require that
States make reasonable efforts to give the beneficiary prompt oral
notice of the delay, give the beneficiary written notice, within 2
calendar days of determining a need for a delay but no later than the
timeframes in paragraph (c)(7)(v)(B), of the reason for the decision to
extend the timeframe, and resolve the grievance as expeditiously as the
beneficiary's health condition requires and no later than the date the
extension expires, if the State extends the timeframe for a standard
resolution or an expedited resolution.
We also proposed at Sec. 441.301(c)(7)(iv)(B) and (c)(7)(v)(B)(2)
that beneficiaries be permitted to request, and the State provide for,
expedited resolution of a grievance. However, we noted that these
proposed requirements differ from the current grievance system
requirements for Medicaid managed care plans at part 438, subpart F,
which do not include specific requirements for an expedited resolution
of a grievance. We solicited comment on whether part 438, subpart F
should be amended to include the proposed requirements for expedited
resolution of a grievance at Sec. 441.301(c)(7)(iv)(B) and (v)(B)(2).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses. We note that, as
discussed in the previous section, we are not finalizing the expedited
resolution process at Sec. 441.301(c)(7)(iv)(B). We will discuss the
impact of this change to the requirements in Sec. 441.301(c)(7)(v) in
our response to the comments below.
Comment: A few commenters requested that we provide additional
information to clarify what is expected for a grievance to be
considered resolved.
Response: We believe that the resolutions of grievances can take
many forms and may vary on a case-by-case basis, and thus we decline to
revise the requirements at Sec. 441.301(c)(7)(v) to provide a more
specific definition. We proposed and are finalizing as discussed in
this section II.B.2 that a beneficiary may file a grievance even if the
beneficiary does not request remedial action. We expect that grievances
will vary not only in severity and urgency but will also vary according
to the formality of the response. Some grievances, as noted in a
response above, may require only a simple acknowledgment of the
concern. Others may require immediate action(s), including
intervention(s) with or action(s) taken against the provider. Still
others may involve the State setting up a long-term corrective action
plan or monitoring, consistent with applicable State laws governing
such. We believe that a critical part of the grievance process involves
collecting input from the beneficiary filing the grievance on the
resolution or outcome they hope to achieve through the grievance
process. This may include instances in which the beneficiary wishes to
bring a concern to the State's attention but is not necessarily
pursuing a specific resolution.
Comment: A few commenters raised concerns or questions about how
States should ensure compliance with resolutions. One commenter noted
the importance of ensuring corrective actions are taken in response to
grievances so that policy and systems transformation can take place in
a timely manner. One commenter requested that we provide States with
more tools to ensure provider compliance, including appropriate
monetary and nonmonetary penalties. Another commenter stated that the
grievance resolution process should include an order for the creation
of a corrective action plan and subsequent monitoring.
Response: We appreciate the commenters' suggestions, but we decline
to add specific actions to the requirements at Sec. 441.301(c)(7)(v).
As noted above, we believe that there will be variety in both
grievances and resolutions. It would be difficult, and perhaps
detrimental, to establish a set of Federal penalties that may be over-
or under-responsive to the range of matters heard in the grievance
process. Thus, we want to retain flexibility in the

[[Page 40590]]

regulatory requirements to allow State grievance systems to respond
appropriately to each situation. We expect that States will apply a
reasonable interpretation to the requirement that the States
``resolve'' the grievance. For instance, if resolution reasonably
requires a corrective action plan for a provider (for grievances
resolved against providers) or a corrective action plan for the State
(for grievances resolved against the State), we expect that a
corrective action plan would be executed and monitored as part of the
resolution in accordance with applicable State laws. Through State law
and regulations, States can create penalties, whether monetary or non-
monetary, for providers that have violated their obligations as set
forth by the State Medicaid program.
Comment: Several commenters suggested that the grievance resolution
process should include formal follow-up requirements. To ensure proper
follow-up, one commenter recommended that the regulations specify that
grievances and their resolutions be reviewed at the subsequent person-
centered planning process. One commenter recommended that the State
should perform a follow up at 30 and 90 days after the resolution.
Response: We decline to add specific follow-up requirements to
Sec. 441.301(c)(7)(v). As discussed in prior responses, we believe
that grievances are likely to take many forms. We agree that, in some
instances, follow-up or ongoing monitoring may be a critical element of
a particular resolution and, thus, should be included. In other cases,
the grievance may not require follow-up and, thus, a formal follow-up
requirement would impose an unnecessary administrative burden. There
may also be instances in which a beneficiary may not wish to be
repeatedly contacted after they believe the matter has been resolved.
We believe that determining the appropriateness of when, and how, to
monitor outcomes of grievances should be part of policies States
develop for their grievance system.
Comment: One commenter recommended that we revise the requirement
at Sec. 441.301(c)(7)(v)(A) to require that the State solicit more
information from beneficiaries on how a delayed resolution could hurt
the beneficiary. One commenter suggested that we include the language
from this provision in the timeframe requirement for expedited
grievances at Sec. 441.301(c)(7)(v)(B)(2) so that the requirement
reads, ``as expeditiously as the beneficiary's health condition
requires and no longer than 14 calendar days after the State receives
the grievance.''
Response: We decline to make the suggested modifications to the
requirement at Sec. 441.301(c)(7)(v)(A). We clarify that this
requirement at Sec. 441.301(c)(7)(v)(A) sets a general expectation for
expeditious resolutions for all grievances. We encourage States to
ensure that beneficiaries provide, in their grievances, detailed
information about their concerns (including negative impacts they are
experiencing or believe they will experience). However, we have
specifically not set requirements for the amount or type of information
beneficiaries must submit when filing a grievance, as we do not wish to
inadvertently mandate a process that is administratively burdensome for
beneficiaries. We believe that commenters may have interpreted this
requirement as a means of identifying grievances being filed for
expedited resolution, which was not the intent. Additionally, as
discussed above, we are not finalizing the requirement for an expedited
resolution at Sec. 441.301(c)(iv)(B)(2).
We also note that, consistent with our discussion above related to
concerns about confusion between the purpose of the grievance system
and the critical incident system described in Sec. 441.302(a)(6), we
are revising the language in this provision. Specifically, we are
finalizing our proposal at Sec. 441.301(c)(7)(v)(A) with modification
to require that the State resolve each grievance and provide notice as
expeditiously as the beneficiary's health condition requires, instead
of our proposal, which would have required that such notice be provided
as expeditiously as the beneficiary's health, safety, and welfare
requires. We believe this avoids confusion with the critical incident
system and aligns the language with a parallel requirement in the
managed care grievance requirements at Sec. 438.408(a), as well as our
language in Sec. Sec. 441.301(c)(7)(v)(D)(3) (pertaining to
expeditious resolution during extensions). We believe that ``health
condition'' may be broadly interpreted to refer both to physical and
mental health and well-being of the beneficiary.
Comment: A few commenters supported our proposal at Sec.
441.301(c)(7)(v)(B)(1) that standard resolution of a grievance and
notice to affected parties must occur within 90 calendar days of
receipt of the grievance. However, some commenters, while not
specifically opposing the 90-day timeframe, expressed concerns that the
timeframe proposed for resolving grievances may not always allow for a
thorough investigation. One commenter noted that, while this timeframe
might allow for investigation and resolution of some grievances, other
grievances might require more extensive investigation (such as
interviews, on-site visits, legal review and consultation, and request
for additional documentation) and could take longer. The commenter also
worried about the time involved in allowing the beneficiary a
reasonable opportunity to present evidence face-to-face and in writing,
as well as access to their case file to review in advance.
Conversely, a number of commenters recommended that the standard
resolution timeframe be shortened to 45 days. Many of these commenters
stated that 90 days is too long for an individual to wait for
resolution if they are experiencing a serious violation of their rights
or access to services.
Response: We agree with commenters that some grievances may take
longer than 90 days to resolve properly and note that these extenuating
circumstances can be addressed through the use of the 14-day extension
we are finalizing at Sec. 441.301(c)(7)(v)(C) if the conditions set
forth in that requirement are met. We also agree with commenters that
grievances should be resolved as expeditiously as possible, but we do
not agree that cutting the proposed timeframe in half (to 45 days)
would be a sufficient timeframe. We based our proposal of 90 calendar
days on the current timeframe for resolution in the managed care
grievance system at Sec. 438.408(b), and we do not find reason to
believe that FFS grievances would require less time to resolve than
grievances in the managed care system. We do not wish to set a
timeframe that encourages hasty investigations, nor the overuse of the
14-day extensions. We also note that 90 calendar days is the maximum
allowed timeframe and that States may choose to set a shorter
timeframe, or several timeframes for different types of grievances, so
long as none of the timeframes exceed 90 calendar days. We are
finalizing the 90-calendar day timeframe for resolutions as proposed.
Comment: One commenter noted that the proposed timeframe of 14 days
for expedited resolution was too long and suggested that it be reduced
to 7 days. On the other hand, many commenters expressed concerns about
staff capacity necessary to respond to expedited grievances within 14
calendar days, as well as the feasibility of completing investigations
within the proposed 14-day timeframe. Commenters believed that, given
the potential seriousness of grievance inquiries, it may be difficult

[[Page 40591]]

for all necessary information to be gathered in 14 days and to grant
the beneficiary a reasonable opportunity to present evidence in a face-
to-face meeting. Several commenters recommended that, if finalizing an
expedited resolution timeframe, we extend the timeframe to 30 calendar
days, and one commenter recommended 30 business days.
Response: As discussed above, we are not finalizing the requirement
for an expedited resolution process. In addition to the comments
summarized above about the process itself, we agree with commenters
that if a beneficiary has filed a grievance and wishes to present
evidence and participate in a face-to-face meeting with the
decisionmaker, 7 calendar days, or even 14 calendar days, may not be
sufficient time for all relevant materials to be gathered and reviewed
by the beneficiary and decisionmaker, nor to arrange for a resolution
meeting. As discussed above, we are encouraging States to create their
own processes for expediting resolution of certain grievances. We
believe that there will be some grievances filed that may (and should)
be resolved almost immediately, including by a referral to the critical
incident system or fair hearings process. We note that several
commenters suggested that 30 days is a reasonable timeframe for
expediting resolutions, and States may want to take that recommendation
under consideration when developing their own processes.
Consistent with our decision not to finalize the expedited
resolution process at Sec. 441.301(c)(7)(iv)(B), we are not finalizing
Sec. 441.301(c)(7)(v)(B)(2).
Comment: One commenter noted that imposing any timelines for
resolving grievances could detract from staff resources needed to
investigate critical incidents, particularly if the grievance and
critical incident systems use the same staff.
Response: We recognize that States will have to supply staff and
resources for both the grievance and critical incident systems that we
are finalizing in this rule. We will provide technical assistance to
States as needed to help identify ways to manage both systems,
including setting priorities and managing the critical incident
investigation and grievance resolution timeframes.
Comment: A number of commenters responded to our invitation to
comment on whether part 438, subpart F should be amended to include the
proposed expedited resolution requirements at Sec.
441.301(c)(7)(iv)(B) and (v)(B)(2). Several commenters recommended that
expedited procedures be extended to the managed care grievance
procedures at part 438 subpart F. However, several commenters opposed
adding expedited resolution timeframes to part 438 subpart F. Similar
to the opposition presented to including expedited resolutions in the
FFS grievance system, these commenters believed that very few
expressions of dissatisfaction require expedited resolution and that
other mechanisms exist to address health and safety concerns in a
timely manner. A few commenters also provided suggestions on possible
changes to the managed care grievance requirements, such as adding a
prohibition of punitive action against beneficiaries who file
grievances.
Response: We will take these comments under consideration. We note
that we are not, at this time, finalizing an expedited resolution
process in the FFS grievance system and are not finalizing the
requirements we proposed at Sec. 441.301(c)(7)(iv)(B) and at Sec.
441.301(c)(7)(v)(B)(2) for such a process. We also note that, while
outside the scope of this proposal, we will take other recommendations
regarding potential changes to the managed care grievance process under
consideration as well.
Comment: A few commenters noted support for the proposal at Sec.
441.301(c)(7)(v)(C) that States be permitted to extend the timeframes
for the resolution of grievances by up to 14 calendar days.
Response: We thank the commenters for their support.
We did not receive comments on the requirements we proposed at
Sec. 441.301(c)(7)(v)(D).
After consideration of public comments, we are finalizing our
proposal at Sec. 441.301(c)(7)(v)(A) with modification to require that
the State resolve each grievance, and provide notice, as expeditiously
as the beneficiary's health condition (instead of health, safety, and
welfare) requires. Additionally, consistent with our decision not to
finalize the expedited resolution process at Sec.
441.301(c)(7)(iv)(B), we are not finalizing the expedited resolution
timeframe at Sec. 441.301(c)(7)(v)(B)(2), redesignating Sec.
441.301(c)(7)(v)(B)(1) as Sec. 441.301(c)(7)(v)(B), and retitling
Sec. 441.301(c)(7)(v)(B) as ``Resolution timeframes.'' We are also
removing the word ``standard'' in Sec. 441.301(c)(7)(v)(B)(1) (which
we are finalizing at Sec. 441.301(c)(7)(v)(B)) since the finalized
requirements do not distinguish between ``standard resolution'' and
other types of resolutions.
We are finalizing Sec. 441.301(c)(7)(v)(C), with a technical
correction to redesignate paragraphs (C)(1)(i) and (C)(1)(ii) as (C)(1)
and (C)(2), respectively. We are finalizing Sec. 441.301(c)(7)(v)(D)
as proposed, with minor technical corrections. Specifically, we are
changing the periods at the end of Sec. 441.301(c)(7)(v)(D)(1) and (2)
to semi-colons and adding ``and'' at the end of Sec.
441.301(c)(7)(v)(D)(2).
e. Notice of Resolution (Sec. 441.301(c)(7)(vi))
We proposed at Sec. 441.301(c)(7)(vi) requirements related to the
notice of resolution for beneficiaries. Specifically, at Sec.
441.301(c)(7)(vi)(A), we proposed to require that States establish a
method for written notice to beneficiaries and that the method meet the
availability and accessibility requirements at Sec. 435.905(b). At
Sec. 441.301(c)(7)(vi)(B), we proposed to require that States make
reasonable efforts to provide oral notice of resolution for expedited
resolutions.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters recommended that we expand the
requirements proposed at Sec. 441.301(c)(7)(vi) pertaining to the
information beneficiaries receive at the resolution of their grievance.
The commenters requested we include a requirement that the notice
explain what the grievance is, the information considered, the
necessary remedial actions (if any) for resolution, and the ability to
request further review.
Response: We encourage States to include this information in
resolution notices as appropriate, but we decline to make changes to
this requirement in our final rule. We note that this requirement, as
written, is consistent with the parallel requirement in Sec.
438.408(d), which provides States with flexibility in developing a
method by which managed care plans will notify enrollees of
resolutions. We intend to provide States with this same flexibility in
the FFS system, as we see no compelling reason to impose more rigid
requirements on one system than the other.
We also note that, consistent with the discussion above not to
finalize the expedited resolution process, we are not finalizing Sec.
441.301(c)(7)(vi)(B), which requires oral notice for expedited
resolutions. We expect that States, should they decide to include an
expedited resolution process in their grievance system, would develop
an

[[Page 40592]]

appropriate system for notifying beneficiaries of these resolutions.
After consideration of the comments received, we are finalizing
Sec. 441.301(c)(7)(vi)(A) without substantive changes. However,
consistent with our decision (discussed above) not to finalize the
expedited resolution process at Sec. 441.301(c)(7)(iv)(B), we are not
finalizing the requirement we proposed relating to the expedited
resolution process at Sec. 441.301(c)(7)(vi)(B) and redesignating
Sec. 441.301(c)(7)(vi)(A) as Sec. 441.301(c)(7)(vi).
f. Recordkeeping (Sec. 441.301(c)(7)(vii))
We proposed at Sec. 441.301(c)(7)(vii) recordkeeping requirements
related to grievances. Specifically, at Sec. 441.301(c)(7)(vii)(A), we
proposed to require that States maintain records of grievances and
review the information as part of their ongoing monitoring procedures.
At Sec. 441.301(c)(7)(vii)(B), we proposed to require that the record
of each grievance must contain at a minimum the following information:
a general description of the reason for the grievance, the date
received, the date of each review or review meeting (if applicable),
resolution and date of the resolution of the grievance (if applicable),
and the name of the beneficiary for whom the grievance was filed.
Further, at Sec. 441.301(c)(7)(vii)(C), we proposed to require that
grievance records be accurately maintained and in a manner that would
be available upon our request.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported the proposal at Sec.
441.301(c)(7)(vii)(A) to require that States maintain records of
grievances and review the information as part of their ongoing
monitoring procedures, and for the proposal at Sec.
441.301(c)(7)(vii)(C) that grievance records would be available upon
CMS's request. A few commenters were also specifically supportive of
what they regarded as the proposal's potential to collect and track
standardized information about service system issues, including
obstacles to informed choice and person-centered planning.
One commenter observed that there will be important lessons and
conclusions that may be drawn from the data that should help the State
to take steps to deter future service provider actions that lead to
grievances. The commenter also hoped that such data could lead to
educational opportunities to refine State and service provider
knowledge of HCBS settings and person-centered service plan rules, and
data should be collected on the efficacy of such educational
interventions. One commenter suggested that we require qualitative, as
well as quantitative, reporting.
Response: We decline to make any additional changes to our proposal
at Sec. 441.301(c)(7)(vii) in this final rule, but we agree with the
commenters that the data and records that States collect as part of the
grievance process may be critical in helping States improve their HCBS
programs. While we are not finalizing specific requirements for how
States must use this data, promising practices related to data
collection and analysis, including methods of capturing qualitative
data from the records, will likely be included in the technical
assistance that will be available to States during the implementation
period.
Comment: A few commenters recommended requiring States to make
information on grievances publicly available, such as by releasing an
annual report on the anonymized grievances received in the previous 12
months, categorized by issue, severity, and resolution or lack of
resolution. One commenter suggested that such a report would enhance
transparency and could assist with quality improvement by providing
States, providers, and consumer advocates with insight into grievance
patterns and trends. Another commenter recommended that we require
public online disclosure of grievance details and resolutions. The
commenter noted this would help individuals make informed choices about
providers and would encourage compliance with person-centered planning
and settings requirements. One commenter, presuming that the State's
recordkeeping system would be made publicly available, suggested that
we include the name of the decision maker in the records so that CMS,
researchers, and advocacy groups can ensure that decision makers are
making unbiased decisions.
Response: We did not propose that States publicly report
information about grievance resolutions in this final rule; we note,
for instance, that we did not include reporting on the grievance system
as part of the reporting requirement being finalized at Sec. 441.311,
nor are we requiring that States report information about grievances as
part of the website posting requirement being finalized at Sec.
441.313. We decline to make any changes in this final rule to require
such public reporting.
We believe that some public disclosures may not be suitable or
appropriate in every instance, and it would be difficult to tailor a
meaningful requirement to anticipate all of these circumstances. We are
concerned that, for example, in States with smaller HCBS populations,
it may be difficult to truly anonymize information about grievances.
Relatedly, some beneficiaries may not want grievances published about
specific providers, as some commenters suggest, as this would further
complicate anonymity when some providers only serve a few clients. We
are concerned also that public disclosure could have a chilling effect
if beneficiaries believed their grievance could be made part of a
public report. While we agree that, over time, data about trends in
grievances could be useful to both the States and external interested
parties in promoting systemic improvements of HCBS, we defer to States
to determine when and how to make this information public and for what
purpose. We also note that the specific recommendation to add the name
of the decision maker to the record is addressed in another response
later in this section.
Comment: One commenter recommended that we establish a process for
an annual or regular review of the States' summary of issues and the
States' resolution of the issues. Another commenter recommended
requiring an independent evaluator periodically review States'
grievance processes to identify common barriers, trends, participation
rates, and effectiveness of resolutions.
Response: When developing the proposed requirements at Sec.
441.301(c)(7), we did not intend to create a formal system in which we
would routinely review individual resolutions made by States' grievance
systems and are not persuaded otherwise after review of public comments
received. As discussed further in this section II.B., we proposed, and
are finalizing, the requirement at Sec. 441.301(c)(7)(vii)(C) that
States must make records available to us upon request. This provides
CMS with authority to review records should we need to review the
functioning of a State's grievance system on a case-by-case basis.
We believe that the grievance system's designated decision makers
are generally in the best position to determine appropriate resolutions
to beneficiaries' concerns and that the need to review individual
records should be decided on a case-by-case basis. We do agree regular
review of the States' grievance systems is a good

[[Page 40593]]

suggestion, and we will take it under consideration for future guidance
and rulemaking. Similarly, we are not requiring that States have their
grievance system reviewed by an independent evaluator in this final
rule--in part because we believe many States will likely do this
anyway, as part of their standard audit processes. However, we agree
that having the system regularly reviewed by an independent entity is a
good practice that States may consider.
Comment: A few commenters suggested specific categories of
information to be added to the record of each grievance proposed at
Sec. 441.301(c)(7)(vii)(B). One commenter suggested that all
information considered should be included as a category in the record
of each grievance. A few commenters recommended we add that the name of
the decisionmaker be included in the record to ensure that conflict of
interest requirements at Sec. 441.301(c)(7)(iii)(C)(3) are preserved.
Response: We thank commenters for their suggestions, but we decline
to add new record requirements for States at Sec.
441.301(c)(7)(vii)(B). We believe capturing the names of staff and
individuals who decided the outcome of each grievance is an operational
and internal matter for States. States can record whatever information
about a grievance resolution that they deem appropriate in addition to
what is required. We believe Sec. 441.301(c)(7)(vii)(B) as finalized
reflects an appropriate minimum level of detail. We note that Sec.
441.301(c)(7)(vii)(B) aligns with the managed care grievance system
recordkeeping requirement at Sec. 438.416.
After consideration of public comments received, we are finalizing
Sec. 441.301(c)(7)(vii) without substantive modifications. However, we
are finalizing Sec. 441.301(c)(7)(viii)(B)(1) through (5) with minor
technical modifications. We are replacing the periods at the end of
each paragraph with semi-colons, to accurately reflect that Sec.
441.301(c)(7)(vii)(B)(1) through (6) are elements of a nonexhaustive
list, not separate declarative statements. We are also adding the word
``and'' to the end of Sec. 441.301(c)(7)(vii)(B)(5).
g. Applicability Date (Sec. 441.301(c)(7)(viii))
In the proposed rule (88 FR 27977), we recognized that many States
may need time to implement the proposed grievance system requirements,
including needing time to amend provider agreements, make State
regulatory or policy changes, implement process or procedural changes,
update information systems for data collection and reporting, or
conduct other activities to implement these requirements. However, we
noted that the absence of a grievance system in FFS HCBS systems poses
a substantial risk of harm to beneficiaries. We proposed at Sec.
441.301(c)(7)(viii) that the requirements at Sec. 441.301(c)(7) be
effective 2 years after the effective date of the final rule. A 2-year
time period after the effective date of the final rule for States to
implement these requirements reflected our attempt to balance two
competing challenges: (1) the fact that there is a gap in existing
regulations for FFS HCBS grievance processes related to important HCBS
beneficiary protection issues involving person-centered planning and
HCBS settings requirements; and (2) feedback from States and other
interested parties that it could take 1 to 2 years to amend State
regulations and work with their State legislatures, if needed, as well
as to revise policies, operational processes, information systems, and
contracts to support implementation of the proposals outlined in this
section. We also considered all of the HCBS proposals outlined in the
proposed rule (88 FR 27971 through 27995) as whole. We solicited
comments on overall burden for States to meet the requirements of this
section, whether this timeframe is sufficient, whether we should
require a shorter timeframe (1 year to 18 months) or longer timeframe
(3 to 4 years) to implement these provisions, and if an alternate
timeframe is recommended, the rationale for that alternate timeframe.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: One commenter supported our proposal at Sec.
441.301(c)(7)(viii) that the requirement at Sec. 441.301(c)(7) be
effective 2 years after the effective date of the final rule. However,
one commenter, stating that these grievance protections will be vital
to HCBS beneficiaries, recommended that States be required to come into
compliance within 18 months after the effective date of the
regulations.
A few commenters expressed concerns about the burden they believe
will be associated with developing a grievance system, particularly in
States that do not already have grievance processes in place.
Commenters believed that it would take significant resources to help
beneficiaries understand what rights they can claim under the grievance
system. Commenters also described costs or activities such as: funding
and statutory change requests to State legislatures; administrative
rulemaking; IT and administrative system design and development, which
may include vendor procurement; collaboration with other State agencies
or agency divisions; partnering with providers for implementation;
hiring and training new staff; and approval of implementation advance
planning documents by CMS. These commenters suggested alternative
effective dates ranging from 3 to 5 years. One commenter also suggested
an effective date of 4 years after CMS releases relevant subregulatory
guidance.
Response: We appreciate the fact that States will have to expend
resources in developing the grievance system, particularly States that
do not currently have grievance systems for Medicaid beneficiaries
receiving services under section 1915(c), (i), (j) and (k) authorities
through a FFS delivery system. Because of the activities that some
States will have to perform to develop the grievance system shared by
commenters, we agree that requiring an earlier timeframe of 18 months
is not realistic. We also appreciate, and agree with, the sense of
urgency expressed by commenters. We believe it is important to
prioritize giving beneficiaries the opportunity to have their concerns
heard. In this final rule, we have provided States with as much
flexibility as possible to build on or retain existing grievance
systems and have kept specific information systems requirements to a
minimum. We have also reduced some potential initial administrative
challenges by not finalizing a formal expedited resolution requirement
and by allowing States to decide whether, and how, to implement such a
policy. After consideration of public comments received as discussed
herein, we are finalizing the substance of Sec. 441.301(c)(7)(viii) as
proposed, but with minor modifications to correct erroneous uses of the
word ``effective'' and retitle the requirement as Applicability date
(rather than Effective date). We are also modifying the language at
Sec. 441.301(c)(7)(viii) to specify that States must comply with the
requirements at Sec. 441.301(c)(7) beginning 2 years from the
effective date of this final rule, rather than stating that this
requirement is effective 2 years after the date of enactment of the
final rule. (New text in bolded font). We are finalizing Sec.
441.301(c)(7)(viii) with a technical modification to specify that the
applicability date applies to the requirements at Sec. 441.301(c)(7).
Comment: A few commenters requested enhanced FMAP to support
implementation and operationalization

[[Page 40594]]

of the grievance process. Two commenters recommended that, in addition
to providing 90 percent FFP for information systems improvements, we
should offer 75 percent FFP for all quality-related activities,
including operational costs associated with a grievance system. The
commenters suggested this would create parity between the States whose
service delivery systems are largely FFS and the States with managed
care services that can receive 75 percent FFP for External Quality
Review (EQR) activities.
Response: We note that enhanced FMAP is available for certain
activities related to administering the Medicaid program and designing,
developing, implementing, and operating certain IT systems.\60\
However, Federal matching rates are established by Congress and CMS
does not have the authority to change or increase them, nor do we have
the authority to add additional activities not specified in statute
into the scope of an existing enhanced FMAP. We also do not agree that
providing broader enhanced match for the FFS grievance system would
create parity with managed care, as we believe this is an inaccurate
characterization of payments related to the managed care grievance
systems. While commenters are correct that States can receive 75
percent enhanced match for EQR activities, which are listed at Sec.
438.358, these activities are primarily validation and review of data
on performance measures; the operation of a grievance system is not
listed as an EQR activity. We also note that the associated
administrative costs for MCOs, PIHPs, and PAHPs are variable and
negotiated with the State as part of their contracts.
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\60\ For a current list of activities eligible for this enhanced
FMAP, refer to: MACPAC, ``Federal Match Rates for Medicaid
Administrative Activities,'' last access: October 22, 2023. https://www.macpac.gov/federal-match-rates-for-medicaid-administrative-activities/.
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After consideration of public comments received, we are finalizing
the substance of Sec. 441.301(c)(7)(viii) as proposed, but with minor
modifications to correct erroneous uses of the word ``effective'' and
retitle the requirement as Applicability date (rather than Effective
date). We are also modifying the language at Sec. 441.301(c)(7)(viii)
to specify that States must comply with the requirements at Sec.
441.301(c)(7) beginning 2 years from the effective date of this final
rule, rather than stating that this requirement is effective 2 years
after the date of enactment of the final rule. (New text in bolded
font.) We are finalizing Sec. 441.301(c)(7)(viii) with a technical
modification to specify that the applicability date applies to the
requirements at Sec. 441.301(c)(7).
h. Application to Other Authorities
As discussed earlier in section II.B.1. of this preamble, section
2402(a)(3)(A) of the Affordable Care Act requires States to improve
coordination among, and the regulation of, all providers of Federally
and State-funded HCBS programs to achieve a more consistent
administration of policies and procedures across HCBS programs. In
accordance with the requirement of section 2402(a)(3)(A) of the
Affordable Care Act for States to achieve a more consistent
administration of policies and procedures across HCBS programs and
because HCBS State plan options also must comply with the HCBS Settings
Rule and with similar person-centered planning and service plan
requirements, we proposed to include these grievance requirements
within the applicable regulatory sections. Specifically, we proposed to
apply these proposed requirements in Sec. 441.301(c)(7) to sections
1915(j), (k), and (i) State plan services at Sec. Sec.
441.464(d)(2)(v), 441.555(b)(2)(iv), and 441.745(a)(1)(iii),
respectively.
Also, consistent with our proposal for section 1915(c) waivers, we
proposed to apply the proposed grievance requirements in Sec.
441.301(c)(7) to sections 1915(j), (k), and (i) State plan services
based on our authority under section 1902(a)(19) of the Act to assure
that there are safeguards for beneficiaries and our authority at
section 2402(a)(3)(B)(ii) of the Affordable Care Act to require a
complaint system for beneficiaries. We stated that the same arguments
for applying these requirements for section 1915(c) waivers are equally
applicable to these other HCBS authorities. We requested comment on the
application of the grievance system provisions to section 1915(i), (j),
and (k) authorities. We also noted that, in the language added to Sec.
441.464(d)(2)(v), the proposed grievance requirements apply when self-
directed personal assistance services authorized under section 1915(j)
include services under a section 1915(c) waiver program.
As described in the proposed rule (88 FR 27978), we did not propose
to apply these requirements to section 1905(a) services. Specifically,
we considered whether to also apply the proposed requirements to
section 1905(a) ``medical assistance'' in the form of State plan
personal care services, home health services, and case management
services, but did not propose these requirements apply to any section
1905(a) State plan services because section 1905(a) services are not
required to comply with HCBS settings requirements and because the
person-centered planning and service plan requirements for most section
1905(a) services are substantially different from those for section
1915(c), (i), (j), and (k) services. Further, the vast majority of HCBS
is delivered under section 1915(c), (i), (j), and (k) authorities,
while only a small percentage of HCBS nationally is delivered under
section 1905(a) State plan authorities. We solicited comment, seeing
the value in discussing and seeking public input, on whether we should
establish grievance requirements for section 1905(a) State plan
personal care services, home health services and case management
services.
We received public comments on these proposals. The following is a
summary of the comments and our responses.
Comment: A few commenters supported the proposal to apply the
grievance system provisions proposed for section 1915(c) at Sec.
441.301(c)(7) to sections 1915(i), (j) and (k) authorities. They agreed
with the goal of aligning the different HCBS program authorities and
promoted consistency with managed care.
Response: We thank commenters for their support.
Comment: One commenter supported the application of the grievance
requirements to self-directed personal assistance services under
section 1915(j) of the Act as well. This commenter noted that, during
the pandemic, there was no clear way to file a grievance with Medicaid
concerning a lack of access to direct care workers, for example.
One commenter, on the other hand, questioned the operationalization
of the grievance process for self-directed personal care service models
under sections 1915(j) and (k), where the beneficiary acts as the
employer for purposes of hiring, training, supervising, and firing,
their provider, if necessary. This commenter was concerned that
allowing beneficiaries to file grievances against their provider would
erode a beneficiary's responsibilities as the employer. Another
commenter, while supporting application of the grievance process to
section 1915(j) self-directed services, did suggest that implementing
this requirement in self-directed models may require additional time
and guidance.
Response: We believe it would be inappropriate to exclude
beneficiaries enrolled in self-directed services delivery models from
the grievance system and decline to do so in this final rule. As noted
by other commenters, beneficiaries enrolled in self-directed

[[Page 40595]]

services may experience systemic challenges with their services; they
may also interact with other providers in addition to their self-
directed service provider (such as the entity providing financial
management services). We also note that the grievance system is a venue
for expressing concerns about violations of the HCBS settings
requirements, which may be relevant to some beneficiaries in self-
directed programs. We do not believe that additional time needs to be
granted specifically for inclusion of beneficiaries using self-directed
services.
Comment: Several commenters responded to our request for comment on
whether we should establish grievance requirements for section 1905(a)
State plan personal care services, home health services and case
management services. A few commenters supported the proposal not to
extend the requirements to section 1905(a) services on the basis that
these services are not subject to the same person-centered planning and
HCBS settings rules. Additionally, several commenters also believed the
expansion of these requirements to section 1905(a) State plan services
would pose additional challenges to State Medicaid and operating
agencies. One commenter noted that, in States that deliver section
1905(a) State plan services and section 1915(c) services through
different agencies or agency divisions, implementation could prove
challenging and costly. A few commenters stated that States should be
encouraged (but not required) to implement the proposed provisions to
their section 1905(a) State plan services.
However, a few commenters supported extending the grievance system
requirements to section 1905(a) services. Among these commenters, a few
commenters recommended that CMS apply the grievance system requirements
specifically to mental health rehabilitative services delivered under
section 1905(a) services. These services, some commenters stated, are
delivered to large numbers of Medicaid beneficiaries, particularly
those with mental health needs. These commenters elaborated on concerns
that, otherwise, there would be disparities between individuals
receiving similar services from the same State Medicaid agency under
different authorities, and that many Medicaid recipients with mental
health disabilities receiving services under the section 1905(a)
authority would not have recourse if their rights were violated. One
commenter also suggested that mental health rehabilitative services are
considered ``home- and community-based services'' under the broader
definition enacted by Congress in the American Rescue Plan Act of 2021.
Response: At this time, we are not requiring inclusion of section
1905(a) services in the State grievance system. That said, we are not
convinced by the argument that including section 1905(a) services would
simply be too much work, as we do believe it is critical that
beneficiaries have access to mechanisms to claim their rights and have
their concerns heard. Rather, we note that there are statutory and
regulatory differences between services authorized under sections
1905(a) and 1915 of the Act. We would need to consider how to define
the nature of the grievances that would be filed for section 1905(a)
services, given that they do not have the same person-centered planning
and HCBS settings rule requirements at Sec. 441.301(c)(1) through (6).
As we discussed extensively in this section, the bases for a grievance
are providers' and States' performance of the requirements at Sec.
441.301(c)(1) through (6). We believe this definition of grievance
provides clear parameters for matters that would be the subject of
grievances. We note that person-centered service planning requirements
are established for section 1915(j) services in Sec. 441.468, for
section 1915(k) services in Sec. 441.540, and for section 1915(i)
services at Sec. 441.725. While person-centered service planning might
be part of some specific 1905(a) services, it is not a required
component of all section 1905(a) services.
Similarly, the HCBS settings requirements a Sec. 441.301(c)(3)
through (6) that apply to section 1915(c) services have counterparts
for section 1915(k) services at Sec. 441.530 and for 1915(i) services
at Sec. 441.710. (For more discussion of the application of the HCBS
settings rule's application to section 1915(c), (i), and (k) services,
we refer readers to the final rule published in 2014 at 79 FR 2948.)
Section 1915(j) services offered through a section 1915(c) waiver (as
specified, for instance, at Sec. 441.452(a)) would also be subject to
the HCBS settings requirements at Sec. 441.301(c)(3) through (6).
There is not a similar application of the HCBS settings rule to section
1905(a) services.
If we are to apply a grievance process to 1905(a) services, it is
likely we would weigh proposing a grievance process for all section
1905(a) services versus for only specific section 1905(a) services.
These services are diverse, are offered in diverse settings, and lack
the clear regulatory framework that we were able to use in constructing
the bases for grievances in section 1915 services. We believe this
requires additional consideration and discussion with the public beyond
what could be finalized in this current rule.
Though we are not finalizing inclusion of section 1905(a) services
in the State grievance system in this rule, we acknowledge that many
beneficiaries, including those receiving mental health services, are
served by section 1905(a) services and encourage States to consider
development of grievance processes to address these beneficiaries'
concerns. We appreciate the commenters' suggestions. Given that our
work to better ensure access in the Medicaid program is ongoing, we
intend to gain implementation experience with this final rule, and we
will consider the recommendations provided on the proposed rule to help
inform any future rulemaking in this area, as appropriate.
After consideration of public comments, we are finalizing the
application of the grievance system requirements for section 1915(c)
waivers, as finalized in this rule at Sec. 441.301(c)(7), to the other
HCBS authorities under sections 1915(j), 1915(k), and 1915(i). However,
after further review, we determined it is necessary to make
modifications to our regulations for these other HCBS authorities to
clarify this intention. Our proposed regulation text for these HCBS
authorities did not accurately reflect or effectuate our proposal to
require States to implement and maintain a grievance system, in
accordance with Sec. 441.301(c)(7), for these HCBS authorities as
well. We are finalizing the regulation text we proposed at Sec. Sec.
441.464 (for section 1915(j)), 441.555 (for section 1915(k)), and
441.745 (for section 1915(i)) with modification to more clearly specify
that a State must implement and maintain a grievance system in
accordance with the requirements we are finalizing at Sec.
441.301(c)(7) for HCBS programs they administer under these
authorities.
For application to section 1915(j) services, we are not finalizing
the amendment we proposed at Sec. 441.464(d)(2)(v), but rather
finalizing this new requirement for a grievance system at Sec.
441.464(d)(5). We will retain the current language at Sec.
441.464(d)(2)(v), which indicates that States must include grievance
processes, generally, among the support activities about which States
provide information, counseling, training, and assistance. At Sec.
441.464(d)(5), we are finalizing with modification for clarity and
precision that the State must implement and maintain a grievance
process in accordance with Sec. 441.301(c)(7), rather

[[Page 40596]]

than the language we proposed at Sec. 441.464(d)(2)(v) (Grievance
process, as defined in Sec. 441.301(c)(7) when self-directed PAS
include services under a section 1915(c) waiver program). We are also
finalizing Sec. 441.464(d)(5) with a technical modification to clarify
that the grievance system must meet the requirements of Sec.
441.301(c)(7), but that references therein to section 1915(c) of the
Act are instead references to section 1915(j) of the Act.
For application to section 1915(k) services, we are not finalizing
the amendment we proposed at Sec. 441.555(b)(2)(iv), but rather
finalizing this new requirement for a grievance system at Sec.
441.555(e). We will retain the current language at Sec.
441.555(b)(2)(iv), which indicates that States must include grievances
processes, generally, among the support activities about which States
provide information, counseling, training, and assistance. At Sec.
441.555(e), we are finalizing with modification for clarity and
precision that the State must implement and maintain a grievance
process in accordance with Sec. 441.301(c)(7), rather than the
language we proposed at Sec. 441.555(b)(2)(iv) (Grievance process, as
defined in Sec. 441.301(c)(7)). We are also finalizing Sec.
441.555(e) with a technical modification to clarify that the grievance
system must meet the requirements of Sec. 441.301(c)(7), but that
references therein to section 1915(c) of the Act are instead references
to section 1915(k) of the Act.
For application to section 1915(i) services, we are finalizing the
amendment we proposed at Sec. 441.745(a)(1)(iii) with modifications.
As proposed, Sec. 441.745(a)(1)(iii) had indicated that a State must
provide beneficiaries receiving section 1915(i) services with the
opportunity to file a grievance. To clarify that the State must
maintain a grievance process in accordance with Sec. 441.301(c)(7) for
beneficiaries receiving HCBS under section 1915(i), we are finalizing
Sec. 441.745(a)(1)(iii) to specify that the State must implement and
maintain a grievance process in accordance with Sec. 441.301(c)(7). We
note that several requirements being finalized at Sec. 441.301(c)(7)
(such as Sec. 441.301(c)(7)(iii)(A), (B)(2), and (C)(1), discussed in
section II.B.2.b. of this final rule) require States to provide the
beneficiary with the opportunity to file grievances in the grievance
system. We are also finalizing Sec. 441.745(a)(1)(iii) with a
technical modification to clarify that the grievance system must meet
the requirements of Sec. 441.301(c)(7), but that references therein to
section 1915(c) of the Act are instead references to section 1915(i) of
the Act. Additionally, as we are finalizing a new Sec.
441.745(a)(1)(iii) in this rule, we are redesignating the current Sec.
441.745(a)(1)(iii) as Sec. 441.745(a)(1)(iv).
We also note that while we are finalizing these amendments to
regulations under section 1915(j), (k) and (i) authorities, we are not
suggesting that States that provide HCBS through multiple authorities
must operate a separate grievance process for each program. As
discussed earlier in II.B.2. of this preamble, while States are allowed
to maintain multiple grievance processes (so long as each process
complies with Sec. 441.301(c)(7)), we strongly encourage States to
maintain a single, integrated grievance system for all HCBS
beneficiaries.
i. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
proposals at Sec. Sec. 441.301(c)(7) as follows:
We are finalizing the requirement describing the grievance
system purpose at Sec. 441.301(c)(7)(i) with technical modifications
to specify that States must establish a procedure under which a
beneficiary can file a grievance related to the State's or a provider's
performance of (rather than compliance with) the activities described
in paragraphs (c)(1) through (6) of Sec. 441.301(c)(7). (New language
identified in bold.) We are also adding language to Sec.
441.301(c)(7)(i) stating that the State may contract with other
entities to perform activities described in Sec. 441.301(c)(7) but
retains responsibility for ensuring performance of and compliance with
these provisions. The finalized requirement at Sec. 441.301(c)(7)(i)
will read: Purpose. The State must establish a procedure under which a
beneficiary may file a grievance related to the State's or a provider's
performance of the activities described in paragraphs (c)(1) through
(6) of this section. This requirement does not apply to a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act. The State may have activities described
in paragraph (c)(7) of this section performed by contractors or other
government entities, provided, however, that the State retains
responsibility for ensuring performance of and compliance with these
provisions.
We are finalizing the definition of grievance at Sec.
441.301(c)(7)(ii) with a technical modification, conforming with the
modification at Sec. 441.301(c)(7)(i), to specify that a grievance
will mean an expression of dissatisfaction or complaint related to the
State's or a provider's performance of (rather than compliance with)
the activities described in paragraphs (c)(1) through (6), regardless
of whether remedial action is requested. (New language identified in
bold.) We are finalizing the definition of grievance system at Sec.
441.301(c)(7)(ii) as proposed.
We are finalizing the process requirement at Sec.
441.301(c)(7)(iii)(A) as proposed, with the following exceptions. We
are finalizing Sec. 441.301(c)(7)(iii)(A)(1) with modification to
specify that another individual or entity may file a grievance on
behalf of the beneficiary, or provide the beneficiary with assistance
or representation throughout the grievance process, with the written
consent of the beneficiary or authorized representative. The finalized
requirement at Sec. 441.301(c)(7)(ii)(A)(1) will read: Another
individual or entity may file a grievance on behalf of the beneficiary,
or provide the beneficiary with assistance or representation throughout
the grievance process, with the written consent of the beneficiary or
authorized representative. We are finalizing Sec.
441.301(c)(7)(iii)(A)(2) as proposed.
We are finalizing the process requirement at Sec.
441.301(c)(7)(iii)(B) as proposed.
We are finalizing Sec. 441.301(c)(7)(iii)(B)(1) with a
modification to correct an erroneous reference to subchapter by
replacing subchapter with paragraph (c)(7).
We are finalizing the process requirements at Sec.
441.301(c)(7)(iii)(B)(2) with a modification to specify that States
must provide beneficiaries with reasonable assistance in ensuring
grievances are appropriately filed with the grievance system. We are
also finalizing Sec. 441.307(c)(7)(iii)(B)(2) with modifications to
change the term ``individuals who are limited English proficient'' to
``individuals with Limited English Proficiency.'' We are also
finalizing with modification to clarify that auxiliary aids and
services are to be available where necessary to ensure effective
communication. As finalized, Sec. 441.301(c)(7)(iii)(B)(2) specifies
that States must provide beneficiaries reasonable assistance in
ensuring grievances are appropriately filed with the grievance system,
completing forms, and taking other procedural steps related to a
grievance. This includes, but is not limited to, ensuring the grievance
system is accessible to individuals with disabilities and to provide
meaningful access to individuals with Limited English Proficiency,
consistent with Sec. 435.905(b) of this chapter, and includes
auxiliary aids and services

[[Page 40597]]

where necessary to ensure effective communication, such as providing
interpreter services and toll-free numbers that have adequate TTY/TTD
and interpreter capability.
We are finalizing the process requirement at Sec.
441.301(c)(7)(iii)(B)(3) with modifications to require that States
ensure that punitive or retaliatory action (rather than just punitive
actions) is neither threatened nor taken against an individual filing a
grievance or who has had a grievance filed on their behalf. The
finalized requirement at Sec. 441.301(c)(7)(iii)(B)(3) will read:
Ensure that punitive or retaliatory action is neither threatened nor
taken against an individual filing a grievance or who has had a
grievance filed on their behalf. (New language identified in bold.)
We are finalizing the process requirement Sec.
441.301(c)(7)(iii)(B)(4) with a modification to remove the reference to
expedited grievances. The finalized requirements at Sec.
441.301(c)(7)(iii)(B)(4) will read: Accept grievances and requests for
extension of timeframes from the beneficiary.
We are finalizing the process requirements at Sec.
441.301(c)(7)(iii)(B)(5) with a modification to change mention of
individuals who are limited English proficient to individuals with
Limited English Proficiency.
We are finalizing the process requirements at Sec.
441.301(c)(7)(iii)(B)(6) and (7) as proposed.
We are finalizing the requirements at Sec.
441.301(c)(7)(iii)(C)(4) and (5) with a modification to replace the
reference to Sec. 441.301(c)(7)(v)(B)(1) and (2) and adding a
reference to Sec. 441.301(c)(7)(v). We are also finalizing Sec.
441.301(c)(7)(iii)(C)(5) with a modification to change the reference to
45 CFR 164.510(b) to a broader reference to the HIPAA Privacy Rule (45
CFR part 160 and part 164 subparts A and E).
Aside from the modifications noted previously to Sec.
441.301(c)(7)(iii)(C)(4) and (5), we are finalizing Sec.
441.301(c)(7)(iii)(C) as proposed, with minor formatting changes.
We are finalizing the filing timeframe requirement at
Sec. 441.301(c)(7)(iv) with modifications by removing the expedited
resolution requirement at Sec. 441.301(c)(7)(iv)(B) and redesignating
Sec. 441.301(c)(7)(iv)(A) as Sec. 441.301(c)(7)(iv). The finalized
requirement at 441.301(c)(7)(iv) will read: Filing timeframes. A
beneficiary may file a grievance at any time.
We are finalizing the resolution and notification
requirement at Sec. 441.301(c)(7)(v)(A) with a modification to require
that the State resolve each grievance, and provide notice, as
expeditiously as the beneficiary's health condition (instead of health,
safety, and welfare) requires. The finalized requirement at Sec.
441.301(c)(7)(v)(A) will read: Basic rule. The State must resolve each
grievance, and provide notice, as expeditiously as the beneficiary's
health condition requires, within State-established timeframes that may
not exceed the timeframes specified in this section.
We are not finalizing the expedited resolution timeframe
at Sec. 441.301(c)(7)(v)(B)(2). Instead, we are redesignating Sec.
441.301(c)(7)(v)(B)(1) as Sec. 441.301(c)(7)(v)(B) and retitling Sec.
441.301(c)(7)(v)(B) as ``Resolution timeframes.'' We are also removing
the word ``standard'' from Sec. 441.301(c)(7)(v)(B). The finalized
requirement at Sec. 441.301(c)(7)(v)(B) will read: Resolution
timeframes. For resolution of a grievance and notice to the affected
parties, the timeframe may not exceed 90 calendar days from the day the
State receives the grievance. This timeframe may be extended under
paragraph (c)(7)(v)(C) of this section.
We are finalizing the timeframe extension requirement at
Sec. 441.301(c)(7)(v)(C) and (D) without substantive changes. We are
finalizing Sec. 441.301(c)(7)(v)(C) with a technical modification to
redesignate paragraphs (C)(1)(i) and (C)(1)(ii) as (C)(1) and (C)(2),
respectively. We are finalizing Sec. 441.301(c)(7)(v)(D) as proposed,
but with a technical modification to change the periods at the end of
Sec. 441.301(c)(7)(v)(D)(1) and (2) to semi-colons, and adding ``and''
at the end of Sec. 441.301(c)(7)(v)(D)(2).
We are finalizing the notice format requirement at Sec.
441.301(c)(7)(vi)(A) without substantive modification. However, we are
not finalizing the proposal relating to the expedited resolution
process at Sec. 441.301(c)(7)(vi)(B). Therefore, we are redesignating
Sec. 441.301(c)(7)(vi)(A) as Sec. 441.301(c)(7)(vi).
We are finalizing the recordkeeping requirements at Sec.
441.301(c)(7)(vii) without substantive modifications. However, we are
finalizing Sec. 441.301(c)(7)(viii)(B)(1) through (5) with semi-colons
rather than periods at the end of each paragraph, and with the word
``and'' at the end of Sec. 441.301(c)(7)(vii)(B)(5).
We are finalizing the applicability date requirements at
Sec. 441.301(c)(7)(viii) to specify that States must comply with the
requirement at paragraph (c)(7) beginning 2 years from the effective
date of this final rule.
Additionally, we are finalizing the application of the grievance
process requirements at Sec. 441.301(c)(7) to section 1915(j), (k) and
(i) authorities as follows:
For application to section 1915(j) services, we are not
finalizing a reference at Sec. 441.464(d)(2)(v), as we had proposed,
but rather finalizing a new requirement at Sec. 441.464(d)(5) that
specifies that States must implement and maintain a grievance process
in accordance with Sec. 441.301(c)(7), except that the references to
section 1915(c) of the Act are instead references to section 1915(j) of
the Act.
For application to section 1915(k) services, we are not
finalizing a reference at Sec. 441.555(b)(2)(iv), as we had proposed,
but rather finalizing a new requirement at Sec. 441.555(e) that
specifies that States must implement and maintain a grievance process
in accordance with Sec. 441.301(c)(7), except that the references to
section 1915(c) of the Act are instead references to section 1915(k) of
the Act.
For application to section 1915(i) services, we are
finalizing a new Sec. 441.745(a)(1)(iii) with modification to clarify
that the State must maintain a grievance process in accordance with
Sec. 441.301(c)(7), except that the references to section 1915(c) of
the Act are instead references to section 1915(i) of the Act. We are
redesignating the existing Sec. 441.745(a)(1)(iii) as Sec.
441.745(a)(1)(iv).
3. Incident Management System (Sec. Sec. 441.302(a)(6), 441.464(e),
441.570(e), 441.745(a)(1)(v) and 441.745(b)(1)(i))
Section 1902(a)(19) of the Act requires States to provide
safeguards as may be necessary to assure that eligibility for care and
services will be determined, and that such care and services will be
provided, in a manner consistent with simplicity of administration and
the best interests of the recipients. Section 1915(c)(2)(A) of the Act
and current Federal regulations at Sec. 441.302(a) require that States
have in place necessary safeguards to protect the health and welfare of
individuals receiving section 1915(c) waiver program services. Further,
as discussed previously in section II.B.1. of this rule, section
2402(a) of the Affordable Care Act requires the Secretary of HHS to
ensure that all States receiving Federal funds for HCBS, including
Medicaid, develop HCBS systems that are responsive to the needs and
choices of beneficiaries receiving HCBS, maximize independence and
self-direction, provide support and coordination to assist with a
community-supported life, and achieve a more a more consistent

[[Page 40598]]

and coordinated approach to the administration of policies and
procedures across public programs providing HCBS.\61\ Among other
things, section 2402(a)(3)(B)(ii) of the Affordable Care Act requires
development and oversight of a system to qualify and monitor providers.
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\61\ Section 2402(a) of the Affordable Care Act--Guidance for
Implementing Standards for Person-Centered Planning and Self-
Direction in Home and Community-Based Services Programs. Accessed at
https://acl.gov/sites/default/files/news%202016-10/2402-a-Guidance.pdf.
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As noted earlier in section II.B.1. of this rule, we released
guidance for section 1915(c) waiver programs included in the 2014
guidance,\62\ which noted that States should report on State-developed
performance measures to demonstrate that they meet six assurances,
including a Health and Welfare assurance for States to demonstrate that
they have designed and implemented an effective system for assuring
waiver participant health and welfare. Specifically, the 2014 guidance
highlighted, related to the Health and Welfare assurance, the
following:
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\62\ Modifications to Quality Measures and Reporting in Sec.
1915(c) Home and Community-Based Waivers. March 2014. Accessed at
https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_2.pdf.
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The State demonstrates on an ongoing basis that it
identifies, addresses, and seeks to prevent instances of abuse,
neglect, exploitation, and unexplained death;
The State demonstrates that an incident management system
is in place that effectively resolves incidents and prevents further
similar incidents to the extent possible;
The State's policies and procedures for the use or
prohibition of restrictive interventions (including restraints and
seclusion) are followed; and
The State establishes overall health care standards and
monitors those standards based on the responsibility of the service
provider as stated in the approved waiver.
Consistent with the expectations for other performance measures,
the 2014 guidance noted that States should conduct systemic remediation
and implement a Quality Improvement Project when they score below 86
percent on any of their Health and Welfare performance measures.
Despite States implementing these statutory and regulatory
requirements to protect the health and welfare of individuals receiving
section 1915(c) waiver program services, and States' adherence to
related subregulatory guidance, there have been notable and high-
profile instances of abuse and neglect in recent years that highlight
the risks associated with poor quality care and with inadequate
oversight of HCBS in Medicaid. For example, a 2018 report, ``Ensuring
Beneficiary Health and Safety in Group Homes Through State
Implementation of Comprehensive Compliance Oversight,'' \63\ (referred
to as the Joint Report, developed by ACL, OCR, and the OIG), found
systemic problems with health and safety policies and procedures being
followed in group homes and that failure to comply with these policies
and procedures left beneficiaries in group homes at risk of serious
harm.
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\63\ Ensuring Beneficiary Health and Safety in Group Homes
Through State Implementation of Comprehensive Compliance Oversight.
US Department of Health and Human Services, Office of the Inspector
General, Administration for Community Living, and Office for Civil
Rights. January 2018. Accessed at https://oig.hhs.gov/reports-and-publications/featured-topics/group-homes/group-homes-joint-report.pdf.
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In addition, in 2016 and 2017, OIG released several reports on
their review of States' compliance with Federal and State requirements
regarding critical incident reporting and
monitoring.^{64 65 66} OIG found that several States did not
comply with Federal waiver and State requirements for reporting and
monitoring critical incidents involving individuals receiving HCBS
through waivers. In particular, the reports indicated that:
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\64\ HHS OIG. ``Connecticut did not comply with Federal and
State requirements for critical incidents involving developmentally
disabled Medicaid beneficiaries.'' May 2016. Accessed at https://oig.hhs.gov/oas/reports/region1/11400002.pdf.
\65\ HHS OIG. ``Massachusetts did not comply with Federal and
State requirements for critical incidents involving developmentally
disabled Medicaid beneficiaries.'' July 2016. Accessed at https://oig.hhs.gov/oas/reports/region1/11400008.pdf.
\66\ HHS OIG. ``Maine did not comply with Federal and State
requirements for critical incidents involving Medicaid beneficiaries
with developmental disabilities.'' August 2017. Accessed at https://oig.hhs.gov/oas/reports/region1/11600001.pdf.
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Critical incidents were not reported correctly;
Adequate training to identify appropriate action steps for
reported critical incidents or reports of abuse or neglect was not
provided to State staff;
Appropriate data sets to trend and track critical
incidents were not accessible to State staff; and
Critical incidents were not clearly defined, making it
difficult to identify potential abuse or neglect.
In 2016, we conducted three State audits based at least in part on
concerns regarding health and welfare and media coverage on abuse,
neglect, or exploitation issues.\67\ We found that these three States
had not been meeting their section 1915(c) waiver assurances, similar
to findings reported by the OIG. In two cases, for the incidents of
concern, tracking and trending of critical incidents were not present.
Further, in at least two of the States, staffing at appropriate levels
was identified as an issue.
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\67\ Presentation by CMS for Advancing States: Quality in the
HCBS Waiver--Health and Welfare. See: http://www.nasuad.org/sites/nasuad/files/Final%20Quality%20201.pdf.
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In January 2018, the United States Government Accountability Office
(GAO) released a report on a study of 48 States that covered assisted
living services.\68\ The GAO found large inconsistencies between States
in their definition of a critical incident and their system's ability
to report, track, and collect information on critical incidents that
have occurred. States also varied in their oversight methods, as well
as the type of information they were reviewing as part of this
oversight. The GAO recommended that requiring States to report
information on incidents (such as the type and severity of incidents
and the number of incidents) would strengthen the effectiveness of
State and Federal oversight.
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\68\ Government Accountability Office. ``Medicaid assisted
living services--improved Federal oversight of beneficiary health
and welfare is needed.'' January 2018. Accessed at https://www.gao.gov/assets/690/689302.pdf.
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In July 2019, we issued a survey to States that operate section
1915(c) waivers, requesting information on their approach to
administering incident management systems. The goal of the survey was
to obtain a comprehensive understanding of how States organize their
incident management system to best respond to, resolve, monitor, and
prevent critical incidents in their waiver programs. The survey found
that:
Definitions of critical incidents vary across States and,
in some cases, within States for different HCBS programs or
populations;
Some States do not use standardized forms for reporting
incidents, thereby impeding the consistent collection of information on
critical incidents;
Some States do not have electronic incident management
systems, and, among those that do, many use systems with outdated
electronic platforms that are not linked with other State systems,
leading to the systems operating in silos and the need to consolidate
information across disparate systems; and
Many States cited the lack of communication within and
across State agencies, including with investigative agencies, as a
barrier to incident resolution.

[[Page 40599]]

Additionally, during various public engagement activities conducted
with interested parties over the past several years, we have heard that
ensuring access to HCBS requires that we must first ensure health and
safety systems are in place across all States, a theme underscored by
the Joint Report.
a. Incident Management System Requirements (Sec. 441.302(a)(6))
Based on these findings and reports, under the authorities at
sections 1902(a)(19) and 1915(c)(2)(A) of the Act and section
2402(a)(3)(B)(ii) of the Affordable Care Act, we proposed a new
requirement at Sec. 441.302(a)(6) to require that States provide an
assurance that they operate and maintain an incident management system
that identifies, reports, triages, investigates, resolves, tracks, and
trends critical incidents. This proposal is intended to ensure
standardized requirements for States regarding incidents that harm or
place a beneficiary at risk of harm and is based on our experience
working with States as part of the section 1915(c) waiver program and
informed by the incident management survey described previously in this
section of the final rule. In the absence of an incident management
system, people receiving section 1915(c) waiver program services are at
risk of preventable or intentional harm. As such, we believe that such
a system to identify and address incidents of abuse, neglect,
exploitation, or other harm during the course of service delivery is in
the best interest of and necessary for protecting the health and
welfare of individuals receiving section 1915(c) waiver program
services. We proposed similar requirements for section 1915(i), (j) and
(k) HCBS programs at Sec. Sec. 441.464(e), 441.570(e),
441.745(a)(1)(v), and 441.745(b)(1)(i); these are discussed further in
section II.B.3.i of this final rule.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Many commenters supported the proposal at Sec.
441.302(a)(6) to require States to provide an assurance that they
operate and maintain an incident management system that identifies,
reports, triages, investigates, resolves, tracks, and trends critical
incidents. Additionally, these commenters noted that the proposed
requirements for this incident management system can ensure States
standardize data and processes for critical incident monitoring,
identify trends, and influence timely oversight of responses to
incidents to minimize health and safety risks for beneficiaries
receiving HCBS.
Several commenters stated that establishing an incident management
system, including requirements for data-driven analytics and trend
reporting, would help to better inform States and providers by creating
new collaborative models to measure improvements to better ensure
quality of life for HCBS beneficiaries. In the same vein, one commenter
noted that States should use the data and information collected on
critical incidents to develop strategies to reduce or eliminate the
risk of abuse, neglect, or exploitation; to enable discovery of root
cause for occurrence of critical incidents; and to identify actions to
influence critical incidents proactively, instead of reactively.
Response: We appreciate the support for our proposal and agree that
requiring States to provide an assurance that they operate and maintain
an incident management system that identifies, reports, triages,
investigates, resolves, tracks, and trends critical incidents will
ensure that States are better informed and more able to identify root
causes for the occurrence of critical incidents, enabling them to act
more proactively to influence and prevent the occurrence of such
incidents.
Comment: A few commenters requested we clarify how States can fully
address critical incidents for dually eligible beneficiaries who are
enrolled in managed care plans, when the managed care plan does not
have access to Medicare claims data. In the same vein, they were also
concerned that States would require extensive resources to utilize the
Medicare claims data.
These commenters also requested clarification on the feasibility of
reporting across Medicare and Medicaid in dual eligible special needs
plan (D-SNP) contracts.
Response: Since 2011, we have provided States access to Medicare
data for dually-eligible beneficiaries, including for beneficiaries in
different categories of dual eligibility, free-of-charge via the
Medicare-Medicaid Data Sharing Program.\69\ Information on the
Medicare-Medicaid Data Sharing Program, including how to request data
and the standard data sharing agreements, is available through the
State Data Resource Center.\70\
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\69\ See Medicare-Medicaid Data Sharing Program at https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/StateAccesstoMedicareData.
\70\ See State Data Resource Center at https://www.statedataresourcecenter.com/home/contact-us.
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We proposed that the incident management system requirements, as
specified at Sec. 441.302(a)(6) and as finalized in this rule, will
apply to section 1915(c)(i), (j), and (k) services delivered through
managed care plans. We also note that dually eligible beneficiaries
enrolled in managed care plans known as fully integrated dual eligible
special needs plans (FIDE SNP) and highly integrated dual eligible
special needs plans (HIDE SNP), are subject to the incident management
requirements at Sec. 441.302(a)(6) as finalized. We will provide
technical assistance regarding the application of these requirements to
beneficiaries in different categories of dual eligibility.
Comment: A few commenters expressed concern that the requirements
we proposed for this incident management system generally seemed to be
more focused on documentation of critical incidents, rather than
impacting quality and outcomes for HCBS participants to ensure optimal
health and welfare. One commenter recommended that States should assure
that resolution of critical incidents focuses on preventing harm to the
HCBS participant(s) involved in the critical incident. This commenter
also suggested that States should take actions to not only prevent
further harm to HCBS participant(s) involved in a critical incident,
but actions based on the critical incident should be taken to prevent
further harm to all HCBS participants.
Response: We believe the requirements we proposed at Sec.
441.302(a)(6), and as finalized in this rule, give States the
flexibility to decide how to design and implement their incident
management system. We encourage States to consider implementing quality
improvement processes as part of their incident management systems, as
quality improvement processes can help States to promote the health and
welfare of beneficiaries by addressing systemic issues in their HCBS
programs. We also note that the purpose of tracking and trending
critical incidents is to assist States in understanding patterns that
require interventions to promote improvement and prevent the recurrence
of harm to beneficiaries.
We also refer readers to the requirements currently set forth at
Sec. 438.330(b)(5)(ii) that MCOs, PHIPs, and PAHPs participate in
efforts by the State to prevent, detect, and remediate critical
incidents, consistent with assuring beneficiary health and welfare as
required in Sec. 441.302 and Sec. 441.703(a). Further, as noted
herein, the six assurances and related

[[Page 40600]]

subassurances for section 1915(c) waiver programs, including the Health
and Welfare assurance, as set forth in the 2014 guidance, continue to
apply. In addition, as discussed in section II.B.8. of this final rule,
the HCBS Quality Measure Set reporting requirements include
requirements for States to implement quality improvement strategies in
their HCBS programs; while the HCBS Quality Measure Set requirements
being finalized in this rule are distinct and severable from the
incident management requirements being finalized at Sec.
441.302(a)(6), we believe the HCBS Quality Measure Set requirements
support the quality improvement objectives described by this commenter.
After consideration of these public comments, we are finalizing our
proposal to require at Sec. 441.302(a)(6) that States must provide an
assurance that the State operates and maintains an incident management
system that identifies, reports, triages, investigates, resolves,
tracks, and trends critical incidents as proposed.
b. Critical Incident Definition (Sec. 441.302(a)(6)(i)(A))
At Sec. 441.302(a)(6)(i)(A) through (G), we proposed new
requirements for States' incident management systems. Specifically, at
Sec. 441.302(a)(6)(i)(A), we proposed to establish a standard
definition of a critical incident to include, at a minimum, verbal,
physical, sexual, psychological, or emotional abuse; neglect;
exploitation including financial exploitation; misuse or unauthorized
use of restrictive interventions or seclusion; a medication error
resulting in a telephone call to or a consultation with a poison
control center, an emergency department visit, an urgent care visit, a
hospitalization, or death; or an unexplained or unanticipated death,
including but not limited to a death caused by abuse or neglect.
We proposed the Federal minimum standard definition of a critical
incident at Sec. 441.302(a)(6)(i)(A) to address the lack of a
standardized Federal definition for the type of events or instances
that States should consider a critical incident that must be reported
by a provider to the State and considered for an investigation by the
State to assess whether the incident was the result of abuse, neglect,
or exploitation, and whether it could have been prevented. The
definition we proposed at Sec. 441.302(a)(6)(i)(A) is based on
internal analyses of data and information obtained through a CMS survey
of States' incident management systems, commonalities across
definitions, and common gaps in States' definitions of critical
incidents (for instance, that many States do not consider sexual
assault to be a critical incident).
We also requested comment on whether there are specific types of
events or instances of serious harm to section 1915(c) waiver
participants, such as identity theft or fraud, that would not be
captured by the proposed definition and that should be included, and
whether the inclusion of any specific types of events or instances of
harm in the proposed definition would lead to the overidentification of
critical incidents.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the proposed minimum standard
definition of a critical incident. Commenters expressed that the
proposed requirements at Sec. 441.302(a)(6)(i)(A) establish a minimum
Federal definition of a critical incident which would help to
standardize practices across States and HCBS programs to better serve
and prevent harm or risk of harm for beneficiaries. A few commenters
noted the standardized Federal minimum definition of a critical
incident will increase consistency across States, section 1915(c)
waivers, and HCBS programs. A few commenters suggested CMS further
explain the critical incident definition to minimize misinterpretation,
stating that explanations of definitions for each type of critical
incident could ensure reporting is uniform and consistent across all
State programs and services. These commenters stated that without a
uniform understanding of each type of critical incident, critical
incidents could be over or under reported. Similarly, several other
commenters suggested that the definition of critical incident we
proposed is overly broad, expressing it could impede the State's
coordination with other agencies and interested parties. These
commenters indicated that more explanation of the definitions of
critical incident at Sec. 441.302(a)(6)(i)(A) could help to address
varying interpretations in implementation of the proposed requirements,
noting that each State Medicaid agency or interested parties could
independently establish meaning.
Response: We disagree with commenters that the proposed definition
of critical incident is overly broad. We believe that the proposed
requirements at Sec. 441.302(a)(6)(i)(A) provide States with a
comprehensive minimum standard definition of a critical incident. We
recommend that States view the definition as a minimum Federal
standard. States may consider expanding the definition to include other
health and safety concerns based on the unique needs of their HCBS
populations and the specific characteristics of their HCBS programs. We
plan to provide technical assistance, as needed, to States if they have
questions about the types of incidents that should be included in the
standardized definition, and how this definition relates to existing
critical incident definitions already in use.
Comment: Commenters responded to our request for comment on whether
there were specific types of events or instances of serious harm that
would not be captured by the proposed critical incident definition and
should be included. A few commenters suggested that we broaden the
definition of critical incident and suggested that the following types
of incidents be included in the proposed definition of critical
incident at Sec. 441.302(a)(6)(i)(A): abuse between HCBS waiver
housemates; expression of racism, sexism, homophobia, or transphobia by
a provider toward a beneficiary; lack of direct care workers; physical
or emotional harm suffered by participant; falls with severe or
moderate injury/illness; missed or delayed provision of services
identified in the person-centered plan; refusal of service; self-
neglect; and a range of harmful things beneficiaries may experience.
Alternatively, a few commenters recommended that CMS not expand the
minimum definition of critical incident further, indicating the
critical incident definition offers flexibility to States to expand
their critical incident definition to fit the HCBS program and
population served by the State. Commenters expressed that CMS should
provide technical assistance, for all States, including for States that
already have an incident management system with critical incident
definitions and policies and programs in place.
Response: We appreciate commenters sharing these suggestions. We
note that many of these types of events would be captured by the
minimum standard definition. For instance, we would consider abuse
between HCBS waiver housemates to fall under verbal, physical, sexual,
psychological, or emotional abuse. Similarly, expressions of racism,
sexism, homophobia, or transphobia by a provider toward a beneficiary
may be considered a critical incident. If a lack of direct care
workers, a refusal of service, or missed or delayed provision of
services identified in the person-centered service plan results in

[[Page 40601]]

harm or risk of risk from the failure of a provider to deliver needed
services, we would expect a State to consider those events as instances
of neglect. Physical or emotional harm suffered by a participant as a
result of one or more types of events included in our definition of
critical incidents or that results in death would also be captured as a
critical incident. Falls with severe or moderate injury/illness may be
considered critical incidents depending on whether they occur as a
result of an event included in our definition of critical incidents.
They would also be considered critical incidents if they result in
death. Some of these events, such as missed or delayed provision of
services identified in the person-centered service plan, could also
meet the definition of a grievance and be appropriate for consideration
under the grievance system, which we are finalizing as part of a
separate provision in Sec. 441.301(c)(7) (discussed in section II.B.2
of this rule.)
We decline to include refusing a service or self-neglect in the
minimum standard definition because we intend this definition to focus
on incidents that occur during the course of service delivery. However,
States may include these events in their own definitions.
We are unsure what the commenter intended by ``range of harmful
things beneficiaries may experience'' and are unable to respond
directly to that recommendation.
We appreciate these comments and will take this feedback into
consideration when developing resources for States on the incident
management system's requirements.
Comment: One commenter stated that we should consider whether what
constitutes a critical incident might differ between adult and child
beneficiaries and recommended that pediatricians could assist States in
development and implementation of incident management requirements,
including critical incident requirements. This commenter also stated
that data and information for children receiving HCBS and housed in
pediatric health systems should be linked with the State electronic
critical incident system proposed at Sec. 441.302(a)(6)(i)(B).
Response: As previously discussed, our proposal is to establish a
minimum Federal definition, and States may consider expanding the
definition to include other health and safety concerns based on the
unique needs of their HCBS populations. We also encourage States to
include input from interested parties, including experts in children
receiving HCBS, when developing and implementing their incident
management systems and policies and procedures to meet the proposed
requirements. We discuss requirements for data and information sharing
and electronic systems in more detail below in this section II.B.3. of
the rule.
Comment: Several commenters provided feedback about the inclusion
of medication errors resulting in a telephone call to or a consultation
with a poison control center in the proposed critical incident
definition at Sec. 441.302(a)(6)(i)(A)(5). One commenter expressed
support for the reporting of a medication error resulting in a
telephone call to or a consultation with a poison control center, and
agreed they should be reported by the provider to the State. Another
commenter expressed that beneficiaries receiving HCBS are encouraged to
be independent and have the right to self-determination, and completing
investigations on medication errors could be infringing upon HCBS
beneficiaries' self-determination. One commenter requested we consider
that managed care plans do not typically receive member data from
poison control centers unless they are contracted with the managed care
plan to provide this notification, making it difficult to track
incidents that result in a consultation with the poison control center
unless this data is captured elsewhere in member claims data. One
commenter expressed concern that including a medication error in the
definition of critical incidents could be problematic since not all
providers who serve HCBS beneficiaries are clinical staff who can
render a professional clinical determination of medication error, which
could result in medication errors being over or under reported and skew
data reports.
Response: We plan to provide States with technical assistance to
help address issues raised by providers in reporting any critical
incidents that occur during the delivery of services as specified in a
beneficiary's person-centered service plan, or any critical incidents
that are a result of the failure to deliver authorized services,
including medication errors resulting in a telephone call to or a
consultation with a poison control center. Because we also are
finalizing Sec. 441.302(a)(6)(i)(C) as described in II.B.3.d. of this
rule, we confirm that States must require providers to report to them
any critical incidents that occur during the delivery of services as
specified in a beneficiary's person-centered service plan, or any
critical incidents that are a result of the failure to deliver
authorized services. As such, a provider would be expected to report a
medication error resulting in a contact with a poison control center if
the medication error occurred during the delivery of services or a
result of the failure to deliver services. We believe that such a
system to identify and address incidents of abuse, neglect,
exploitation, or other harm during the course of service delivery is in
the best interest of and necessary for protecting the health and
welfare of individuals receiving HCBS.
Comment: One commenter requested that CMS clarify that in addition
to audio-only telephone, that the use of audio or video technology be
made acceptable to satisfy the requirement proposed at Sec.
441.302(a)(6)(i)(A)(5) that the State adopt the minimum standard
definition for critical incident for a medication error resulting in
contact with a poison control center.
Response: We do not have the authority to define additional
communication types or consultation methods for poison control centers.
We decline to add ``use of audio or video technology'' to the
requirement proposed at Sec. 441.302(a)(6)(i)(A)(5). We encourage
States to collaborate with their State and local poison control centers
to understand the types of consultation that are acceptable and make
requests for additional communication types or consultation methods for
poison control centers.
Comment: Several commenters responded to our solicitation to
comment on whether the proposed critical incident definition at Sec.
441.302(a)(6)(i)(A) should include other specific types of events or
instances of serious harm to beneficiaries receiving HCBS, such as
identity theft or fraud. Most commenters responding to the request for
comment recommended that CMS not expand the critical incident
definition to include identity theft or fraud, noting it could create
duplication of existing investigative and reporting processes.
Alternatively, a few commenters supported the inclusion of identity
theft and fraud in the critical incident definition. One commenter
recommended that CMS provide additional guidance on identity theft or
fraud in the context of exploitation, including financial exploitation
if added to the minimum critical incident definition. One commenter
expressed concern with including identity theft or fraud in the
proposed critical incident definition, except when the individual has
been formally and legally judged incompetent to make relevant
decisions.
Response: We agree with commenters that expanding the critical
incident definition at Sec. 441.302(a)(6)(i)(A) to include identity
theft or fraud could

[[Page 40602]]

create duplication of existing Federal investigative agencies and
reporting processes. Therefore, we have not identified a compelling
reason to add other types of incidents, such as identity theft or
fraud, to the standardized minimum definition of critical incidents we
proposed and are finalizing in this rule.
Comment: One commenter specifically responded to the request for
comment soliciting whether the proposed critical incident definition at
Sec. 441.302(a)(6)(i)(A) includes any specific types of events or
instances of harm that would lead to the overidentification of critical
incidents. The commenter supported the proposed definition, noting it
would not result in overidentification of critical incidents. This
commenter noted that, although the events included in the critical
incident definition they use are not the same as those in the proposed
critical incident definition at Sec. 441.302(a)(6)(i)(A), they
believed that the proposed definition would not cause
overidentification of critical incidents because their policies require
any incident, not solely those that are defined, to be reported.
Response: We appreciate the support for our proposal.
After consideration of these public comments, we are finalizing
Sec. 441.302(a)(6)(i)(A) as proposed with the following minor
modifications: a minor formatting modification at Sec.
441.302(a)(6)(i)(A)(3) to correct an improper italicization; a minor
technical modification at Sec. 441.302(a)(6)(i)(A)(5) to correct
missing punctuation; and a minor formatting modification to conclude
Sec. 441.302(a)(6)(i)(A)(6) with a semi-colon.
c. Electronic Critical Incident Systems (Sec. 441.302(a)(6)(i)(B))
At Sec. 441.302(a)(6)(i)(B), we proposed that States must have
electronic critical incident systems that, at a minimum, enable
electronic collection, tracking (including of the status and resolution
of investigations), and trending of data on critical incidents. We also
solicited comment on the burden associated with requiring States to
have electronic critical incident systems and whether there is specific
functionality, such as unique identifiers, that should be required or
encouraged for such systems. As part of our proposal, we also
encouraged, but did not propose to require, States to advance the
interoperable exchange of HCBS data and support quality improvement
activities by adopting standards in 45 CFR part 170 and other relevant
standards identified in the Interoperability Standards Advisory
(ISA).\71\
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\71\ Relevant standards adopted by HHS and identified in the ISA
include the USCDI (https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi), eLTSS (https://www.healthit.gov/isa/documenting-care-plans-person-centered-services), and Functional
Assessment Standardized Items (https://www.healthit.gov/isa/representing-patient-functional-status-andor-disability).
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We received public comments on these proposals. Below is a summary
of the public comments we received and our responses.
Comment: Several commenters supported the proposed requirements at
Sec. 441.302(a)(6)(i)(B), that a State have an electronic critical
incident system that, at a minimum, enables electronic collection,
tracking (including of the status and resolution of investigations),
and trending of data on critical incidents. A few commenters expressed
concern about the impact of the proposed requirements on States that
already have multiple incident management systems, including electronic
systems, for different programs, administered by different operating
agencies. Commenters requested that we allow States flexibility to
design the electronic critical incident systems, which we proposed to
require at Sec. 441.302(a)(6)(i)(B), by taking into account existing
State incident management systems and processes which fit their unique
program and systems structures. A few commenters were especially
concerned about the impact on States that already enable electronic
collection of critical incidents and questioned whether a single
incident management system is required to be implemented across all
waivers and authorities, or whether a separate system can be
implemented for each waiver or program. Commenters expressed concern
about having to consolidate current incident management systems,
designed based on State infrastructure, into a single electronic
system.
Response: We acknowledge that some States currently have electronic
incident management systems in place for HCBS, and it is not our intent
for States to abandon these systems. We encourage States to build upon
existing incident management system infrastructure and protocols to
meet the electronic critical incident systems requirements we proposed
at Sec. 441.302(a)(6)(i)(B) and are finalizing in this rule.
We believe that a single electronic critical incident system may
best enable the State to prevent the occurrence of critical incidents
and protect the health and safety of beneficiaries across their
lifespan. For example, in the absence of a single electronic critical
incident system, States may have more difficulty developing and
implementing a comprehensive plan to address and resolve critical
incidents across HCBS programs and authorities. A single electronic
incident management system could also better enable the State to track
critical incidents for providers that deliver services in multiple HCBS
programs or under different HCBS authorities, identify systemic causes
of critical incidents, or detect patterns of preventable critical
incidents and, in turn, implement strategies to more effectively
prevent critical incidents.
We assume that some States may need to make at least some changes
to their existing systems to fully comply with the requirements at
Sec. 441.302(a)(6)(i)(B). We have attempted to provide the State with
as much flexibility as possible in the design of their incident
management system. As such, the State may opt to maintain multiple
systems that comply with the requirements at Sec. 441.302(a)(6).
We encourage each State to consider developing a single electronic
critical incident system for all of their HCBS programs under section
1915(c), (i), (j), and (k) authorities.
However, if a State chooses to implement multiple systems, we
strongly encourage the State to share data among those systems to
enable the development and implementation of a comprehensive plan to
address and resolve critical incidents for HCBS beneficiaries and track
and trend incidents for specific providers. We note that the State is
responsible for ensuring compliance with the requirements of applicable
Federal or State laws and regulations governing confidentiality,
privacy, and security of certain information and records.
Comment: Several commenters recommended that CMS consider providing
additional funding opportunities to assist States in the development
and implementation of electronic critical incident systems we proposed
to require at Sec. 441.302(a)(6)(i)(B).
Response: As noted in the proposed rule (88 FR 27979), in Medicaid,
enhanced Federal financial participation (FFP) is available at a 90
percent Federal Medical Assistance Percentage (FMAP) for the design,
development, or installation of improvements of mechanized claims
processing and information retrieval systems, in accordance with
applicable

[[Page 40603]]

Federal requirements.\72\ Enhanced FFP at a 75 percent FMAP is also
available for operations of such systems, in accordance with applicable
Federal requirements.\73\ However, we reiterate that receipt of these
enhanced funds is conditioned upon States meeting a series of standards
and conditions to ensure investments are efficient and effective.\74\
---------------------------------------------------------------------------

\72\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\73\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\74\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
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Comment: A few commenters supported CMS encouraging States to
advance the interoperable exchange of HCBS data by adopting standards
in the Interoperability Standards Advisory (ISA), and requested we
further promote, support, and incentivize the development of better
interoperability infrastructure to facilitate more seamless data
sharing between States, providers, and managed care plans.
Response: While we did not propose any specific requirements
related to interoperability for the electronic incident management
system, States should ensure the advancement of the interoperable
exchange of HCBS data, to further improve the identification and
reporting on the prevalence of critical incidents for HCBS
beneficiaries to support quality improvement activities that can help
promote the health and safety of HCBS beneficiaries. We clarify that,
to receive enhanced FMAP funds, the State Medicaid agency is required
at Sec. 433.112(b)(12) to ensure the alignment with, and incorporation
of, standards and implementation specifications for health information
technology adopted by the Office of the National Coordinator for Health
IT in 45 CFR part 170, subpart B, among other requirements set forth in
Sec. 433.112(b)(12). States should also consider adopting relevant
standards identified in the Interoperability Standards Advisory (ISA)
\75\ to bolster improvements in the identification and reporting on the
prevalence of critical incidents for HCBS beneficiaries and present
opportunities for the State to develop improved information systems
that can support quality improvement activities that can help promote
the health and safety of HCBS beneficiaries.
---------------------------------------------------------------------------

\75\ Relevant standards adopted by HHS and identified in the ISA
include the USCDI (https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi), eLTSS (https://www.healthit.gov/isa/documenting-care-plans-person-centered-services), and Functional
Assessment Standardized Items (https://www.healthit.gov/isa/representing-patient-functional-status-andor-disability).
---------------------------------------------------------------------------

Comment: A few commenters recommended CMS not require States to
include additional specific functionalities, including unique
identifiers.
Response: We agree with commenters to not require or encourage a
specific functionality, such as unique identifiers.
After consideration of public comments received, we are finalizing
our proposal to require at Sec. 441.302(a)(6)(i)(B) that States use an
information system, meeting certain requirements, for electronic data
collection, tracking, and trending of critical incident data, as
proposed, with minor modifications. We are finalizing Sec.
441.302(a)(6)(i)(B) with the addition of the word ``enables'' and
striking ``enables'' from Sec. 441.302(a)(6)(i)(B)(1) so that it
applies to all paragraphs in Sec. 441.302(a)(6)(i)(B). We are
finalizing minor formatting changes to conclude paragraphs
(a)(6)(i)(B)(2) and (3) with semi-colons.
d. Provider Critical Incident Reporting--During Delivery of or Failure
To Deliver Services (Sec. 441.302(a)(6)(i)(C))
At Sec. 441.302(a)(6)(i)(C), we proposed that States must require
providers to report to the State any critical incidents that occur
during the delivery of section 1915(c) waiver program services as
specified in a waiver participant's person-centered service plan, or
any critical incidents that are a result of the failure to deliver
authorized services. We believe that this proposed requirement will
help to specify provider expectations for reporting critical incidents
and to ensure that harm that occurs because of the failure to deliver
services will be appropriately identified as a critical incident.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported the requirement we proposed at
Sec. 441.302(a)(6)(i)(C) that a State must require providers to report
to the State any critical incidents that occur during the delivery of
services as specified in a beneficiary's person-centered service plan,
or any critical incidents that are a result of the failure to deliver
authorized services. One commenter expressed that requiring providers
to report on any critical incidents that occur during service delivery,
or as a result of the failure to deliver authorized services,
encourages better, more transparent reporting and provides a more
accurate reflection of the prevalence and types of critical incidents
occurring in HCBS delivery. Another commenter noted missed or delayed
services, especially a pattern of missed or delayed service
appointments, can lead to poor health outcomes for beneficiaries.
Response: We appreciate the expressions of support for our
proposal.
Comment: A few commenters raised concerns with the requirement we
proposed at Sec. 441.302(a)(6)(i)(C) that States require providers to
report to them any critical incidents that occur during the delivery of
section 1915(c) waiver program services as specified in a waiver
participant's person-centered service plan, or as a result of the
failure to deliver services authorized under a section 1915(c) waiver
program and as specified in the waiver participant's person-centered
service plan. One commenter expressed that this requirement would
require reviewers of critical incidents to draw conclusions about the
service provider's role, without taking into account a beneficiary's
right to privacy, decision making, personal preferences, and autonomy,
especially for beneficiaries who live in their own home and/or receive
care from different providers. Another commenter expressed concern
that, even after a thorough investigation, it is often impossible to
definitively substantiate certain allegations of abuse or neglect or
determine whether a negative outcome, such as a hospitalization, was
the direct result of a critical incident that occurred during the
delivery of services or as a result of the failure to deliver services
as authorized. A commenter expressed concern that the requirement for
providers to report to States any critical incidents that are a result
of the failure to deliver authorized services is too broad and could
cause critical incident reporting to be ineffective and inconsistent.
Response: We proposed requirements for States regarding the
reporting of critical incidents by providers that we believe are
important for identifying and addressing incidents of abuse, neglect,
exploitation, or other harms that occur during the course of service
delivery or as a result of the failure to deliver services. We note
that the reporting of a critical incident does not necessarily mean
that an action should be taken by the State in response to the critical
incident. Further, even if no action is warranted or it is not possible
to substantiate an allegation of abuse or neglect, it is still
important to have the critical incident reported, and investigation
conducted if appropriate, in case, for instance, a pattern later

[[Page 40604]]

emerges that indicates systemic causes of critical incidents or that
warrants action by the State.
Comment: A few commenters suggested we modify Sec. 441.302(a)(6)
to specify that critical incident records be collected in accordance
with applicable privacy laws, such as HIPAA and its implementing
regulations.
Response: In consideration of public comments received, we have not
identified a compelling reason, and therefore decline, to add a
reference to specific privacy laws to the requirements at Sec.
441.302(a)(6). We note that States have existing obligations to comply
with applicable Federal and State laws and regulations governing
confidentiality, privacy, and security of information, records, and
data obtained and maintained in a critical incident system. We note
that this regulatory requirement does not modify these obligations to
comply with applicable laws.
Comment: One commenter suggested we require States to accept
critical incident reports, and acknowledge receipt of the report,
directly from beneficiaries or other interested parties, establish a
process to accept such reports, and allow reports to be made orally or
in writing. The commenter recommended that we should require that
punitive action is neither threatened nor taken against any individual
who makes a report in good faith.
Response: We decline to modify our proposal to broaden the
requirements related to critical incidents we proposed at Sec.
441.302(a)(6)(i)(C) in this final rule. Although we proposed to only
require providers to report critical incidents at Sec.
441.301(a)(6)(i)(C), the State is not precluded from accepting the
reporting of critical incidents from others, who are not providers,
including beneficiaries or other interested parties. We believe that
our proposal that the State assure a system to identify and address
incidents of abuse, neglect, exploitation, or other harm during the
course of service delivery, or as a result of the failure to deliver
services, is in the best interest of, and necessary for, protecting the
health and welfare of beneficiaries receiving HCBS in section 1915(c)
waiver programs and under section 1915(i), (j) and (k) State plan
services.
We encourage States to include in their policies and procedures
that beneficiaries would not be prohibited from reporting critical
incidents and, in doing so, would be free from any punitive action when
reporting a critical incident to the State. We have provided States
with flexibility to establish their own policies and procedures related
to addressing punitive actions against beneficiaries involved in the
critical incident process.
After consideration of these public comments, we are finalizing our
proposal at Sec. 441.302(a)(6)(i)(C) with a modification to require
providers to report to the State, within State-established timeframes
and procedures, any critical incident that occurs during the delivery
of services authorized under section 1915(c) of the Act and as
specified in the beneficiary's (instead of waiver participant's)
person-centered service plan, or occurs as a result of the failure to
deliver services authorized under section 1915(c) of the Act and as
specified in the beneficiary's (instead of waiver participant's)
person-centered service plan. (New language identified in bold.) We are
also finalizing Sec. 441.302(a)(6)(i)(C) with minor formatting changes
to conclude Sec. 441.302(a)(6)(i)(C) with a semi-colon.
e. Data Sources To Identify Unreported Critical Incidents (Sec.
441.302(a)(6)(i)(D))
At Sec. 441.302(a)(6)(i)(D), we proposed to require that States
use claims data, Medicaid Fraud Control Unit data, and data from other
State agencies such as Adult Protective Services or Child Protective
Services to the extent permissible under applicable State law to
identify critical incidents that are unreported by providers and occur
during the delivery of section 1915(c) waiver program services, or as a
result of the failure to deliver authorized services. We believe that
such data can play an important role in identifying serious instances
of harm to waiver program participants, which may be unreported by a
provider, such as a death that occurs as a result of choking of an
individual with a developmental disability residing in a group home, or
a burn that occurs because a provider failed to appropriately supervise
someone with dementia and that results in an emergency department
visit.
We solicited comment on whether States should be required to use
these data sources to identify unreported critical incidents, and
whether there are other specific data sources that States should be
required to use to identify unreported critical incidents.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters expressed support for our proposal at
Sec. 441.302(a)(6)(i)(D). One commenter noted that these data sources
could help establish pathways at the beneficiary and systems levels for
reporting, tracking, and addressing issues with person-centered
planning and provider noncompliance, and they will also advance efforts
to ensure States' ongoing compliance with the HCBS Settings Rule.
Another commenter approved of the requirement that States use data
sources to identify unreported critical incidents, including claims
data, Medicaid Fraud Control Unit data, and data from other State
agencies such as Adult Protective Services or Child Protective Services
to the extent permissible under applicable State law, expressing that
implementation of this requirement could result in a more accurate
reflection of the prevalence and types of critical incidents occurring
in HCBS delivery, in working with managed care plans and providers.
Response: We appreciate the support for our proposal.
Comment: Two commenters requested that collaboration with police
and law enforcement be included in the data sources under Sec.
441.302(a)(6)(i)(D). One commenter noted CMS should require providers
to report to law enforcement in a timely manner any reasonable
suspicion of a crime committed against a beneficiary receiving HCBS.
Another commenter recommended CMS require providers to report suspicion
of a crime to law enforcement. A commenter also questioned whether an
investigative agency includes law enforcement. Additionally, a few
commenters also recommended that collaboration with the designated
Protection & Advocacy (P&A) system for the State be included in the
data sources under Sec. 441.302(a)(6)(i)(D), citing that P&A systems
have the authority to investigate incidents of abuse and neglect of
individuals with developmental disabilities if the incidents are
reported to the system or if there is probable cause to believe that
the incidents occurred.
Response: While we intend that Sec. 441.302(a)(6)(i)(D)
establishes the minimum requirements for States to use certain data
sources to detect unreported critical incidents, States retain
flexibility to use additional data sources, such as police and law
enforcement data and P&A systems, to identify critical incidents that
are unreported by providers. However, we decline to include additional
data sources in the regulation at this time. We are concerned that it
would be difficult for States to use non-Medicaid data sources, such as
data from P&A systems and law enforcement records, to effectively
identify unreported critical incidents for Medicaid beneficiaries and
that such requirements would be administratively and operationally

[[Page 40605]]

burdensome for States to implement. At Sec. 441.302(a)(6)(i)(D), we
proposed to require that States use claims data, Medicaid Fraud Control
Unit data, and data from other State agencies to the extent permissible
under applicable State law to identify critical incidents that are
unreported by providers and occur during the delivery of section
1915(c) waiver program services, or as a result of the failure to
deliver authorized services, identifying Adult Protective Services or
Child Protective Services as examples of State agencies. We encourage
the State to include additional State agency data sources to detect
unreported critical incidents as defined at Sec. 441.302(a)(6)(i)(D)
as appropriate.
Comment: A couple commenters stated that CMS should direct States
to take definitive enforcement actions to address provider compliance
with the incident management requirements. One commenter proposed to
penalize HCBS providers that do not timely report critical incidents by
imposing monetary penalties or suspension from the Medicaid program.
Another commenter recommended that we allow States to implement an
escalation of remedies to address provider reporting, up to and
including a separate investigation with sanctions, if necessary.
Response: We reiterate that States already have broad authority to
create penalties, whether monetary or non-monetary, for providers that
have violated their obligations as set forth by the State Medicaid
program.
After consideration of public comments we received, we are
finalizing our proposal at Sec. 441.302(a)(6)(i)(D), with a
modification to require providers to report to the State, within State-
established timeframes and procedures, any critical incident that
occurs during the delivery of services authorized under section 1915(c)
of the Act and as specified in the beneficiary's (instead of waiver
participant's) person-centered service plan, or occurs as a result of
the failure to deliver services authorized under section 1915(c) of the
Act and as specified in the beneficiary's (instead of waiver
participant's) person-centered service plan. (New language identified
in bold.) We are also finalizing Sec. 441.302(a)(6)(i)(D) with minor
formatting changes to conclude Sec. 441.302(a)(6)(i)(D) with a semi-
colon.
f. Critical Incident Data Sharing (Sec. 441.302(a)(6)(i)(E))
At Sec. 441.302(a)(6)(i)(E), we proposed States share information,
consistent with the regulations in 42 CFR part 431, subpart F on the
status and resolution of investigations. We set the expectation that
data sharing could be accomplished through the use of information
sharing agreements with other entities in the State responsible for
investigating critical incidents if the State refers critical incidents
to other entities for investigation.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters recommended CMS provide technical
assistance related to the data sharing requirements. Commenters noted
data sharing barriers in and between the State, agencies, and divisions
within in the same agency, influencing successful implementation of the
proposed requirements at Sec. 441.302(a)(6)(i)(G).
Response: We appreciate these comments identifying the need for
technical assistance related to data and information sharing
agreements. We will take this feedback into consideration when
developing resources for States on the incident management system
requirements.
Further, we generally note that the State is responsible for
ensuring its critical incident system(s) comply with all applicable
Federal and State laws and regulations governing confidentiality,
privacy, and security of records obtained, maintained, and disclosed
via this incident management system.
After consideration of public comments, we are finalizing the
proposed Sec. 441.302(a)(6)(i)(E) as proposed, with a minor technical
modification to clarify that mention of critical incident in Sec.
441.302(a)(6)(i)(E) refers to critical incidents as defined in
paragraph (a)(6)(i)(A) of this section (meaning Sec. 441.302).
g. Separate Investigation of Critical Incidents (Sec.
441.302(a)(6)(i)(F))
At Sec. 441.302(a)(6)(i)(F), we proposed to require the State be
required to separately investigate critical incidents if the
investigative agency fails to report the resolution of an investigation
within State-specified timeframes. These proposed requirements are
intended to ensure that the failure to effectively share information
between State agencies or other entities in the State responsible for
investigating incidents does not impede a State's ability to
effectively identify, report, triage, investigate, resolve, track, and
trend critical incidents, particularly where there could be evidence of
serious harm or a pattern of harm to a section 1915(c) waiver program
participant for which a provider is responsible.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Many commenters expressed serious concerns about the
requirements we proposed at Sec. 441.302(a)(6)(i)(F), that the State
is required to separately investigate critical incidents if the
investigative agency fails to report the resolution of an investigation
within State-specified timeframes. Commenters recognized the importance
of cross-agency collaboration but identified that the timeframes for
investigations by investigative agencies, such as Adult Protective
Services and Child Protective Services, can be prolonged. Further,
opening a separate concurrent investigation at the State level, if the
investigative agency fails to report the resolution of an investigation
within State-specified timelines, could compromise the integrity of
both investigations. Some commenters questioned the feasibility of the
requirements at Sec. 441.302(a)(6)(i)(F) due to State statutory
provisions around investigative agency responsibilities and allowable
data sharing.
Response: These proposed requirements are intended to ensure that
the failure to effectively share information between State agencies or
other entities in the State responsible for investigating incidents
does not impede a State Medicaid agency's ability to effectively
identify, report, triage, investigate, resolve, track, and trend
critical incidents to protect the health and welfare of HCBS
beneficiaries. We believe that requiring the State to separately
investigate critical incidents if the investigative agency fails to
report the resolution of an investigation within State-specified
timeframes will strengthen the ability of the State Medicaid agency to
act quickly and/or separately if investigations by Adult Protective
Services, Child Protective Services, or other State agencies are taking
longer to address and resolve. Further, it will ensure that the State
has the information it needs to take action to protect beneficiary
health and safety if a provider is responsible (intentionally or
unintentionally) for causing harm to beneficiaries or putting
beneficiaries at risk of harm. Additionally, we note that the State
Medicaid agency may have the authority to take certain actions against
the provider (such as suspend their Medicaid enrollment) that other
State agencies, such as Adult Protective

[[Page 40606]]

Services or Child Protective Services, are unable to take.
We have provided States with flexibility to establish State-
specified timelines to separately investigate critical incidents if the
investigative agency fails to report the resolution of an investigation
and encourage States to take into account specific nuances that may
impact the timelines.
After consideration of public comments, we are finalizing the
proposed Sec. 441.302(a)(6)(i)(F) as proposed.
h. Reporting (Sec. Sec. 441.302(a)(6)(i)(G) and 441.302(a)(6)(ii))
Section 1902(a)(6) of the Act requires State Medicaid agencies to
make such reports, in such form and containing such information, as the
Secretary may from time to time require, and to comply with such
provisions as the Secretary may from time to time find necessary to
assure the correctness and verification of such reports. Under our
authority at section 1902(a)(6) of the Act, we proposed to modernize
the health and welfare reporting by requiring all States to report on
the same Federally prescribed quality measures as opposed to the State-
developed measures, which naturally vary State by State. Specifically,
at Sec. 441.302(a)(6)(i)(G), we proposed to require that States meet
the reporting requirements at Sec. 441.311(b)(1) related to the
performance of their incident management systems. We discuss these
reporting requirements in our discussion of proposed Sec.
441.311(b)(1). Further, under our authority at sections 1915(c)(2)(A)
and 1902(a)(19) of the Act, we proposed to codify a minimum performance
level to demonstrate that States meet the requirements at Sec.
441.302(a)(6). Specifically, at Sec. 441.302(a)(6)(ii), we proposed to
require that States demonstrate that: an investigation was initiated,
within State-specified timeframes, for no less than 90 percent of
critical incidents; an investigation was completed and the resolution
of the investigation was determined, within State-specified timeframes,
for no less than 90 percent of critical incidents; and corrective
action was completed, within State-specified timeframes, for no less
than 90 percent of critical incidents that require corrective action.
This minimum performance level strengthens health and welfare reporting
requirements while taking into account that there may be legitimate
reasons for delays in investigating and addressing critical incidents.
In the proposed rule (88 FR 27980), we considered whether to allow
good cause exceptions to the minimum performance level in the event of
a natural disaster, public health emergency, or other event that would
negatively impact a State's ability to achieve a minimum 90 percent. We
opted not to propose good cause exceptions because the minimum 90
percent performance level accounts for various scenarios that might
impact a State's ability to achieve these performance levels, and there
are existing disaster authorities that States could utilize to request
a waiver of these requirements in the event of a public health
emergency or a disaster.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A couple of commenters expressed concern about
implementing the performance levels at the 90 percent threshold at
Sec. 441.302(a)(6)(ii). Alternatively, one commenter recommended the
performance level should instead be 100 percent to protect the health
and welfare of HCBS beneficiaries, since the minimum performance level
to demonstrate that States meet the requirements at Sec. 441.302(a)(6)
should gauge State performance by how efficiently they conduct critical
incident investigations.
Response: We believe the performance levels at the 90 percent
threshold sets a high, but achievable standard, for complying with the
requirements at Sec. 441.302(a)(6)(ii). Our intention in proposing
minimum performance requirements at Sec. 441.302(a)(6)(ii) was to
provide a standard by which we could oversee, and hold States
accountable, for complying with the requirements for an incident
management system that we are finalizing at Sec. 441.302(a)(6).
Further it, was intended to strengthen the critical incident
requirements while also recognizing that there may be legitimate
reasons why critical incident processes occasionally are not completed
timely in all instances. However, it is our expectation that States
make reasonable efforts to ensure every critical incident is
investigated, resolved, and (if necessary) subject to corrective action
within State-specified timeframes.
Comment: A few commenters suggested CMS include a good-cause
exception to the incident management performance level for certain
instances that fall outside of the specified performance standards for
appropriate reasons, such as for resource challenges or when the
investigating agency requests that the State refrain from contact due
to an ongoing and active investigation. Alternatively, a few commenters
supported the approach in the proposed rule to not allow good-cause
exceptions to the incident management performance level, observing that
the 90 percent minimum performance level already gives States leeway
for unexpected occurrences.
Response: We reiterate our belief that the 90 percent minimum
performance level sets a high, but achievable standard for States'
incident management systems. We underscore that the minimum 90 percent
performance level accounts for various scenarios that might impact the
State's ability to achieve these performance levels, and there are
existing disaster authorities that States could utilize to request a
waiver of these requirements in the event of a public health emergency
or a disaster. The 90 percent minimum performance level is intended to
strengthen incident management system requirements. We also recognize
that there may be legitimate reasons why incident management processes
occasionally are not completed timely in all instances. We reiterate
that our expectation is that States make reasonable efforts to ensure
every critical incident is investigated, resolved, and (if necessary)
subject to corrective action within State-specified timeframes.
After consideration of public comments, we are finalizing our
proposals at Sec. Sec. 441.302(a)(6)(i)(G) and 441.302(a)(6)(ii) as
proposed.
i. Applicability Date
We proposed at Sec. 441.302(a)(6)(iii) to provide States with 3
years to implement these requirements in FFS delivery systems following
the effective date of the final rule. For States with managed care
delivery systems under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and that include HCBS in the MCO's,
PIHP's, or PAHP's contract, we proposed to provide States until the
first rating period that begins on or after 3 years after the effective
date of the final rule to implement these requirements.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters expressed concerns about the burden
they believe will be associated with the proposed provision to
implement the incident management requirements at Sec. 441.302(a)(6)
within 3 years following the effective date of the final rule.
Commenters stated that implementation of the incident management
requirements as proposed at Sec. 441.302(a)(6)(i)(B) could require

[[Page 40607]]

potential State statute and regulatory amendments, lead time for
securing additional technology resources, and operational and workflow
changes. Commenters requested CMS consider alternative effective dates
for the incident management system ranging from 4 to 7 years, with the
most frequent suggestions at 4 to 5 years to address these concerns.
Response: We believe that 3 years for States to comply with the
requirements at Sec. 441.302(a)(6) is realistic and achievable for
most of the incident management provisions. However, we agree that the
proposed 3-year implementation timeframe for States to comply with the
electronic incident management requirements at Sec.
441.302(a)(6)(i)(B) could create hardships for States. We agree that
States and managed care plans may require a timeframe longer than 3
years to address funding needs, policy changes, IT procurements, and
other systems changes, necessary to implement an electronic incident
management system as required at Sec. 441.302(a)(6)(i)(B), which may
necessitate 5 years.
After consideration of public comments, we are finalizing Sec.
441.302(a)(6)(iii) with minor modifications to correct erroneous uses
of the word ``effective.'' We are retitling the requirement at Sec.
441.302(a)(6)(iii) as Applicability date (rather than Effective date).
We are also modifying the applicability date to require that States
must comply with the requirements in paragraph (a)(6) beginning 3 years
from the effective date of this final rule, except for the requirement
at paragraph (a)(6)(B) of this section, with which the State must
comply beginning 5 years from the effective date of the final rule. In
addition, we are making a technical correction to clarify that the
applicability dates in Sec. 441.302(a)(6)(iii) apply only to the
requirements in Sec. 441.302(a)(6). Additionally, we are also
finalizing with modification the language pertaining to managed care
delivery systems to improve accuracy and alignment with common phrasing
in managed care contracting policy at Sec. 441.302(a)(6)(iii).
j. Application to Other Authorities
At Sec. 441.302(a)(6)(iii), we proposed to apply these
requirements to services delivered under FFS or managed care delivery
systems. Section 2402(a)(3)(A) of the Affordable Care Act requires
States to improve coordination among, and the regulation of, all
providers of Federally and State-funded HCBS programs to achieve a more
consistent administration of policies and procedures across HCBS
programs. In the context of Medicaid coverage of HCBS, it should not
matter whether the services are covered directly on an FFS basis or by
a managed care plan to its enrollees. The requirement for consistent
administration should require consistency between these two modes of
service delivery. We proposed that a State must ensure compliance with
the requirements in Sec. 441.302(a)(6) with respect to HCBS delivered
both under FFS and managed care delivery systems.
Section 2402(a)(3)(A) of the Affordable Care Act requires States to
improve coordination among, and the regulation of, all providers of
Federally and State-funded HCBS programs to achieve a more consistent
administration of policies and procedures across HCBS programs. In
accordance with the requirement of section 2402(a)(3)(A) of the
Affordable Care Act for States to achieve a more consistent
administration of policies and procedures across HCBS programs and
because of the importance of assuring health and welfare for other HCBS
State plan options, we proposed to include the incident management
requirements at Sec. 441.302(a)(6) within the applicable regulatory
sections, including section 1915(j), (k), and (i) State plan services
at Sec. Sec. 441.464(e), 441.570(e), and 441.745(a)(1)(v),
respectively. We note that a conforming reference to Sec.
441.745(b)(1)(i), although not discussed in preamble of the proposed
rule, was included in the proposed rule (88 FR 28086); the reference
supports the application of incident management requirements to section
1915(i) services. Consistent with our proposal for section 1915(c)
waivers, we based on our authority under section 1902(a)(19) of the Act
to assure that there are safeguards for beneficiaries. We believe the
same arguments for these requirements for section 1915(c) waivers are
equally applicable for these other HCBS authorities.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the requirements at Sec.
441.302(a)(6)(iii), expressing that States must ensure compliance with
the requirements in Sec. 441.302(a)(6) with respect to HCBS delivered
both in FFS and managed care delivery systems, noting there is no
meaningful difference between abuse, neglect, or exploitation
perpetrated by a provider paid through a managed care plan or by a
provider paid through a FFS delivery system. One commenter recommended
we assist States in developing instructions for State incident
management systems for work with Medicaid managed care plans and
contracted providers in implementing the requirements in Sec.
441.302(a)(6).
Response: We appreciate the support for our proposal. We will take
this feedback into consideration when developing technical assistance
and other resources for States on the incident management system
requirements.
After consideration of public comments received, we are finalizing
the proposal at Sec. 441.302(a)(6)(iii) for HCBS delivered under both
FFS and managed care delivery systems.
Comment: Several commenters supported the proposal to apply the
incident management system requirements at Sec. 441.302(a)(6) to
sections 1915(i), (j) and (k) authorities. Commenters expressed that
equally applicable requirements for States across waiver authorities
can ensure better access, equity, quality, and reporting for HCBS
beneficiaries.
Response: We appreciate the support for our proposal.
Comment: A few commenters responded to our request for comment on
whether we should establish similar health and welfare requirements for
section 1905(a) State plan personal care, home health, and case
management services. Several commenters supported the proposal not to
extend the incident management requirements at Sec. 441.302(a)(6) to
section 1905(a) services and expressed that applying these requirements
to State plan benefits would pose critical challenges for State
Medicaid and other operating agencies, due to varying levels of HCBS
provided and different data reporting infrastructure States have for
1905(a) services. A few commenters recommended that CMS apply the
incident management system requirements to mental health rehabilitative
services delivered under section 1905(a) State plan authority. A couple
of commenters suggested that mental health rehabilitative services are
considered home- and community-based services under the broader
definition enacted by Congress in the American Rescue Plan Act of 2021.
They also indicated that many Medicaid beneficiaries with mental health
disorders and disabilities receiving services under the section 1905(a)
authority would benefit from the beneficiary protections afforded
through the incident management system requirements at Sec.
441.302(a)(6).

[[Page 40608]]

Response: At this time, we are not mandating inclusion of section
1905(a) services in the State requirements for incident management
systems, due to the statutory and regulatory differences between
services authorized under sections 1905(a) and 1915 of the Act. That
said, we are not persuaded by the argument that including section
1905(a) services would simply be too much work, as we do believe it is
critical that Medicaid beneficiaries have protections for freedom from
harm. We acknowledge that many beneficiaries, particularly those
receiving mental health services, are served by section 1905(a)
services, and encourage States to consider development of critical
incident processes to address protections for beneficiaries from harm
or events that place a beneficiary at risk of harm.
After consideration of public comments, we are finalizing
application of the requirements at Sec. 441.302(a)(6) to other HCBS
program authorities within the applicable regulatory sections,
including section 1915(j), (k), and (i) State plan services. We are
finalizing the requirements at Sec. Sec. 441.464(e), 441.570(e), and
441.745(a)(1)(v) and (b)(1)(i) as proposed, with minor modifications to
clarify that the references to section 1915(c) of the Act are instead
references to section 1915(j), 1915(k), and 1915(i) of the Act,
respectively.
k. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
requirements at Sec. Sec. 441.302(a)(6), as follows:
We are finalizing Sec. 441.302(a)(6)(i)(A) as proposed
with the following minor modifications: a minor formatting modification
at Sec. 441.302(a)(6)(i)(A)(3) to correct an improper italicization; a
minor technical modification at Sec. 441.302(a)(6)(i)(A)(5) to correct
missing punctuation; and a minor formatting modification to conclude
Sec. 441.302(a)(6)(i)(A)(6) with a semi-colon.
We are finalizing Sec. 441.302(a)(6)(i)(B) as proposed
with the following minor modifications: adding the word ``Enables'' to
Sec. 441.302(a)(6)(i)(B) and striking it from Sec.
441.302(a)(6)(i)(B)(1); and minor formatting modifications to conclude
Sec. 441.302(a)(6)(i)(B)(2) and (3) with a semi-colon.
We are finalizing the requirements at Sec.
441.302(a)(6)(i)(C) with a modification to require providers to report
to the State, within State-established timeframes and procedures, any
critical incident that occurs during the delivery of services
authorized under section 1915(c) of the Act and as specified in the
beneficiary's person-centered service plan, or occurs as a result of
the failure to deliver services authorized under section 1915(c) of the
Act and as specified in the beneficiary's person-centered service plan.
We are also finalizing Sec. 441.302(a)(6)(i)(C) with a minor
formatting change so that it concludes with a semi-colon.
We are finalizing the requirements at Sec.
441.302(a)(6)(i)(D, with a modification to require providers to report
to the State, within State-established timeframes and procedures, any
critical incident that occurs during the delivery of services
authorized under section 1915(c) of the Act and as specified in the
beneficiary's person-centered service plan, or occurs as a result of
the failure to deliver services authorized under section 1915(c) of the
Act and as specified in the beneficiary's person-centered service plan.
We are also finalizing Sec. 441.302(a)(6)(i)(D) with a minor
formatting change so that it concludes with a semi-colon.
We are finalizing the requirement at Sec.
441.302(a)(6)(i)(E) with a minor formatting modification to change a
reference to Sec. 441.302(a)(6)(i)(A) to paragraph (a)(6)(i)(A).
We are finalizing the requirements at Sec.
441.302(a)(6)(i)(F) and (G) and (a)(6)(ii) as proposed.
We are finalizing the requirement at Sec.
441.302(a)(6)(iii) with modifications to specify that States must
comply with the requirements in paragraph (a)(6) beginning 3 years from
the effective date of this final rule; except for the requirement at
paragraph (a)(6)(B) of this section, with which the State must comply
beginning 5 years after the date that is the effective date of this
final rule; and in the case of the State that implements a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's,
or PAHP's contract, the first rating period for contracts with the MCO,
PIHP, or PAHP beginning on or after 3 years from the effective date of
this final rule, except for the requirement at paragraph (a)(6)(B) of
this section, with which the first rating period for contracts with the
MCO, PIHP, or PAHP beginning on or after 5 years from the effective
date of this final rule.
We are finalizing the requirements at Sec. Sec.
441.464(e), 441.570(e), and 441.745(a)(1)(v) and (b)(1)(i) with minor
modifications to clarify that the references to section 1915(c) of the
Act are instead references to section 1915(j), 1915(k), and 1915(i) of
the Act, respectively.
4. Reporting (Sec. 441.302(h))
As discussed earlier in section II.B.1. of this rule, section
2402(a)(3)(A) of the Affordable Care Act requires HHS to promulgate
regulations to ensure that States develop HCBS systems that are
designed to improve coordination among, and the regulation of, all
providers of Federally and State-funded HCBS programs to achieve a more
consistent administration of policies and procedures across HCBS
programs. We also believe that standardizing reporting across HCBS
authorities will streamline and simplify reporting for providers,
improve States' and CMS's ability to assess HCBS quality and
performance, and better enable States to improve the quality of HCBS
programs through the availability of comparative data. Further, section
1902(a)(6) of the Act requires State Medicaid agencies to make such
reports, in such form and containing such information, as the Secretary
may from time to time require, and to comply with such provisions as
the Secretary may from time to time find necessary to assure the
correctness and verification of such reports.
To avoid duplicative or conflicting reporting requirements at Sec.
441.302(h), we proposed to amend Sec. 441.302(h) by removing the
following language: ``annually''; ``The information must be consistent
with a data collection plan designed by CMS and must address the
waiver's impact on -''; and by removing paragraphs (1) and (2) under
Sec. 441.302(h). Further, we proposed to add ``, including the data
and information as required in Sec. 441.311'' at the end of the new
amended text, ``Assurance that the agency will provide CMS with
information on the waiver's impact.'' By making these changes, we
proposed to consolidate reporting expectations in one new section at
proposed Sec. 441.311, described in section II.B.7. of the proposed
rule, under our authority at section 1902(a)(6) of the Act and section
2402(a)(3)(A) of the Affordable Care Act. As noted earlier in section
II.B.1. of the proposed rule, this reporting will supersede existing
reporting for section 1915(c) waivers and standardize reporting across
section 1915 HCBS authorities.
We did not receive specific comments on this proposal.
We are finalizing our proposed amendment of Sec. 441.302(h) as
proposed.
We did receive comments on proposed Sec. 441.311, described in
section II.B.7. of this rule, which establishes a new Reporting
Requirements section. Comments on this proposal and our

[[Page 40609]]

responses are summarized in section II.B.7. of this final rule.
5. HCBS Payment Adequacy (Sec. Sec. 441.302(k), 441.464(f),
441.570(f), 441.745(a)(1)(vi))
Section 1902(a)(30)(A) of the Act requires State Medicaid programs
to ensure that payments to providers are consistent with efficiency,
economy, and quality of care and are sufficient to enlist enough
providers so that care and services are available to beneficiaries at
least to the extent as to the general population in the same geographic
area. Access to most HCBS generally requires hands-on and in-person
services to be delivered by direct care workers. Direct care workers
are referred to by various names, such as direct support professionals,
personal care attendants, and home health aides, within and across
States. They perform a variety of roles, including nursing services,
assistance with activities of daily living (such as mobility, personal
hygiene, and eating) and instrumental activities of daily living (such
as cooking, grocery shopping, and managing finances), behavioral
supports, employment supports, and other services to promote community
integration for older adults and people with disabilities. We discuss
the definition of direct care workers in more detail below in the
context of our proposed definition of direct care workers.
Direct care workers typically earn low wages and receive limited
benefits ^{76 77 78} contributing to a shortage of direct care
workers and high rates of turnover in this workforce, which can limit
access to and impact the quality of HCBS. Workforce shortages can also
reduce the cost-effectiveness of services for State Medicaid agencies
that take into account the actual cost of delivering services when
determining Medicaid payment rates, such as by increasing the reliance
on overtime and temporary staff, which have higher hourly costs than
non-overtime wages paid to permanent staff. Further, an insufficient
supply of HCBS providers can prevent individuals from transitioning
from institutions to home and community-based settings and from
receiving HCBS that can prevent institutionalization. HCBS is, on
average, less costly than institutional services,^{79 80} and
most older adults and people with disabilities prefer to live in the
community. Accordingly, limits on the availability of HCBS lessen the
ability for State Medicaid programs to deliver LTSS in a cost-
effective, beneficiary friendly manner.
---------------------------------------------------------------------------

\76\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\77\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\78\ We recognize that there are workforce shortages that may
impact access to other Medicaid-covered services aside from HCBS. We
are focusing in this rule on addressing workforce shortages in HCBS
and continue to assess the feasibility and potential impact of other
actions to address workforce shortages in other parts of the health
care sector.
\79\ Reaves, E.L., & Musumeci, M.B. December 15, 2015. Medicaid
and Long-Term Services and Supports: A Primer. Kaiser Family
Foundation. Accessed at https://www.kff.org/medicaid/report/medicaid-and-long-term-services-and-supports-a-primer/.
\80\ Kim, M-Y, Weizenegger, E., & Wysocki, A. July 22, 2022.
Medicaid Beneficiaries Who Use Long-Term Services and Supports:
2019. Chicago, IL: Mathematica. Accessed at https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-user-brief-2019.pdf.
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Shortages of direct care workers and high rates of turnover also
reduce the quality of HCBS. For instance, workforce shortages can
prevent individuals from receiving needed services and, in turn, lead
to poorer outcomes for people who need HCBS. Insufficient staffing can
also make it difficult for providers to achieve quality standards.\81\
High rates of turnover can reduce quality of care,\82\ including
through the loss of experienced and qualified workers and by reducing
continuity of care for people receiving HCBS,\83\ which is associated
with the reduced likelihood of improvement in function among people
receiving home health aide services.\84\
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\81\ American Network of Community Options and Resources
(ANCOR). 2021. The state of America's direct support workforce 2021.
Alexandria, VA: ANCOR. Accessed at https://www.ancor.org/sites/default/files/the_state_of_americas_direct_support_workforce_crisis_2021.pdf.
\82\ Newcomer R, Kang T, Faucett J . Consumer-directed personal
care: comparing aged and non-aged adult recipient health-related
outcomes among those with paid family versus non-relative providers.
Home Health Care Serv Q. 2011;30(4):178- 97.
\83\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\84\ Russell D, Rosati RJ, Peng TR, Barr[oacute]n Y,
Andreopoulos E . Continuity in the provider of home health aide
services and the likelihood of patient improvement in activities of
daily living. Home Health Care Manage Pract. 2013;25(1):6-12.
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While workforce shortages have existed for years, the COVID-19
pandemic exacerbated the problem, leading to higher rates of direct
care worker turnover (for instance, due to higher rates of worker-
reported stress), an inability of some direct care workers to return to
their positions prior to the pandemic (for instance, due to difficulty
accessing child care or concerns about contracting COVID-19 for people
with higher risk of severe illness), workforce shortages across the
health care sector, and wage increases in retail and other jobs that
tend to draw from the same pool of workers.^{85 86 87} Further,
demand for direct care workers is expected to continue rising due to
the growing needs of the aging population, the changing ability of
aging caregivers to provide supports, the increased provision of
services in the most integrated community setting rather than
institutional services, and a decline in the number of younger workers
available to provide services.^{88 89 90}
---------------------------------------------------------------------------

\85\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\86\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\87\ American Network of Community Options and Resources
(ANCOR). 2021. The state of America's direct support workforce 2021.
Alexandria, VA: ANCOR. Accessed at https://www.ancor.org/sites/default/files/the_state_of_americas_direct_support_workforce_crisis_2021.pdf.
\88\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\89\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\90\ Centers for Medicare & Medicaid Services. November 2020.
Long-Term Services and Supports Rebalancing Toolkit. Accessed at
https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-rebalancing-toolkit.pdf.
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Section 2402(a) of the Affordable Care Act requires the Secretary
of HHS to ensure that all States receiving Federal funds for HCBS,
including Medicaid, develop HCBS systems that are responsive to the
needs and choices of beneficiaries receiving HCBS, maximize
independence and self-direction, provide coordination for and support
each person's full engagement in community life, and achieve a more
consistent and coordinated approach to the administration of policies
and procedures across public programs providing HCBS.\91\ In
particular, section 2402(a)(1) of the Affordable Care Act requires
States to allocate resources for

[[Page 40610]]

services in a manner that is responsive to the changing needs and
choices of beneficiaries receiving HCBS, while section
2402(a)(3)(B)(iii) of the Affordable Care Act requires States to
oversee and monitor HCBS system functions to assure a sufficient number
of qualified direct care workers to provide self-directed personal
assistance services. To comply with sections 2402(a)(1) and
2402(a)(3)(B)(iii) of the Affordable Care Act, States must have a
sufficient direct care workforce to be able to deliver services that
are responsive to the changing needs and choices of beneficiaries, and,
specifically, a sufficient number of qualified direct care workers to
provide self-directed personal assistance services. We proposed
requirements across section 1915(c), (i), (j) and (k) HCBS programs to
further this outcome.
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\91\ Section 2402(a) of the Affordable Care Act--Guidance for
Implementing Standards for Person-Centered Planning and Self-
Direction in Home and Community-Based Services Programs. Accessed at
https://acl.gov/sites/default/files/news%202016-10/2402-a-Guidance.pdf.
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a. Assurance of Sufficient Rates (Sec. 441.302(k))
Consistent with section 1902(a)(30)(A) of the Act and sections
2402(a)(1) and 2402(a)(3)(B)(iii) of the Affordable Care Act, we
proposed to require at Sec. 441.302(k) that State Medicaid agencies
provide assurance that payment rates for certain HCBS authorized under
section 1915(c) of the Act are sufficient to ensure a sufficient direct
care workforce (defined and explained later in this section of the
rule) to meet the needs of beneficiaries and provide access to services
in accordance with the amount, duration, and scope specified in the
person-centered service plan, as required under Sec. 441.301(c)(2). We
believe that this proposed requirement supports the economy,
efficiency, and quality of HCBS authorized under section 1915(c) of the
Act, by ensuring that a sufficient portion of State FFS and managed
care payments for HCBS go directly to compensation of the direct care
workforce.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A significant number of commenters raised the issue of
State Medicaid rates for homemaker, home health aide, and personal care
services. Many commenters suggested that requiring that a sufficient
portion, or even requiring a specific percent, of Medicaid payments be
spent on compensation for direct care workers will not address rate
sufficiency, which they regard as the underlying cause of low wages for
direct care workers. Even commenters who were supportive of Sec.
441.302(k) generally or the proposed minimum performance level at Sec.
441.302(k)(3) (discussed further below) acknowledged that the policies
may be more successful if they coincided with rate increases to ensure
that providers' service operations remain fully supported. Many
commenters recommended that as an alternative to (or in addition to)
this proposal, we create requirements that States regularly review and
update or increase their rates.
Several commenters were concerned that wages for direct care
workers will not increase if the underlying Medicaid payment rates for
the services remain low and are not increased. However, one commenter
suggested that if a State's Medicaid rates are low, this places even
greater importance on ensuring that as much of the rate as possible is
going to compensation for direct care workers.
A few commenters expressed the belief that the accountability and
transparency created by the proposal, in addition to the associated
reporting requirement we proposed at Sec. 441.311(e) (discussed
further in section II.B.7. of this rule), would encourage providers to
pass more of their Medicaid payments along to direct care worker wages.
A few commenters offered anecdotal observations that, when their State
allocated additional funds to HCBS providers, the commenters believed
the increased funding was not passed along to direct care worker wages.
One commenter noted that a permanent payment adequacy requirement is
preferable to the temporary pass-through policies that have been
enacted for one-time rate increases, because a permanent requirement
would not be dependent on rate increases.
Response: While section 1902(a)(30)(A) of the Act does not provide
us with authority to require specific payment rates or rate-setting
methodologies, section 1902(a)(30)(A) of the Act does provide us with
authority to oversee that States assure that payments are consistent
with efficiency, economy, and quality of care and are sufficient to
enlist enough providers so that care and services are available under
the plan, at least to the extent that such care and services are
available to the general population in the geographic area. We did not
propose to establish, and are not finalizing, specific payment rates
for HCBS under the Medicaid program. Instead, we reiterate that under
section 1902(a)(30)(A) of the Act payments must be sufficient to
recruit and retain enough providers to ensure care and services are
available to beneficiaries; we proposed to implement this requirement
by specifying a percentage of Medicaid payments be spent on
compensation to direct care workers. We believe this policy will also
promote, and be consistent with, economy, efficiency, and quality of
care.
Broadly speaking, we also do not believe that simply increasing
rates alone, without setting guardrails for how the payments are
allocated, would ensure that direct care workers' wages will increase.
Rather, we agree with commenters who believed that, regardless of the
underlying Medicaid rate, requiring a certain amount of Medicaid
payments be spent on compensation will help ensure that Medicaid
payments are distributed in a way that supports direct care workers,
including their recruitment and retention, to the greatest extent
possible. While we did not propose, and are not finalizing, a
requirement that State Medicaid agencies increase their rates, we
anticipate that States will examine their rates to assure they are
sufficient to support the direct care workforce to comply with the
policy we proposed and are finalizing with modifications, as discussed
further herein. We also direct commenters to the proposals discussed in
section II.C. of this final rule, which includes a number of provisions
related to rate transparency that are intended to support FFS rate
sufficiency.
Comment: One commenter recommended that we revise Sec. 441.302(k)
to specify that rates must be sufficient to ensure a sufficient number
of providers, including members of the direct care workforce. The
commenter stated that this revision would match the broader term
``provider'' in section 1902(a)(30)(A) of the Act while highlighting
the importance of the direct care workforce.
Response: We appreciate the commenter's feedback, but we decline to
make the recommended revision. At this time, we want to make the focus
of the requirement explicitly on the individuals who are part of the
direct care workforce, whether they act as individual providers (such
as by working as an independent contractor), are employed by a provider
entity, or otherwise. We agree with the commenter that section
1902(a)(30)(A) of the Act requires that Medicaid payments must be
sufficient to enlist enough providers so that care and services are
available to beneficiaries at least to the extent that such care and
services are available to the general population in the geographic
area. We note that section 1902(a)(30)(A) of the Act also requires that
States assure that payments are consistent with efficiency, economy,
and quality of care. We agree that enrolling sufficient numbers of

[[Page 40611]]

providers is critical to Medicaid service delivery, and that providers
in turn may not be able to deliver services if they do not have a
sufficient number of direct care workers. As noted in a previous
response, we proposed to implement these requirements by specifying a
percentage of Medicaid payments be spent on compensation to direct care
workers. We believe this policy will promote, and be consistent with,
economy, efficiency, and quality of care, as required by statute at
section 1902(a)(3)(A) of the Act.
Comment: One commenter requested clarification on whether the
payment adequacy requirement applies only to the voluntary, nonprofit
sector or whether it also applies to State-operated services.
Response: Given the varied nature of HCBS programs, we specifically
proposed for the payment adequacy requirement to apply broadly to
compensation paid to direct care workers by providers receiving
payments for furnishing homemaker, home health aide, or personal care
services from the State; we did not propose to apply these requirements
to only certain types of providers or their ownership arrangements. We
specifically proposed at Sec. 441.302(k)(1)(ii)(G) (which we are
finalizing at Sec. 441.302(k)(1)(ii) as discussed later in this
section) that a direct care worker, to whom this requirement would
apply, may be employed by or contracted with a Medicaid provider, State
agency, or third party or delivering services under a self-directed
service model. The requirements we proposed, and are finalizing in this
section II.B.5, under Sec. 441.302(k) require States to assure that
payment rates are adequate to ensure a sufficient direct care workforce
by, in turn, ensuring that providers spend a certain percentage of
their total payments for certain HCBS on compensation for direct care
workers furnishing those HCBS.
After consideration of the comments received, we are finalizing the
assurance requirement at Sec. 441.302(k) with modifications as
discussed in this section II.B.5 of this final rule. We are finalizing
the language we proposed in the introductory paragraph at Sec.
441.302(k) with technical modifications so that it is clear that the
reference to person-centered service plans is to beneficiaries' person-
centered service plans. The finalized language at Sec. 441.302(k) will
read: HCBS payment adequacy. Assurance that payment rates are adequate
to ensure a sufficient direct care workforce to meet the needs of
beneficiaries and provide access to services in the amount, duration,
and scope specified in beneficiaries' person-centered service plans.
b. Minimum Performance Requirement and Flexibilities (Sec.
441.302(k)(2), (3), (4), (5), and (6))
Our proposal at Sec. 441.302(k)(2) and (3) was designed to affect
the inextricable link between sufficient payments being received by the
direct care workforce and access to and, ultimately, the quality of
HCBS received by Medicaid beneficiaries. We believe that this proposed
requirement would not only benefit direct care workers but also
individuals receiving Medicaid HCBS because supporting and stabilizing
the direct care workforce will result in better qualified employees,
lower turnover, and a higher quality of care. The direct care workforce
must be able to attract and retain qualified workers in order for
beneficiaries to access providers of the services they have been
assessed to need and for the direct care workforce to be comprised of
workers with the training, expertise, and experience to meet the
diverse and often complex HCBS needs of individuals with disabilities
and older adults. Without access to a sufficient pool of direct care
workers, individuals are forced to forgo having their needs met, or
have them addressed by workers without sufficient training, expertise,
or experience to meet their unique needs, both of which could lead to
worsening health and quality of life outcomes, loss of independence,
and institutionalization.^{92 93 94 95} Further, we believe
that ensuring adherence to a Federal standard of the percentage of
Medicaid payments going to direct care workers is a concrete step in
recruitment and retention efforts to stabilize this workforce by
enhancing salary competitiveness in the labor market. In the absence of
such requirements, we may be unable to support and stabilize the direct
care workforce because we would not be able to ensure that the payments
are used primarily and substantially to pay for care and services
provided by direct care workers. Therefore, at Sec. 441.302(k)(3)(i),
we proposed to require that at least 80 percent of all Medicaid
payments, including but not limited to base payments and supplemental
payments, with respect to the following services be spent on
compensation to direct care workers: homemaker services, home health
aide services, and personal care services.\96\
---------------------------------------------------------------------------

\92\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\93\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
\94\ American Network of Community Options and Resources
(ANCOR). 2021. The state of America's direct support workforce 2021.
Alexandria, VA: ANCOR. Accessed at https://www.ancor.org/sites/default/files/the_state_of_americas_direct_support_workforce_crisis_2021.pdf.
\95\ Chong, N., I. Akorbirshoev, J. Caldwell, H.S. Kaye, and M.
Mitra. 2021. The relationship between unmet need for home and
community-based services and health and community living outcomes.
Disability Health Journal. Accessed at https://www.sciencedirect.com/science/article/abs/pii/S1936657421001953.
\96\ We note that section 2402(a) of the Affordable Care Act
applies broadly to all HCBS programs and services funded by HHS.
Further, section 2402(a) does not include limits on the scope of
services, HCBS authorities, or other factors related to its use of
the term HCBS. Therefore, we believe that there is no indication
that personal care, homemaker, and home health aide services would
fall outside the scope of section 2402(a).
---------------------------------------------------------------------------

While many States have already voluntarily established such
minimums for payments authorized under section 1915(c) of the Act,\97\
we believe a Federal standard would support ongoing access to, and
quality and efficiency of, HCBS. Our proposal was based on feedback
from States that have implemented similar requirements for payments for
certain HCBS under section 9817 of the ARP \98\ or other State-led
initiatives. We refer readers to our proposed rule for more specific
discussion of the feedback we received from States regarding their
implementation of similar requirements (88 FR 27984).
---------------------------------------------------------------------------

\97\ For instance, as part of their required activities to
enhance, expand, or strengthen HCBS under ARP section 9817, some
States have required that a minimum percentage of rate increases and
supplemental payments go to the direct care workforce. See https://www.medicaid.gov/medicaid/home-community-based-services/guidance/strengthening-and-investing-home-and-community-based-services-for-medicaid-beneficiaries-american-rescue-plan-act-of-2021-section-9817/index.html for more information on ARP section 9817.See https://www.medicaid.gov/medicaid/home-community-based-services/guidance/strengthening-and-investing-home-and-community-based-services-for-medicaid-beneficiaries-american-rescue-plan-act-of-2021-section-9817/index.html for more information on ARP section 9817.
\98\ Information on State activities to expand, enhance, or
strengthen HCBS under ARP section 9817 can be found on Medicaid.gov
at https://www.medicaid.gov/medicaid/home-community-based-services/guidance/strengthening-and-investing-home-and-community-based-services-for-medicaid-beneficiaries-american-rescue-plan-act-of-2021-section-9817/index.html.
---------------------------------------------------------------------------

We focused our proposed requirement on homemaker services, home
health aide services, and personal care services because they are
services for which we

[[Page 40612]]

expect that the vast majority of payment should be comprised of
compensation for direct care workers. These services are comprised of
individualized supports for Medicaid beneficiaries delivered by direct
care workers and generally have low equipment or supply costs relative
to other services. Further, these are services that would most commonly
be conducted in individuals' homes and general community settings. As
such, there should be low facility or other indirect costs associated
with the services. We requested comment on the following options for
the minimum percentage of payments that must be spent on compensation
to direct care workers for homemaker services, home health aide
services, and personal care services: (1) 75 percent; (2) 85 percent;
and (3) 90 percent. If an alternate minimum percentage was recommended,
we requested that commenters provide the rationale for that minimum
percentage.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Many commenters (regardless of whether they supported the
overall proposal itself) applauded our acknowledgement of, and efforts
to address, HCBS workforce shortages, which many commenters
characterized as a ``crisis.'' Many commenters appeared to agree that
wages to direct care workers are generally low, and that these low
wages contribute to overall workforce challenges. Both providers and
beneficiaries submitted comments detailing struggles they have had in
hiring and retaining qualified direct care workers. Some of these
commenters described the frustration of having to constantly recruit
and train new direct care workers. Some commenters described having to
turn away new clients due to staff shortages, and beneficiaries
reported experiencing delays or reductions in their services due to
difficulty in finding direct care workers to provide the services. Many
direct care workers also submitted personal examples of the hardships
caused by financial strain due to inadequate pay, including having to
work long hours at multiple jobs to earn extra income, missing time
with their own families, struggling to pay bills, risking exposure to
(or contracting) COVID-19, and experiencing burnout and psychological
stress. A few of these commenters indicated they had left the direct
care workforce due to low wages.
Several commenters stated that the proposed minimum performance
requirement, if finalized, would likely lead to increases in wages for
direct care workers and strengthen the workforce, which in turn could
improve the quality of HCBS. In particular, a number of commenters
noted the potential for the proposal to have a positive impact on
workers who are Black, other people of color, and women, who are
disproportionately represented in the direct care workforce--groups
that have historically experienced low wages due to discrimination.
Commenters were able to draw anecdotal connections between wages
and worker retention. A few providers, for instance, noted that they
had made efforts to increase their workers' wages, and observed that
the increase in wages had a positive impact on their staff retention
and the number of beneficiaries the providers were able to serve.
A few other commenters noted that there are other factors that may
contribute to worker shortages, and recommended that we continue to
partner with the Administration for Community Living and other Federal
agencies to promote a comprehensive, integrated campaign that addresses
multiple facets of the workforce shortage, including promotion of and
improvement of social valuation of this work, support of workforce
pipelines, changes to immigration policy, and creative strategies for
atypical workforce development.
Response: We thank commenters for sharing their personal
experiences and perspectives on how they have been affected by the
direct care workforce shortage and the low wages paid to many direct
care workers. We share the belief that this requirement will create a
foundation of support for the direct care workforce, which we believe
is fundamental to HCBS delivery. We focused in this proposal on
compensation for direct care workers because, as we noted above and
many commenters confirmed anecdotally, many direct care workers have
been paid low wages for a long time.^{99 100} We recognize that
other factors also play important roles in worker retention and
shortages. While we will continue to partner with other Federal
agencies to address these issues, some of the factors affecting the
workforce lie outside of our regulatory purview and are outside of the
scope of this proposal.
---------------------------------------------------------------------------

\99\ MACPAC Issue Brief. State Efforts to Address Medicaid Home-
and Community-Based Services Workforce Shortages. March 2022.
Accessed at https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
\100\ Campbell, S., A. Del Rio Drake, R. Espinoza, K. Scales.
2021. Caring for the future: The power and potential of America's
direct care workforce. Bronx, NY: PHI http://phinational.org/wp-content/uploads/2021/01/Caring-for-the-Future-2021-PHI.pdf.
---------------------------------------------------------------------------

Comment: A significant number of commenters provided feedback on
the idea of having a national minimum performance level (separate from
providing comment on what the percentage should be). One commenter,
representing several State agencies, supported the intent of the
proposal and indicated that the proposed requirements could ``improve
recruitment, retention and economic security of the HCBS direct care
workforce.'' While offering cautions, the commenter indicated that many
States generally support a single national minimum performance
requirement, but they also recommended that we consider providing
States with flexibility related to the requirement based on provider
size, rural/urban status, and risk of closure.
Many commenters expressed concerns that a single national minimum
performance level could fail to take into account various factors that
might affect the percent of Medicaid payments that is spent on
compensation for direct care workers including substantial differences
among HCBS waiver programs, such as size, services, populations,
service area, and staffing needs; State requirements for providers,
such as differences in business operations requirements, licensure
costs, staff training requirements, or whether States require providers
to maintain physical office space; and local economic environments,
including cost of living, taxes, and wage laws. Many commenters
requested that we not finalize a minimum performance level, so that
providers may be allowed flexibility to allocate their Medicaid
payments as they determine to be appropriate. One commenter, while
acknowledging a workforce crisis, noted that Area Agencies on Aging and
provider organizations are taking steps to improve recruitment and
retention and that a Federal mandate such as the 80 percent minimum
performance level proposed in the rule is unnecessary, may have
unintended consequences, and may complicate State and local efforts
currently underway.
Response: After consideration of public comments as described in
this section II.B.5 of this rule, we are finalizing a national minimum
performance level in this final rule. We believe that not doing so
would fail to help address the chronic shortages in the HCBS direct
care workforce. In this context, the status quo amounts to minimal
oversight over how much of the Medicaid payment is going to support the
direct care workers who are

[[Page 40613]]

performing the core activities of homemaker, home health aide, and
personal care services. While some States have already implemented
initiatives to ensure that a certain percentage of Medicaid payments or
rate increases are going to direct care worker compensation, as noted
above, we believe a Federal requirement is necessary and would be more
effective to promote consistency and transparency nationwide.
We agree that there may be State or local circumstances that impact
the percent of Medicaid payments that is spent on compensation for
direct care workers. Where possible, we have built flexibilities into
this requirement as discussed further in this section II.B.5 to ensure
that it addresses certain differences among HCBS programs and
providers. Specifically, as we discuss in detail later in this section,
we are modifying the policy we proposed at Sec. 441.302(k) by: (1)
adding a definition of excluded costs at Sec. 441.302(k)(1)(iii) to
ensure certain costs are not included in the minimum performance level
calculation of the percentage of Medicaid payments to providers that is
spent on compensation for direct care workers; (2) revising the
definition of direct care worker proposed at Sec. 441.301(k)(1)(ii) to
clarify that clinical supervisors are included in the definition of
direct care workers; (3) revising Sec. 441.302(k)(3)(ii) to allow
States to set a separate minimum performance level for small providers;
(4) adding a new provision at Sec. 441.302(k)(4) to provide an option
for States to develop reasonable, objective criteria to identify small
providers to meet a small provider minimum performance level set by the
State; (5) adding a new provision at Sec. 441.302(k)(5) to allow
States to develop reasonable, objective criteria to exempt certain
providers from meeting the minimum performance level requirement; and
(6) adding a new provision at Sec. 441.302(k)(7) to exempt the Indian
Health Service (IHS) and Tribal health programs subject to 25 U.S.C.
1641 from the HCBS payment adequacy requirements at Sec. 441.302(k).
The specific modifications and the rationale for these modifications
are discussed in greater detail in this section II.B.5. of the final
rule.
Further, we are modifying the policy we proposed at Sec.
441.302(k) to require States to comply with this HCBS payment adequacy
policy beginning 6 years after the effective date of this final rule,
rather than the 4 years we proposed. (We discuss this modification to
Sec. 441.302(k)(4), being redesignated as Sec. 441.302(k)(8), in
section II.B.5.h., of this rule.) We will continue to use our standard
enforcement tools and discretion, as appropriate, when States must
comply with Sec. 441.302(k).
Ultimately, while we agree that providers generally have
flexibility to determine how to spend their Medicaid payments, we
believe it is important to reiterate the parameters for payment rates
required under section 1902(a)(30)(A) of the Act. Section
1902(a)(30)(A) of the Act requires that payment rates must be economic
and efficient; they must not be so high as to be uneconomic or
inefficient. This provision also requires payment rates to be
consistent with quality of care and sufficient to enlist enough
providers to ensure a specified level of access to services for
beneficiaries; rates must not be so low as to impermissibly limit
beneficiaries' access to care or the quality of care they receive. The
Supreme Court in Armstrong v. Exceptional Child Center, Inc., in
considering this provision, recognized that Congress was ``explicitly
conferring enforcement of this judgment-laden standard upon the
Secretary[,] . . . thereby achieving `the expertise, uniformity,
widespread consultation, and resulting administrative guidance that can
accompany agency decision-making.' '' \101\ We believe that
implementing this statutory requirement includes some degree of
oversight into how providers are allocating the Medicaid payments that
they receive for delivering HCBS to beneficiaries. For example, if
providers are spending a high proportion of their Medicaid payments on
compensation to direct care workers but beneficiaries have difficulty
accessing services and quality is compromised due to an insufficient
number of direct care workers, then the payment rate may be too low to
satisfy section 1902(a)(30)(A). Conversely, if concerns about access to
and quality of services were not present and providers were spending a
low proportion of their Medicaid payments on compensation to direct
care workers, then the Medicaid payment rate may exceed a level that is
economic and efficient, contributing to overhead spending and/or
operating margin at levels higher than needed to ensure access and
quality.
---------------------------------------------------------------------------

\101\ Armstrong v. Exceptional Child Center, Inc., 575 U.S. 320,
328-29 (2015) (internal citations omitted).
---------------------------------------------------------------------------

Comment: While several commenters agreed that a national minimum
performance level is authorized by section 1902(a)(30) of the Act, a
few other commenters disagreed that this policy is authorized by
section 1902(a)(30) of the Act. These latter commenters noted that
section 1902(a)(30)(A) of the Act requires each State plan for medical
assistance to provide such methods and procedures relating to the
utilization of, and the payment for, care and services available under
the plan as may be necessary to assure that payments are consistent
with efficiency, economy, and quality of care and are sufficient to
enlist enough providers so that care and services are available under
the plan at least to the extent that such care and services are
available to the general population in the geographic area. As such,
these commenters contended that this statutory provision applies to
State plans, not to CMS, and speaks to the adequacy of payments to
Medicaid-enrolled healthcare providers, not the providers' workforce.
They stated that section 1902(a)(30)(A) of the Act cannot be read to
delegate authority to us to prescribe specific wage pass-through
requirements that States must impose upon providers.
Response: We believe that the statutes we cited support the
components of our proposal. Regarding the applicability of section
1902(a)(30)(A) of the Act, we refer readers to our prior discussion of
section 1902(a)(30)(A) of the Act in section II.B.5.a. of this rule. As
we noted in that discussion, section 1902(a)(30)(A) of the Act provides
us with authority to oversee that States assure that payments are
consistent with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and services are
available under the plan, at least to the extent that such care and
services are available to the general population in the geographic
area. We did not propose to establish, and are not finalizing, specific
payment rates. Instead, we proposed that States demonstrate that
payments are sufficient to ensure care and services are available to
beneficiaries by specifying a percentage of Medicaid payments that
States must ensure is spent on compensation to direct care workers. We
believe this policy will also promote, and be consistent with, economy,
efficiency, and quality of care. We also disagree that section
1902(a)(30)(A) of the Act speaks only to provider enrollment. We
believe that setting a performance level at which States support their
State plan assurance that payments are consistent with efficiency,
economy, and quality of care is an appropriate use of our oversight
authority under section 1902(a)(30)(A) of the Act.
Comment: A few commenters agreed that sections 2402(a)(1) and
2402(a)(3) of the Affordable Care Act authorize the creation of a
national minimum

[[Page 40614]]

performance requirement to support the direct care workforce. However,
a few commenters disagreed with this application of section 2402(a)(1)
of the Affordable Care Act. These commenters noted that section
2402(a)(1) of the Affordable Care Act requires the Secretary of the
Department of Health and Human Services (HHS) to promulgate regulations
to ensure that all States develop service systems that are designed to
allocate resources for services in a manner that is responsive to the
changing needs and choices of beneficiaries receiving non-
institutionally-based long-term services and supports and that provides
strategies for beneficiaries receiving such services to maximize their
independence, including through the use of client-employed providers.
Commenters stated that, although this provision speaks to HHS's
authority to promulgate regulations, those regulations must pertain to
ensuring that States develop systems to appropriately allocate
resources to the types of services their beneficiaries need. These
commenters contended that section 2402 of the Affordable Care Act
allows HHS to, for example, require States to assess whether they
should provide services such as delivering healthy meals to certain
populations or allow beneficiaries to hire a family member to assist
them (and fund the wages), but it does not provide HHS the authority to
require States to impose upon providers wage pass-through requirements
that are set at a specific minimum performance level.
Response: We disagree with commenters' interpretation of section
2402(a)(1) of the Affordable Care Act. Section 2402(a)(1) of the
Affordable Care Act requires States to allocate resources for services
in a manner that is responsive to the changing needs and choices of
beneficiaries receiving HCBS. As discussed throughout this section, one
of the most fundamental ways that HCBS programs meet the needs of
beneficiaries is by having a sufficient direct care workforce to
provide the services beneficiaries have been assessed to need. Without
an adequate supply of workers, beneficiaries may not be able to access
all the services that they need and that fully reflect their choices or
preferences. We believe that setting a benchmark that helps measure
whether Medicaid payments are being allocated in a way that is
responsive to the HCBS workforce shortage and supports essential
aspects of HCBS delivery is an appropriate application of our authority
under section 2402(a)(1) of the Affordable Care Act.
Comment: One commenter did not agree that section
2402(a)(3)(B)(iii) of the Affordable Care Act authorized the
application of a minimum performance requirement. The commenter noted
that section 2402(a)(3)(B)(iii) of the Affordable Care Act requires the
Secretary of HHS to promulgate regulations to ensure that all States
develop service systems that are designed to improve coordination
among, and the regulation of, all providers of such services under
Federally and State-funded programs in order to oversee and monitor all
service system functions to assure an adequate number of qualified
direct care workers to provide self-directed personal assistance
services. The commenter stated that this statutory provision both
bestows authority upon HHS to promulgate regulations and specifically
references the need to ensure an adequate number of direct care
workers. However, the commenter noted that, like section 2402(a)(1) of
the ACA, section 2402(a)(3)(B)(iii) specifies that HHS's role--and its
authority to promulgate such regulations--is limited to ensuring that
States develop service systems that assure an adequate number of
qualified direct care workers to provide self-directed personal
assistance services. The commenter also stated that this statutory
provision applies only to the self-directed service delivery model and
does not authorize HHS to promulgate wage pass-through requirements
with respect to services delivered by provider agencies. The commenter
stated, generally, that the Medicaid program's fundamental premise is
to allow each State or Territory the ability to tailor its program to
reflect its unique needs, and that this is at odds with a requirement
for States to direct providers' behavior.
Response: We generally disagree with the commenter's analysis of
section 2402(a)(3)(B)(iii) of the Affordable Care Act that it does not
authorize the application of a minimum performance requirement. Section
2402(a)(3)(B)(iii) of the Affordable Care Act requires States to
oversee and monitor HCBS system functions to assure there is a
sufficient number of qualified direct care workers to provide self-
directed personal assistance services. We believe that, to comply with
this statutory requirement, States must have a sufficient direct care
workforce to be able to deliver services that are responsive to the
changing needs and choices of beneficiaries (regardless of delivery
model), and, specifically, States must have a sufficient number of
qualified direct care workers to provide self-directed personal
assistance services. In other words, an insufficient direct care
workforce generally will impact whether a State has a sufficient number
of qualified direct care workers to provide self-directed personal
assistance services in compliance with this requirement. However, we do
agree that section 2402(a)(3)(B)(iii) of the Affordable Care Act speaks
specifically to self-directed services. We cited this authority for the
purposes of supporting our inclusion of self-directed services in this
proposal.
As noted in prior responses, we believe that section 1902(a)(30)(A)
of the Act and 2402(a)(1) of the Affordable Care Act authorize us to
set parameters or benchmarks for HCBS expenditures (both including and
in addition to expenditures for self-directed personal care services).
Section 1902(a)(30)(A) of the Act provides us with authority to oversee
that States assure that Medicaid payments for services are consistent
with efficiency, economy, and quality of care and are sufficient to
enlist enough providers so that care and services are available under
the plan, at least to the extent that such care and services are
available to the general population in the geographic area. Section
2402(a)(1) of the Affordable Care Act requires HHS to ensure States to
allocate resources for services in a manner that is responsive to the
changing needs and choices of beneficiaries receiving HCBS. States
retain flexibility in how they construct their HCBS systems. Rather, we
believe the minimum performance requirement we proposed, and are
finalizing with modifications in this section II.B.5, sets a benchmark
to help us determine whether States are ensuring that their HCBS
systems are allocating sufficient resources to support the direct care
workforce to ensure there are sufficient providers so that care and
services are available to beneficiaries and that these services are
consistent with efficiency, economy, and quality of care. We believe
that setting such a benchmark that helps measure whether Medicaid
payments are being allocated in a way that is responsive to the HCBS
workforce shortage and supports essential aspects of HCBS delivery is
an appropriate application of our authority under section 2402(a)(1) of
the Affordable Care Act and applies to other HCBS in addition to the
self-directed personal care services specifically addressed in section
2402(a)(iii)(B).
Comment: A number of commenters stated that we did not provide
enough data to support the proposal for an 80 percent minimum
performance level. One commenter suggested that by not providing
sufficient data to support the

[[Page 40615]]

proposal, we have not fulfilled our obligations under the
Administrative Procedure Act.
A number of commenters recommended we collect more data before
finalizing a certain percent for the national minimum performance
level. Some commenters suggested that a State-by-State analysis of
rates and the potential impact of a minimum performance level would
need to be performed before setting a minimum performance level. A few
of these commenters suggested that helpful data could be collected from
States' rate studies, HCBS waiver rates, provider cost reports, or the
data we proposed in the proposed rule to be reported to us (including
our proposals at Sec. 441.311(e) and Sec. 447.203, which we discuss
in sections II.B.7. and II.C. of this rule, respectively). One
commenter suggested using the electronic visit verification (EVV)
system \102\ as a tool for gathering relevant data. Several commenters
also suggested that any additional data collection performed to support
a national minimum performance level be used to assess unintended
consequences of such a level.
---------------------------------------------------------------------------

\102\ Section 12006 of the 21st Century Cures Act (Pub. L. 114-
255) requires States to have EVV systems for Medicaid personal care
services and home health care services.
---------------------------------------------------------------------------

A few commenters questioned the specific data relied on for the
proposal of an 80 percent minimum performance level. They noted
concerns including:
A lack of support for the claim in the proposed rule that
some States have set wage pass-through requirements as high as 90
percent;
Use of data on the American Rescue Plan Act of 2021
section 9817 funds by a few States to increase worker wages, which have
only been relatively recently distributed, and thus reflect limited
data;
State wage pass-through requirements as part of their
activities to enhance, expand, or strengthen HCBS under section 9817
the American Rescue Plan Act of 2021were generally only applied to
temporary rate increases, not entire rates; and
Minnesota and Illinois, two States that have wage pass-
through requirements, have their requirements set at 72 percent and 77
percent, respectively, and both use different definitions of
compensation or direct care worker than what was proposed.
Response: As discussed in the proposed rule (88 FR 27982), we based
our proposal on feedback from States that have implemented similar
requirements for payments for certain HCBS under section 9817 of the
ARP \103\ or other State-led initiatives. For example, as noted by
commenters, Minnesota has established a minimum threshold of 72.5
percent,\104\ while Illinois has implemented a minimum threshold of 77
percent, for similar requirements for HCBS payments as we
proposed.\105\ To further clarify the data that we used to inform our
proposal, which was referenced in footnote 81 in the proposed rule (88
FR 27983 to 27984), we note the following examples of different types
of States' wage pass-through requirements that States added to spending
plans for ARP section 9817:
---------------------------------------------------------------------------

\103\ Information on State activities to expand, enhance, or
strengthen HCBS under ARP section 9817 can be found on Medicaid.gov
at https://www.medicaid.gov/medicaid/home-community-based-services/guidance/strengthening-and-investing-home-and-community-based-services-for-medicaid-beneficiaries-american-rescue-plan-act-of-2021-section-9817/index.html.
\104\ See https://www.revisor.mn.gov/statutes/cite/256B.85/pdf
for more information.
\105\ See https://casetext.com/regulation/illinois-administrative-code/title-89-social-services/part-240-community-care-program/subpart-t-financial-reporting/section-2402040-minimum-direct-service-worker-costs-for-in-home-service for more
information.
---------------------------------------------------------------------------

Indiana announced a Direct Service Workforce Investment
Grant in which 95 percent of the grant funds must be spent on direct
service professionals.\106\
---------------------------------------------------------------------------

\106\ Indiana Family and Social Services Administration, ``HCBS
Enhanced FMAP Spending Plan: Direct Service Workforce Investment
Grant Program,'' https://www.in.gov/fssa/ompp/hcbs-enhanced-fmap-spending-plan/.
---------------------------------------------------------------------------

Massachusetts required that HCBS providers use 90 percent
of a rate increase to support their direct care workers.\107\
---------------------------------------------------------------------------

\107\ Massachusetts Executive Office of Health and Human
Services, ``Strengthening Home and Community Based Services and
Behavioral Health Services Using American Rescue Plan (ARP)
Funding,'' https://www.mass.gov/info-details/strengthening-home-and-community-based-services-and-behavioral-health-services-using-american-rescue-plan-arp-funding.
---------------------------------------------------------------------------

North Carolina required that 80 percent of its rate
increases for certain HCBS be spent on direct care worker wages.\108\
---------------------------------------------------------------------------

\108\ North Carolina Department of Health and Human Services,
North Carolina ``January 2023 Quarterly Report for the
Implementation of the American Rescue Plan Act of 2021, Section
9817--10% FMAP Increase for HCBS'' https://medicaid.ncdhhs.gov/hcbs-spending-plan-narrative-january-2023/download?attachment.
---------------------------------------------------------------------------

West Virginia set different wage pass-through requirements
(ranging from 50 percent to 100 percent) for the amount of the rate
increase that would be allocated to direct care workers providing
services to beneficiaries in several of the State's waiver
programs.\109\
---------------------------------------------------------------------------

\109\ West Virginia Department of Health and Human Resources,
``Spending Plan for Implementation of American Rescue Plan Act of
2021, Section 9817.'' https://dhhr.wv.gov/bms/News/Documents/WV%20State%20ARP%20HCBS%20Spending%20Plan.pdf.
---------------------------------------------------------------------------

We acknowledge that we are unable to present a State-by-State study
of the impact of a specific minimum performance level on all State
Medicaid programs and providers. The variability among HCBS programs
(including staffing requirements, service definitions, and rate
methodologies) poses challenges to performing and presenting a multi-
State analysis of the allocation of Medicaid payments to direct care
workers using existing available data, such as rate studies or cost
reports. We also note that information from EVV system reporting would
only pertain to use of personal care services or home health aide
services (not homemaker services) and would not speak to rates. We
agree that the reporting requirement we proposed, and are finalizing in
this rule, at Sec. 441.311(e) may generate standardized data that is
more amenable to national comparisons.
We also believe that the reporting requirement at Sec. 441.311(e)
may yield important data that will support transparency around the
portion of Medicaid payments being shared with direct care workers;
such transparency in and of itself may well encourage States and
providers to look critically at their rates and how they are allocated.
Further, we believe that gathering and sharing data about the amount of
Medicaid dollars that are going to the compensation of workers is a
critical step in understanding the ways we can enact policies that
support the direct care workforce and thereby help advance access to
high quality care for Medicaid beneficiaries. However, we believe that
a reporting requirement alone will not be as effective at stabilizing
the direct care workforce.
We believe that compensation levels are a significant factor in the
creation of a stable workforce, and that a stable workforce will result
in better qualified employees, lower turnover, and safer and higher
quality care. If individuals are attracted to the HCBS workforce and
incentivized to remain employed in it with sufficient compensation, the
workforce is more likely to be comprised of workers with the training,
knowledge, and experience to meet the diverse and often complex needs
of individuals with disabilities and older adults receiving HCBS. A
stable and qualified workforce will also enable beneficiaries to access
providers of the services they have been assessed to need. As noted in
an earlier comment

[[Page 40616]]

summary, commenters almost unanimously agreed that the direct care
workforce shortage is posing extensive challenges to HCBS access and
quality of care. We believe that setting a minimum performance
requirement that we have determined to be reasonable based on available
information (and is supported by many commenters) is an appropriate
exercise of our responsibility to oversee the sufficiency of Medicaid
payments under section 1902(a)(30)(A) of the Act and States' allocation
of resources under section 2402(a) of the Affordable Care Act.
We agree that the data from States that implemented wage pass-
throughs through activities in their ARP section 9817 spending plans is
relatively recent. However, we do not believe that data should be
disqualified simply because it was generated recently; such data is
likelier to provide a more current snapshot of States' Medicaid rates
and the needs of their direct care workforce.
We also agree that States applied wage pass-through requirements to
rate increases that they were implementing as part of their ARP section
9817 spending plans and that at least some of these wage pass-through
requirements were temporary. As such, these percentages might not be as
relevant to the selection of a minimum performance level as a permanent
wage pass-through requirement applied to the entire Medicaid rate. That
said, we do believe that these data are useful for illustrating that
the need to support direct care workers' wages is relevant across the
country, and that States and interested parties have not only
identified increases in wages for direct care workers as a priority,
but they have also identified allocating specific portions of Medicaid
rates as an appropriate mechanism for addressing low wages. We echo a
comment summarized earlier that the advantage of establishing a
permanent minimum performance requirement is that it creates a stable
support for the direct care workforce, rather than intermittent
increases in compensation that are dependent on specific actions taken
by State or Federal legislatures.
As observed by some commenters, the percent we proposed, at 80
percent, is slightly higher than the wage pass-through requirements set
by Minnesota and Illinois. We believe that the 80 percent minimum
performance level we are finalizing is informed by the current range of
the wage pass-through requirements set by those States, but is set
slightly higher to encourage further steps towards improving
compensation for workers. We also note that we are not required to
replicate precisely what certain States have done.
We continue to believe 80 percent is the feasible performance level
to ensure that payments made for Medicaid HCBS are appropriately
allocated to direct care workers' compensation to ensure sufficient
providers for beneficiaries to access HCBS as approved in their person-
centered plans. However, given that the 80 percent minimum performance
is higher than what States have currently set in terms of permanent
wage pass-through requirements, we will provide States with additional
time to come into compliance with the 80 percent performance level. We
are finalizing at Sec. 441.302(k)(8) a modification to the
applicability date for Sec. 441.302(k) to indicate that States must
comply with this requirement at Sec. 441.302(k) beginning 6 years
after the effective date of this rule, rather than 4 years as proposed.
We will continue to use our standard enforcement tools and discretion,
as appropriate, when States must comply with Sec. 441.302(k). As
discussed in greater detail below, we are also finalizing additional
flexibilities that States, at their option, may utilize to apply a
different percentage for small providers and exempt certain providers
that experience hardships from the State's calculation for meeting
these performance levels. We also describe below an exemption of the
Indian Health Service (IHS) and Tribal health programs subject to 25
U.S.C. 1641 from the HCBS payment adequacy requirements.
Comment: A significant number of commenters stated that an 80
percent minimum performance level, if finalized, would not leave
providers enough money for costs associated with administrative tasks,
programmatic activities, supervision, technology, office or facility
expenses, training, or travel reimbursement. Many commenters noted the
80 percent minimum performance level would result in unintended
consequences--namely that affected HCBS providers would cut back on
services, limit or stop serving Medicaid beneficiaries, or close
altogether. A few commenters expressed concern that our proposal would
result in fewer new providers enrolling as Medicaid HCBS providers.
Many commenters worried that such reductions in available services or
the provider pool would reduce, rather than increase, beneficiaries'
access to high-quality HCBS. A few commenters worried that HCBS
provider closures, as a result of the proposed policy, could result in
more beneficiaries moving into institutional settings.
Several commenters also expressed the belief that the 80 percent
minimum performance level would discourage innovation among providers.
One commenter suggested that providers would be penalized if they
relied on assistive technology, remote supports, or other technology
solutions to support beneficiaries in lieu of human assistance.
Response: We thank commenters for their feedback. As discussed in
greater detail later in this section, we are modifying the policy we
proposed at Sec. 441.302(k)(3) to establish certain exceptions from
the minimum performance level, and to establish a 6-year effective
date, rather than the 4 years we had proposed. We will continue to use
our standard enforcement tools and discretion, as appropriate, when
States must comply with Sec. 441.302(k). As discussed in greater
detail below, we are also: (1) adding a definition of excluded costs at
Sec. 441.302(k)(1)(iii) to exclude certain costs from the minimum
performance level calculation of the percentage of Medicaid payments to
providers that is spent on compensation for direct care workers; (2)
revising the definition of direct care worker proposed at Sec.
441.301(k)(1)(ii) to clarify that clinical supervisors are included in
the definition of direct care workers; (3) revising Sec.
441.302(k)(3)(ii) to allow States to set a separate minimum performance
level for small providers; (4) adding a new provision at Sec.
441.302(k)(4) to provide an option for States to develop reasonable,
objective criteria to identify small providers to meet a small provider
minimum performance level set by the State; (5) adding a new provision
at Sec. 441.302(k)(5) to allow States to develop reasonable, objective
criteria to exempt certain providers from meeting the minimum
performance level requirement; and (6) adding a new provision at Sec.
441.302(k)(7) to exempt the Indian Health Service (IHS) and Tribal
health programs subject to 25 U.S.C. 1641 from the HCBS payment
adequacy requirements at Sec. 441.302(k).
We believe that these amended requirements will address some
commenters' concerns about leaving providers sufficient administrative
funds for certain personnel and administrative activities and will meet
the needs of providers that are small or experiencing other challenges
in meeting the minimum performance level.
We always encourage providers to find innovative ways to deliver
services but believe that these services (even if delivered with the
assistance of

[[Page 40617]]

technology or telehealth) at their core require direct care workers to
provide them. It is difficult to imagine how strategies that do not aim
to stabilize direct care worker wages would improve the efficacy or
quality of these services. We do believe, however, that placing a limit
on the amount of the Medicaid payment going to expenses other than
direct care worker compensation could encourage innovative efforts to
improve and streamline administrative activities.
In response to commenters' concerns that this proposal would have
the unintended consequence of causing program cuts or provider
closures, we do not believe this outcome would be the result from
implementing the proposed minimum performance level. We believe that
the current environment--in which providers and beneficiaries routinely
struggle to find qualified direct care workers, and direct care workers
leave the HCBS workforce for better-paying jobs--poses a significant
threat to access and community integration because there are an
insufficient number of direct care workers to meet beneficiaries'
needs. In addition, the direct care worker shortage threatens
beneficiary access to services and community integration as such
shortage may lead to provider closures if providers are unable to find
enough workers to deliver services. This shortage also threatens
service quality through the loss of well-trained and experienced direct
care workers, if left unaddressed. Further, we believe that the
modifications we are finalizing to this requirement will help to
mitigate these concerns.
Comment: Some commenters (including beneficiaries, providers, labor
organizations, disability or legal advocacy organizations, and research
and policy organizations) agreed that 80 percent was an appropriate or
reasonable payment adequacy requirement. A couple of these commenters
based their support on personal experience, including a few who
indicated that they were providers, and stated that 80 percent was an
achievable minimum performance level. A few commenters pointed out that
the medical loss ratio (MLR) for managed care is 85 percent. One
commenter suggested that the minimum performance level be increased to
85 percent to align with the MLR. One commenter recommended that the 80
percent standard should account for necessary administration of HCBS
programs, including training. This commenter stated that, if it does
not account for necessary administration, the payment rates that States
and managed care programs have established are likely too low. The
commenter also recommended that, once the requirement is implemented,
we review whether the percentage should be higher than 80 percent.
A number of commenters suggested alternative, lower minimum
performance levels. Several commenters (including providers, State
Medicaid agencies, a labor organization, and an advocacy organization)
suggested minimum performance levels ranging from 70 percent to 75
percent. A few of the commenters who recommended 75 percent self-
identified as providers and believed that 75 percent was achievable
based on their own experiences and expenditure calculations. One
commenter recommended we mandate a 72.35 percent minimum performance
level and change the definition of compensation to exclude the 7.65
percent employer share of FICA taxes for direct care workers; the
commenter believed this would reduce confusion regarding employers'
shares of taxes and align the definition of compensation with that used
by some States. A few commenters recommended 70 percent based on
experience with rate studies or provider expenditures in their States.
Several commenters, including providers and commenters representing
State agencies, recommended setting a minimum performance level at
either 60 percent or 65 percent, based on the commenters' personal
experience running a provider agency or overseeing provider agencies.
One commenter suggested a minimum performance level of 60 percent based
on a hypothetical analysis of one State's HCBS rates and projected
expenditures.
While not making specific recommendations, several commenters
(mostly providers and State Medicaid agencies) submitted comments that
included anecdotal data of what providers spend on compensation; these
percentages ranged from 55 to 81 percent.
Response: We thank commenters for engaging in this issue, including
sharing their own experiences allocating Medicaid payments. While we
found the feedback provided by commenters instructive, both the range
of recommendations and the anecdotal nature of information supporting
most of the recommendations prevented us from relying on the
recommendations to finalize additional modifications to the proposed
minimum performance at the provider level requirement at Sec.
441.302(k)(3).
We do not agree that we should increase the minimum performance
level upward to match the 85 percent MLR required in managed care as
the MLR is a calculation and associated reporting requirement for
Medicaid managed care contracts in accordance with Sec. 438.8 and is
not specific to HCBS.
Additionally, as discussed previously and in more detailed
responses below, we are finalizing some modifications related to the
exclusion of certain costs, the inclusion of clinical supervisors in
the definition of direct care workers, and options for a small provider
minimum performance level and hardship exemptions for some providers
that will change somewhat the impact of the minimum performance level.
Further, we are modifying the policy we proposed at Sec. 441.302(k) to
establish certain exceptions from the minimum performance level
proposed at Sec. 441.302(k)(3), and requiring States to comply
beginning 6 years after the effective date of this final rule, rather
than the 4 years we had proposed. We will continue to use our standard
enforcement tools and discretion, as appropriate, when the minimum
performance level requirement go into effect. We believe these
modifications are necessary to balance the goal of stabilizing the
direct care workforce with the operational realities faced by providers
of varying sizes and locations.
Comment: A few commenters suggested that the minimum performance
level, if finalized, should be applied at the State level, rather than
the provider level. Commenters suggested that applying the minimum
performance level at the State level would create some flexibility, as
this would require only that all providers in the State meet the
minimum performance level in aggregate. However, a few other commenters
recommended that we clarify that the minimum performance level applies
at the provider level.
Response: We clarify that we intended to propose that the minimum
performance level policy would apply at the provider level, meaning
that the State must ensure that each provider spends Medicaid payments
they receive for certain HCBS on direct care worker compensation in
accordance with the minimum performance level requirement. As noted
previously, we believe it is important for States to hold providers
individually accountable for how they allocate their Medicaid payments
and are finalizing other policies, discussed below and elsewhere in
this section II.B.5. of the final rule, for States to accommodate
providers that need additional flexibility. We note that there was an
error in the heading of Sec. 441.302(k)(3), which was proposed

[[Page 40618]]

as ``Minimum performance at the State level.'' We apologize for any
confusion this may have caused; we believe that most commenters, based
on their comments, understood the minimum performance requirement to
apply at the provider level. Accordingly, we are finalizing Sec.
441.302(k)(3) with modification by revising the heading for Sec.
441.302(k)(3) to read ``Minimum performance at the provider level,'' as
it was originally intended to read.
Additionally, to ensure that it is understood that the minimum
performance level that must be met by the State is calculated as the
percentage of total payment (not including excluded costs, which are
discussed in greater detail in section II.B.5.d. of this final rule) to
a provider for furnishing homemaker, home health aide, or personal care
services, as set forth at Sec. 440.180(b)(2) through (4), represented
by the provider's total compensation to direct care workers. (New text
in bold font).
Comment: A significant number of commenters worried that a national
minimum performance level, regardless of the percentage, would have a
disparate impact on providers that are small, new, in rural or
underserved areas, or run by/for people from specific underserved
communities (such as indigenous people) or individuals for whom English
is a second language. Some commenters worried that the proposal favors
large providers and would lead to consolidation of providers. A few
other commenters worried that this would mean that beneficiaries would
have fewer choices of providers and have to work with larger corporate
providers. One commenter worried that a national minimum performance
level would have a disparate impact on agency providers (which may have
more overhead costs), as opposed to providers of self-directed
services.
A number of commenters requested that if we finalize a national
payment adequacy requirement, we include additional flexibilities to
minimize unintended consequences on certain providers, particularly
small and rural providers. One commenter suggested that we allow for
``hardship exemptions'' on a case-by-case basis. One commenter
suggested that we allow States to exempt providers that pay workers 200
percent of the Federal Poverty Level. Another commenter suggested that
we exempt States from the payment adequacy requirement if the State has
a minimum hourly base wage of $15 per hour applicable to direct care
workers delivering the affected services.
Other commenters recommended adjustments to the national minimum
performance level, rather than exemptions. A few commenters suggested
that we allow for a variable payment adequacy requirement or for
``scaling'' of the minimum performance level, adjusted for different
provider sizes or different types of services. A few other commenters
recommended requiring a range to identify rates, which could vary by
provider size, number of Medicaid beneficiaries served, rural or urban
status, hardship status (risk of closure), or other characteristics.
One commenter suggested the rate could vary by delivery system or
service type. A number of commenters recommended that we allow States
to set their own payment adequacy requirement.
A small number of commenters raised concerns that requiring a
minimum performance level would conflict with 25 U.S.C. 1641, governing
how IHS and Tribal health programs (as defined in 25 U.S.C. 1603(25))
may use Medicare and Medicaid funds, and other applicable laws
providing for Tribal self-governance and self-determination. One
commenter recommended that we exempt IHS and Tribal health programs
from the requirement.
Response: We believe that at least some of commenters' concerns
about provider impact may be alleviated by some of the modifications we
are finalizing to our proposed policy in this section II.B.5. of the
final rule. In particular, we are excluding travel costs from the
calculation of the minimum performance level, as increased travel
expenses were cited as a primary concern for rural providers. (We refer
readers to the discussion of the definition of compensation and
excluded costs in section II.B.5.d. of this rule, below.)
We note that the purpose of this proposal is not to set a
particular wage for direct care workers, but to ensure that Medicaid
payments are being allocated in ways that promote efficiency, economy,
and quality of care. We believe that all States are accountable to this
requirement and should hold their providers accountable. However, we
also agree that some small providers may experience additional
challenges in meeting a payment adequacy requirement, as any fixed
costs must be covered by a smaller pool of revenues than for larger
providers, and small providers have fewer opportunities for
administrative efficiencies than larger providers do. We share
commenters' desires that the minimum performance level not have a
disparate impact on small providers, new providers that may still be
developing their processes, providers that may, for various reasons,
have additional administrative tasks (such as an increased need for
interpreter or translation services), or providers that face
disparately high costs, such as providers that may have to pay for
temporary lodging for direct care workers delivering services to
clients in extremely rural areas.
While we are finalizing a minimum performance level at Sec.
441.302(k)(3)(i) as previously discussed that States must apply to most
of their providers, we also agreed with commenters' suggestions. We are
finalizing our policy with modifications at Sec. 441.302(k)(3)(ii) to
provide that States may apply a different minimum percentage to small
providers that the States develop in accordance with requirements at
Sec. 441.302(k)(4). These modifications at Sec. 441.302(k)(3)(ii) and
(k)(4) will allow States the option to require a reasonable number of
small providers, as defined using reasonable, objective criteria set by
the State through a transparent process that must include public notice
and opportunities for comment from interested parties, to meet a
different minimum performance level. This separate minimum performance
level would also be set by the State based on reasonable, objective
criteria through a transparent process that must include public notice
and opportunities for comment from interested parties. In order to
apply a small provider minimum performance level, States must ensure it
is supported by data or other reasonable factors in the State. We also
note that States would still need to collect and report data as
required in Sec. 441.302(k)(2) and Sec. 441.311(e) (discussed in
section II.B.7. of this rule) for providers subject to the small
provider minimum performance level.
Further, under our authority at section 1902(a)(6) of the Act, we
are finalizing an additional provision at Sec. 441.302(k)(6)(i), to
require that States that establish a small provider minimum performance
level in accordance with Sec. 441.302(k)(4) must report to CMS
annually, in the form and manner, and at a time, specified by CMS, on
the following: the State's small provider criteria; the State's small
provider minimum performance level; the percent of providers of
services set forth at Sec. 440.180(b)(2) through (4) that qualify for
the small provider performance level; and a plan, subject to CMS review
and approval, for small providers to meet the minimum performance
requirement at Sec. 441.302(k)(3)(i) within a reasonable period of
time.

[[Page 40619]]

We also agree with commenters that some providers may experience
hardships with meeting a payment adequacy requirement because, for
instance, they are new to serving Medicaid beneficiaries and thus have
not had time to develop administrative efficiencies. Additionally, we
agree that special attention needs to be paid where a provider may be
at risk of closure and could cause beneficiaries to lose access to HCBS
in a particular area. We also agree that States are best positioned to
identify the nature of the hardships and which providers are
experiencing these hardships. As a result, we are finalizing a
modification at Sec. 441.302(k)(5) to allow States to develop
reasonable, objective criteria through a transparent process to exempt
from the minimum performance requirement at Sec. 441.302(k)(3) a
reasonable number of providers determined by the State to be facing
extraordinary circumstances that prevent their compliance with Sec.
441.302(k)(3). The State must develop these criteria through a
transparent process that includes public notice and opportunities for
comment from interested parties. If a provider meets the State's
hardship exemption criteria, the provider should be excluded from the
State's calculation of the minimum performance level at Sec.
441.302(k)(3). We note that we expect that most providers would be
subject to a hardship exemption on a temporary basis, and that States
would still need to collect and report data as required in Sec.
441.302(k)(2) and Sec. 441.311(e) for providers with hardship
exemptions.
Further, under our authority at section 1902(a)(6) of the Act, we
are finalizing an additional provision at Sec. 441.302(k)(6)(ii) to
require that States that provide a hardship exemption to providers
facing extraordinary circumstances must report to CMS annually, in the
form and manner, and at a time, specified by CMS, on the State's
hardship criteria, the percentage of providers of services set forth at
Sec. 440.180(b)(2) through (4) that qualify for a hardship exemption,
and a plan, subject to CMS review and approval, for reducing the number
of providers that qualify for a hardship exemption within a reasonable
period of time.
We plan to issue guidance on both the small provider performance
level and the hardship exemption and encourage States to consult with
CMS as they develop their criteria. However, we note that, for States
in which a small proportion of providers (less than 10 percent of the
total number of providers of services at Sec. 440.180(b)(2) through
(4)) qualify for either the small provider performance level or a
hardship exemption, CMS may waive the requirements, at Sec.
441.302(k)(6)(i)(D), for States to report on a plan for small providers
to meet the minimum performance level at Sec. 441.302(k)(3)(i) within
a reasonable period of time, and at Sec. 441.302(k)(6)(ii)(C), for
States to report on a plan for reducing the number of providers that
qualify for a hardship exemption within a reasonable period of time. We
are finalizing this waiver at Sec. 441.302(k)(6)(iii).
In addition, we are modifying the date for when States must comply
with the requirements at Sec. 441.302(k) to be beginning 6 years after
the effective date of the final rule, rather than the 4 years we had
proposed. (We refer readers to our discussion in II.B.5.h. of this
rule.) We will continue to use our standard enforcement tools and
discretion, as appropriate, when the minimum performance level
requirement goes into effect.
Finally, we are persuaded by commenters who raised concerns about
interactions between statutory requirements for IHS and certain Tribal
health programs health programs subject to 25 U.S.C. 1641 and the
proposed requirement at Sec. 441.302(k). Congress has already passed
laws, such as 25 U.S.C. 1641, specifying how IHS and Tribal health
programs (as defined in 25 U.S.C. 1603(25)) are to use their Medicaid
collections. Because Congress has already specified how such funds must
be used, we are finalizing an exemption at Sec. 441.302(k)(7) to the
HCBS payment adequacy requirements at Sec. 441.302(k) for IHS and
Tribal health programs subject to 25 U.S.C. 1641.
After consideration of the comments received, we are finalizing
Sec. 441.302(k)(3) with modifications, as well as finalizing new
requirements at Sec. 441.302(k)(4), (5), and (6). The requirements we
are finalizing with modifications are as follows:
We are finalizing Sec. 441.302(k)(3) with several modifications to
retitle the requirement as Minimum performance at the provider level
and clarify the components of the required calculation and the services
that fall within this requirement. We also made modifications at Sec.
441.302(k)(3) to clarify that excluded costs are not included in the
calculation of the percentage of total payments to a provider that is
spent on compensation to direct care workers and to specify the
specific services (homemaker, home health aide, and personal care
services) to which the payment adequacy requirement applies. We are
also modifying Sec. 441.302(k)(3) to note the exceptions to the
minimum performance level that we are adding at (k)(5) (hardship
exemption) and (k)(7) (IHS and Tribal health programs subject to 25
U.S.C. 1641). As finalized, Sec. 441.302(k)(3) specifies that, except
as provided in paragraphs (k)(5) and (7), the State must meet the
following minimum performance level as applicable, calculated as the
percentage of total payment (not including excluded costs) to a
provider for furnishing homemaker, home health aide, or personal care
services, as set forth at Sec. 440.180(b)(2) through (4), represented
by the provider's total compensation to direct care workers. (New text
in bold font).
We are modifying the language at Sec. 441.302(k)(3)(i) to read
that the minimum performance level of 80 percent applies to all
payments to a provider, except as provided in paragraph (k)(3)(ii). We
are finalizing a new requirement at Sec. 441.302(k)(3)(ii) to read
that at the State's option, for providers determined by the State to
meet its State-defined small provider criteria in paragraph (k)(4)(i)
of this section, the State must ensure that each provider spends the
percentage set by the State in accordance with paragraph (k)(4)(ii) of
this section of total payments the provider receives for services it
furnishes as described in paragraph (k)(3) of this section on total
compensation for direct care workers who furnish those services.
We are redesignating the applicability date we proposed at Sec.
441.302(k)(4) as Sec. 441.302(k)(8), as discussed further in section
II.B.5.f. of this rule. We are finalizing a new Sec. 441.302(k)(4) and
adding new paragraphs (i) and (ii) to provide an option for States to
develop reasonable, objective criteria through a transparent process to
identify small providers to meet the State-defined small provider
minimum performance level; require that the transparent process for
developing criteria to identify providers that meet the small provider
minimum performance level must include public notice and opportunities
for comment from interested parties; and require that the small
provider minimum performance level be set based on reasonable,
objective criteria the State develops through a transparent process
that includes public notice and opportunities for comment from
interested parties.
We are finalizing a new Sec. 441.302(k)(5) to allow States to
develop reasonable, objective criteria through a transparent process to
exempt from the minimum performance requirement at Sec. 441.302(k)(3)
a reasonable number of providers determined by the State to be facing

[[Page 40620]]

extraordinary circumstances that prevent their compliance with Sec.
441.302(k)(3). The State must develop these criteria through a
transparent process that includes public notice and opportunities for
comment from interested parties. If a provider meets the State's
hardship exemption criteria, the provider should be excluded by the
State from its calculation of the State's compliance with the minimum
performance level at Sec. 441.302(k)(3).
We are finalizing a new provision at Sec. 441.302(k)(6) to require
States to report on their development and use of the small provider
minimum performance level and hardship exemption. Specifically, at
Sec. 441.302(k)(6)(i), States that establish a small provider minimum
performance level in accordance with Sec. 441.302(k)(4) must report to
CMS annually, in the form and manner, and at a time, specified by CMS,
on the following: the State's small provider criteria; the State's
small provider minimum performance level; the percent of providers of
services at Sec. 440.180(b)(2) through (4) that qualify for the small
provider performance level; and a plan, subject to CMS review and
approval, for small providers to meet the minimum performance
requirement at Sec. 441.302(k)(3)(i) within a reasonable period of
time. We are also requiring at Sec. 441.302(k)(6)(ii) that States that
provide a hardship exemption to providers facing extraordinary
circumstances must report to CMS annually, in the form and manner, and
at a time, specified by CMS, on the State's hardship criteria, the
percentage of providers of services at Sec. 440.180(b)(2) through (4)
that qualify for a hardship exemption, and a plan, subject to CMS
review and approval, for reducing the number of providers that qualify
for a hardship exemption within a reasonable period of time.
Additionally, we are finalizing a waiver at Sec. 441.302(k)(6)(iii)
that specifies that CMS may waive the reporting requirements in
paragraphs (6)(i)(D) or (6)(ii)(C), as applicable, if the State
demonstrates it has applied the small provider minimum performance
level at Sec. 441.302(k)(4)(ii) or the hardship exemption at Sec.
441.302(k)(5) to a small proportion of the State's providers.
Finally, we are finalizing a new Sec. 441.302(k)(7) specifying
that the Indian Health Service and Tribal health programs subject to
the requirements at 25 U.S.C. 1641 are exempt from the requirements at
Sec. 441.302(k).
c. Other Services (Sec. 441.302(k)(3))
We considered whether the requirements we proposed at Sec.
441.302(k)(3)(i) related to the percent of Medicaid payments going to
the direct care workforce should apply to other services in addition to
homemaker, home health aide, or personal care services (as set forth at
Sec. 440.180(b)(2) through (4)), such as adult day health,
habilitation, day treatment or other partial hospitalization services,
psychosocial rehabilitation services, and clinic services for
individuals with chronic mental illness. However, these services may
have facility or other indirect costs for which we do not have adequate
information to determine a minimum percent of the payment that should
be spent on compensation for the direct care workforce. We requested
comment on whether the proposed requirements at Sec. 441.302(k)(3)(i)
related to the percent of payments going to the direct care workforce
should apply to other services listed at Sec. 440.180(b). In
particular, in recognition of the importance of services provided to
individuals with intellectual or developmental disabilities, we
requested comment on whether the proposed requirements at Sec.
441.302(k)(3)(i) related to the percent of payments going to the direct
care workforce should apply to residential habilitation services, day
habilitation services, and home-based habilitation services.
We also requested comment on the following options for the minimum
percentage of payments that must be spent on compensation to direct
care workers for each specific service that this provision should apply
if this provision should apply to other services at Sec. 440.180(b):
(1) 65 percent; (2) 70 percent; (3) 75 percent; and (4) 80 percent.
Specifically, we requested that commenters respond separately on the
minimum percentage of payments for services delivered in a non-
residential community-based facility, day center, senior center, or
other dedicated physical space, which would be expected to have higher
other indirect costs and facility costs built into the Medicaid payment
rate than other HCBS. If an alternate minimum percentage is
recommended, we requested that commenters provide the rationale for
that minimum percentage.
We further clarified that we were requesting comment on a different
range of options for the other services at Sec. 440.180(b) than for
the services at Sec. 440.180(b)(2) through (4) because we expect that
some of the other services at Sec. 440.180(b), such as adult day
health and day habilitation services, may have higher other indirect
costs and facility costs than the services at Sec. 440.180(b)(2)
through (4). We also requested that commenters respond separately on
the minimum percentage of payments for facility-based residential
services and other facility-based round-the-clock services that have
other indirect costs and facility costs that would be paid for at least
in part by room and board payments that Medicaid does not cover. If a
minimum percentage is recommended for any services, we requested that
commenters provide the rationale for that minimum percentage.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: One commenter requested additional clarification on how
the services we proposed to be included in the requirements at Sec.
441.302(k)(3) were selected. One commenter suggested that we only apply
the minimum performance requirement to personal care services. The
commenter suggested we could align the requirement with the EVV system
reporting requirement,\110\ which applies to personal care services,
including personal care services delivered as part of habilitation
services.
---------------------------------------------------------------------------

\110\ Section 12006 of the 21st Century Cures Act (Pub. L. 114-
255).
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Response: The priority of this proposal is to support the direct
care workforce, and to this end we have focused on accountability for
services that rely on direct care workers to perform the core
activities. As noted in the background discussion of this provision and
in previous responses, the services subject to the minimum performance
requirement were selected because they are unlikely to have facility
costs as part of the rate or as a component of the core service. We
also note that the data we reviewed when determining an appropriate
minimum performance requirement focused on home-based services, not
facility-based services. Additionally, as identified in an analysis
performed by CMS, the three services we proposed to be subject to this
requirement at Sec. 441.302(k) fall within the taxonomy of home-based
services, which are both high-volume and high-cost.\111\ Thus, we
believe that targeting these services will maximize the impact of this
requirement by addressing the needs of many beneficiaries and promoting
better oversight of the allocation of Medicaid rates for frequently
used services. Given these similarities among homemaker, home health
aide, and personal care

[[Page 40621]]

services, we cannot find a justification for removing homemaker and
home health aide services from this requirement.
---------------------------------------------------------------------------

\111\ Centers for Medicare & Medicaid Services. ``Trends in Rate
Methodologies for High-Cost, High Volume Taxonomies.'' https://www.medicaid.gov/sites/default/files/2019-12/trends-in-rate-august-2017.pdf. Last access October 2, 2023.
---------------------------------------------------------------------------

Comment: A few commenters requested that we provide a more specific
definition of personal care services. Commenters noted that States do
not always use HCBS taxonomies consistently, and personal care services
can be applied to a different constellation of activities in different
waivers. Similarly, one commenter noted that the lack of definitions in
the proposed rule for homemaker, home health aide, and personal care
services is problematic because States do not use these terms
consistently and use a variety of different terms to describe these
services.
Response: We understand that States have service definitions for
homemaker, home health aide, and personal care services that differ
from the definition of homemaker, home health aide, and personal care
services in the section 1915(c) waiver Technical Guide \112\ and that
States do not always use these terms consistently. However, codifying
definitions of homemaker, home health aide, and personal care services
would have broad implications for State's HCBS programs that would
extend beyond the HCBS payment adequacy requirements in this final
rule. We will provide additional subregulatory guidance and technical
assistance to aid in implementation of the HCBS payment adequacy
requirements and may consider addressing in future rulemaking.
---------------------------------------------------------------------------

\112\ See Centers for Medicare & Medicaid Services,
``Application for a Sec. 1915(c) Home and Community Based Waiver:
Instructions, Technical Guide and Review Criteria.'' January 2019.
Available at https://wms-mmdl.cms.gov/WMS/help/35/Instructions_TechnicalGuide_V3.6.pdf.
---------------------------------------------------------------------------

Comment: Many commenters responded to our solicitation for comment
on whether we should include habilitation services in the services
subject to the minimum performance requirement. Most commenters who
responded did not believe that habilitation services should be included
in the requirement. They echoed our concerns that these services are
likelier to include at least some activities in a provider-operated
facility or residential setting, which changes the expected costs of
providing and allocation of the payment for these services.
Much of the public feedback around habilitation services focused on
the facility or residential portion of those services. Commenters noted
that rent, utilities, property maintenance, and other costs associated
with residential or facility-based services can vary significantly. One
commenter suggested that if residential habilitation was included in
the minimum performance requirement, the minimum performance level for
residential habilitation should be set at 75 percent to account for
additional administrative costs. A few other commenters suggested that
a different minimum performance level should be set for habilitation
services, if included, but did not specify a particular percentage.
Some commenters also suggested that residential services might
require more, or different staffing levels, as well as different types
of staff than home-based services, which might change the necessary
minimum performance level. Commenters disagreed, however, on whether
these staffing differences would necessitate a higher or lower minimum
performance level than for in-home services, and commenters did not
recommend a percentage to specifically address the perceived
differences in staffing. One commenter objected to any discussion of
residential settings, out of concern that this would appear to promote
congregate settings in violation of the home and community-based
settings requirements; the commenter stated that all services should be
provided in the community.
Several commenters recommended that we not apply the minimum
performance level at Sec. 441.302(k)(3)(i) to habilitation services
and encouraged us to collect data on the percent of payments for
habilitation services.
Response: We believe that the comments we received affirm our
decision not to apply the HCBS payment adequacy policy we are
finalizing at Sec. 441.302(k) to habilitation or other facility-based
services (in which services are delivered in a provider-operated
physical location and for which facility-related costs are included in
the Medicaid payment rate) due to the number of additional or variable
expenses associated with facility-based services. While outside the
scope of this final rule, we refer readers to and our requirements for,
and the criteria of, a home and community-based setting at Sec.
441.301(c)(4) and (5).
We agree with commenters that additional data collection on
habilitation services would be useful. Please refer to the discussion
of Sec. 441.311(e) in section II.B.7. of this rule, below.
Comment: Although not necessarily supporting the inclusion of
habilitation services in the minimum performance requirement,
commenters worried about the impact on beneficiaries receiving
habilitation services, who are largely individuals with intellectual or
developmental disabilities or behavioral health needs. Some commenters
stated that direct care workers who had been providing habilitation
services might switch to working for providers that offer homemaker,
home health aide, or personal care services because they believed that
the requirements at Sec. 441.302(k), if finalized, would lead to
increased wages paid to these workers or to Medicaid agencies
allocating more resources for these services. One commenter speculated
that, if a lower minimum performance level was set for residential
habilitation, this would encourage more services to be provided in
congregate settings because providers would try to take advantage of
the lower minimum performance level. Several commenters that provided
services to people with intellectual disabilities and people with
mental illness suggested we amend Sec. 441.302(k)(3)(i) to specify an
exclusion for direct care workers (or direct service professionals)
providing services for individuals with intellectual and developmental
disabilities or severe mental illness, as they believed that many of
these services are delivered as facility-based habilitation services;
the commenters were concerned that these providers have additional non-
compensation expenses that are not considered by the proposal, and that
it was unclear whether facility-based services were already excluded
from the proposal.
Response: We agree that, by excluding habilitation services from
this requirement, we are excluding services that are used more
frequently by certain populations. This was not our intent, and we do
not intend to explicitly exclude certain services from this requirement
on the basis of the population receiving the service. However, as noted
above, because of differences in these services, we do not believe we
can set an appropriate minimum performance level for these services at
this time. Although we are not requiring that habilitation or other
facility-based services (in which services are delivered in a provider-
operated physical location and for which facility-related costs are
included in the Medicaid payment rate) be included in the minimum
performance requirement, States are able to set wage pass-through
requirements of their own for such services to promote the stability of
the workforce; we also believe that States may naturally adjust rates
or wages in other services in response to the implementation of the
minimum performance requirement for homemaker, home health aide, and
personal care services.

[[Page 40622]]

Comment: One commenter expressed a concern that the minimum
performance requirement would apply to skilled nursing facilities.
Several commenters requested that we clarify in Sec. 441.302(k)(3)(i)
that direct care workers would be excluded from the minimum performance
requirement if they are providing services in residential settings. One
commenter requested that we clarify that assisted living facilities or
assisted living services are not included in the minimum performance
requirement, while another commenter raised concern about a lack of
clarity about whether the requirement applies to assisted living
facilities.
Response: The requirements we are finalizing in this section II.B.
of this rule only apply to HCBS, and the minimum performance
requirement at Sec. 441.302(k)(3) applies specifically to homemaker,
home health aide, and personal care services as set forth at Sec.
440.180(b)(2) through (4). However, while the minimum performance
requirement would not apply to institutional services (because those
are not HCBS), we decline to explicitly restrict the application of
this requirement on the basis of different community-based settings. As
we noted in prior responses, we selected homemaker, home health aide,
and personal care services because these are typically services
delivered in the home. However, we acknowledge that beneficiaries may
live in different residential settings that are considered homes, and
that these services may be bundled with other services delivered to
beneficiaries in residential settings.
Comment: A number of commenters requested that we add private duty
nursing to the services subject to the minimum performance requirement.
Response: We believe that at least some commenters may be referring
to private duty nursing as defined at section 1905(a)(8) of the Act and
Sec. 440.80 of our regulations. As discussed in greater detail below
in section II.B.5.g. of this rule, we are not planning to require that
the minimum performance level be applied to services authorized under
section 1905(a) at this time. We note that home health aide services,
included in Sec. 440.180(b)(3) but authorized as part of a section
1915(c) waiver, are included in the minimum performance requirement. It
is possible that some services that commenters are characterizing as
``private duty nursing'' may fall within the category of a section
1915(c) home health aide service, even as we acknowledge that Federal
requirements for private duty nursing specify that these are skilled
care services provided by a registered nurse or licensed practical
nurse.
Comment: A few commenters recommended that we apply the minimum
performance requirement to a number of other services that are
experiencing staffing shortages, including: job supports; respite
provided in the community; community habilitation services; in-home
cognitive rehabilitation therapy; and in-home physical, occupational
and speech therapy services. A few commenters suggested, without
specifying which services, that the minimum performance requirement
ought to be expanded to other services, or that it would be easier to
administer if applied to a broader array of services than just
homemaker, home health aide, and personal care services.
Response: We thank the commenters for their suggestions and will
take them under consideration for potential future rulemaking. As we
noted earlier in this section of the final rule, we selected homemaker,
home health aide, and personal care services because they are services
for which we expect that the vast majority of payment to be comprised
of compensation for direct care workers. Further, they are high-volume
and high-cost services,\113\ and as a result, we believe that targeting
these services will maximize the impact of this requirement by
addressing the needs of many beneficiaries and promoting better
oversight of the allocation of Medicaid rates for frequently used
services. We note that States are able to apply wage pass-through
requirements to additional services if they choose.
---------------------------------------------------------------------------

\113\ Centers for Medicare & Medicaid Services. ``Trends in Rate
Methodologies for High-Cost, High Volume Taxonomies.'' https://www.medicaid.gov/sites/default/files/2019-12/trends-in-rate-august-2017.pdf. Last access October 2, 2023.
---------------------------------------------------------------------------

After consideration of the comments received, we are finalizing our
proposed language at Sec. 441.302(k)(3) to apply the minimum
performance requirement to homemaker, home health aide, and personal
care services as set forth at Sec. 440.180(b)(2) through (4).
d. Definition of Compensation (Sec. 441.302(k)(1)(i))
At Sec. 441.302(k)(1)(i), we proposed to define compensation to
include salary, wages, and other remuneration as defined by the Fair
Labor Standards Act and implementing regulations (29 U.S.C. 201 et
seq., 29 CFR parts 531 and 778), and benefits (such as health and
dental benefits, sick leave, and tuition reimbursement). In addition,
we proposed to define compensation to include the employer share of
payroll taxes for direct care workers delivering services under section
1915(c) waivers. We considered whether to include training or other
costs in our proposed definition of compensation. However, we
determined that a definition that more directly assesses the financial
benefits to workers would better ensure that a sufficient portion of
the payment for services went to direct care workers, as it is unclear
that the cost of training and other workforce activities is an
appropriate way to quantify the benefit of those activities for
workers. We requested comment on whether the definition of compensation
should include other specific financial and non-financial forms of
compensation for direct care workers.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A couple of commenters noted support for our definition of
compensation and encouraged us to finalize the definition as proposed.
Response: We thank the commenters for their support.
Comment: Several commenters expressed concern that workers'
overtime pay would not be considered part of the definition of
compensation.
Response: Our definition of compensation as proposed at Sec.
441.302(k)(1)(i)(A) included salary, wages, ``and other remuneration as
defined by the Fair Labor Standards Act'' and its regulations. As the
Fair Labor Standards Act includes overtime pay in its definition of
wages, overtime pay therefore is included in our definition of
compensation as well.
Comment: Many commenters supported the inclusion of health and
dental insurance and sick leave in the definition of benefits at Sec.
441.302(k)(1)(i)(B). A few commenters requested that life insurance,
disability insurance, and retirement contributions also be added to
this definition. Several commenters also requested clarification as to
whether paid time off was included in the definition of compensation,
and a few suggested that it should be included.
One commenter noted that our definition of compensation was too
broad, particularly the use of the term ``such as'' when describing the
inclusion of benefits. The commenter expressed concern that employers
could over-include items in compensation by calling them ``benefits.''
One commenter worried that if too many benefits were included in
compensation, this would reduce workers' take-home pay.
One commenter expressed concerns that it will be difficult for
State

[[Page 40623]]

Medicaid agencies to quantify benefits included in direct care worker
compensation.
Response: We believe that all the items identified by these
commenters--life insurance, disability insurance, retirement, and paid
time off--would be reasonably considered part of compensation. In its
glossary, the Bureau of Labor Statistics (BLS) defines compensation as
``employer costs for wages, salaries, and employee benefits,'' and
notes that the National Compensation Survey includes the following
categories in employee benefits: insurance (life insurance, health
benefits, short-term disability, and long-term disability insurance);
paid leave (vacations, holidays, and sick leave); and retirement
(defined benefit and defined contribution plans).\114\ We believe the
items suggested by the commenters align with our intent and are
reflected by a common understanding of ``benefits'' as exemplified in
the BLS glossary.
---------------------------------------------------------------------------

\114\ See BLS ``Glossary'' at https://www.bls.gov/bls/glossary.htm.
---------------------------------------------------------------------------

To help clarify what is meant by ``benefits,'' we are modifying the
language we proposed at Sec. 441.302(k)(1)(i)(B) in this final rule.
We are retaining ``health and dental benefits'' but also are adding to
the list ``life and disability insurance.'' We note that the definition
used by BLS simply refers to health benefits, life insurance, and
different types of disability insurance collectively as ``insurance,''
but we believe that spelling out examples of types of insurance is
useful here. In the context of our definition, ``insurance'' listed by
itself might be unclear (since it could be confused with other types of
insurance that would not be considered compensation, like employers'
liability insurance), and we wish to make it clear that the benefits
must benefit the employee directly. We are also modifying ``sick
leave'' to the broader term ``paid leave,'' as this should be
understood to cover any time for which the employee is paid, whether it
be for sick leave, holidays, vacations, and so forth. We also are
adding retirement, which we believe is also a useful blanket term for
different types of retirement plans or contributions on the employee's
behalf. After consideration of public comments, we are finalizing Sec.
441.302(k)(1)(i)(B) with modification to specify that compensation
includes benefits, such as health and dental benefits, life and
disability insurance, paid leave, retirement, and tuition
reimbursement.
When proposing that benefits be included in the definition of
compensation, we intentionally included the phrase ``such as'' to
indicate that the examples of benefits provided in the definition is
not exhaustive. We did not attempt to list all possible benefits in the
regulatory definition, as we believe that would run the risk of
creating a definition that is too narrow. We plan to provide technical
assistance to States on how to help ensure that providers are applying
a reasonable definition of ``benefits'' and are only counting expenses
thereunder that would reasonably be considered an employee benefit.
Comment: Some commenters supported including employers' share of
payroll taxes in the definition of compensation at Sec.
441.302(k)(1)(i)(C). However, several commenters recommended that this
expense be removed from the definition, as these are not expenses
included in employees' take-home pay and are the responsibility of the
employer. Several commenters requested that employers' contributions to
worker's compensation and unemployment insurance be included in the
definition of compensation.
Response: It is our intent to include employers' payroll tax
contributions for unemployment insurance and workman's compensation (as
well as payments required by the Federal Insurance Compensation Act)
under Sec. 441.302(k)(1)(i)(C) and thus as part of our definition of
compensation for the purposes of the requirements at Sec. 441.302(k).
While not necessarily paid directly to the workers, these expenses are
paid on their behalf. We also note, for instance, that per the BLS, the
National Compensation Survey calls these payroll taxes ``legally
mandated employee benefits'' and includes them as part of the
definition of ``employee benefits'' for the purposes of determining
compensation.\115\ We plan to provide technical assistance to States on
how to help ensure that providers are including payroll tax
contributions for unemployment insurance and workman's compensation
when reporting on compensation to workers.
---------------------------------------------------------------------------

\115\ See BLS ``Glossary'' at https://www.bls.gov/bls/glossary.htm.
---------------------------------------------------------------------------

Comment: Several commenters noted support for including tuition
reimbursement in the definition of compensation. Several commenters
suggested that costs associated with continuing education should also
be included as compensation.
Response: We appreciate the commenters' support. We believe the
term ``tuition reimbursement'' is broad enough to cover a variety of
scenarios in which a provider may choose to reimburse a worker for
tuition costs incurred either prior to or during their period of
employment.
Comment: A number of commenters supported either including training
in the definition of compensation or excluding training from the
administrative and other expenses that are not considered compensation
under this rule. Some of these commenters noted that certain types of
services or programs might involve additional training for staff, such
as services delivered to beneficiaries with complex needs. One
commenter suggested that raising workers' wages will not necessarily
increase service quality if it is not accompanied by better training
for staff. Another commenter worried that providers could decide to cut
back on training in order to meet the minimum performance level, which
could endanger workers. Commenters cited examples of trainings,
including in-service trainings and cardiopulmonary resuscitation
trainings, as being critical for caring for beneficiaries. Several
commenters suggested that direct care workers who serve beneficiaries
with higher-acuity needs may require additional training than other
direct care workers.
Commenters suggested that, if training was included in the
definition of ``compensation'' (or was excluded from administrative and
other expenses that are not considered compensation under this rule),
training should be defined to include time spent in training, training
materials, trainers, and training facilities.
Conversely, one commenter stated that if training was included in
the definition of compensation, the minimum performance level should be
adjusted further upward (above 80 percent). One commenter stated that
if training was included as compensation to direct care workers, this
cost should be restricted to the time workers spend in training and not
include training materials and payments made to the trainer. One
commenter stated that the cost of onboarding new staff should not be
considered ``training.'' One commenter expressed skepticism that
training was truly a major cost for providers.
Response: We clarify that the time direct care workers spend in
training would already be accounted for in the definition of
compensation. We agree with commenters on several points: that training
is critical to the quality of services; that training needs might vary
across (or even within) States' Medicaid HCBS programs, depending on
the nature of the services or the acuity of

[[Page 40624]]

the beneficiaries served; that training costs may be difficult to
standardize; and that worker training is essential to quality, as well
as the health and safety of both the direct care worker and the
beneficiary. We do not want to encourage providers to reduce training
to cut administrative costs.
However, we are also reluctant upon considering comments to treat
all training costs as ``compensation'' to the direct care worker.
Trainings, as commenters noted, are often required as part of the job
and may vary depending on the services or the needs of the
beneficiaries they serve. We are concerned that including training
costs in the definition of compensation could mean that direct care
workers with higher training requirements would see more of their
``compensation'' going to training expenses, which could cause them to
receive lower take-home pay than colleagues with fewer training
requirements.
Rather than include training costs in the definition of
compensation at Sec. 441.302(k)(1)(i)), we are creating a new
definition at Sec. 441.302(k)(1)(iii) to define excluded costs for the
purposes of the payment adequacy requirement at Sec. 441.302(k)(3).
Excluded costs are those that are not included in the State's
calculation of the percentage of Medicaid payments that is spent on
compensation for direct care workers required at Sec. 441.302(k)(3).
In other words, States would ensure providers deduct these costs from
their total Medicaid payments before performing the calculation. We are
specifying at Sec. 441.302(k)(3)(iii) that excluded costs are limited
to: training costs (such as costs for training materials or payment to
qualified trainers); travel costs for direct care workers (such as
mileage reimbursement or public transportation subsidies); and costs of
personal protective equipment for direct care workers. This would mean
that providers could deduct the total eligible training expenses,
travel costs, and personal protective equipment for direct care workers
from the total payments they receive for homemaker, home health aide,
and personal care services before the compensation percentage is
determined for the minimum performance level as required under Sec.
441.302(k)(3).
The training costs that are excluded costs under Sec.
441.302(k)(1)(iii) are limited to those costs associated with the
training itself (such as qualified trainers and materials) and are
distinct from the compensation paid to a direct care worker
participating in the training as part of their employment duties under
Sec. 441.302(k)(1)(i).
Comment: One commenter requested clarification as to whether travel
expenses were part of the definition of ``compensation.'' Many
commenters stated that travel or transportation expenses should be
included in the definition of compensation, or not treated as an
administrative expense. Many commenters also expressed the concern that
it would be difficult to cover the cost of travel as part of
administrative expenses and other expenses that are not considered
compensation under this rule, especially in rural areas where direct
care workers may have to travel large distances to visit clients or
transport them to appointments. A few commenters worried that if travel
were considered an administrative expense, providers would be reluctant
to serve beneficiaries outside of a narrow service area to save on
travel expenses. A number of direct care workers shared experiences of
having to pay for gas out-of-pocket when they transported beneficiaries
and having to shoulder the financial burden of wear-and-tear on their
cars. One commenter noted that travel costs are frequently included in
rate calculations. Several commenters suggested that ``travel,'' if
included in the definition of compensation, should include time workers
spent travelling, mileage reimbursement, and public transportation
reimbursement.
However, a few commenters specifically noted that travel should not
be considered part of the definition of compensation. One commenter
noted that due to the variability of travel costs, it would be
difficult to include travel in a standardized definition of
compensation.
Response: We agree with commenters that certain travel-related
expenses should not be considered compensation to direct care workers.
Travelling to beneficiaries' homes or assisting them in the community
is an essential function of the job, and thus, travel reimbursement is
not for the direct care worker's personal benefit.\116\ We also agree
that travel costs will vary significantly by region and even by
beneficiary. We too are concerned that including travel in the
definition of compensation could mean that direct care workers with
higher travel demands would see more of their compensation going to
travel, which could cause them to receive lower take-home pay than
colleagues with lower travel demands.
---------------------------------------------------------------------------

\116\ See 29 U.S.C. 207(e)(2) (permitting employers to exclude
``reasonable payments for traveling expenses'' when determining an
employee's regular rate of pay under the FLSA); see also 29 CFR
778.217 (same).
---------------------------------------------------------------------------

At the same time, we are aware of the critical importance of travel
to the delivery of these services and do not want to create unintended
consequences. We are persuaded by commenters' concerns that counting
travel as an administrative expense could induce some providers to stop
serving beneficiaries that live outside certain regions. We would also
be concerned if direct care workers were expected to shoulder the
financial burden of travel out-of-pocket, as appears to be happening in
some cases now.
To preserve beneficiary access to services and avoid burden or
disparate impact on beneficiaries, direct care workers, and providers
in rural or underserved areas, we are excluding travel costs in this
final rule from the calculation of the percent of Medicaid payments for
certain services going to compensation for direct care workers. This
means that providers can deduct the total travel expenses for direct
care workers that providers incur from the total Medicaid payments they
receive before the compensation percentage is determined.
In order to reflect the exclusion of travel costs from the payment
calculation, we are adding a new Sec. 441.302(k)(1)(iii)(B) that
specifies that travel costs (such as reimbursement for mileage or
public transportation) may be considered an excluded cost for the
purposes of the minimum performance requirement at Sec. 441.302(k)(3).
The travel costs that are excluded costs under Sec. 441.302(k)(1)(iii)
are limited to those costs associated with the travel itself (such as
reimbursement for mileage or public transportation) and are distinct
from the compensation paid to a direct care worker for any time spent
traveling as part of their employment duties under Sec.
441.302(k)(1)(i). Please refer to our discussion in an earlier response
regarding the new definition of excluded costs at Sec.
441.302(k)(1)(iii) and its effect for the calculation required at Sec.
441.302(k)(3).
Comment: Several commenters expressed concerns about covering the
cost of vehicle purchases or maintenance as an administrative expense.
One commenter suggested that if travel were included in the definition
of compensation, it should include the cost of vehicles or vehicle
maintenance.
Response: We note that the payment adequacy requirement applies to
Medicaid payments for homemaker services, home health aide services,
and personal care services. In our

[[Page 40625]]

experience, it is rare that providers would be purchasing vehicles for
these services or that vehicle purchases would be part of the rate. We
do not expect that the cost of vehicles would be part of excludable
travel costs, but we plan to provide technical assistance to States on
a case-by-case basis.
Comment: Several commenters noted that personal protective
equipment (PPE) for staff should be counted as compensation or that
these expenses should not count as an administrative expense. Several
direct care workers also shared experiences of having to provide their
own PPE during the COVID-19 public health emergency (PHE), and the
harms caused to them both physically and financially by contracting
COVID-19.
Response: We agree, particularly given the recent experience with
the COVID-19 PHE, that PPE should not be treated as an administrative
expense. Providing direct care workers with adequate PPE is critical
for the health and safety of both the direct care workers and the
beneficiaries they serve. We also do not believe that direct care
workers should have to pay for PPE out-of-pocket or that it is
considered part of their compensation.
Similar to our approach with training and travel above, we are
excluding the cost of PPE for direct care workers in this final rule
from the calculation of the percentage of payments spent on
compensation for direct care workers. In order to reflect the exclusion
of PPE costs from the payment calculation, we are adding new Sec. Sec.
441.302(k)(1)(iii) that specifies that PPE costs for direct care
workers may be considered an excluded cost for the purposes of the
minimum performance requirement at Sec. 441.302(k). Please refer to
our discussion in an earlier response regarding the new definition of
excluded costs at Sec. 441.302(k)(1)(iii) and its effect for the
calculation required at Sec. 441.302(k)(3).
Comment: Several commenters requested clarification as to what
activities and costs would not be counted as compensation under this
rule. A significant number of commenters described other activities or
costs they believed should count as compensation, should not be counted
as part of non-compensation costs, or simply would not be affordable if
providers were left with only 20 percent of the Medicaid rate for
personal care, homemaker, or home health aide services. These included
costs associated with:
Administration, including wages paid to administrative and
human resources staff, who perform activities such as billing, payroll
processing, contracts management, or scheduling client appointments;
Other business expenses, such as organization
accreditation, liability insurance, and licensure.
Human resources activities, including recruitment
activities or advertising for new staff.
Background checks, drug screening, and medical screening
for employees (such as testing staff for tuberculosis prior to starting
service delivery).
Office space and utilities (especially for providers that
are required by State law to have a physical office).
Office supplies, medical supplies, food, or other out-of-
pocket expenses for clients, IT, mobile devices (including those used
for electronic visit verification), and staff uniforms.
Non-cash awards to direct care workers, such as parties,
staff retreats, gifts for staff, Employee Assistance Programs, or other
wellness programs.
Recordkeeping and complying with quality measures and
other reporting requirements.
Commenters noted that these costs are essential to operating a
service organization. Commenters also noted that at least some of these
costs, such as office space, are fixed costs, or costs that are beyond
providers' control.
Response: We believe that most of the items listed above would
qualify as administrative expenses, but some activities may be
considered compensation or excluded costs under the definitions we are
finalizing at Sec. 441.302(k)(1), depending on the context. We clarify
that, by designating activities as administrative and other expenses
that are not considered compensation under this rule, we do not suggest
that they are inessential. However, we also believe, as has been
discussed in prior responses, that a vast majority of the payment for
homemaker, home health aide, and personal care services must be spent
supporting core activities that are performed by direct care workers.
As noted by commenters in earlier comment summaries, we also do not
want States to allow providers to add so many non-cash benefits to a
worker's compensation that their take-home pay is excessively reduced.
We plan to provide technical assistance to States to help ensure that
States understand what are considered administrative and other expenses
that are included in the percentage calculation and what are considered
excluded costs.
Comment: Several commenters raised concerns that wages spent for
staff conducting certain beneficiary support activities would not be
considered compensation. These activities include completing person-
centered service plans or scheduling client appointments.
Response: We believe that some of the activities described by
commenters are activities that would be performed by staff who would
classify as direct care workers, as we proposed to define at Sec.
441.302(k)(1)(ii). We refer readers to our discussion of our proposed
definition of direct care workers in the next section below. We plan to
provide technical assistance to help States appropriately identify
direct care workers and, separately, administrative staff,
administrative activities, and other costs that are not considered
compensation under this rule.
Comment: A few commenters expressed the concern that employers will
shift more administrative activities to direct care workers, to avoid
having these activities fall under administrative and other costs that
are not considered compensation under this rule. The commenter stated
that this could increase burnout for direct care workers.
Response: As discussed earlier, the definition of compensation we
proposed, and are finalizing with modification, includes all
compensation paid to direct care workers for activities related to
their roles as direct care workers. States should ensure providers do
not count in the percentage calculation at Sec. 441.302(k)(3)
compensation for the time that workers spend on administrative or other
tasks unrelated to their roles as direct care workers as compensation
to direct care workers. We would not view as permissible under this
regulation the shifting of administrative tasks to direct care workers
as a way to inflate compensation for direct care workers. However,
providers can count as compensation to direct care workers the time
that direct care workers spend on tasks, including administrative
tasks, such as completing timecards, that are directly related to their
roles as direct care workers in providing services to beneficiaries. We
plan to provide States with technical assistance on how to accurately
capture compensation for workers who provide direct care and perform
administrative or other roles. However, we decline to make changes in
this final rule based on these comments.
Comment: Several commenters requested clarification on what was
included in the denominator of the calculation (in other words, what is
meant by ``payments'' when calculating the percent of payments being
spent on compensation for direct care workers). One commenter suggested
that rather

[[Page 40626]]

than requiring 80 percent of Medicaid payments be spent on
compensation, we require that 80 percent of all revenue be spent on
compensation. One commenter requested clarification about whether, for
managed care delivery systems, payment is the State's capitation
payment to the MCO or the MCO's payment to the home care provider
agency. The commenter also recommended that we require States to set a
minimum payment rate that MCOs or other entities pay home care agencies
and that the minimum rates be set at a level to pay workers the locally
required minimum wage and other compensation as defined in the
regulation, and for the home care agency to reserve 20 percent
overhead.
A few commenters made specific suggestions for parameters of what
should be included or excluded in the denominator, such as:
Only collected revenue (and not billed charges) would be
considered as base or supplemental payments;
Excluding refunded or recouped payments from current or
prior years based on program financial audits;
Excluding chargebacks; and
Excluding bad debt.
Response: For Medicaid FFS payments in the denominator of the
calculation should include base and supplemental payments (as described
in SMDL 21-006 \117\). Those base and supplemental payments should only
include payments actually collected, or revenue, rather than billed
charges. In addition, refunded or recouped payments from current or
prior years based on program financial audits, chargebacks, and bad
debt should be excluded from those base and supplemental payment
amounts. We are available to provide States with technical assistance
related to calculating payments for the purpose of determining the
percent of all payments that is spent on compensation.
---------------------------------------------------------------------------

\117\ CMS State Medicaid Director Letter: SMDL 21-006. December
2021. New Supplemental Payment Reporting and Medicaid
Disproportionate Share Hospital Requirements under the Consolidated
Appropriations Act, 2021. Available at https://www.medicaid.gov/sites/default/files/2021-12/smd21006.pdf.
---------------------------------------------------------------------------

For Medicaid managed care, payments refer to payments from the
managed care plan to the provider and not the capitation payment from
the State to the managed care plan. Further, for Medicaid managed care,
payments in the denominator of the calculation should include only
those payments actually collected and exclude refunded or recouped
payments from current or prior years based on program financial audits,
chargebacks, and bad debt. We note that section 1902(a)(30)(A) of the
Act does not provide us with authority to require specific payment
rates or rate-setting methodologies.
As discussed throughout this section (II.B.5), we proposed the
requirements at Sec. 441.302(k) using our authority under section
1902(a)(30)(A) of the Act, which requires State Medicaid programs to
ensure that payments to providers are consistent with efficiency,
economy, and quality of care and are sufficient to enlist enough
providers so that care and services are available to beneficiaries at
least to the extent as to the general population in the same geographic
area. We believe section 1902(a)(30)(A) of the Act speaks specifically
to Medicaid payments, not to all revenue received by providers (which
may be from various sources); thus, we decline to modify the
requirement to affect non-Medicaid revenues.
Comment: One commenter requested that revenue from value-based care
(VBC) arrangements in managed care be exempt from the calculation so as
not to disrupt State or managed care efforts moving toward VBC or to
disincentivize providers from pursuing innovative strategies to improve
health and financial outcomes such as lowering emergency room visits,
inpatient utilization, and admissions from HCBS to inpatient settings
such as nursing facilities. The commenter also noted that providers
must make numerous additional investments above and beyond typical
compensation rates for a VBC or pay-for-performance (PFP) arrangement
to work. Additionally, the commenter noted, VBC and PFP programs rely
on lengthy cycles of data, tracking, analysis, and reconciliation
before additional payments are made. The commenter stated that, if
these types of payments are included in the denominator of the
calculation, this will prove disruptive to these programs.
Response: We appreciate the commenter raising these concerns and
agree that VBC, PFP, and other unique payment arrangements that reward
and support quality over quantity are important, and it was not our
intention to appear to discourage them or minimize their value.
However, given the wide-ranging designs of such payments and that most
HCBS are often not included in these arrangements, we are not requiring
a specific way to address them in this final rule. We also decline to
adopt the commenter's suggestion to exempt revenue from VBC
arrangements in managed care from the calculation of the percent of
Medicaid payments for certain HCBS that is spent on compensation of
direct care workers, as such an exemption would undermine the intent of
the proposal and the usefulness of the data for assessing the
percentage of all Medicaid payments for certain HCBS that is spent on
compensation for direct care workers. We plan to provide States with
technical assistance as needed on how to include revenues from VBC,
PFP, and other unique payment arrangements in the calculation.
After consideration of the comments received, we are finalizing
Sec. 441.302(k)(1)(i) with a modification to clarify at Sec.
441.302(k)(1)(i)(B) that compensation includes benefits, such as health
and dental benefits, life and disability insurance, paid leave,
retirement, and tuition reimbursement.
We are also finalizing a new definition at Sec. 441.302(k)(1)(iii)
to define excluded costs, which are costs that are not included in the
calculation of the percentage of Medicaid payments that is spent on
compensation for direct care workers. In other words, States must
ensure providers deduct these costs from their total Medicaid payments
before performing the calculation required at Sec. 441.302(k)(3)).
Such costs are limited to: (A) Costs of required trainings for direct
care workers (such as costs for qualified trainers and training
materials); (B) Travel costs for direct care workers (such as mileage
reimbursement or public transportation subsidies) provided to direct
care workers; and (C) Costs of personal protective equipment for direct
care workers.
e. Definition of Direct Care Worker (Sec. 441.302(k)(1)(ii))
At Sec. 441.302(k)(1)(ii), we proposed to define direct care
workers to include workers who provide nursing services, assist with
activities of daily living (such as mobility, personal hygiene, eating)
or instrumental activities of daily living (such as cooking, grocery
shopping, managing finances), and provide behavioral supports,
employment supports, or other services to promote community
integration. Specifically, we proposed to define direct care workers to
include nurses (registered nurses, licensed practical nurses, nurse
practitioners, or clinical nurse specialists) who provide nursing
services to Medicaid-eligible individuals receiving HCBS, licensed or
certified nursing assistants, direct support professionals, personal
care attendants, home health aides, and other individuals who are paid
to directly provide services to Medicaid beneficiaries receiving HCBS
to address activities of daily living or instrumental activities of
daily living, behavioral supports, employment supports, or

[[Page 40627]]

other services to promote community integration. We further identified
in the preamble of the proposed rule that our definition of direct care
worker is intended to exclude nurses in supervisory or administrative
roles who are not directly providing nursing services to people
receiving HCBS.
Our proposed definition of direct care worker was intended to
broadly define such workers to ensure that the definition appropriately
captures the diversity of roles and titles across States that direct
care workers may have. We included workers with professional degrees,
such as nurses, in our proposed definition because of the important
roles that direct care workers with professional degrees play in the
care and services of people receiving HCBS, and because excluding
workers with professional degrees may increase the complexity of
reporting, and may unfairly punish States, managed care plans, and
providers that disproportionately rely on workers with professional
degrees in the delivery of HCBS. We also proposed to define direct care
workers to include individuals employed by a Medicaid provider, State
agency, or third party; contracted with a Medicaid provider, State
agency, or third party; or delivering services under a self-directed
service model. This proposed definition is in recognition of the varied
service delivery models and employment relationships that can exist in
HCBS waivers. We requested comment on whether there are other specific
types of direct care workers that should be included in the definition,
and whether any of the types of workers listed should be excluded from
the definition of direct care worker.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported finalizing the definition of
direct care worker as proposed. However, one commenter opposed the
entire definition. The commenter noted that the definition, which
resembles a definition of direct care worker used by the Department of
Labor, is distinguishable from the definition used by the Bureau of
Labor Statistics. The commenter recommended that no definition should
be finalized until there has been an interagency workgroup to review
and coordinate the different definitions.
Response: As discussed earlier in this section II.B.5.e. of this
rule, our proposed definition of direct care worker was intended to
capture the diversity of roles and titles across States that direct
care workers may have. It was also intended to include individuals in
the varied service delivery models and employment relationships that
can exist in HCBS waivers. As discussed later in this section II.B.5.e.
of this rule, we are finalizing the definition of direct care worker
largely as proposed with a modification to clarify that direct care
workers include nurses and other staff providing clinical supervision,
as we do not want to discourage clinical oversight that contributes to
the quality of services by creating a disincentive for providers to
hire clinicians when necessary. We believe that the definition of
direct care worker, as finalized, appropriately defines direct care
worker for the specific purposes of the requirements in Sec.
441.302(k), and we note that it was subject to interagency review.
Comment: Several commenters supported including clinicians (such as
those we proposed at Sec. 441.302(k)(1)(ii)(A)) in the definition of
direct care worker. Commenters noted that providers are often required
to have clinicians on staff and that such clinicians are critical to
ensuring quality of care. A few commenters, however, expressed
ambivalence or reservations about including clinicians in the
definition of direct care worker. One commenter noted that some States
do not include nurses in their State definitions of direct care worker.
A few commenters observed that because clinicians (including nurses)
generally earn higher wages, providers that employ clinicians will have
an easier time reaching the minimum performance level for direct care
worker compensation or that the higher wages of clinicians will mask
the lower wages of direct care workers who do not have professional
degrees and generally earn lower wages.
Response: We continue to believe it is appropriate to include
clinicians (such as registered nurses, licensed practical nurses, nurse
practitioners, or clinical nurse specialists) in the definition of
direct care worker and are finalizing the definition in this final rule
with these clinicians included. There is a shortage of nurses and other
clinicians delivering HCBS, and we believe it is important to support
these members of the HCBS workforce (especially as they also work
directly with beneficiaries). We echo observations from commenters that
some services are required to be delivered or monitored by clinicians.
We also would not want to discourage clinical oversight that
contributes to the quality of services by creating a disincentive for
providers to hire clinicians when necessary. Therefore, we are
clarifying that our definition of direct care worker is intended to
include nurses and other staff who directly provide services to
beneficiaries or who provide clinical supervision. However, consistent
with the proposed rule, our definition is intended to exclude staff who
provide administrative supervision. We are finalizing a modification at
the end of Sec. 441.302(k)(1)(ii)(F) to specifically include nurses
and other staff providing clinical supervision.
Comment: One commenter suggested that if a State requires that a
program employ a nurse to perform occasional beneficiary visits, the
State should pay the nurses directly, rather than requiring the
providers to pay them.
Response: We thank the commenter for this suggestion. While we do
not intend to establish specific requirements for how States pay for
services provided by nurses, we agree that this could be a solution for
States that would prefer for providers to reach the payment adequacy
requirement without relying on salaries for clinical staff. We decline
to make changes in this final rule based on this comment.
Comment: A number of commenters requested that we include private
duty nurses, including registered nurses, licensed practical nurses,
and certified nursing assistants, in the definition of direct care
worker.
Response: We note that private duty nurses are not necessarily a
separate category of worker, but rather registered nurses, licensed
practical nurses, or certified nursing assistants who provide services
classified and billed as private duty nursing. As a technical matter,
we clarify that only registered nurses and licensed practical nurses
may provide private duty nursing services authorized under Sec.
440.80. As discussed above, these types of clinicians are included in
the definition of direct care worker in Sec. 441.302(k)(1)(i)(A) so
long as they are providing one of the three HCBS services specified in
the minimum performance requirement (homemaker, home health aide, or
personal care services). However, private duty nursing is not one of
the services we have proposed, and are finalizing, for application of
this the minimum performance requirement.
Comment: Many commenters recommended that nurse supervisors be
included in the definition of direct care workers. Several of these
commenters noted that these are required positions for their programs.
Some commenters observed that nurse supervisors perform important
activities like supervising and training other direct care workers,

[[Page 40628]]

coordinating beneficiaries' care, or completing documentation and other
paperwork specific to beneficiaries' care (as opposed to paperwork
related to business administration). Several commenters stated that
clinical supervision is critical to the quality of HCBS. A few
commenters noted that nurse supervisors sometimes visit beneficiaries
or provide direct services when filling in for absent direct care
workers.
One commenter noted support for excluding general administrative or
supervisory staff from the definition of direct care workers. A few
commenters expressed concerns about the exclusion of administrative or
supervisory staff who may sometimes also provide services to
beneficiaries. Some of these commenters noted that especially during
workforce shortages, administrative staff or supervisors may fill in
for direct care workers. A couple of commenters requested clarification
on how wages for staff who perform both direct care work and
administrative or supervisory work should be counted for the purposes
of complying with the minimum performance level. One commenter
requested clarification on whether first line supervisors of direct
support professionals are included in the definition of direct care
workers.
Several commenters stated that they opposed the exclusion of
supervisory or managerial staff because these are required positions
for their programs. Several commenters noted that staff who provide
supervision or perform administrative tasks, such as understanding and
reviewing compliance and other regulatory requirements, are critical to
quality. One commenter expressed the concern that excluding supervisory
or managerial staff from the 80 percent minimum performance level would
mean that providers would have to lower the salaries of these
positions, and then in turn may have trouble filling these positions.
One commenter raised concerns about ``wage compression,'' with
providers reducing wages for higher-skilled jobs or paying these jobs
more like entry-level jobs.
Response: We are persuaded that nurses or other staff who provide
clinical oversight and training for direct care workers participate in
activities directly related to beneficiary care (such as completing or
reviewing documentation of care), are qualified to provide services
directly to beneficiaries, and periodically interact with beneficiaries
should be included in the definition of direct care workers at Sec.
441.302(k)(1)(ii). As noted earlier, we are modifying our definition of
direct care worker at Sec. 441.302(k)(1)(ii)(F) to clarify that it
includes nurses and other staff providing clinical supervision.
However, consistent with the proposed rule, our definition is intended
to exclude staff who provide administrative supervision (such as
overseeing business operations).
While we acknowledge that administrative staff and administrative
supervisors are often required staff and perform essential functions
(including quality and compliance reporting and recordkeeping), we
believe it is critical for the economic and efficient use of Medicaid
funds that the vast majority of Medicaid payment for homemaker, home
health aide, and personal care services must go to supporting the core
activities of that service; the core activities of homemaker, home
health aide, and personal care services are performed by direct care
workers. As discussed above, evidence specifically shows that direct
care workers are paid low wages and, thus, our priority is ensuring a
greater share of Medicaid payments go to direct care workers'
compensation. If there is an insufficient number of direct care workers
employed by a provider, then those HCBS cannot be delivered, and
beneficiaries may not be able to access the HCBS they need. We will
continue to partner with States to help providers find efficient ways
to support their administrative and reporting requirements.
Comment: Many commenters expressed concern that direct support
professionals were excluded from the definition of direct care worker,
as direct care workers are often associated with provision of services
to older adults and people with physical disabilities, while direct
service professionals typically provide services to people with
intellectual and developmental disabilities.
Response: We note that direct support professionals are explicitly
included in the definition of direct care worker at Sec.
441.302(k)(1)(ii)(C), so there is no need to further modify the
definition of direct care worker in response to these comments. If
someone designated by their State as a direct support professional
provides a service that is subject to the minimum performance
requirement, their compensation will be included in the calculation for
the minimum performance level.
Comment: One commenter suggested that payments to contract
employees should not count toward the minimum performance level.
Response: Given the varied nature of HCBS programs, we specifically
proposed for the definition of direct care worker at Sec.
441.302(k)(1)(ii)(G) to encompass a broad array of employment
relationships. We cannot find sufficient justification for excluding
certain types of employment relationships from this requirement and are
finalizing our definition of direct care worker to include individuals
employed by a Medicaid provider, State agency, or third party;
contracted with a Medicaid provider, State agency, or third party; or
delivering services under a self-directed service model, as proposed.
However, we are making a technical modification for clarity to not
finalize Sec. 441.302(k)(1)(ii)(G) and to add language proposed at
Sec. 441.302(k)(1)(ii)(G) to the end of Sec. 441.302(k)(1)(ii).
Comment: One commenter opposed including workers who deliver
services via a self-directed services delivery model in the definition
of direct care workers. They noted that including these workers would
``chip away at the uniqueness at the heart of the self-direction
paradigm,'' unintentionally burden self-directed employers and
employees, reduce autonomy by introducing a single title for a wide
variety of caregiving types, and would not recognize the flexible and
interdependent nature of self-direction or the fact that Medicaid
beneficiaries who self-direct their services do not retain the funds
that remain in budgets at the end of the year.
Response: We thank the commenter for raising their concerns. We
decline to make modifications to the definition of direct care worker
to exclude direct care workers providing services in self-directed
services delivery models generally. We believe it is important for
States to have a sufficient direct care workforce to be able to deliver
services that are responsive to the changing needs and choices of
beneficiaries, as required by section 2402(a)(1) of the Affordable Care
Act, regardless of whether they are receiving services through a self-
directed services delivery model or a model that is not self-directed.
Further, we believe it is important for States to have a sufficient
number of qualified direct care workers to provide self-directed
personal assistance services, as required by section 2402(a)(3)(B)(iii)
of the Affordable Care Act.
However, we do agree that there are certain self-directed services
delivery models for which the minimum performance level at (k)(3) would
not be appropriate. We intend to apply the requirements at Sec.
441.302(k)(3) to models in which the beneficiary directing the services
is not setting the payment rate for the worker (such as

[[Page 40629]]

agency-provider models). We do not intend to apply the requirements to
self-directed services delivered through models in which the
beneficiary sets the payment rate for the worker (such as in individual
budget authority models). In the latter scenario, we expect that all or
nearly all of that payment rate routinely is spent on the direct care
worker's compensation. We are finalizing a new requirement at Sec.
441.302(k)(2)(ii) that clarifies this policy; this requirement is
discussed in greater detail in section II.B.5.g. of this final rule.
After consideration of the comments received, we are finalizing the
definition of direct care worker at Sec. 441.302(k)(1)(ii) with
technical modifications for clarity to change the term, Medicaid-
eligible individuals, to the term, Medicaid beneficiaries, in both
Sec. 441.302(k)(1)(ii)(A) and (F). We are finalizing Sec.
441.302(k)(1)(ii) with a modification at the end of Sec.
441.302(k)(1)(ii)(F) to provide that direct care workers include nurses
and other staff providing clinical supervision. The finalized revised
text at Sec. 441.302(k)(1)(ii)(F) will read: Other individuals who are
paid to provide services to address activities of daily living or
instrumental activities of daily living, behavioral supports,
employment supports, or other services to promote community integration
directly to Medicaid beneficiaries receiving HCBS available under this
subpart, including nurses and other staff providing clinical
supervision. We are making a technical modification to not finalize
Sec. 441.302(k)(1)(ii)(G) and add language proposed at Sec.
441.302(k)(1)(ii)(G) to the end of Sec. 441.302(k)(1)(ii) to clarify
that a direct care worker may be employed by a Medicaid provider, State
agency, or third party; contracted with a Medicaid provider, State
agency, or third party; or delivering services under a self-directed
service model.
f. Reporting (Sec. 441.302(k)(2))
Section 1902(a)(6) of the Act requires State Medicaid agencies to
make such reports, in such form and containing such information, as the
Secretary may from time to time require, and to comply with such
provisions as the Secretary may from time to time find necessary to
assure the correctness and verification of such reports. At Sec.
441.302(k)(2), under our authority at section 1902(a)(6) of the Act, we
proposed to require that States demonstrate that they meet the minimum
performance level at Sec. 441.302(k)(3)(i) through new Federal
reporting requirements at Sec. 441.311(e). We discuss these reporting
requirements in our discussion of proposed Sec. 441.311(e) in section
II.B.7 of this final rule.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses. We also direct
the reader to the discussion of Sec. 441.311(e) in section II.B.7. of
this final rule for additional comments and responses.
Comment: A number of commenters, while not supporting the minimum
performance requirement, did express support for the requirement that
States must collect and report data on the percent of Medicaid payments
for certain HCBS going to compensation of direct care workers.
Commenters noted this reporting could yield important data about the
compensation to workers and allow for national comparisons.
Response: We agree with commenters that the reporting requirement
proposed at Sec. 441.311(e) will yield important data about
compensation to workers that will help support the HCBS direct care
workforce and promote better oversight of how Medicaid payments for
certain services are used.
We note that, while several commenters encouraged us to finalize
the reporting requirement at Sec. 441.311(e) without finalizing the
minimum performance requirement at Sec. 441.302(k)(3), no commenter
suggested that we finalize the minimum performance requirement without
a reporting requirement. We believe that the reference included in
Sec. 441.302(k)(2) to the reporting requirement at Sec. 441.311(e) is
necessary for CMS to oversee States' compliance with the minimum
performance requirement at Sec. 441.302(k)(3); however, the reporting
requirement at Sec. 441.311(e) is distinct and severable from the
minimum performance requirement at Sec. 441.302(k). As discussed in
more detail in section II.B.7, the reporting requirement at Sec.
441.311(e), which we are finalizing with modifications, addresses a
broader universe of services than is included in the minimum
performance level at Sec. 441.302(k)(3) and has an earlier
applicability date than the date we are finalizing at Sec.
441.302(k)(8) (discussed later in this section). While we are
finalizing both the minimum performance requirement at Sec.
441.302(k)(3) and the payment adequacy reporting requirement, as
amended, at Sec. 441.311(e), these represent distinct policies, and we
believe that the reporting requirement can (and will) function
independently from the minimum performance requirement.
Comment: Several commenters suggested that we add a requirement to
Sec. 441.302(k)(2) that would require States, as part of their
assurances of compliance with the minimum percentage requirement, to
acknowledge and explain any differences between the actual payment
rates for home care services and the rate most recently recommended by
the interested parties' advisory group under Sec. 447.203(b)(6) of
this final rule and discussed in section II.C. of this rule. The
commenters suggested that if the actual rate is lower than the
recommended rate, the State would also need to explain why it is
sufficient to ensure access to services.
Response: Although the interested parties' advisory group will
provide an invaluable perspective on the adequacy of rates, as
discussed in greater detail later in this preamble, the role of the
group finalized at Sec. 447.203(b)(6) is advisory. States will not be
required to follow the recommendations of the group. We believe the
policies as we are finalizing strike the right balance of
accountability and flexibility for wholly new rate processes. We
further note the recommendations of the interested parties' advisory
group will be posted publicly for review. Finally, we note that we are
also finalizing steps a State must take to demonstrate adequate access
to services when proposing a rate reduction or restructuring in
circumstances that could result in diminished access to care.
After consideration of the comments received, we are finalizing
Sec. 441.302(k)(2) with modifications. For reasons discussed in
section II.B.5.g. of this final rule, at Sec. 441.302, we are
redesignating paragraph (k)(2) as paragraph (k)(2)(i) to allow for the
addition of a new requirement at paragraph (k)(2)(ii) regarding
treatment of certain payment data under self-directed services delivery
models.
As discussed in section II.B.5.b. of this rule, we are finalizing
reporting requirements at Sec. 441.302(k)(6) to ensure accountability
in the States' use of the small provider minimum performance level and
hardship exemptions. To clarify that States must comply with this
requirement, as well as the reporting requirement at Sec. 441.311(e),
we are finalizing references to Sec. 441.302(k)(6) in Sec.
441.302(k)(2)(i). We also are finalizing a technical modification for
clarity that the State must demonstrate annually, consistent with the
reporting requirements at Sec. Sec. 441.302(k)(6) and 441.311(e), that
they meet the minimum performance level at Sec. 441.302(k)(3). (New
text in bold font).

[[Page 40630]]

g. Application to Other Authorities (Proposed at Sec. 441.302(k)(4),
Finalized at Sec. 441.302(k)(8); and Sec. Sec. 441.464(f),
441.570(f), and 441.745(a)(1)(vi))
At Sec. 441.302(k)(4), we proposed to apply the HCBS requirements
described in the proposed rule to services delivered under FFS or
managed care delivery systems. As discussed earlier in section II.B.1.
of this preamble, section 2402(a)(3)(A) of the Affordable Care Act
requires States to improve coordination among, and the regulation of,
all providers of Federally and State-funded HCBS programs to achieve a
more consistent administration of policies and procedures across HCBS
programs. In the context of Medicaid coverage of HCBS, it should not
matter whether the services are covered directly on an FFS basis or by
a managed care plan to its enrollees. The requirement for consistent
administration should require consistency between these two modes of
service delivery. We accordingly proposed to specify that a State must
ensure compliance with the requirements in Sec. 441.302(k) with
respect to HCBS delivered both under FFS and managed care delivery
systems.
Similarly, because workforce shortages exist under other HCBS
authorities, which include many of the same types of services to
address activities of daily living or instrumental activities of daily
living as under section 1915(c) waiver authority, we proposed to
include these requirements within the applicable regulatory sections.
Specifically, we proposed to apply the proposed requirements at Sec.
441.302(k) to section 1915 (j), (k), and (i) State plan at Sec. Sec.
441.464(f), 441.570(f), and 441.745(a)(1)(vi), respectively. Consistent
with our proposal for section 1915(c) waivers, we proposed these
requirements based on our authority under section 1902(a)(30)(A) of the
Act to ensure payments to HCBS providers are consistent with
efficiency, economy, and quality of care and are sufficient to enlist
enough providers so that care and services are available to
beneficiaries at least to the extent as to the general population in
the same geographic area. We believed the same arguments for proposing
these requirements for section 1915(c) waivers are equally applicable
for these other HCBS authorities. We requested comment on the
application of payment adequacy provisions across section 1915(i), (j),
and (k) authorities. As noted earlier in section II.B.4. of the
proposed rule, to accommodate the addition of new language at Sec.
441.464(e) and (f), we proposed to renumber existing Sec. 441.464(e)
as paragraph (g) and existing Sec. 441.464(f) as paragraph (h). We
requested comment on whether we should exempt, from these requirements,
services delivered using any self-directed service delivery model under
any Medicaid authority.
We considered whether to also apply these proposed payment adequacy
requirements to section 1905(a) ``medical assistance'' State plan
personal care and home health services. However, we did not propose
that these requirements apply to any section 1905(a) State plan
services based on State feedback that they do not have the same data
collection and reporting capabilities in place for section 1905(a)
services as they do for section 1915(c), (i), (j), and (k) services.
Further, the vast majority of HCBS is delivered under section 1915(c),
(i), (j), and (k) authorities, while only a small percentage of HCBS
nationally is delivered under section 1905(a) State plan authorities.
We requested comment on whether we should apply these requirements to
section 1905(a) State plan personal care and home health services.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported holding providers delivering
care in managed care delivery systems accountable for paying a
sufficient amount to direct care workers. A few commenters requested
that we clarify how this requirement would apply to MCOs, PIHPs, and
PAHPs. One commenter noted that managed care plans do not control the
payment rates that contracted providers pay their direct care workers.
A few commenters requested that we clarify managed care plans'
responsibility for tracking and reporting expenditures. A few
commenters expressed concern that this proposal would pose particular
reporting or accounting burdens for providers that participate in
multiple Medicaid managed care plans, serve non-Medicaid clients, or
receive bundled payments.
Response: We acknowledge commenters' broad concerns about how these
requirements will apply to managed care plans and will provide
technical assistance regarding specific questions as they are raised
during implementation. However, we are finalizing our proposal to apply
the requirements at Sec. 441.302(k) to both managed care and FFS
delivery systems. We clarify here that the requirements in Sec.
441.302(k) are the ultimate responsibility of States, regardless of
whether their HCBS are delivered through an FFS delivery system,
managed care delivery system, or both. The minimum performance
requirement applies at the provider level, not the managed care plan
level. We expect that States will develop an appropriate process with
their managed care plans should the State determine that managed care
plans have some role in activities such as the data collection or
reporting required in Sec. 441.302(k)(2) (being finalized as Sec.
441.302(k)(2)(i)). We agree that managed care plans do not control
payment rates that contracted providers pay their direct care workers
and reiterate that the focus of Sec. 441.302(k) is on the percentage
of the payment to providers that is passed along as compensation to
direct care workers.
We plan to provide technical assistance to States with managed care
delivery systems to minimize provider reporting and accounting burden
and to address questions related to bundled payments that include the
affected services (homemaker, home health aide, and personal care
services).
Comment: A few commenters specifically noted support for applying
the payment adequacy requirement to programs authorized under all
section 1915 authorities. One commenter did not support applying this
requirement to ``all 1915 waiver authorities'' but did not provide a
specific rationale for their recommendation.
Response: We are finalizing Sec. Sec. 441.464(f), 441.570(f), and
441.745(a)(1)(vi) (applying Sec. 441.302(k) to section 1915(j), (k)
and (i) services, respectively) with minor technical modifications as
noted later in this section II.B.5.g. of this final rule.
Comment: A number of commenters expressed concerns about the
application of the minimum performance level to self-directed services
authorized under sections 1915(j) and 1915(k) of the Act. A few
commenters, while not necessarily suggesting that self-directed
services should be excluded from the payment adequacy requirement,
believed that it would take more time and additional guidance to
implement the requirement for self-directed services.
Some commenters raised concerns about the application of the
requirement to specific models of self-direction, particularly the
self-directed model with service budget (as defined in Sec.
441.545(b)) (often referred to as the individual budget authority
model), in which the beneficiary sets the direct care worker's wages.
Some commenters worried that the application of the minimum performance
level to such

[[Page 40631]]

models would put the individual beneficiary in the position of acting
as a provider for this purpose. Other commenters were concerned that if
the minimum performance level was applied to these self-directed
services delivery models, beneficiaries would have to apply a set
percent of their budget to compensation of workers and thus would lose
the flexibility of determining how their budget was spent or what to
pay their direct care workers. One commenter pointed out that
beneficiaries in self-directed services delivery models do not
personally keep unspent funds and, thus, do not stand to profit by
lowering direct care workers' wages. A few commenters also requested
clarification of how the payment adequacy requirement would impact the
co-employment relationship in self-directed services. One commenter
noted that the vast majority of HCBS furnished under self-directed
services delivery models are paid so that the entire payment rate goes
toward direct care worker's wages and other associated costs such as
employer taxes, workers' compensation, and other employer requirements
such as State-mandated paid sick leave, while payment for financial
management services is paid separately. In these models, nearly 100
percent of the payment rate goes toward the direct care worker's wages
and associated costs, which would create an unfair comparison to
agency-directed services.
A few commenters noted that it would be undesirable to apply the
minimum performance level to HCBS furnished via self-directed services
delivery models because these services involve additional activities
and costs not associated with other types of services. These commenters
noted that services furnished via self-directed services delivery
models involve more training and human resources support for the
beneficiaries to help them hire and direct their workers. One commenter
stated that the proposed minimum performance level of 80 percent would
be too high to accommodate other non-compensation activities included
in self-directed services delivery models, such as employment or day
activities, case management, and back up supports.
On the other hand, some commenters noted that self-directed
services delivery models should be included in the payment adequacy
requirements and that it is important to support compensation for
direct care workers who provide HCBS via self-directed services
delivery models. One commenter noted that most personal care services
in the commenter's State are furnished via self-directed services
delivery models.
Response: We agree with commenters that the minimum performance
requirement may be difficult to apply (and, in fact, may simply be
inapplicable) to self-directed services delivery models with service
budget authority in which the beneficiary directing the services sets
the worker's wages as the payment rate for the service (such as models
meeting the definition of Sec. 441.545(b) for section 1915(k)
services, or self-directed services typically authorized under the
section 1915(j) authority).
We also agree with one commenter who noted that, because of the
separate payment of financial management services, nearly all of the
payments for personal care, homemaker, and home health aide services
furnished via self-directed services delivery models with service
budget authority are spent on compensation for direct care workers. We
believe that applying the minimum performance requirement to such
models would be ineffectual and an unnecessary burden on States.
We believe the minimum performance requirement is appropriate when
applied to a Medicaid rate for self-directed services that includes
both compensation to direct care workers and administrative activities
and in which the beneficiary did not set the payment rate for the
worker.
We note that at least some of the ``non-compensation activities''
identified by one commenter, such as employment or day activities and
case management, do not appear to fall under the specific services to
which we proposed, and are finalizing, for the minimum performance
requirement to apply, and therefore, they would not likely be subject
to the minimum performance requirement as finalized.
To clarify the application of Sec. 441.302(k) to HCBS furnished
via self-directed services delivery models, we are finalizing a new
requirement at Sec. 441.302(k)(2)(ii), specifying that, if the State
provides that homemaker, home health aide, or personal care services,
as set forth at Sec. 440.180(b)(2) through (4), may be furnished under
a self-directed services delivery model in which the beneficiary
directing the services sets the direct care worker's payment rate, then
the State does not include such payment data in its calculation of the
State's compliance with the minimum performance levels at paragraph
(k)(3).
We are finalizing the general application of Sec. 441.302(k) to
HCBS authorized under section 1915(j), (k), and (i) authorities, with
the understanding that some services delivered under these authorities
will fall under the exception for self-directed services delivery
models being finalized at Sec. 441.302(k)(2)(ii).
We note that the exception at Sec. 441.302(k)(2)(ii) directs
States to exclude certain data from the specified excluded self-
directed services models when establishing compliance with the minimum
performance level or small provider performance level at Sec.
441.302(k)(3). We believe, however, that the regulation text at Sec.
441.302(k) requiring States to assure that payment rates are adequate
to ensure a sufficient direct care workforce to meet the needs of
beneficiaries and provide access to services in the amount, duration,
and scope specified in beneficiaries' person-centered service plans
applies to all self-directed services models offered under all section
1915 authorities.
Comment: Commenters were mixed in their support for excluding
section 1905(a) services from the payment adequacy requirement. A few
commenters expressed strong support for extending the payment adequacy
requirement to services authorized under section 1905(a), particularly
commenters writing from States in which larger numbers of beneficiaries
receive section 1905(a) State plan services. One commenter expressed
concern that not including section 1905(a) services would
disproportionately exclude direct care workers providing services to
children or adults with intellectual and developmental disabilities.
One commenter noted that section 1902(a)(6) of the Act gives CMS the
authority to apply the requirement section 1905(a) services.
However, several commenters did not support applying the
requirement to section 1905(a) State plan services. Many of these
commenters simply did not support applying the minimum performance
requirement to services under any authority. A few commenters agreed
with our concerns that applying the payment adequacy requirement to
section 1905(a) State plan services would pose a particular burden on
States due to differences in how these services are delivered and
monitored.
Several commenters expressed concerns about potential unintended
consequences of not applying the minimum performance requirement to
section 1905(a) State plan services. In particular, some commenters
raised concerns that direct care workers would stop working for
providers that deliver section 1905(a) services, in favor of working
for providers that were subject to the minimum performance requirement.
On the other hand, a few

[[Page 40632]]

commenters worried that providers would stop providing services under
section 1915 authorities and switch to providing section 1905(a)
services to avoid having to comply with the payment adequacy
requirement.
Response: At this time, we are not requiring the application of the
HCBS payment adequacy requirements at Sec. 441.302(k) to section
1905(a) services. Given our work to better ensure access in the
Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will take these comments under
consideration for any potential future rulemaking regarding section
1905(a) services.
Comment: One commenter requested clarification as to whether the
payment adequacy requirements would apply to services delivered under
section 1115 authority.
Response: At Sec. 441.302(k)(4) (which we are finalizing at Sec.
441.302(k)(8)), we proposed to apply these requirements to services
delivered under FFS or managed care delivery systems, including those
authorized under section 1115(a) of the Act. We are finalizing this
requirement in this final rule, with modifications as noted herein,
including retaining the application to managed care delivery systems
authorized section 1115(a).
After consideration of public comments, and for reasons discussed
in sections II.B.5.b. and II.B.5.h. of this rule, we are finalizing
Sec. 441.302(k)(4) with modifications to redesignate Sec.
441.302(k)(4) as Sec. 441.302(k)(8) and change the date for States to
comply with the requirements at Sec. 441.302(k) from 4 years to 6
years. We are finalizing Sec. 441.302(k)(8) with minor modifications
to correct erroneous uses of the word ``effective.'' We are retitling
the requirement at Sec. 441.302(k)(8) as Applicability date (rather
than Effective date). We are also modifying the language at Sec.
441.302(k)(8) to specify that States must comply with the requirements
in Sec. 441.302(k) beginning 6 years after the effective date of this
final rule, rather than stating that Sec. 441.302(k)(8) is effective 6
years after the effective date of the final rule. In addition, we are
finalizing technical modifications to the language pertaining to the
applicability date for States providing services through managed care
delivery systems to improve accuracy and alignment with common phrasing
in managed care contracting policy.
As finalized, the redesignated Sec. 441.302(k)(8) reads:
Applicability date. States must comply with the requirements set forth
in paragraph (k) of this section beginning 6 years after the effective
date of this paragraph; and in the case of the State that implements a
managed care delivery system under the authority of section 1915(a),
1915(b), 1932(a), or 1115(a) of the Act and includes homemaker, home
health aide, or personal care services, as set forth at Sec.
440.180(b)(2) through (4) in the MCO's, PIHP's, or PAHP's contract, the
first rating period for contracts with the MCO, PIHP, or PAHP beginning
on or after the date that is 6 years after the effective date of this
paragraph. (New language identified in bold.)
After consideration of the comments, as noted above in this
section, we are finalizing a requirement at Sec. 441.302(k)(2)(ii)
specifying that if the State provides that homemaker, home health aide,
or personal care services, as set forth at Sec. 440.180(b)(2) through
(4), may be furnished under a self-directed services delivery model in
which the beneficiary directing the services sets the direct care
worker's payment rate, then the State does not include such payment
data in its calculation of the State's compliance with the minimum
performance levels at paragraph (k)(3).
We are finalizing the application of Sec. 441.302(k) to section
1915(j), (k), and (i) services with minor modifications. We are
finalizing a technical modification to clarify that the reference to
person-centered service plans in Sec. Sec. 441.464(f), 441.570(f), and
441.745(a)(1)(vi) is to beneficiaries' person-centered service plans.
We are also clarifying in Sec. Sec. 441.464(f), 441.570(f), and
441.745(a)(1)(vi) that while Sec. 441.302(k) applies to services
delivered under these authorities, references to section 1915(c) of the
Act are instead references to sections 1915(j), (k), or (i), as
appropriate.
Additionally, to ensure application of all relevant requirements of
Sec. 441.302(k) to section 1915(i) and (k) authorities, we are also
finalizing a modification to Sec. Sec. 441.474(c), 441.580(i) and
441.745(a)(1)(vii) to clarify that the reporting requirement at Sec.
441.302(k)(6) applies to section 1915(j), (k) and (i) authorities,
respectively. (We note that discussion of the finalization of
Sec. Sec. 441.474(c), 441.580(i) and 441.745(a)(1)(vii) is in II.B.7.
of this final rule.) We note that while we are applying the requirement
at Sec. 441.302(k)(6) to section 1915(j), (k), and (k) authorities,
States would only be required to comply with this reporting requirement
if the State provided services under these authorities described in
Sec. 441.302(k)(2)(i) and if the State meets the other criteria set
forth in Sec. 441.302(k)(6).
h. Applicability Date (Proposed at Sec. 441.302(k)(4), Being Finalized
at Sec. 441.302(k)(8))
As noted throughout the HCBS provisions in this preamble, we
recognize that many States may need time to implement these
requirements, including to amend provider agreements or managed care
contracts, make State regulatory or policy changes, implement process
or procedural changes, update information systems for data collection
and reporting, or conduct other activities to implement these proposed
payment adequacy requirements. We expect that these activities will
take longer than similar activities for other HCBS provisions in the
rule. Further, we expect that it will take a substantial amount of time
for managed care plans and providers to establish the necessary
systems, data collection tools, and processes necessary to collect the
required information to report to States. As a result, we proposed at
Sec. 441.302(k)(4), to provide States with 4 years to implement these
requirements in FFS delivery systems following the effective date of
the final rule. For States that implement a managed care delivery
system under the authority of sections 1915(a), 1915(b), 1932(a), or
1115(a) of the Act and include HCBS in the MCO's, PIHP's, or PAHP's
contract, we proposed to provide States until the first rating period
for contracts with the MCO, PIHP, or PAHP, beginning on or after 4
years after the effective date of the final rule to implement these
requirements. Similar to our rationale in other sections, this proposed
timeline reflects feedback from States and other interested parties
that it could take 3 to 4 years for States to complete any necessary
work to amend State regulations and work with their State legislatures,
if needed, as well as to revise policies, operational processes,
information systems, and contracts to support implementation of the
proposals outlined in this section. We also considered the overall
burden of the proposed rule as a whole in proposing the effective date
for the payment adequacy provision. We invited comments on the overall
burden associated with implementing this section, whether this
timeframe is sufficient, whether we should require a shorter timeframe
(such as 3 years) or longer timeframe (such as 5 years) to implement
the payment adequacy provisions and if an alternate timeframe is
recommended, the rationale for that alternate timeframe.
We received public comments on these proposals. The following is a

[[Page 40633]]

summary of the comments we received and our responses.
Comment: A few commenters supported our proposal that the minimum
performance requirement go into effect four years after the publication
of this final rule. One commenter noted that 4 years should be
sufficient time for States and providers to make necessary adjustments.
A few commenters noted that 4 years was too long, given the urgency of
the workforce shortage. One commenter suggested that we require the
minimum performance requirement go into effect January 1, 2025, while
another commenter suggested a 2-year effective date. One commenter
suggested the requirement should go into effect in 3 years, to align
with some of the other proposed effective dates in this rule.
Other commenters recommended that we allow for a longer effective
date, such as 6 years. Commenters noted that large-scale changes, such
as what would be required to comply with the minimum performance
requirement, would take time.
Several commenters suggested that compliance with the minimum
performance requirement be phased in over time to give providers and
States an opportunity to adjust their systems and policies.
Response: While we are sympathetic to commenters' sense of urgency
regarding the workforce shortage, we do not believe it is realistic for
States to comply with the requirements earlier than the proposed four
years. We agree with commenters that, for some States, ensuring that a
minimum percent of Medicaid payments go to direct care worker
compensation (and tracking compliance with this requirement) will
require a period of adjustment. We do expect that providers should
already be aware of their Medicaid revenues and what they pay their
workers; however, we acknowledge that they may not already be reporting
this information to the States and that the States will need to work
with their providers to develop an appropriate reporting mechanism. We
also understand that some providers will have to adjust how they
operate their business in order to meet the required minimum
performance level. We also acknowledge that we will need to provide
additional subregulatory guidance and technical assistance to aid in
implementation.
We agree with commenters that a slightly longer date for States to
comply with the requirements is necessary. We believe that the
complementary reporting requirement at Sec. 441.311I (discussed in
section II.B.7. of this rule) can be leveraged to create a transition
period to aid States in their compliance with Sec. 441.302(k)(3). As
such, we are finalizing Sec. 441.302(k)(8) with a modification to
change the date for States to comply with the requirements from 4 years
to 6 years. The data collected as part of Sec. 441.311(e) will give
States feedback on how close they are to reaching the minimum
performance level and will help CMS develop targeted technical
assistance for States that are farther away from attaining compliance.
For States electing to create a State-defined minimum performance level
for small providers, this period between reporting and performance will
also allow States to make any necessary adjustments to their State-
defined minimum performance levels. It will also allow States to make
any necessary adjustments to their criteria for hardship exemptions and
to identify providers who need hardship exemptions. We will continue to
use our standard enforcement tools and discretion, as appropriate, when
the requirements at Sec. Sec. 441.302(k) go into effect.
As noted in section II.B.5.b. and II.B.5.h. of this section, we are
creating new requirements at Sec. 441.302(k)(4) through (7) and thus
are redesignating proposed Sec. 441.302(k)(4) as Sec. 441.302(k)(8)
and finalizing Sec. 441.302(k)(8) with the modifications as noted in
section II.B.5.b. of this final rule. We are finalizing Sec.
441.302(k)(8) with minor modifications to correct erroneous uses of the
word ``effective.'' We are retitling the requirement at Sec.
441.302(k)(8) as Applicability date (rather than Effective date). We
are also modifying the language at Sec. 441.302(k)(8) to specify that
States must comply with the requirements in Sec. 441.302(k) beginning
6 years after the effective date of this final rule, rather than
stating that Sec. 441.302(k)(8) is effective 6 years after the
effective date of the final rule. In addition, we are finalizing
technical modifications to the language pertaining to the applicability
date for States providing services through managed care delivery
systems to improve accuracy and alignment with common phrasing in
managed care contracting policy.
i. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
requirements at Sec. 441.302(k) as follows:
We are finalizing the assurance requirement at Sec.
441.302(k) with technical modifications.
We are finalizing Sec. 441.302(k)(1) with a technical
modification.
The definition of compensation at Sec. 441.302(k)(1)(i)
(now also at Sec. 441.311(e)(1)(i)) and finalized as proposed, with
the exception of Sec. 441.302(k)(1)(i)(B) (now also at Sec.
441.311(e)(1)(i)(B)), which is revised to read: Benefits (such as
health and dental benefits, life and disability insurance, paid leave,
retirement, and tuition reimbursement).
The definition of direct care worker at Sec.
441.302(k)(1)(ii) (now also at Sec. 441.311(e)(ii)) is finalized with
technical modifications to Sec. 441.302(k)(1)(ii)(A) and (F) (now also
at Sec. 441.311(e)(1)(ii)(A) and (F)). We are also finalizing the
following addition at the end of Sec. 441.302(k)(1)(ii)(F) (now also
at Sec. 441.311(e)(1)(ii)(F)), including nurses and other staff
providing clinical supervision. The revised text at Sec.
441.302(k)(1)(ii)(F) (now also at Sec. 441.311(e)(1)(ii)(F)) will read
as follows: Other individuals who are paid to provide services to
address activities of daily living or instrumental activities of daily
living, behavioral supports, employment supports, or other services to
promote community integration directly to Medicaid beneficiaries
receiving home and community-based services available under this
subpart, including nurses and other staff providing clinical
supervision. In addition, we are making a technical modification to not
finalize Sec. 441.302(k)(1)(ii)(G) and add language proposed at Sec.
441.302(k)(1)(ii)(G) to the end of Sec. 441.302(k)(1)(ii) to clarify
that a direct care worker may be employed by a Medicaid provider, State
agency, or third party; contracted with a Medicaid provider, State
agency, or third party; or delivering services under a self-directed
services delivery model.
A definition of excluded costs is finalized at Sec.
441.302(k)(1)(iii) (now also at Sec. 441.311(e)(1)(iii)) as follows:
Excluded costs means costs that are not included in the calculation
of the percentage of Medicaid payments to providers that is spent on
compensation for direct care workers. Such costs are limited to:
(A) Costs of required trainings for direct care workers (such as
costs for qualified trainers and training materials);
(B) Travel costs for direct care workers (such as mileage
reimbursement or public transportation subsidies); and
(C) Costs of personal protective equipment for direct care workers.
Section 441.302(k)(2) is finalized with modifications. We
are redesignating the language at Sec. 441.302(k)(2) as Sec.
441.302(k)(2)(i). We are finalizing Sec. 441.302(k)(2)(i) to include
references to the reporting requirements that are finalized at

[[Page 40634]]

Sec. Sec. 441.302(k)(6) and 441.311(e) and the exception finalized at
Sec. 441.302(k)(2)(ii). We also made a technical modification for
clarity that the State must demonstrate annually, consistent with the
reporting requirements at Sec. Sec. 441.302(k)(6) and 441.311(e), that
they meet the minimum performance level at Sec. 441.302(k)(3). In
addition, we made technical modifications for clarity and precision to
specify the specific services (homemaker, home health aide, and
personal care services) to which the payment adequacy requirement
applies and to specify that these requirements apply to services
authorized under section 1915(c) of the Act, unless excepted under
Sec. 441.302(k)(2)(ii).
We are finalizing at new requirement at Sec.
441.302(k)(2)(ii) that clarifies that if the State provides that
homemaker, home health aide, or personal care services, as set forth at
Sec. 440.180(b)(2) through (4), may be furnished under a self-directed
services delivery model in which the beneficiary directing the services
sets the direct care worker's payment rate, then the State would not
include such payment data in its calculation of the State's compliance
with the minimum performance levels at paragraph (k)(3).
Section 441.302(k)(3) is finalized with several
modifications to retitle the requirement as ``Minimum performance at
the provider level'' and clarify the components of the required
calculation and the services that fall within this requirement. Section
441.302(k)(3) is also finalized with modifications to clarify that
excluded costs are not included in the calculation of the percentage of
total payments to a provider that is spent on compensation to direct
care workers and to specify the specific services (homemaker, home
health aide, and personal care services) to which the payment adequacy
requirement applies. We are also modifying Sec. 441.302(k)(3) to note
the exceptions to the minimum performance level that we are adding at
(k)(5) (hardship exemption) and (k)(7) (IHS and Tribal health programs
subject to 25 U.S.C. 1641).
Section 441.302(k)(3)(i) is finalized with a clarification
that the minimum performance level of 80 percent applies to all
payments to a provider, except as provided in paragraph (k)(3)(ii).
Section 441.302(k)(3)(ii) is amended to add an option for
States to set a State-defined small provider minimum performance level.
As finalized, Sec. 441.302(k)(3)(ii) reads: (ii) At the State's
option, providers determined by the State to meet its State-defined
small provider criteria in paragraph (k)(4)(i) of this section, the
State must ensure that each provider spends the percentage set by the
State in accordance with paragraph (k)(4)(ii) of this section of total
payments the provider receives for services it furnishes as described
in paragraph (k)(3) on total compensation for direct care workers who
furnish those services.
An option for States to develop criteria to identify small
providers to meet the State-defined small provider minimum performance
level is added at new Sec. 441.302(k)(4).
An option for States to provide some providers with a
hardship exemption is added at new Sec. 441.302(k)(5).
Reporting requirements are finalized at Sec.
441.302(k)(6), establishing reporting requirements for States that
utilize the small provider minimum performance level and hardship
exemption options finalized at Sec. 441.302(k)(4)(ii) and (k)(5), as
well as a waiver of these requirements that may be granted under
certain circumstances.
An exemption from the requirements at Sec. 441.302(k) is
finalized for IHS and Tribal health programs subject to 25 U.S.C. 1641
at Sec. 441.302(k)(7).
Section 441.302(k)(4) is renumbered as Sec. 441.302(k)(8)
and is finalized, with other technical modifications, to specify that
States must comply with the requirements set forth at Sec.
441.302(k)(8) beginning 6 years from the effective date of this final
Rule.
We are finalizing Sec. Sec. 441.464(f), 441.570(f), and
441.745(a)(1)(vi) with technical modification to clarify that the
references to person-centered service plans in Sec. Sec. 441.464(f),
441.570(f), and 441.745(a)(1)(vi) are to beneficiaries' person-centered
service plans. We are also finalizing modifications to clarify that
Sec. 441.302(k) applies to services delivered under these authorities,
except that references to section 1915(c) of the Act are instead
references to sections 1915(j), (k), or (i) of the Act, as appropriate.
We are finalizing a modification to Sec. Sec. 441.474(c),
441.580(i), and 441.745(a)(1)(vii) to clarify that the reporting
requirement at Sec. 441.302(k)(6) applies to section 1915(j), (k) and
(i) authorities, respectively.
6. Supporting Documentation Required (Sec. 441.303(f)(6))
As discussed in the proposed rule (88 FR 27986), States vary in
whether they maintain waiting lists for section 1915(c) waivers, and if
a waiting list is maintained, how individuals may join the waiting
list. Section 1915(c) of the Act authorizes States to set enrollment
limits or caps on the number of individuals served in a waiver, and
many States maintain waiting lists of individuals interested in
receiving waiver services once a spot becomes available. While some
States require individuals to first be determined eligible for waiver
services to join the waiting list, other States permit individuals to
join a waiting list after an expression of interest in receiving waiver
services. This can overestimate the number of people who need Medicaid-
covered HCBS because the waiting lists may include individuals who are
not eligible for services. According to the Kaiser Family Foundation,
over half of people on HCBS waiting lists live in States that do not
screen people on waiting lists for eligibility.\118\
---------------------------------------------------------------------------

\118\ Burns, A., M. O'Malley Watts, M. Ammula. A Look at Waiting
lists for Home and Community-Based Services from 2016 to 2021.
Kaiser Family Foundation. https://www.kff.org/47f8e6f/.
---------------------------------------------------------------------------

We have not previously required States to submit any information on
the existence or composition of waiting lists, which has led to gaps in
information on the accessibility of HCBS within and across States.
Further, feedback obtained during various public engagement activities
conducted with States and other interested parties over the past
several years about reporting requirements for HCBS, as well as
feedback received through the RFI \119\ discussed earlier, indicate
that there is a need to improve public transparency and processes
related to States' HCBS waiting lists. In addition, we have found, over
the past several years in particular, that some States are operating
waiting lists for their section 1915(c) waiver programs despite serving
fewer people than their CMS-approved enrollment limit or cap, even
though States are expected to enroll individuals up to their CMS-
approved enrollment limit or cap before imposing a waiting list.
However, because we do not routinely collect information on States' use
of waiting lists and the number of people on waiting lists, we are
unable to determine the extent to which States are operating such
unauthorized waiting lists or to work with States to address these
unauthorized waiting lists.
---------------------------------------------------------------------------

\119\ CMS Request for Information: Access to Coverage and Care
in Medicaid & CHIP. February 2022. For a full list of question from
the RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
---------------------------------------------------------------------------

Section 1902(a)(6) of the Act requires State Medicaid agencies to
make such reports, in such form and containing such information as the
Secretary may from time to time require, and to comply with such
provisions as the

[[Page 40635]]

Secretary may from time to time find necessary to assure the
correctness and verification of such reports. Based on the authority
found at section 1902(a)(6) of the Act, we proposed to require
information from States on waiting lists to improve public transparency
and processes related to States' HCBS waiting lists and ensure that we
are able to adequately oversee and monitor States' use of waiting lists
in their section 1915(c) waiver programs. To address new proposed
requirements at Sec. 441.311(d)(1), described in section II.B.7. of
this rule, on State reporting on waiting lists, we proposed to amend
Sec. 441.303(f)(6) by adding a sentence to the end of the existing
regulatory text to require that if the State has a limit on the size of
the waiver program and maintains a list of individuals who are waiting
to enroll in the waiver program, the State must meet the reporting
requirements at Sec. 441.311(d)(1).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses. We also received
a number of comments on the related reporting requirement at Sec.
441.311(d). Those comments are addressed in section II.B.7.
Comment: A few commenters shared local data and anecdotal
experiences about States' waiting lists, which some described as
containing thousands of people and requiring beneficiaries to wait for
long periods of time, even years, before accessing services. One
commenter observed that as demand for HCBS grows, the waiting lists
will also grow. A few commenters expressed concerns that the long
waiting times may result in beneficiaries having to enter institutional
care. Commenters also noted that beneficiaries and their families
experience confusion regarding waiting lists, including how long they
will have to remain on the waiting list before receiving services;
commenters noted that this confusion or lack of transparency can make
it difficult for beneficiaries to make informed decisions or plan for
future care needs.
A few commenters specifically supported our proposed amendment to
Sec. 441.303(f) that would require States to report information on
waiting lists for section 1915(c) waiver programs, which commenters
believed would contribute to transparency and provide additional data
to help make future changes within HCBS programs. Commenters believed
that a requirement to report this information would improve CMS's
ability to provide oversight and to hold States accountable for waiting
list practices. A few commenters believed that creating reporting
requirements for waiting lists is a necessary step toward the larger
goal of reducing HCBS waiting lists through expansion of HCBS programs.
A few commenters noted this information is critical when requesting
additional appropriations from State legislatures to expand HCBS
programs.
Response: We thank the commenters for their support and for sharing
their experiences and perspectives. We agree that collecting and
reporting data on waiting lists is a critical step in identifying unmet
needs among beneficiaries and can support the efficient administration
and expansion of HCBS programs.
Comment: A few commenters expressed opposition to adding a
reporting requirement for section 1915(c) waiver programs. Commenters
noted concerns that this requirement would necessitate changes in
States' data collection processes and IT systems.
Response: We address commenters' concerns in more detail in the
discussion of Sec. 441.311(d) in section II.B.7. of this rule. As we
note in that section, we have designed the reporting requirement to
minimize administrative burden on States while still generating
valuable data about waiting lists needed to support transparency and
accountability. We plan to offer States technical assistance as needed
to help align their current data collection practices with what will be
needed to comply with this reporting requirement.
After consideration of the public comments, we are finalizing the
requirements at Sec. 441.303(f) as proposed. We note that specific
recommendations regarding the reporting requirement are addressed in
section II.B.7. as part of the discussion of Sec. 441.311(d).
7. Reporting Requirements (Sec. Sec. 441.311, 441.474(c), 441.580(i),
and 441.745(a)(1)(vii))
Section 1902(a)(6) of the Act requires State Medicaid agencies to
make such reports, in such form and containing such information, as the
Secretary may from time to time require, and to comply with such
provisions as the Secretary may from time to time find necessary to
assure the correctness and verification of such reports. As discussed
in section II.B.1. of the proposed rule, in 2014, we released guidance
for section 1915(c) waiver programs in which we requested States to
report on State-developed performance measures across several domains,
as part of an overarching HCBS waiver quality strategy. The 2014
guidance established an expectation that States conduct systemic
remediation and implement a Quality Improvement Project when they score
below 86 percent on any of their performance measures. Under our
authority at section 1902(a)(6) of the Act, we proposed requirements at
Sec. 441.311, in combination with other proposed requirements
identified throughout the proposed rule, to supersede and fully replace
the reporting metrics and the minimum 86 percent performance level
expectations for States' performance measures described in the 2014
guidance.
The reporting requirements we proposed in the proposed rule
represented consolidated feedback from States, consumer advocates,
managed care plans, providers, and other HCBS interested parties on
improving and enhancing section 1915(c) waiver performance to integrate
nationally standardized quality measures into the reporting
requirements, address gaps in existing reporting requirements related
to access and the direct service workforce, strengthen health and
welfare and person-centered planning reporting requirements, and
eliminate annual performance measure reporting requirements that
provide limited useful data for assessing State compliance with
statutory and regulatory requirements. The intent of the proposed
reporting requirements was to allow us to better assess State
compliance with the statutory and regulatory requirements for section
1915(c) waiver programs. As indicated at the end of this preamble
section, we proposed that the reporting requirements at Sec. 441.311
also apply to State plan options authorized under section 1915(i), (j)
and (k) of the Act, as well as to both FFS and managed care delivery
systems, unless otherwise indicated.
We proposed, at Sec. 441.311(a), a regulation setting forth the
statutory basis and scope of the reporting requirements in Sec.
441.311.
We did not receive comments on Sec. 441.311(a). Based on further
consideration, we are finalizing Sec. 441.311(a) with a modification
for clarity to remove ``simplification'' and make a minor formatting
change to ensure Sec. 441.311(a) aligns directly with the statutory
requirement at section 1902(a)(19) of the Act.
We also note that, consistent with statements we made in the
introduction of sections II. and II.B. of this final rule regarding
severability, we intend that each provision in Sec. 441.311 of this
final rule is, as finalized, distinct and severable to the extent it
does not rely on another final policy or regulation that we proposed.
While we intend that each of the provisions being finalized

[[Page 40636]]

within Sec. 441.311, and policies and regulations being finalized
elsewhere in this rule, present a comprehensive approach for our
oversight of States' Medicaid programs and improving HCBS, we also
intend that each reporting requirement within Sec. 441.311 is distinct
and severable from one another and from other policies and regulations,
being finalized in this rule as well as those rules and regulations
currently in effect, to the extent applicable.
Specifically, we proposed, and are finalizing, various reporting
requirements in Sec. 441.311 to provide mechanisms for us to oversee
States' compliance with other policies being finalized in this rule,
such as reporting requirements at Sec. 441.311(b)(1) through (2) for
incident management system and critical incident requirements under
Sec. 441.302(a)(6), as well as to collect data to support future
policy considerations to address the direct care worker shortage at
Sec. 441.311(e). While we intend them to be distinct and severable, we
are finalizing these reporting requirements in Sec. 441.311 to
consolidate them in one place in regulation so they are easier to find.
They are not interdependent to the extent each does not rely on another
final policy or regulation that we proposed and are finalizing in this
rule. We believe that the reporting requirements being finalized herein
at Sec. 441.311(b)(1) through (4), (c), (d)(1) and (2), and (e) are
each valuable on their own and would provide critical data and
oversight even in a circumstance where individual provisions within
Sec. 441.311 were not finalized or implemented; however, we note that
in this final rule, we are finalizing all reporting requirements in
Sec. 441.311, albeit some with modifications, as discussed in this
section.
a. Compliance Reporting
(1) Incident Management System Assessment (Sec. 441.311(b)(1) and (2))
As noted earlier in section II.B.3. of this rule, there have been
notable and high-profile instances of abuse and neglect in recent years
that highlight the risks associated with poor quality care and with
inadequate oversight of HCBS in Medicaid. This is despite State efforts
to implement statutory and regulatory requirements to protect the
health and welfare of individuals receiving section 1915(c) waiver
program services, and State adoption of related subregulatory guidance.
In addition, a July 2019 survey of States that operate section 1915(c)
waivers found that:
Definitions of critical incidents vary across States and,
in some cases, within States for different HCBS programs or
populations;
Some States do not use standardized forms for reporting
incidents, thereby impeding the consistent collection of information on
critical incidents;
Some States do not have electronic incident management
systems, and, among those that do, many use systems with outdated
electronic platforms that are not linked with other State systems,
leading to the systems operating in silos and the need to consolidate
information across disparate systems; and
Many States cited the lack of communication within and
across State agencies, including with investigative agencies, as a
barrier to incident resolution.
Based on these findings and reports, as well as feedback obtained
during various public engagement activities conducted with interested
parties over the past several years to standardize and strengthen
health and welfare reporting requirements, we proposed new requirements
for States' incident management systems at Sec. 441.302(a)(6), as
discussed in section II.B.3. of this preamble. We also proposed new
reporting requirements that will allow us to better assess State
compliance with the requirements at Sec. 441.302(a)(6).
Relying on our authority at section 1902(a)(6) of the Act, at Sec.
441.311(b), we proposed to establish new compliance reporting
requirements. Specifically, at Sec. 441.311(b)(1)(i), we proposed to
require that States report every 24 months on the results of an
incident management system assessment to demonstrate that they meet the
requirements at Sec. 441.302(a)(6) that the State operate and maintain
an incident management system that identifies, reports, triages,
investigates, resolves, tracks, and trends critical incidents,
including that:
The State define critical incidents to meet the proposed
minimum standard definition at Sec. 441.302(a)(6)(i)(A);
The State have an electronic critical incident system
that, at a minimum, enables electronic collection, tracking (including
of the status and resolution of investigations), and trending of data
on critical incidents as proposed at Sec. 441.302(a)(6)(i)(B);
The State require that providers report any critical
incidents that occur during the delivery of section 1915(c) waiver
program services as specified in a waiver participant's person-centered
service plan, or are a result of the failure to deliver authorized
services, as proposed at Sec. 441.302(a)(6)(i)(C);
The State use claims data, Medicaid Fraud Control Unit
data, and data from other State agencies such as Adult Protective
Services or Child Protective Services to the extent permissible under
applicable State law to identify critical incidents that are unreported
by providers and occur during the delivery of section 1915(c) waiver
program services, or as a result of the failure to deliver authorized
services, as proposed at Sec. 441.302(a)(6)(i)(D);
The State ensure records being used as part of the
incident management system are handled in compliance with 45 CFR
164.510(b), and records with protected health information are obtained
and used with beneficiary consent at Sec. 441.302(a)(6)(i)(E);
The State share information on reported incidents, the
status and resolution of investigations, such as through the use of
information sharing agreements, with other entities in the State
responsible for investigating critical incidents, if the State refers
critical incidents to other entities for investigation, as proposed at
Sec. 441.302(a)(6)(i)(E); and
The State separately investigate critical incidents if the
investigative agency fails to report the resolution of an investigation
within State-specified timeframes as proposed at Sec.
441.302(a)(6)(i)(F).
Given the risk of preventable and intentional harm to beneficiaries
when effective incident management systems are not in place, documented
instances of abuse and neglect among people receiving HCBS, and
identified shortcomings and weaknesses of States' incident management
systems discussed earlier, we believed the proposed requirement for
States to report every other year on the results of an incident
management system assessment is in the best interest of and necessary
for protecting the health and welfare of individuals receiving section
1915(c) waiver program services. In the absence of such a reporting
requirement, we believed that we are unable to determine whether States
have effective systems in place to identify and address incidents of
abuse, neglect, exploitation, or other harm during the course of
service delivery; ensure that States are protecting the health and
welfare of individuals receiving section 1915(c) waiver program
services; and safeguard people receiving section 1915(c) waiver program
services from preventable or intentional harm.
In proposing an every 24-month timeframe for reporting, we were
attempting to take into account the

[[Page 40637]]

likely frequency of State changes to policies, procedures, and
information systems, while also balancing State reporting burden and
the potential risk to beneficiaries if States have incident management
systems that are not compliant with the proposed requirements at Sec.
441.302(a)(6). We believed an every 24-month timeframe for reporting is
sufficient to detect substantial changes to policies, procedures, and
information systems and ensure that we have accurate information on
States' incident management systems. We also proposed, at Sec.
441.311(b)(1)(ii), to allow States to reduce the frequency of reporting
to up to once every 60 months for States with incident management
systems that are determined to meet the requirements at proposed Sec.
441.302(a)(6). We invited comments on whether the timeframe for States
to report on the results of the incident management system assessment
is sufficient or if we should require reporting more frequently (every
year) or less frequently (every 3 years). We also invited comment on
whether we should require reporting more frequently (every 3 years or
every 4 years) for States that are determined to have an incident
management system that meets the requirements at Sec. 441.302(a)(6).
If an alternate timeframe is recommended, we requested that commenters
provide the rationale for that alternate timeframe.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses. We also received
comments on the incident management system requirements. Those comments
and our responses are in section II.B.3. of this final rule.
Comment: A few commenters generally supported the proposed incident
management requirements being finalized at Sec. 441.302(a)(6), which
are the subject of the reporting requirement at Sec. 441.311(b)(1).
One commenter questioned how these reporting requirements would
interact with current State reporting requirements related to critical
incidents or other waiver reporting requirements.
Response: We thank commenters for their support. We expect to
implement new reporting forms for the new reporting requirements that
we are finalizing in this final rule, including the critical incident
reporting requirements. We also expect to modify existing reporting
forms, particularly to remove the reporting requirements in the 2014
guidance \120\ that are being superseded and fully replaced by the
requirements in this final rule. We note that some components of the
existing reporting forms may remain in effect to the extent that they
cover other requirements that remain unchanged by the requirements that
we are finalizing in this final rule. States and interested parties
will have an opportunity to comment on the new reporting forms and the
revised forms through the Paperwork Reduction Act notice and comment
process. Further, we expect that States will be able to build on
existing systems to comply with the requirements being finalized in
this rule at Sec. Sec. 441.302(a)(6) and 441.311(b)(1) (discussed in
sections II.B.3. and II.B.7. of this rule, respectively.) We plan to
provide technical assistance to specific State questions, as needed,
about how these requirements can align and interact with current
practices.
---------------------------------------------------------------------------

\120\ We note that, although States will no longer be expected
to meet the reporting requirements and 86 percent minimum
performance level in the 2014 guidance, the six assurances and
related subassurances in the 2014 guidance continue to apply.
---------------------------------------------------------------------------

Comment: A few commenters requested clarification on the assessment
that is mentioned in Sec. 441.311(b)(1)(i). Commenters requested more
information on the contents of the assessment States must perform of
their incident management systems and how States should report the
results of the assessment. A few commenters requested more detail on
the reporting template and when the report would need to be submitted.
A few commenters expressed the hope that the reporting timing could be
aligned with waiver years or other administrative deadlines. One
commenter inquired if States were expected to pay for the assessment.
One commenter requested clarification on the deadline for when this
assessment must be completed. A few commenters noted that the
assessment was required to be performed annually.
Response: The assessment that States perform of their systems will
include review of the elements being finalized at Sec. 441.302(a)(6).
The requirements we are finalizing in Sec. 441.302(a)(6) is discussed
in detail in section II.B.3. of this final rule. The assessment results
will be collected as part of the overall data collection activities
associated with the reporting requirements in Sec. 441.311. Per Sec.
441.311(f), as finalized herein (and discussed below in this section
II.B.7.), States will be required to comply with the reporting
requirement for Sec. 441.311(b)(1) beginning 3 years after the
effective date of this final rule. This means that States will be
required to submit the assessment results to CMS in three years; thus,
assessments should be performed in time for States to meet this
timeframe. We will be making the required assessment and reporting
template available for public comment through the Paperwork Reduction
Act notice and comment process. Specific reporting due dates will be
determined through subregulatory guidance.
We anticipate that the costs that States incur to conduct and
report on the results of the assessment will be eligible for Federal
match as an administrative activity. Current Medicaid Federal matching
funds are available for State expenditures on the design, development,
and installation (including enhancements), and for operation, of
mechanized claims processing and information retrieval systems. Under
section 1903(a)(7) of the Act, Federal matching funds are available for
administrative activities necessary for the proper and efficient
administration of the Medicaid State plan. This may include the costs
that States incur to conduct and report on the results of the incident
management assessment.
We also clarify that there is not a requirement that the incident
management assessment be performed annually. As discussed in greater
detail below, Sec. Sec. 441.311(b)(1)(i) and (ii) require that States
must submit an incident management assessment every 24 months unless
CMS determines the system meets the requirements at Sec.
441.302(a)(6), at which point the assessment must be made every 60
months. Assessments of the incident management system need to be
performed as part of this assurance schedule. However, States are
welcome to perform assessments more frequently than this schedule
requires.
Comment: A few commenters requested that we require States to
assess whether the State system tracks the reporting of critical
incidents to the designated State Protection and Advocacy system at the
same time the incident was reported to the State.
Response: We are declining to make modifications to requirements
for States system assessments. We note that commenters made a similar
request to add this requirement to the system requirements proposed at
Sec. 441.302(a)(6). We also declined to add the requirement to Sec.
441.302(a)(6). We refer readers to section II.B.3. of this rule for the
related discussion. However, States are welcome to add other factors to
their system assessment beyond the requirements we are finalizing in
this rule.

[[Page 40638]]

Comment: One commenter requested clarification on the consequences
of a State's incident management system being found to be non-compliant
with Sec. 441.302(a)(6).
Response: Corrective actions or other enforcement actions will be
determined on a case-by-case basis, using our standard enforcement
authority, for States with incident management systems that are
determined by the assessment to not be compliant with the requirements
at Sec. 441.302(a)(6). Additionally, States that do not have compliant
systems will be required to perform assessments every 24 months, as
required by Sec. 441.311(b)(1)(i) until CMS determines that the system
meets the requirements of Sec. 441.302(a)(6) and the State can reduce
reporting frequency to every 60 months, as provided by Sec.
441.311(b)(1)(ii). We are not making any changes in this final rule
based on this comment.
Comment: A few commenters supported the proposals at Sec.
441.311(b)(1)(i) and (ii) that States must provide the required
assessment every 24 months and, if the system is determined to be
compliant, every 60 months. One commenter encouraged us to reduce the
frequency in Sec. 441.311(b)(1)(i) to one year. One commenter
suggested that States should provide assessments on their systems every
1 to 2 years, and if the State's system has been deemed to be in
compliance, the assessment should be provided every 3 to 4 years.
A few commenters, however, believed that the reporting frequency
should be increased. One commenter recommended this reporting should
occur every three years. A few commenters worried that 24 months would
not be sufficient time for States to submit the assessment to CMS, and
implement any system changes, which might require IT systems updates
and acquiring additional funding from State legislatures. One commenter
suggested that the assessment should be submitted every 5 years to
align with the waiver renewal cycle.
One commenter noted that requiring an assessment every 24 months
will create an unnecessary duplication of work. The commenter agreed
with the need for an initial assessment but contended that the ongoing
assessments were unnecessary, as States could independently monitor
ongoing operations and make quality improvements and system updates as
needed.
Response: We continue to believe that 24 months (and, for compliant
systems, 60 months) is an appropriate frequency that ensures
accountability without being overly burdensome. We refer readers to our
prior response regarding situations in which we determine, based on the
State's assessment, that its system does not meet the requirements
finalized at Sec. 441.302(a)(6).
We do not agree that requiring a regular schedule of system review
is duplicative. If a State is already conducting regular system reviews
as part of a quality improvement process, that review can form the
basis for the every 24-month or, as appropriate, every 60-month
assessment. We believe that for States that may not already have such
processes in place, some regular schedule of review is necessary to
ensure that over time, systems do not fall out of compliance. We also
would encourage States to use these assessments as opportunities to
conduct more comprehensive audits or reviews to identify opportunities
for system improvements.
After consideration of the comments received, we are finalizing the
reporting frequency in Sec. 441.311(b)(1)(i) with a technical
modification for clarity that the State must report on the results of
an incident management system assessment, every 24 months, in the form
and manner, and at a time, specified by CMS, rather than according to
the format and specifications provided by CMS. We are finalizing Sec.
441.311(b)(1)(ii) as proposed.
(2) Critical Incidents (Sec. 441.311(b)(2))
As discussed earlier in section II.B.4. of the proposed rule, at
Sec. 441.302(a)(6)(i)(A), we proposed to require States to define
critical incidents at a minimum as verbal, physical, sexual,
psychological, or emotional abuse; neglect; exploitation including
financial exploitation; misuse or unauthorized use of restrictive
interventions or seclusion; a medication error resulting in a telephone
call to or a consultation with a poison control center, an emergency
department visit, an urgent care visit, a hospitalization, or death; or
an unexplained or unanticipated death, including but not limited to a
death caused by abuse or neglect.
Based on the same rationale as discussed previously in section
II.B.7.a.(1) of this preamble related to the proposed incident
management system assessment reporting requirement, at Sec.
441.311(b)(2), relying on our authority under section 1902(a)(6) of the
Act, we proposed to require that States report annually on the number
and percent of critical incidents for which an investigation was
initiated within State-specified timeframes; number and percent of
critical incidents that are investigated and for which the State
determines the resolution within State-specified timeframes; and number
and percent of critical incidents requiring corrective action, as
determined by the State, for which the required corrective action has
been completed within State-specified timeframes. We intended to use
the information generated from the proposed reporting requirements at
Sec. 441.311(b)(2)(i) through (iii) to determine if States meet the
requirements at Sec. 441.302(a)(6)(ii).\121\ Given the risk of harm to
beneficiaries when effective incident management systems are not in
place, documented instances of abuse and neglect among people receiving
HCBS, and identified shortcomings and weaknesses of States' incident
management systems discussed earlier, we believed the proposed
requirement at Sec. 441.311(b)(2) for States to report annually on
critical incidents is in the best interest of and necessary for
protecting the health and welfare of individuals receiving section
1915(c) waiver program services. We invited comments on the timeframe
for States to report on the critical incidents, whether we should
require reporting less frequently (every 2 years), and if an alternate
timeframe is recommended, the rationale for the alternate timeframe.
---------------------------------------------------------------------------

\121\ We note that there was a typographical error in the NPRM
at 88 FR 27987, incorrectly identifying the proposed reporting
requirements at Sec. 441.311(b)(2)(ii) through (iv), rather Sec.
441.311(b)(2)(i) through (iii).
---------------------------------------------------------------------------

We received public comments on this proposal. The following is a
summary of the comments we received and our responses. We also received
comments on the minimum performance requirements for critical incident
investigations proposed in Sec. 441.302(a)(6), which form the basis of
the reporting requirement at Sec. 441.311(b)(2). These comments and
our responses are in section II.B.3. of this final rule.
Comment: A few commenters generally supported our proposal at Sec.
441.311(b)(2). One commenter observed that the current lack of
standardized incident management systems across all States puts
beneficiaries at risk and believed that the critical incident reporting
requirements will help to prevent adverse experiences, increase
accountability for States, and provide beneficiaries with an avenue of
redress when they experience harm.
Response: We thank commenters for their support.
Comment: A few commenters opposed the reporting requirement at
Sec. 441.311(b)(2). One commenter

[[Page 40639]]

believed that building the necessary IT systems to complete the
reporting will impose an extraordinary cost to States and take years to
develop, test, and implement. Another commenter expressed concerns that
the reporting requirements would necessitate a restructuring of some
States' critical incident management, including revising policies,
procedures, trainings, and processes.
Response: As discussed in the proposed rule (88 FR 27978), since
2014, States operating section 1915(c) waiver programs have been
expected to demonstrate on an ongoing basis that they identify,
address, and seek to prevent instances of abuse, neglect, exploitation,
and unexplained death, and demonstrate that an incident management
system is in place that effectively resolves incidents and prevents
further similar incidents to the extent possible. While we acknowledge
that some States may have to make some adjustments to their systems, we
expect that most will be able to build on existing systems to achieve
this reporting. We plan to offer States technical assistance as needed
to support questions they may have about adjustments they need to make
to existing policies, tracking, and reporting systems. We decline to
make any changes in this final rule based on these comments.
Comment: A few commenters requested that we share more details
about the reporting template and when the report would need to be
submitted. A few commenters expressed the hope that the reporting
timing could be aligned with waiver years or other administrative
deadlines.
Response: The reporting requirement at Sec. 441.311(b)(2) will be
collected as part of the overall data collection activities associated
with the reporting requirements in Sec. 441.311. Per Sec. 441.311(f),
as finalized herein and discussed in this section II.B.7. of the rule,
States must comply with the reporting requirement at Sec.
441.311(b)(2) beginning 3 years from the effective date of this final
rule]. Prior to that applicability date, we will be making the
reporting template available for public comment through the Paperwork
Reduction Act notice and comment process. Specific reporting due dates
will be determined through subregulatory guidance.
Comment: One commenter requested clarification on whether the
reporting was statewide or could be submitted for each program. The
commenter noted that for States operating multiple critical incident
systems, or tracking critical incidents at the program level, reporting
of data at an aggregate statewide level will not only prove
operationally challenging, but it could also limit the ability to
identify and address program-specific issues.
Response: States are expected to report aggregated statewide data
for this requirement. We believe that a State could track critical
incidents by program at the State level and then aggregate this data
for the purposes of the reporting requirement at Sec. 441.311(b)(2).
We plan to offer technical assistance to States, as needed, that have
decentralized critical incident systems to facilitate the aggregated
statewide reporting. We also note that States will be able to provide
input into the reporting instrument when it is shared for public
comment during the Paperwork Reduction Act notice and public comment
process.
Comment: One commenter was critical of the proposed reporting
metrics at Sec. 441.311(b)(2), believing that the focus of the metrics
was too much on timeliness: timely initiation of investigations, timely
resolutions, and timely corrective action. The commenter did not
believe that there was sufficient focus on the substance of the
incidents. A few commenters recommended that we add the following
metrics to Sec. 441.311(b)(2): the number of critical incidents in
each year, categorized by type of incident and extent of injury or by
severity; whether corrective action was needed; whether corrective
action was performed; whether any corrective action addressed the needs
of current participants or future participants (or both); and whether
corrective action adequately addressed participants' needs.
One commenter stated that the information should be reported to the
public, although in a format that protects the anonymity of the
beneficiary and filer. The commenter also suggested that a separate
section of the public report should provide information on
substantiated critical incidents by provider, including the service
provider's owner and the name under which they are doing business.
Response: We disagree that the metrics in Sec. 441.311(b)(2) focus
only on timeliness. Inherent in these metrics is the expectation that
States will promptly investigate and resolve critical incidents, which
we believe is the essential purpose of the critical incident system. We
developed the reporting requirement at Sec. 441.311(b)(2) to strike a
balance between collecting enough information to enable Federal
oversight of the States' system designed to investigate and resolve
critical incidents and imposing as minimal an administrative burden on
States and providers as possible. We believe it is important for States
to have flexibility in how they design their system to identify,
report, triage, investigate, resolve, track, and trend critical
incidents as set forth in the proposed requirements at Sec.
441.302(a)(6), which we are finalizing as discussed in section II.B.3.
We also believe that requiring a broad, national reporting requirement
for States to report critical incident timeliness data will provide a
mechanism to assess whether States are complying with their own
timeframes for investigating, resolving, and implementing corrective
actions, and to ensure States are complying with their own established
processes for reviewing and addressing critical incidents.
We did not propose, and are not finalizing, specific requirements
for how States must use this data. We will likely include promising
practices related to data collection and analysis, including methods of
capturing qualitative data from the records, in technical assistance
for States to aid in implementation.
We note that the data required in Sec. 441.311(b)(2) is included
in the public posting requirement we are finalizing at Sec. 441.313
(discussed in greater detail in II.B.9. of this final rule). We are not
requiring that States publicly report specific information about
critical incidents, including the names of providers involved in
critical incidents. We believe that some public disclosures may not be
suitable or appropriate in every instance, and it would be difficult to
tailor a meaningful requirement to anticipate all of these
circumstances. We are concerned that, for example, in States with
smaller HCBS populations, it may be difficult to truly anonymize
information about critical incidents. While we agree that, over time,
qualitative data about trends in critical incidents could be useful to
both States and other interested parties in promoting systemic
improvements in their HCBS programs, we defer to States to determine
when and how to make this information public, in accordance with
applicable laws governing confidentiality of such information, and for
what purpose.
Comment: A few commenters supported the proposal that this data
should be reported on an annual basis. A few commenters recommended
less frequent reporting, such as every two years, to reduce burden.
One commenter, while not necessarily recommending a different
reporting frequency, noted that reporting requirements must take into
account the unique factors that impact the length of time it could take
to complete an

[[Page 40640]]

investigation or conduct corrective action. The commenter noted that
depending on the nature of the corrective action and when the
corrective action process begins in a reporting year, annual reporting
may result in misleading data about the number of resolved critical
incidents or completed corrective actions.
Response: Given the importance and time-sensitive nature of
critical incident investigations, resolutions, and corrective actions,
we believe it is necessary to collect this data on an annual basis so
we may monitor these systems. We also clarify that the reporting is not
intended to track how many critical incidents were investigated,
resolved, or resulted in completed corrective actions in a reporting
year; the requirement is to report how many critical incidents were
investigated, resolved, or resulted in completed corrective actions
within State-specified timeframes during the reporting period. Thus,
even if the reporting period falls in the middle of a critical incident
resolution or corrective action, these incidents would not be reported
as ``non-compliant'' if they were still within the State-specified
timeframes for completion.
After consideration of these comments, we are finalizing the
introductory text at Sec. 441.311(b)(2), with a technical modification
for clarity that the State must report to CMS annually in the form and
manner, and at a time, specified by CMS, rather than according to the
format and specifications provided by CMS. We are also simplifying the
title and moving the reference to Sec. 441.302(a)(6)(i)(A) from the
title of Sec. 441.311(b)(2) to the introductory text. As finalized,
the introductory text at Sec. 441.311(b)(2) will specify that the
State must report to CMS annually on the following information
regarding critical incidents as defined in Sec. 441.302(a)(6)(i)(A),
in the form and manner, and at a time, specified by CMS. We are
finalizing Sec. 441.311(b)(2)(i) through (iii) as proposed.
(3) Person-Centered Planning (Sec. 441.311(b)(3))
Under the authority of section 1902(a)(6) of the Act, we proposed
at Sec. 441.311(b)(3) to require that States report annually to
demonstrate that they meet the requirements at Sec. 441.301(c)(3)(ii).
Specifically, at Sec. 441.311(b)(3)(i), we proposed to require that
States report on the percent of beneficiaries continuously enrolled for
at least 365 days for whom a reassessment of functional need was
completed within the past 12 months. At Sec. 441.311(b)(3)(ii), we
proposed to require that States report on the percent of beneficiaries
continuously enrolled for at least 365 days who had a service plan
updated as a result of a reassessment of functional need within the
past 12 months. These proposed requirements were based on feedback
obtained during various interested parties' engagement activities
conducted with States and other interested parties over the past
several years about the reporting discussed in the 2014 guidance. As
discussed in section II.B.7. of the preamble for the proposed rule,
this feedback indicated that we should strengthen person-centered
planning reporting requirements and eliminate annual performance
measure reporting requirements that provide limited useful data for
assessing State compliance with statutory and regulatory requirements.
These proposed requirements were also based on feedback received
through the RFI \122\ discussed earlier about the need to standardize
reporting and set minimum standards for HCBS.
---------------------------------------------------------------------------

\122\ CMS Request for Information: Access to Coverage and Care
in Medicaid & CHIP. February 2022. For a full list of question from
the RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
---------------------------------------------------------------------------

As discussed in section II.B.1. of the preamble for the proposed
rule, we proposed a revision to the regulatory text so that it is clear
that changes to the person-centered service plan are not required if
the re-assessment does not indicate a need for changes. As such, for
the purpose of the reporting requirement at Sec. 441.311(b)(3)(ii),
beneficiaries would be considered to have had a person-centered service
plan updated as a result of the re-assessment if it is documented that
the required re-assessment did not indicate a need for changes.
For both of the metrics at Sec. 441.301(c)(3)(ii), we proposed to
allow States to report a statistically valid random sample of
beneficiaries, rather than for all individuals continuously enrolled in
the waiver program for at least 365 days.
We invited comments on whether there are other specific compliance
metrics related to person-centered planning that we should require
States to report, either in place of or in addition to the metrics we
proposed. We also invited comments on the timeframe for States to
report on person-centered planning, whether we should require reporting
less frequently (every 2 years), and if an alternate timeframe is
recommended, the rationale for the alternate timeframe.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses. We also received
comments on the person-centered service plans minimum performance
requirements proposed in Sec. 441.301(c)(3)(ii), which form the basis
of the reporting requirement at Sec. 441.311(b)(3). These comments and
our responses are in section II.B.1. of this final rule.
Comment: A few commenters expressed support for the requirement
that States report annually on the specified performance metrics for
person-centered planning. Commenters echoed sentiments that are
reflected in section II.B.1. of this final rule, that many States are
already regularly performing the assessment and reassessment activities
in compliance with the minimum performance standards being finalized in
Sec. 441.301(c)(3)(ii) and, thus, reporting on these activities is
reasonable.
We did not receive feedback in response to our request for comment
on additional or alternative metrics that should be included in the
reporting requirement at Sec. 441.311(b)(3).
Response: We thank commenters for their support. We note that the
metrics in Sec. 441.311(b)(3) are based on the minimum performance
requirements being finalized at Sec. 441.301(c)(3)(ii); comments on
these minimum performance standards are discussed in section II.B.1. of
this final rule.
Comment: A few commenters expressed reservations about the proposal
to allow States to report data on a statistically valid sample of
beneficiaries, suggesting instead that we require complete reporting on
all relevant beneficiary data.
Response: We intended that the proposed requirement allow States to
report data and information for the person-centered service planning
reporting metrics at Sec. 441.311(b)(3) using a statistically valid
random sampling of beneficiaries would reduce State burden, while still
providing valuable data for strengthening States' person-centered
service planning processes. We will consider expanding the reporting to
capture the full population of beneficiaries receiving HCBS in future
rulemaking if it is determined that such an approach gives a more
complete picture of person-centered service planning. We note that
States may choose to report on the total population for this measure as
opposed to a sample, for instance, if doing so better aligns with their
data collection process or needs.
We note that, as proposed, we stated in Sec. 441.311(b)(3)(i) and
(ii) that the State may report these metrics for a statistically valid
random sample of

[[Page 40641]]

beneficiaries. We are finalizing the requirements at Sec.
441.311(b)(3)(i) and (ii) with a technical modification to specify that
the State may report this metric using statistically valid random
sampling of beneficiaries. (Revised language identified in bold.) We
make this technical correction to better align the language with
standard terminology for the sampling methodology we intended in these
requirements.
Comment: One commenter specifically noted that the frequency of
annual reporting was feasible. One commenter noted that while the
reporting frequency is reasonable, it is important to align with other
reporting requirements already placed on States and managed care plans
to minimize State and managed care plan reporting burdens.
A few commenters requested clarification on when the report
required in Sec. 441.311(b)(3) would be due to CMS and whether we
would provide a template for the reporting. One commenter requested
clarification on how this aggregated data should be reported, noting
that current mechanisms for reporting similar data are waiver specific.
Response: We will be releasing subregulatory guidance, including
technical specifications for the new reporting requirements in this
final rule, and making the required reporting templates available for
public comment through the Paperwork Reduction Act notice and comment
process. Per Sec. 441.311(f) below, States must comply with the
reporting requirement for Sec. 441.311(b)(3) beginning 3 years from
the effective date of this final rule]. Specific reporting due dates
will be determined through subregulatory guidance; we will work with
States to align these due dates with other obligations to minimize
administrative burden to the greatest extent possible.
After consideration of the public comments received, we are
finalizing the reporting requirement at Sec. 441.311(b)(3)(i) and
(ii), with the technical modification noted above to specify that the
State may report this metric using statistically valid random sampling
of beneficiaries. We are also finalizing a technical correction to the
regulation text at Sec. 441.311(b)(3). In the proposed rule (88 FR
27988), we indicated that we were proposing at Sec. 441.311(b)(3) to
require that States report annually to demonstrate that they meet the
requirements at Sec. 441.301(c)(3)(ii). In the publication of the
proposed rule, this language was omitted from the regulatory text in
error. We are finalizing Sec. 441.311(b)(3) with technical
modifications to specify that, to demonstrate that the State meets the
requirements at Sec. 441.301(c)(3)(ii) regarding person-centered
planning (as described in Sec. 441.301(c)(1) through (3)), the State
must report to CMS annually. We are also making a technical
modification to indicate that the reporting must be in the form and
manner, and at a time, specified by CMS. We believe, based on the
language included in the proposed rule (88 FR 27988) and the comments
received, that commenters understood the intent of this regulation even
with language omitted.
(4) Type, Amount, and Cost of Services (Sec. 441.311(b)(4))
As discussed previously in section II.B.4. of this preamble, we
proposed to amend Sec. 441.302(h) to avoid duplicative or conflicting
reporting requirements with the new Reporting Requirements section at
proposed Sec. 441.311. In particular, at Sec. 441.302(h), we proposed
to remove paragraphs (1) and (2). At Sec. 441.311(b)(4), we proposed
to add the language previously at Sec. 441.302(h)(1). In doing so, we
proposed to retain the current requirement that States report on the
type, amount, and cost of services and to include the reporting
requirement in the new consolidated reporting section at Sec. 441.311.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: One commenter supported this proposal.
Response: We thank the commenter for their support.
Comment: One commenter requested clarification on whether the
reporting requirement at Sec. 441.311(b)(4) will apply to managed care
plans.
Response: The requirement at Sec. 441.311(b)(4) replicates the
current requirement at Sec. 441.302(h), which applies to section
1915(c) programs, regardless of whether they are part of a FFS or
managed care delivery system.
As stated in the proposed rule (88 FR 27988), it was our intent to
consolidate the current reporting requirement at Sec. 441.302(h)(1)
with the new requirements being finalized at Sec. 441.311. We note
that as this requirement was presented in the proposed rule, we
inadvertently struck part of the language from Sec. 441.302(h) that we
intended to retain in Sec. 441.311(b)(4) that clarified the reporting
frequency (annually) and the object (the 1915(c) waiver's impact on the
State plan) of the requirement currently at Sec. 441.302(h)(1). We are
concerned that without this omitted language, Sec. 441.311(b)(4) does
not include information needed to implement this requirement. We
believe that, as we expressed our intent in the proposed rule (88 FR
27988) to retain the reporting requirement at Sec. 441.302(h)(1),
readers would have understood that we intended to preserve the
essential elements of the reporting.
To ensure that this requirement can be implemented as intended, we
are finalizing Sec. 441.311(b)(4) with language from Sec. 441.302(h)
to specify that, annually, the State will provide CMS with information
on the waiver's impact on the type, amount, and cost of services
provided under the State plan. (Restored language is noted in bold.)
We also specify here that, as the requirement at Sec. 441.302(h)
specifies certain reporting for programs authorized under section
1915(c), this new requirement at Sec. 441.311(b)(4) will similarly
apply only to section 1915(c) waiver programs. We discuss the impact of
this clarification on references to section 1915(j), (k), and (i)
services (at Sec. Sec. 441.474(c), 441.580(i), and 441.745(a)(1)(vii))
later in this section.
After consideration of the comments received, and in light of the
clarification outlined above, we are finalizing the provision at Sec.
441.311(b)(4) to specify that annually, the State will provide CMS with
information on the waiver's impact on the type, amount, and cost of
services provided under the State plan. Further, we are finalizing
Sec. 441.311(b)(4) with a technical modification to specify that the
information is to be reported in the form and manner, and at a time,
specified by CMS.
b. Reporting on the Home and Community-Based Services (HCBS) Quality
Measure Set (Sec. 441.311(c))
At Sec. 441.311(c), relying on our authority under section
1902(a)(6) of the Act, we proposed to require that States report every
other year on the HCBS Quality Measure Set, which is described later in
section II.B.8. of the preamble. Specifically, we proposed, at Sec.
441.311(c)(1)(i), to require that States report every other year,
according to the format and schedule prescribed by the Secretary
through the process for developing and updating the HCBS Quality
Measure Set described in section II.B.8. of the final rule, on measures
identified in the HCBS Quality Measure Set as mandatory measures for
States to report or are identified as measures for which the Secretary
will report on behalf of States, and, at Sec. 441.311(c)(1)(ii), to
allow States to report on measures in the HCBS Quality Measure Set that
are not

[[Page 40642]]

identified as mandatory, as described later in this section of the
rule.
We proposed every other year for State reporting in recognition of
the fact that the current, voluntary HCBS Quality Measure Set is
heavily comprised of survey-based measures, which are more burdensome,
including for beneficiaries who would be the respondents for the
surveys, and costlier to implement than other types of quality
measures. Further, we believed that requiring reporting every other
year, rather than annually, would better allow States to use the data
that they report for quality improvement purposes, as it would provide
States with sufficient time to implement interventions that would
result in meaningful improvement in performance scores from one
reporting period to another. We also proposed this frequency in
recognition of the overall burden of the proposed requirement.
Because the delivery of high quality services is in the best
interest of Medicaid beneficiaries, we proposed at Sec.
441.311(c)(1)(iii), under our authority at section 1902(a)(19) of the
Act, to require States to establish performance targets, subject to our
review and approval, for each of the measures in the HCBS Quality
Measure Set that are identified as mandatory for States to report or
are identified as measures for which we will report on behalf of
States, as well as to describe the quality improvement strategies that
they will pursue to achieve the performance targets for those
measures.\123\
---------------------------------------------------------------------------

\123\ We note that compliance with CMS regulations and reporting
requirements does not imply that a State has complied with the
integration mandate of Title II of the ADA, as interpreted by the
Supreme Court in the Olmstead Decision.
---------------------------------------------------------------------------

At Sec. 441.311(c)(1)(iv), we proposed to allow States to
establish State performance targets for other measures in the HCBS
Quality Measure Set that are not identified as mandatory for States to
report or as measures for which the Secretary will report on behalf of
States as well as to describe the quality improvement strategies that
they will pursue to achieve the performance targets for those targets.
At Sec. 441.311(c)(2), we proposed to report on behalf of the
States, on a subset of measures in the HCBS Quality Measure Set that
are identified as measures for which we will report on behalf of
States. Further, at Sec. 441.311(c)(3), we proposed to allow, but not
require, States to report on measures that are not yet required but
will be, and on populations for whom reporting is not yet required but
will be phased-in in the future.
We solicited comments on whether there should be a threshold of
compliance that would exempt the State from developing improvement
strategies, and if so, what that threshold should be. We also invited
comments on whether the timeframe for States to report on the measures
in HCBS Quality Measure Set is sufficient, whether we should require
reporting more frequently (every year) or less frequently (every 3
years), and, if an alternate timeframe is recommended, the rationale
for that alternate timeframe. We welcomed comments on any additional
changes we should consider in this section.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses. We also received
comments on the HCBS Quality Measure Set requirements proposed at Sec.
441.312. These comments and our responses are in section II.B.8. of
this final rule.
Comment: Regarding whether there should be a threshold of
compliance that would exempt the State from developing improvement
strategies, one commenter recommended exemptions for States to develop
improvement strategies if they are performing within the top 5th to
10th percentile of performance targets for the quality measures in the
HCBS Quality Measure Set, to alleviate administrative burden. Another
commenter discouraged CMS from permitting a compliance threshold
exemption for States from developing improvement strategies,
emphasizing that all States should be held accountable for providing
high-quality care and services to beneficiaries receiving HCBS
regardless of performance.
Response: We continue to believe that, for each of the measures in
the HCBS Quality Measure Set that are identified as mandatory for
States to report, or are identified as measures for which we will
report on behalf of States, States should establish and describe the
quality improvement strategies to achieve the performance targets for
those measures.\124\ We reiterate our belief that the HCBS Quality
Measure Set will promote more common and consistent use within and
across States of nationally standardized quality measures in HCBS
programs, and will allow CMS and States to have comparative quality
data on HCBS programs. As such, exempting States from developing
improvement strategies for quality measures in the HCBS Quality Measure
Set does not align with this intent.
---------------------------------------------------------------------------

\124\ We note that compliance with CMS regulations and reporting
requirements does not imply that a State has complied with the
integration mandate of Title II of the ADA, as interpreted by the
Supreme Court in the Olmstead Decision.
---------------------------------------------------------------------------

Comment: Several commenters recommended either faster or slower
implementation for reporting of the measures in the HCBS Quality
Measure Set. A few commenters recommended we change the timeframe
requirement for States to report on the quality measures in the HCBS
Quality Measure Set to every year. In this same vein, one commenter
suggested we align the reporting timelines required for reporting
measures in the HCBS Quality Measure Set to other Medicaid, CHIP,
Medicare, and Marketplace measure sets, expressing that reporting
biennially (every other year) could lock in data lags that could hinder
State progress in improving HCBS for beneficiaries. A few commenters
recommended alternatives to the HCBS Quality Measure Set biennial
reporting time frame. These alternatives included the following:
initiating reporting based on State choice; reporting on odd- or even-
numbered years; and beginning State reporting upon renewal of their
section 1915(c) waiver or based on the State reporting years for their
waiver program.
A few commenters expressed concern that the timeframe for reporting
measures in the HCBS Quality Measure Set should be longer than every
other year, emphasizing the significant amount of systems work,
contracting, and survey data needed to capture the necessary data and
implement reporting on HCBS measures. Commenters recommended we
consider that the implementation of the HCBS Quality Measure Set
reporting requirements as proposed at Sec. 441.311(c)(1)(iii) could
require State statutory and regulatory amendments, lead time for
securing additional technology resources, and operational and workflow
changes. Commenters requested CMS consider alternative dates for States
beginning reporting on the measures in the HCBS Quality Measure Set,
ranging from an additional 3 to 5 years to address these concerns.
Response: We continue to believe that a biennial timeframe
requirement for States to report on the measures in HCBS Quality
Measure Set is an appropriate frequency that ensures accountability
without being overly burdensome and are finalizing the frequency of
reporting as proposed. We determined that a shorter annual reporting
timeframe would not likely be operationally feasible because of the
potential systems and contracting changes (to existing contracts or the
establishment of new contracts) that States may be required to make.
For

[[Page 40643]]

example, additional reporting requirements may need to be added to
State contracts, changes may be needed to data sharing agreements with
managed care plans, and modifications of databases or systems might be
required to record new variables.
However, to provide States sufficient time to comply with the
requirements finalized at Sec. 441.311(c), we are finalizing at Sec.
441.311(f)(2) an applicability date beginning 4 years, rather than 3
years, from the effective date of this final rule for the HCBS Quality
Measure Set reporting at Sec. 441.311(c). Our primary purpose in
extending the effective date is to ensure States have sufficient time
for interested parties to provide input into the measures, as required
by Sec. 441.312(g), which we are finalizing in section II.B.8. of this
rule.
In general, we anticipate that States will not need more than 4
years after the effective date of the final rule, to implement systems
and contracting changes, or acquire any additional support needed to
report on the quality measures in the HCBS Quality Measure Set.
We plan to work collaboratively with States to provide the
technical assistance and reporting guidance through the Paperwork
Reduction Act process necessary to support reporting.
Comment: A few commenters requested confirmation of whether States
with section 1115 demonstrations are expected to comply with the HCBS
Quality Measures Set requirements in this final rule.
Response: Yes, consistent with the applicability of other HCBS
regulatory requirements to such demonstration projects, the reporting
requirements for section 1915(c) waiver programs and section 1915(i),
(j), and (k) State plan services included in this rule, including the
requirements at Sec. 441.311 (and the related quality measure
requirements at Sec. 441.312), would apply to such services included
in approved section 1115 demonstration projects, unless we explicitly
waive or exclude one or more of the requirements as part of the
approval of the demonstration project.
Comment: A couple of commenters recommended that we offer States
financial assistance to develop and deploy the ability to report the
quality measures in the HCBS Quality Measure Set.
Response: We note that Medicaid Federal matching funds are
available for State expenditures on the design, development, and
installation (including of enhancements), and for operation, of
mechanized claims processing and information retrieval systems. We also
note that under section 1903(a)(7) of the Act, Federal matching funds
are available for administrative activities necessary for the proper
and efficient administration of the Medicaid State plan. This may
include developing and deploying the ability to report the quality
measures in the HCBS Quality Measure Set.
Comment: A few commenters expressed that instructions related to
the reporting requirements for the quality measures in the HCBS Quality
Measures Set, and how they are related to the section 1915(c) waiver
reporting requirements, would be helpful for implementing the reporting
of the measure set.
Response: We thank commenters for the feedback. We plan to work
collaboratively with States to provide the technical assistance and
reporting guidance through the Paperwork Reduction Act process
necessary to support reporting and help facilitate compliance with this
requirement.
After consideration of public comments received, we are finalizing
the HCBS Quality Measure Set reporting requirements at Sec. 441.311(c)
with modifications. At Sec. 441.311(f)(2), we are finalizing that
States must comply with the reporting requirements at Sec. 441.311(c)
beginning 4 years, rather than 3 years, from the effective date of this
final rule for the HCBS Quality Measure Set. Our primary purpose in
extending the applicability date is to ensure States have sufficient
time for interested parties to provide input into the measures, as
required by Sec. 441.312(g), which we are finalizing in section
II.B.8. of this rule.
c. Access Reporting (Sec. 441.311(d))
As noted earlier in section II.B.6. of this preamble, feedback
obtained during various public engagement activities conducted with
States and other interested parties over the past several years about
reporting requirements for HCBS, as well as feedback received through
the RFI \125\ discussed earlier, indicated that there is a need to
improve public transparency and processes related to States' HCBS
waiting lists and for standardized reporting on HCBS access, including
timeliness of HCBS and the comparability to services received to
eligibility for services. At Sec. 441.311(d) we proposed that the
State must report to CMS annually on the following, according to the
format and specifications provided by CMS. We are finalizing in this
rule Sec. 441.311(d) with a technical modification for clarity that
requires that the State must report to CMS annually on the following,
in the form and manner, and at a time, specified by CMS. (New language
identified in bold.)
---------------------------------------------------------------------------

\125\ CMS Request for Information: Access to Coverage and Care
in Medicaid & CHIP. February 2022. For a full list of question from
the RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
---------------------------------------------------------------------------

(i) Waiver Waiting Lists (Sec. 441.311(d)(1)(i))
At Sec. 441.311(d)(1)(i), relying on our authority under section
1902(a)(6) of the Act, we proposed to require that States provide a
description annually, according to the format and specifications
provided by CMS, on how they maintain the list of individuals who are
waiting to enroll in a section 1915(c) waiver program, if they have a
limit on the size of the waiver program and maintain a list of
individuals who are waiting to enroll in the waiver program, as
described in Sec. 441.303(f)(6). We further proposed to require that
this description must include, but be not limited to, information on
whether the State screens individuals on the waiting list for
eligibility for the waiver program, whether the State periodically re-
screens individuals on the waiver list for eligibility, and the
frequency of re-screening if applicable. We also proposed to require
States to report, at Sec. 441.311(d)(1)(ii), the number of people on
the waiting list, if applicable, and, at Sec. 441.311(d)(1)(iii), the
average amount of time that individuals newly enrolled in the waiver
program in the past 12 months were on the waiting list, if applicable.
We invited comments on whether there are other specific metrics or
reporting requirements related to waiting lists that we should require
States to report, either in place of or in addition to the requirements
we proposed. We also invited comments on the timeframe for States to
report on their waiting lists, whether we should require reporting less
frequently (every 2 or 3 years), and if an alternate timeframe was
recommended, the rationale for that alternate timeframe.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses. We also received
comments on the related requirement at Sec. 441.303(f). Those comments
are addressed in section II.B.6. of this rule.
Comment: Many commenters supported the proposal at Sec.
441.311(d)(1) to require States to report on waiting lists, including
whether the State screens individuals on the list for eligibility,
frequency of re-screening, number of individuals waiting to enroll, and
average amount of time newly enrolled individuals were on the waiting
list. Commenters

[[Page 40644]]

believed that this reporting would promote consistency, transparency,
oversight, and accountability of waiting list practices and help States
identify unmet needs among their Medicaid beneficiaries. Commenters
noted that this additional information will better allow interested
parties to advocate for policy changes to address underlying causes of
waiting lists and expand HCBS programs; one commenter described this
requirement as a good ``first step'' to understanding access issues for
HCBS waivers.
A few commenters stated this requirement, with its potential to
support policies that reduce waiting lists, would help beneficiaries
avoid having to turn to institutional care for their LTSS needs.
Commenters also noted transparent, understandable data about waiting
lists may help individuals and families to make more informed decisions
about accessing coverage as they plan for their future.
A few commenters noted that nationally comparable data and
information-sharing among States will encourage standardization of
waiting list processes and help States identify best practices for
reducing waiting lists. Commenters noted that inconsistencies in the
way States report data about their waiting lists and the current lack
of standardized reporting requirements makes it difficult to form a
clear picture of how many people are waiting to receive services, as
well as how many of these individuals on the waiting list are actually
eligible for services. One commenter suggested that making the waiting
list public may lead to needed administrative updates to waiting lists,
such as removing duplicate applications or applications from
beneficiaries who have moved out of State or passed away.
Response: We agree that this critical data is not currently
available in a way that allows for monitoring or comparison on a
national level. We believe that this reporting requirement is an
important first step in making data publicly available that can be used
to identify unmet needs among Medicaid beneficiaries, support
policymaking, and improve administrative efficiency.
Comment: A few commenters expressed opposition to, or concerns
about, the waiting list reporting requirement at Sec. 441.311(d)(1). A
few commenters expressed concerns that the reporting requirement did
not align with current State waiting list practices and would require
significant change in data collection and IT systems. One commenter was
concerned that due to differences in States' HCBS programs,
infrastructure, and waiting list practices, attempting to collect and
compare data on a national level could be misleading. A few commenters
requested clarification on how CMS would use this data to drive
meaningful policy changes and improvement in HCBS access. A few
commenters stated that the proposed requirements would not address the
underlying causes of waiting lists, which they attributed to limited
funding for HCBS waiver slots, low Medicaid reimbursement rates, delays
or barriers within States' Medicaid eligibility determination
processes, or shortages of HCBS direct care workers. A few commenters,
while not necessarily opposing the requirement at Sec. 441.311(d)(1),
suggested that we focus on gathering information about why States have
caps on the number of beneficiaries who may be served by HCBS waivers
and why States have waiting lists when they have not met their waiver
caps.
One commenter raised a concern that the reporting requirement would
cause States to redirect or prioritize resources for waivers with
waiting lists at the expense of waivers that currently do not have
waiting lists.
Response: We are not currently collecting States' data on their
waiting lists and understand that States may have to update data
collection systems to comply with this new requirement. We proposed the
reporting requirement at Sec. 441.311(d) to strike a balance between
collecting enough information to enable Federal oversight of States'
waiting list practices and imposing as minimal an administrative burden
on States and providers as possible. We plan to offer States technical
assistance as needed to help align their current data collection
practices with what will be needed to comply with this reporting
requirement. The reporting requirement at Sec. 441.311(d)(1) is a
first step in what will be an evolving process to promote transparency,
oversight, and data-driven improvements in States' waiting list
practices. We acknowledge that differences in States' HCBS programs may
initially make comparing States' data challenging, but we believe that
collecting this data will help highlight such differences and draw
connections between different States' policies and the impact on their
beneficiaries' access to HCBS. As noted by other commenters, States may
be able to use this data to learn from the experiences of other States.
We acknowledge that there are many underlying causes for States to
have long waiting lists, but we believe that the first step toward
addressing these challenges, where possible, is to quantify the scope
of these waiting lists through data collection. This data will not only
help identify situations in which a State appears to be maintaining a
waiting list when not all of the waiver's slots are taken but can also
facilitate conversations with States about reasons for limitations on
waiver enrollment.
We clarify that the purpose of this requirement is to document
unmet needs for individuals who are seeking enrollment in HCBS waivers
and to identify resources or practices that could be used to improve
waiting list processes. As such, our goal is not to require that States
shift needed resources away from other areas of their Medicaid
programs.
Comment: One commenter requested that we provide reporting tools to
help States track the required data. One commenter requested that the
data needed for this reporting requirement be derived from the State's
own eligibility and service authorization processes, not from providers
and beneficiaries, particularly for self-directed services.
Response: We plan to release subregulatory guidance and other tools
to assist States with implementation of this reporting requirement. We
will also be making the reporting template available for public comment
through the Paperwork Reduction Act notice and comment process.
While States have flexibility as to how they will gather the data
needed to complete this reporting, we encourage States to find ways to
rely on administrative data rather than gathering data directly from
beneficiaries to meet the reporting requirements.
Comment: A few commenters requested that the information about
waiting lists be made available to the public in a consumer-friendly
and accessible format in order to facilitate program accountability and
potentially improve beneficiary understanding of waiting list
information. One commenter suggested that publishing data about the
waiting list may help publicize the need for more direct care workers.
Response: As discussed in more detail later in section II.B.9 of
this rule, we are finalizing a requirement at Sec. 441.313(a) to
require States to operate a website that meets the availability and
accessibility requirements at Sec. 435.905(b) of this chapter and that
provides the results of the reporting requirements at Sec. 441.311
(including this access reporting requirement at Sec. 441.311(d), as
well as the incident management, critical incident, person-centered
planning, and service provision compliance data; data on the HCBS
Quality Measure Set; and

[[Page 40645]]

payment adequacy data, discussed in this section) and the reporting
requirements at Sec. 441.302(k)(6). Please refer to the discussion of
the website posting requirements in section II.B.9. of this rule.
Comment: One commenter suggested that we consider offering
incentives for States to reduce or end waiting lists through a higher
FMAP rate for a limited time period. One commenter requested that
States be given a grace period and allowed to update their section
1915(c) waivers prior to any punitive action.
Response: We note that the requirement at Sec. 441.311(d)(1) is a
reporting requirement intended to encourage transparency and does not
include any specific performance measures with which States must
comply. To the extent that States are in compliance with existing
requirements for section 1915(c) waiver programs, it is also not
intended to require that States make changes to their waiver programs
or processes. We intend to use our standard enforcement discretion to
require State compliance with the reporting requirement, which (as
discussed under Sec. 441.311(f) below) will go into effect three years
after the effective date of this final rule. In addition, we note that
CMS does not have authority to provide States with a higher FMAP rate
for any expenditures than has been authorized by statute.
Comment: A number of commenters noted that waiting list
terminology, definitions, and processes vary widely among States and
even among individual State programs. Commenters observed that some
States operate what they refer to as interest lists, preauthorization
lists, or similarly named lists, rather than waiting lists. In some
cases, individuals can sign up to express interest in a waiver program
but may not have yet been assessed for eligibility at the time they
joined the interest list. Commenters questioned whether these
individuals would be considered ``waiting to enroll'' as described in
the proposed rule, as they are waiting to be determined eligible to
enroll. Commenters requested clarification as to what data would be
collected from States that maintain interest lists or similarly named
lists of individuals who have not yet been determined to be eligible
for the waiver.
A few commenters expressed concerns that if interest lists are not
included in this requirement, States may be encouraged to stop
maintaining waiting lists. One commenter noted that if the requirement
does apply to interest lists, States that use an interest list approach
would have to make significant changes to their processes to meet the
waiting list reporting requirement. One commenter observed that in
their State, the State maintains a single waiting list for all waivers,
which could complicate reporting.
Several commenters requested that we create a definition of a
waiting list. One commenter supported what they believed to be our
proposed standardized definition of a waiting list (but did not specify
what they thought that definition to be). A few commenters requested
that we require States to have waiting lists for their waiver programs
and that States screen individuals for eligibility prior to placing the
individuals on the waiting list.
Response: We intended for the reporting requirement to apply to all
States that maintain a list of individuals interested in enrolling in a
section 1915(c) waiver program, whether or not the individual has been
assessed for eligibility. As we stated in the proposed rule (88 FR
27986), many States maintain waiting lists of individuals interested in
receiving waiver services once a spot becomes available. While some
States require individuals to first be determined eligible for waiver
services to join the waiting list, other States permit individuals to
join a waiting list after an expression of interest in receiving waiver
services.
We note that the requirement at Sec. 441.311(d)(1) requires States
to submit a description of their waiting list that includes information
on whether the State screens individuals on the waiting list for
eligibility for the waiver program, whether the State periodically re-
screens individuals on the waiver list for eligibility, and the
frequency of re-screening if applicable. This requirement indicates
that Sec. 441.311(d)(1) applies to States even if they do not screen
the individuals on their list for eligibility. We believe that for the
purposes of this requirement individuals who are waiting to be screened
for eligibility for the waiver are considered ``waiting to enroll.''
We believe that States that maintain an interest list (or a
similarly named list of individuals who have expressed interest in the
waiver and are waiting to be assessed for eligibility) can report the
same information required in Sec. 441.311(d)(1) as States that
maintain lists of individuals who have been screened for eligibility.
We expect, for instance, that States typically would have information
about the number of individuals who are on an interest list and how
long those individuals have been on those lists. If a State maintains
two separate lists for a waiver--a list of individuals who have been
screened for eligibility for the waiver and a list of individuals who
have expressed interest in enrolling in the waiver but have not yet
been screened--the State should report on both to meet the reporting
requirements at Sec. 441.311(d)(1).
As we did not propose a formal definition of waiting list, nor a
requirement for States to maintain a waiting list of individuals who
have been screened for eligibility, we will not add these components to
the finalized Sec. 441.311(d). States retain flexibility in
determining whether or not to maintain a list of individuals who are
interested in enrolling in the waiver (whether or not the individual
has been screened for eligibility). We will take commenters'
recommendations into consideration for future policymaking if, after
monitoring reporting generated by Sec. 441.311(d), we identify the
need for further standardization of these processes.
Comment: We received responses to our comment solicitation on
additional metrics that could be collected regarding the waiting list.
One commenter recommended that we not add more metrics to Sec.
441.311(d)(1). Several commenters did suggest additional metrics. Many
of these commenters believed that more detailed data would allow for a
better assessment of overall unmet needs and disparities within the
waiting lists. Additional metrics suggested by commenters included:
Disaggregated data about beneficiaries, by demographic
categories, including race, ethnicity, Tribal status, language status,
sex or gender identification, sexual orientation, age, and geographic
location;
Disaggregated data on beneficiaries' dual eligible status,
disability, diagnosis, functional status, level of care, and risk of
institutionalization;
Whether States maintain separate waiting lists or
registries for beneficiaries who are eligible for HCBS but have been
determined by the State to not have a need prioritized by the State for
enrollment in the waiver;
The criteria used to determine beneficiaries' placement
and movement within a waiting list;
How much time individuals spend waiting for an eligibility
assessment and how much time elapses between an assessment and service
authorization;
The number of eligibility screens performed on each
beneficiary on the waiting list in the past year, and why a rescreen
was performed;
The number of beneficiaries removed from the waiting list
due to death, admission to an institutional

[[Page 40646]]

setting, or having been rescreened and deemed ineligible;
The number of beneficiaries on the waiting list who are
receiving care through another State Medicaid program, reasons why
beneficiaries prefer to remain on the waiting list rather than enroll
in other services, and what beneficiary needs remain unmet by other
Medicaid programs while a beneficiary is on a waiting list; and
Whether a participant who has been approved for HCBS
waiver services is able to find a provider, how long it took for them
to find that provider, and what services they wanted, but could not
access because no provider was available.
Response: We thank commenters for their feedback. We will take
these recommendations under consideration for future policymaking, but
at this time decline to make modifications to the requirements based on
these comments.
We believe it is important to strike a balance between collecting
enough information to promote transparency around waiting lists and
imposing as minimal an administrative burden on States and providers as
possible. We also believe that information on whether States screen
individuals on their waiting lists, the number of beneficiaries on the
waiting list, and the average amount of time beneficiaries enrolled in
HCBS waivers spent on the waiting list provides important preliminary
data on the States' waiting list practices. As we gather and review
this data, we will consider what additional information may be needed
to further improve our oversight of HCBS programs and improve
beneficiaries' access to services.
However, we agree that some of the granular data elements suggested
by commenters could provide States with valuable insight into their own
programs and beneficiary needs. We encourage States to consider what
information they have the capacity to collect and would find useful for
developing local policies to support beneficiaries' access to section
1915(c) HCBS waiver programs in their State.
Comment: One commenter recommended requiring that States report
duplicated and unduplicated counts of individuals across waiver program
waiting lists.
Response: We have not identified a compelling reason to require
that States report unduplicated counts of beneficiaries for all waiver
programs. We clarify that the reporting required for Sec.
441.331(d)(1) is for each waiting list; if an individual is on multiple
waiting lists, we believe that person should be counted among
individuals on each of those waiting lists.
Comment: A few commenters recommended additional metrics that fall
outside the scope of reporting on waiting list practices or waiver
enrollment, including:
Whether individuals on waiting lists are also being
screened for eligibility for other programs that they may be able to
benefit from (for example, Supplemental Nutrition Assistance Program);
How long it takes a State to approve enrollment in any
program that provides Medicaid LTSS, from the date that it receives an
application until the date of the approval letter; and
Additional measures to assess the needs of populations
that face barriers to navigating the HCBS programs, applying, and
getting on a waiting list.
Response: While these metrics lie outside the scope of the proposed
reporting requirements, we will add these to other comments regarding
broader HCBS access and equity issues that we will consider for future
policymaking.
Comment: A few commenters suggested that we collect data on reasons
for long waiting times, such as challenges with workforce availability
or provider capacity. Some commenters, particularly those representing
States or providers, were concerned that without this information,
States and providers would be held responsible for long waiting lists
or long waiting times for services that are due to reasons beyond
States' or providers' control. One commenter recommended adding a
requirement that States describe any conditions, such as State funding
priorities, that serve to limit access to the HCBS described in the
waiver application. A few commenters recommended adding a requirement
to the interested parties' advisory group being finalized at Sec.
447.203 that would require States, through their interested parties'
advisory groups, to examine reasons for gaps in services that are
revealed by the reporting on waiting lists.
Response: We do not believe it would be feasible at this stage to
standardize the collection of qualitative data regarding the causes of
waiting lists; this data would also be difficult to validate. As noted
in prior responses, the purpose of the requirement at Sec.
441.311(d)(1) is to encourage transparency; the requirement does not
include any specific performance measures with which States or
providers must comply. We believe that collecting the number of
individuals on the waiting list and the length of time individuals
spend on waiting list will present quantifiable and comparable baseline
data that can facilitate more nuanced conversations with States about
potential unmet beneficiary needs and the underlying causes of these
unmet needs.
We note that, regarding the interested parties' advisory group
being finalized at Sec. 447.203, the requirements at Sec. 447.203
already include an expectation that access reporting that is required
by 441.311(d) would be appropriate data for the Interested Parties
Advisory Group (IPAG) to consider when making recommendations regarding
the sufficiency of rates. We decline to add a specific requirement as
suggested by the commenter, as we wish to allow both States and the
IPAGs some discretion in determining their approach to examining the
impact on payments rates in their State.
Comment: A few commenters supported annual reporting for Sec.
441.311(d)(1). One commenter observed that one of their State agencies
had already identified annual reporting on the waiting list as a best
practice and was publishing an annual report. One commenter recommended
quarterly reporting to encourage States to take more aggressive steps
to reduce the size of their waiting lists. A few commenters believed
that biennial (every other year) reporting would reduce burden on
States and better account for fluctuations in waiting list size that
are beyond the State Medicaid agency's control.
One commenter highlighted that waiting list volumes may vary at
certain times of year or from year to year, depending on how States
structure the release of new waiver slots and the timing of the State
legislative sessions where new funding for waiver slots may be
approved. The commenter stated that it is important to take these
factors into account when considering reporting frequency and when
evaluating reported data from year to year.
Response: We are finalizing the annual reporting frequency as
proposed at Sec. 441.311(d)(1). We continue to believe that annual
reporting on waiting lists strikes the right balance between collecting
current data on waiting lists and minimizing burden on States to the
greatest extent possible. We believe reporting more frequently than
annually may represent an undue burden on States, although States are
encouraged to share information with interested parties within their
State on a more frequent basis if they are able to do so. We are
concerned that if we extend the reporting to a biennial frequency, the
information will become outdated prior

[[Page 40647]]

to the next public report. We also note that States will likely have to
develop or maintain the same data tracking systems regardless of
whether the reporting itself is done annually or biennially; we believe
the potential reduction in administrative burden by biennial reporting
is outweighed by the need for more timely information on waiting lists.
Comment: One commenter requested clarification that the reporting
requirement at Sec. 441.311(d)(1) is limited to the section 1915(c)
authority and to the section 1915(j) authority, where it is used as the
State's authority for self-direction in a section 1915(c) waiver. This
commenter recommended limiting this requirement to these authorities.
Response: We agree that, because section 1915(i) and section
1915(k) State plan services cannot have capped enrollment, the
reporting requirements at Sec. 441.311(d)(1) would not apply to these
authorities. We also agree that the reporting requirements at Sec.
441.311(d)(1) would also apply to section 1915(j) authority only where
section 1915(j) is used as the State's authority for self-direction in
a section 1915(c) waiver. We note that the reporting requirements at
Sec. 441.311(d)(1) would apply to section 1115(a) demonstration
projects that include HCBS if the State caps enrollment for the HCBS
under the section 1115(a) demonstration project. As discussed later in
this section, section II.B.7. of this final rule, we are finalizing the
application of the reporting requirements at Sec. 441.311 to section
1915(j), (k), and (i) authorities with modifications to specify that
States must only comply with the reporting requirements applicable to
the services under these authorities.
After consideration of the commenters received, we are finalizing
Sec. 441.311(d)(1) as proposed.
(ii) Reporting on Wait Times for Services and Authorized Service Hours
Provided (Sec. 441.311(d)(2))
At Sec. 441.311(d)(2)(i), based on our authority under section
1902(a)(6) of the Act, we proposed to require States report annually on
the average amount of time from when homemaker services, home health
aide services, or personal care services, as listed in Sec.
440.180(b)(2) through (4), are initially approved to when services
began, for individuals newly approved to begin receiving services
within the past 12 months. We proposed to focus on these specific
services for this reporting requirement because of feedback from
States, consumer advocates, managed care plans, providers, and other
HCBS interested parties that timely access to these services is
especially challenging and because the failure of States to ensure
timely access to these services poses substantial risk to the health,
safety, and quality of care of individuals residing independently and
in other community-based residences. We believed that having States
report this information will assist us in our oversight of State HCBS
programs by helping us target our technical assistance and monitoring
efforts. We requested comment on whether this requirement should apply
to additional services authorized under section 1915(c) of the Act.
For this metric, we proposed to allow States to report on a
statistically valid random sample of individuals newly approved to
begin receiving these services within the past 12 months, rather than
for all individuals newly approved to begin receiving these services
within the past 12 months. We invited comments on the timeframe for
States to report on this metric, whether we should require reporting
less frequently (every 2 or 3 years), and if an alternate timeframe is
recommended, the rationale for that alternate timeframe. We also
invited comments on whether there are other specific metrics related to
the amount of time that it takes for eligible individuals to begin
receiving homemaker services, home health aide services, or personal
care services that we should require States to report, either in place
of or in addition to the metric we proposed.
At Sec. 441.311(d)(2)(ii), also based on our authority under
section 1902(a)(6) of the Act, we proposed to require States to report
annually on the percent of authorized hours for homemaker services,
home health aide services, or personal care services, as listed in
Sec. 440.180(b)(2) through (4), that are provided within the past 12
months. For this metric, we further proposed to allow States to report
on a statistically valid random sample of individuals authorized to
receive these services within the past 12 months, rather than all
individuals authorized to receive these services within the past 12
months. We invited comments on the timeframe for States to report on
this metric, whether we should require reporting less frequently (every
2 or 3 years), and if an alternate timeframe is recommended, the
rationale for that alternate timeframe. We also invited comments on
whether there are other specific metrics related to individuals' use of
authorized homemaker services, home health aide services, or personal
care services that we should require States to report, either in place
of or in addition to the metric we proposed. We further requested
comment on whether this requirement should apply to additional services
authorized under section 1915(c) of the Act.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported our proposals at Sec.
441.311(d)(2) that States report on the time it takes between service
authorization and service delivery and the number of authorized hours
compared to the number of hours provided. A few commenters, while
characterizing these as imperfect measures, nevertheless noted that the
data measurements can help assess systematic issues with provider
enrollment and access to care. One commenter observed that similar data
is not currently available from their State, and believed this type of
data would be useful.
Commenters noted that in their experience, beneficiaries might wait
months after being authorized to receive services for the services to
actually begin, or do not receive all of the services indicated in
their person-centered care plan; these delays and underutilization of
services cause a wide array of issues for the beneficiary and their
families.
Commenters also noted these proposals complemented the waiver
waiting list requirement at Sec. 441.311(d)(1), noting that even when
individuals are enrolled in a waiver, this does not always mean that
their services start immediately. A few commenters also stated that in
their experience, even in States that do not have waiting lists for
their waiver programs, beneficiaries may wait long periods of time for
the waiver services to begin.
Response: As we discuss further in responses below, we recognize
that the reasons for service delays and underutilization are nuanced.
The reporting requirements at Sec. 441.311(d)(2) are a first step in
what will be an evolving process to promote transparency, oversight,
and data-driven improvements in States' waiting list practices.
Comment: A few commenters cited factors that may contribute to
delays or underutilization of services, some of which are beyond the
control of State Medicaid agencies, managed care plans, or providers.
Commenters cited challenges including administrative inefficiency,
shortages of direct care workers or available providers, and geographic
constraints. Other

[[Page 40648]]

commenters cited specific obstacles, such as: difficulty in obtaining
complete medical information from the beneficiary, delays in the care
planning process, additional training requirements for self-directed
service workers, lags in providers submitting claims or other delays in
claims processing, or unavailability of the beneficiary due to travel,
hospitalization, changes in provider, withdrawal from the program, or
loss of Medicaid eligibility. A few commenters suggested that in some
cases, beneficiaries decline services or are already receiving a
different service that meets their needs prior to the new services
being authorized.
One commenter noted that there are service delivery delays in care
provided under private payers and wondered how these delays compare to
those in Medicaid HCBS and whether they may be attributable to the
adequacy of the provider network or to reimbursement rates.
A few commenters believed that the requirements at Sec.
441.311(d)(2) would not address these underlying causes of service
delays or underutilization and, thus, would not improve access to
services. One commenter requested clarification on how this data would
be used to promote meaningful change.
On the other hand, some commenters believed that the requirements
at Sec. 441.311(d)(2) can help identify unmet needs and uncover some
of the causes of these challenges, which in turn can focus efforts on
efficient solutions.
Response: We acknowledge that there are many underlying causes for
service delays or service underutilization. We believe that the first
step toward addressing these challenges, where possible, is to quantify
the scope of these delays or underutilization through data collection.
Additionally, some of the challenges commenters cited are within the
purview of States, managed care plans, or providers to address. If the
data demonstrates what appears to be significant delays or
underutilization, we believe this information can help facilitate
conversations with States, managed care plans, and providers about the
reasons for these reporting results.
We also note that the purpose of the data is to track trends in
service delivery times and utilization, not to track the outcomes for
each beneficiary. The reporting will be the average amount of time a
random sample of beneficiaries waited between service authorization and
the start of services, and the total percent of authorized services
that were provided. Thus, some of the factors that commenters cited,
particularly those involving the behavior of specific beneficiaries,
such as failure to provide timely medical data, declining services, or
traveling, we believe should not significantly impact the reported
numbers unless these obstacles are particularly prevalent (in which
case, this may also be an area to identify for policy or program
improvement).
Comment: A few commenters opposed the requirements at Sec.
441.311(d)(2). A few commenters suggested that some States or managed
care plans are not currently tracking the time between service
authorization and the start of services and that it would take
significant resources to develop, test, and deploy changes to the
State's documentation management system. One commenter noted that it
may be difficult to track this data because services are authorized,
and claims are paid using different systems or are overseen by
different parts of State government. One commenter noted that, while
their State does track service utilization data, it would take
additional staff resources to comply with the reporting requirements.
Response: We are not currently collecting States' data on the times
between service authorization and when services begin, or the number of
authorized hours that are being utilized and understand that States may
not be tracking all of this data; the absence of this data is what has
prompted us to propose the requirement at Sec. 441.311(d)(2). We
recognize that, because this data has not previously been tracked by
all States, some States may have to update their data collection
systems to comply with this new requirement. As discussed elsewhere in
this rule, in Medicaid, enhanced FFP is available at a 90 percent FMAP
for the design, development, or installation of improvements of
mechanized claims processing and information retrieval systems, in
accordance with applicable Federal requirements. Enhanced FFP at a 75
percent FMAP is also available for operations of such systems, in
accordance with applicable Federal requirements. We reiterate that
receipt of these enhanced funds is conditioned upon States meeting a
series of standards and conditions to ensure investments are efficient
and effective. We also note that, under section 1903(a)(7) of the Act,
Federal matching funds are available for administrative activities
necessary for the proper and efficient administration of the Medicaid
State plan.
We developed the reporting requirement at Sec. 441.311(d)(2) to
strike a balance between collecting enough information to enable
Federal oversight of service delivery and utilization and imposing as
minimal an administrative burden on States and providers as possible.
We believe the long-term benefits of collecting this data outweigh the
initial burden of implementation. Accordingly, we decline to make any
changes in this final rule based on these comments.
We are finalizing Sec. 441.311(d)(2)(i) with a modification that
we believe will further reduce administrative burden on States. As
noted in an earlier comment summary, some commenters noted that in some
instances beneficiaries may wait long periods of time to receive
services. Upon further consideration, we have determined that the
requirement at Sec. 441.311(d)(2) as written may present some data
collection challenges in situations in which the beneficiary's date of
approval of service and the date when services actually begin are
separated by enough time that they fall in two different reporting
periods. For instance, if the reporting period aligned with the
calendar year, if an individual was approved for services on November
1, 2028, but did not start receiving services until February 1, 2029,
it is not clear how that beneficiary's wait time for services would be
captured in the reporting period for January 1, 2028, through December
31, 2028. (We note that we are using the calendar year as the reporting
period only for the purposes of this example. As discussed later in
this section, we will work with States and other interested parties
through the Paperwork Reduction Act process to determine the actual
reporting period.) It appears that in this circumstance, the State
would have to first indicate that the beneficiary had waited 2 months
(November 1, 2028, through the end of the reporting period on December
31, 2028); then the State would need to submit updated information for
this beneficiary to report the beneficiary's total wait time. This
process would need to be repeated on a rolling basis for other
beneficiaries whose approval date and service start date fell in
different reporting periods. Repeated updates to States' data would be
burdensome, make it difficult for States to share meaningful data with
CMS and the public, and lead to delays in State reporting of complete
data for each reporting period.
To avoid this type of confusion in reporting, we are amending the
requirement at Sec. 441.311(d)(2)(i) to specify that the reporting is
for individuals newly receiving services, rather than for individuals
newly approved to begin receiving services. (Revised language is noted
in bold.) As applied to the example above, this

[[Page 40649]]

modification to Sec. 441.311(d)(2)(i) means that the beneficiary whose
services began on February 1, 2029 would be included in the January 1,
2029, through December 31, 2029, reporting period; the State would be
able to ``look back'' to identify when the services were approved (in
the example, services were approved November 1, 2028) and the State
would report the beneficiary's total wait time between November 1, 2028
and February 1, 2029. We believe this modification preserves the
intention of what we proposed in Sec. 441.311(d)(2)(i)--to measure the
time between when a beneficiary was approved to receive services and
when the services actually begin--but clarifies and streamlines the
reporting process.
Comment: A few commenters expressed concerns that States would use
information about unfilled service hours to infer whether or not
authorized services are necessary for the beneficiary. These commenters
noted that many reasons exist as to why an individual would be unable
to receive authorized care on a particular day but still need the care,
such as the service provider was unavailable or there was confusion
around when and what services were to be delivered on that day. One
commenter requested reassurance that the reporting requirement at Sec.
441.311(d)(2)(ii) to report on the average number of hours authorized
that are provided would not be used to reduce or limit beneficiaries'
access to services. One commenter suggested that we monitor services to
ensure that States are not reducing services in response to this data.
Response: The purpose of this reporting requirement at Sec.
441.311(d)(2)(ii) is not to audit individual beneficiaries' service
utilization or to use the information as a reason to reduce their
authorized service hours. The purpose and intent of the requirement is
to identify barriers to beneficiaries' access to services. Accordingly,
we decline to make any changes in this final rule based on these
comments. However, we note that the State is required at Sec.
441.301(c)(2) to ensure that the person-centered service plan reflects
the services and supports that are important for the individual to meet
the needs identified through an assessment of functional need, as well
as what is important to the individual with regard to preferences for
the delivery of such services and supports, and this requirement
remains unchanged. States and managed care plans should not use the
data collected to meet the reporting requirement at Sec.
441.311(d)(2)(ii) to reduce authorized hours.
Comment: One commenter requested clarification on when the approval
of services occurs, such as at the time of enrollment or when a
physician signs the plan of treatment. The commenter also observed that
it will be critical to standardize the data elements that must be
captured in this reporting.
Response: Given the variable nature of States' processes, we defer
to States to determine when services are considered to have been
approved and how this approval date can be tracked consistently for the
reported services. We intend to provide States with technical
assistance, including technical specifications and sampling guidance,
for the new reporting requirements in this final rule, which will aid
in consistent data reporting. We will also be making the reporting
template available for public comment through the Paperwork Reduction
Act notice and comment process.
Comment: A couple of commenters recommended requiring States to set
a target for timeliness (such as 7 days) and measure the percentage of
all cases in which the wait time exceeded that target.
Response: At this time, we are focusing on creating baseline data-
reporting standards. We will take these recommendations for setting or
requiring benchmarks under consideration should we pursue future
rulemaking in this area.
Comment: We received responses to our comment solicitation on
whether Sec. 441.311(d)(2) should apply to other section 1915(c)
services aside from homemaker, home health aide, and personal care
services as set forth at Sec. 440.180(b)(2) through (4).
One commenter recommended narrowing the scope of this requirement
to personal care services only and removing homemaker and home health
aide services from the requirement. The commenter contended that
homemaker services do not cover activities of daily living which are
typically associated with direct care to HCBS beneficiaries. The
commenter also noted that home health aide services are typically
offered under the Medicaid State plan rather than a section 1915(c)
waiver. The commenter concluded that limiting the requirement to
personal care services would allow CMS and States to concentrate on
highly utilized personal care services and would make the requirement
more operationally feasible for States.
On the other hand, a few commenters advocated for extending the
reporting requirements to all HCBS. One of these commenters suggested
that applying the requirement to only a few services would create an
unintended consequence of focusing more attention on certain services
and the populations receiving those services, at the expense of other
beneficiaries. A few of these commenters also pointed out that other
services are experiencing direct care worker shortages that could be
contributing to service delays or underutilization that need to be
identified.
One commenter suggested that we add services offered by specialty
providers, such as occupational therapists, physical therapists, or
speech-language pathologists, to the requirement.
A couple of commenters recommended extending the requirement to
include services typically delivered to people with intellectual or
developmental disabilities, such as habilitation services. Similar to
the reasons cited by commenters for extending the requirement to all
HCBS, commenters in favor of extending the requirements to include
habilitation noted that these services are critical and beneficiaries
who receive them are experiencing delays in services or other access
issues. However, one commenter requested that we not extend these
requirements to habilitation services, citing concerns that some
States' information systems are not equipped to track this information
for habilitation services. The commenter also noted that differences
between habilitation services and other types of HCBS require
additional study and consideration prior to applying these reporting
requirements for habilitation services.
Response: We believe that the services proposed for inclusion in
this requirement include activities of daily living that are critical
to beneficiaries' health, safety, and ability to live successfully in
the community. Additionally, as identified in an analysis performed by
CMS, the three services fall within the taxonomy of home-based
services, which are both high-volume and high cost.\126\ Thus, we
believe that targeting these services will maximize the impact of this
requirement by addressing the needs of many beneficiaries and promoting
better oversight of frequently used services. Given the similarities
among homemaker, home health aide, and personal care services, we
cannot find a justification for removing homemaker

[[Page 40650]]

and home health aide services from this requirement.
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\126\ Centers for Medicare & Medicaid Services. ``Trends in Rate
Methodologies for High-Cost, High Volume Taxonomies.'' https://www.medicaid.gov/sites/default/files/2019-12/trends-in-rate-august-2017.pdf. Last access October 2, 2023.
---------------------------------------------------------------------------

Because we want to start by focusing on a selection of high-volume,
high-cost services, we do not at this time intend to expand the
reporting requirement to all HCBS. We do agree with commenters that
services in addition to homemaker, home health aide, and personal care
services may be particularly vulnerable to delays due to shortages in
the direct care workforce. For that reason, we are extending the
requirement to habilitation services in this final rule which, like
homemaker, home health aide, and personal care services, tend to be
hands-on services that are delivered by direct care workers who often
earn lower wages. We believe that expanding the reporting to include
habilitation services will ensure that beneficiary populations, namely
individuals with intellectual or developmental disabilities who
commonly receive personal care services as part of their habilitation
services, are not excluded from our efforts to support the direct care
workforce.
We acknowledge the comment that habilitation services are unique
from other services, but also cannot identify reasons why these
differences should exclude them from this reporting requirement.
After consideration of these comments and the benefits of aligning
reporting requirements across services, we are finalizing the reporting
requirements at Sec. 441.311(d)(2)(i) and (ii) with a modification to
include homemaker, home health aide, personal care, and habilitation
services, as set forth at Sec. 440.180(b)(2) through (4) and (6).
Comment: One commenter requested clarification on whether Sec.
441.311(d)(2) would apply to services in both managed care and FFS
delivery systems. One commenter requested that we require reporting on
managed care plans' prior authorization practices, including differing
lengths of authorizations and untimely authorizations that were not in
place or renewed prior to the date of expected services. The commenter
noted that missing authorizations may cause disruptions in payments to
providers and threaten the continuity of beneficiaries' access to the
services.
Response: The reporting requirements apply to services delivered
under both FFS and managed care delivery systems. For additional
information, we refer readers to the discussion of Sec. Sec.
441.311(f) and 438.72(b) below. We note that a State may consider
requiring reporting on specific managed care processes through its
contracts with managed care plans.
Comment: A few commenters requested clarification as to whether the
requirements at Sec. 441.311(d)(2) would apply to self-directed
services. A few commenters raised specific questions or concerns about
the application of the reporting requirements at Sec. 441.311(d)(2) to
self-directed services, particularly self-directed service models with
individual budget authority. Commenters noted that the inherent
flexibility of these services might make reporting on the utilization
of service hours particularly misleading. One commenter noted that,
when an individual selects an independent worker to provide services,
that worker might have to go through background checks and training
that would make it appear that the service delivery is delayed. One
commenter worried that States would become concerned with the
appearance of delays in the delivery of self-directed services and
discourage beneficiaries from seeking self-directed services. Another
commenter pointed out that since beneficiaries might use their budget
authority to purchase equipment or devices that replace some hands-on
services, or may choose to adjust their service schedules, service
utilization data on these services might inaccurately suggest that the
beneficiary is being underserved. On the other hand, one commenter
recommended that self-directed services be included in this reporting.
Another commenter stated that from their personal experience as a
provider, beneficiaries receiving self-directed services tend to have
higher service utilization rates than beneficiaries in agency-directed
services. One commenter suggested that data on all models of self-
directed services be tailored to the unique needs of the model, such as
by requiring reporting on the percent of the budget used rather than
the number of service hours. Another commenter suggested that
additional guidance would be needed to apply the reporting requirements
to self-directed models.
Response: As discussed in section II.B.7.e. of this final rule,
these reporting requirements will apply to self-directed services. We
thank commenters for raising these concerns. As noted earlier, we
intend to provide States with technical assistance, including technical
specifications and sampling guidance, for the new reporting
requirements in this final rule, which should aid in reporting on self-
directed services. As noted in a prior response, the purpose of the
data is to track trends in service delivery times and utilization, not
to track the outcomes for each beneficiary. The reporting will be the
average amount of time a random sample of beneficiaries waited between
service authorization and the start of services, and the total percent
of authorized services that are provided. Thus, some of the factors
that commenters cited, such as additional training for self-directed
service workers or individual beneficiaries' changes in schedules,
should not significantly impact the reported numbers. However, we will
work with States to monitor this issue.
Comment: A few commenters raised concerns about the proposal to
allow States to report data on a statistically valid sample of
beneficiaries, suggesting instead that we require complete reporting on
all relevant beneficiary data. Commenters were concerned that using a
sample could mask disparities or fail to identify individuals with
particularly acute unmet needs. One commenter suggested that if we
permit reporting on a random sample, we add a requirement that the data
must include information on race, ethnicity, and population (such as
older adults, people with intellectual and developmental disabilities,
and people with physical disabilities) in order to identify disparities
in service delivery.
Response: To minimize State reporting burden, we are finalizing the
requirement to allow States to report data for Sec. 441.311(d)(2)
using statistically valid random sampling. We believe that due to
variety in States' current tracking systems, some States might find
reporting using statistically valid random sampling to be more
manageable and auditable than attempting to report on all
beneficiaries. We will consider expanding reporting to the full
population in future rulemaking if it is determined that such an
approach gives a more complete picture of service delivery. We note
that States may choose to report on the full population, as opposed to
sampling their beneficiaries, if for instance, doing so better aligns
with their data collection process or needs.
We are finalizing the requirements at Sec. 441.311(d)(2)(i) and
(ii) with a technical modification to specify that the State may report
this metric using statistically valid random sampling of beneficiaries.
(Revised language identified in bold.) We make this technical
correction to better align the language with standard terminology for
the sampling methodology we intended in these requirements.
Comment: We received responses to our comment solicitation on
additional metrics that could be collected regarding service delivery
and utilization. One commenter

[[Page 40651]]

recommended that we not add more metrics to Sec. 441.311(d)(2).
Several commenters did suggest additional metrics. Many of these
commenters noted that more detailed data would allow for a better
assessment of overall unmet needs and disparities within service
delivery. Additional metrics suggested by commenters included:
Disaggregated data about beneficiaries, by demographic
categories, including race, ethnicity, language status, sex or gender
identification, sexual orientation, age, and geographic location;
Tracking the total number of beneficiaries who received
service authorizations versus the number of beneficiaries who received
services;
Tracking why services are not provided or why a
beneficiary declines a service;
Disaggregated data by HCBS authority and population
(including dual eligibility), delivery system, provider type, and
managed care plan; and
Tracking beneficiaries' long-term access to services or
other metrics to measure continuity of care and how the care
contributes to beneficiaries' goals and outcomes.
One commenter, while not recommending that we require the measure
for all States, shared a State's experience of including a measure to
assess missed visits in its managed LTSS program. The commenter
observed that this required a significant amount of time to identify
legitimate reasons for services to not have been provided and to build
the system mechanisms to capture that data, which was primarily
identified through case management record review.
Response: We thank commenters for their thoughtful feedback. We
will take these recommendations under consideration for future
policymaking, but at this time, we decline to modify the metrics
required at Sec. 441.311(d)(2) based on these comments.
As noted in previous responses, we do not believe it would be
feasible at this stage to standardize the collection of certain types
of qualitative data, such as reasons for delayed or undelivered
services, or how the services contribute to beneficiaries' outcomes;
this data would also be difficult to validate and, as noted by one
commenter, time-consuming to implement.
We believe it is important to strike a balance between collecting
information to promote transparency around service times and
utilization and imposing as minimal an administrative burden on States
and providers as possible. We also believe that the reporting
requirements at Sec. 441.311(d)(2) are straightforward metrics on
which to begin reporting. As we gather and review this data, we will
consider what additional information may be needed to further improve
our oversight of HCBS programs and improve beneficiaries' access to
services and may consider additional reporting requirements in the
future.
However, we agree that some of the granular data elements suggested
by commenters could provide States with valuable insight into their own
programs and beneficiary needs. We encourage States to consider what
information they have the capacity to collect and would find useful for
developing local policies to support beneficiaries' access to HCBS
waivers in their State.
Comment: A few commenters recommended additional metrics that fall
outside the scope of the reporting in Sec. 441.311(d)(2). One
commenter recommended collecting data on case manager or service
coordinator caseloads. A few commenters recommended measuring time
between an individual's date of application and their eligibility
determination, and the time between an individual's eligibility
determination and the plan of care development or authorization for
services.
Another commenter noted that a cause of delay in receiving HCBS may
be due to delays in the development of care plans that are required for
HCBS delivery to begin. The commenter noted that a potential solution
to this specific barrier is the use of provisional plans of care, which
are discussed in Olmstead Letter #3.\127\ The commenter recommend that
we affirm that HCBS provisional plans of care are an available option
and require States to report on usage of such plans.
---------------------------------------------------------------------------

\127\ Refer to Centers for Medicare and Medicaid Services,
``Olmstead Letter #3, Attachment 3-a.'' July 25, 2000. Available at
https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/smd072500b.pdf;. The commenter notes that in
Olmstead Letter #3, Attachment 3-a (https://www.medicaid.gov/Federal-Policy-Guidance/downloads/smd072500b.pdf), CMS explains that
it ``will accept as meeting the requirements of the law a
provisional written plan of care which identifies the essential
Medicaid services that will be provided in the person's first 60
days of waiver eligibility, while a fuller plan of care is being
developed and implemented.'' During this time, the relevant agencies
work with the beneficiary to develop and finalize a ``comprehensive
plan of care,'' which goes into effect as soon as practically
possible, and at least within 60 days.
---------------------------------------------------------------------------

Response: We thank commenters and note these comments are not
directly related to the proposed requirements in Sec. 441.311(d), and
thus we decline to make modifications to Sec. 441.311(d) based on
these suggestions. We plan to consider the comments as we regard
broader HCBS access and equity issues for future policymaking. We also
note that while requiring use of provisional care plans would be
outside the of scope of this requirement, we agree with the commenter
that the use of provisional care plans as described in Olmstead Letter
#3 may help avoid the delay of services pending the development of the
care plan.\128\ In this letter, we explain that we will accept, as
meeting requirements, a provisional written plan of care which
identifies the essential Medicaid services that will be provided in the
person's first 60 days of waiver eligibility, while a fuller plan of
care is being developed and implemented. During this time, the relevant
agencies work with the beneficiary to develop and finalize a
``comprehensive plan of care,'' which goes into effect as soon as
practically possible, and at least within 60 days.
---------------------------------------------------------------------------

\128\ Centers for Medicare and Medicaid Services, ``Olmstead
Letter #3, Attachment 3-a.'' July 25, 2000, which is available at
https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/smd072500b.pdf.
---------------------------------------------------------------------------

Comment: One commenter recommended that we allow States the option
to choose one of the proposed criteria in Sec. 441.311(d)(2) on which
to report or to propose a different metric on which to report. The
commenter believed this would permit flexibility in reporting on and
context for data related to timeliness of initiation of service
planning and service delivery. The commenter believed that this could
serve as the first stage in a phased approach for access reporting.
Response: We thank the commenter for their suggestion. However, we
believe it is important to take steps to establish nationally
comparable data, which would require States to report on the same
metrics. As discussed in previous responses, we are not finalizing any
additional metrics for Sec. 441.311(d)(2) and believe that the two
metrics included in this requirement are a reasonable first step in
data collection.
Comment: A few commenters supported annual reporting for Sec.
441.311(d)(2). One commenter noted that annual reporting will better
monitor service interruptions due to shortages of direct care workers.
One commenter noted that a beneficiary's service utilization can
fluctuate significantly even from month to month. One commenter
believed that biennial (every other year) reporting would reduce burden
on States.
Response: We are finalizing the annual reporting frequency as
proposed

[[Page 40652]]

in Sec. 441.311(d)(2). We continue to believe that annual reporting
strikes the right balance between collecting current data and
minimizing burden on States to the greatest extent possible. We are
concerned that if we extend the reporting to a biennial frequency, the
information will become outdated prior to the next public report.
After consideration of the comments received, we are finalizing the
requirements at Sec. 441.311(d)(2), with modifications. We are
finalizing Sec. 441.311(d)(2)(i) with a modification to specify that
the reporting is for individuals newly receiving services within the
past 12 months, rather than for individuals newly approved to begin
receiving services. We are also finalizing a modification so that both
reporting requirements at Sec. 441.311(d)(2)(i) and (ii) require
reporting on homemaker services, home health aide services, personal
care, or habilitation services, as set forth in Sec. 440.180(b)(2)
through (4) and (6), and allow States to report using statistically
valid random sampling of beneficiaries.
We note that we are finalizing Sec. 441.311(d)(2) with technical
corrections. As a result of modifying Sec. 441.311(d)(2) to include
habilitation services, we are modifying the title of this provision to
specify Access to homemaker, home health aide, personal care, and
habilitation services. We are also finalizing a technical modification
in both Sec. 441.311(d)(2)(i) and (ii) to indicate that the services
are as ``set forth'' in Sec. 440.180(b)(2) through (4) and (6), rather
than as ``listed'' in.
d. Payment Adequacy (Sec. 441.311(e))
At Sec. 441.311(e), we proposed new reporting requirements for
section 1915(c) waivers, under our authority at section 1902(a)(6) of
the Act, requiring that States report annually on the percent of
payments for homemaker, home health aide, and personal care services,
as listed at Sec. 440.180(b)(2) through (4), spent on compensation for
direct care workers. For the same reasoning discussed in section
II.B.5. of this preamble, we have focused this requirement on homemaker
services, home health aide services, and personal care services because
they are services for which we expect that the vast majority of payment
should be comprised of compensation for direct care workers and for
which there would be low facility or other indirect costs. These are
services that would most commonly be conducted in individuals' homes
and general community settings. As such, there should be low facility
or other indirect costs associated with the services. We also believed
that this reporting requirement could serve as the mechanism by which
States demonstrated that they meet the proposed HCBS Payment Adequacy
requirements at Sec. 441.302(k).
We considered whether the proposed reporting requirements at Sec.
441.311(e) related to the percent of payments going to the direct care
workforce should apply to other services, such as adult day health,
habilitation, day treatment or other partial hospitalization services,
psychosocial rehabilitation services and clinic services for
individuals with chronic mental illness. We had selected homemaker,
home health aide, and personal care services (as defined at Sec.
440.180(b)(2) through (4)) for this reporting requirement to align with
the payment adequacy minimum performance requirement at Sec.
441.302(k)(3), which is discussed in section II.B.5. of this preamble.
However, we requested comment on whether States should be required to
report annually on the percent of payments for other services listed at
Sec. 440.180(b) spent on compensation for direct care workers and, in
particular, on the percent of payments for residential habilitation
services, day habilitation services, and home-based habilitation
services spent on compensation for direct care workers.
We further proposed that States separately report for each service
subject to the reporting requirement and, within each service,
separately report on payments for services that are self-directed. We
considered whether other reporting requirements such as a State
assurance or attestation or an alternative frequency of reporting could
be used to determine State compliance with the requirement at Sec.
441.302(k) and decided that the proposed requirement would be most
effective to demonstrate State compliance. We requested comment on
whether we should allow States to provide an assurance or attestation,
subject to audit, that they meet the requirement in place of reporting
on the percent of payments, and whether we should reduce the frequency
of reporting to every other year.
To minimize burden on States and providers, we proposed that States
report in the aggregate for each service across all of their services
across all programs as opposed to separately report for each waiver or
HCBS program. However, we requested comment on whether we should
require States to report on the percent of payments for certain HCBS
spent on compensation for direct care workers at the delivery system,
HCBS waiver program, or population level. We also requested comment on
whether we should require States to report on median hourly wage and on
compensation by category.
In consideration of additional burden reduction for certain
providers, we requested comment on whether we should allow States the
option to exclude, from their reporting to us, payments to providers of
agency directed services that have low Medicaid revenues or serve a
small number of Medicaid beneficiaries, based on Medicaid revenues for
the service, number of direct care workers serving Medicaid
beneficiaries, or the number of Medicaid beneficiaries receiving the
service. We also requested comment on whether we should establish a
specific limit on this exclusion and, if so, the specific limit we
should establish, such as to limit the exclusion to providers in the
lowest 5th, 10th, 15th, or 20th percentile of providers in terms of
Medicaid revenues for the service, number of Medicaid beneficiaries
served, or number of direct care workers serving Medicaid
beneficiaries.
We proposed that payments for self-directed services by States
should be included in these reporting requirements, although we noted
feedback from interested parties indicating that compensation for
direct care workers in self-directed models tends to be higher and may
comprise a higher percentage of the payments for services than other
HCBS. This decision not to exclude them was based on the importance of
ensuring a sufficient direct care workforce for self-directed services.
We requested comment on whether we should allow States to exclude
payments for self-directed services from these reporting requirements.
We note that, for clarity, we are aligning the definitions of
compensation, direct care worker, and excluded costs at Sec.
441.311(e)(1) with those we are finalizing in Sec. 441.302(k)(1). As a
result, the reporting requirement we proposed at Sec. 441.311(e) is
finalized at Sec. 441.311(e)(2)(i), as discussed below. While we
consider the reporting requirement at Sec. 441.311(e) to be distinct
and severable from the payment adequacy requirements in Sec.
441.302(k), we believe that the reverse is not the case--that Sec.
441.302(k) does rely on the reporting mechanism at Sec. 441.311(e) to
establish compliance with the minimum performance requirement at Sec.
441.302(k)(3). As such, we believe it is advantageous to have aligned
definitions.
We received public comments on this proposal. The following is a
summary of

[[Page 40653]]

the comments we received and our responses.
Comment: Several commenters expressed general support for our
proposed requirement at Sec. 441.311(e) that States report annually on
the percent of payments for homemaker, home health aide, and personal
care services, as listed at Sec. 440.180(b)(2) through (4), spent on
compensation for direct care workers. Commenters believed that this
requirement would provide data about how Medicaid payments are being
spent, which would improve oversight and enable meaningful comparisons
across programs. One commenter requested clarification on the intent of
the reporting requirement.
Commenters also believed that this requirement would ensure
compliance with the payment adequacy minimum performance requirement at
Sec. 441.302(k)(3). Several commenters, however, expressed support for
finalizing this reporting requirement, but not for finalizing the
minimum performance requirement at Sec. 441.302(k)(3). These
commenters noted that the reporting requirement by itself would yield
useful data that would support payment transparency in HCBS programs.
Response: This requirement is intended to help track the percent of
Medicaid payments for certain HCBS that is spent on compensation for
direct care workers. As we discussed extensively in section II.B.5. of
this rule, we believe that ensuring that a significant portion of
payments for these hands-on services is spent on compensation for
direct care workers aligns with our responsibility under section
1902(a)(30)(A) of the Act to require assurance that payments are
consistent with efficiency, economy, and quality of care. We do note
that this reporting requirement also is a mechanism by which States
demonstrate compliance with the payment adequacy requirements at Sec.
441.302(k), which is discussed in detail in section II.B.5. of this
rule.
While we are finalizing the payment adequacy requirements at Sec.
441.302(k), we agree that the value provided by this reporting
requirement is distinct and severable from the minimum performance
requirement and serves as a standalone requirement. To clarify the
distinction between this reporting requirement and the payment adequacy
requirement at Sec. 411.302(k), we are revising the language at Sec.
411.311(e)(2) to remove the reference to the minimum performance
requirement at Sec. 411.302(k)(3). We believe this will better
demonstrate that the reporting requirement has a function aside from
demonstrating compliance with Sec. 411.302(k). We also believe this to
be necessary because, as discussed further below, we are finalizing the
reporting requirement at Sec. 411.311(e)(2) to include reporting of
data related to habilitation services, which are not subject to the
minimum performance requirement at Sec. 411.302(k)(3). Thus, we
believe retaining the reference to Sec. 411.302(k)(3) would cause some
confusion.
Comment: A few commenters opposed the reporting requirement
proposed at Sec. 441.311(e) (which we are finalizing at Sec.
411.311(e)(2)). These commenters noted that the reporting requirement
would increase administrative burden and administrative costs for
providers; a few commenters believed the increase in administrative
tasks would undermine the goal of the minimum performance requirement
at Sec. 441.302(k)(3) to reduce providers' spending on administrative
activities.
Other commenters expressed concern that this requirement would
create a burden for States. One commenter, although recognizing the
need for more data about compensation to direct care workers, believed
that most States do not currently collect this type of data and would
require significant time, administrative effort, and expense to
collect, compile, report, and analyze the data in a meaningful way. A
few commenters stated that States would need to make significant
changes to current billing and reporting practices and IT in order to
isolate the use of reimbursements for the three specified services from
the larger menu of services a provider typically offers. A couple of
commenters expressed concerns about the time and resources it would
take to educate providers about the requirements and their reporting
responsibilities.
Additionally, a few commenters expressed concerns about whether
States have the capacity to validate the accuracy of providers' reports
and conduct audits, especially in States with a large number of
providers. One commenter expressed concern about the cost associated
with hiring and training independent auditors to audit providers'
reported compensation of direct care workers. One commenter shared
first-hand experience with implementing a wage pass-through requirement
as part of the State's spending plan under ARP section 9817; the
commenter regarded the process of monitoring and validating the
percentage of payments going to direct care workers as administratively
burdensome.
Response: We acknowledge that complying with this reporting
requirement will necessitate certain expenditures of resources and time
on the part of providers and States. As noted by commenters, we believe
that the value of the data collected through their efforts makes these
expenditures of resources worthwhile. As discussed further below, we
are finalizing the redesignated Sec. 441.311(e)(2)(i) to require only
aggregated data by service, as proposed, which we believe will reduce
burden on both providers and States.
We believe that, generally speaking, States and providers should
already have information about the amount of Medicaid payments
providers receive for specific services, and that providers likely
already track expenditures on wages and benefits for their workers. We
also believe that the simpler, aggregated reporting will be easier for
States to validate and include in their existing auditing processes.
However, to ensure that States are prepared to comply with this
reporting, we are adding a requirement at Sec. 441.311(e)(3) to
require that States must report, one year prior to the applicability
date for (e)(2)(i) of this section, on their readiness to comply with
the reporting requirement in (e)(2)(i) of this section. This will allow
us to identify States in need of additional support to come into
compliance with Sec. 441.311(e)(2)(i) and provide targeted technical
assistance to States as needed.
Comment: A couple of commenters requested that CMS issue
subregulatory guidance or share best practices to assist with
strategies for collecting data and ensuring compliance with the
requirement. One commenter recommended that we work with States to
determine the most efficient way to gather comparable, useful data to
inform future rate policies, including exploring whether existing State
tools could meet the requirement or could do so with modification.
A few commenters raised particular concerns about cost reports,
which they believed would be necessary for implementing the reporting
requirement. Commenters stated that without standardized cost reports,
it will be difficult to ensure consistent and comparable data reporting
across programs. Some of these commenters noted that, in States that do
not currently require cost reports, this will present a new burden for
both providers and States. A couple of commenters worried that
providers may lack both the familiarity and the resources to complete
cost reports. A few commenters requested that CMS

[[Page 40654]]

develop a standard cost reporting template to ensure accurate data
collection and assessment of compliance across all States.
A couple of commenters, noting the language proposed in Sec.
441.311(e) (which we are finalizing at Sec. 441.311(e)(2)(i)) that the
reporting will be at the time and in the form and matter specified by
CMS, requested additional information regarding the method of
submission and the methodology that will be required for the
calculations used in the report.
Response: We intend to release subregulatory guidance to assist
States with implementation of this requirement, and we plan to also
provide technical assistance and best practices to help States identify
ways to use existing infrastructure or tools to gather and report.
Further, as noted earlier, we intend to provide States with technical
specifications for the new reporting requirements in this final rule,
which will aid in consistent data reporting. In addition, we will be
making the reporting template available for public comment through the
Paperwork Reduction Act notice and comment process. Through that
process, the public will have the opportunity to review and provide
feedback on the elements of the required State reports, including the
methodology of the calculations, as well as the timing and format of
the report to us.
As discussed further below, we are finalizing the requirement at
Sec. 441.311(e)(2)(i) (originally proposed at Sec. 441.311(e)) that
States need only report aggregated data by service. We believe this
will reduce the overall burden on States and providers and reduce the
need for complex cost reporting.
Comment: One commenter requested enhanced FMAP for costs associated
with the reporting requirement.
Response: Enhanced FFP is available at a 90 percent FMAP for the
design, development, or installation of improvements of mechanized
claims processing and information retrieval systems, in accordance with
applicable Federal requirements.\129\ Enhanced FFP at a 75 percent FMAP
is also available for operations of such systems, in accordance with
applicable Federal requirements.\130\ We reiterate that receipt of
these enhanced funds is conditioned upon States meeting a series of
standards and conditions to ensure investments are efficient and
effective.\131\ We decline to make any changes in this final rule based
on this comment.
---------------------------------------------------------------------------

\129\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\130\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\131\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
---------------------------------------------------------------------------

Comment: One commenter suggested that, instead of requiring
reporting on the percentage of Medicaid payments going to compensation
for direct care workers, we should require States to report annually on
how their rates are determined and if the State's rate review included
factors such as current wage rates, inflation, required costs of
business, and increasing health insurance rates. Another commenter
recommended that CMS consider implementing a regular review and
assessment to determine if State Medicaid rates provide competitive
wages for the direct care workforce and review how these wages are
funded in the various payment models.
Response: We focused this particular proposal on the allocation of
Medicaid payments, not on rate setting or rate methodology. Such
considerations are outside the scope of this proposal. However, we
direct readers to the discussion in Documentation of Access to Care and
Service Payment Rates (section II.C. of this final rule) which may
speak to readers' interests in rate transparency and analysis. We
decline to make any changes in this final rule based on this comment.
Comment: A few commenters requested clarification of the
enforcement mechanisms for the reporting requirement.
Response: In terms of enforcing compliance of the States'
obligation to submit reports as required at Sec. 441.311(e), we intend
to use our standard enforcement discretion. In terms of providers'
cooperation with States in submitting the data States need to make
their reports, we note that States already have broad authority to take
enforcement action and create penalties, whether monetary or non-
monetary, for providers that have violated their obligations as set
forth by the State Medicaid program. We decline to make any changes in
this final rule based on this comment.
Comment: A few commenters requested that we clarify managed care
plans' responsibility for tracking and reporting expenditures. A few
commenters expressed concern that this proposal would pose particular
reporting or accounting burdens for providers that participate in
multiple Medicaid managed care plans, serve non-Medicaid clients, or
receive bundled payments.
Response: We plan to provide technical assistance to States to
address the role of managed care plans in adhering to this reporting
requirement, as well as to assist with strategies for addressing
bundled payments that include the services affected by this
requirement. Also, as discussed in greater detail below, we are not
proposing granular reporting (such as requiring data be disaggregated
by managed care plan or by HCBS waiver program). Additionally, we would
like to emphasize that our intention is that the State requires
providers share information about the percent of all of their Medicaid
FFS payments and the payment they receive from managed care plans that
is being spent on compensation for the direct care workforce; we do not
intend that the State should expect providers to provide a separate
percent of Medicaid payments from each managed care plan in which they
are enrolled, or provide separate calculations based on payment from
services provided to non-Medicaid beneficiaries that is separate and
distinct from their participation in the Medicaid managed care program.
We therefore decline to make any changes in this final rule based on
this comment.
Comment: A couple of commenters suggested that we expand reporting
to include more HCBS than the three services specified, or even to
apply this requirement to all HCBS. One of the commenters noted that,
while more work, it would be administratively simpler to report on a
broader array of services, rather than trying to isolate data for a few
HCBS. One of the commenters recommended that we could phase in these
expanded reporting requirements, beginning with homemaker, home health
aide, and personal care services.
Response: As discussed below, we are expanding this reporting
requirement in this final rule to include habilitation services. We
tailored this requirement to address the services that are most likely
to be delivered by direct care workers who predominantly earn lower
wages. At this time, we do not intend to expand the requirement beyond
homemaker, home health aide, personal care, and habilitation services.
However, we note that States are free to collect additional information
for State use if the States believe this would simplify administration
or they would like to track allocations of Medicaid payments to direct
care workers providing other types of HCBS.

[[Page 40655]]

Comment: In response to our request for comments, a few commenters
recommended expanding the reporting requirement to include the percent
of payments for residential habilitation services, day habilitation
services, and home-based habilitation services that is spent on
compensation for direct care workers. One commenter believed that it
was important to include habilitation because, in the absence of such
data, individuals with developmental disabilities will be disadvantaged
since habilitation is a primary vehicle for the delivery of support
services to people with intellectual and developmental disabilities in
most States. Another commenter believed this information would be
critical for determining any future minimum performance level for
compensation to direct care workers that was applied to habilitation
services.
A few commenters, on the other hand, did not support including
habilitation services, but did not specify reasons why these services
should be excluded.
Response: We agree with commenters that collecting information
about habilitation services would yield useful data about the
allocation of Medicaid payments in support of the direct care
workforce. Like homemaker, home health aide, and personal care
services, habilitation services also tend to be hands-on services that
are delivered by direct care workers who often earn lower wages.
However, a key difference between habilitation services and the
services that were initially selected for this reporting requirement is
that they may include facility costs if the service includes
residential habilitation or day habilitation. Reporting on habilitation
could be useful in better understanding these costs as well, as it will
allow for a comparison between the facility-based habilitation services
and in-home services. We also agree with commenters that, as
habilitation services are more often delivered to people with
intellectual and developmental disabilities, excluding habilitation
services will disproportionately impact beneficiaries with intellectual
and developmental disabilities.
While we agree with commenters that it is important to collect data
on habilitation services, we also acknowledge that, as noted above,
some services include facility costs that may impact the percent of
Medicaid payments being spent on compensation for direct care workers.
Similar to our proposed requirement at Sec. 441.311(e), that self-
directed services be reported separately, we also are requiring that
services that include facility costs in the Medicaid rate be reported
separately; this way, we can observe the differences between the
allocation of payments in facility-based services versus services that
are provided solely in the beneficiary's home or in community settings
that are not facilities.
After consideration of the comments, we are adding habilitation
services to this reporting requirement being finalized at Sec.
441.311(e)(2)(i). We are modifying the requirement at Sec.
441.311(e)(2)(i) to specify that the services included in this
requirement are those set forth at Sec. 440.180(b)(2) through (4) and
(6). We note that Sec. 440.180(b)(6) refers to habilitation services,
without distinguishing between residential habilitation services, day
habilitation services, and home-based habilitation services. Thus, we
are also specifying that services with facility costs included in the
Medicaid rate must be reported separately. These categories will be
further described in subregulatory guidance. We approximate this
distinction in this reporting requirement through the separate
depiction of services with facility costs.
Comment: One commenter recommended that we exclude nurses and
direct care workers who provide nursing assistance from this reporting
requirement. Another commenter suggested that we should require data to
be stratified by workforce. This commenter worried that without this
disaggregation, workers who typically earn lower wages (such as
personal care assistants) will be ``overshadowed'' in the data by
workers who typically earn higher wages (such as nurses). The commenter
believed this lack of transparency within the data would limit targeted
interventions and advocacy for the lowest-paid positions within HCBS.
Response: Nurses and staff who provide nursing assistance are
included in the definition of direct care worker we are finalizing at
Sec. 441.311(e)(1)(ii), as discussed previously. While some of the
underlying rationale of this reporting requirement is related to
concerns about low wages earned by some direct care workers, our
broader concern is the health of the HCBS workforce as a whole. The
HCBS workforce is experiencing a shortage of workers in all categories,
including clinicians and nursing assistants. These workers provide
direct, hands-on services to beneficiaries and may in some cases be
required to provide or supervise the services. We do not believe
excluding them from the reporting serves our larger interests in
supporting the direct care workforce overall. For that reason, we also
do not believe that it is necessary to include a Federal reporting
requirement that compensation to nurses should be reported separately,
as our primary interest is in tracking the allocation of Medicaid
payments to the direct care workers who are delivering the services. As
noted above, States may choose to disaggregate data (for State use) for
different categories of direct care workers in order to examine
workforce issues at the State level.
Comment: Several commenters responded to our request for comment on
whether we should allow States to provide an assurance or attestation,
subject to audit, that they meet the requirement in place of reporting
on the percent of payments. A few commenters opposed an attestation
rather than a reporting requirement. These commenters agreed that the
reporting requirement is the most effective means of verifying States'
compliance with the payment adequacy minimum performance requirement at
Sec. 441.302(k)(3). Commenters also noted that the reporting
requirement, rather than an attestation only, will yield granular data
that will allow for comparison across States and, within States, across
providers and service categories; such data, commenters believe, will
enable States to better understand the impact of payment levels on
access and adjust their rates accordingly, as well as prove useful for
CMS's Federal oversight of beneficiaries' access.
A few commenters, on the other hand, supported requiring an
attestation in lieu of a reporting requirement. Commenters, who mostly
represented State agencies, preferred the option as being less
burdensome and allowing for more flexibility. One commenter suggested
that such an attestation could still be a means of limited data
collection and proposed that, as part of an attestation, we provide
States with a standardized reporting tool to assess whether their rates
are sufficient to ensure a livable wage for direct care workers.
A couple of commenters noted that, while an attestation would be
helpful to Medicaid programs, some Medicaid agencies noted that they
would still need to collect at least some provider-level data to ensure
compliance.
Response: We agree with commenters that a reporting requirement
will be more effective and useful at monitoring and understanding the
allocation of Medicaid payments to compensation for direct care
workers, especially as this reporting requirement is intended to do
more than simply demonstrate compliance with the payment adequacy
requirements at Sec. 441.302(k). We also

[[Page 40656]]

are persuaded by commenters' observations that, even with an
attestation, States would still need to collect data from providers to
ascertain the accuracy of their attestation. In light of the fact that
an attestation would only slightly reduce burden and would not result
in data collection that would allow for national comparisons, we are
moving forward with the reporting requirement rather than replacing it
with an attestation.
Comment: Several commenters responded to our proposal at Sec.
441.311(e) (which we are finalizing at Sec. 441.311(e)(2)(i)) that
reporting would be required annually as well as our request for comment
on whether we should reduce the frequency of reporting to every other
year. A few commenters supported our proposal that this reporting would
be collected annually. One commenter believed that reporting less
frequently than every year would result in the reporting of out-of-date
data and would delay identification of problems in the HCBS system that
could cause access issues for beneficiaries. Another commenter noted
that the value of the data for rate-setting and the work of the
interested party advisory group (discussed in section II.C.2. of this
final rule, specifically in the discussion of Sec. 447.203(b)(6))
outweighs any potential burden of annual reporting.
A few commenters supported reporting every two years, rather than
an annual reporting period. One commenter made the specific suggestion
that the reporting should be every two years with a 12-month lag to
better ensure accurate reporting. Commenters who supported reporting
every 2 years stated that this would allow States sufficient time to
collect data, conduct necessary follow-up activities, and publish data
while also helping them better balance this requirement with other
compliance and reporting activities. One commenter opposed an annual
reporting period because it misaligned with their State's cycle of rate
methodology review, which occurs every three to five years.
One commenter proposed an alternative reporting frequency of 3
years, but with the expectation that States would be collecting the
data quarterly and analyzing the data annually. The commenter noted
this frequency would also give the MAC and BAG (discussed in section
II.A. of this rule) time to react to the data prior to its being
reported to CMS.
Response: We agree that if too much time lapses between each
reporting period, the reports, when released, will become quickly out
of date. We also appreciate commenters' observations that interested
parties, including advisory groups, might rely on this data when making
recommendations for Medicaid rates or examining HCBS workforce issues;
this places even greater importance on timely data. We also note that,
as discussed further below, we are finalizing the requirement that only
aggregated data must be reported, which should reduce burden on States
and providers and make annual reporting manageable. We note that while
annual reporting may be more frequent than States' rate review process,
collecting this data annually will allow States to track trends in
workforce compensation that they could include in their rate reviews.
We decline to add a requirement specifying how frequently States
should review the data they collect. The purpose of this requirement
is, in part, to establish the frequency with which States must submit a
report to CMS, which we proposed as being on an annual basis. We do not
intend to require that States collect and internally review their data
quarterly; however, States may choose to do so if feasible and useful.
We expect that, at minimum, States will review and analyze the data
they receive on an annual basis as part of their submission of the
report required by Sec. 441.311(e)(2)(i).
Comment: One commenter specifically noted support for the
requirement at Sec. 441.311(e) that States report separately for each
service subject to the reporting requirement. A few commenters
requested that we finalize the requirement to allow States to report
aggregated data to minimize burden. A few commenters suggested that
aggregate reporting would be preferable to a more granular approach
(such as reporting on the percent of payments for certain HCBS spent on
compensation for direct care workers at the delivery system, HCBS
waiver program, or population level; reporting on median hourly wage
and on compensation by category).
Response: As noted in our background discussion of this provision,
we believe that reporting on aggregated data by service strikes the
best balance between monitoring the proportion of Medicaid payments
that are being spent on compensation for direct care workers and
avoiding unnecessary data collection and burden on States and
providers.
Comment: We received responses to our request for comment on
whether we should require States to report on the percent of payments
for certain HCBS that is spent on compensation for direct care workers
at the delivery system, HCBS waiver program, or population level. A
number of commenters supported more granular reporting, which they
believed would yield more valuable data and support transparency.
Several commenters supported reporting at the delivery system level,
which commenters believed would help capture differences between
managed care and FFS. A few of these commenters also suggested that for
managed care delivery systems, reporting should also be disaggregated
by plan. One commenter also suggested that within managed care
reporting, States should report separately for services delivered to
dually eligible beneficiaries.
A few commenters supported breaking down the reporting by HCBS
program.
One commenter noted that both provider payments and direct care
worker compensation can have considerable variations across all of a
State's programs and having this information would be useful for State
policymakers as they develop payment rates. This commenter believed
that States and providers must already be tracking which services are
provided under each program.
A few commenters supported reporting at the population level.
Suggestions for what would be included in the population level
reporting included race, ethnicity, and geographic location. One
commenter believed that demographic information about beneficiaries and
their geographic regions would help address barriers to access that are
unique to certain populations and areas (such as access issues in rural
regions). One commenter, however, believed that collecting data at the
population level was not feasible.
Commenters made suggestions for additional details to add to the
reporting requirement, including reporting on:
Direct care worker turnover;
Compensation to workers by setting (services delivered at
home, residential, or facility-based day settings); and
The number of direct care workers who are considered W-2
employees versus independent contractors.
Response: We thank commenters for their thoughtful feedback. We
will take these recommendations under consideration for future
policymaking, but at this time are moving forward with finalizing the
language in the requirement at Sec. 441.311(e)(2)(i) specifying that
States must report the percent of total Medicaid payments spent on
compensation to direct care workers by service. We note that a few of
the suggestions are outside of the

[[Page 40657]]

scope of this proposal, which is intended for States to report data
about the percent of payments for certain HCBS that is spent on
compensation for direct care workers, not for providers to report on
the demographics or employment status of each of their workers, nor on
granular beneficiary-level data. We direct readers who are interested
to data collection about beneficiaries, including demographic data, to
the discussion of the HCBS Quality Measure Set in section II.B.8. of
this rule.
As noted in previous responses, we believe it is important to
strike a balance between collecting enough information to enable
Federal oversight of how Medicaid payments are being allocated and
imposing as minimum an administrative burden on States and providers as
possible. We believe that the data on the percent of Medicaid payments
going to compensation for direct care workers is sufficient to help us
ensure that a significant portion of Medicaid payments for these hands-
on services goes to the direct care workforce, which in turn supports
our responsibility under section 1902(a)(30)(A) of the Act to require
assurance that payments are consistent with efficiency, economy, and
quality of care.
However, we agree that some of the granular data elements suggested
by commenters could provide States with valuable insight into their own
programs and workforce needs. We encourage States to consider what
information they have the capacity to collect and would find useful for
developing local policies to support direct care workers in their
State.
Comment: One commenter also recommended collecting data
specifically designed to measure the impact of the payment adequacy
minimum performance requirement (which we are finalizing at Sec.
441.302(k)) on the HCBS provider network. The commenter suggested we
collect data on:
The number of providers employing direct care workers that
opened or closed before and after the effective date of the minimum
performance requirement;
The number of beneficiaries (particularly those with
higher needs) for whom providers started or discontinued service
provision before and after the effective date of the minimum
performance requirement;
The number of health and safety waiver requests that were
received before and after the effective date of the minimum performance
requirement; and
The causal factors service providers cite when closing
their business before and after the rule becomes effective.
Response: As the reporting requirement proposed at Sec. 441.311(e)
was intended only to measure the percent of Medicaid rates going to
direct care worker compensation, recommendations for data collection
regarding provider behavior are outside of the scope of our proposal.
However, we note that there are already data collection
requirements for some HCBS regarding the number of beneficiaries served
through a section 1915(k) program (as required at Sec. 441.580) or
annual reporting on the projected number of beneficiaries who will be
served under section 1915(i) (as required at Sec. 441.745(a)(1)).
Additionally, we are finalizing other reporting requirements in
this final rule that may speak to some of the commenter's concerns.
Specifically, we note that we are finalizing a rate disclosure process
(discussed in section II.C., particularly under Sec. 447.203(c)),
which will include identification of the number of Medicaid-paid claims
and the number of Medicaid enrolled beneficiaries who received a
service within a calendar year for certain services, including
homemaker, home health aide, personal care, and habilitation services
defined at Sec. 440.180(b)(2) through (4) and (6). We also note that
the reporting requirement finalized in the previous section of this
rule (under Sec. 441.311(d)) will require reporting on the following
metrics related to beneficiary access to homemaker, home health aide,
personal care, and habilitation services: the average amount of time
from when services are initially approved to when services began, for
individuals newly approved to begin receiving services within the past
12 months; and the percent of authorized hours for the services that
are provided within the past 12 months. We note that these other
reporting requirements, as finalized, will go into effect prior to the
finalized effective date for the payment adequacy minimum performance
requirement. This means that there will be data collected for these
metrics both before and after the implementation of the payment
adequacy requirement at Sec. 441.302(k). Finally, we note that we do
not know what the commenter is referring to by using the term, health
and safety waiver requests.
Comment: Commenters responded to our request for comment on whether
we should require States to report on median hourly wage and on
compensation by category. A number of commenters supported adding this
level of detail to the reporting requirement. Commenters noted that
this level of reporting would help monitor workforce compensation
generally, including identifying whether there were compensation
disparities across service types. A few commenters also suggested this
data would help track the impact of the payment adequacy minimum
performance requirement (required at Sec. 441.302(k)(3)) on workforce
compensation. One commenter also suggested that this data could be
helpful to the interested parties advisory group (discussed further in
section II.C.2. of this rule, under Sec. 447.203(b)(6)). A few
commenters also recommended that we require collection of specific
details on other provider expenditures, such as for travel, training,
administrative expenses, or other non-compensation program expenses.
One commenter, however, noted that median hourly wage and
compensation by category reporting could be duplicative of other
measures and required reporting.
Response: We thank commenters for their thoughtful feedback. In the
proposed rule, in addition to requesting comment on whether we should
require reporting on median hourly wages, in a separate proposal (under
Sec. 447.203(b)(3)) we had proposed a payment rate disclosure process
for HCBS that included providing information about the hourly Medicaid
rates paid for homemaker, home health aide, and personal care services.
The proposals under Sec. 447.203(b)(3) were standalone reporting
requirements unrelated to the reporting requirement at Sec.
441.311(e). As discussed in section II.C. of this final rule, the
payment rate disclosure process at Sec. 447.203(b)(3) is being
finalized with modifications to include habilitation services in the
reporting requirement. We do not see a need to finalize an additional
reporting process that may be duplicative of both data and burden.
Additionally, upon consideration of the comments, we have
identified no compelling reason to require a Federal requirement for
disaggregating the data by compensation category. We believe that
employee benefits, in addition to wages, are also integral to direct
care workers. (We refer readers to the discussion in section II.B.5. of
this rule, which includes concerns raised by public commenters about
the lack of benefits for direct care workers.) Additionally, the third
component of compensation--employers' share of payroll taxes--is a
fixed cost. While States may want to collect this disaggregated data
from providers to observe local compensation trends or to

[[Page 40658]]

share with the interested parties advisory group, we are not adding a
requirement for this disaggregation as part of the required State
reporting at Sec. 441.311(e).
Comment: In response to our request for comment, a few commenters
recommended that we allow States to exclude from their reporting to CMS
payments to providers of agency-directed services that have low
Medicaid revenues or serve a small number of beneficiaries. We did not
receive feedback on metrics for determining which providers would be
eligible for such an exclusion, nor on possible caps or limits for an
exclusion.
One commenter noted that excluding certain providers due to size,
revenue, or geography would create further inequities in the HCBS field
and be administratively infeasible to implement. A couple of commenters
worried that excluding small providers would create perverse incentives
for providers to remain small by failing to hire additional workers or
declining to serve additional beneficiaries.
Response: We are concerned that excluding certain providers from
the reporting requirement at Sec. 441.311(e) would not support the
goals of this requirement to promote transparency about how Medicaid
payments are being allocated.
For clarity, we also note that the reporting requirement we
proposed at Sec. 441.311(e), and are finalizing at Sec.
441.311(e)(2)(i), requires each State to report to CMS annually on the
percentage of Medicaid payments for certain services that is spent on
compensation for direct care workers. We intend that each State collect
and report this data regardless of whether the State establishes, and
their providers meet, the hardship exemption we are finalizing at Sec.
441.302(k)(5) or the small provider requirements at Sec.
441.302(k)(3)(ii) and (4). We do note that, under the requirements we
are finalizing at Sec. 441.302(k)(6), the State must report additional
information regarding any small provider requirements or hardship
exemptions the State develops and implements.
However, we are finalizing the reporting requirement at Sec.
441.311(e) with modification, adding Sec. 441.311(e)(4) to exclude
data from Indian Health Service and Tribal health programs subject to
the requirements at 25 U.S.C. 1641 from the required reporting. As
discussed in section II.B.5.b. of this final rule, the requirements
being finalized at Sec. 441.302(k) conflict with statutory
requirements at 25 U.S.C. 1641, and we are finalizing, at Sec.
441.302(k)(7), an exemption to the payment adequacy requirement at
Sec. 441.302(k) for IHS and Tribal health programs subject to 25
U.S.C. 1641. Given the conflict between Sec. 441.302(k) and the
statutory requirements at 25 U.S.C. 1641, we would likely be unable to
use HCBS payment adequacy data from IHS and the Tribal health programs
subject to 25 U.S.C. 1641 to inform future policymaking related to how
IHS or Tribal health programs spend Medicaid payments they receive,
including on direct care worker compensation. Further, we do not want
data from the exempted IHS and Tribal health programs to skew the other
data States would collect and report to CMS under Sec. 441.311(e),
which CMS intends to use to evaluate direct care worker compensation
nationally and inform policymaking to address the workforce shortage.
Comment: A few commenters suggested other metrics that could be
used as the basis for an exception to the reporting requirement. One
commenter suggested that an exception could be made for providers in
areas (defined as a city, county, or grouping of zip codes) with a
documented deficit of service providers accepting new clients. One
commenter recommended that any provider who pays a full-time direct
care worker at an hourly rate that exceeds 200 percent of the Federal
poverty level be exempted from reporting. Another commenter suggested
that if a provider can demonstrate they spend more than 85 percent of
Medicaid payments on compensation should be exempted from any detailed
cost reporting.
Response: As noted above, we are finalizing the reporting
requirement without exceptions for providers. However, we appreciate
the recommendations for possible exceptions criteria and will take
these into consideration for future policymaking.
Comment: One commenter requested that we exclude self-directed
services from reporting. However, we received a number of comments
encouraging us to include self-directed services in the reporting as
proposed and agreeing that these services should be reported
separately. A few of these commenters stated that self-directed
services should be reported separately from agency-provided services,
due to the differences in these service models.
A few commenters, however, believed that the reporting for self-
directed services should be further broken down by whether the service
is provided by an independent worker or by a worker who is employed by
an agency. One commenter noted that our rationale for separating out
self-directed services was that compensation for workers in self-
directed models tends to be higher and to comprise a greater percentage
of Medicaid payment for services, which the commenter believed to be
true of services delivered by independent providers, but not
necessarily of self-directed services delivered through agency models.
One commenter noted that some States might have challenges in
distinguishing payments for self-directed services delivered via agency
models, as these payments may appear in claims processing as
traditional HCBS agency payments, rather than as self-directed
services.
Response: We agree with commenters that, in terms of the percent of
the payment going to compensation for direct care workers, there will
be significant differences between the percent for services delivered
by independent workers hired by the beneficiary for whom the
beneficiary sets the payment rate under a self-directed services
delivery model versus those delivered by a worker employed by a
provider. In particular, we are concerned that this reporting
requirement might not yield meaningful data if applied to the self-
directed services delivery models in which the individual beneficiary
determines the wage paid directly to the direct care worker out of the
beneficiary's service budget (such as models meeting the definition at
Sec. 441.545(b) for section 1915(k) services, self-directed services
typically authorized under section 1915(j)). We believe the reporting
requirement on the percentage of payments going to compensation for
direct care workers is only appropriate when applied to a Medicaid rate
that includes both compensation to direct care workers and
administrative activities. In the former scenario, we expect that all
or nearly all of that payment rate routinely is spent on the direct
care worker's compensation; in the latter scenario, we expect the
payment rate to a provider includes both the direct care worker's
compensation and administrative costs for the provider.
Based on the comments received, and to ensure we are collecting
only meaningful data that demonstrates the percent of Medicaid payments
that are going to direct care worker compensation, we are finalizing a
new requirement at Sec. 441.311(e)(2)(ii) that specifies, if the State
provides that homemaker, home health aide, personal care services, or
habilitation services, as set forth at Sec. 440.180(b)(2) through (4)

[[Page 40659]]

and (6), may be furnished under a self-directed services delivery model
in which the beneficiary directing the services sets the direct care
worker's payment rate, then the State must exclude such payment data
from the reporting required in paragraph (e) of this section. We note
that self-directed homemaker, home health aide, personal care, or
habilitation services delivered through self-directed services models
not described in Sec. 441.311(e)(2)(ii) would still be part of the
reporting requirements finalized at Sec. 441.311(e)(2)(i).
After consideration of the comments received, we are finalizing
Sec. 441.311(e) with modifications. As discussed in section II.B.5. of
this final rule, we are replicating at Sec. 441.311(e)(1)(i), (1)(ii),
and (1)(iii) the finalized definitions at Sec. 441.302(k)(1)(i),
(k)(1)(ii), and (k)(1)(iii), respectively.
At Sec. 441.311, we are redesignating paragraph (e) as paragraph
(e)(2)(i). At finalized Sec. 441.311(e)(2)(i), we are making a
technical modification to remove the reference to the definition of
direct care workers at Sec. 441.302(k)(1). As we are also adding the
definition of direct care workers at Sec. 441.311(e)(1)(ii), the
reference to Sec. 441.302(k)(1) is unnecessary. We are finalizing
Sec. 441.311(e)(2)(i) with substantive modifications to specify that
the State must report to CMS annually on the percentage of total
payments (not including excluded costs), to include habilitation
services (as set forth in Sec. 440.180(b)(6)) in the reporting, and to
specify that States must report separately for services delivered in a
provider-operated physical location for which facility-related costs
are included in the payment rate. (Revised text in bold font). We are
also finalizing Sec. 441.311(e)(2)(i) with technical modifications to:
include references to Sec. 441.311(e)(2)(ii) and (4); clarify that the
provision applies to services as set forth in Sec. 440.180(b)(2)
through (4) and (6) (as opposed to services at Sec. 440.180(b)(2)
through (4) that are authorized under section 1915(c) of the Act); and
clarify that reporting is at the time and in the form and manner
specified by CMS.
We are finalizing a new requirement at Sec. 441.311(e)(2)(ii) that
specifies if the State provides that homemaker, home health aide,
personal care services, or habilitation services, as set forth at Sec.
440.180(b)(2) through (4) and (6), may be furnished under a self-
directed services delivery model in which the beneficiary directing the
services sets the direct care worker's payment rate, then the State
must exclude such payment data from the reporting required in paragraph
(e) of this section.
We are finalizing a new Sec. 441.311(e)(3), requiring that the
State must report, one year prior to the applicability date for
paragraph (e)(2)(i) of this section, on its readiness to comply with
the reporting requirement in paragraph (e)(2)(i) of this section.
We are finalizing a new Sec. 441.311(e)(4) to require States to
exclude data from the Indian Health Service and Tribal health programs
subject to the requirements at 25 U.S.C. 1641 from the required
reporting at Sec. 441.311(e), as well as to require that States not
require submission of data by, or include any data from, the Indian
Health Service or Tribal health programs subject to the requirements at
25 U.S.C. 1641 for the State's reporting required under Sec.
441.311(e)(2).
e. Applicability Date (Sec. 441.311(f))
We proposed at Sec. 441.311(f)(1) to provide States with 3 years
to implement the compliance reporting requirements at Sec. 441.311(b),
the HCBS Quality Measure Set reporting requirements at Sec.
441.311(c), and the access reporting requirements at Sec. 441.311(d)
in FFS delivery systems following the effective date of the final rule.
For States that implement a managed care delivery system under the
authority of sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act
and include HCBS in the MCO's, PIHP's, or PAHP's contract, we proposed
to provide States until the first rating period for contracts with the
MCO, PIHP, or PAHP, beginning on or after 3 years after the effective
date of the final rule to implement these requirements. This time
period was based on feedback from States and other interested parties
that it could take 2 to 3 years to amend State regulations and work
with their State legislatures, if needed, as well as to revise
policies, operational processes, information systems, and contracts to
support implementation of these proposed reporting requirements. We
also considered all of the HCBS proposals outlined in the proposed rule
as whole. We invited comments on whether this timeframe was sufficient,
whether we should require a shorter timeframe (2 years) or longer
timeframe (4 years) to implement these provisions, and if an alternate
timeframe was recommended, the rationale for that alternate timeframe.
In addition, we proposed at Sec. 441.311(f)(2) to provide States
with 4 years to implement the payment adequacy reporting requirements
at Sec. 441.311(e) in FFS delivery systems following the effective
date of the final rule. For States that implement a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and include HCBS in the MCO's, PIHP's,
or PAHP's contract, we proposed to provide States until the first
rating period for contracts with the MCO, PIHP, or PAHP beginning on or
after 4 years after the effective date of the final rule to implement
these requirements. This time period was intended to align with the
effective date for the HCBS payment adequacy requirements at Sec.
441.302(k), which are discussed in section II.B.5. of this preamble. It
was also based on feedback from States and other interested parties
that it could take 3 to 4 years to amend State regulations and work
with their State legislatures, if needed, as well as to revise
policies, operational processes, information systems, and contracts to
support implementation of these reporting requirements. We also
considered all of the HCBS proposals outlined in the proposed rule as a
whole. We solicited comments on whether this timeframe was sufficient,
whether we should require a shorter timeframe (3 years) or longer
timeframe (5 years) to implement these provisions, and if an alternate
timeframe is recommended, the rationale for that alternate timeframe.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported the effective dates in Sec.
441.311(f). One commenter noted that the effective dates appear to be
appropriate and necessary to ensure that data is reported accurately
and uniformly. One commenter suggested that States should begin to
report on person-centered planning within 2 years. One commenter noted
particular support for the longer four-year timeframe for the payment
adequacy reporting requirements at Sec. 441.311(e), which the
commenter noted recognized the additional complexity of this provision.
A few commenters stated that they support the 4-year effective date for
Sec. 441.311(e) but would advocate for a 6-year effective date if the
payment adequacy minimum performance level in Sec. 441.302(k) is also
being finalized.
A number of commenters noted that while they are supportive of each
of these proposals individually, they were nevertheless concerned that
the number of new requirements will be difficult to implement cost-
effectively and accurately in the proposed timeframes. Several
commenters noted that proposed data elements required in Sec. 441.311
are beyond what the States

[[Page 40660]]

currently collect and--even if the States are able to expand on
existing systems--will require policy and process changes and system
updates and will place strain on existing staff resources; some
commenters stated these changes may require seeking appropriations from
State legislatures for additional staff or system upgrades, as well as
acquiring vendor support, which could take additional time. A few
commenters noted their States would face challenges in coordinating
data collection across multiple systems, which may be administered by
different agencies or contracted entities. A few commenters noted the
feasibility of compliance with Sec. 441.311 will depend on how quickly
CMS can provide subregulatory guidance on the reporting requirements;
these commenters requested that we set an effective date of 3 or 4
years after the release of subregulatory guidance.
While commenters requested that we extend the timeframes in Sec.
441.311(f), we received few suggestions for how much additional time
would be needed. A few commenters suggested alternative timeframes of 4
to 6 years for the provisions in Sec. 441.311. One commenter suggested
that timeframes should be specifically waived for self-directed
services and that States should be required to submit transition plans
for implementing the requirements for self-directed services.
Response: We are finalizing the substance of Sec. 441.311(f) as
proposed, but with minor modifications to correct erroneous uses of the
word ``effective.'' We are retitling the requirement at Sec.
441.311(f) as Applicability dates (rather than Effective dates). We are
also modifying the language at Sec. 441.311(f) to specify the dates
when States must comply with the requirements in Sec. 441.311(f),
rather than stating the dates when the requirements in Sec. 441.311(f)
are effective, beginning a specified number of years after the
effective date of the final rule.
As noted above in section II.B.7.b. of the rule, we have determined
it is necessary to provide States with an additional year for
compliance with the quality measure set reporting requirement at Sec.
441.311(c). Our primary purpose in extending the date for States to
comply is to ensure States have sufficient time for interested parties
to provide input into the measures, as required by Sec. 441.312(g),
which we are finalizing in section II.B.8. of this rule.
Regarding the dates for States to comply with the other
requirements in Sec. 441.311, as discussed throughout this section, we
continue to believe that many of these requirements build on activities
that States have already been doing as part of the administration of
their HCBS programs and will work with States to identify ways to
leverage existing data collection tools and update their current
systems as efficiently as possible.
We also acknowledge that complying with these reporting
requirements will necessitate expenditures of resources and time on the
part of States, managed care plans, and (in some cases) providers. We
believe that the value of the data collected through their efforts
makes this expenditure of resources worthwhile. This data captures
information related to beneficiaries' health and safety (addressed by
the incident management system and critical incident reporting in Sec.
441.311(b)(1) and (2)) and beneficiaries' long-standing concerns about
access to HCBS waivers and services (addressed by the person-centered
planning and access reporting requirements in Sec. 441.311(b)(3) and
(d)). These data are urgently needed, and we do not want to postpone
implementation of this reporting further than proposed.
Additionally, the data collected as part of the payment adequacy
reporting requirement in Sec. 441.311(e) not only addresses the
current workforce shortages that are impacting service delivery, but
the data are also going to be relied on by the interested parties
advisory group (discussed further in section II.C.2. of this rule,
under Sec. 447.203(b)(6)) to develop recommendations to the State on
Medicaid rates for certain HCBS. We do not believe the interests of
beneficiaries, providers, workers, or States are served by delaying the
collection and publication of this information. As a result, we are
declining to make changes in this final rule based on these comments.
We plan to provide technical assistance to States experiencing
challenges implementing specific reporting requirements.
Comment: A few commenters, while not opposing the proposed dates
that the reporting requirements become effective, noted that it is
important to align these reporting requirements with other reporting
requirements in States and for managed care plans to minimize State and
managed care plan reporting burdens. Commenters also believed that
streamlining reporting requirements across programs could help to
ensure that States and CMS do not analyze similar data that report on
the same populations and same or similar programs across different
timeframes, which would complicate findings.
Response: We will be releasing subregulatory guidance, including
technical specifications for the new reporting requirements in this
final rule, and making the required reporting templates available for
public comment through the Paperwork Reduction Act notice and comment
process. Specific reporting due dates will be determined through
subregulatory guidance; we plan to work with States to align these due
dates with other obligations to minimize administrative burden to the
greatest extent possible.
After consideration of public comments, we are finalizing Sec.
441.311(f) with minor modifications to correct erroneous uses of the
word ``effective.'' We are removing from Sec. 441.311(f)(1) the date
for States to comply with the quality measure set reporting
requirements date and adding it to Sec. 441.311(f)(2) so that States
will have 4 years from the effective date of this final rule to comply
with those requirements.
We are also finalizing in Sec. 441.311(f)(1) and (2) a
modification to the language pertaining to managed care delivery
systems to improve accuracy and alignment with common phrasing in
managed care contracting policy. We are specifying at Sec.
441.311(f)(1) that States must comply with the reporting requirements
at paragraphs (b) and (d) of this section beginning 3 years after the
effective date of this final rule; and in the case of a State that
implements a managed care delivery system under the authority of
sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes
HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period
for contracts with the MCO, PIHP, or PAHP beginning on or after the
date that is 3 years after the effective date of this final rule.
We are specifying at Sec. 441.311(f)(2) that States must comply
with the reporting requirements at paragraphs (c) and (e) of this
section beginning 4 years after the effective date of this final rule;
and in the case of a State that implements a managed care delivery
system under the authority of sections 1915(a), 1915(b), 1932(a), or
1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's
contract, the first rating period for contracts with the MCO, PIHP or
PAHP beginning on or after the date that is 4 years after the effective
date of this final rule.
f. Application to Other Authorities (Sec. Sec. 441.311(f), 441.474(c),
441.580(i), and 441.745(a)(1)(iii))
At Sec. 441.311(f), we proposed to apply all of the reporting
requirements described in Sec. 441.311 to services delivered under FFS
and managed care

[[Page 40661]]

delivery systems. As discussed earlier in section II.B.1. of this
preamble, section 2402(a)(3)(A) of the Affordable Care Act requires
States to improve coordination among, and the regulation of, all
providers of Federally and State-funded HCBS programs to achieve a more
consistent administration of policies and procedures across HCBS
programs, and as noted in the Medicaid context this would include
consistent administration between FFS and managed care programs. We
accordingly proposed to specify that a State must ensure compliance
with the requirements in Sec. 441.302(a)(6) with respect to HCBS
delivered both under FFS and managed care delivery systems.
As discussed earlier in section II.B.1. of this preamble, the
proposed requirements at Sec. 441.311, in combination with other
proposed requirements identified throughout the proposed rule, are
intended to supersede and fully replace the reporting expectations and
the minimum 86 percent performance level for State's performance
measures described in the 2014 guidance, also discussed earlier in
section II.B.1. of this preamble. We expect that States may implement
some of the requirements proposed in the proposed rule in advance of
any effective date. We will work with States to phase out the 2014
guidance as they implement the requirements in this final rule to
reduce unnecessary burden and to avoid duplicative or conflicting
reporting requirements.
In accordance with the requirement of section 2402(a)(3)(A) of the
Affordable Care Act for States to achieve a more consistent
administration of policies and procedures across HCBS programs, and
because these reporting requirements are relevant to other HCBS
authorities, we proposed to include these requirements within the
applicable regulatory sections for other HCBS authorities.
Specifically, we proposed to apply the requirements at Sec. 441.311 to
section 1915(j), (k), and (i) State plan services at Sec. Sec.
441.474(c), 441.580(i), and 441.745(a)(1)(vii), respectively.
Consistent with our proposal for section 1915(c) waivers, we proposed
these requirements based on our authority under section 1902(a)(6) of
the Act, which requires State Medicaid agencies to make such reports,
in such form and containing such information, as the Secretary may from
time to time require, and to comply with such provisions as the
Secretary may from time to time find necessary to assure the
correctness and verification of such reports. We believed the same
arguments for these requirements for section 1915(c) waivers are
equally applicable for these other HCBS authorities. We requested
comment on the application of these provisions across section 1915(i),
(j), and (k) authorities. To accommodate the addition of new language
at Sec. 441.580(i), we proposed to renumber existing Sec. 441.580(i)
as Sec. 441.580(j).
We considered whether to also apply these reporting requirements to
section 1905(a) ``medical assistance'' State plan personal care, home
health, and case management services. However, we proposed that these
requirements not apply to any section 1905(a) State plan services based
on State feedback that they do not have the same data collection and
reporting capabilities in place for section 1905(a) services as they do
for sections 1915(c), (i), (j), and (k) services and because the
person-centered planning, service plan, and waiting list requirements
that comprise a significant portion of these reporting requirements
have little to no relevance for section 1905(a) services, in comparison
to section 1915(c), (i), (j), and (k) services. Further, the vast
majority of HCBS is delivered under section 1915(c), (i), (j), and (k)
authorities, while only a small percentage of HCBS nationally is
delivered under section 1905(a) State plan authority. We requested
comment on whether we should establish similar reporting requirements
for section 1905(a) ``medical assistance'' State plan personal care,
home health, and case management services.
We noted that we expected that we would establish new processes and
forms for States to meet the reporting requirements, provide additional
technical information on how States can meet the reporting requirements
including related to sampling requirements (where States are permitted
to report on a sample of beneficiaries rather than on all individuals
who meet the inclusion criteria for the reporting requirement), and
amend existing templates and establish new templates under the
Paperwork Reduction Act.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported applying the proposed reporting
requirements at Sec. 441.311 to services delivered under managed care,
noting that it is important to gather data on services across delivery
systems. A few commenters requested clarification on whether, or how,
the reporting requirements applied to services delivered under managed
care.
Response: The reporting requirements in this section apply to
services in both FFS and managed care delivery systems. We note that
comments about the application of specific provisions to managed care
are addressed in the sections above. As needed, we plan to provide
technical assistance to States that have additional questions.
Comment: A few commenters expressed support for applying reporting
requirements at Sec. 441.311 to services delivered through other
section 1915 authorities. A few commenters, while not necessarily
recommending that we exclude self-directed services authorized under
section 1915(j), noted that because of differences in self-directed
services, we should consider extending timeframes for implementation in
self-directed services or release additional guidance specific to self-
directed services.
Response: We are finalizing our proposal to extend the reporting
requirements in this section to services offered under sections
1915(i), (j), and (k). We note that comments about the application of
specific provisions to self-directed care are addressed in the sections
above. While we do not believe it is necessary to extend timeframes for
the implementation of the reporting requirements in section 1915(j)
self-directed services, we plan to provide technical assistance to
States that have additional questions.
Comment: One commenter requested clarification that the waiver
reporting requirement at Sec. 441.311(d)(1) is limited to the section
1915(c) authority and to the section 1915(j) authority, where it is
used as the State's authority for self-direction in a section 1915(c)
waiver. This commenter recommended limiting this requirement to these
authorities.
Response: We agree that, because section 1915(i) and section
1915(k) State plan services cannot have capped enrollment, the
reporting requirements at Sec. 441.311(d)(1) would not apply to these
authorities. We also agree that the reporting requirements at Sec.
441.311(d)(1) would also apply to section 1915(j) authority only where
section 1915(j) is used as the State's authority for self-direction in
a section 1915(c) waiver. We note that the reporting requirements at
Sec. 441.311(d)(1) would apply to section 1115(a) demonstration
projects that include HCBS if the State caps enrollment for the HCBS
under the section 1115(a) demonstration project.
We also note that, similar to the concern raised by commenters
about the applicability of Sec. 441.311(d)(1), as discussed in section
II.B.7.a.4. of this

[[Page 40662]]

rule, Sec. 441.311(b)(4) also applies only to section 1915(c)
programs.
Comment: A few commenters requested that we extend the reporting
requirements at Sec. 441.311 to section 1905(a) services. Commenters
noted that, in some States, many people receive services through
section 1905(a). A few commenters also raised concerns that there would
be a disparate impact on certain populations or less oversight of
certain services if reporting requirements were not extended to
services under section 1905(a), such as personal care, home health, or
rehabilitative services. A few commenters recommended not extending the
reporting requirements to section 1905(a) services at this time, citing
concerns about additional burden.
Response: At this time, we are not mandating inclusion of section
1905(a) services in the reporting requirements at Sec. 441.311. Given
that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider these comments provided on the proposed rule
to help inform any future rulemaking in this area, as appropriate. We
are not persuaded by the argument that including section 1905(a)
services would simply be too much work, as we do agree that
transparency, accountability, and oversight are critical for all HCBS.
However, we are continuing to review statutory and regulatory
differences between services authorized under sections 1905(a) and 1915
of the Act that could impact how these requirements would apply to
section 1905(a) services. We also note that we have not extended the
minimum performance requirements for incident management, person-
centered planning, or payment adequacy to section 1905(a) services
(refer to discussions in sections II.B.1., II.B.3, and II.B.5. of this
final rule, respectively, for more detail on those discussions).
Furthermore, as section 1905(a) service do not have waiting lists, the
requirement at Sec. 441.311(d)(1) would not be applicable to these
services.
After consideration of the comments received, we are finalizing
application of Sec. 441.311 to section 1915(j), (k), and (i)
authorities. We are making modifications at Sec. Sec. 441.474(c),
441.580(i) and 441.745(a)(1)(vii) with modifications to clarify that
the references to section 1915(c) of the Act are instead references to
section 1915(j), (k) and (i) of the Act, respectively.
g. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
requirements at Sec. 441.311 as follows:
We are finalizing Sec. 441.311(a) with a modification for
clarity to remove ``simplification'' and make a minor formatting change
to ensure Sec. 441.311(a) aligns directly with the statutory
requirement at section 1902(a)(19) of the Act .
We are finalizing the incident management system
compliance requirement at Sec. 441.311(b) with a technical
modification for clarity in Sec. 441.311(b)(1)(i) that the State must
report on the results of an incident management system assessment,
every 24 months, in the form and manner, and at a time, specified by
CMS, rather than according to the format and specifications provided by
CMS.
We are finalizing the critical incident compliance
requirement at Sec. 441.311(b)(2) with a technical modification for
clarity that the State must report to CMS annually in the form and
manner, and at a time, specified by CMS, rather than according to the
format and specifications provided by CMS. For consistency, we are also
simplifying the title and removing the reference to Sec.
441.302(a)(6)(i)(A) from the title of Sec. 441.311(b)(2).
We are finalizing the person-centered planning reporting
requirement at Sec. 441.311(b)(3) with a technical modification to
specify at Sec. 441.311(b)(3), to demonstrate that the State meets the
requirements at Sec. 441.301(c)(3)(ii) regarding person-centered
planning (as described in Sec. 441.301(c)(1) through (3)), the State
must report to CMS annually on the following, in the form and manner,
and at a time, specified by CMS, rather than according to the format
and specifications provided by CMS. We are also finalizing the
reporting requirement at Sec. 441.311(b)(3)(i) and (ii), with the
technical modification noted previously, to specify that the State may
report this metric using statistically valid random sampling of
beneficiaries.
We are finalizing the reporting requirement at Sec.
441.311(b)(4) with a modification to restore language that was
erroneously omitted, and with additional technical modifications so
that Sec. 441.311(b)(4) specifies that annually, the State will
provide CMS with information on the waiver's impact on the type,
amount, and cost of services provided under the State plan, in the form
and manner, and at a time, specified by CMS.
We are finalizing the HCBS Quality Measure Set reporting
requirements at Sec. 441.311(c) with modifications. At Sec.
441.311(c), we are finalizing a date of 4 years, rather than 3 years,
for States to comply with the HCBS Quality Measure Set reporting
requirements at Sec. 441.311(c).
We are finalizing the access reporting requirement at
Sec. 441.311(d) with a technical modification to specify that
reporting will be in the form and manner, and at a time, specified by
CMS. We are finalizing Sec. 441.311(d)(1) as proposed. We are
finalizing Sec. 441.311(d)(2)(i) with a modification to specify that
the reporting is for individuals newly receiving services within the
past 12 months, rather than for individuals newly approved to begin
receiving services. We are finalizing the requirements at Sec.
441.311(d)(2), with modifications so that both reporting requirements
at Sec. 441.311(d)(2)(i) and (ii) require reporting on homemaker
services, home health aide services, personal care, or habilitation
services, as set forth in Sec. 440.180(b)(2) through (4) and (6), and
allow States to report using statistically valid random sampling of
beneficiaries. We are modifying the title of this provision at Sec.
441.311(d)(2) to specify Access to homemaker, home health aide,
personal care, and habilitation services. We are also finalizing a
technical modification in both Sec. 441.311(d)(2)(i) and (ii) to
indicate that the services are, as set forth in Sec. 440.180(b)(2)
through (4) and (6), rather than, as listed in, as noted in the
proposed rule.
We are replicating at Sec. 441.311(e)(1)(i) through (iii)
the finalized definitions at Sec. 441.302(k)(1)(i), through (iii),
respectively.
We are redesignating Sec. 441.311(e) as Sec.
441.311(e)(2)(i) and finalizing Sec. 441.311(e)(2)(i) with
modifications to specify that, except as provided at (e)(2)(ii) and
(4), the State must report to CMS annually on the total percentage of
payments (not including excluded costs) for furnishing homemaker
services, home health aide services, personal care, and habilitation
services, as set forth in Sec. 440.180(b)(2) through (4) and (6), that
is spent on compensation for direct care workers, at the time and in
the form and manner specified by CMS. The State must report separately
for each service and, within each service, must separately report
services that are self-directed and services delivered in a provider-
operated physical location for which facility-related costs are
included in the payment rate.

[[Page 40663]]

We are finalizing a new requirement at Sec.
441.311(e)(2)(ii) that specifies if the State provides that homemaker,
home health aide, personal care services, or habilitation services, as
set forth at Sec. 440.180(b)(2) through (4) and (6), may be furnished
under a self-directed services delivery model in which the beneficiary
directing the services sets the direct care worker's payment rate, then
the State must exclude such payment data from the reporting required in
paragraph (e) of this section.
We are finalizing a new Sec. 441.311(e)(3), requiring
that the State must report, 1 year prior to the applicability date for
paragraph (e)(2)(i) of this section, on its readiness to comply with
the reporting requirement in paragraph (e)(2)(i) of this section.
We are finalizing a new Sec. 441.311(e)(4) to require
States to exclude the Indian Health Service and Tribal health programs
subject to the requirements at 25 U.S.C. 1641 from the reporting
required in paragraph (e) of this section, and not require submission
of data by, or include any data from, the Indian Health Service or
Tribal health programs subject to the requirements at 25 U.S.C. 1641
for the State's reporting required under paragraph (e)(2).
We are finalizing Sec. 441.311(f) with modification to
move the date that States are required to comply with the quality
measure reporting at Sec. 441.311(c) from Sec. 441.311(f)(1) to Sec.
441.311(f)(2), and to clarify the language regarding applicability
dates in the case of a State that implements a managed care delivery
system under the authority of sections 1915(a), 1915(b), 1932(a), or
1115(a) of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's
contract.
We are finalizing Sec. Sec. 441.474(c), 441.580(i), and
441.745(a)(1)(vii) with modifications to clarify that the references to
section 1915(c) of the Act are instead references to section 1915(j),
(k), and (i) of the Act, respectively.
8. Home and Community-Based Services (HCBS) Quality Measure Set
(Sec. Sec. 441.312, 441.474(c), 441.585(d), and 441.745(b)(1)(v)).
On July 21, 2022, we issued State Medicaid Director Letter #22-003
\132\ to release the first official version of the HCBS Quality Measure
Set. The HCBS Quality Measure Set is a set of nationally standardized
quality measures for Medicaid-covered HCBS. It is intended to promote
more common and consistent use within and across States of nationally
standardized quality measures in HCBS programs, create opportunities
for CMS and States to have comparative quality data on HCBS programs,
drive improvement in quality of care and outcomes for people receiving
HCBS, and support States' efforts to promote equity in their HCBS
programs. It is also intended to reduce some of the burden that States
and other interested parties may experience in identifying and using
HCBS quality measures. By providing States and other interested parties
with a set of nationally standardized measures to assess HCBS quality
and outcomes and by facilitating access to information on those
measures, we believe that we can reduce the time and resources that
States and other interested parties expend on identifying, assessing,
and implementing measures for use in HCBS programs.
---------------------------------------------------------------------------

\132\ CMS State Medicaid Director Letter. SMD# 22-003 Home and
Community-Based Services Quality Measure Set. July 2022. Accessed at
https://www.medicaid.gov/federal-policy-guidance/downloads/smd22003.pdf.
---------------------------------------------------------------------------

a. Basis and Scope (Sec. 441.312(a))
Section 1102(a) of the Act provides the Secretary of HHS with
authority to make and publish rules and regulations that are necessary
for the efficient administration of the Medicaid program. Section
1902(a)(6) of the Act requires State Medicaid agencies to make such
reports, in such form and containing such information, as the Secretary
may from time to time require, and to comply with such provisions as
the Secretary may from time to time find necessary to assure the
correctness and verification of such reports. Under our authority at
sections 1102(a) and 1902(a)(6) of the Act, we proposed a new section,
at Sec. 441.312, Home and Community-Based Services Quality Measure
Set, to require use of the HCBS Quality Measure Set in section 1915(c)
waiver programs and promote public transparency related to the
administration of Medicaid-covered HCBS. We proposed to describe the
basis and scope for this requirement at Sec. 441.312(a).
In proposing this requirement, we believed that quality is a
critical component of efficiency, and as such, having a standardized
set of measures used to assess the quality of Medicaid HCBS programs
supports the efficient operation of the Medicaid program. Further, we
believed that it is necessary for the efficient administration of
Medicaid-covered HCBS authorized under section 1915(c) of the Act,
consistent with section 1902(a)(4) of the Act, as it would establish a
process through which we regularly update and maintain the required set
of measures at Sec. 441.311(c) in consultation with States and other
interested parties (as described later in this section of the rule).
The process, as proposed, would ensure that the priorities of
interested parties are reflected in the selection of the measures
included in the HCBS Quality Measure Set. The process, as proposed,
also would ensure that the required set of HCBS quality measures is
updated to address gaps in the HCBS Quality Measure Set as new measures
are developed and to remove measures that are less relevant or add less
value than other available measures, and the HCBS quality measures
meets scientific and other standards for quality measures. Due to the
constantly evolving field of HCBS quality measurement, we proposed
these requirements based on our belief that the failure to establish
such a process would result in ongoing reporting by States of measures
that do not reflect the priorities of interested parties, measures that
offer limited value compared to other measures, and measures that do
not meet strong scientific and other standards. It would also result in
a lack of reporting on key measurement priority areas, which could be
addressed by updating the HCBS Quality Measure Set as new measures are
developed. The failure to establish such a process would lead to
inefficiency in States' HCBS quality measurement activities through the
continued reporting on an outdated set of measures. In other words, we
believed that such a process is necessary for the efficient
administration of Medicaid-covered HCBS by ensuring that quality
measure reporting requirements are focused on the most valuable,
useful, and scientifically supported areas of quality measurement, and
that quality measures with limited value are removed timely from
quality measure reporting requirements.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Many commenters supported the proposed basis and scope at
Sec. 441.312(a). Several commenters supported the requirements at
Sec. 441.312 (a) in its entirety.
Response: We thank the commenters for their support for our
proposal.
Comment: A few commenters raised concerns that the HCBS Quality
Measure Set is overly prescriptive from a Federal perspective and sets
a one-size-fits-all approach, expressing that the responsibility for
safeguarding quality in HCBS belong to each State.
Response: We disagree with commenters that the proposed requirement
for States to use the HCBS Quality Measure Set is overly

[[Page 40664]]

prescriptive. CMS and States have worked for decades to support the
increased availability and provision of high-quality HCBS for Medicaid
beneficiaries. While there are quality and reporting requirements for
Medicaid HCBS, the requirements vary across authorities and are often
inadequate to provide the necessary information for ensuring that HCBS
are provided in a high-quality manner that best protects the health and
welfare of beneficiaries. Consequently, quality measurement and
reporting expectations are not consistent across services, and instead
vary depending on the authorities under which States are delivering
services. While we support State flexibility, the lack of standardized
measures has resulted in thousands of metrics and measures currently in
use across States, with different metrics and measures often used for
different HCBS programs within the same State. As a result, CMS and
States are limited in the ability to compare HCBS quality and outcomes
within and across States or to compare the performance of HCBS programs
for different Medicaid beneficiary populations. We underscore our
belief that use of the HCBS Quality Measure Set will promote more
common and consistent use within and across States of nationally
standardized quality measures in HCBS programs, create opportunities
for CMS and States to have comparative quality data on HCBS programs,
drive improvement in quality of care and outcomes for people receiving
HCBS, and support States' efforts to promote equity in their HCBS
programs. As discussed further in this section II.B.8. of this rule, we
are finalizing the requirements at Sec. 441.312(a) as proposed and
plan to provide technical assistance to States as needed to address the
concerns raised by commenters.
Comment: Several commenters requested that CMS align the HCBS
quality measures universally across Medicaid programs, recommending
streamlining measures across the HCBS Quality Measure Set, the Medicaid
and CHIP (MAC) Quality Rating System (QRS), and the Adult Core Set.
Further, commenters recommended we consider a minimum set of mandatory
quality measures and limit them to a small set, similar to the MAC QRS,
and allow States the flexibility to utilize voluntary measures in
addition to the minimum mandatory measures, as appropriate. Commenters
further noted that States already have implemented measures that may
not be included in the quality measures identified in the HCBS Quality
Measure Set, and this approach for a small set of mandatory measures
could minimize disruption to the quality-related work that is currently
being undertaken by States in their Medicaid programs.
One commenter observed that creating a unified reporting structure
on mandatory measures would bring a level of discipline and consistency
that would foster more reliable data across the Medicaid program,
noting that it is imperative to create alignment for data collection
across States.
Response: We thank the commenters for this feedback. We will take
these comments into consideration when developing and updating the HCBS
Quality Measure Set and developing subregulatory guidance on the
required use of the HCBS Quality Measure Set. We agree with the
commenters on the importance of parsimony, alignment, and harmonization
in quality measurement across the Medicaid program, to the extent
possible. While we aim to align measures across programs as much as
possible, the HCBS Quality Measure Set is designed to promote more
common and consistent use of nationally standardized quality measures
in HCBS programs and to support States with improving quality and
outcomes specifically for beneficiaries receiving HCBS. As a result, we
expect the HCBS Quality Measure Set to be in alignment with the MAC QRS
and the Child and Adult Core Sets.
We also acknowledge that States are already using quality measures
to assess quality in their HCBS programs, and it is not our intent for
States to abandon this quality-related work. The measure set is
intended to reduce some of the burden that States and other interested
parties may experience in identifying and using HCBS quality measures.
However, States may continue to utilize existing measures not found in
the HCBS Quality Measure Set if the States believe they generate
valuable information, as long as the measures in the HCBS Quality
Measures Set are implemented in accordance with Sec. 441.312, which we
are finalizing as discussed further in this section II.B.8. of this
rule.
After consideration of the comments received, we are finalizing
Sec. 441.312(a) with a minor formatting change to correct punctuation.
b. Definitions (Sec. 441.312(b))
We proposed a definition at Sec. 441.312(b)(1) for ``Attribution
rules,'' to mean the process States use to assign beneficiaries to a
specific health care program or delivery system for the purpose of
calculating the measures in the HCBS Quality Measure Set as described
at Sec. 441.312(d)(6). We also proposed a definition at Sec.
441.312(b)(2) for ``Home and Community-Based Services Quality Measure
Set'' to mean the Home and Community-Based Services Quality Measures
for Medicaid established and updated at least every other year by the
Secretary through a process that allows for public input and comments,
including through the Federal Register.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Commenters generally supported the proposed definitions at
Sec. 441.312(b).
Response: We thank these commenters for their support.
After consideration of the comments received, we are finalizing at
Sec. 441.312(b)(1) the definition of attribution rules as proposed. As
discussed in more detail in our discussion of Sec. 441.312(c) in the
next section below (section B.8.c. of this rule), we are making several
changes related to the frequency of updates to the HCBS Quality Measure
Set. To accommodate those changes, we are striking the words, at least
every other year, from the definition of the Home and Community-Based
Services Quality Measure Set we proposed at Sec. 441.312(b)(2).
As finalized at Sec. 441.312(b)(2) the definition of Home and
Community-Based Services Quality Measure Set means the Home and
Community-Based Services Quality Measures for Medicaid established and
updated by the Secretary through a process that allows for public input
and comment, including through the Federal Register, as described in
paragraph (d) of this section. We note that the measure updates are
specified in Sec. 441.312(c) as finalized, and thus the frequency of
updates do not need to be set forth in the definition of the HCBS
Quality Measure Set. Additionally, we are finalizing Sec. 441.312(b)
with a minor technical modification to correct an inadvertent omission
in the regulatory text in the proposed rule and are finalizing the
addition of the numbers (1) and (2) in front of each definition.
c. Responsibilities of the Secretary (Sec. 441.312(c))
At Sec. 441.312(c), we described the proposed general process for
the HCBS Quality Measure Set that the Secretary will follow to update
and maintain the HCBS Quality Measure Set. Specifically, at Sec.
441.312(c)(1), we proposed that the Secretary will identify, and update
at

[[Page 40665]]

least every other year, through a process that allows for public input
and comment, the quality measures to be included in the HCBS Quality
Measure Set. At Sec. 441.312(c)(2), we proposed that the Secretary
will solicit comment at least every other year with States and other
interested parties, which we identified later in this section of the
preamble of the proposed rule, to:
Establish priorities for the development and advancement
of the HCBS Quality Measure Set.
Identify newly developed or other measures that should be
added, including to address gaps in the measures included in the HCBS
Quality Measure Set.
Identify measures that should be removed as they no longer
strengthen the HCBS Quality Measure Set.
Ensure that all measures included in the HCBS Quality
Measure Set are evidence-based, are meaningful for States, and are
feasible for State-level and program-level reporting as appropriate.
The proposed frequency for updating the quality measures included
in the HCBS Quality Measure Set was aligned with the proposed frequency
at Sec. 441.311(c)(1) for States' reporting of the measures in the
HCBS Quality Measure Set. We based other aspects of the proposed
process that the Secretary will follow to update and maintain the HCBS
Quality Measure Set in part on the processes for the Secretary to
update and maintain the Child, Adult, and Health Home Core Sets as
described in the Medicaid Program and CHIP; Mandatory Medicaid and
Children's Health Insurance Program (CHIP) Core Set Reporting final
rule (88 FR 60278); (hereinafter the ``Mandatory Medicaid and CHIP Core
Set Reporting final rule''). We believed that such alignment in
processes will ensure consistency and promote efficiency for both CMS
and States across Medicaid quality measurement and reporting
activities.
At Sec. 441.312(c)(3), we proposed that the Secretary will, in
consultation with States and other interested parties, develop and
update the measures in the HCBS Quality Measure Set, at least every
other year, through a process that allows for public input and comment.
We solicited comments on whether the timeframes for updating the
measures in the HCBS Quality Measure Set and conducting the process for
developing and updating the HCBS Quality Measure Set is sufficient,
whether we should conduct these activities more frequently (every year)
or less frequently (every 3 years), and if an alternate timeframe was
recommended, the rationale for that alternate timeframe.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters expressed support for our proposal at
Sec. 441.312(c)(1) to identify and update the quality measures
included in the HCBS Quality Measure Set at least every other year,
through a process that allows for public input and comment. One
commenter noted that identifying and updating the measures annually,
instead of every other year, could maximize the effectiveness of the
HCBS Quality Measure Set, especially with a new and rapidly evolving
field of HCBS measures, suggesting that an every other year frequency
might impact the use of innovative approaches to inform quality
improvement in HCBS. Alternatively, several commenters expressed
concern and recommended less frequent updates to the HCBS Quality
Measure Set, questioning the usefulness of the measures that change
every other year and suggesting that taking a longer time between
updates to the HCBS Quality Measure Set will minimize financial burden
and allow States to more accurately measure improvement over time. In
the same vein, one commenter expressed that every other year updates to
the measure set might have an effect and impact the usefulness of
longitudinal data. These commenters suggested alternative timeframes
ranging from 3 to 5 years, with 3 years being the most frequently
suggested frequency for updates to the HCBS Quality Measure Set.
Response: We thank commenters for their feedback. In consideration
of comments received, we agree that clarification of the frequency in
updates to the HCBS Quality Measure Set is required. We note that the
proposed process for updating the quality measures included in the
Quality Measure Set differs in frequency from, though is based in part
on, the processes for the Secretary to update and maintain the Child,
Adult, and Health Home Core Sets as described in the final rule,
``Medicaid Program and CHIP; Mandatory Medicaid and Children's Health
Insurance Program (CHIP) Core Set Reporting'' (88 FR 60278)
(hereinafter the ``Mandatory Medicaid and CHIP Core Set Reporting final
rule''). We proposed a frequency for updating the quality measures
included in the HCBS Quality Measure Set, which is different from the
mandatory annual State reporting of the Core Set measures in the
Mandatory Medicaid and CHIP Core Set Reporting final rule, because the
HCBS Quality Measure Set was only first released for voluntary use by
States in July 2022, while Child, Adult, and Health Home Core Sets
voluntary reporting has been in place for a number of years. Further, a
substantial portion of the measures included in the HCBS Quality
Measure Set, particularly compared to the Child, Adult, and Health Home
Core Sets, is derived from beneficiary experience of care surveys,
which are costlier to implement than other types of measures. We
recognize that States may need to make enhancements to their data and
information systems or incur other costs in implementing the HCBS
Quality Measure Set. Upon further consideration, we assure States that
CMS will not update the measure set to add new measures or retire
existing measures more frequently than every other year, and are
modifying the beginning date as no later than December 31, 2026,
instead of 2025. We note that, while the finalized requirement will
allow CMS to add new measures or retire existing measures every other
year, CMS intends to retain each of the measures in the measure set for
at least 5 years to ensure the availability of longitudinal data,
unless there are serious issues associated with the measures (such as
related to measure reliability or validity) or States' use of the
measures (such as excessive cost of State data collection and reporting
or insurmountable technical issues with State reporting on the
measures).
After consideration of the comments received about the frequency of
updating the quality measures in Sec. 441.312(c)(1), we are finalizing
Sec. 441.312(c)(1) with modifications to require that the Secretary
shall identify and update quality measures no more frequently than
every other year, beginning no later than December 31, 2026, the
quality measures to be included in the Home and Community-Based
Services Quality Measure Set as defined in paragraph (b) of this
section). (New language identified in bold.)
We are also finalizing a new requirement at Sec. 441.312(c)(2) to
require the Secretary to make technical updates and corrections to the
Home and Community-Based Services Quality Measure Set annually as
appropriate. This addition is intended to ensure that the measures
included in the measure set are accurate and up to date, and that we
may correct errors, clarify information related to the measures, and
align with updated technical specifications of measure stewards,
particularly given the revision to Sec. 441.312(c)(2) to indicate that
CMS will not update the HCBS Quality Measure Set more frequently than
every other

[[Page 40666]]

year. To accommodate the new requirement at Sec. 441.312(c)(2), we
have renumbered the provisions proposed at Sec. Sec. 441.312(c)(2) and
(3) to Sec. Sec. 441.312(c)(3) and (4), respectively.
We are finalizing redesignated Sec. 441.312(c)(3)(iv) with a minor
technical modification for clarity to specify that the Secretary shall
ensure that all measures included in the Home and Community-Based
Services Quality Measure Set reflect an evidence-based process
including testing, validation, and consensus among interested parties;
are meaningful for States; and are feasible for State-level, program-
level, or provider-level reporting as appropriate. We are also
finalizing the redesignated requirement at Sec. 441.312(c)(4) with a
modification to replace the words, at least, with the words, no more
frequently than, to require that the Secretary, in consultation with
States, develop and update, no more frequently than every other year,
the Home and Community-Based Services Quality Measure Set using a
process that allows for public input and comment as described in
paragraph (d) of this section.
As noted in the proposed rule, in Medicaid, enhanced FFP is
available at a 90 percent FMAP for the design, development, or
installation of improvements of mechanized claims processing and
information retrieval systems, in accordance with applicable Federal
requirements.\133\ Enhanced FFP at a 75 percent FMAP is also available
for operations of such systems, in accordance with applicable Federal
requirements.\134\ However, we reiterate that receipt of these enhanced
funds is conditioned upon States meeting a series of standards and
conditions to ensure investments are efficient and effective.\135\ We
clarify, to receive enhanced FMAP funds, the State Medicaid agency is
required at Sec. 433.112(b)(12) to ensure the alignment with, and
incorporation of, standards and implementation specifications for
health information technology adopted by the Office of the National
Coordinator for Health IT in 45 CFR part 170, subpart B, among other
requirements set forth in Sec. 433.112(b)(12). States should also
consider adopting relevant standards identified in the Interoperability
Standards Advisory (ISA) \136\ to bolster improvements in the
identification and reporting on the prevalence of critical incidents
for HCBS beneficiaries and present opportunities for the State to
develop improved information systems that can support quality
improvement activities that can help promote the health and safety of
HCBS beneficiaries.
---------------------------------------------------------------------------

\133\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\134\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\135\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
\136\ Relevant standards adopted by HHS and identified in the
ISA include the USCDI (https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi), eLTSS (https://www.healthit.gov/isa/documenting-care-plans-person-centered-services), and Functional
Assessment Standardized Items (https://www.healthit.gov/isa/representing-patient-functional-status-andor-disability).
---------------------------------------------------------------------------

We plan to provide States with technical assistance and
subregulatory guidance to support implementation of the HCBS Quality
Measure Set.
After consideration of the comments received, we are finalizing
Sec. 441.312(c) with modifications. We are finalizing Sec.
441.312(c)(1) with modifications to require that the Secretary shall
identify, and update no more frequently than every other year,
beginning no later than December 31, 2026, the quality measures to be
included in the Home and Community-Based Services Quality Measure Set
as defined in paragraph (b) of this section. (New language identified
in bold.)
We are finalizing Sec. 441.312(c)(2) without substantive changes,
but we are redesignating the requirement as Sec. 441.312(c)(3). We are
finalizing a new requirement at Sec. 441.312(c)(2) that the Secretary
shall make technical updates and corrections to the Home and Community-
Based Services Quality Measure Set annually as appropriate. We are also
redesignating what had been proposed as Sec. 441.312(c)(3) as (c)(4)
and finalizing the redesignated Sec. 441.312(c)(4) with a modification
to replace the word at least with no more frequently than.
d. Process for Developing and Updating the HCBS Quality Measure Set
(Sec. 441.311(d))
At proposed Sec. 441.312(d), we described the proposed process for
developing and updating the HCBS Quality Measure Set. Specifically, we
proposed that the Secretary will address the following through a
process to:
Identify all measures in the HCBS Quality Measure Set,
including newly added measures, measures that have been removed,
mandatory measures, measures that the Secretary will report on States'
behalf, measures that States can elect to have the Secretary report on
their behalf, as well as the measures that the Secretary will provide
States with additional time to report and the amount of additional
time.
Inform States how to collect and calculate data on the
measures.
Provide a standardized format and reporting schedule for
reporting the measures.
Provide procedures that States must follow in reporting
the measure data.
Identify specific populations for which States must report
the measures, including people enrolled in a specific delivery system
type such as those enrolled in a managed care plan or receiving
services on a fee-for-service basis, people who are dually eligible for
Medicare and Medicaid, older adults, people with physical disabilities,
people with intellectual or developmental disabilities, people who have
serious mental illness, and people who have other health conditions;
and provide attribution rules for determining how States must report on
measures for beneficiaries who are included in more than one
population.
Identify the measures that must be stratified by race,
ethnicity, Tribal status, sex, age, rural/urban status, disability,
language, or such other factors as may be specified by the Secretary.
Describe how to establish State performance targets for
each of the measures.
As discussed in section II.B.8. of the proposed rule (88 FR 27992
through 27993), we anticipated that, for State reporting on the
measures in the HCBS Quality Measure Set, as outlined in the reporting
requirements we proposed at Sec. 441.311, the technical information on
attribution rules described at proposed Sec. 441.312(d)(6), would call
for inclusion in quality reporting based on a beneficiary's continuous
enrollment in the Medicaid waiver. This ensures the State has enough
time to furnish services during the measurement period. In the
technical information, we anticipated we would set attribution rules to
address transitions in Medicaid eligibility, enrollment in Medicare, or
transitions between different delivery systems or managed care plans,
within a reporting year, for example, based on the length of time
beneficiaries was enrolled in each. We invited comment on other
considerations we should address in the attribution rules or other
topics we should address in the technical information.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters provided input on the proposed process

[[Page 40667]]

that the Secretary will follow to update and maintain the HCBS Quality
Measure Set. A few commenters recommended that, to advance meaningful
quality improvement and measurement, we should prioritize the
importance of a measure and a measure's usability and use for measure
selection and suggested an additional evaluative category of advancing
equity. A couple of commenters suggested that we should consider
implementing a process to determine if quality measures are based on
person-centered planning principles, emphasizing that many of the
measures in the HCBS Quality Measure Set are more system and process-
oriented, rather than focused on assessing and improving person-
centered experiences and preferences. One commenter recommended we
conduct a broad-based public review of possible quality measures and
domains for individuals with intellectual and developmental
disabilities to inform the quality measures process. Another commenter
suggested that we include an oral health measure for beneficiaries
receiving HCBS in the selection of measures for the HCBS Quality
Measure Set. A few commenters recommended we prioritize the development
and inclusion of culturally and linguistically appropriate measures
within the HCBS Quality Measure Set, prioritizing reporting of the most
feasible measures, aligning the CMS Core Sets, to capture the
experiences and outcomes of diverse populations and ensure that HCBS
programs address the unique needs and preferences of beneficiaries from
different cultural backgrounds.
Response: At Sec. 441.312(d), we described the general process
that the Secretary will follow to update and maintain the HCBS Quality
Measure Set.
We underscore the importance of alignment in quality measurement
across the Medicaid program, to the extent possible. We proposed at
Sec. 441.312(d)(7), that the process for developing and updating the
HCBS Quality Measure Set will address the subset of measures that must
be stratified by race, ethnicity, Tribal status, sex, age, rural/urban
status, disability, language, or such other factors as may be specified
by the Secretary and informed by consultation every other year with
States and interested parties.
After further consideration, we have identified that including
Tribal status as a measure stratification factor is misaligned, as it
is not included as a measure stratification factor for the Adult Core
Set as defined in the Mandatory Medicaid and CHIP Core Set Reporting
final rule. We are also concerned that this additional measure
stratification factor will create additional burden for States. After
further consideration, to ensure alignment in Medicaid quality
measurement and alignment of the HCBS Quality Measure Set with the
Adult Core Set, we are removing Tribal status as a measure
stratification factor at Sec. 441.312(d)(7). We note that Tribal
status could be included as a measure stratification factor under such
other factors as may be specified by the Secretary and informed by
consultation every other year with States and interested parties in
accordance with Sec. 441.312(b)(2) and (g).
At Sec. 441.312(d), we proposed and are finalizing the process for
developing and updating the HCBS Quality Measure Set. At Sec.
441.312(d)(5) the process for developing and updating the HCBS Quality
Measure Set includes the identification of the beneficiary populations
for which States are required to report the HCBS quality measures
identified by the Secretary. We are finalizing Sec. 441.312(d)(5)(i)
with a technical modification, including the identification of the
beneficiaries receiving services through specified delivery systems for
which States are required to report the HCBS quality measures
identified by the Secretary, replacing managed care plan with MCO,
PIHP, or PAHP as defined in Sec. 438.2. (New language identified in
bold.)
Comment: A few commenters requested we clarify how the HCBS Quality
Measure Set would relate to measurement for beneficiaries who are
dually eligible for Medicare and Medicaid. One commenter further
expressed strong support for disaggregation of data for dually eligible
beneficiaries, but also questioned whether partial benefit dually
eligible beneficiaries were required to be included in the population
for quality measurement, as most do not receive HCBS or any other
Medicaid benefits.
Response: We plan to provide States with guidance and technical
assistance to help address issues specific to dually eligible
beneficiaries. Further, inclusion and exclusion criteria for each
measure will be addressed through the technical specifications for the
measure. We note that, to the extent that dual-eligible beneficiaries
are receiving services authorized under section 1915(c), (i), (j), or
(k) Medicaid programs and delivered through managed care plans, and
meet the inclusion criteria for the measure, they are required to be
included in the reporting on that measure. We will provide technical
assistance regarding the application of these requirements to
beneficiaries in different categories of dual eligibility.
Comment: One commenter requested that CMS clarify the requirement
at Sec. 441.312(d)(7) referencing the subset of measures in the HCBS
Quality Measure Set that must be stratified by health equity
characteristics, noting that the proposed Sec. 441.312(f) would
require States to stratify 100 percent of measures by 7 years after the
effective date of the final rule. They emphasized a disconnect between
the two provisions, as a subset of measures is not the same as 100
percent of measures and suggest removing the word subset to avoid
confusion in implementation.
Response: Reporting of stratified data is a cornerstone of our
approach to advancing health equity. We note reporting stratified data
helps identify and eliminate health disparities across HCBS
populations. As we noted in the proposed rule (88 FR 27993), measuring
health disparities, reporting these results, and driving improvements
in quality are cornerstones of the CMS approach to advancing health
equity through data reporting and stratification aligns with E.O.
13985.\137\
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\137\ Exec. Order No. 13985 (2021), Accessed 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/.
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At Sec. 441.312(f), in specifying which measures, and by which
factors, States must report stratified measures consistent with Sec.
441.312(d)(7), the Secretary will take into account whether
stratification can be accomplished based on valid statistical methods
and without risking a violation of beneficiary privacy and, for
measures obtained from surveys, whether the original survey instrument
collects the variables necessary to stratify the measures, and such
other factors as the Secretary determines appropriate. We reiterate
that we considered giving States the flexibility to choose which
measures they would stratify and by what factors. However, as discussed
in the Mandatory Medicaid and CHIP Core Set Reporting rule (87 FR
51313), consistent measurement of differences in health and quality of
life outcomes between different groups of beneficiaries is essential to
identifying areas for intervention and evaluation of those
interventions.\138\ This consistency could not be achieved if each
State made its own decisions about which data it

[[Page 40668]]

would stratify and by what factors.^{139 140} We also recognize
that States may be constrained in their ability to stratify measures in
the HCBS Quality Measure Set and that data stratification would require
additional State resources. We also may face constraints in stratifying
measures for which we are able to report on behalf of States, as our
ability to stratify will be dependent on whether the original dataset
or survey instrument: (1) collects the demographic information or other
variables needed and (2) has a large enough sample size. preserved and
model accuracy is improved. In consideration of these factors we are
finalizing at Sec. 441.312(d)(7) that the subset of measures among the
measures in the HCBS Quality Measure Set that must be stratified by
health equity characteristics as proposed.
---------------------------------------------------------------------------

\138\ Schlotthauer AE, Badler A, Cook SC, Perez DJ, Chin MH.
Evaluating Interventions to Reduce Health Care Disparities: An RWJF
Program. Health Aff (Millwood). 2008;27(2):568-573.
\139\ Centers for Medicare & Medicaid Services (CMS) Office of
Minority Health (OMH). Stratified Reporting. 2022; https://www.cms.gov/About-CMS/Agency-Information/OMH/research-and-data/statistics-and-data/stratified-reporting.
\140\ National Quality Forum. A Roadmap for Promoting Health
Equity and Eliminating Disparities. Sep 2017. Accessed at https://www.qualityforum.org/Publications/2017/09/A_Roadmap_for_Promoting_Health_Equity_and_Eliminating_Disparities__The_Four_I_s_for_Health_Equity.aspx.
---------------------------------------------------------------------------

In response to the commenter's observation regarding when 100
percent of the measures must be stratified, we note that, for reasons
discussed in greater detail in section II.B.7. and II.B.8.e. of this
final rule, we are modifying the requirement at Sec. 441.311(f) to
change the timing by which measures must be stratified. As finalized,
Sec. 441.311(f) requires that stratification of 25 percent of the
measures in the Home and Community-Based Services Quality Measure Set
for which the Secretary has specified that reporting should be
stratified by 4 years after the effective date of these regulations, 50
percent of such measures by 6 years after the effective date of these
regulations, and 100 percent of measures by 8 years after the effective
date of these regulations.
After consideration of the comments received, we are finalizing
Sec. 441.312(d)(1) through (6) and (8) as proposed. We are finalizing
Sec. 441.312(d)(7) with modification to remove Tribal status as a
stratification factor. As finalized, Sec. 441.312(d)(7) provides that
the process for developing and updating the HCBS Quality Measure Set
will address the subset of measures among the measures in the HCBS
Quality Measure Set that must be stratified by race, ethnicity, sex,
age, rural/urban status, disability, language, or such other factors as
may be specified by the Secretary and informed by consultation every
other year with States and interested parties.
e. Phasing In of Certain Reporting (Sec. 441.311(e) and (f))
At Sec. 441.312(e), we proposed, in the process for developing and
updating the HCBS Quality Measure Set described at proposed Sec.
441.312(d), that the Secretary consider the complexity of State
reporting and allow for the phase-in over a specified period of time of
mandatory State reporting for some measures and of reporting for
certain populations, such as older adults or people with intellectual
and developmental disabilities. At Sec. 441.312(f), we proposed that,
in specifying the measures and the factors by which States must report
stratified measures, the Secretary will consider whether such
stratified sampling can be accomplished based on valid statistical
methods, without risking a violation of beneficiary privacy, and, for
measures obtained from surveys, whether the original survey instrument
collects the variables or factors necessary to stratify the measures.
We considered giving States the flexibility to choose which
measures they would stratify and by what factors. However, as we noted
was discussed in the Mandatory Medicaid and CHIP Core Set Reporting
final rule (88 FR 60278), consistent measurement of differences in
health and quality of life outcomes between different groups of
beneficiaries is essential to identifying areas for intervention and
evaluation of those interventions.\141\ This consistency could not be
achieved if each State made its own decisions about which data it would
stratify and by what factors.^{142 143}
---------------------------------------------------------------------------

\141\ Schlotthauer AE, Badler A, Cook SC, Perez DJ, Chin MH.
Evaluating Interventions to Reduce Health Care Disparities: An RWJF
Program. Health Aff (Millwood). 2008;27(2):568-573.
\142\ Centers for Medicare & Medicaid Services (CMS) Office of
Minority Health (OMH). Stratified Reporting. 2022; https://www.cms.gov/About-CMS/Agency-Information/OMH/research-and-data/statistics-and-data/stratified-reporting.
\143\ National Quality Forum. A Roadmap for Promoting Health
Equity and Eliminating Disparities. Sep 2017. Accessed at https://www.qualityforum.org/Publications/2017/09/A_Roadmap_for_Promoting_Health_Equity_and_Eliminating_Disparities__The_Four_I_s_for_Health_Equity.aspx.
---------------------------------------------------------------------------

In the proposed rule, we recognized that States may be constrained
in their ability to stratify measures in the HCBS Quality Measure Set
and that data stratification would require additional State resources.
We also noted that there are several challenges to stratification of
measure reporting. First, the validity of stratification is threatened
when the demographic data are incomplete. Complete demographic
information is often unavailable to us and to States due to several
factors, including the fact that Medicaid applicants and beneficiaries
are not required to provide race and ethnicity data. Second, when
States with smaller populations and less diversity stratify data, it
may be possible to identify individual data, raising privacy concerns.
Therefore, if the sample sizes are too small, the data would be
suppressed, in accordance with the CMS Cell Size Suppression Policy and
the data suppression policies for associated measure stewards and
therefore not publicly reported to avoid a potential violation of
privacy.\144\
---------------------------------------------------------------------------

\144\ CMS Cell Size Suppression Policy, Issued 2020: https://www.hhs.gov/guidance/document/cms-cell-suppression-policy or the
cell suppression standards of the associated measure stewards.
---------------------------------------------------------------------------

We also acknowledged that we may face constraints in stratifying
measures for which we are able to report on behalf of States, as our
ability to stratify would be dependent on whether the original dataset
or survey instrument: (1) collects the demographic information or other
variables needed and (2) has a large enough sample size. The
Transformed Medicaid Statistical Information System (T-MSIS), for
example, currently has the capability to stratify some HCBS Quality
Measure Set measures by sex and urban/rural status, but not by race,
ethnicity, or disability status. This is because applicants provide
information on sex and urban/rural address, which is reported to T-MSIS
by States, whereas applicants are not required to provide information
on their race and ethnicity or disability status, and often do not do
so. However, we have developed the capacity to impute race and
ethnicity using a version of the Bayesian Improved Surname Geocoding
(BISG) method \145\ that includes Medicaid-specific enhancements to
optimize accuracy, and are able to stratify by race and ethnicity,
urban/rural status, and sex.
---------------------------------------------------------------------------

\145\ Elliott, Marc N., et al. ``Using the Census Bureau's
surname list to improve estimates of race/ethnicity and associated
disparities.'' Health Services and Outcomes Research Methodology 9.2
(2009): 69-83.
---------------------------------------------------------------------------

With these challenges in mind, we proposed that stratification by
States in reporting of HCBS Quality Measure Set data would be
implemented through a phased-in approach in which the Secretary would
specify which measures and by which factors States must stratify
reported measures. At Sec. 441.312(f), we proposed that States would
be required to provide stratified data for 25 percent of the measures
in the HCBS Quality Measure Set for

[[Page 40669]]

which the Secretary has specified that reporting should be stratified
by 3 years after the effective date of these regulations, 50 percent of
such measures by 5 years after the effective date of these regulations,
and 100 percent of measures by 7 years after the effective date of
these regulations. We noted that the percentages listed here aligned
with the proposed phase-in of equity reporting in the Mandatory
Medicaid and CHIP Core Set Reporting final rule (88 FR 60278). However,
the timeframe associated with each percentage of measures to phase-in
equity reporting that we proposed in this rule is different with a
slower phase-in, in large part because when compared to the Child,
Adult, and Health Home Core Sets, the HCBS Measure Set in its current
form includes a substantial number of measures that are derived from
beneficiary experience of care surveys, which are costlier to implement
than other types of measures. In addition, the slower phase-in was also
intended to take into consideration the overall burden of the reporting
requirements and that States have less experience with the HCBS Quality
Measure Set. Specifically, the Mandatory Medicaid and CHIP Core Set
Reporting final rule (88 FR 60278) requires States to provide
stratified data for 25 percent of measures within 2 years after the
effective date of the final rule, 50 percent of measures within 3 years
after the effective date of the final rule, and 100 percent of measures
within 5 years after the effective date of the final rule.
In our proposed rule, we determined that our proposed phased-in
approach to data stratification would be reasonable and minimally
burdensome, and thus consistent with E.O. 13985 on Advancing Racial
Equity and Support for Underserved Communities Through the Federal
Government (January 20, 2021),\146\ because we were balancing the
importance of being able to identify differences in outcomes between
populations under these measures with the potential operational
challenges that States may face in implementing these proposed
requirements.
---------------------------------------------------------------------------

\146\ Exec. Order No. 13985 (2021), Accessed 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/.
---------------------------------------------------------------------------

We recognized that States may need to make enhancements to their
data and information systems or incur other costs in implementing the
HCBS Quality Measure Set. We reminded States that enhanced FFP is
available at a 90 percent match rate for the design, development, or
installation of improvements of mechanized claims processing and
information retrieval systems, in accordance with applicable Federal
requirements.\147\ Enhanced FFP at a 75 percent match rate is also
available for operations of such systems, in accordance with applicable
Federal requirements.\148\ We also encouraged States to advance the
interoperable exchange of HCBS data and support quality improvement
activities by adopting standards in 45 CFR part 170 and other relevant
standards identified in the ISA.\149\
---------------------------------------------------------------------------

\147\ See section 1903(a)(3)(A)(i) of the Act and Sec.
433.15(b)(3), 80 FR 75817 through 75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\148\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\149\ Relevant standards adopted by HHS and identified in the
ISA include the USCDI (https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi), eLTSS (https://www.healthit.gov/isa/documenting-care-plans-person-centered-services), and Functional
Assessment Standardized Items (https://www.healthit.gov/isa/representing-patient-functional-status-andor-disability).
---------------------------------------------------------------------------

We invited comments on the proposed schedule for phasing in
reporting of HCBS Quality Measure Set data. We also solicited comment
on whether we should phase-in reporting on all of the measures in the
HCBS Quality Measure Set.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported our proposal at Sec.
441.312(f) in its entirety.
Response: We thank the commenters for their support of our proposed
requirements.
Comment: Several commenters submitted recommendations and requests
related to the details of stratified reporting, such as definitions of
specific categories of populations, data suppression policies, how to
handle missing data, and different measures of delivery systems.
Response: We believe that stratified data would enable us and
States to identify the health and quality of life outcomes of
underserved populations and potential differences in outcomes based on
race, ethnicity, sex, age, rural/urban status, disability, language,
and other such factors on measures contained in the HCBS Quality
Measure Set. We refer readers to section II.B.8. of the proposed rule
(88 FR 27993) for a detailed discussion of stratified data and
sampling.
We expect to align with Department of Health and Human Services
(HHS) data standards for stratification, based on the disaggregation of
the 1997 Office of Management and Budget (OMB) Statistical Policy
Directive No 15.\150\ We expect to update HCBS Quality Measure Set
reporting stratification categories if there are any changes to OMB or
HHS Data Standards. We will take this feedback into account as we plan
technical assistance and develop guidance for States.
---------------------------------------------------------------------------

\150\ The categories for HHS data standards for race and
ethnicity are based on the disaggregation of the OMB standard:
https://minorityhealth.hhs.gov/omh/browse.aspx?lvl=3&lvlid=53.
---------------------------------------------------------------------------

Comment: Several commenters supported all the proposed requirements
for stratification but recommended either faster or slower
implementation. A couple of commenters suggested that States be
required to report stratified data by 3 years after the effective date
of this final rule rather than phase in this requirement. Multiple
commenters provided alternate phase-in schedules for stratification of
the HCBS Quality Measure Set, with the most frequent suggestions to add
two to five years to the phase-in timeline for data stratification
requirements for the measures in the HCBS Quality Measure Set. Some
commenters expressed that they supported a staggered implementation
timeline of the data stratification requirements and noted that
additional time and flexibility for States could make compliance more
attainable because of State legislative, budgeting, procurement, and
contracting requirements. Another commenter, who represents State
agencies, emphasized that many States have long-standing challenges
with collecting complete demographic data on Medicaid beneficiaries,
and they expressed concerns with small samples, staffing capacity,
survey fatigue, and problems identifying baseline demographics. One
commenter recommended that the initial implementation of stratification
occur with a rolling start date by State, based on waiver renewal date.
Response: We continue to believe that the time frame for States to
implement stratification of data on quality measures in the HCBS
Quality Measure Set is an appropriate frequency that ensures
accountability without being overly burdensome. We determined that a
shorter phase timeframe would not likely be operationally feasible
because of the potential systems and contracting changes (to existing
contracts or the establishment of new contracts) that

[[Page 40670]]

States may be required to make, in order to collect these data for
reporting. For example, additional reporting requirements may need to
be added to State contracts, changes may be needed to data sharing
agreements with managed care plans, and modifications of databases or
systems might be required to record new variables.
As discussed in section II.B.7. of this final rule, we are
finalizing at Sec. 441.311(f)(2) that States must comply with the HCBS
Quality Measure Set reporting requirement at Sec. 441.311(c) beginning
4 years after the effective date of this final rule, rather than 3
years. We are making this modification in order to allow for sufficient
time for interested parties to provide input into the measures, as
required by Sec. 441.312(g), which we are finalizing as described in
this section II.B.8. of this rule. To align with this modification, we
are finalizing the phase-in requirement at Sec. 441.312(f). As
finalized, Sec. 441.312(f) requires that stratification of 25 percent
of the measures in the Home and Community-Based Services Quality
Measure Set for which the Secretary has specified that reporting should
be stratified by 4 years after the effective date of these regulations,
50 percent of such measures by 6 years after the effective date of
these regulations, and 100 percent of measures by 8 years after the
effective date of these regulations.
We anticipate that States will not need more than 4 years after the
effective date of the final rule, to implement systems and contracting
changes, or any additional support needed to report on the quality
measures in HCBS Quality Measure Set. However, as described at
finalized Sec. 441.312(e), we will consider the complexity of State
reporting and allow for the phase in over a specified period of time of
mandatory State reporting for some measures and of reporting for
certain populations, such as older adults or people with intellectual
and disabilities. Further, we plan to work collaboratively with States
to provide technical assistance and reporting guidance through the
Paperwork Reduction Act process necessary to support reporting.
Comment: A couple of commenters recommended that we offer States
financial assistance to develop and deploy health equity efforts,
including funding support in addressing the capture of self-reported
data.
Response: As discussed above, in Medicaid, enhanced FFP is
available at a 90 percent FMAP for the design, development, or
installation of improvements of mechanized claims processing and
information retrieval systems, in accordance with applicable Federal
requirements. Enhanced FFP at a 75 percent FMAP is also available for
operations of such systems, in accordance with applicable Federal
requirements. We reiterate that receipt of these enhanced funds is
conditioned upon States meeting a series of standards and conditions to
ensure investments are efficient and effective.\151\ This may include
improving data reporting, which could promote greater health equity.
---------------------------------------------------------------------------

\151\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
---------------------------------------------------------------------------

We clarify, to receive enhanced FMAP funds, the State Medicaid
agency is required at Sec. 433.112(b)(12) to ensure the alignment
with, and incorporation of, standards and implementation specifications
for health information technology adopted by the Office of the National
Coordinator for Health IT in 45 CFR part 170, subpart B, among other
requirements set forth in Sec. 433.112(b)(12). States should also
consider adopting relevant standards identified in the ISA \152\ to
bolster improvements in the identification and reporting on the
prevalence of critical incidents for HCBS beneficiaries and present
opportunities for the State to develop improved information systems
that can support quality improvement activities. We further clarify
that States are responsible for ensuring compliance with the
requirements of HIPAA and its implementing regulations, as well as any
other applicable Federal or State privacy laws governing
confidentiality of a beneficiary's records.
---------------------------------------------------------------------------

\152\ Relevant standards adopted by HHS and identified in the
ISA include the USCDI (https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi), eLTSS (https://www.healthit.gov/isa/documenting-care-plans-person-centered-services), and Functional
Assessment Standardized Items (https://www.healthit.gov/isa/representing-patient-functional-status-andor-disability).
---------------------------------------------------------------------------

After consideration of the comments we received, we are finalizing
Sec. 441.312(e) as proposed.
We are finalizing Sec. 441.312(f) with a modification to require
that stratification of 25 percent of the measures in the Home and
Community-Based Services Quality Measure Set for which the Secretary
has specified that reporting should be stratified by 4 years after the
effective date of these regulations, 50 percent of such measures by 6
years after the effective date of these regulations, and 100 percent of
measures by 8 years after the effective date of these regulations.
e. Consultation With Interested Parties (Sec. 441.312(g))
At Sec. 441.312(g), we proposed the list of interested parties
with whom the Secretary must consult to specify and update the quality
measures established in the HCBS Quality Measure Set. The proposed list
of interested parties included: State Medicaid Agencies and agencies
that administer Medicaid-covered HCBS; health care and HCBS
professionals who specialize in the care and treatment of older adults,
children and adults with disabilities, and individuals with complex
medical needs; health care and HCBS professionals, providers, and
direct care workers who provide services to older adults, children and
adults with disabilities and complex medical and behavioral health care
needs who live in urban and rural areas or who are members of groups at
increased risk for poor outcomes; HCBS providers; direct care workers
and organizations representing direct care workers; consumers and
national organizations representing consumers; organizations and
individuals with expertise in HCBS quality measurement; voluntary
consensus standards setting organizations and other organizations
involved in the advancement of evidence-based measures of health care;
measure development experts; and other interested parties the Secretary
may determine appropriate.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters commended our proposal at Sec.
441.312(g) to consult and receive input from interested parties. These
commenters expressed they are encouraged by the continued collaboration
with CMS in identifying and updating the HCBS Quality Measure Set. A
few commenters shared suggestions for others to include as interested
parties, mentioning managed care plans, community representatives from
underserved communities, family members, and caregivers.
Response: We appreciate the submission of these comments and will
take them into consideration as the Secretary carries out the
responsibilities at Sec. 441.312(g).
Comment: One commenter recommended we establish an ongoing process
of consultation with States and interested parties to make updates to
the quality measures in the HCBS Quality Measure Set in a longer cycle
between updates based on consensus, such as 5 years. This commenter
emphasized this

[[Page 40671]]

approach can assure interested parties that the measure set will
continue to be developed over time based on new information and
priorities and help avoid making changes too rapidly to be sustained by
States.
Response: We appreciate the submission of these comments. As noted
previously, we are finalizing Sec. 441.312(c)(1) and (2) with
modifications to indicate that we will identify, and update no more
frequently than every other year, beginning no later than December 31,
2026, the quality measures to be included in the HCBS Quality Measure
Set as defined in paragraph (b) of this section.
We will make technical updates and corrections to the HCBS Quality
Measure Set annually as appropriate. Additionally, as discussed in
greater detail in section II.B.7. of this final rule, we are giving
States more time to engage with interested parties by finalizing an
applicability date of 4 years, rather than 3 years, for the requirement
that States must comply with the HCBS Quality Measure Set reporting at
Sec. 441.311(c). We are making this revision in order to allow for
sufficient time for interested parties to provide input into the
measures, as required by Sec. 441.312(g).
After consideration of the comments received, we are finalizing
Sec. 441.312(g) as proposed.
f. Application to Other Authorities (Sec. Sec. 441.474(c), 441.585(d),
and 441.745(b)(1)(v))
Because these quality measurement requirements are relevant to
other HCBS authorities, we proposed to include these requirements
within the applicable regulatory sections for other HCBS authorities.
Specifically, we proposed to apply the proposed requirements at Sec.
441.312 to section 1915(j), (k), and (i) State plan services at
Sec. Sec. 441.474(c), 441.585(d), and 441.745(b)(1)(v), respectively.
Consistent with our proposal for section 1915(c) waivers, we proposed
these requirements based on our authority under section 1902(a)(6) of
the Act, which requires State Medicaid agencies to make such reports,
in such form and containing such information, as the Secretary may from
time to time require, and to comply with such provisions as the
Secretary may from time to time find necessary to assure the
correctness and verification of such reports. We believed the same
arguments for proposing these requirements for section 1915(c) waivers
are equally applicable for these other HCBS authorities. We requested
comment on the application of these provisions across sections 1915(i),
(j), and (k) authorities.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the proposal to apply the
HCBS Quality Measure Set requirements at Sec. 441.312 to sections
1915(i), (j) and (k) authorities, stating there should be equally
applicable requirements for States across authorities to ensure
consistency, coordination, and alignment across quality improvement
activities for these HCBS beneficiaries.
Alternatively, a few commenters expressed that applying the HCBS
Quality Measure Set requirements across sections 1915(i), (j) and (k)
authorities could pose challenges for States since the application of
quality measure data collection and reporting for these HCBS
authorities is mixed among States. One commenter requested an exemption
for the section 1915(i) authority, noting that implementing the HCBS
Quality Measure Set requirements for this authority is onerous, since
the service array for section 1915(i) programs is more limited than in
section 1915(c) programs.
Response: We thank commenters for their support. We note that
States can cover the same services under section 1915(i) as they can
cover under section 1915(c) of the Act. As such, exempting States from
implementing the HCBS Quality Measure Set requirements under section
1915(i) does not align with our intent, which is to ensure consistency
and alignment in reporting requirements across HCBS authorities. We are
finalizing our proposal to apply the HCBS Quality Measure Set
requirements to sections 1915(c), (i), (j) and (k) authorities and plan
to provide technical assistance to States as needed to address the
concerns raised by commenters.
After consideration of the comments received, we are finalizing the
application of Sec. 441.312 to section 1915(j) services by finalizing
a reference to Sec. 441.312 at Sec. 441.474(c). (Note that we also
discuss finalization of Sec. Sec. 441.474(c) in section II.B.7. of
this final rule.) We are finalizing the application of Sec. 441.312 to
sections 1915(k) and 1915(i) services at Sec. Sec. 441.585(d) and
441.745(b)(1)(v) with modifications to clarify that the references to
section 1915(c) of the Act are instead references to section 1915(k)
and 1915(i) of the Act, respectively.
g. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
requirements at Sec. 441.312 as follows:
We are finalizing Sec. 441.312(a) with a minor technical
change.
We are finalizing the definition of attribution rules and
Home and Community-Based Services Quality Measure Set at Sec.
441.312(b)(1) with a minor formatting change.
We are finalizing the responsibilities of the Secretary at
Sec. 441.312(c)(1) with technical modifications to revise the
frequency for updating the measure set to no more frequently than every
other year and replace December 31, 2025 with December 31, 2026.
We are finalizing a new requirement at Sec. 441.312(c)(2)
that the Secretary shall make technical updates and corrections to the
Home and Community-Based Services Quality Measure Set annually as
appropriate.
We are redesignating Sec. 441.312(c)(2) as paragraphs
(c)(3) and finalizing with minor technical modification.
We are redesignating Sec. 441.312(c)(3) as Sec.
441.312(c)(4) and finalizing Sec. 441.312(c)(4) with a minor technical
modification to replace ``at least'' with ``no more frequently than.''
We are finalizing Sec. 441.312(d)(i) as proposed with a
modification for clarity to replace managed care plan with MCO, PIHP or
PAHP as defined in Sec. 438.2.
We are finalizing Sec. 441.312(e) as proposed.
We are finalizing the requirement at Sec. 441.312(f) with
a technical modification in the dates by when a certain percent of
measures are to be stratified, delaying each deadline by one year.
We are finalizing Sec. 441.312(g) as proposed.
We are finalizing the reference to Sec. 441.312 in Sec.
441.474(c) as proposed.
We are finalizing the requirements at Sec. Sec.
441.585(d) and 441.745(b)(1)(v) with modification to clarify that the
references to section 1915(c) of the Act are instead references to
section 1915(k) and 1915(i) of the Act, respectively.
9. Website Transparency (Sec. Sec. 441.313, 441.486, 441.595, and
441.750)
Section 1102(a) of the Act provides the Secretary of HHS with
authority to make and publish rules and regulations that are necessary
for the efficient administration of the Medicaid program. Under our
authority at section 1102(a) of the Act, we proposed a new section, at
Sec. 441.313, titled Website Transparency, to promote public
transparency related to the administration of Medicaid-covered HCBS. As
noted in the proposed rule, we believe quality is a critical component
of efficiency, as payments

[[Page 40672]]

for services that are low quality do not produce their desired effects
and, as such, are more wasteful than payments for services that are
high quality. The proposed approach was based on feedback we obtained
during various public engagement activities conducted with States and
other interested parties over the past several years that it is
difficult to find information on HCBS access, quality, and outcomes in
many States. As a result, it is not possible for beneficiaries,
consumer advocates, oversight entities, or other interested parties to
hold States accountable for ensuring that services are accessible and
high quality for people who need Medicaid HCBS. We believe that the
website transparency requirements support the efficient administration
of Medicaid-covered HCBS authorized under section 1915(c) of the Act by
promoting public transparency and the accountability of the quality and
performance of Medicaid HCBS systems, as the availability of such
information improves the ability of interested parties to hold States
accountable for the quality and performance of their HCBS systems.
a. Website Availability and Accessibility (Sec. 441.313(a))
At Sec. 441.313(a), we proposed to require States to operate a
website that meets the availability and accessibility requirements at
Sec. 435.905(b) of this chapter and provides the results of the
reporting requirements under Sec. 441.311 (specifically, incident
management, critical incident, person-centered planning, and service
provision compliance data; data on the HCBS Quality Measure Set; access
data; and payment adequacy data). We solicited comment on whether the
requirements at Sec. 435.905(b) are sufficient to ensure the
availability and accessibility of the information for people receiving
HCBS and other HCBS interested parties and for specific requirements to
ensure the availability and accessibility of the information.
We received public comment on these proposals. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the website transparency
provisions at Sec. 441.313(a), emphasizing that advancing the
collection of information and data by States is important to enable the
ability of the public, including beneficiaries, to be able to access
and compare performance results across States for the reporting
requirements proposed at Sec. 441.311.
Response: We appreciate the support for our proposal and thank
commenters for their feedback. We note that consistent with statements
we made in the introduction of sections II. and II.B. of this final
rule regarding severability, while the intent of Sec. 441.313 is for
States to post all information collected under Sec. Sec. 441.302(k)(6)
and 441.311 as required, we believe that the website posting
requirements being finalized herein at Sec. 441.313 would provide
critical data to the public even in a circumstance where individual
provisions at Sec. Sec. 441.302(k)(6) and 441.311 were not finalized
or implemented. We do acknowledge that Sec. 441.313 is interrelated
with Sec. Sec. 441.302(k)(6) and 441.311 to the extent that if one of
the reporting requirements was not finalized or implemented, posting of
the data collected under that particular requirement would not be
available to post on the website as required at Sec. 441.313. However,
if one or more of the reporting requirements at Sec. Sec.
441.302(k)(6) and 441.311 is finalized and implemented, then States
must post this data on the website as required in Sec. 441.313, as
finalized. We note that in this final rule, we are finalizing the
reporting requirement at Sec. 441.302(k)(6) (as discussed in section
II.B.5. of this final rule) and the reporting requirements proposed in
Sec. 441.311 (with modifications, as discussed in section II.B.7. of
this final rule.)
Comment: One commenter requested we consider providing additional
FMAP for the website creation and support needed to conduct the public
posting of information and data required under Sec. 441.311 on the
State web page, including to address increased staff time and effort to
answer questions regarding the public information required to be
reported.
Response: We note we do not have authority to permit States to
claim Medicaid expenditures at enhanced FMAP rates that are not
specified in statute. As noted in the proposed rule, in Medicaid,
enhanced FFP is available at a 90 percent FMAP for the design,
development, or installation of improvements of mechanized claims
processing and information retrieval systems, in accordance with
applicable Federal requirements.\153\ Enhanced FFP at a 75 percent FMAP
is also available for operations of such systems, in accordance with
applicable Federal requirements.\154\ However, receipt of these
enhanced funds is conditioned upon States meeting a series of standards
and conditions to ensure investments are efficient and effective.\155\
We plan to provide States with technical assistance related to the
availability of enhanced FMAP to support the implementation of the
requirements in this final rule.
---------------------------------------------------------------------------

\153\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\154\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\155\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
---------------------------------------------------------------------------

After consideration of the comments received, we are finalizing the
introductory paragraph at Sec. 441.313(a) as proposed with one
modification to include the additional reporting requirements to
specify that the State must operate a website consistent with Sec.
435.905(b) of this chapter that provides the results of the reporting
requirements specified at Sec. Sec. 441.302(k)(6) and 441.311.
b. Website Data and Information (Sec. 441.313(a)(1))
We proposed at Sec. 441.313(a)(1) to require that the data and
information States are required to report under Sec. 441.311 be
provided on one web page, either directly or by linking to the web
pages of the MCO, PAHP, PIHP, or primary care case management entity
that is authorized to provide services. We solicited comment on whether
States should be permitted to link to web pages of these managed care
plans and whether we should limit the number of separate web pages that
a State could link to, in place of directly reporting the information
on its own web page.
We received public comments on this proposal. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported and noted that the States
should have one central web page operated and housed solely by the
State to ensure data and information is reported consistently across
their HCBS programs. One of the commenters suggested a State could, in
their centralized State web page, give users the opportunity to filter
by provider, managed care plan, or locality and include contact
information for managed care plans. A few commenters generally
supported permitting States to link to web pages of managed care plans
to meet the proposed requirement.
Another commenter identified that beneficiaries may rely on their
managed care plan's website for information instead of the State
website and

[[Page 40673]]

recommended limiting web page links to managed care plans' websites,
raising concern that requiring States to post the data and information
from the managed care plans could be duplicative and lead to user
confusion if website updates between the State and managed care plans
were not synched. A few commenters emphasized that having multiple
managed care plan web page links to access the data and information
that States are required to report under Sec. 441.311 could place a
burden on beneficiaries, consumers, and the public, to find and
navigate the unique displays of managed care plan websites.
Response: We thank commenters for their suggestions. We have
attempted to provide States with as much flexibility as possible in
reporting of data and information required at Sec. 441.311. State and
managed care plan reporting of required data and information must be
available and accessible for HCBS beneficiaries and other interested
parties, without placing undue burden on them. Upon further
consideration, we agree that it adds a undue level of complexity and
the potential for duplicate sources of the data and information by
requiring the State to link to individual web pages of managed care
plans.
After consideration of these public comments, we are finalizing the
requirements at Sec. 441.313(a)(1) with a modification to remove the
word, web page, and replace with the word, website, and made minor
formatting changes. We plan to provide technical assistance to States
as needed to address the concerns raised by commenters.
Comment: One commenter agreed that the State should link to managed
care plan web pages to report on the results of the reporting
requirements at Sec. 441.311, rather than have the managed care plans
forward these results to the State to report on their State website.
This commenter also recommended requiring the same language and format
requirements in Sec. 438.10(d) apply to Sec. 441.33 and noted that
many States serve Medicaid HCBS participants who receive services under
managed LTSS and FFS, and that misalignment could occur between the
regulations for managed care and FFS.
Response: Managed care plan websites required at Sec. 438.10(c)(3)
are already subject to the requirements at Sec. 438.10(d), and we have
not identified a compelling reason to make a similar reference in Sec.
441.311. We decline to add mention of Sec. 438.10(d) and are
finalizing the requirements at Sec. 441.311 as proposed.
After consideration of public comments, we are finalizing the
requirements at Sec. 441.313(a)(1) with a modification to require the
State to include all content on one website, either directly or by
linking to websites of individual MCO's, PIHP's, or PAHP's, as defined
in Sec. 438.2. We also are finalizing the requirements at Sec.
441.313(a)(1) with a modification to remove the word, web page, and
replace with the word, website, and make minor formatting changes.
c. Accessibility of Information (Sec. 441.313(a)(2))
At Sec. 441.313(a)(2), we proposed to require that the website
include clear and easy to understand labels on documents and links. We
requested comments on whether these requirements are sufficient to
ensure the accessibility of the information for people receiving HCBS
and other HCBS interested parties and for specific requirements to
ensure the accessibility of the information.
We received public comment on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Two commenters recommended we recognize the communication
needs of deaf, hard of hearing, deaf-blind, and blind individuals,
including those who have low vision, emphasizing that these
beneficiaries should have access to culturally and linguistically
competent services, as well as services and auxiliary aids pursuant to
Title II of the Americans with Disabilities Act (ADA) of 1990 and
section 504 of the Rehabilitation Act of 1973 (section 504). They also
recommended that we reference the Twenty-First Century Communications
and Video Accessibility Act of 2010 (Pub. L. 111-260), which includes
the use of clear language, icons, captioned videos, American Sign
Language, and suitable color contrast. The commenters emphasized that
any website materials and reports should be written with
accommodations, including large print and braille, to ensure
beneficiaries have equal, effective, and meaningful website
communication. One commenter recommend that we also consider that due
to the ``digital divide'' many HCBS beneficiaries do not have easy
access to the internet and recommended we require States and managed
care plans to share the information posted on their websites in an
alternative format at the beneficiary's request.
Response: We confirm that our proposal requires States to operate a
website that meets the availability and accessibility requirements at
Sec. 435.905(b) of this chapter, which requires the provision of
auxiliary aids and services at no cost to individuals with disabilities
in accordance with the ADA and section 504. We have attempted to
provide the State with as much flexibility as possible in the design of
their website. We agree that State and managed care plan websites must
be available and accessible for people receiving HCBS and other HCBS
interested parties. Further, we note that States' websites are subject
to State or local laws regarding accessibility, and States must comply
with other applicable laws independent of the requirements at Sec.
441.313(a).
We encourage States to identify inequities for HCBS beneficiaries
who have insufficient internet access and develop mechanisms to
communicate website information that is available and accessible.
After consideration of comments received, we are finalizing Sec.
441.313(a)(2) as proposed.
d. Website Operation Verification (Sec. 441.313(a)(3))
At Sec. 441.313(a)(3), we proposed to require that States verify
the accurate function of the website and the timeliness of the
information and links at least quarterly. We requested comment on
whether this timeframe is sufficient or if we should require a shorter
timeframe (monthly) or a longer timeframe (semi-annually or annually).
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters responded to our comment solicitation,
expressing alternative timeframes related to the requirements at Sec.
441.313(a)(3). Two commenters suggested websites should be updated on a
more frequent monthly basis to ensure accuracy and functionality. A few
other commenters suggested that websites should be updated semi-
annually. Alternatively, another commenter requested that the
verification of web content be completed annually to minimize
administrative burden on States with significant web content to review
and verify.
Response: We agree that accurate function of the website and the
timeliness of the information is important. We note in section II.B.9.
of the proposed rule (88 FR 27995 through 27996), and reiterate here,
that we believe promoting public transparency and accountability of the
quality and performance of Medicaid HCBS systems, and the availability
of such information will improve the ability of

[[Page 40674]]

beneficiaries, consumer advocates, oversight entities, or other
interested parties to hold States accountable for ensuring that
services are accessible and high quality for people who need Medicaid.
We believe that verification quarterly, is reasonable taking into
account the level of complexity required for such State reporting. We
decline to make any changes to Sec. 441.313(a)(3) in this final rule.
After consideration of the comments received, we are finalizing
Sec. 441.313(a)(3) as proposed.
e. Oral and Written Translation Requirements (Sec. 441.313(a)(4))
At Sec. 441.313(a)(4), we proposed to require that States include
prominent language on the website explaining that assistance in
accessing the required information on the website is available at no
cost and include information on the availability of oral interpretation
in all languages and written translation available in each non-English
language, how to request auxiliary aids and services, and a toll free
and TTY/TDY telephone number.
We received public comment on this proposal. The following is a
summary of the comments we received and our responses.
Comment: Several commenters supported the proposed requirements at
Sec. 441.313(a)(4), One commenter further stated that, to ensure best
quality, instructions to States on expectations for conducting
translation in non-English languages to support the availability of
oral interpretation in all languages and to assure uniformity across
State policies to implement this component of the provision would be
helpful. A few commenters opposed the proposed requirements at Sec.
441.313(a)(4), expressing concern about the State financial and
administrative burden that could occur due to the necessity to hire
vendors to meet the expectations to conduct translation in non-English
languages as required.
Response: We believe that the proposed requirements at Sec.
441.313(a)(4) are important for ensuring that the required information
on the website is accessible to people receiving HCBS and other
interested parties. We reiterate, as noted in the proposed rule (88 FR
27979 and 27995), in Medicaid, enhanced FFP is available at a 90
percent FMAP for the design, development, or installation of
improvements of mechanized claims processing and information retrieval
systems, in accordance with applicable Federal requirements.\156\
Enhanced FFP at a 75 percent FMAP is also available for operations of
such systems, in accordance with applicable Federal requirements.\157\
However, receipt of these enhanced funds is conditioned upon States
meeting a series of standards and conditions to ensure investments are
efficient and effective.\158\
---------------------------------------------------------------------------

\156\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\157\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\158\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
---------------------------------------------------------------------------

After consideration of comments received, we are finalizing the
requirements at Sec. 441.313(a)(4) as proposed.
f. CMS Website Reporting (Sec. 441.313(b))
We proposed at Sec. 441.313(b) that CMS report on its website the
information reported by States to us under Sec. 441.311. For example,
we envisioned that we will update CMS's website to provide HCBS
comparative information reported by States that can be compared to HCBS
information shared by other States. We also envisioned using data from
State reporting in future iterations of the CMS Medicaid and CHIP
Scorecard.\159\
---------------------------------------------------------------------------

\159\ CMS's Medicaid and CHIP Scorecard. Accessed at https://www.medicaid.gov/state-overviews/scorecard/index.html.
---------------------------------------------------------------------------

We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: A few commenters supported the proposal that CMS would
report on its own website the results of the data and information
required to be reported under Sec. 441.311, noting this enables easier
comparison of results across States and serve as a single information
source for users. One commenter suggested we consider a source, such as
an HCBS hub, as defined by the commenter, on the CMS website, where
users can quickly be directed to State HCBS programs and contracted
managed care plan website pages.
One commenter suggested we initiate a best practice using the CMS
website as an example for States to follow and share input with States
on developing their websites to meet the requirements at Sec.
441.313(a). Another commenter recommended we convene a technical expert
panel of relevant interested parties to create a set of guidelines and
best practices that States could leverage to meet the proposed website
transparency requirements at Sec. 441.313(a) to offset States' time
and resource investments in building the website, and to assist with
minimizing the State's risk of updating websites that do not meet
requirements.
Response: We appreciate the submission of these comments and will
take this feedback into consideration as CMS updates its website to
report on the results of the data and information required to be
reported under Sec. 441.311.
After consideration of the comments received, we decline to make
any changes to Sec. 441.313(b) in this final rule and are finalizing
as proposed.
g. Applicability Dates (Sec. 441.313(c))
We proposed at Sec. 441.313(c) to provide States with 3 years to
implement these requirements in FFS delivery systems. For States with
managed care delivery systems under the authority of sections 1915(a),
1915(b), 1932(a), or section 1115(a) of the Act and that include HCBS
in the MCO's, PIHP's, or PAHP's contract, we proposed to provide States
until the first managed care plan contract rating period that begins on
or after 3 years after the effective date of the final rule to
implement these requirements. We based this proposed time period
primarily on the effective date for State reporting at Sec. 441.311.
We solicited comments on whether this timeframe is sufficient,
whether we should require a longer timeframe (4 years) to implement
these provisions, and if a longer timeframe is recommended, the
rationale for that longer timeframe.
We received comments on this proposal. Below is a summary of the
comments and our responses.
Comment: Most commenters supported the timeframe of 3 years
following the effective date of the final rule to implement the website
transparency requirements at Sec. 441.313, emphasizing that these
requirements facilitate the process of comparing results across States
and create a single source where beneficiaries, providers, advocates,
and policymakers can find a ``wealth of information about HCBS
access.'' One commenter expressed support for the proposed section
regarding transparency related to the administration of Medicaid-
covered HCBS but did not believe it should take 3 years to implement. A
few commenters also expressed concerns about the challenges they
believe will be associated with the website transparency requirements
at Sec. 441.313, due to administrative burden States may face with
significant web content to

[[Page 40675]]

review and verify to implement the provision.
Response: We believe that 3 years is a realistic and achievable
timeframe for States to comply with the website transparency
requirements, and we have not identified a compelling reason make
changes to this date. We are finalizing the requirement at Sec.
441.3131(c) as proposed with modifications as described later in this
section. We reiterate, as noted in the proposed rule, in Medicaid,
enhanced FFP is available at a 90 percent FMAP for the design,
development, or installation of improvements of mechanized claims
processing and information retrieval systems, in accordance with
applicable Federal requirements.\160\ Enhanced FFP at a 75 percent FMAP
is also available for operations of such systems, in accordance with
applicable Federal requirements.\161\ However, receipt of these
enhanced funds is conditioned upon States meeting a series of standards
and conditions to ensure investments are efficient and effective.\162\
---------------------------------------------------------------------------

\160\ See section 1903(a)(3)(A)(i) and Sec. 433.15(b)(3), 80 FR
75817-75843; https://www.medicaid.gov/state-resourcecenter/faq-medicaid-and-chip-affordable-care-act-implementation/downloads/affordable-care-act-faq-enhancedfunding-for-medicaid.pdf; https://www.medicaid.gov/federal-policy-guidance/downloads/SMD16004.pdf.
\161\ See section 1903(a)(3)(B) and Sec. 433.15(b)(4).
\162\ See Sec. 433.112 (b, 80 FR 75841; https://www.ecfr.gov/current/title-42/chapter-IV/subchapter-C/part-433/subpart-C.
---------------------------------------------------------------------------

After consideration of public comments, we are finalizing the
substance of Sec. 441.313(c) as proposed, but with minor modifications
to correct erroneous uses of the word ``effective'' and to make
technical modifications at Sec. 441.313(c) to the language pertaining
to managed care delivery systems to improve accuracy and alignment with
common phrasing in managed care contracting policy. We are retitling
the requirement at Sec. 441.313(c) as Applicability date (rather than
Effective date). We are also modifying the language at Sec. 441.313(c)
to specify that States must comply with the requirements in Sec.
441.313(c) beginning 3 years from the effective date of this final
rule.
h. Application to Managed Care and Fee-for Service (Sec. Sec. 441.486,
441.595, and 441.750)
As discussed in section II.B.1. of the proposed rule, section
2402(a)(3)(A) of the Affordable Care Act requires States to improve
coordination among, and the regulation of, all providers of Federally
and State-funded HCBS programs to achieve a more consistent
administration of policies and procedures across HCBS programs. In the
context of Medicaid coverage of HCBS, it should not matter whether the
services are covered directly on a FFS basis or by a managed care plan
to its enrollees. The requirement for consistent administration should
require consistency between these two modes of service delivery. We
accordingly proposed to specify that a State must ensure compliance
with the requirements in Sec. 441.313, with respect to HCBS delivered
both under FFS and managed care delivery systems.
Similarly, because we proposed to apply the reporting requirements
at Sec. 441.311 to other HCBS State plan options, we also proposed to
include these website transparency requirements within the applicable
regulatory sections. Specifically, we proposed to apply the
requirements of Sec. 441.313 to section 1915(j), (k), and (i) State
plan services at Sec. Sec. 441.486, 441.595, and 441.750,
respectively. Consistent with our proposal for section 1915(c) waivers,
we proposed these requirements based on our authority under section
1102(a) of the Act to make and publish rules and regulations that are
necessary for the efficient administration of the Medicaid program. We
believe the same reasons for these requirements for section 1915(c)
waivers are equally applicable for these other HCBS authorities.
We solicited comment on the application of these provisions across
section 1915(i), (j), and (k) authorities.
We did not receive public comments on this provision.
After consideration of public comments received on this rule, we
are finalizing the application of the website transparency requirements
at Sec. 441.313 to section 1915(j), (k), and (i) State plan services.
We are finalizing our proposed requirements at Sec. Sec. 441.486,
441.595, and 441.750 with minor modifications to clarify that the
references to section 1915(c) of the Act are instead references to
section 1915(j), 1915(k), and 1915(i) of the Act, respectively.
i. Summary of Finalized Requirements
After consideration of the public comments, we are finalizing the
requirements at Sec. 441.313 as follows:
We are finalizing the requirement at Sec. 441.313(c),
with a technical modification to the language to improve accuracy and
alignment with common phrasing in managed care contracting policy. We
also are finalizing Sec. 441.313(c) to specify that States must comply
with the requirements as described in Sec. 441.313(c) of this section
beginning 3 years after the effective date of this final rule; and in
the case of the State that implements a managed care delivery system
under the authority of sections 1915(a), 1915(b), 1932(a), or 1115(a)
of the Act and includes HCBS in the MCO's, PIHP's, or PAHP's contract,
the first rating period for contracts with the MCO, PIHP, or PAHP
beginning on or after the date that is 3 years after the effective date
of this final rule.
We are finalizing at Sec. Sec. 441.313(a) and (b) with
minor technical modifications to include the additional requirements at
Sec. 441.302(k)(6).
We are finalizing the requirements at Sec. 441.313(c)
with minor formatting changes.
We are finalizing Sec. Sec. 441.486, 441.595, and 441.750
with minor modifications to clarify that the references to section
1915(c) of the Act are instead references to section 1915(j), 1915(k),
and 1915(i) of the Act, respectively.
10. Applicability of Proposed Requirements to Managed Care Delivery
Systems
As discussed earlier in sections II.B.1., II.B.4., II.B.5.,
II.B.7., and II.J. of this rule, we proposed to apply the requirements
we proposed at Sec. Sec. 441.301(c)(3), 441.302(a)(6), 441.302(k),
441.311, and 441.313 to both FFS and managed care delivery systems.
Although the proposed provisions at Sec. Sec. 441.301(c)(3),
441.302(a)(6) and (k), 441.311, and 441.313 would apply to LTSS
programs that use a managed care delivery system to deliver services
authorized under section 1915(c) waivers and section 1915(i), (j), and
(k) State plan authorities, we believe incorporating a reference in 42
CFR part 438 would be helpful to States and managed care plans.
Therefore, we proposed to add a cross reference to the requirements in
proposed Sec. 438.72 to be explicit that States that include HCBS in
their MCO's, PIHP's, or PAHP's contracts would have to comply with the
requirements at Sec. Sec. 441.301(c)(1) through (3), 441.302(a)(6) and
(k), 441.311, and 441.313. We believed this would make the obligations
of States that implement LTSS programs through a managed care delivery
system clear, consistent, and easy to locate. While we believed the
list proposed in Sec. 438.72 would help States easily identify the
provisions related to LTSS, we identified that a provision specified in
any other section of 42 CFR part 438 or any other Federal regulation
but omitted from Sec. 438.72, is still in full force and effect. We
also noted that Sec. 438.208(c)(3)(ii) currently references Sec.
441.301(c)(1) and (2). We did not propose any changes to the regulatory

[[Page 40676]]

language at Sec. 441.301(c)(1) or (2) or to Sec. 438.208(c)(3)(ii) in
the proposed rule. We included Sec. 441.301(c)(1) and (2) in the
proposed regulatory language at Sec. 438.72 so that it would be clear
that the requirements at Sec. 441.301(c)(1) and (2) continue to apply.
We received various comments and questions about how specific
provisions would be implemented in managed care contexts; these
comments and our responses are addressed in the sections pertaining to
those provisions. We did not receive other comments specifically on
this proposal at Sec. 438.72.
Upon further review, we have determined it necessary to make a
clarifying correction to Sec. 438.72, which we are finalizing with
modifications. We proposed that Sec. 438.72(b) would read that the
State must comply with the review of the person-centered service plan
requirements at Sec. 441.301(c)(1) through (3), the incident
management system requirements at Sec. 441.302(a)(6), the payment
adequacy requirements at Sec. 441.302(k), the reporting requirements
at Sec. 441.311, and the website transparency requirements at Sec.
441.313 for services authorized under section 1915(c) waivers and
section 1915(i), (j), and (k) State plan authorities. We noted that in
some cases, our description of the references in the regulations did
not align with the titles of those regulations (such as at Sec.
441.302(a)(6), in which only Sec. 441.302(a)(6)(i) is specifically
titled requirements, although our intent was for States to comply with
Sec. 441.302(a)(6)(i) through (iii). To avoid confusion due to any
misaligned language, we are removing the narrative descriptions of the
requirements and retaining just the references to the regulatory text.
After consideration of public comments, we are finalizing Sec.
438.72(b) with this modification, which will read that the State must
comply with requirements at Sec. Sec. 441.301(c)(1) through (3),
441.302(a)(6), 441.302(k), 441.311, and 441.313 for services authorized
under section 1915(c) waivers and section 1915(i), (j), and (k) State
plan authorities.

C. Documentation of Access to Care and Service Payment Rates (Sec.
447.203)

Section 1902(a)(30)(A) of the Act requires that State plans
``assure that payments are consistent with efficiency, economy, and
quality of care and are sufficient to enlist enough providers so that
care and services are available under the plan at least to the extent
that such care and services are available to the general population in
the geographic area.'' Through the provisions we are finalizing in
Sec. 447.203, we are establishing an updated process through which
States will be required to document, and we will ensure, compliance
with the requirements of section 1902(a)(30)(A) of the Act.
In the 2015 final rule with comment period, we codified a process
that requires States to complete and make public AMRPs that analyze and
inform determinations of the sufficiency of access to care (which may
vary by geographic location in the State) and are used to inform State
policies affecting access to Medicaid services, including provider
payment rates. The AMRP must specify data elements that support the
State's analysis of whether beneficiaries have sufficient access to
care, based on data, trends, and factors that measure beneficiary
needs, availability of care through enrolled providers, and utilization
of services. States are required to update their AMRPs at regular
intervals and whenever the State proposes to reduce FFS provider
payment rates or restructure them in circumstances when the changes
could result in diminished access. Specifically, the AMRP process at
Sec. 447.203 before this final rule (which we refer to in this final
rule preamble as the previous AMRP process) required States to consider
the extent to which beneficiary needs are fully met; the availability
of care through enrolled providers to beneficiaries in each geographic
area, by provider type and site of service; changes in beneficiary
utilization of covered services in each geographic area; the
characteristics of the beneficiary population (including considerations
for care, service and payment variations for pediatric and adult
populations and for individuals with disabilities); and actual or
estimated levels of provider payment available from other payers,
including other public and private payers, by provider type and site of
service. The analysis further required consideration of beneficiary and
provider input, and an analysis of the percentage comparison of
Medicaid payment rates to other public and private health insurer
payment rates within geographic areas of the State, for each of the
services reviewed, by the provider types and sites of service. While
the previous regulations included broad requirements for what an
acceptable methodology used to conduct this analysis must include,
States retained discretion in establishing their processes, including
but not limited to the specification of data sources and analytical
methodologies to be used. For example, States were broadly required to
include actual or estimated levels of provider payments available from
other payers; however, States retained discretion on which payers they
reported on, including where the payment data was sourced from. The
result has been a large analytical burden on States without a
standardization that allows us and other interested parties to compare
data between States to understand whether the Federal access standards
are successfully achieving access consistent with section
1902(a)(30)(A) of the Act for beneficiaries nationwide.
Through the previous AMRP process, we aimed to create a transparent
and data-driven process through which to ensure State compliance with
section 1902(a)(30)(A) of the Act. Following publication of the 2011
proposed rule and as discussed in both the 2015 final rule with comment
period and the 2016 final rule, as we worked with States to implement
the previous AMRP requirements, many States expressed concerns about
the rule.^{163 164 165} States were concerned about the
administrative burden of completing the previous AMRPs and questioned
whether the previous AMRP process is the most effective way to
establish that access to care in a State's Medicaid program meets
statutory requirements. States with high managed care enrollment were
also concerned about the previous AMRP process because the few
remaining FFS populations in their State often reside in long-term care
facilities or require only specialized care that is ``carved out'' of
managed care (that is, not covered under the State's contract with
managed care plans), but long-term care and specialized care services
were not required to be analyzed under the previous AMRP process. We
have also heard concerns from other interested parties, including
medical associations and non-profit organizations, that the 2015 final
rule with comment period afforded States too much discretion in
developing access measures which could lead to ineffective monitoring
and enforcement, as well as challenges comparing access across States.
One commenter on the 2015 final rule was concerned that States had too
much discretion in ``. . . setting standards and access measure . . .''
and ``. . . whether they have met their chosen standards'' as this
process relies on self-regulation rather than ``an independent,
objective third party as the primary arbiter of a State's compliance

[[Page 40677]]

. . .'' \166\ Another commenter stated that ``CMS should designate a
limited and standardized set of data measures that would be collected
rather than leaving the decision of which data measures to use to State
discretion'' as this would ``enable the development of key, valid, and
uniform measures; more effective monitoring and enforcement; and will
ensure comparability of objective measures across the States.'' \167\
At the time of publication of the 2011 proposed rule and 2015 final
rule with comment period, we noted our belief that a uniform approach
to meeting the statutory requirement under section 1902(a)(30)(A) of
the Act, including setting standardized access to care data measures,
could prove difficult given then-current limitations on data, local
variations in service delivery, beneficiary needs, and provider
practice roles.^{168 169}
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\163\ 76 FR 26341.
\164\ 80 FR 67576 at 67583 and 67584.
\165\ 81 FR 21479 at 21479.
\166\ American Medical Association, Comment Letter on 2015 Final
Rule with Comment Period (January 4, 2016), https://www.regulations.gov/comment/CMS-2011-0062-0328.
\167\ American Association of Retired Persons, Comment Letter on
2011 Propose Rule (July 5, 2011), https://www.regulations.gov/comment/CMS-2011-0062-0121.
\168\ 76 FR 26341 at 26349.
\169\ 80 FR 67576 at 67577, 67579, 67590.
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Separately, the Supreme Court, in Armstrong v. Exceptional Child
Center, Inc., 575 U.S. 320 (2015), ruled that Medicaid providers and
beneficiaries do not have a direct private right of action against
States to challenge Medicaid payment rates in Federal courts. This
decision means provider and beneficiary legal challenges against States
are unavailable in Federal court to supplement our oversight as a means
of ensuring compliance with section 1902(a)(30)(A) of the Act. The
Armstrong decision also underscored HHS' and CMS' unique responsibility
for resolving issues concerning the interpretation and implementation
of section 1902(a)(30)(A) of the Act. The Supreme Court's Armstrong
decision placed added importance on CMS' administrative review of SPAs
proposing to reduce or restructure FFS payment rates. Accordingly, the
2015 final rule with comment period was an effort to establish a more
robust oversight and enforcement strategy with respect to section
1902(a)(30)(A) of the Act.
In consideration of State agencies' and other interested parties'
feedback on the previous AMRP process, as well as CMS' obligation to
ensure continued compliance with section 1902(a)(30)(A) of the Act, we
are updating the requirements in Sec. 447.203. We are rescinding and
replacing the AMRP requirements previously in Sec. 447.203(b)(1)
through (8) with a streamlined and standardized process, described in
Sec. 447.203(b) and (c). This change is informed by a center-wide
review of our policy and processes regarding access to care for all
facets of the Medicaid program. The 2015 final rule with comment period
acknowledged our need to better understand FFS rate actions and their
potential impact on State programs, and the requirements we finalized
require a considerable amount of data from States. To ensure States
were meeting the statutory requirement under section 1902(a)(30)(A) of
the Act, the previous AMRP process was originally intended to establish
a transparent data-driven process for States to measure the current
status of access to services within the State and utilize this process
for monitoring access when proposing rate reductions and
restructurings.\170\ As the rule took effect and as we reviewed States'
previous AMRPs, we found that some rate reductions and restructurings
had much smaller impacts than others. The 2017 SMDL reflected the
experience that certain payment rate changes would not likely result in
diminished access to care and do not require the substantial review of
access data that generally is required under the 2015 final rule with
comment period. Since publication of the 2019 CMCS Informational
Bulletin stating the agency's intention to establish a new access
strategy, we have developed the new process we are finalizing in this
final rule that considers the lessons learned under the previous AMRP
process, and emphasizes transparency and data analysis, with specific
requirements varying depending on the State's current payment levels
relative to Medicare, the magnitude of the proposed rate reduction or
restructuring, and any access to care concerns raised to State Medicaid
agency by interested parties. With these provisions, we aim to balance
Federal and State administrative burden with our shared obligation to
ensure compliance with section 1902(a)(30)(A) of the Act (and our
obligation to oversee State compliance with the same).
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\170\ 80 FR 67576 at 67577.
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We received public comments on our overall approach to a new access
strategy as well as broad comments about multiple provisions in the
rule. We received some comments that were outside of the scope of the
proposed rule entirely (for example, related to access in managed care
and coverage of services), and therefore, are not addressed in this
final rule. We also note that some commenters expressed general support
for all of the provisions in section II.C. of this rule, as well as for
this rule in its entirety. In response to commenters who supported
some, but not all, of the policies and regulations we proposed in the
proposed rule (particularly in section II.C related to FFS access), we
are clarifying and emphasizing our intent that each final policy and
regulation is distinct and severable to the extent it does not rely on
another final policy or regulation that we proposed.
While the provisions in section II.C. of this final rule are
intended to present a comprehensive approach to ensuring that FFS
payment rates are adequate to ensure statutorily sufficient access for
beneficiaries, and these provisions complement the goals expressed and
policies and regulations being finalized in sections II.A. (MAC and
BAC) and II.B. (HCBS) of this final rule, we intend that each of them
is a distinct, severable provision, as finalized. Unless otherwise
noted in this rule, each policy and regulation being finalized under
this section II.C is distinct and severable from other final policies
and regulations being finalized in this section or in sections II.A. or
II.B of this final rule, as well as from rules and regulations
currently in effect.
Consistent with our previous discussion earlier in section II. of
this final rule regarding severability, we are clarifying and
emphasizing our intent that 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, or stayed pending further State action, it
shall be severable from this final rule, and from rules and regulations
currently in effect, and not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other, dissimilar circumstances. For example, we intend that the
policies and regulations we are finalizing related to the payment rate
transparency publication requirement (section II.C.2.a. of this final
rule) are distinct and severable from the policies and regulations we
are finalizing related to the comparative payment rate analysis
requirement and the payment rate disclosure publication requirement
(sections II.C.2.b. of this final rule, which we further intend are
severable from each other). These provisions are in turn also severable
from the interested parties advisory group provision in section
II.C.2.c. of this final rule, the State analysis procedures for rate
reduction and restructuring SPAs in section II.C.3. of this final rule,
and from the Medicaid provider participation and

[[Page 40678]]

public process to inform access to care policies in section II.C.4. of
this final rule, and each of these in turn is intended to be severable
from each other.
The following is a summary of the general comments we received on
our proposal to rescind the previous AMRP requirements in Sec.
447.203(b)(1) through (8) and replace them with a streamlined and
standardized process in Sec. 447.203(b) and (c), and our responses.
Comment: We received general support from most commenters for our
proposal to rescind the AMRP process finalized in the 2015 final rule
with comment period in its entirety and replace it with new
requirements for payment rate transparency and State analysis
procedures for rate reductions and restructuring as described in the
proposed rule to ensure compliance with section 1902(a)(30)(A) of the
Act. We also received commenter feedback encouraging CMS to ensure the
process replacing the AMRPs is robust and public, and that it ensures
access to critical services is measured adequately.
Response: We thank the commenters for their support and are
finalizing the rescission of the previous AMRP process in its entirety
and its replacement with the new requirements as proposed, apart from
some minor revisions to the proposed regulatory language, which we
address in detail later in this final rule. As of the effective date of
this final rule, States are no longer required to submit AMRPs to CMS
as previously required in Sec. 447.203(b)(1) through (8). We believe
our new policies are robust and that they ensure public transparency
and that access to critical services is measured adequately.
Comment: While most commenters generally supported the proposal to
rescind Sec. 447.203(b) in its entirety and replace it with new
requirements to ensure FFS Medicaid payment rate adequacy, a couple of
commenters recommended that CMS maintain some or all of the AMRP
process for certain providers (that is, FQHCs, clinics, dental care
providers, and community mental health providers), in addition to the
newly proposed payment rate transparency, comparative payment rate
analysis, and payment rate disclosure requirements. Additionally, these
commenters raised concerns that the newly proposed requirements focused
exclusively on fee schedule payment rate transparency and comparison to
Medicare payment rates; therefore, FQHCs, clinics, dental care
providers, and community mental health providers would be excluded from
the proposed payment rate transparency and comparative payment rate
analysis provisions because these providers generally are not paid fee
schedule payment rates (within the meaning of this final rule) and/or
lack corresponding Medicare payment rates. One commenter recommended
keeping the AMRP requirements in place as a separate process for
analyzing access to primary care services provided by FQHCs, clinics,
or dental providers if these providers are excluded from the payment
rate transparency and comparative payment rate disclosure as a way to
assess access to care to these services and providers as they were
previously included in the AMRP requirements. Another commenter stated
that, in comparison to the AMRPs, the provisions in the proposed rule
are an oversimplified approach to evaluating Medicaid FFS payment rates
and do not sufficiently focus on payment levels for a comprehensive
continuum of behavioral health services.
Response: We acknowledge these commenters' support for the previous
AMRP process and suggestion to continue to subject payment rates for
FQHCs, clinics (as defined in Sec. 440.90), dental care providers, and
community mental health providers to the previous AMRP process.
However, we are not incorporating this suggestion, to ensure a
consistent approach to evaluating access to care within FFS and across
delivery systems that more appropriately balances administrative burden
on States and us with the usefulness of the process for ensuring that
payment rates comply with section 1902(a)(30)(A) of the Act.
To address commenters' concerns about services being excluded from
the payment rate transparency provision in Sec. 447.203(b)(1), we will
briefly address which payment rates are and are not subject to the
payment rate transparency provisions, but this issue is discussed in
greater detail in a later comment response. For purposes of the payment
rate transparency provision in Sec. 447.203(b)(1), Medicaid FFS fee
schedule payment rates are payment amounts made to a provider and known
in advance of a provider delivering a service to a beneficiary by
reference to a fee schedule. To the extent a State pays fee schedule
payment rates for clinic services (as defined in Sec. 440.90), dental
services, and community mental health services that meet the previously
stated description, those payment rates are subject to the payment rate
transparency provisions in Sec. 447.203(b)(1). As for the comparative
payment rate analysis requirements in Sec. 447.203(b)(2)-(3), as
discussed in greater detail later in this final rule, only codes
included on the CMS-published list of evaluation and management (E/M)
Current Procedural Terminology or Healthcare Common Procedure Coding
System (HCPCS) CPT/HCPCS codes are subject to the analysis.
Additionally, as further discussed in a later comment response,
States use provider-specific cost and visit data for a particular
benefit category to set the prospective payment system (PPS) rates that
are paid to FQHCs or rural health clinics (RHCs) in a process governed
by section 1902(bb) of the Act. Because States utilize these data
rather than fee schedule payment rates within the meaning of this final
rule, those rates paid to FQHCs and RHCs are not subject to the new
payment rate transparency provisions in Sec. 447.203(b)(1) or the
comparative payment rate analysis requirements in Sec. 447.203(b)(2)
through (3). Lastly, like all State plan services for which the State
proposes a rate reduction or restructuring in circumstances where the
changes could result in reduced access, FQHC, RHC, clinic (as defined
in Sec. 440.90), dental, and community mental health services are
subject to access analyses in Sec. 447.203(c) for proposed rate
reductions and restructuring.
While we recognize that there may be multiple approaches to
evaluating access to care for Medicaid beneficiaries, we respectfully
disagree with the commenter that the payment rate transparency and
State analysis procedures for rate reductions and restructuring are an
oversimplified approach for evaluating Medicaid FFS payment rates. As
part of a comprehensive review of our policy and processes regarding
access to care for all facets of the Medicaid program, we proposed a
more streamlined approach, as compared to previous AMRP process, that
we intended better to balance Federal and State administrative burden
with our shared obligation to ensure compliance with section
1902(a)(30)(A) of the Act.
Additionally, we disagree with the commenter that, in comparison to
the previous AMRP process, the provisions in the proposed rule do not
sufficiently focus on payment levels for a comprehensive continuum of
behavioral health services. The provisions of this final rule serve as
one part of our comprehensive efforts to ensure that payment levels
across the continuum of behavioral health services are economic and
efficient, as well as consistent with quality and access consistent
with the statute. As we discussed in the proposed rule, we limited the
scope of behavioral health services subject to

[[Page 40679]]

comparative payment rate analysis to include only outpatient
services.\171\ For this final rule, we have revised the outpatient
behavioral health services category of service in Sec.
447.203(b)(2)(iii), which we are finalizing as ``Outpatient mental
health and substance use disorder services.'' This revision will ensure
this final rule is consistent with the services in the Managed Care
final rule (as published elsewhere in this Federal Register) and
reflects a more granular level of service description. As this category
of service remains outpatient, this allows us to focus on ambulatory
care provided by practitioners in an office-based setting without
duplicating existing Federal requirements for demonstrating compliance
with applicable upper payment limits (UPLs) and the supplemental
payment reporting requirements under section 1903(bb) of the Act.
Therefore, between the comparative payment rate analysis requirements
that we are finalizing in this rule (including outpatient mental health
and substance use disorder services) and existing UPL and supplemental
payment reporting requirements (including requirements specific to
inpatient services furnished in psychiatric residential treatment
facilities, institutions for mental diseases, and psychiatric
hospitals), we believe that States and CMS will have available
sufficient information about inpatient and outpatient mental health and
substance use disorder services payment rates to appropriately monitor
payment levels across the continuum of mental health and substance use
disorder services.
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\171\ 88 FR 27960 at 28006.
---------------------------------------------------------------------------

Comment: Several commenters raised concerns about administrative
burden on States to comply with the payment rate transparency
publication, comparative payment rate analysis, and payment rate
disclosure requirements. Commenters were generally concerned about the
compounding effect on already overburdened State resources that would
be required to meet these provisions, the other HCBS and MAC and BAG
provisions of the proposed rule, and the provisions of the Managed Care
proposed rule. Specifically for the payment rate transparency
provisions under Sec. 447.203(b), commenters were generally concerned
about the significant amount of State resources (including number of
staff, staff time, and financial expense) that would be required to
collect, prepare, analyze, and publish the data and information
required.
Additionally, a few commenters expressed concerns about the burden
associated with the proposed rule and stated that they did not believe
the requirement to publish Medicaid payment rates through the payment
rate transparency publication would benefit the Medicaid program by
providing States and CMS with an effective and meaningful way of
ensuring access to care is sufficient. One commenter stated that they
expect their State Medicaid program to limit future program
enhancements and improvements because they would need to redirect
resources to complying with the provisions of the proposed rule, if
finalized.
Response: We appreciate the commenters' concerns, and we would like
to note that the FFS provisions, including the payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure requirements (Sec. 447.203(b)(1) through (5)), interested
parties' advisory group requirements (Sec. 447.203(b)(6)), and State
analysis procedures for payment rate reductions or payment
restructuring (Sec. 447.203(c)), finalized in this rule are expected
to result in a net burden reduction on States compared to the previous
AMRP requirements, as discussed in the proposed rule and in section
III. of this final rule. We are also providing States with a full 2-
year compliance period between the effective date of this final rule
and the initial applicability date of July 1, 2026, rather than 6 or 9
months as finalized with the previous AMRP process.\172\ Given that the
previously referenced requirements of this final rule should be less
burdensome for States than the rescinded, previous AMRP requirements,
and the length of time States have to prepare to implement these new
requirements, we expect that States will be able to meet the payment
rate transparency, interested parties' advisory group, and State
analysis procedures for payment rate reductions or payment
restructuring requirements, if a rate reduction or restructuring is
proposed through a SPA, without needing to limit future program
enhancements or increase the level of State resources dedicated to
ensuring compliance with the access requirement in section
1902(a)(30)(A) of the Act.
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\172\ In the 2015 final rule with comment period (80 FR 67576),
the previous AMRPs were originally due on July 1 providing States
with approximately 6 months between the final rule effective date of
January 4, 2016, and due date of July 1, 2016. Based on comments
received on the 2015 final rule with comment period, the 2016 final
rule (81 FR 21479) extended the due date to October 1, 2016,
providing States with an additional 3 months to submit their first
AMRPs for a total of approximately 9 months from the effective date
of the 2015 final rule when States were first notified they would be
required to submit AMRPs.
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We would also like to reassure States that the provisions of Sec.
447.203(b)(1) in this final rule include flexibilities that could
further ease the burden on States. For example, the payment rate
transparency publication requirements described in paragraph (b)(1) and
paragraph (b)(1)(ii) have limited formatting requirements, and
therefore we expect many States that already publish at least some of
their Medicaid FFS fee schedule payment rates directly on fee schedules
posted on the State agency's website would only need to make minor
revisions or updates (if any) to comply with the new requirements with
respect to these already-published payment rates. States are not
required to create new fee schedules if their published payment rate
information is already organized in such a way that a member of the
public can readily determine the amount that Medicaid would pay for
each covered service, consistent with Sec. 447.203(b)(1).
Additionally, because commenters informed us that some States use a
contractor to maintain their fee schedules on the contractor's website,
we have revised the language in Sec. 447.203(b)(1) to permit the State
to ``publish all Medicaid fee-for-service payment rates on a website
that is accessible to the general public'' by removing the proposed
requirement that the payment rates be published on a website that is
``developed and maintained by the single State agency.'' This
flexibility is being provided for States to continue utilizing a
contractor to develop fee schedules as well as utilizing a contractor's
(or other third party's) website to publish the payment rate
transparency publication so long as the State publishes a readily
accessible link on its State-maintained website to the required content
and ensures on an ongoing basis that the linked content meets all
applicable requirements of this final rule. We continue to require that
``[t]he website where the State agency publishes its Medicaid fee-for-
service payment rates must be easily reached from a hyperlink on the
State Medicaid agency's website'' in Sec. 447.203(b)(1)(ii). We
acknowledge that States utilization of contractors to meet certain
programmatic responsibilities is a common occurrence, and with this
modification, we are ensuring flexibility for States to rely on these
relationships to meet the payment rate transparency publication
requirement.
With respect to the comparative payment rate analysis in Sec.
447.203(b)(2) and (3), as discussed in the proposed

[[Page 40680]]

rule, States have the flexibility to map their geographical areas to
those used for Medicare payment for purposes of meeting the requirement
that States break down their payment rates by geographical location, as
applicable.\173\ We will provide States with a list of the CPT/HCPCS
codes to be used for comparison in subregulatory guidance, including an
example list, that will be issued prior to the effective date of this
final rule.\174\ While the first published list will be an example list
of codes that would have been subject to the comparative payment rate
analysis if it were in effect for CY 2023, we will publish the initial
list of E/M CPT/HCPCS codes subject to the comparative payment rate
analysis no later than June 30, 2025, to provide States 1 full calendar
year between the issuance of the CMS-published list of E/M CPT/HCPCS
codes and the due date of the comparative payment rate analysis, as
described in the proposed rule.\175\
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\173\ 88 FR 27960 at 28013.
\174\ 88 FR 27960 at 28008.
\175\ 88 FR 27960 at 28008 through 28009.
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For the payment rate disclosure in Sec. 447.203(b)(2) and (3),
which requires States to publish the average hourly Medicaid FFS fee
schedule payment rate for personal care, home health aide, homemaker,
and habilitation services, as discussed in detail in a later response
to comments in this section, there is no Medicare comparison component.
Because the disclosure will reflect only the State's payment rate data,
we chose not to specify codes; this will provide States more
flexibility in meeting the requirements in line with each State's
unique circumstances. For example, the payment rate disclosure
requirements can accommodate the flexibility States have in setting
their payment rates and methodologies for personal care, home health
aide, homemaker, and habilitation services, as well as the provider
types licensed to deliver these services to beneficiaries.
We disagree with commenters that the requirement to publish
Medicaid payment rates through the payment rate transparency
publication would not benefit the Medicaid program by providing States
and CMS with an effective and meaningful way of ensuring access to care
is sufficient. As discussed in the proposed rule, payment rate
transparency is a critical component of assessing compliance with
section 1902(a)(30)(A) of the Act. By publishing their Medicaid payment
rates publicly, States will be providing the necessary information to
evaluate if State payment rates are consistent with efficiency,
economy, and quality of care and are sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area and interested parties have
basic information available to them to understand Medicaid payment
levels and the associated effects of payment rates on access to care so
that they may raise concerns to State Medicaid agencies via the various
forms of public processes available to interested parties.\176\ Also as
discussed in section V.D. of the proposed rule, we considered, but did
not propose, to require Medicaid payment information be directly
submitted to CMS, rather than publicly published, because this
requirement to publicly display payment rate information is
methodologically similar to the previous regulation at Sec. 447.203,
which required previous AMRPs be submitted to us and publicly published
by the State and CMS. We found this aspect of the rule to be an
effective method of publicly sharing access to care information, as
well as ensuring State compliance, and are carrying it forward into the
provisions finalized in this rule.\177\ Additionally, the Supreme
Court's Armstrong decision underscored the importance of CMS'
determinations, as the responsible Federal agency, regarding the
sufficiency of Medicaid payment rates.
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\176\ 88 FR 27960 at 27967.
\177\ 88 FR 27960 at 28075.
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Comment: A couple of commenters requested clarification regarding
CMS exempting States that deliver all of their Medicaid services
through managed care from all of the payment rate transparency
provisions under Sec. 447.203(b).
Response: All States are required to comply with the payment rate
transparency publication, comparative payment rate analysis, and
payment rate disclosure provisions finalized in this rule under Sec.
447.203(b), regardless of the quantity of services covered or delivered
or beneficiaries enrolled in managed care. Due to coverage transition
periods, such as where an individual is Medicaid eligible but not yet
enrolled in a managed care plan or benefits are covered
retroactively,\178\ even States that generally enroll all beneficiaries
into managed care plans pay for some services on a FFS basis that are
carved out of the managed care plan contracts, and therefore, are
expected to have Medicaid FFS fee schedule payment rates in effect.
Such Medicaid FFS fee schedule payment rates are subject to the
provisions finalized in this rule under Sec. 447.203(b).
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\178\ Once an individual is enrolled in Medicaid, coverage is
effective either on the date of application or the first day of the
month of application. Benefits also may be covered retroactively for
up to three months prior to the month of application if the
individual would have been eligible during that period had he or she
applied. Coverage generally stops at the end of the month in which a
person no longer meets the requirements for eligibility. https://www.medicaid.gov/medicaid/eligibility/index.html.
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Comment: Several commenters requested CMS clearly define the
services considered to be categories of services subject to all
provisions under Sec. 447.203(b). One commenter requested CMS publish
information regarding the timing of when States can expect the CMS
published list of E/M CPT/HCPCS codes subject to the comparative
payment rate analysis.
Response: For the payment rate transparency requirements in Sec.
447.203(b)(1), as further discussed in a later response to comments in
this section, services for which providers are paid Medicaid FFS fee
schedule payment rates within the meaning of this final rule, which
generally are payment amounts made to a provider and known in advance
of a provider delivering a service to a beneficiary, are subject to the
requirements of Sec. 447.203(b)(1)(i) through (vi).
For the comparative payment rate analysis described in Sec.
447.203(b)(3)(i), the list of the E/M CPT/HCPCS codes that specifies
the services subject to the analysis will be published in subregulatory
guidance. Prior to the effective date of this final rule, we will issue
subregulatory guidance, including a hypothetical example list of the E/
M CPT/HCPCS codes that would be subject to the comparative payment rate
analysis, if the comparative rate analysis requirements were applicable
with respect to payment rates in effect for CY 2023. This example list
defines the services that would be subject to the comparative payment
rate analysis through the identification of specific E/M CPT/HCPCS
codes that are in effect for CY 2023. In other words, the example list
of E/M CPT/HCPCS codes includes codes that meet the following criteria:
the code is effective for CY 2023; the code is classified as an E/M
CPT/HCPCS code by the American Medical Association (AMA) CPT Editorial
Panel; the code is included on the Berenson-Eggers Type of Service
(BETOS) code list effective for the same time period as the
hypothetical comparative payment rate analysis (CY 2023) and falls into
the E/M family grouping and families and subfamilies for primary care
services, obstetrics and gynecological services, and outpatient
behavioral services (now called

[[Page 40681]]

outpatient mental health and substance use disorder services in this
final rule); and the code has an A (Active), N (Non-Covered), R
(Restricted), or T (Injections) code status on the Medicare Physician
Fee Schedule (PFS) with a Medicare established relative value unit
(RVU) and payment amount for CY 2023. As discussed in the proposed
rule, we expect to provide States with approximately 1 full calendar
year of access to the CMS-published list of E/M CPT/HCPCS codes and
Medicare non-facility payment rates as established in the annual
Medicare PFS rule for a calendar year to provide States with sufficient
time to develop and publish their comparative payment rate analyses as
described in Sec. 447.203(b)(4).\179\ Therefore, we expect that the
first CMS-published list of the E/M CPT/HCPCS codes that actually will
be subject to the comparative payment rate analysis requirements will
be published by July 1, 2025 for CY 2025, to facilitate States'
publication of their comparative payment rate analyses by the
applicability date of July 1, 2026.
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\179\ 88 FR 27960 at 28008-28009.
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The categories of services subject to the payment rate disclosure
requirements described in Sec. 447.203(b)(3)(ii), as discussed later
in this preamble, are personal care, home health aide, homemaker, and
habilitation services provided under FFS State plan authority,
including sections 1915(i), 1915(j), 1915(k) State plan services;
section 1915(c) waiver authority; and under section 1115 demonstration
authority. We are not identifying codes for these categories of
services because States may use a wide variety of codes to bill and pay
for these services, and because the payment rate disclosure does not
have a comparison element that would necessitate uniformity with
another payer. While we encourage States to organize their payment rate
disclosure on a code basis, when possible, for clarity and formatting
consistency with the comparative payment rate analysis, States have
flexibility in meeting the payment rate disclosure requirements to
ensure each State's unique circumstances can be accounted for in the
disclosure.
Comment: Several commenters urged CMS to delay the proposed
applicability date of the Sec. 447.203(b) provisions, including the
compliance actions described in Sec. 447.203(b)(5), to allow States
sufficient time for compliance. Commenters stated that the amount of
recently proposed Federal changes, including this rulemaking and the
Managed Care proposed rule, raised concerns about State resources
necessary to comply with all new Federal regulations. Some commenters
expressed concern that withholding administrative FFP would further
hinder States' ability to meet the requirements and CMS should only act
after exhausting all other efforts to ensure States are compliant
(including adopting a tiered approach to enforcement and directly
engaging with non-compliant States to create a corrective action plan).
Commenters suggested the following alternative applicability dates:
approximately 3 years from the effective date of a final rule (that is,
January 1, 2027), 4 years (that is, January 1, 2028), or 5 years (that
is, January 1, 2029). Alternatively, a few commenters urged CMS to
accelerate the proposed applicability date of the Sec. 447.203(b)
provisions by one year from January 1, 2026, to January 1, 2025, to
ensure payment rate information is published timely to help address
questions about access, particularly for HCBS. In addition to the
proposed compliance procedures described in Sec. 447.203(b)(5), a
couple of commenters suggested CMS publish an annual calendar for
States to follow and CMS should also report on the timeliness of each
State's compliance with the payment rate transparency, comparative
payment rate analysis, and payment rate disclosure requirements.
Response: We are finalizing the payment rate transparency
requirements in Sec. 447.203(b) with an applicability date of July 1,
2026, which is 6 months later than we proposed. This date is an
alternative applicability date that was described in the proposed rule
to allow for States to have a period of at least 2 years between the
effective date of the final rule and the applicability date for the
Sec. 447.203(b) provisions. The July 1, 2026, applicability date
applies to the payment rate transparency, comparative payment rate
analysis, and payment rate disclosure requirements. For payment rate
transparency, the initial publication of the Medicaid FFS payment rates
shall occur no later than July 1, 2026, and include approved Medicaid
FFS payment rates in effect as of July 1, 2026. For the comparative
payment rate analysis and payment rate disclosure, the initial
comparative payment rate analysis and payment rate disclosure must
include Medicaid payment rates in effect as of July 1, 2025, and be
published no later than July 1, 2026. As finalized in this rule, the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year included in the comparative
payment rate analysis must be effective for the same time period for
the same set of E/M CPT/HCPCS codes used for the base Medicaid FFS fee
schedule payment rate. The Medicare PFS is published through annual
notice and comment rulemaking, and takes effect January 1 of the
upcoming calendar year. As discussed in the proposed rule, we
acknowledged that Medicare may issue a correction to the Medicare PFS
after the final rule is in effect, and this correction may impact our
published list of E/M CPT/HCPCS codes and we would like to reemphasize
that we expect States to rely on the CMS published list of E/M CPT/
HCPCS codes subject to the comparative payment rate analysis for
complying with the requirements in paragraphs (b)(2) through (4).\180\
States are required to use the Medicare non-facility payment rates as
established in the Medicare PFS final rule for calendar year 2025 for
purposes of the initial comparative payment rate analysis to be
published by July 1, 2026. In accordance with paragraph (b)(4), the
comparative payment rate analysis is required to be updated no less
than every 2 years and by no later than July 1 of the second year
following the most recent update, therefore, the second comparative
payment rate analysis would be for calendar year 2027, the third
analysis would be for calendar year 2029, so on and so forth. Each
comparative payment rate analysis would use the respective year's CMS
published list of E/M CPT/HCPCS codes which will be updated by CMS
approximately one full calendar year before the due date of the next
comparative payment rate analysis and the list will include changes
made to the AMA CPT Editorial Panel and the Medicare PFS based on the
most recent Medicare PFS final rule, as described in the proposed
rule.\181\
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\180\ 88 FR 27960 at 28009.
\181\ 88 FR 27960 at 28008.
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We are not finalizing the alternative applicability dates,
including dates sooner and later than the July 1, 2026, due date
finalized in this rule, as suggested by commenters. We are not
accelerating the date as we are mindful of the numerous new regulatory
requirements established in this final rule, the Managed Care final
rule (as published elsewhere in this Federal Register), and the
Streamlining Eligibility & Enrollment final rule. We want to ensure
States have adequate time to implement all newly finalized provisions,
with at least 2 years between the effective date and applicability date
as described in the proposed rule.\182\ We

[[Page 40682]]

are also not delaying the applicability date as we believe the
applicability date for the provisions finalized in section II.C. of
this final rule are reasonable given that States should have their
Medicaid FFS fee schedule payment rates data readily available,
Medicare payment rate data are publicly available, and we are making
available supportive guidance and templates with this final rule. In
the beginning of section II. of this final rule, we include a table
with the provisions and relevant timing information and applicability
dates of all provisions in the rule. We believe this table delivers the
information the commenter was seeking. We expect the information
published in this final rule is sufficient for States to comply in a
timely manner and we currently do not intend to publish a calendar in
any other format. We are finalizing the compliance provisions at Sec.
447.203(b)(5) as proposed. While we currently do not intend to publish
a report of the timeliness of each State's compliance with the payment
rate transparency, comparative payment rate analysis, and payment rate
disclosure requirements, as suggested by a couple of commenters, given
that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
---------------------------------------------------------------------------

\182\ 88 FR 27960 at 28008.
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Comment: A number of commenters suggested CMS conduct the proposed
payment rate transparency publication, comparative payment rate
analysis, and payment rate disclosure on behalf of States to ensure a
consistent, national approach to analyzing and publishing payment rate
information. These commenters stated CMS could do this by requiring
States to submit their fee schedules to CMS or CMS could collect fee
schedule rate information during the SPA approval process. Specifically
for the payment rate disclosure, two commenters suggested using
existing data collection tools, specifically the State of the Workforce
Survey, to source the information required for the disclosure to ease
burden on States.\183\ Additionally, a couple of commenters suggested
CMS create a centralized data repository of all States' payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure publications for public use, including data analysis, if the
proposed requirements are applied to States.
---------------------------------------------------------------------------

\183\ The State of the Workforce Survey collects comprehensive
data on provider agencies and the Direct Support Professional (DSP)
workforce providing direct supports to adults (age 18 and over) with
intellectual and developmental disabilities (IDD). The goal of the
survey and the resulting data is to help States examine workforce
challenges, identify areas for further investigation, benchmark
their workforce data, measure improvements made through policy or
programmatic changes, and compare their State data to those of other
States and the NCI-IDD average. https://idd.nationalcoreindicators.org/staff-providers/.
---------------------------------------------------------------------------

Response: As described in section V.D.3 of this final rule, prior
to the issuance of the 2023 proposed rule, we specifically considered
ways for CMS to produce and publish the comparative payment rate
analysis proposed in Sec. 447.203(b)(2) through (3) whereby we would
develop reports for all States demonstrating Medicaid payment rates for
all services or a subset for Medicaid services as a percentage of
Medicare payment rates.\184\ We decided not to propose this approach
because it would rely on T-MSIS data, which would increase the lag in
available data due to the need for CMS to prepare it and then validate
the data with States to ensure the publication is accurate, in addition
to introducing uncertainty into the results due to ongoing variation in
State T-MSIS data quality and completeness. Given the increased lag
time associated with T-MSIS data and uncertainty in results that would
diminish the utility of the comparative payment rate analysis, we
decided producing and publishing the analysis would likely result in
inaccuracies, resulting in burden on States to correspond with CMS to
provide missing information and correct other information. After
considering, and ultimately not proposing, CMS complete a comparative
payment rate analysis on behalf of States, we did not further consider
conducting the payment rate transparency publication or payment rate
disclosure on behalf of States due to the previously stated reasons
(that is, lagging data from T-MSIS and the need that would remain to
validate data with States).
---------------------------------------------------------------------------

\184\ 88 FR 27960 at 28075.
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We are not creating a centralized data repository of all States'
payment rate transparency, comparative payment rate analysis, and
payment rate disclosure publications for public use as suggested by
commenters because we are striving to balance Federal and State
administrative burden with our shared obligation to ensure compliance
with section 1902(a)(30)(A) of the Act. Requiring States to submit the
information they already published on their State or contractor's
website would be duplicative and create additional burden on States. We
acknowledge that we could also pull data from State or contractor
websites to create a central Federal repository; however, we intend our
initial focus to be on establishing the new payment rate transparency,
comparative payment rate analysis, and payment rate disclosure
requirements; providing States with support during the compliance
period; and ensuring these data are available to beneficiaries,
providers, CMS, and other interested parties for the purposes of
assessing access to care issues. Additionally, we believe that the
States, as stewards of Medicaid payment rate information in each of
their Medicaid programs, are the party in the best position to publish
and analyze their own payment rate information. States' ownership of
payment rate information will ensure accurate payment rate transparency
publications, comparative payment rate analyses, and payment rate
disclosures. Given that our work to better ensure access in the
Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will consider the
recommendations provided on the proposed rule to help inform any future
rulemaking in this area, as appropriate.
While we appreciate the suggestion to utilize existing data
collection tools, specifically the State of the Workforce Survey, we
will not be relying on the State of the Workforce Survey because the
data do not include all States, the District of Columbia, and the
Territories (2021 Survey only sourced data from 28 States and the
District of Columbia);), account for payment rate variation by
population (pediatric and adult), provider type, and geographical
location (2021 Survey only includes mean starting wage, the median
starting wage, as well as the minimum and maximum starting hourly
wages); or include individual providers (2021 Survey only sourced data
from provider agencies). Accordingly, it would not be a sufficient data
source to meet the requirements for the payment rate disclosure as
finalized in this final rule.
Comment: We received some comments about CMS requiring States to
change their payment rates. A couple of commenters requested CMS
require States to change their payment rates when deficiencies are
identified through the payment rate transparency publication,
comparative payment rate analysis, or payment rate disclosure; when
provider shortages are documented; and when reimbursement or payment
rates fall below a certain threshold, such as 50 percent of the
corresponding Medicare payment rate; however, most commenters who
suggested CMS set a threshold did not

[[Page 40683]]

suggest a specific number for the threshold. One commenter specifically
asked if CMS would require States to increase institutional service
payment rates. The commenter was concerned that an increase in a direct
care worker's Medicaid hourly rate, without a corresponding increase in
a Medicaid payment rate for institutional services, would result in
fewer hours of care able to be delivered. We received one comment
requesting CMS to expressly permit States to pay more than Medicare for
services furnished through the FFS system. Additionally, one commenter
expressed caution that increasing payment rate transparency does not
necessarily ensure access to care or coverage of services in Medicaid.
Response: To clarify, the provisions in this final rule do not
require States to change their payment rates. Although we intend for
States to consider the information produced for the payment rate
transparency publication, comparative payment rate analysis, and
payment rate disclosure in an ongoing process of evaluating the State's
payment rate sufficiency and when considering changing payment rates or
methodologies (and we intend to make similar use of the information in
performing our oversight activities and in making payment SPA approval
decisions), we did not propose and are not finalizing that any payment
rate changes necessarily would be triggered by the proposed
requirements.
Specifically, we did not propose, nor are we finalizing, a
requirement that States must increase their institutional or non-
institutional service payment rates through this final rule. Based on
the information provided by the commenter (and without additional
information about providers, such as, number of providers in a State or
number of provider accepting new patients or accepting Medicaid), we
understand the concerns raised to generally be an issue with a State's
limitations on service coverage (that is, a coverage limit of $1,000/
month limit on institutional services is insufficient for the amount of
care required). While we do not have the authority to require States to
change their Medicaid payment rates, we remind States that the Medicaid
program is a Federal-State partnership and States have the flexibility
and responsibility to set payment rates that are consistent with
efficiency, economy, quality of care, and access as required by section
1902(a)(30)(A) of the Act and a coverage limit could be inconsistent
with this standard. We encourage the commenter to utilize the public
process procedures described in Sec. 447.204 to raise these concerns
with their State. We also did not propose and are not finalizing a
regulatory change that explicitly permits States to pay more than
Medicare for services furnished through the FFS system. We acknowledge
that existing UPL requirements limit Medicaid payments to a reasonable
estimate of what Medicare would have paid.\185\ However, outside of the
services subject to UPL requirements limiting aggregate State Medicaid
payment amounts, as the Medicaid program is a Federal-State
partnership, States have the flexibility and responsibility to set
payment rates that are consistent with efficiency, economy, and quality
of care as required by section 1902(a)(30)(A) of the Act. Currently,
States can set FFS payment rates that are more than Medicare for
numerous services, provided any applicable aggregate UPL is satisfied,
and creating an explicit permission in regulation would not change the
existing flexibilities States have in setting their payment rates.
---------------------------------------------------------------------------

\185\ Sec. 447.272 for inpatient hospitals, Sec. 447.321 for
outpatient hospitals and clinic services, Sec. 447.325 for other
inpatient and outpatient facilities (nursing facilities,
intermediate care facilities for the developmentally disabled (ICF/
DD), psychiatric residential treatment facilities (PRTF), and
institutions for mental disease (IMDs).
---------------------------------------------------------------------------

We understand the commenter's concerns that increasing payment rate
transparency does not necessarily ensure access to care or coverage of
services in Medicaid. We acknowledged in the proposed rule that there
may be other causes of access to care issues outside of provider
payment rates, such as beneficiaries experiencing difficulty scheduling
behavioral health care appointments due to a provider shortage where
the overall number of behavioral health providers within a State is not
sufficient to meet the demands of the general population.\186\ However,
we believe it is important to address one of the potential causes of
access to care issues: payment rates that are not sufficient to enlist
an adequate supply of providers as required by section 1902(a)(30)(A)
of the Act. Given that our work to better ensure access in the Medicaid
program is ongoing, we intend to gain implementation experience with
this final rule, and we will consider additional areas of access to
care outside of payment rates to help inform any future rulemaking to
promote improved access to care, as appropriate.
---------------------------------------------------------------------------

\186\ 88 FR 27960 at 28016.
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Comment: A number of commenters requested CMS provide States with
guidance, templates, tools, examples, or descriptions of acceptable
forms for publishing the payment rates, comparative payment rate
analysis, and payment rate disclosure to ensure States understand how
to comply with these provisions. A few commenters requested guidance on
specific aspects of provisions of the proposed rule: accessible web
pages and accounting for additional ways payment rates can vary (such
as site of service and patient acuity). Those commenters also noted
that some States use value-based payment (VBP) methodologies and
requested guidance on how the various provisions of the proposed rule
has accounted for these payment methodologies. Additionally, a couple
of commenters suggested CMS provide guidance to the public to ensure
the newly published data are understandable.
Response: Prior to the effective date of this final rule, we will
issue subregulatory guidance including a hypothetical example list of
the E/M CPT/HCPCS codes that would be subject to the comparative
payment rate analysis, if the comparative rate analysis requirements
were applicable with respect to payment rates in effect for CY 2023;
illustrative examples of compliant payment rate transparency,
comparative payment rate analysis, and payment rate disclosure
publications (including to meet accessibility standards); and a
template to support completion of the additional State rate analysis
under Sec. 447.203(c)(2). We encourage States to review the
subregulatory guidance to be issued prior to the effective date of this
final rule and reach out to CMS for technical guidance regarding
compliance with the comparative payment rate analysis and any other
requirement of this final rule.
We are only requiring the payment rate transparency publication,
comparative payment rate analysis, and payment rate disclosure include
payment rate breakdowns by population (pediatric and adult), provider
type, and geographical location, as applicable. Payment rate variations
by site of service are not required, but States have flexibility to
include this optional payment rate break down in the payment rate
transparency publication. While not required in this final rule, should
a State opt to breakdown their payment rates by site of service, the
State should use the minimum payment amount for purposes of the
requirements of Sec. 447.203(b), because a provider is assured to
receive at least this amount for furnishing the service at any site of
service. At State option, the State could also include additional
payment rate breakdowns a provider might receive at other sites of
service in the State (for example: office, inpatient hospital, school,
mobile unit, urgent

[[Page 40684]]

care facility, nursing facility). We did not propose or finalize in
this rule a requirement for States to include a payment rate breakdown
for site of services because we want our initial focus to be on
establishing the new payment rate transparency, comparative payment
rate analysis, and payment rate disclosure requirements, providing
States with support during the compliance period, and ensuring the data
required under this final rule are available to beneficiaries,
providers, CMS, and other interested parties for the purpose of
assessing access to care issues. We believe that payment rate
breakdowns by population (pediatric and adult), provider type, and
geographical location will provide a sufficient amount of transparency
to ensure that interested parties have basic information available to
them to understand Medicaid payment levels and the associated effects
of payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public processes
available to interested parties.
Additionally, payment rate variations based on patient acuity are
also not explicitly required in the payment rate transparency
publication. Payment adjustments for patient acuity generally are
limited to institutional settings (for example, inpatient hospitals and
nursing facilities). Should a State opt to breakdown their payment
rates by patient acuity, to the State should use the minimum payment
amount for purposes of the requirements of Sec. 447.203(b), because a
provider is assured to receive at least this amount for furnishing the
service to any patient. At State option, the State could also include
additional payment rate breakdowns the provider might receive for other
levels of patient acuity. We also acknowledge that prospective payment
system rates, such as Medicare's Patient Driven Payment Model (PDPM)
for nursing facilities and inpatient prospective payment system (IPPS)
for inpatient hospitals, typically account for patient acuity. As
further discussed in a later response to comments in this section, PPS
rates for inpatient hospital, outpatient hospital, and nursing facility
services that are paid to most hospitals and nursing facilities and are
payments based on a predetermined, fixed amount are subject to the
payment rate transparency provision in this final rule. This is because
these PPS rates are typically known in advance of a provider delivering
a service to a beneficiary and fall into the scope of a Medicaid FFS
fee schedule payment rate within the meaning of this final rule, as
discussed in a later response to comments in this section.
We understand the commenters' concerns about ensuring the various
payment rate transparency publications of this final rule are
understandable to the public. We expect State publications of Medicaid
payment rate transparency information, comparative payment rate
analysis, and payment rate disclosures that comply with the
requirements of this final rule to be transparent and clearly
understandable to beneficiaries, providers, CMS, and other interested
parties. Therefore, we do not anticipate a need for guidance for the
public at this time, but we will continue to assess once the
requirements are in effect.
Comment: A couple of commenters suggested CMS conduct provider
shortage assessments and engage providers, beneficiary advocacy
organizations, direct service workers, caregivers, and other relevant
interested parties in the data collection and analysis processes in the
proposed rule and create a Federal-level public comment process within
the CMS review of SPAs and HCBS waiver applications or renewals.
Response: We appreciate the commenters' suggestions; however, we
did not propose to conduct provider shortage assessments, or to engage
with interested parties in the data collection and analysis processes
outside of the work of the interested parties' advisory group in Sec.
447.203(b)(6). After obtaining implementation experience of these new
policies, we will keep these suggestions in mind as we consider whether
additional requirements may be appropriate to propose through future
rulemaking.
Comment: One commenter suggested CMS consider future rulemaking to
require States survey HCBS participants and their support systems to
identify additional access issues and perceived causes, with a
particular focus on assessing access related to unpaid and paid
support. The commenter provided an example of a parent of an adult
child providing a significant number of hours, both paid and unpaid,
which the commenter suggested could be an indicator that the family
cannot find a qualified provider for the services.
Response: We appreciate the commenter's suggestion. Given that our
work to better ensure access in the Medicaid program is ongoing, we
intend to gain implementation experience with this final rule, and we
will consider the recommendations provided on the proposed rule to help
inform any future rulemaking in this area, as appropriate.
Comment: One commenter questioned the relationship between higher
payment rates in FFS and higher rates of accepting new Medicaid
patients, as well as the potential for affecting rates across payers
and delivery systems, noting that even if the State raise the rates for
the Medicaid FFS that does not mean that Medicaid or Medicare managed
care plans, including managed care plans for individuals dually
eligible for both Medicare and Medicaid, also will raise their provider
payment rates. The commenter noted that raising the rates for Medicaid
FFS does not mean that the State will ensure that the managed care
plans operating in the State also pay higher rates, noting that
practitioners are less likely to accept Medicaid if the managed care
plans do not raise payment rates to align when FFS rates have been
increased.
Response: We appreciate the views of the commenter. The provisions
of Sec. 447.203(c) only apply to Medicaid FFS, and do not apply to
Medicaid managed care plans. Requirements for Medicaid managed care are
discussed in the Medicaid Managed Care final rule (as published
elsewhere in this Federal Register). Payment rates that managed care
plans pay to providers are not required to be set at the Medicaid FFS
rate levels as managed care is a risk-based arrangement whereby States
pay managed care plans prospective capitation rates, and plans contract
with network providers and negotiate provider payment rates. Managed
care plans have their own access to care requirements, including the
network adequacy requirements in 42 CFR 438.68. Managed care plan
capitation rates are subject to actuarial soundness requirements at
Sec. 438.4.
1. Fully Fee-For-Service States
We solicited comments on whether additional access standards for
States with a fully FFS delivery system may be appropriate. Because the
timeliness standards of the proposed Medicaid and Children's Health
Insurance Program Managed Care Access, Finance, and Quality proposed
rule (Managed Care proposed rule) at Sec. 438.68 would not apply to
any care delivery in such States, we stated that we were considering
whether a narrow application of timeliness standards to fully FFS
States that closely mirrored the proposed appointment wait time
standards, secret shopper survey requirements, and publication
requirements (as applied to outpatient mental health and substance use
disorder, adult and pediatric; primary care, adult and pediatric;
obstetrics and gynecology; and an additional type of

[[Page 40685]]

service determined by the State) in that rule might be appropriate.
Given that timeliness standards would apply directly to States, we also
solicited comments on a potentially appropriate method for CMS to
collect data demonstrating that States meet the established standards
at least 90 percent of the time.
In developing the proposed rule, with respect to FFS, our intent
and focus was on replacing the previous AMRP process. While we saw
value in discussing and seeking public input on timeliness standards
for fully FFS States that would mirror those proposed in the Managed
Care proposed rule, creating additional alignment between the delivery
systems, we were mindful of the volume of proposed changes that would
require State resources for implementation. Therefore, we chose to
maintain our goal with the FFS provisions of this access rule to
replace the previous AMRP process, and we believed that timeliness
standards were better suited to a larger, ongoing access strategy, to
be considered and proposed in future rulemaking. Nevertheless, we saw
value in gauging the appetite for CMS to adopt timeliness standards in
fully FFS States, and as such included a short section about the
possibility of those standards in the fully FFS context in the proposed
rule. Although we are not finalizing any FFS timeliness standards in
this final rule, we intend to propose them in future rulemaking,
informed by the comments received on this discussion in the proposed
rule. Additionally, by keeping this current rulemaking focused on
replacing the previous AMRP process and not implementing FFS timeliness
standards at this time, we afford ourselves an opportunity to observe
and learn from those standards being established in managed care (and
in the marketplace). Those experiences will provide greater insights
into how to best propose these standards in FFS and provide time to
engage with interested parties on how we might best include newly
proposed FFS timeliness standards in existing requirements, including
those we are finalizing in this rule, mitigating unnecessary burden on
States.
We received public comments in response to this request for
comment. The following is a summary of the comments we received and our
responses.
Comment: Several commenters noted general support for timeliness
standards for fully FFS States. Generally, these commenters agreed that
there is value in aligning access monitoring strategies across delivery
systems so that all Medicaid beneficiaries would benefit from a new
policy, and that these standards could improve access by confirming
whether beneficiaries are actually able to access care in a timely
manner. Some commenters had suggestions if CMS were to adopt timeliness
standards in FFS, such as phasing in the requirements over time or by
service, collecting information on geographic variations in wait times,
and either applying the standards to all FFS programs or allowing
exception for States with minimal covered services delivered through
FFS. Others cited concerns that they would want a future proposal to
address, such as establishing protections for providers who do not have
direct control over their scheduling. Commenters varied on whether they
believed providers should have to perform any additional work to meet
new standards, with one requesting that providers, not just States, be
held accountable for outcomes based on these standards, while another
commenter wanted to ensure these requirements would not add any burden
on providers. One commenter suggested including provider surveys in
addition to participant surveys.
Response: We appreciate the support expressed by a number of
commenters for the concept of applying timeliness standards in fully
FFS delivery systems as a further means to ensure beneficiary access to
covered services. We are also grateful for the suggestions that will
allow us to formulate future proposed rulemaking that considers various
needs and concerns. We note that the request for comment was with
respect to fully FFS States (that deliver no services through managed
care), but we will consider for future rulemaking whether to expand on
that limit, for example, applying standards to States that cover only a
small number of services through managed care delivery, to apply them
to FFS generally, or to maintain the focus on fully FFS States. We
intend to use the experience of the managed care plans and the States
implementing timeliness requirements to assess things like a phased-in
approach, or whether such standards should be proposed for FFS delivery
systems in non-fully FFS States.
Comment: We received a number of comments expressing general
opposition to establishing timeliness standards for services delivered
on a FFS basis, particularly in the context of implementing them
simultaneously with the other access provisions in the proposed rule.
These commenters expressed concern about the burden, both in time and
cost, of establishing the necessary administrative infrastructure to
meet timeliness requirements as well as the requirements proposed in
the proposed rule. One commenter suggested CMS explore how these areas
could be better monitored using existing data collections and
processes. Another pointed out the differences in available resources
between managed care and FFS, such as increased matching rates
associated with managed care External Quality Review that does not
exist with respect to FFS Medicaid, making FFS timeliness standards
more cost prohibitive to implement. Another commenter pointed out that
in FFS delivery systems, States would not know whether wait time issues
identified through monitoring were specific to Medicaid or whether
similar wait time issues were encountered by other patients with other
payers.
Response: We understand the concerns about burden on States, and
for that reason we limited the proposed rule and are only finalizing
provisions that, generally, serve to replace the previous AMRP process.
We see value in the oversight and positive program outcomes that could
be achieved through proposing and implementing FFS timeliness standards
in the future, and also understand there will be differences between
managed care and FFS that create unique issues to address in any future
proposal. For example, there are differences in how providers interact
with plans in a managed care system versus how they interact with the
State Medicaid agency in a FFS system. There are also differences in
the idea of a ``network'' between these delivery models that may impact
how we would assess network adequacy. We will explore how we can best
support States with the administrative burden, and how we can establish
standards that identify problems unique to providing services to
Medicaid beneficiaries.
Comment: Many commenters expressed support for specific aspects of
our request, such as for establishing wait time standards in a FFS
delivery system or utilizing secret shopper surveys for oversight.
These commenters generally pointed to the access improvements such
standards can provide, as they would highlight where there are
deficiencies in finding available providers. One commenter shared
personal experience of longer wait times as a Medicaid beneficiary than
those experienced by non-Medicaid enrollees. One commenter shared
suggestions regarding which benefit categories needed more focus, both
for oversight and in length of wait times, and this commenter along
with a couple others encouraged CMS to align with the Health Insurance

[[Page 40686]]

Marketplace[supreg].\187\ Another commenter cautioned that provider
shortages must be addressed as part of the overall access strategy.
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\187\ Health Insurance Marketplace[supreg] is a registered
service mark of the US Department of Health & Human Services.
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Response: We appreciate hearing from commenters on the specifics of
the timeliness standards request for comments, as we hope to use this
feedback to inform and enhance a future set of proposals. We also fully
intend to include lessons from the experience of the marketplace and
Medicaid managed care in proposing these future standards for the FFS
delivery system and will continue to engage with interested parties
between now and when we undertake future rulemaking on this topic. We
agree that provider shortages present a challenge to access and the
efficacy of wait time standards, and we will examine how best to
acknowledge that reality while holding States and providers to
appropriate standards.
Comment: Several commenters opposed the specific standards listed
in our request for comment. One encouraged CMS to achieve its access
goals through a focus on payment adequacy rather than wait times.
Similarly, another requested CMS allow States to provide verification
and assurances of sufficient access through other, existing data
collection mechanisms. Another stated wait time standards that do not
account for differences in provider availability, as in whether there
are sufficient providers in a geographic area to meet the standards
based on the beneficiary population in that area, would not achieve the
desired effect of increasing access. One commenter expressed that a
secret survey process would be duplicative of existing directory review
processes already undertaken by States and would also force States to
switch vendors from an existing outside entity performing the role, and
stated CMS should instead allow States to continue with current
practices that achieve a similar purpose. Another questioned the data
integrity of a secret survey approach to oversight, stating there are
inherent challenges in collecting consistent information.
Response: We intend to make every effort to utilize existing
processes and to mitigate duplication wherever possible when we propose
FFS timeliness standards in the future. However, we are exploring
proposing these standards because, in our view, appointment wait time
maximums and secret shopper surveys may provide for unique and valuable
oversight of access that we may wish to propose in the future. As
stated previously, in this rule we prioritized a replacement for an
existing rate-based process, but our evaluation and enhancement of
means to ensure beneficiary access will be ongoing. We will utilize
lessons learned from the implementation of timeliness standards under
managed care to inform our future FFS proposals.
Comment: Some commenters were unclear as to whether CMS was
proposing to implement the timeliness standards for fully FFS States as
proposed in the Managed Care proposed rule. One commenter was concerned
how and when CMS would communicate to States that these requirements
had taken effect. Another pointed out specifically that CMS had
included preamble language without including proposed regulatory text
or burden estimates, which they noted would be significant. The
commenter was concerned that the public had not been afforded a
meaningful opportunity for notice and comment.
Response: We apologize for the confusion experienced by some as to
whether this section of the rule was intended as a proposed policy.
This discussion in the proposed rule was a request for comment, not a
proposed policy. We intend to propose these timeliness standards under
FFS in future rulemaking, affording States and other interested parties
the ability to examine a complete proposal and provide comments that we
would consider in a subsequent finalization decision. We are not
finalizing any timeliness standards for FFS delivery systems in this
final rule.
2. Documentation of Access to Care and Service Payment Rates (Sec.
447.203(b))
We proposed to rescind Sec. 447.203(b) in its entirety and replace
it with new requirements to ensure FFS Medicaid payment rate adequacy,
including a new process to promote payment rate transparency. This new
proposed process would require States to publish their FFS Medicaid
payment rates in a clearly accessible, public location on the State's
website, as described later in this section. Then, for certain
services, States would be required to conduct a comparative payment
rate analysis between the States' Medicaid payment rates and Medicare
rates or provide a payment rate disclosure for certain HCBS that would
permit CMS to develop and publish HCBS payment benchmark data.
a. Payment Rate Transparency Sec. 447.203(b)(1)
In paragraph (b)(1), we proposed to require the State agency to
publish all Medicaid FFS payment rates on a website developed and
maintained by the single State agency that is accessible to the general
public. We proposed that published Medicaid FFS payment rates would
include fee schedule payment rates made to providers delivering
Medicaid services to Medicaid beneficiaries through a FFS delivery
system. We also proposed to require that the website be easily reached
from a hyperlink on the State Medicaid agency's website.
Within this payment rate publication, we proposed that FFS Medicaid
payment rates must be organized in such a way that a member of the
public can readily determine the amount that Medicaid would pay for the
service and, in the case of a bundled or similar payment methodology,
identify each constituent service included within the rate and how much
of the bundled payment is allocated to each constituent service under
the State's methodology. We also proposed that, if the rates vary, the
State must separately identify the Medicaid FFS payment rates by
population (pediatric and adult), provider type, and geographical
location, as applicable.
We noted that longstanding legal requirements to provide effective
communication with individuals with disabilities and the obligation to
take reasonable steps to provide meaningful access to individuals with
limited English proficiency also apply to the State's website
containing Medicaid FFS payment rate information. Under Title II of the
Americans with Disabilities Act of 1990, section 504 of the
Rehabilitation Act, section 1557 of the Affordable Care Act, and
implementing regulations, qualified individuals with disabilities may
not be excluded from participation in, or denied the benefits of any
programs or activities of the covered entity, or otherwise be subjected
to discrimination by any covered entity, on the basis of disability,
and programs must be accessible to people with disabilities.\188\
Individuals with disabilities are entitled to communication that is as
effective as communication for people without disabilities, including
through the provision of auxiliary aids and services.\189\ Section 1557
of the Affordable Care Act requires recipients of Federal financial
assistance, including State Medicaid programs, to take reasonable steps
to provide

[[Page 40687]]

meaningful access to their health programs or activities for
individuals with limited English proficiency, which may include the
provision of interpreting services and translations when
reasonable.\190\
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\188\ 29 U.S.C. 794; 42 U.S.C. 18116(a); 42 U.S.C. 12132; 28 CFR
35.130(a); 45 CFR 84.4 (a); 45 CFR 92.2(b).
\189\ 28 CFR 35.160; 45 CFR 92.102; see also 45 CFR 84.52(d).
\190\ 45 CFR 92.101; see also https://www.hhs.gov/civil-rights/for-providers/laws-regulations-guidance/guidance-federal-financial-assistance-title-vi/index.html.
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We proposed that for States that pay varying Medicaid FFS payment
rates by population (pediatric and adult), provider type, and
geographical location, as applicable, those States would need to
separately identify their Medicaid FFS payment rates in the payment
rate transparency publication by each grouping or multiple groupings,
when applicable to a State's program. In the event rates vary according
to these factors, as later discussed in this final rule, our intent is
that a member of the public be readily able to determine the payment
amount that will be made, accounting for all relevant circumstances.
For example, a State that varies their Medicaid FFS payment rates by
population may pay for a service identified by code 99202 when provided
to a child at a rate of $110.00 and when provided to an adult at a rate
of $80.00. Because the Medicaid FFS payment rates vary based on
population, both of these Medicaid FFS payment rates would need to be
included separately as Medicaid FFS payment rates for 99202 in the
State's payment rate transparency publication. As another example, a
State that varies their Medicaid FFS payment rates by provider type may
pay for 99202 when delivered by a physician at a rate of $50.00, and
when delivered by a nurse practitioner or physician assistant at a rate
of $45.00.
In the proposed rule, we acknowledged that we are aware that some
State plans include language that non-physician practitioners (NPPs),
such as a nurse practitioner or physician assistant, are paid a
percentage of the State's fee schedule rate. Because the Medicaid FFS
payment rates vary by provider type, both of the Medicaid FFS payment
rates in both situations (fee schedule rates of $50.00 and $45.00)
would need to be separately identified as Medicaid FFS payment rates
for 99202 in the State's payment rate transparency publication,
regardless of whether the State has individually specified each amount
certain in its approved payment schedule or has State plan language
specifying the nurse practitioner or physician assistant rate as a
percentage of the physician rate. Additionally, for example, a State
that varies their Medicaid FFS payment rates by geographical location
may pay for 99202 delivered in a rural area at a rate of $70, in an
urban or non-rural area as a rate of $60, and in a major metropolitan
area as a rate of $50. We are also aware that States may vary their
Medicaid FFS payment rates by geographical location by zip code, by
metropolitan or micropolitan areas, or other geographical location
breakdowns determined by the State. Because the Medicaid FFS payment
rates vary based on geographical location, all Medicaid FFS payment
rates based on geographical location would need to be included
separately as Medicaid FFS payment rates for 99202 in the State's
payment rate transparency publication.
For a State that varies its Medicaid FFS payment rates by any
combination of these groupings, then the payment rate transparency
publication would be required to reflect these multiple groupings. For
example, the State would be required to separately identify the rate
for a physician billing 99202 provided to a child in a rural area, the
rate for a nurse practitioner billing 99202 provided to a child in a
rural area, the rate for a physician billing 99202 provided to an adult
in a rural area, the rate for a nurse practitioner billing 99202
provided to an adult in a rural area, the rate for a physician billing
99202 provided to a child in an urban area, the rate for a nurse
practitioner billing 99202 provided to a child in an urban area, and so
on. We proposed that this information would be required to be presented
clearly so that a member of the public can readily determine the
payment rate for a service that would be paid for each grouping or
combination of groupings (population (pediatric and adult), provider
type, and geographical location), as applicable. We acknowledged that
States may also pay a single Statewide rate regardless of population
(pediatric and adult), provider type, and geographical location, and as
such would only need to list the single Statewide rate in their payment
rate transparency publication.
We acknowledged that there may be additional burden associated with
our proposal that the payment rate transparency publication include a
payment rate breakdown by population (pediatric and adult), provider
type, and geographical location, as applicable, when States' Medicaid
FFS payment rates vary based on these groupings. Despite the additional
burden, we noted our belief that the additional level of granularity in
the payment rate transparency publication is important for ensuring
compliance with section 1902(a)(30)(A) of the Act, given State Medicaid
programs rely on multiple provider types to deliver similar services to
Medicaid beneficiaries of all ages, across multiple Medicaid benefit
categories, throughout each area of each State.
We further proposed that Medicaid FFS payment rates published under
the proposed payment rate transparency requirement would only include
fee schedule payment rates made to providers delivering Medicaid
services to Medicaid beneficiaries through a FFS delivery system. To
ensure maximum transparency in the case of a bundled fee schedule
payment rate or rate determined by a similar payment methodology where
a single payment rate is used to pay for multiple services, we proposed
that the State must identify each constituent service included in the
bundled fee schedule payment rate or rate determined by a similar
payment methodology. We also proposed that the State must identify how
much of the bundled fee schedule payment rate or rate determined by a
similar payment methodology is allocated to each constituent service
under the State's payment methodology. For example, if a State's fee
schedule lists a bundled fee schedule rate that pays for day treatment
under the rehabilitation benefit and the following services are
included in the day treatment bundle: community based psychiatric
rehabilitation and support services, individual therapy, and group
therapy, then the State would need to identify community based
psychiatric rehabilitation and support services, individual therapy,
and group therapy separately and each portion of the bundled fee
schedule payment rate for day treatment that is allocated to community
based psychiatric rehabilitation and support services, individual
therapy, and group therapy. We proposed to require States identify the
portion of the bundled fee that is allocable to each constituent
service included in the bundled fee schedule payment rate, which would
add an additional level of granularity to the payment rate transparency
publication to enable a member of the public to readily be able to
determine the payment amount that would be made for a service,
accounting for all relevant circumstances, including the payment rates
for each constituent service within a bundle and as a standalone
service. We also proposed to require that the website be easily reached
from a hyperlink to ensure transparency of payment rate information is
available to beneficiaries, providers, CMS, and other interested
parties.
In the proposed rule, we proposed the initial publication of
Medicaid FFS

[[Page 40688]]

payment rates would occur no later than January 1, 2026, and include
approved Medicaid FFS payment rates in effect as of that date, January
1, 2026. We proposed this timeframe to provide States with at least 2
years from the possible effective date of the final rule, if this
proposal were finalized, to comply with the payment rate transparency
requirement. We explained that the proposed timeframe would initially
set a consistent baseline for all States to first publish their payment
rate transparency information and then set a clear schedule for States
to update their payment rates based on the cadence of the individual
States' payment rate changes.
We noted that the same initial publication due date for all States
to publish their payment rates would promote comparability between
States' payment rate transparency publications. In proposing an initial
due date applicable to all States, we reasoned that, once States would
begin making updates to their payment rate transparency publications,
there would be a clear distinction between States that have recently
updated their payment rates and States that have long maintained the
same payment rates. For example, say two States initially publish their
payment rates for E/M CPT code 99202 (office or outpatient visit for a
new patient) at $50. One State annually increases its payment rate by 5
percent over the next 2 years, and would update its payment rate
transparency publication accordingly in 2027 with a payment rate of
$52.50, then in 2028 with a payment rate of $55.13, while the other
State's payment rate for the same service remains at $50 in 2027 and
2028. The transparency of a State's recent payment rates including the
date the payment rates were last updated on the State Medicaid agency's
website, as discussed later, as well as the ability to compare payment
rates between States on accessible and easily reachable websites,
highlights how the proposed payment rate transparency would help to
ensure that Medicaid payment rate information is available to
beneficiaries, providers, CMS, and other interested parties for the
purposes of assessing access to care issues to better ensure compliance
with section 1902(a)(30)(A) of the Act.
We also proposed that the initial publication include approved
Medicaid FFS payment rates in effect as of January 1, 2026. We proposed
this language to narrow the scope of the publication to CMS-approved
payment rates and methodologies, thereby excluding any rate changes for
which a SPA or similar amendment request is pending CMS review or
approval. SPAs are submitted throughout the year, can include
retroactive effective dates, and are subject to a CMS review period
that varies in duration.^{191 192}
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\191\ In accordance with 42 CFR 430.20, an approved SPA can be
effective no earlier than the first day of the calendar quarter in
which an approvable amendment is submitted. For example, a SPA
submitted on September 30th can be retroactively effective to July
1st.
\192\ In accordance with 42 CFR 430.16, a SPA will be considered
approved unless CMS, within 90 days after submission, requests
additional information or disapproves the SPA. When additional
information is requested by CMS and the State has respond to the
request, CMS will then have another 90 days to either approve,
disapprove, and request the State withdraw the SPA or the State's
response to the request for additional information. This review
period includes two 90-day review periods plus additional time when
CMS has requested additional information which can result is a wide
variety of approval timeframes.
---------------------------------------------------------------------------

As discussed later in this final rule regarding paragraph (b)(2)
and (b)(3), we encouraged States to use the proposed payment rate
transparency publication as a source of Medicaid payment rate data for
compliance with the paragraph (b)(3)(i)(B) proposed comparative payment
rate analysis and paragraph (b)(3)(ii)(B) proposed payment rate
disclosure requirements. However, we noted that the comparative payment
rate analysis and payment rate disclosure requirements would look to
rates in effect one year before the publication of the required
analysis or disclosure. We include a more in-depth discussion of the
timeframes for publication of the comparative payment rate analysis and
payment rate disclosure in paragraph (b)(4) later in this final rule,
where we note that the 1-year shift in timeframe is necessitated by the
timing of when Medicare publishes their payment rates in November and
the rates taking effect on January 1, leaving insufficient time for CMS
to publish the code list for States to use for the comparative payment
rate analysis and for States develop and publish their comparative
payment rate analysis by January 1. We noted that the ongoing payment
transparency publication requirements would allow the public to view
readily available, current Medicaid payment rates at all times, even if
slightly older Medicaid payment rate information must be used for
comparative payment rate analyses due to the cadence of Medicare
payment rate changes as well as the payment rate disclosure. We are
cognizant that the payment rate disclosure does not depend on the
availability of Medicare payment rates; however, we proposed to provide
States with the same amount of time to comply with both the proposed
comparative payment rate analysis and payment rate disclosure
requirements.
We stated that, if this proposal were finalized at a time that
would not allow for States to have a period of at least 2 years between
the effective date of the final rule and the proposed January 1, 2026,
due date for the initial publication of Medicaid FFS payment rates,
then we proposed an alternative date of July 1, 2026, for the initial
publication of Medicaid FFS payment rates and for the initial
publication to include approved Medicaid FFS payment rates as of that
date, July 1, 2026. This shift would allow more than 2 years from the
effective date of this final rule for States to comply with the payment
rate transparency requirements.
We proposed to require the that the single State agency include the
date the payment rates were last updated on the State Medicaid agency's
website. We also proposed to require that the single State agency
ensure that Medicaid FFS payment rates are kept current where any
necessary updates to the State fee schedules made no later than 1 month
following the date of CMS approval of the SPA, section 1915(c) HCBS
waiver, or similar amendment revising the provider payment rate or
methodology. Finally, in paragraph (b)(1), we proposed that, in the
event of a payment rate change that occurs in accordance with a
previously approved rate methodology, the State would be required to
update its payment rate transparency publication no later than 1 month
after the effective date of the most recent update to the payment rate.
This provision is intended to capture Medicaid FFS payment rate changes
that occur because of previously approved SPAs containing payment rate
methodologies. For example, if a State sets its Medicaid payment rates
for Durable Medical Equipment, Prosthetics, Orthotics and Supplies
(DMEPOS) at a percentage of the most recent Medicare fee schedule rate,
then the State's payment rate would change when Medicare adopts a new
fee schedule rate through the quarterly publications of the Medicare
DMEPOS fee schedule, unless otherwise specified in the approved State
plan methodology that the State implements a specific quarterly
publication, for example, the most recent April Medicare DMEPOS fee
schedule. Therefore, the State's Medicaid FFS payment rate
automatically updates when Medicare publishes a new fee schedule,
without the submission of a SPA because the State's methodology pays a
percentage of the most recent State plan-specified Medicare fee
schedule rate. In this example, the State would need to

[[Page 40689]]

update its Medicaid FFS payment rates in the payment rate transparency
publication no later than 1 month after the effective date of the most
recent update to the Medicare fee schedule payment rate made applicable
under the approved State plan payment methodology.
While there is no current Federal requirement for States to
consistently publish their rates in a publicly accessible manner, we
noted our awareness that most States already publish at least some of
their payment rates through FFS rate schedules on State agency
websites. Currently, rate information may not be easily obtained from
each State's website in its current publication form, making it
difficult to understand the amounts that States pay providers for items
and services furnished to Medicaid beneficiaries and to compare
Medicaid payment rates to other health care payer rates or across
States. However, through this proposal, we sought to ensure all States
do so in a format that is publicly accessible and where all Medicaid
FFS payment rates can be easily located and understood. The new
transparency requirements under this final rule help to ensure that
interested parties have access to updated payment rate schedules and
can conduct analyses that would provide insights into how State
Medicaid payment rates compare to, for example, Medicare payment rates
and other States' Medicaid payment rates. The policy intends to help
ensure that payments are transparent and clearly understandable to
beneficiaries, providers, CMS, and other interested parties. We
solicited comments on the proposed requirement for States to publish
their Medicaid FFS payment rates for all services paid on a fee
schedule, the proposed structure for Medicaid FFS payment rate
transparency publication on the State's website, and the timing of the
publication of and updates to the State's Medicaid FFS payment rates
for the proposed payment rate transparency requirements in Sec.
447.203(b)(1).
We received public comments on these provisions. The following is a
summary of the comments we received and our responses.
Comment: Commenters overwhelmingly supported the proposed payment
rate transparency provision at Sec. [thinsp]447.203(b)(1) in its
entirety. A couple of commenters specifically expressed support for
ensuring the State's website where the payment rate transparency is
published is fully accessible and provides meaningful access for
individuals with limited English proficiency. Additionally, a couple of
commenters stated that their State already publishes their fee
schedules as proposed by the payment rate transparency requirements.
However, a couple of commenters expressed opposition to the
proposed payment rate transparency provision in its entirety.
Commenters in opposition stated the proposed payment rate transparency
requirements would be administratively burdensome for States and that
the payment rate transparency publication would not result in a
meaningful access analysis. One commenter questioned CMS' authority to
require States to publish their payment rates because section
1902(a)(30) of the Act does not explicitly grant CMS this authority.
Response: We thank the commenters for their support of the proposed
payment rate transparency provision at Sec. [thinsp]447.203(b)(1). We
are finalizing the payment rate transparency provisions by adding and
deleting regulatory language for clarification, making minor revisions
to the organizational structure, updating the required timeframe for
compliance and for updating payment rates after SPA or other payment
authority approval, and incorporating a technical change to account for
States submitting SPAs with prospective effective dates. We list and
describe the specific revisions we made to the regulatory language for
the payment rate transparency provision at Sec. [thinsp]447.203(b)(1)
at the end of this section of responses to comments. The policies in
this final rule allow flexibility that we believe will allow some
States to use existing fee schedule publications for compliance, and we
expect additional States will only need minor revisions. We encourage
States that already publish their fee schedules to review the final
regulatory language and reach out to CMS with any questions regarding
compliance.
We disagree with the commenters regarding administrative burden of
the payment rate transparency publication. As documented in section
III. of this final rule, the FFS provisions, including the payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure requirements (Sec. [thinsp]447.203(b)(1) through (5)),
interested parties' advisory group requirements (Sec.
[thinsp]447.203(b)(6)), and State analysis procedures for payment rate
reductions or payment restructuring (Sec. [thinsp]447.203(c)),
finalized in this rule are expected to result in a net burden reduction
on States compared to the previous AMRP requirements. Additionally, as
addressed in another comment response generally discussing commenters'
concerns about State burden, we have described numerous flexibilities
States will have for compliance with this final rule. Specifically for
the payment rate transparency publication, and as discussed in a later
response to comments, States have flexibility to (1) organize and
format their publication, so that they can use existing fee schedule
publications for compliance (assuming all requirements in Sec.
447.203(b)(1) are met); (2) utilize contractors or other third party
websites to publish the payment rate transparency publication on
(however, we remind States that they are still requiring to publish the
hyperlink to the website where the publication is located on the State
Medicaid agency's website as required in Sec. 447.203(b)(1)(ii) of
this final rule); and (3) for the initial publication, if necessary
historical information about bundled payment rates is unavailable to
the State, then the State does not need to include the bundled payment
rate breakdown as required in Sec. 447.203(b)(1)(iv) of this final
rule (however, we remind States that upon approval of a SPA that
revised the bundled payment rate, the State will be required to update
the publication to comply with Sec. 447.203(b)(1)(iv)). Additionally,
we are providing examples of payment rates that are not subject to the
payment rate transparency publication and an illustrative example of a
compliant payment rate transparency (including to meet accessibility
standards) through subregulatory guidance issued prior to the effective
date of this final rule. We expect these flexibilities and
clarifications to minimize the State administrative burden commenters
expressed concern about, which potentially stemmed from an imprecise
understanding of the Medicaid FFS fee schedule payment rates that are
required to be published in the payment rate transparency publication.
Finally, we would expect that States already have the data for the
payment rate transparency publication readily available through
existing fee schedules, SPAs, or other internal documentation, so the
work to compile that data into a format that complies with this final
rule should require minimal effort.
To clarify, the payment rate transparency publication is not an
analysis requirement, but a transparency requirement for States to
publish their Medicaid FFS fee schedule payment rates, as discussed in
detail in a later response to comments in this section. However, an
analysis component is being finalized in Sec. [thinsp]447.203(b)(2)
and (3) called the comparative payment rate

[[Page 40690]]

analysis, which we believe will result in a meaningful access analysis
because it requires States to compare certain of their Medicaid FFS
payment rates to the Medicare non-facility payment rate as established
in the annual Medicare PFS final rule for a calendar year. This access
analysis will help States and CMS to assess compliance with section
1902(a)(30)(A) of the Act where Medicare payment rates serve as a
benchmark for comparing Medicaid payment rates to another of the
nation's large public health coverage programs. As described in the
proposed rule and in greater detail later in this final rule, Medicare
and Medicaid programs cover and pay for services provided to
beneficiaries residing in every State and territory of the United
States, Medicare payment rates are publicly available, and broad
provider acceptance of Medicare makes Medicare non-facility payment
rates as established on the Medicare PFS for a calendar year an
available and reliable comparison point for States to use in the
comparative payment rate analysis.\193\
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\193\ 88 FR 27960 at 28011.
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We disagree that we do not have the authority to require States to
publish their payment rates. As discussed in the proposed rule, payment
rate transparency is a critical component of assessing compliance with
section 1902(a)(30)(A) of the Act, which requires that State plans
assure that payments are consistent with efficiency, economy, and
quality of care and are sufficient to enlist enough providers so that
care and services are available under the plan at least to the extent
that such care and services are available to the general population in
the geographic area.\194\ Transparency, particularly the requirement
that States must publicly publish their payment rates, helps to ensure
that interested parties have basic information available to them to
understand Medicaid payment levels and the associated effects of
payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public process
available to interested parties. As noted in the proposed rule, most
States already published at least some of their payments through FFS
rate schedule on State agency websites.\195\ Our efforts finalized in
this rule will help ensure all States publish their payment rates
consistently and accessibly so interested parties have fundamental
information about payment rates and can utilize existing public
processes to raise concerns about access. Additionally, the Supreme
Court's Armstrong decision placed added importance on CMS'
determinations, as the responsible Federal agency, regarding the
sufficiency of Medicaid payment rates. The payment rate transparency
requirements included in this final rule reflect that statutory
responsibility to ensure compliance with section 1902(a)(30)(A) of the
Act. We also note that the previous AMRP process that was in effect
prior to this final rule established a transparent data-driven process
to measure access to care in States, including oversight of provider
payment rates, actual or estimated levels of provider payment available
from other payers, and the percentage comparison of Medicaid payment
rates to other public and private health insurer payment rates. This
final rule merely streamlines the approach under the same statutory
authority and shared responsibility that applied for the previous AMRP
process. We remind States of longstanding, general requirement for the
State to maintain statistical, fiscal, and other records necessary for
reporting and accountability under Sec. 431.17(b)(2).
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\194\ 88 FR 27960 at 27967.
\195\ 88 FR 27960 at 28000.
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Comment: Some commenters expressed concerns about the burden
associated with the payment rate transparency publication. They
specifically cited concern about meeting strict State-level website
accessibility requirements, extensive changes that could be needed to
existing claims payment systems (that is, for a State that does not
currently include beneficiary copayment information on their existing
fee schedules, the State may need to make change requests of their
contractor to modify their claims payment system to produce the
Medicaid payment information required in the payment rate transparency
publication to include the total payment amount a provider would
receive inclusive of beneficiary cost sharing), conducting research on
when payment rates were last updated, and monthly monitoring of
Medicare rates to ensure State fee schedule rates set at a percentage
of Medicare are updated timely.
Response: As described in the proposed rule, longstanding legal
requirements to provide effective communication with individuals with
disabilities and the obligation to take reasonable steps to provide
meaningful access to individuals with limited English proficiency also
apply to the websites containing Medicaid FFS payment rate information.
These requirements apply to all State agency, contractor, or other
third-party websites and any burden associated with meeting those
Federal obligations is not created by policies finalized in this rule.
With respect to any State-level accessibility requirements that might
exceed Federal requirements, we refer the commenter to the State
Medicaid agency or other agency responsible for compliance with State
accessibility requirements for guidance or technical assistance
concerning State-imposed accessibility requirements.
Regarding commenters' concerns that States would need to change
existing claims payment systems (that is, the State may need to make
change requests of their contractor to modify their claims payment
system to produce the Medicaid payment information required for the
payment rate transparency publication that includes beneficiary cost
sharing in fee schedule amounts), we want to clarify State claiming and
payment systems, and the output of these systems, generally are not
subject to the payment rate transparency publication requirements as
the provision only applies to Medicaid FFS fee schedule payment rates.
We do not anticipate it would be unduly burdensome for a State to
maintain its Medicaid FFS fee schedules in an appropriate format
outside of its claiming and payment systems. States are not required to
publish claims data or data about actual payments made to providers
under the payment rate transparency publication provision.
Commenters were concerned about whether beneficiary cost sharing
information should be included in the payment rate transparency
publication. To clarify, the payment rates published under Sec.
447.203(b)(1)(i) must be inclusive of the payment amount from the
Medicaid agency plus any applicable coinsurance and deductibles to the
extent that a beneficiary is expected to be liable for those payments.
By requiring States to publish the payment amount the Medicaid agency
would pay and any beneficiary cost sharing as a single payment amount,
we focus on the total Medicaid payment amount a provider would expect
to receive for furnishing a given service to a Medicaid beneficiary and
which is therefore most relevant to a provider's decision to accept the
Medicaid payment rate, thereby furthering our section 1902(a)(30)(A)
access goals to ensure payment rates are sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area. Furthermore, this
representation of payment rates is consistent with the

[[Page 40691]]

comparative payment rate analysis,\196\ which minimizes burden on
States by requiring the Medicaid FFS fee schedule payment rate be
displayed in the same way for both publications. Additionally, we
recognize that beneficiary cost sharing amounts can vary depending on
the State Medicaid program and the status of the Medicaid enrollee.
Therefore, we expect States with cost-sharing requirements could
experience additional burden in complying with the payment rate
transparency publication, if States were required to remove variable
cost sharing amount from the Medicaid FFS fee schedule payment rate for
each service subject to the publication.
---------------------------------------------------------------------------

\196\ 88 FR 27960 at 28013.
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Regarding commenters' concerns about conducting research on when
payment rates were last updated, we want to clarify that the
requirement to include the date the rates were last updated refers to a
date for the website publication. In other words, the date should
provide assurance that the rates on the website are current as of the
specified date. We do not expect, nor did we propose, States to examine
historical records to find the dates every rate was last updated.
However, if a State wishes to include that information for all or a
subset of published rates, it can.
Regarding commenters' concerns about monthly monitoring of Medicare
rates to ensure the payment rate transparency publication is up to
date, firstly, to clarify, only States that set their Medicaid payment
rates at a percentage of a Medicare payment rate would be affected by
this consideration. For those States that set their Medicaid payments
rates as a percentage of a Medicare payment rate, we expect the State
to already be monitoring changes in Medicare rates in accordance with
their approved payment methodology and Sec. Sec. 430.10 and 430.20 and
part 447, subpart B, which require States to pay the approved State
plan payment rates in their State plan effective on or after the
approved effective date of the State plan provision. Therefore, if a
State's approved State plan pays a rate based on the most current
Medicare payment rate for a particular service, then payment of any
rate outside of the approved State plan methodology would result in a
State plan compliance issue. We expect that States with such payment
methodologies routinely are monitoring Medicare payment rates to ensure
that their Medicaid payment rates are updated according to the approved
methodology. Medicare fee schedule updates are well documented and
accessible to States on cms.gov, even in the event of a change to a
Medicare payment rate outside the usual cadence of Medicare updates for
that rate (an off-cycle update) and keeping up with Medicare fee
schedule updates is critical for ensuring a State's payment rate
transparency publication is accurate and updated timely.\197\
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\197\ https://www.cms.gov/medicare/payment/fee-schedules.
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Comment: A few commenters requested clarification on the format of
the payment rate transparency publication, particularly if Medicaid FFS
payment rates should be organized by CPT code.
Response: In this final rule, in regard to the payment rate
transparency provision, we are not requiring States to publish their
payment rates by CPT/HCPCS code, which is required in the comparative
payment rate analysis discussed later in this section. However, we
encourage States to consider organizing their publication by CPT/HCPCS
code, due to the common use of CPT/HCPCS for billing for medical
services across the country, including in State Medicaid programs. The
goal of the payment rate transparency publication is to ensure all
States publish their Medicaid FFS fee schedule payment rates in a
format that is publicly accessible and where all these rates can be
easily located and understood. States can determine what organizational
and formatting structure is most suitable for organizing rates in a
manner that will be easily understood by providers and beneficiaries.
Comment: A couple of commenters requested clarification on the
requirement that States separately identify Medicaid FFS fee schedule
payment rates by population, specifically inquiring if ``population''
referred to beneficiary demographics or waiver/program population.
Response: As indicated in the regulation text, population refers to
beneficiary demographics, specifically adult and pediatric populations.
Under this final rule, States will be required to publish their
Medicaid FFS fee schedule payment rates separately identified by rates
paid for the adult population and the pediatric population, if the
rates differ in the State. As stated in the proposed rule, we
acknowledge that a State may pay a single Statewide rate regardless of
population, provider type, or geographical location, and such a State
would only need to list the single Statewide rate in its payment rate
transparency publication. We also acknowledge that States define
pediatric differently (such as, 18 years old or younger, 19 years old
or younger, and 21 years old or younger) and we encourage States to
disclose the age range the State's Medicaid program uses in the payment
rate transparency publication for transparency purposes.
Comment: Some commenters requested clarification regarding which
payments are subject to the payment rate transparency requirements
outlined in paragraph (b)(1). Multiple commenters questioned if the
following payment methodologies would be subject to the payment rate
transparency requirements under paragraph (b)(1): manually priced items
(for example, physician administered drugs), provider-specific rates
(for example, PPS rates typically paid to FQHCs or all-inclusive per-
visit rates typically paid to clinics (we assume commenters meant
clinics as defined in Sec. 440.90)), per diem rates, cost and cost-
based payment methodologies (including interim payments) typically paid
to facility-based providers, and negotiated rates. Additionally, many
commenters questioned if disproportionate share hospital (DSH)
payments, FFS supplemental payments, or managed care State directed
payments (SDPs) would be included in the payment rate transparency
publication. A couple of commenters stated that only requiring States
to publish base payment rates would not provide a member of the public
with the ability to readily determine the amount Medicaid would pay for
a service because excluding DSH payments and supplemental payments is
an inaccurate, incomplete, and misleading representation of a Medicaid
provider's actual, overall payments from the Medicaid program.
Response: In Sec. 447.203(b)(1) of the proposed rule, we proposed
that ``[t]h State agency is required to publish all Medicaid fee-for-
service payment rates . . . . Published Medicaid [FFS] payment rates
include fee schedule payment rates made to providers delivering
Medicaid services to Medicaid beneficiaries through a [FFS] delivery
system.'' We acknowledge that this language was not clear that we
intended to require the publication requirement to include only
Medicaid FFS fee schedule payment rates. Accordingly, in this final
rule, we have made some revisions to the proposed regulatory language
in Sec. [thinsp]447.203(b)(1) to change the organizational structure
of (b)(1) by adding romanettes and clarify that only Medicaid FFS fee
schedule payment rates are required to be published in the payment rate
transparency publication. Throughout (b)(1), references to ``fee
schedule payment'' were replaced with

[[Page 40692]]

``Medicaid fee-for-service fee schedule payment rates'' for clarity and
consistency. Therefore, in (b)(1) we state that, the State agency is
required to publish all Medicaid FFS fee schedule payment rates.
Further, in Sec. [thinsp]447.203(b)(1)(i), we specify that, ``for
purposes of paragraph (b)(1), the payment rates that the State agency
is required to publish are Medicaid fee-for-service fee schedule
payment rates made to providers delivering Medicaid services to
Medicaid beneficiaries through a fee-for-service delivery system.''
We would like to clarify which Medicaid FFS fee schedule payment
rates are subject to the payment rate transparency provisions in Sec.
[thinsp]447.203(b). Medicaid FFS fee schedule payment rates are payment
amounts made to a provider, known in advance of a provider delivering a
service to a beneficiary by reference to a fee schedule. A fee schedule
is a list, table, or similar presentation of covered services and
associated payment amounts that are generally determined at the State's
discretion. We also consider a State to use a fee schedule when the
State has not yet organized its payment amounts into such a
straightforward list, table, or similar presentation, but under the
State's approved payment methodology, the State determines payment
rates based on the application of a mathematical formula to another fee
schedule or other reference rate stated as an amount certain. In other
words, a fee schedule that utilizes a formula, but has not yet been
organized into a list, table, or similar presentation of covered
services and associated payment amounts, is included in the scope of
fee schedules subject to the payment rate transparency provisions. For
example, a Medicaid payment methodology that provides for payment at 80
percent of the corresponding Medicare PFS rate would constitute a
Medicaid fee schedule payment methodology because it applies a formula
to a fee schedule to produce a fee schedule payment rate that is known
in advance of a provider delivering the service. This formula reflects
that the State's fee schedule payment methodology starts with the
Medicare PFS fee schedule, then reduces the fee schedule amount to 80
percent of the Medicare PFS amount to arrive at the Medicaid fee
schedule payment rate. States that utilize the previously described
formula-based methodology that may not currently publish these payment
rates on a fee schedule will be required to publish the actual payment
amounts as determined by their formula in the payment rate transparency
publication under this final rule. This final rule focuses on ensuring
transparency of Medicaid FFS fee schedule payment rates so that they
are ``. . . organized in such a way that a member of the public can
readily determine the amount that Medicaid would pay for the service,''
as stated in the proposed regulatory language in Sec. 447.203(b)(1),
which we are finalizing in Sec. 447.203(b)(1)(iii) of this final rule
with a slight modification to replace ``the service'' with ``a given
service.'' Merely publishing the mathematical formula that a member of
the public would need to use to calculate each payment rate the State
has set for a particular service would not meet this requirement of
this final rule. To summarize, fee schedule payment methodologies that
utilize a formula applied to another fee schedule are included in the
scope of fee schedules, and the payment rate transparency publication
must reflect the actual fee schedule payment rate amounts.
Certain bundled payment rates (as discussed later in this comment
response) and PPS rates for inpatient hospital, outpatient hospital,
and nursing facility services are considered fee schedules payment
rates subject to the payment rate transparency publication because
these payment amounts are also known in advance of a provider
delivering a service to a beneficiary and are stated (or can readily be
stated) as a list, table, or similar presentation.
We recognize that PPS rates are utilized in different contexts in
Medicaid to pay for various services (including for services of FQHCs,
RHCs, inpatient hospitals, outpatient hospitals, inpatient psychiatric
facilities, inpatient rehabilitation facilities, long-term care
hospitals, and nursing facilities) and can be calculated differently,
depending on the service. PPS rates in Medicaid used to pay for
services provided by inpatient hospitals, outpatient hospitals,
inpatient psychiatric facilities, inpatient rehabilitation facilities,
long-term care hospitals, and nursing facilities would be included. In
the context of payment rates to hospitals and nursing facilities, the
term ``encounter rate'' or ``per diem rate'' can also be used to
describe the PPS rate received by these providers. This term generally
describes a daily payment rate that is paid to a hospital or nursing
facility during a patient's admission to a hospital or nursing
facility. In this situation, the PPS payment methodology typically
makes payment based on a predetermined, fixed amount. States often use
or model their payment methodologies after Medicare's prospective
payment systems to pay for outpatient hospital, inpatient hospital, and
nursing facility services. In these situations, under Medicare's
prospective payment systems, Medicare typically pays providers for a
particular service an amount derived based on the services expected to
be received during a visit or course of treatment (for more complex
conditions). For example, under the Medicare IPPS, payment is made
based on the Diagnosis Related Group (DRG) to which the patient
discharge is assigned. States also often use other grouping systems,
such as Medicare's PDPM for nursing facilities, Ambulatory Payment
Classifications under Medicare's hospital outpatient PPS for hospital
outpatient services items, or Medicare's End Stage Renal Disease PPS
for facilities or hospital-based providers that furnish dialysis
services and supplies. These PPS rates for inpatient hospital,
outpatient hospital, and nursing facility services are paid to most
hospitals and nursing facilities and are typically known in advance of
a health care provider delivering a service to a beneficiary.
Therefore, these types of PPS rates would be subject to the payment
rate transparency publication in this final rule.
In contrast, FQHCs and RHCs are paid PPS rates that are developed
under a methodology that is statutorily mandated under section 1902(bb)
of the Act, which generally requires that FQHCs and RHCs receive a per
visit, or encounter, rate that is provider-specific and must be based
on a health center's unique cost and visit data.\198\ This requirement
creates a payment rate floor where FQHC and RHCs cannot be paid less
than the PPS rate developed under this statutorily mandated
methodology. Because this statutory payment floor is set by Congress,
FQHC and RHC payment rates are uniquely situated in a manner that does
not exist for other Medicaid payment rates under State discretion.\199\
Although States must comply with section 1902(a)(30)(A) of the Act,
this statutory provision does

[[Page 40693]]

not set a specific payment rate floor. Therefore, because of the unique
provider-specific payment floor mandated by Congress for FQHCs and
RHCs, we believe access concerns related to payment rates for FQHCs and
RHCs are attenuated and as such, we are not including FQHC and RHC PPS
rates in the payment rate transparency publication requirement.
Furthermore, because the FQHC and RHC PPS rates are provider-specific
based on an individual provider's costs and scope of service and
required to be paid by States as a floor set by Congress, we generally
do not believe that publication of the individual providers' payment
rates as part of the payment rate transparency provision finalized in
this rule would not result in actionable information for CMS to
consider in ensuring compliance with section 1902(a)(30)(A) of the Act
as intended through this final rule at this time.
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\198\ In the context of payment rates to FQHCs and RHCs, the
terms ``encounter rate,'' ``per visit rate,'' and ``provider-
specific rate'' can also be used to describe the PPS payment rate.
\199\ We acknowledge that Medicaid payment rates for hospice
services also have a statutorily mandated payment floor: the
Medicaid hospice payment rates are calculated based on the annual
hospice rates established under Medicare. These rates are authorized
by section 1814(i)(1)(C)(ii) of the Act, which also provides for an
annual increase in payment rates for hospice care services. However,
we do not believe these rates would be burdensome on States to
include because they are paid to all Medicaid participating hospice
providers and are therefore not carving them out of this
requirement.
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In addition, if we were to require States to also publish FQHC and
RHC PPS rates, we would expect a significant increase in burden on
States in meeting this requirement. FQHC and RHC PPS rates are unique
to each FQHC and RHC in a State (rather than a single fee schedule rate
that Medicaid would pay for a given service to any provider in a State)
and, therefore, publicizing the FQHC and RHC rates would represent a
sharp increase in States' efforts for rates that are less concerning to
CMS due to the statutory payment floor in section 1902(bb) of the Act.
We do not believe the increase in burden is justifiable given our aim
to balance Federal and State administrative burden with our shared
obligation to ensure compliance with section 1902(a)(30)(A) of the Act
with this final rule. Finally, and as discussed in detail in an earlier
response to comments in this section, like all State plan services for
which the State proposes a rate reduction or restructuring in
circumstances where the changes could result in reduced access, FQHC
and RHC services are subject to the access analyses in Sec.
[thinsp]447.203(c) for proposed rate reductions and restructuring.
Certain FFS VBP payment methodologies are also fee schedule payment
methodologies, even if the exact dollar amount that a particular
provider will receive for a given service is not known in advance
because of the need to adjust for metric-based performance. In such a
case, a State might have an approved FFS VBP payment methodology in the
State plan that includes a 2 percent withhold of the fee schedule
payment amount and the potential for an additional 3 percent bonus to
the provider based on the provider's performance for the year on
certain quality measures. Assuming the State's payment methodology
starts with a base payment of 80 percent of the Medicare PFS payment
amount, the provider's minimum payment for the service would be .98 *
(PFS * .80), and the maximum payment (achieved through a retrospective
true-up payment based on final quality performance for the year) would
be 1.03 * (PFS * .80). The provider's minimum and maximum possible
payment amounts are known in advance (2 percent less than the Medicaid
fee schedule amount, and 3 percent more, respectively) and are based on
the application of a formula to a fee schedule. We also consider this
type of FFS VBP arrangement to constitute a fee schedule payment
methodology, because although the State does not know in advance the
final payment amount a given provider will receive for a particular
service (since the provider's quality performance is not known in
advance), the minimum payment amount is calculable in advance based on
the application of a mathematical formula to a fee schedule amount. We
expect the State to use the minimum payment amount for purposes of the
requirements of Sec. 447.203(b), because this is the amount that a
provider is assured to receive for furnishing the service. At State
option, the State could also include information on the maximum payment
amount the provider might receive under the FFS VBP payment
methodology.
We would also like to clarify what payments are not subject to the
payment rate transparency publication provision. Payment rates that are
not subject to the transparency provisions include those where the
minimum fee schedule payment is not known in advance of a provider
delivering a service to a beneficiary because certain variables
required for the payment calculation are unknown until after the
provider has delivered the service. For example, cost-based and
reconciled cost payment methodologies (including those that involve
interim payments) are not subject to the payment rate transparency
provisions because actual cost is unknown until the end of the
provider's reporting period. As another example, FFS supplemental
payment methodologies are not subject to the payment rate transparency
publication provision because these methodologies often utilize
variables, such as claims volume or number of qualifying providers, for
dividing up a pre-determined payment pool, and actual supplemental
payment amounts are unknown until the end of the provider's (or
providers') reporting period.
While a relatively simple FFS VBP payment methodology (such as the
one discussed earlier in this response, with a bonus and withhold
percentage added to or subtracted from a fee schedule rate based on
provider performance) is considered to result in a fee schedule payment
rate subject to the payment rate publication requirement, we
acknowledge that some States already utilize more complex FFS VBP
payment methodologies (including episodes of care \200\ and integrated
care models \201\) that utilize quality and cost measures to determine
the provider's unique payment amount. Providers who participate in one
of these complex VBP payment arrangements generally report quality and
cost data to the State at the end of the provider's reporting period
and then the State uses that data to determine the provider's payment
amount after the provider has furnished services. Excluding complex VBP
payment methodologies from the payment rate transparency publication
balances burden on States to publish the required information with the
ability of interested parties to understand key Medicaid payment levels
so that they may raise concerns to State Medicaid agencies. If we were
to require States to publish payment rates determined by complex FFS
VBP payment methodologies, it would be burdensome on States, as these
payment rates are

[[Page 40694]]

unique to the provider and are determined using variables (the
provider's quality performance and cost of furnishing services) that
are unknown until after a provider's reporting period has ended. As
these measures are generally unknown until after the provider's
reporting period has ended, the State does not know a provider's
payment in advance. Therefore, complex VBP payment methodologies as
previously described are not fee schedule payment methodologies within
the meaning of this final rule that are subject to the payment rate
transparency provision.
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\200\ We consider episodes of care to be a complex VBP because
the payment methodology determines the total payment by comparing
the provider's cost of care for an episode to the State determined
thresholds for how much the State expects a provider to spend on an
episode. The provider's cost of care is an unknown variable that can
be higher, the same, or lower than the State's threshold and will
vary from provider to provider and episode to episode. Therefore,
the unknown amount of a provider's cost of care for an episode
relative to the State's threshold affects the actual payment the
provider will receive for delivering a service, creating a situation
where the State is unable to reasonably know a provider's payment in
advance.
\201\ We consider integrated care models to be a complex VBP
because the payment methodologies used in these models, for example,
shared savings methodologies, determine the total payment by
comparing the provider's cost of care to the State determined total
cost of care benchmark for how much the State expects a provider to
spend. The provider's cost of care is an unknown variable that can
be higher, the same, or lower than the State's threshold and will
vary from provider to provider. Additionally, States can apply risk
and gain-sharing arrangements that decreases or increases provider's
payment rate based on their performance in meeting specific quality
goals. Therefore, the unknown amount of a provider's cost of care
relative to the State's total cost of care benchmark and additional
decreases or increases to payment rates based on performance meeting
quality goals affects the actual payment the provider will receive
for delivering a service, creating a situation where the State is
unable to reasonably know a provider's payment in advance.
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We also recognize that an advanced payment methodology, as
described in SMDL 20-004, could utilize fee schedule payments within
the meaning of this final rule.\202\ For example, a State could
calculate an advanced payment of $10,000 for a provider that is
expected to furnish 1,000 services and each service is paid at a fee
schedule payment rate of $10. The advanced payment amount was
originally determined by a fee schedule payment rate, which is known in
advance of a provider delivering a service to a beneficiary, and
therefore these rates would appear to be covered by this requirement.
However, there are also features of certain advanced payment
methodologies that could place them outside the scope of this
requirement. For example, an advanced payment methodology that permits
States to include risk adjustments and quality performance adjustments
to the advanced payment amount, and/or requires the State to perform a
reconciliation to the actual number of claims, could mean that the
Medicaid payment amount that the provider could expect to receive could
not be known in advance. At the time of publication of this final rule,
there are no approved SPAs that utilize an advanced payment methodology
as discussed in SMDL 20-004, so we are unable to state definitively
whether any advanced payment methodology that may be used in FFS
Medicaid pursuant to a future SPA would be subject to the payment rate
transparency publication requirement. Without implementation experience
of advanced payment methodologies, we will review future advanced
payment methodologies on a case-by-case basis to determine if the
methodology uses a fee schedule payment methodology within the meaning
of this final rule. We encourage States that propose advanced payment
methodology after finalization of this rule to reach out to CMS for
technical assistance on determining whether advanced payment amounts
are subject to the payment rate transparency publication requirements.
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\202\ https://www.medicaid.gov/sites/default/files/2020-09/smd20004.pdf.
---------------------------------------------------------------------------

We interpret the commenter's reference to ``manually priced items''
to mean a provider payment rate that the State determines after a
service or item has been delivered to a beneficiary and the provider
has billed for it. For example, certain durable medical equipment items
that are infrequently furnished to beneficiaries may be paid at the
manufacturer's suggested retail price minus a percentage. This is
described in the approved State plan, and when such an item is
furnished to a beneficiary, the State must manually adjust the amount
paid for the claim to equal the manufacturer's suggested retail price
minus the percentage listed in the State plan, rather than pay a
particular Medicaid FFS fee schedule payment rate. Because these
services and items are infrequently furnished and States manually price
each service and item as they are delivered to the beneficiary, we
understand that it would be impractical and burdensome on States to
maintain current lists of the manufacturer's suggested retail price for
all potential items or services a beneficiary might require and a
provider may bill for, and that States often source these items and
services from multiple manufacturers. Therefore, for the purposes of
the payment rate transparency publication, we consider manually priced
payment methodologies that utilize the manufacturer's suggested retail
price to result in a payment amount that is not known in advance of a
provider delivering a service or item to a beneficiary, and thus not to
be a fee schedule payment methodology subject to the payment rate
transparency publication requirements.
We interpret the commenter's reference to ``negotiated rates'' to
mean a provider payment rate where the individual provider's final
payment rate is agreed upon through negotiation with the State Medicaid
agency. For example, negotiated rates may be offered by a State when a
particular service has very low utilization, a custom item is required
(for example, certain wheelchairs), or the State does not have
information needed to establish a payment rate under an approved State
plan payment methodology (for example, information from other payers,
such as Medicare or the State's employee health insurance on how much
they pay for the service or item) to establish a fixed payment rate. In
these instances, generally, the State has not developed a rate prior to
service delivery; payment for the service or item on a case-by-case-
basis in the circumstances does not constitute a fee schedule payment
methodology. Additionally, DSH payments and supplemental payments are
not subject to the payment rate transparency publication requirement
because they do not fall into the description of Medicaid FFS fee
schedule payment rates for purposes of the payment rate transparency
provision in Sec. [thinsp]447.203(b)(1). Finally, SDPs in Medicaid
managed care delivery systems are outside the scope of Sec.
[thinsp]447.203(b)(1)(i), which is specific to the FFS delivery system.
We invite States to reach out to CMS for technical assistance if
they have a FFS payment rate or methodology that may not clearly align
with the previous descriptions and examples of Medicaid FFS fee
schedule payment rates that are subject to the payment rate
transparency publication provision, and other payment methodologies
that are not.
We disagree with commenters that that only requiring States to
publish base payment rates would not provide a member of the public
with the ability to readily determine the amount Medicaid would pay for
a service. To clarify, we did not intend for the payment rate
transparency publication to reflect the entire universe of payments a
provider may receive. Setting the scope of the publication to Medicaid
FFS fee schedule payment rates, as previously discussed in this
response to commenters, balances burden on States to publish the
required information with the ability of interested parties to
understand key Medicaid payment levels so that they may raise concerns
to State Medicaid agencies. If we were to require States to also
include DSH payments and supplemental payments along with the Medicaid
FFS fee schedule payment rates, it would significantly increase burden
on States and might not result in the public clearly understanding the
amount that any given provider could expect to receive for furnishing
the service to a Medicaid beneficiary, as DSH payments and supplemental
payments are generally paid on a provider-level basis rather than a
service-level basis, and not all providers of a given service will
qualify for these payments.
Comment: One commenter requested clarification regarding whether
payment rates paid to the direct support workforce are subject to the
payment rate transparency publication requirements. Another commenter
questioned if self-directed service payment rates should be published

[[Page 40695]]

separately from agency model personal care services.
Response: We interpret the commenter's reference to ``the direct
support workforce'' to generally mean the direct support workers or
direct support professionals that provide hands-on and in-person
Medicaid services to beneficiaries. To the extent a State's payment
rates to direct support workforce utilize Medicaid FFS fee schedule
payment rates within the meaning of this final rule, as discussed in
detail in an earlier response to comments in this section, those
payment rates would be subject to payment rate transparency
requirements under Sec. [thinsp]447.203(b)(1).
Regarding self-directed service payment rates being separately
published from agency model personal care services, we assume the
commenter was referring to self-directed models with service budget and
agency-provider models authorized under 42 CFR 441.545. We would like
to clarify that, to the extent a State pays an agency-provider a
Medicaid FFS fee schedule payment rate as discussed in detail in an
earlier response to comments in this section, then those payment rates
are subject to the payment rate transparency requirements in Sec.
[thinsp]447.203(b)(1). Self-directed models with service budget \203\
are not subject to the payment rate transparency publication
requirement in Sec. [thinsp]447.203(b)(1). As previously stated,
payment rates that are not subject to the payment rate transparency
publication requirement include those that that are not known in
advance of a provider delivering a service to a beneficiary. Under the
self-directed model with service budget, the State only sets the
beneficiary's overall service budget, and the beneficiary negotiates
the payment rate with the direct support worker; therefore, the State
is not setting the payment rate and does not know in advance what rate
the direct service worker will be paid for furnishing services to the
beneficiary. This does not constitute a fee schedule payment
methodology for purposes of the payment rate transparency publication
requirement, and as such these types of payment rates are excluded from
the publication requirement. We further clarify that we do not expect
States to list each beneficiary's individual self-directed service
budget in the payment rate transparency publication.
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\203\ Self-directed services are paid for using an
individualized budget. States are required to describe the method
for calculating the dollar values of individual budgets based on
reliable costs and service utilization, define a process for making
adjustments to the budget when changes in participants' person-
centered service plans occur, and define a procedure to evaluate
participants' expenditures. https://www.medicaid.gov/medicaid/long-term-services-supports/self-directed-services/index.html.
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Comment: One commenter expressed concern that requiring States to
publish all Medicaid FFS payment rates online could have unintended
consequences, such as beneficiary confusion about how much their
copayment amount would be if it was included on the State's fee
schedule which typically lists the amount allowed for the service, as
well as State burden from increased documentation on the State's
website. The commenter recommended CMS permit States to provide easily
accessible links where the fee schedules are located to copayment
information already available to providers and clients in a clear and
concise manner.
Response: We understand commenters' concerns about the effects of
the payment rate transparency publication in practice. Regarding
commenters' concerns about beneficiary confusion, we want to clarify
that the payment rates published under Sec. 447.203(b)(1)(i) must be
inclusive of the payment amount from the Medicaid agency plus any
applicable coinsurance and deductibles to the extent that a beneficiary
is expected to be liable for those payments, as discussed earlier in a
response to comments this section. We encourage States, as part of
transparency efforts, to include in the payment rate transparency
publication a link to the page on the website where existing
beneficiary cost sharing information is located so beneficiaries and
other interested parties will be able to easily access this existing
source of information about beneficiary cost sharing obligations.
Additionally, regarding commenters' concerns about burden from
increased documentation on the State's website, as documented in
section III. of this final rule, the FFS provisions, including the
payment rate transparency, comparative payment rate analysis, and
payment rate disclosure requirements (Sec. [thinsp]447.203(b)(1)
through (5)), interested parties' advisory group requirements (Sec.
[thinsp]447.203(b)(6)), and State analysis procedures for payment rate
reductions or payment restructuring (Sec. [thinsp]447.203(c)), are
expected to result in a net burden reduction on States compared to the
previous AMRP requirements. With the finalization of the provisions in
this rule, we aim to balance Federal and State administrative burden
with our shared obligation to ensure compliance with section
1902(a)(30)(A) of the Act (and our obligation to oversee State
compliance with the same). As previously stated, States also have the
flexibility to utilize contractors or other third-party websites to
publish the payment rate transparency publication on (however, we
remind States that they are still requiring to publish the hyperlink to
the website where the publication is located on the State Medicaid
agency's website as required in Sec. 447.203(b)(1)(ii) of this final
rule).
Comment: One commenter requested clarification on the 1-month
update requirement for the payment rate transparency requirement. The
commenter stated that there are instances where SPAs are submitted with
prospective effective dates or where States may face a delayed
operationalization in their claims system that includes approved rate
changes. The commenter noted that, in both instances under the proposed
regulatory language for the payment rate transparency requirement, a
State would be expected to publish rates that are not yet in effect or
not currently being paid to providers. The commenter suggested revising
the regulatory language to require States update rate changes in the
payment rate transparency publication within 1 month of CMS approval of
a SPA, the effective date of payment rate changes, or the date system
changes are operationalized by a State, whichever date occurs latest.
Additionally, one commenter suggested extending the requirement for
updates to the payment rate transparency publication to 2 months
instead of 1 month as proposed.
Response: In response to comments, we have revised the regulatory
language to account for SPAs with prospective effective dates. As
finalized in this rule, Sec. 447.203(b)(1)(vi) now states, ``[t]he
agency is required to include the date the payment rates were last
updated on the State Medicaid agency's website and to ensure these data
are kept current where any necessary update must be made no later than
1 month following the latter of the date of CMS approval of the State
plan amendment, section 1915(c) HCBS waiver amendment, or similar
amendment revising the provider payment rate or methodology, or the
effective date of the approved amendment.'' We are adding this language
as a technical change to account for States submitting SPAs with
prospective effective dates as the proposed regulatory language would
have required State to publish payment rates in the payment rate
transparency publication that were approved, but not yet effective. We
thank the commenter for pointing out this possibility, and we believe
this change will ensure a State's payment rate transparency publication
is as current as possible, and accurate once published.

[[Page 40696]]

However, we have not included regulatory language to account for
system changes with a delayed operationalization date as suggested by
this commenter. In accordance with Sec. Sec. 430.10 and 430.20 and
part 447, subpart B, States are required to pay the approved State plan
payment rates in their State plan effective on or after the approved
effective date. Therefore, payment of any rate outside of the approved
State plan would result in a State plan compliance issue, and non-
compliance is not a circumstance we would accommodate in regulations.
We have also not extended the timeframe from 1 month to 2 months for
States to update their payment rate transparency publications after a
payment rate change. States are aware that a payment rate change is
forthcoming and its requested effective date when they submit a SPA,
and as such, we believe 1 month is more than sufficient to update the
payment rate transparency publication. We invite States to reach out to
CMS for technical guidance regarding any technological or operational
limitations that may impact a State's compliance with the payment rate
transparency publication requirement.
Comment: We received a few comments expressing concern about which
bundled payment rates would be subject to the payment rate transparency
publication as well as concern about the burden imposed on States from
operational challenges to break down bundled payment rates into
constituent services and rates allocated to each constituent service in
the bundle. These commenters also requested clarification on how States
will be required to publish bundled payment rates in the payment rate
transparency publication. Commenters requested clarification regarding
the following instances where bundled payment rates are used by States:
team-based services, provider-specific rates (for example, PPS rates
typically paid for FQHC and RHC services or an encounter rate typically
paid to clinics for clinic services (we assume commenters meant clinic
services as defined in Sec. 440.90) and CCBHC services), and per diem
rates paid for facility or institutional (that is, hospital and nursing
facility) services. These commenters stated that this requirement would
be burdensome, operationally difficult, or not feasible because
individual rates for constituent services within the bundle do not
exist or bundled rates are established on a provider-specific basis
using provider-specific historical cost data and inflationary
adjustments. These commenters requested further clarification regarding
a definition of constituent services, how States should unbundle rates
and services from a bundled rate, as well as additional explanation of
the value CMS believes this requirement will contribute to the Medicaid
program. They encouraged CMS to explicitly exempt facility and
institutional providers from the payment rate transparency publication
requirements.
Response: Bundled payments are a versatile payment methodology that
States can utilize within and across numerous Medicaid benefit
categories. Bundled payments are generally developed using State-
specific assumptions about the type, quantity, and intensity of
services included in the bundle, and generally are based on the payment
rates for the individual constituent services when they are furnished
outside the bundled rate.
In this final rule, we clarify bundled payment rates that are
subject to the requirement in the payment rate transparency publication
provision that States identify how much of the bundled fee schedule
payment rate is allocated to each constituent service under the State's
payment methodology. In the case of a bundled payment methodology, the
State must publish the Medicaid FFS bundled payment rate and, where the
bundled payment rate is based on fee schedule payment rates for each
constituent service, must identify each constituent service included
within the rate and how much of the bundled payment rate is allocated
to each constituent service under the State's methodology.
To explain further, the bundled payment rates that are subject to
this requirement are State-developed payment rates that provide a
single payment rate for furnishing a bundle of services, including
multiple units of service, multiple services within a single benefit
category, or multiple services across multiple benefit categories. In
any of these instances, multiple providers and provider types could
contribute to a bundle of services, which is what we interpret the
comment about team-based services to mean. Bundled payment rates that
are based on fee schedule payment rates for each constituent service
are subject to the requirement to identify each constituent service
included within the rate and how much of the bundled payment rate is
allocated to each constituent service under the State's methodology.
States can develop bundled payment rates for multiple units of a
single service, for example, by setting a daily rate for up to 4 hours
of personal care services a day that includes multiple 15-minute units
of personal care services for which there is a fee schedule payment
rate. States can also develop a bundled payment rate for multiple
services within a single benefit category. For example, within the
rehabilitative services Medicaid benefit, a daily rate for assertive
community treatment, which can include constituent services set at fee
schedule payment rates for assessments, care coordination, crisis
intervention, therapy, and medication management, is considered a
bundled rate. Finally, States can also develop a bundled payment rate
for one or more services across multiple benefit categories. For
example, a daily rate that includes constituent services set at fee
schedule payment rates for up to 2 hours of personal care services, up
to 2 hours of targeted case management services, and 1 hour of physical
therapy services is considered a bundled rate. As all of these examples
describe bundled payment rates comprised of constituent services that
are based on fee schedule payment rates, they are subject to the
bundled rate breakdown requirement in the payment rate transparency
provision. Later in this response, we will discuss how States are
required to allocate the bundled payment rate to each constituent
service under the State's methodology.
Within a bundled payment rate, a constituent service is a Medicaid-
covered service included in a bundle of multiple units of service and/
or multiple services. These constituent services within the bundled
payment rate must correspond to service descriptions in section 3.1-A
of the State plan, which describes covered services. When initially
adding a bundled payment rate to the State plan, States are required to
separately list out each constituent service included in the bundle to
ensure that non-covered services are not included in the bundled
rate.\204\ For example, a bundle for assertive community treatment
covered under the rehabilitative services State plan benefit should not
include room and board, as rehabilitative services are not covered in
institutional settings. Therefore, ``room and board'' is a non-covered
service under the rehabilitative services benefit and would not be a
constituent service in the bundled payment rate.
---------------------------------------------------------------------------

\204\ https://www.medicaid.gov/sites/default/files/state-resource-center/downloads/spa-and-1915-waiver-processing/bundled-rate-payment-methodology.pdf.
---------------------------------------------------------------------------

We also clarify payment rates that pay for various services and
could be considered a bundled payment rate that

[[Page 40697]]

are not subject to the requirement in the payment rate transparency
publication provision. For purposes of the requirement of this final
rule, this bundled payment rate breakdown requirement only applies to
bundled payment rates that are based on fee schedule payment rates for
each constituent service. Payment rate methodologies that do not
utilize fee schedule payment rates for each constituent service to
create a single State-developed bundled payment rate to pay for a
combination of services, including multiple units of the same service,
multiple services within a single benefit category, or multiple
services across multiple benefit categories, are not subject to the
bundled rate breakdown requirement in the payment rate transparency
publication provision. For example, prospective payment system rates
that States use to pay for services provided in inpatient hospitals,
outpatient hospitals, inpatient psychiatric facilities, inpatient
rehabilitation facilities, long-term care hospitals, and nursing
facilities are not subject to the bundled rate breakdown requirement,
because these PPS rates (as previously mentioned, in the context of
payment rates to hospitals and nursing facilities, the terms
``encounter rate'' or ``per diem rate'' can also be used to describe
the prospective payment system rate received by these providers) do not
utilize fee schedule payment rates to create a single payment rate to
pay for a bundle of services. These PPS payment methodologies generally
pay providers an amount derived based on a formula that accounts for
the resources required to treat a patient, such as the patient's
condition (that is, illness severity or clinical diagnosis), the
provider's operating costs (that is, labor, supplies, insurance), and
adjustment factors (that is, cost of living, case-mix, State determined
factors), such as when an individual has an inpatient hospital stay for
knee replacement surgery. While these PPS rates generally are subject
to the payment rate transparency publication requirement in this final
rule because they are typically known in advance of a provider
delivering a service to a beneficiary, they are not subject to the
breakdown requirement to the extent they do not utilize exclusively fee
schedule payment rates to create a single payment rate for the bundle
of services. Therefore, if we were to require States to also break down
PPS rates, it would significantly increase burden on States and might
not result in the public clearly understanding the amount that any
given provider could expect to receive for the furnishing the services
to a Medicaid beneficiary, as PPS rates are generally not determined
based only on payment rates for constituent services within the meaning
of this final rule. We believe a fee schedule payment rate for each
constituent service is needed to enable the State to perform a
straightforward and reliable allocation of the bundled payment rate to
each included service. Therefore, because PPS rates are not determined
based on fee schedule payment rates for each constituent service within
the meaning of this final rule, States do not need to identify each
constituent service included within a PPS rate and how much of the PPS
rate is allocated to each constituent service under the State's
methodology. In response to the comment asking about FQHC and RHC PPS
rates, please see the discussion earlier in this section explaining why
these rates are carved out of this requirement due to the statutory
floor for rates and consideration of potentially undue burden on
States.
Regarding whether payment rates for CCBHC services are subject to
the bundled payment rate breakdown requirement, PPS rates for CCBHC
demonstration services authorized under section 223 of the Protecting
Access to Medicare Act of 2014 are not subject to the payment rate
transparency publication requirement, including the bundled rate
breakdown requirement, because these payments rates are outside of
Medicaid FFS State plan authority. For CCBHC services covered and paid
for under Medicaid FFS State plan authority, States that use Medicaid
FFS fee schedule rates within the meaning of this rule to pay for CCBHC
services must include these payment rates in the payment rate
transparency provisions. Additionally, Medicaid FFS fee schedule rates
that are bundled payment rates within the meaning of this rule paid to
clinics (as defined in Sec. 440.90), are subject to the bundled rate
breakdown requirement.
Based on this, if a State determines a bundled payment rate is
subject to the bundled payment rate breakdown requirement, we will now
discuss how to allocate the bundled payment rate to each constituent
service under the State's methodology. States have flexibility in
determining the assumptions regarding the type, quantity, intensity,
and price of the constituent services that they factor into the initial
development of a bundled rate.\205\ When States establish the payment
rate for a bundle, States may include the current fee schedule payment
rates for the constituent services to determine the total bundled rate.
For example, a State might pay a $480 bundled rate for assertive
community treatment, based on the application of a small discount
factor to the fee schedule payment rates for all of the constituent
services (assessments, care coordination, crisis intervention, therapy,
and medication management). In this scenario, the State's fee schedule
payment rates might be $50 for an assessment, $30 for care
coordination, $200 for crisis intervention, $200 for 2 hours of
individual therapy, and $20 for medication management. Separately, the
State would pay a total of $500 for all of these services; however, the
State might determine that a provider likely would realize efficiencies
from providing the services together in a coordinated fashion, and so
might reduce the bundled payment rate by 4 percent to account for these
expected savings. Thus, the State's bundled payment rate would be $480,
which would be allocated as follows: $480 * ($50/$500) = $48 for
assessment; $480 * ($30/$500) = $28.80 for care coordination; $480 *
($200/$500) = $192 for crisis intervention; $480 * ($200/$500) = $192
for 2 hours of individual therapy; and $480 * ($20/$500) = $19.20 for
medication management. In this example, the State would identify each
of these constituent services and use these allocation amounts to meet
the requirements finalized in paragraph (b)(1)(iv).
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\205\ For new bundled rates, CMS requests information on how
States developed the rates, including: assumptions regarding the
type, quantity, intensity, and price of the component services
typically provided to support the economy and efficiency of the
rate. https://www.medicaid.gov/sites/default/files/state-resource-center/downloads/spa-and-1915-waiver-processing/bundled-rate-payment-methodology.pdf.
---------------------------------------------------------------------------

In response to commenters' request for an explanation of the value
CMS believes the bundled payment rate breakdown requirement will
contribute to the Medicaid program, our rationale is the same as for
this payment rate publication requirement generally. Bundled rates are
not inherently transparent, and in order to achieve the same goal of
transparency in service of ensuring adequate access to covered care and
services, it is important for interested parties to know what is
covered in a bundled rate and how much of the bundle is attributable to
each constituent service, which provides information relevant to
whether the bundled rate is adequate in relation to its constituent
services and enables comparison to how the constituent services are
paid when

[[Page 40698]]

furnished outside the bundle. Our primary goal with the payment rate
transparency publication is ensuring Medicaid payment rates are
publicly available in such a way that a member of the public can
readily determine the amount that Medicaid would pay for a given
service. Transparency helps to ensure that interested parties have
basic information available to them to understand Medicaid payment
levels and the associated effects of payment rates on access to care so
that they may raise concerns to State Medicaid agencies via the various
forms of public process available to interested parties.
In response to commenters' concerns that the bundled payment rate
breakdown provision would be burdensome, operationally difficult, or
not feasible because individual rates for constituent services within
the bundle do not exist, we are providing guidance on how States are
expected to address these circumstances. We acknowledge there are
instances where States may have bundled payment rates that have been in
place for many years, even decades, and the State currently does not
have available information about how the payment rates were developed.
Therefore, the State may lack historical data to perform a reasonable
allocation of the bundled payment rate to constituent services. We also
recognize there are instances where States utilizing bundled payment
rates do not permit providers to bill for the constituent services
separately. In this instance, States may no longer regularly update the
fee schedule amounts for the constituent services included in the
bundled payment rate because the bundle is primarily how the services
are delivered and billed by providers. Therefore, the current fee
schedule payment rates for the constituent services do not reflect how
the State would pay for the constituent services outside of the bundle.
States have flexibility in determining how best to allocate the
bundled payment rate to each constituent service in these scenarios.
Should a State not have certain historical data about the bundled
payment rate available, we are offering a few solutions for the State
to consider. If a State can reasonably calculate missing rates, we
expect them to do so for the purposes of completing the bundled payment
rate allocation. For example, a State may have a bundled payment rate
that includes five constituent services, which the State knows was
calculated by summing the undiscounted fee schedule payment rates for
each of the five constituent services. Today, the State may be unable
to locate the fee schedule amount for one of the constituent services.
In this instance, we would expect the State to reasonably deduce the
allocated rate for the fifth constituent service by summing the four
known rates for the four constituent services and subtracting that
amount from the total bundled payment rate. If a State cannot calculate
a missing portion of a bundled payment rate, they may use current fee
schedule rates. For example, a State may have a bundled payment rate,
but it does not have historical information about how the bundled
payment rate was originally calculated from the constituent services.
In this instance, we would expect the State to use the current fee
schedule rates for the constituent services included in the bundle to
allocate the bundled payment rate for the payment rate transparency
publication. Regardless of the approach States utilize to allocate the
bundled payment rate to the constituent services, we expect States to
include a description of how the bundled payment rate was allocated in
the payment rate transparency publication to ensure that a member of
the public can readily determine the amount that Medicaid would pay for
the bundled service and understand how the State has accomplished a
reasonable allocation of this amount to each constituent service
included in the bundle, as required in Sec. 447.203(b)(1)(iii).
In situations where the State cannot reasonably deduce how to
allocate the bundled payment rate to the constituent services included
in the bundle or the current fee schedule rates for the constituent
services do not serve as a reasonable proxy to determine the allocation
of the bundled payment rate to its constituent services, we invite
States to reach out to us for technical assistance on how to comply
with Sec. 447.203(b)(1)(iv) on a case-by-case basis. We expect this
guidance to provide States with relief from burden associated with
allocating the bundled payment rate to constituent services when
historical information is unavailable, including in certain situations
raised by commenters where individual historical rates for constituent
services within the bundle are no longer available. Regardless of how a
State chooses to address a lack of data related to a bundled payment
rate, we expect the State to update the payment rate transparency
publication with an accurate allocation information following the
effective date or CMS approval date of a SPA, a section 1915(c) HCBS
waiver amendment, or similar amendment amending the bundled payment
rate in question in accordance with Sec. 447.203(b)(1)(vi). These
processes require the State to provide information about the fee
schedule payment rates for the constituent services included in the
bundle, therefore making available the necessary data to perform an
allocation for the payment rate transparency publication.
We also invite States to contact CMS for technical assistance if
they have a bundled payment methodology that does not clearly align
with the previous descriptions and examples of bundled payment rates
that are and are not subject to the bundled payment rate breakdown
requirement. We also encourage States to review our existing Bundled
Rate Payment Methodology resource on Medicaid.gov for more information
about bundled payment methodologies.\206\
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\206\ https://www.medicaid.gov/sites/default/files/state-resource-center/downloads/spa-and-1915-waiver-processing/bundled-rate-payment-methodology.pdf.
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Regarding commenters' concerns about burden on States to break down
institutional services bundled payment rates into constituent services
in the payment rate transparency publication, we understand these
concerns were primarily about operational challenges States would face
if rates paid to hospitals and nursing facilities, as well as cost-
based rates generally, were subject to this provision. As previously
discussed in this response, PPS rates that are not determined based on
fee schedule payment rates for each constituent service within the
meaning of this final rule are not subject to the bundled rate
breakdown requirement in Sec. 447.203(b)(1)(iv); however, PPS rates
generally are considered Medicaid FFS fee schedule payment rates in the
context of this rule and are required to be published in the payment
rate transparency publication under Sec. 447.203(b)(1) as finalized in
this rule. Also previously discussed in this response, PPS rates for
FQHCs and RHCs are not subject to the bundled rate breakdown
requirement in Sec. 447.203(b)(1)(iv) because these payment rates are
not subject to the payment rate transparency publication requirement
under Sec. 447.203(b)(1).
In this final rule, we are revising the regulatory language to make
clear what bundled payment rates are subject to the constituent service
allocation, or breakdown, requirement. We proposed in Sec.
447.203(b)(1) to provide that the State must, ``. . . in the case of a
bundled or similar payment methodology, identify each constituent
service included within the rate and

[[Page 40699]]

how much of the bundled payment rate is allocated to each constituent
service under the State's methodology.'' We are finalizing Sec.
447.203(b)(1)(iv) to state, ``In the case of a bundled payment
methodology, the State must publish the Medicaid fee-for-service
bundled payment rate and, where the bundled payment rate is based on
fee schedule payment rates for each constituent service, must identify
each constituent service included within the rate and how much of the
bundled payment is allocated to each constituent service under the
State's methodology.'' (new language identified in bold). We also
deleted ``or similar'' from ``In the case of a bundled payment
methodology . . .'' because we determined that this language is
unnecessary and potentially confusing; instead, in this final rule, we
are clarifying specifically which bundled payment rates are subject to
the requirement to identify each constituent service included within
the rate and how much of the bundled payment is allocated to each
constituent service under the State's methodology.
Comment: Several commenters offered suggestions and recommendations
for the proposed payment rate transparency requirements. These
suggestions and recommendations include linking together FFS and
managed care plan web pages for full transparency, allowing State
contractors to publish the State's payment rates, requiring the
published format of the payment rates be ready for data analysis,
requiring States to publish information about payment rate models and
methodologies (that is, payment rate development information,
potentially including cost factors and assumptions underlying a rate,
such as wages, employee-related expenses, program-related expenses, and
general and administrative expenses) as well as the frequency and
processes for rate reviews, and requiring States publish additional
granular data, particularly for dental services (for example,
utilization, median payment rates, and service frequency).
Response: We appreciate commenters' suggestions and recommendations
for the payment rate transparency publication requirement. While the
transparency provisions in the Managed Care final rule (as published
elsewhere in this Federal Register) and this final rule share a similar
goal, we are not incorporating the suggestion to require States to link
together FFS and managed care plan web pages for full transparency
because there is often no relationship between FFS Medicaid payment
rates and managed care plan provider rates, as the rates are determined
through different processes, subject to different Federal requirements,
and States, managed care plans, and CMS assess access to care
differently for FFS and managed care. Therefore, we believe that
requiring States link their FFS payment rate transparency publication
websites with managed care plan web pages would not provide
beneficiaries, providers, CMS, and other interested parties with
relevant payment information for the purposes of assessing access to
care issues to better ensure compliance of FFS payment rates with
section 1902(a)(30)(A) of the Act.
As discussed in an earlier response to comments in this section, we
have revised the regulatory language in Sec. 447.203(b)(1) from what
we originally proposed to permit States the flexibility to continue to
utilize contractors and other third parties for developing and
publishing their fee schedules on behalf of the State. Specifically, in
Sec. 447.203(b)(1), we deleted the language requiring that the website
where Medicaid fee-for-service fee schedule payment rates be published
be ``developed and maintained by the single State agency.'' As
finalized, Sec. 447.203(b)(1) requires the State ``. . . publish all
Medicaid fee-for-service fee schedule payment rates on a website that
is accessible to the general public.'' We continue to require that
``The website where the State agency publishes its Medicaid fee-for-
service payment rates must be easily reached from a hyperlink on the
State Medicaid agency's website.'' in Sec. 447.203(b)(1)(ii).
We are not incorporating the suggestion to require the format of
the payment rate transparency publication be ready for any particular
form of data analysis. Our primary goal with the payment rate
transparency publication is ensuring Medicaid payment rates are
publicly available in such a way that a member of the public can
readily determine the amount that Medicaid would pay for a given
service. Transparency helps to ensure that interested parties have
basic information available to them to understand Medicaid payment
levels and the associated effects of payment rates on access to care so
that they may raise concerns to State Medicaid agencies via the various
forms of public process available to interested parties. Transparency
will provide us and other interested parties with information necessary
that is not currently available at all or not available in a clear and
accessible format for us to ensure the payment rates for consistency
with efficiency, economy, and quality of care and are sufficient to
enlist enough providers so that care and services are available under
the plan at least to the extent that such care and services are
available to the general population in the geographic area. The payment
rate transparency publication is the first step in ensuring payment
rate data is transparent, then the comparative payment rate analysis is
the next step in analyzing the payment rate data relative to Medicare
as a benchmark. Additionally, given the requirements that the payment
rate transparency publications be publicly available, clear, and
accessible, we anticipate that various interested parties will be able
to adapt the published information manually or through technological
means so that it is suited to any analysis they wish to perform.
We are not incorporating the suggestion to require States to
publish information about payment rate models and methodologies (that
is, payment rate development information, potentially including cost
factors and assumptions underlying a rate, such as wages, employee-
related expenses, program-related expenses, and general and
administrative expenses), the frequency and processes for rate reviews,
or additional granular data, particularly for dental services (for
example, utilization, median payment rates, and service frequency),
because we want our initial focus to be on establishing the new payment
rate transparency publication, comparative payment rate analysis, and
payment rate disclosure requirements, providing States with support
during the compliance period, and ensuring these data are available to
beneficiaries, providers, CMS, and other interested parties for the
purposes of assessing access to care issues. While the payment rate
transparency publication does not require additional granular data
outside of payment rate variations by population (pediatric and adult),
provider type, and geographical location, we would like to note that
utilization in the form of the number of Medicaid-paid claims and the
number of Medicaid enrolled beneficiaries who received a service is
required to be included in the comparative payment rate analysis and
payment rate disclosure; however, these requirements do not include
dental services. We acknowledge that the commenters' suggestions would
add relevant and beneficial context to the payment rate information
required to be published by States in this final rule. Given that our
work to better ensure access in the Medicaid program is ongoing, we
intend to gain implementation experience with

[[Page 40700]]

this final rule, and we will consider the recommendations provided on
the proposed rule to help inform any future rulemaking in this area, as
appropriate. While we are not adopting all of these suggestions and
recommendations, we note that States have the flexibility to add the
elements described to their payment rate transparency publications if
they so choose.
We believe that there are minimal qualities that the website
containing the payment rate transparency publication necessarily must
include, such as being able to function quickly and as an average user
would expect; requiring minimal, logical navigation steps; taking
reasonable steps to provide meaningful access to individuals with
limited English proficiency; and ensuring accessibility for persons
with disabilities in accordance with section 504 of the Rehabilitation
Act and Title II of the ADA. An example of this includes a single web
page clearly listing the names of the State's published fee schedules
(such as Physician Fee Schedule, Rehabilitation Services Fee Schedule,
etc.)) as links that transport the user to the relevant State fee
schedule file, which file should be in a commonly accessible file
format that generally can be viewed within a web browser without
requiring the user to download a file for viewing in separate software.
In this example, there is no unnecessary burden (including requiring
payment (paywall)) creation of an account and/or password to view the
web page, or need to install additional software to view the files) on
the individual to trying to view the published fee schedules. We invite
States to reach out to CMS for technical guidance regarding compliance
with the payment rate transparency publication requirement. We also
encourage States to review the subregulatory guidance, which includes
an example of what a compliant payment rate transparency publication
might look like, that we will issue prior to the effective date of this
final rule.
Comment: A few commenters suggested narrowing the scope of the
payment rate transparency requirement. Commenters recommended narrowing
the scope by requiring publication of payment rate transparency
information only about a representative subset of services, a State's
most common provider types and covered services, or the same CMS-
published list of E/M codes that we proposed for the comparative
payment rate analysis requirement. A subset of these commenters
suggested that, once States have acclimated to the requirements of
payment rate transparency, then CMS could expand the requirement
gradually to include all Medicaid FFS payment rates, to ease burden on
States.
Response: We appreciate the commenters' suggestions on narrowing
the scope of the payment rate transparency requirement; however, we are
not changing the scope in this final rule. As previously discussed in
detail in an earlier response to comments in this section, for purposes
of the payment rate transparency provision in Sec. 447.203(b)(1),
Medicaid FFS fee schedule payment rates are FFS payment amounts made to
a provider, and known in advance of a provider delivering a service to
a beneficiary by reference to a fee schedule. While we understand the
broad scope of included rates will require some work for many States to
implement, we believe the time between the effective date of this final
rule and the applicability date of July 1, 2026, for the first
publication of payment rate transparency information is sufficient for
these requirements. Given that our work to better ensure access in the
Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will consider the
recommendations provided on the proposed rule to help inform any future
rulemaking in this area, as appropriate.
Comment: One commenter suggested requiring States identify an
additional level of payment rate variation within the population
(pediatric and adult) where, within the pediatric population, Medicaid
and CHIP pay different rates, which should be disclosed separately in
the payment rate transparency publication.
Response: We appreciate the commenter's suggestion; however, we are
not including a requirement that States break down payment rates to
include separate Medicaid and CHIP payment rate information within the
pediatric population payment rate reporting. Regulations applicable to
CHIP under 42 CFR part 457 and relevant guidance are beyond the scope
of this rulemaking. After obtaining implementation experience with
these new policies, we will consider proposing to require States to
identify additional levels of payment rate variations in the Medicaid
FFS payment rate transparency publication through future rulemaking.
Comment: One commenter suggested applying the payment rate
transparency requirements to all Medicaid HCBS programs.
Response: To the extent a State's Medicaid HCBS program utilizes
Medicaid FFS fee schedule payment rates within the meaning of this
final rule, as discussed in detail earlier in this section, those
payment rates would be subject to payment rate transparency publication
requirements described in Sec. 447.203(b)(1). Additionally, we are
finalizing a similar provision to the Medicaid FFS fee schedule payment
rate transparency requirement for HCBS direct care worker compensation
elsewhere in this final rule. The HCBS Payment Adequacy and Reporting
requirements in this final rule require that States report annually, in
the aggregate for each service, on the percent of payments for
homemaker, home health aide, personal care, and habilitation services
that are spent on compensation for direct care workers, and separately
report on payments for such services when they are self-directed and
facility-based.
Comment: One commenter suggested collecting provider-level data on
all payments, not just fee schedule payment rates, as well as the
source(s) of non-Federal share for payments, to determine net Medicaid
payments (total Medicaid provider payments received minus the
provider's contributions to the non-Federal share through mechanisms
including provider-related donations, health care-related taxes,
intergovernmental transfers, and certified public expenditures) to each
provider.
Response: Existing UPL and the supplemental payment reporting
requirements under section 1903(bb) of the Act, as established by
Division CC, Title II, Section 202 of the Consolidated Appropriations
Act, 2021 (CAA) (Pub L. 116-260),) already require States to submit
provider-level payment data for certain services to CMS. Therefore, we
are not incorporating the suggestion to collect provider-level data on
all payments because this would be duplicative of existing requirements
and because that is not the intention of the payment rate transparency
publication requirement. While we do collect information about the non-
Federal share through SPA reviews, regulatory requirements regarding
collection of non-Federal share data are beyond the scope of this
rulemaking.
Comment: A couple of commenters stated that dually eligible
beneficiaries and their providers face unique issues when accessing and
delivering Medicaid services (such as beneficiaries facing worse
outcomes and having complex needs that require providers to coordinate
and deliver specialized care) and requested CMS include additional
provisions in the payment rate transparency publication requirements
specifically for this group. One commenter suggested CMS require the

[[Page 40701]]

payment rate transparency publication, comparative payment rate
analysis, and payment rate disclosure address the experience of people
who are dual-eligible and include factors related to Medicare coverage.
Another commenter suggested requiring that the payment rates be
disaggregated for the purposes of comparing providers serving dually
eligible beneficiaries from those serving Medicare-only or Medicaid-
only beneficiaries to ensure differences in access to care and payment
rates are documented. The commenter also recommended the payment rate
transparency publication identify when Medicaid is the primary or
secondary payer in the context of a State's lesser-of payment policies
(that is, for dually eligible Qualified Medicare Beneficiaries, States
are obligated to pay Medicare providers for deductibles and co-
insurance after Medicare has paid; however, States limit those payments
to the lesser of the Medicaid rate for the service or the Medicare co-
insurance amount).
Response: We appreciate the commenters' concern for and suggestions
on how we might evaluate access to care for dually eligible
beneficiaries. We are not incorporating the suggestion to require the
payment rate transparency publication, comparative payment rate
analysis, and payment rate disclosure address the experience of people
who are dual-eligible and include factors related to Medicare coverage
because these provisions focus on requiring States to publish and
analyze quantitative data (such as, payment rates, claims volume,
beneficiary counts) to assess access to care, rather than qualitive
data (such as, surveys on beneficiary experience). We are also not
incorporating the suggestion to identify when Medicaid is the primary
or secondary payer in the context of a State's lesser-of payment
policies in the payment rate transparency publication because we remain
focused on the transparency of States' payment rates, rather than
States' payment policies, as a method of assessing consistency with
section 1902(a)(30)(A) of the Act. Additionally, we are not
incorporating the suggestion to require States disaggregate their
Medicaid FFS fee schedule payment rates for providers serving dually
eligible beneficiaries from those serving Medicare-only or Medicaid-
only beneficiaries because we want our initial focus to be on
establishing the new payment rate transparency, comparative payment
rate analysis, and payment rate disclosure requirements, providing
States with support during the compliance period, and ensuring the data
required under this final rule are to beneficiaries, providers, CMS,
and other interested parties for the purpose of assessing access to
care issues. We believe that payment rate breakdowns by population
(pediatric and adult), provider type, and geographical location will
provide a sufficient amount of transparency to ensure that interested
parties have basic information available to them to understand Medicaid
payment levels and the associated effects of payment rates on access to
care so that they may raise concerns to State Medicaid agencies via the
various forms of public processes available to interested parties.
Monitoring access to care is an ongoing priority of the agency and
we will continue to work with States and other interested parties as we
seek to expand access monitoring in the future, including potentially
through future rulemaking. However, we remain focused on maintaining a
balance in Federal and State administrative burden with our shared
obligation to ensure compliance with section 1902(a)(30)(A) of the Act
(and our obligation to oversee State compliance with the same).
Comment: A couple of commenters recommended that the payment rate
transparency requirements under Sec. 447.203(b) be applied to payment
rates for services delivered to beneficiaries through managed care to
ensure managed care plan rates are published publicly.
Response: While we appreciate the value in transparency of provider
payment rates in managed care delivery systems, regulations applicable
to managed care under 42 CFR parts 438 and 457 are beyond the scope of
this rulemaking.
Comment: One commenter requested CMS work with States to correct
deficient payment rates once identified by the transparency
requirements.
Response: To clarify, the provisions in this final rule do not
require States to change their provider payment rates. The goal of the
payment rate transparency publication is to ensure all States publish
their Medicaid FFS fee schedule payment rates in a format that is
publicly accessible and where all Medicaid FFS fee schedule payment
rates can be easily located and understood.
Transparency, particularly the requirement that States must
publicly publish their Medicaid FFS fee schedule payment rates, helps
to ensure that interested parties have basic information available to
them to understand Medicaid payment levels and the associated effects
of payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public process
available to interested parties. We will utilize the information in the
payment rate transparency publication during SPA reviews and other
situations when States are proposing provider payment rate changes for
services included in the publication and when the public process in
Sec. 447.204 is used to raise access to care issues related to
possible deficient payment rates for services included in the
publication.
After consideration of public comments, we are finalizing all
provisions under Sec. 447.203(b)(1) as proposed, apart from the
following changes:
Updated the organizational structure of (b)(1) to add
romanettes.
Added clarifying language to the proposed language stating
what Medicaid FFS payment rates need to be published.
++ In paragraph (b)(1), the proposed language was revised from
``The State agency is required to publish all Medicaid fee-for-service
payment rates . . .'' to finalize the language as ``The State agency is
required to publish all Medicaid fee-for-service fee schedule payment
rates . . .'' (new language identified in bold)
++ In paragraph (b)(1)(i), the proposed language was revised from
``Published Medicaid fee-for-service payment rates include fee schedule
payment rates . . .'' to finalize the language as ``For purposes of
paragraph (b)(1), the payment rates that the State agency is required
to publish are Medicaid fee-for-service payment rates . . .'' (new
language identified in bold)
Deleted the proposed language specifying that the payment
rate transparency must be developed and maintained on the State
Medicaid agency's website. The proposed language was revised from ``The
State agency is required to publish all Medicaid fee-for-service
payment rates on a website developed and maintained by the single State
agency that is accessible to the general public'' to finalize the
language as ``The State agency is required to publish all Medicaid fee-
for-service payment rates on a website that is accessible to the
general public.'' in paragraph (b)(1).
Revised the proposed language about a member of the public
being able to readily determine the payment amount for a service from
``Medicaid fee-for-service payment rates must be organized in such a
way that a member of the public can readily determine the amount that
Medicaid would pay for the service'' to finalize the language as

[[Page 40702]]

``Medicaid fee-for-service payment rates must be organized in such a
way that a member of the public can readily determine the amount that
Medicaid would pay for a given service.'' in paragraph (b)(1)(iii).
(new language identified in bold)
Revised the proposed language about bundled payment rates
from ``. . . in the case of a bundled or similar payment methodology,
identify each constituent service included within the rate and how much
of the bundled payment is allocated to each constituent service under
the State's methodology'' to:
++ Delete ``or similar'' from ``In the case of a bundled or similar
payment methodology . . .''
++ Add ``the State must publish the Medicaid fee-for-service
bundled payment rate and, where the bundled payment rate is based on
fee schedule payment rates for each constituent service, must . . .''
The language is finalized as ``In the case of a bundled payment
methodology, the State must publish the Medicaid fee-for-service
bundled payment rate and, where the bundled payment rate is based on
fee schedule payment rates for each constituent service, must identify
each constituent service included within the rate and how much of the
bundled payment is allocated to each constituent service under the
State's methodology.'' in paragraph (b)(1)(iv). (new language
identified in bold)
Revised the applicability date for this section from the
proposed January 1, 2026, to require that the initial publication of
the Medicaid FFS payment rates shall occur no later than July 1, 2026,
and include approved Medicaid FFS payment rates in effect as of July 1,
2026, in paragraph (b)(1)(vi).
Revised the proposed language about updating the
publication after SPA approval from ``The agency is required to include
the date the payment rates were last updated on the State Medicaid
agency's website and to ensure these data are kept current where any
necessary update must be made no later than 1 month following the date
of CMS approval of the State plan amendment, section 1915(c) HCBS
waiver amendment, or similar amendment revising the provider payment
rate or methodology.'' to finalize the language as ``The agency is
required to include the date the payment rates were last updated on the
State Medicaid agency's website and to ensure these data are kept
current, where any necessary update must be made no later than 1 month
following the latter of the date of CMS approval of the State plan
amendment, section 1915(c) HCBS waiver amendment, or similar amendment
revising the provider payment rate or methodology, or the effective
date of the approved amendment.'' in paragraph (b)(1)(vi). (new
language identified in bold)
b. Comparative Payment Rate Analysis and Payment Rate Disclosure Sec.
447.203(b)(2) Through (5)
In paragraph (b)(2), we proposed to require States to develop and
publish a comparative payment rate analysis of Medicaid payment rates
for certain specified services, and a payment rate disclosure for
certain HCBS. We specified the categories of services that States would
be required to include in a comparative payment rate analysis and
payment rate disclosure of Medicaid payment rates. Specifically, we
proposed that for each of the categories of services in paragraphs
(b)(2)(i) through (iii), each State agency would be required to develop
and publish a comparative payment rate analysis of Medicaid payment
rates as specified in proposed Sec. 447.203(b)(3). We also proposed
that for each of the categories of services in paragraph (b)(2)(iv),
each State agency would be required to develop and publish a payment
rate disclosure of Medicaid payment rates as specified in proposed
Sec. 447.203(b)(3). We proposed for both the comparative payment rate
analysis and payment rate disclosure that, if the rates vary, the State
must separately identify the payment rates by population (pediatric and
adult), provider type, and geographical location, as applicable. The
categories of services listed in paragraph (b)(2) include: primary care
services; obstetrical and gynecological services; outpatient mental
health and substance use disorder services; and personal care, home
health aide, and homemaker services, as specified in Sec.
440.180(b)(2) through (4), provided by individual providers and
providers employed by an agency.
In paragraph (b)(2), we proposed to require States separately
identify the payment rates in the comparative payment rate analysis and
payment rate disclosure, if the rates vary, by population (pediatric
and adult), provider type, and geographical location, as applicable.
These proposed breakdowns of the Medicaid payment rates, similar to how
we proposed payment rates would be broken down in the payment rate
transparency publication under proposed Sec. 447.203(b)(1), would
apply to all proposed categories of services listed in paragraph
(b)(2): primary care services, obstetrical and gynecological services,
outpatient mental health and substance use disorder services, and
personal care, home health aide, and homemaker services provided by
individual providers and providers employed by an agency.
We acknowledged that not all States pay varied payment rates by
population (pediatric and adult), provider type, and geographical
location, which is why we have included language ``if the rates vary''
and ``as applicable'' in the proposed regulatory text. We included this
language in the proposed regulatory text to ensure the comparative
payment rate analysis and payment rate disclosure capture all Medicaid
payment rates, including when States pay varied payment rates by
population (pediatric and adult), provider type, and geographical
location. We also included proposed regulatory text for the payment
rate disclosure to ensure that the average hourly payment rates for
personal care, home health aide, and homemaker services provided by
individual providers and providers employed by an agency would be
separately identified for payments made to individual providers and to
providers employed by an agency, if the rates vary, as later discussed
in connection with Sec. 447.203(b)(3)(ii). For States that do not pay
varied payment rates by population (pediatric and adult), provider
type, and geographical location and pay a single Statewide payment rate
for a single service, then the comparative payment rate analysis and
payment rate disclosure would only need to include the State's single
Statewide payment rate.
We proposed to include a breakdown of Medicaid payment rates by
population (pediatric and adult), provider type, and geographical
location, as applicable, on the Medicaid side of the comparative
payment rate analysis in paragraph (b)(2) to align with the proposed
payment rate transparency provision, to account for State Medicaid
programs that pay variable Medicaid payment rates by population
(pediatric and adult), provider type, and geographical location, and to
help ensure the State's comparative payment rate analyses accurately
align with Medicare. Following the initial year that the proposed
provisions proposed would be in effect, these provisions would align
with and build on the payment rate transparency requirements described
in Sec. 447.203(b)(1), because States could source the codes and their
corresponding Medicaid payment rates that the State already would
publish to meet the payment rate transparency requirements.

[[Page 40703]]

We explained that these proposed provisions are intended to help
ensure that the State's comparative payment rate analysis contains the
highest level of granularity in each proposed aspect by considering and
accounting for any variation in Medicaid payment rates by population
(pediatric and adult), provider type, and geographical location, as
previously required in the AMRP process under Sec. 447.203(b)(1)(iv)
and (v), and (b)(3). Additionally, Medicare varies payment rates for
certain NPPs (nurse practitioners, physician assistants, and clinical
nurse specialists) by paying them 85 percent of the full Medicare PFS
amount and varies their payment rates by geographical location through
calculated adjustments to the pricing amounts to reflect the variation
in practice costs from one geographical location to another; therefore,
we explained that the comparative payment rate analysis accounting for
these payment rate variations is crucial to ensuring the Medicaid FFS
payment rates accurately align with FFS Medicare PFS rates.\207\
Medicare payment variations for provider type and geographical location
would be directly compared with State Medicaid payment rates that also
apply the same payment variations, in addition to payment variation by
population (pediatric and adult) which is unique to Medicaid, yet an
important payment variation to take into consideration when striving
for transparency of Medicaid payment rates. For States that do not pay
varied payment rates by population (pediatric and adult), provider
type, or geographical location and pay a single Statewide payment rate
for a single service, Medicare payment variations for provider type and
geographical location would be considered by calculating a Statewide
average of Medicare PFS rates which is later discussed in this final
rule.
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\207\ https://www.medpac.gov/wp-content/uploads/2021/11/MedPAC_Payment_Basics_22_Physician_FINAL_SEC.pdf.
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Similar to the payment rate transparency publication, we
acknowledged that there may be additional burden associated with our
proposal that the payment rate transparency publication and the
comparative payment rate analysis include a payment rate breakdown by
population (pediatric and adult), provider type, and geographical
location, as applicable, when States' payment rates vary based on these
groupings. However, we believe that any approach to requiring a
comparative payment rate analysis would involve some level of burden
that is greater for States that choose to employ these payment rate
differentials, since any comparison methodology would need to take
account--through a separate comparison, weighted average, or other
mathematically reasonable approach--of all rates paid under the
Medicaid program for a given service. In all events, we believe this
proposal would create an additional level of granularity in the
analysis that is important for ensuring compliance with section
1902(a)(30)(A) of the Act. We noted that multiple types of providers,
for example, physicians, physician assistants, and nurse practitioners,
are delivering similar services to Medicaid beneficiaries of all ages,
across multiple Medicaid benefit categories, throughout each State.
Section 1902(a)(30)(A) requires ``. . . that payments are
consistent with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and services are
available under the plan at least to the extent that such care and
services are available to the general population in the geographic
area,'' and we noted our belief that having sufficient access to a
variety of provider types is important to ensuring access for Medicaid
beneficiaries meets this statutory standard. For example, a targeted
payment rate reduction to nurse practitioners, who are often paid less
than 100 percent of the State's physician fee schedule rate, could have
a negative impact on access to care for services provided by nurse
practitioners, but this reduction would not directly impact physicians
or their willingness to participate in Medicaid and furnish services to
beneficiaries. By proposing that the comparative payment rate analysis
include a breakdown by provider type, where States distinguish payment
rates for a service by provider type, we explained that the analysis
would capture this payment rate variation among providers of the same
services and provide us with a granular level of information to aid in
determining if access to care is sufficient, particularly in cases
where beneficiaries depend to a large extent on the particular provider
type(s) that would be affected by the proposed rate change for the
covered service(s).
We identified payment rate variation by population (pediatric and
adult), provider type, and geographical location as the most commonly
applied adjustments to payment rates that overlap between FFS Medicaid
and Medicare and could be readily broken down into separately
identified payment rates for comparison in the comparative payment rate
analysis. For transparency purposes and to help to ensure the
comparative payment rate analysis is conducted at a granular level of
analysis, we explained our belief that it is important for the State to
separately identify their rates, if the rates vary, by population
(pediatric and adult), provider type, and geographical location, as
applicable. We solicited comments on the proposal to require the
comparative payment rate analysis to include, if the rates vary,
separate identification of payment rates by population (pediatric and
adult), provider type, and geographical location, as applicable, in the
comparative payment rate analysis in proposed Sec. 447.203(b)(2).
We acknowledged that States may apply additional payment
adjustments or factors, for example, the Consumer Price Index, Medicare
Economic Index, or State-determined inflationary factors or budget
neutrality factors, to their Medicaid payment rates other than
population (pediatric and adult), provider type, and geographical
location. We stated that we expect any other additional payment
adjustments and factors to already be included in the State's published
Medicaid fee schedule rate or calculable from the State plan, because
Sec. 430.10 requires the State plan to be a ``comprehensive written
statement . . . contain[ing] all information necessary for CMS to
determine whether the plan can be approved to serve as a basis for . .
. FFP . . .'' Therefore, for States paying for services with a fee
schedule payment rate, the Medicaid fee schedule is the sole source of
information for providers to locate their final payment rate for
Medicaid services provided to Medicaid beneficiaries under a FFS
delivery system. For States with a rate-setting methodology where the
approved State plan describes how rates are set based upon a fee
schedule (for example, payment for NPPs are set a percentage of a
certain published Medicaid fee schedule), the Medicaid fee schedule
would again be the source of information for providers to identify the
relevant starting payment rate and apply the rate-setting methodology
described in the State plan to ascertain their Medicaid payment.\208\
We solicited comments on any additional types of payment adjustments or
factors States make to their Medicaid payment rates as listed on their
State fee schedules that should be identified in the comparative
payment rate analysis that we have not

[[Page 40704]]

already discussed in Sec. 447.203(b)(i)(B) of this final rule, and how
the inclusion of any such additional adjustments or factors should be
considered in the development of the Medicare PFS rate to compare
Medicaid payment rates to, as later described in Sec.
447.203(b)(3)(i)(C), of this final rule.
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\208\ https://www.medicaid.gov/state-resource-center/downloads/spa-and-1915-waiver-processing/fed-req-pymt-methodologies.docx.
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In paragraphs (b)(2)(i) through (iv), we proposed that primary care
services, obstetrical and gynecological services, and outpatient
behavioral health services would be subject to a comparative payment
rate analysis of Medicaid payment rates and personal care, home health
aide, and homemaker services provided by individual providers and
providers employed by an agency would be subject to a payment rate
disclosure of Medicaid payment rates. We begin with a discussion about
the importance of primary care services, obstetrical and gynecological
services, and outpatient behavioral health services as proposed in
Sec. 447.203(b)(2)(i) through (iii), and the reason for their
inclusion in this proposed requirement. Then, we will discuss the
importance and justification for including personal care, home health
aide, and homemaker services provided by individual providers and
providers employed by an agency as proposed in Sec. 447.203(b)(2)(iv).
In Sec. 447.203(b)(2)(i) through (iii), we proposed to require
primary care services, obstetrical and gynecological services, and
outpatient mental health and substance use disorder services be
included in the comparative payment rate analysis, because we believe
that these categories of services are critical preventive, routine, and
acute medical services in and of themselves, and that they often serve
as gateways to access to other needed medical services, including
specialist services, laboratory and x-ray services, prescription drugs,
and other mandatory and optional Medicaid benefits that States cover.
Including these categories of services in the comparative payment rate
analysis would require States to closely examine their Medicaid FFS
payment rates to comply with section 1902(a)(30)(A) of the Act. As
described in the recent key findings from public comments on the
February 2022 RFI that we published, payment rates are a key driver of
provider participation in the Medicaid program.\209\ By proposing that
States compare their Medicaid payment rates for primary care services,
obstetrical and gynecological services, and outpatient mental health
and substance use disorder services to Medicare payment rates, States
would be required to analyze if and how their payments are consistent
with efficiency, economy, and quality of care and are sufficient to
enlist enough providers so that care and services are available under
the plan at least to the extent that such care and services are
available to the general population in the geographic area.
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\209\ Summary of Public Comments in response to the CMS 2022
Request for Information: Access to Coverage and Care in Medicaid &
CHIP. December 2022. For the report, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-report.pdf.
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In the proposed rule, we noted our belief that Medicare payment
rates for these services are likely to serve as a reliable benchmark
for a level of payment sufficient to enlist providers to furnish the
relevant services to a beneficiary because Medicare delivers services
through a FFS delivery system across all geographical regions of the US
and historically, the vast majority of physicians accept new Medicare
patients, with extremely low rates of physicians opting out of the
Medicare program, suggesting that Medicare's payment rates are
generally consistent with a high level of physician willingness to
accept new Medicare patients.\210\ Additionally, Medicare payment rates
are publicly published in an accessible and consistent format by CMS
making Medicare payment rates an available and reliable comparison
point for States, rather than private payer data which typically is
considered proprietary information and not generally available to the
public. Therefore, we explained that the proposed requirement that
States develop and publish a comparative payment rate analysis would
enable States, CMS, and other interested parties to closely examine the
relationship between State Medicaid FFS payment rates and those paid by
Medicare. This analysis would continually help States to ensure that
their Medicaid payment rates are set at a level that is likely
sufficient to meet the statutory access standard under section
1902(a)(30)(A) of the Act that payments be sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area.
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\210\ Physicians and practitioners who do not wish to enroll in
the Medicare program may ``opt-out'' of Medicare. This means that
neither the physician, nor the beneficiary submits the bill to
Medicare for services rendered. Instead, the beneficiary pays the
physician out-of-pocket and neither party is reimbursed by Medicare.
A private contract is signed between the physician and the
beneficiary that states that neither one can receive payment from
Medicare for the services that were performed. See https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opt-out-affidavits.
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We noted our belief that the comparative payment rate analysis
would provide States, CMS, and other interested parties with clear and
concise information for identifying when there is a potential access to
care issue, such as Medicaid payment rates not keeping pace with
changes in corresponding Medicare rates and decreases in claims volume
and beneficiary utilization of services. As discussed later in this
section, numerous studies have found a relationship between Medicaid
payment rates and provider participation in the Medicaid program and,
given the statutory standard of ensuring access for Medicaid
beneficiaries, a comparison of Medicaid payment rates to other payer
rates, particularly Medicare payment rates as justified later in this
rule, is an important barometer of whether State payment rates and
policies are sufficient for meeting the statutory access standard under
section 1902(a)(30)(A) of the Act.
We proposed to focus on these particular services because they are
critical medical services and of great importance to overall
beneficiary health. Beginning with primary care, these services provide
access to preventative services and facilitate the development of
crucial doctor-patient relationships. Primary care providers often
deliver preventive health care services, including immunizations,
screenings for common chronic and infectious diseases and cancers,
clinical and behavioral interventions to manage chronic disease and
reduce associated risks, and counseling to support healthy living and
self-management of chronic diseases; Medicaid coverage of preventative
health care services promotes disease prevention which is critical to
helping people live longer, healthier lives.\211\ Accessing primary
care services can often result in beneficiaries receiving referrals or
recommendations to schedule an appointment with physician specialists,
such as gastroenterologists or neurologists, that they would not be
able to obtain without the referral or recommendation by the primary
care physician. Additionally, primary care physicians provide
beneficiaries with orders for laboratory and x-ray services as well as
prescriptions for necessary medications that a beneficiary would not be
able to access without the primary care physician. Research over the
last century has shown that the impact of the doctor-patient
relationship on

[[Page 40705]]

patient's health care experience, health outcomes, and health care
costs exists \212\ and more recent studies have shown that the quality
of the physician-patient relationship is positively associated with
functional health among patients.\213\ Another study found that higher
primary care payment rates reduced mental illness and substance use
disorders among non-elderly adult Medicaid enrollees, suggesting that
positive spillover from increasing primary care rates also positively
impacted behavioral health outcomes.\214\ Lastly, research has shown
that a reduction in barriers to accessing primary care services has
been associated with helping reduce health disparities and the risk of
poor health outcomes.^{215 216} These examples illustrate how
crucial access to primary care services is for overall beneficiary
health and to enable access to other medical services. We solicited
comments on primary care services as one of the proposed categories of
services subject to the comparative payment rate analysis requirements
in proposed Sec. 447.203(b)(2)(i).
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\211\ https://www.medicaid.gov/medicaid/benefits/prevention/index.html.
\212\ Cockerham, W.C. (2021). The Wiley Blackwell Companion to
Medical Sociology (1st ed.). John Wiley & Sons.
\213\ Olaisen, R.H., Schluchter, M.D., Flocke, S.A., Smyth,
K.A., Koroukian, S.M., & Stange, K.C. (2020). Assessing the
longitudinal impact of physician-patient relationship on Functional
Health. The Annals of Family Medicine, 18(5), 422-429. https://doi.org/10.1370/afm.2554.
\214\ Maclean, Johanna Catherine, McCleallan, Chandler, Pesko,
Michael F., and Polsky, Daniel. (2023). Medicaid reimbursement rates
for primary care services and behavioral health outcomes. Health
economics, 1-37. https://doi.org/10.1002/hec.4646.
\215\ Starfield, B., Shi, L., & Macinko, J. (2005). Contribution
of primary care to health systems and health. The Milbank quarterly,
83(3), 457-502. https://doi.org/10.1111/j.1468-0009.2005.00409.x.
\216\ https://health.gov/healthypeople/priority-areas/social-determinants-health/literature-summaries/access-primary-care.
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Similar to primary care services, both obstetrical and
gynecological services and outpatient behavioral health services
provide access to preventive and screening services unique to each
respective field. A well-woman visit to an obstetrician-gynecologist
often provides access to screenings for cervical and breast cancer;
screenings for Rh(D) incompatibility, syphilis infection, and hepatitis
B virus infection in pregnant persons; monitoring for healthy weight
and weight gain in pregnancy; immunization against the human
papillomavirus infection; and perinatal depression screenings among
other recommended preventive services.^{217 218} Behavioral
health care promotes mental health, resilience, and wellbeing; the
treatment of mental and substance use disorders; and the support of
those who experience and/or are in recovery from these conditions,
along with their families and communities. Outpatient behavioral health
services can overlap with preventative primary care and obstetrical and
gynecological services, for example screening for depression in adults
and perinatal depression screenings, but also provide unique preventive
and screening services such as screenings for unhealthy alcohol use in
adolescents and adults, anxiety in children and adolescents, and eating
disorders in adolescents and adults, among other recommended preventive
services.\219\
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\217\ Rh(D) incompatibility is a preventable pregnancy
compilation where a woman who is Rh negative is carrying a fetus
that is Rh positive (Rh factor is a protein that can be found on the
surface of red blood cells). When the blood of an Rh-positive fetus
gets into the bloodstream of an Rh-negative woman, her body will
recognize that the Rh-positive blood is not hers. Her body will try
to destroy it by making anti-Rh antibodies. These antibodies can
cross the placenta and attack the fetus's blood cells. This can lead
to serious health problems, even death, for a fetus or a newborn.
Prevention of Rh(D) incompatibility requires screening for Rh
negative early in pregnancy (or before pregnancy) and, if needed,
giving a medication to prevent antibodies from forming.
\218\ https://www.acog.org/clinical/clinical-guidance/committee-opinion/articles/2018/10/well-woman-visit.
\219\ https://www.uspreventiveservicestaskforce.org/uspstf/topic_search_results?topic_status=P.
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The US is simultaneously experiencing a maternal health crisis and
mental health crisis, putting providers of obstetrical and
gynecological and outpatient behavioral health services, respectively,
at the forefront.^{220 221} According to Medicaid and CHIP
Payment and Access Commission (MACPAC), ``Medicaid plays a key role in
providing maternity-related services for pregnant women, paying for
slightly less than half of all births nationally in 2018.'' \222\ Given
Medicaid's significant role in maternal health during a time when
maternal mortality rates in the US continue to worsen and the racial
disparities among mothers continues to widen,^{223 224}
accessing obstetrical and gynecological care, including care before,
during, and after pregnancy is crucial to positive maternal and infant
outcomes.\225\ We solicited comments on obstetrical and gynecological
services as one of the proposed categories of services subject to the
comparative payment rate analysis requirements in proposed Sec.
447.203(b)(2)(ii).
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\220\ https://www.whitehouse.gov/wp-content/uploads/2022/06/Maternal-Health-Blueprint.pdf.
\221\ https://www.whitehouse.gov/briefing-room/statements-releases/2022/05/31/fact-sheet-biden-harris-administration-highlights-strategy-to-address-the-national-mental-health-crisis/.
\222\ https://www.macpac.gov/wp-content/uploads/2020/01/Medicaid%E2%80%99s-Role-in-Financing-Maternity-Care.pdf.
\223\ https://www.cdc.gov/nchs/data/hestat/maternal-mortality/2020/maternal-mortality-rates-2020.htm.
\224\ https://www.nytimes.com/2022/02/23/health/maternal-deaths-pandemic.html?smid=url-share.
\225\ https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/rural-health/09032019-Maternal-Health-Care-in-Rural-Communities.pdf.
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Improving access to behavioral health services is a critical,
national issue facing all payors, particularly for Medicaid which plays
a crucial role in mental health care access as the single largest payer
of services and has a growing role in payment for substance use
disorder services, in part due to Medicaid expansion and various
efforts by Congress to improve access to behavioral health
services.^{226 227} Several studies have found an association
between reducing the uninsured rate through increased Medicaid
enrollment and improved and expanded access to critically needed
behavioral health services.\228\ Numerous studies have found positive
outcomes associated with Medicaid expansion: increases in the insured
rate and access to care and medications for adults with depression,
increases in coverage rates and a greater likelihood of being diagnosed
with a mental health condition as well as the use of prescription
medications for a mental health condition for college students from
disadvantaged backgrounds,\229\ and a decrease in delayed or forgone
necessary care in a nationally representative sample of non-elderly
adults with serious psychological distress.\230\ While individuals who
are covered by Medicaid have better access to behavioral health
services compared to people who are uninsured, some coverage gaps
remain in access to behavioral health care for many people, including
those with Medicaid.
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\226\ https://www.medicaid.gov/medicaid/access-care/downloads/coverage-and-behavioral-health-data-spotlight.pdf.
\227\ https://www.medicaid.gov/medicaid/benefits/behavioral-health-services/index.html.
\228\ https://www.cbpp.org/research/health/to-improve-behavioral-health-start-by-closing-the-medicaid-coverage-gap.
\229\ Cowan, Benjamin W. & Hao, Zhuang. (2021). Medicaid
expansion and the mental health of college students. Health
economics, 30(6), 1306-1327. https://www.nber.org/system/files/working_papers/w27306/w27306.pdf.
\230\ Novak, P., Anderson, A.C., & Chen, J. (2018). Changes in
Health Insurance Coverage and Barriers to Health Care Access Among
Individuals with Serious Psychological Distress Following the
Affordable Care Act. Administration and policy in mental health,
45(6), 924-932. https://doi.org/10.1007/s10488-018-0875-9.
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In the proposed rule, we noted that some of the barriers to
accessing

[[Page 40706]]

behavioral health treatment in Medicaid reflect larger system-wide
access problems: overall shortage of behavioral health providers in the
United States and relatively small number of psychiatrists who accept
any form of insurance or participate in health coverage programs.\231\
Particularly for outpatient behavioral health services for Medicaid
beneficiaries, one reason physicians are unwilling to accept Medicaid
patients is because of low Medicaid payment rates.\232\ One study found
evidence of low Medicaid payment rates by examining outpatient Medicaid
claims data from 2014 in 11 States with a primary behavioral health
diagnosis and an evaluation and management (E/M) procedure code of
99213 (Established patient office visit, 20-29 minutes) or 99214
(Established patient office visit, 30-39 minutes) and found that
psychiatrists in nine States were paid less, on average, than primary
care physicians.\233\ These pieces of research and data about the
importance of outpatient behavioral health services and the existing
challenges beneficiaries face in trying to access outpatient behavioral
health services underscore how crucial access to outpatient behavioral
health services is, and that adequate Medicaid payment rates for these
services is likely to be an important driver of access for
beneficiaries. We solicited comments on outpatient behavioral health
services as one of the proposed categories of services subject to the
comparative payment rate analysis requirements in proposed Sec.
447.203(b)(2)(iii) which we are finalizing as ``Outpatient mental
health and substance use disorder services.''
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\231\ https://www.kff.org/medicaid/issue-brief/medicaids-role-in-financing-behavioral-health-services-for-low-income-individuals/.
\232\ https://www.healthaffairs.org/do/10.1377/forefront.20190401.678690/full/.
\233\ Mark, Tami L., Parish, William, Zarkin, Gary A., and
Weber, Ellen (2020). Comparison of Medicaid Reimbursements for
Psychiatrists and Primary Care Physicians. Psychiatry services
71(9), 947-950. https://doi.org/10.1176/appi.ps.202000062.
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In Sec. 447.203(b)(2)(iv), we proposed to require personal care,
home health aide, and homemaker services provided by individual
providers and providers employed by an agency in the payment rate
disclosure requirements proposed in Sec. 447.203(b)(3)(ii). We noted
that many HCBS providers nationwide are facing workforce shortages and
high staff turnover that have been exacerbated by the COVID-19
pandemic, and these issues and related difficulty accessing HCBS can
lead to higher rates of costly, institutional stays for
beneficiaries.\234\ As with any covered service, the supply of HCBS
providers has a direct and immediate impact on beneficiaries' ability
to access high quality HCBS, therefore, we included special
considerations for LTSS, specifically HCBS, through two proposed
provisions in Sec. 447.203. The first provision in proposed paragraph
(b)(2)(iv) would require States to include personal care, home health
aide, and homemaker services provided by individual providers and
providers employed by an agency to be included in the payment rate
disclosure in proposed paragraph (b)(3)(ii). The second provision in
paragraph (b)(6), discussed in the next section, would require States
to establish an interested parties' advisory committee to advise and
consult on rates paid to certain HCBS providers. We explained that this
provision is intended to help contextualize lived experience of direct
care workers and beneficiaries who receive the services they deliver by
providing direct care workers, beneficiaries and their authorized
representatives, and other interested parties with the ability to make
recommendations to the State Medicaid agency regarding the sufficiency
of Medicaid payment rates for these specified services to help ensure
sufficient provider participation so that these HCBS are accessible to
beneficiaries consistent with section 1902(a)(30)(A) of the Act.
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\234\ https://www.kff.org/coronavirus-covid-19/event/march-30-web-event-unsung-heroes-the-crucial-role-and-tenuous-circumstances-of-home-health-aides-during-the-pandemic/; https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
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The proposed payment rate disclosure would require States to
publish the average hourly payment rates made to individual providers
and to providers employed by an agency, separately, if the rates vary,
for each category of services specified in Sec. 447.203(b)(2)(iv). No
comparison to Medicare payment rates would be required in recognition
that Medicare generally does not cover and pay for these services, and
when these services are covered and paid for by Medicare, the services
are very limited and provided on a short-term basis, rather than long-
term basis as with Medicaid HCBS. While Medicare covers part-time or
intermittent home health aide services (only if a Medicare beneficiary
is also getting other skilled services like nursing and/or therapy at
the same time) under Medicare Part A (Hospital Insurance) or Medicare
Part B (Medical Insurance), Medicare does not cover personal care or
homemaker services.\235\
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\235\ https://www.medicare.gov/coverage/home-health-services.
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We proposed to require these services be subject to a payment rate
disclosure because this rule aims to standardize data and monitoring
across service delivery systems with the goal of improving access to
care. To remain consistent with the proposed HCBS provisions at Sec.
441.311(d)(2) and (e), where we proposed to require annual State
reporting on access and payment adequacy metrics for homemaker, home
health aide, and personal care services, we proposed to include these
services, provided by individual providers and providers employed by an
agency in the FFS payment rate disclosure proposed in 447.203(b)(2). We
explained that we selected these specific services because we expect
them to be most commonly conducted in individuals' homes and general
community settings and, therefore, constitute the vast majority of FFS
payments for direct care workers delivering services under FFS. We
acknowledged that the proposed analyses required of States in the HCBS
provisions at Sec. 441.311(d)(2) and (e) and in the FFS provisions at
Sec. 447.203(b)(2) are different, although, unique to assessing access
in each program and delivery system. We proposed to include personal
care, home health aide, and homemaker services for consistency with
HCBS access and payment adequacy provisions, and also to include these
services in the proposed provisions of Sec. 447.203(b)(2) to require
States to conduct and publish a payment rate disclosure. We noted our
belief the latter proposal is important because the payment rate
disclosure of personal care, home health aide, and homemaker services
would provide CMS with sufficient information, including average hourly
payment rates, claims volume, and number of Medicaid enrolled
beneficiaries who received a service as specified in proposed Sec.
447.203(b)(3)(ii), from States for ensuring compliance with section
1902(a)(30)(A) of the Act, which requires that payments be consistent
with efficiency, economy, and quality of care and sufficient to enlist
enough providers so that care and services are available under the plan
at least to the extent that such care and services are available to the
general population in the geographic area.
Additionally, we explained that this proposal to include personal
care, home health aide, and homemaker services provided by individual
providers and providers employed by an agency is

[[Page 40707]]

supported by the statutory mandate at section 2402(a) of the Affordable
Care Act. Among other things, section 2402(a) of the Affordable Care
Act directs the Secretary to promulgate regulations ensuring that all
States develop service systems that ensure that there is an adequate
number of qualified direct care workers to provide self-directed
services. We solicited comments on personal care, home health aide, and
homemaker services provided by individual providers and providers
employed by an agency as the proposed categories of services subject to
the payment rate disclosure requirements in proposed Sec.
447.203(b)(2)(iv).
After discussing our proposed categories of services for the
comparative payment rate analysis and payment rate disclosure
requirements, we discussed the similarities and differences between the
proposed rule and services previously included in the AMRP
requirements. We explained that while the proposed rule would eliminate
the previous triennial AMRP process, there are some similarities
between the service categories for which we proposed to require a
comparative payment rate analysis or payment rate disclosure in Sec.
447.203(b)(2) and those subject to the previous AMRP requirements under
Sec. 447.203(b)(5)(ii). Specifically, Sec. 447.203(b)(5)(ii)(A)
previous required the State agency to use data collected through the
previous AMRP process to provide a separate analysis for each provider
type and site of service for primary care services (including those
provided by a physician, FQHC, clinic, or dental care). We proposed the
comparative payment rate analysis include primary care services,
without any parenthetical description. We explained our belief this is
appropriate because the proposed rule includes a comparative payment
rate analysis that is at the Current Procedural Terminology (CPT) or
Healthcare Common Procedure Coding System (HCPCS) code level, as
applicable, the specifics for which are discussed later in this
section. This approach requires States to perform less sub-
categorization of the data analysis, and as discussed later, the
analysis would exclude FQHCs and clinics.
We explained that the previous AMRP process also includes in Sec.
447.203(b)(5)(ii)(C) behavioral health services (including mental
health and substance use disorder); however, we proposed that the
comparative payment rate analysis only would include outpatient
behavioral health services to narrow the scope of the analysis by
excluding inpatient behavioral health services (including inpatient
behavioral health services furnished in psychiatric residential
treatment facilities, institutions for mental diseases, and psychiatric
hospitals). While we acknowledged that behavioral health services
encompass a broad range of services provided in a wide variety of
settings, from outpatient screenings in a physician's office to
inpatient hospital treatment, we proposed to narrow the scope of
behavioral health services to outpatient services only to focus the
comparative payment rate analysis on ambulatory care provided by
practitioners in an office-based setting without duplicating existing
requirements, or analysis that must be completed to satisfy existing
requirements, for upper payment limits (UPL) and the supplemental
payment reporting requirements under section 1903(bb) of the Act, as
established by Division CC, Title II, Section 202 of the CAA, 2021.
The proposed categories of services are delivered as ambulatory
care where the patient does not need to be hospitalized to receive the
service being delivered. Particularly for behavioral health services,
we proposed to narrow the scope to outpatient behavioral health
services to maintain consistency within the categories of service
included in the proposed comparative payment rate analysis and payment
rate disclosure all being classified as ambulatory care. Additionally,
as discussed further in this section of the final rule, we proposed
that the comparative payment rate analysis would be conducted on a CPT/
HCPCS code level, focusing on E/M codes. By narrowing the comparative
payment rate analysis to E/M CPT/HCPCS codes, we proposed States'
analyses includes a broad range of core services which would cover a
variety of commonly provided services that fall into the categories of
service proposed in paragraphs (b)(2)(i) through (iii). To balance
State administrative burden with our oversight of State compliance with
the access requirement in section 1902(a)(30)(A) of the Act, we also
proposed to limit the services to those delivered primarily by
physicians and NPPs in an office-based setting for primary care,
obstetrical and gynecological, and outpatient behavioral health
services. By excluding facility-based services, particularly inpatient
behavioral health services, we explained our intent to ensure the same
E/M CPT/HCPCS code-level methodology could be used for all categories
of services included in the proposed comparative payment rate analysis,
including the use of E/M CPT/HCPCS codes used for outpatient behavioral
health services. Rather than fee schedule rates, States often pay for
inpatient behavioral health services using prospective payment rate
methodologies, such as DRGs, or interim payment methodologies that are
reconciled to actual cost.\236\ These methodologies pay for a variety
of services delivered by multiple providers that a patient receives
during an inpatient hospital stay, rather than a single ambulatory
service billed by a single provider using a single CPT/HCPCS code.
Variations in these payment methodologies and what is included in the
rate could complicate the proposed comparison to FFS Medicare rates for
the services identified in paragraphs (b)(2)(i) through (iii) and could
frustrate comparisons between States and sometimes even within a single
State. Therefore, we explained that we do not believe the E/M CPT/HCPCS
code level methodology proposed for the comparative payment rate
analysis would be feasible for inpatient behavioral health services or
other inpatient and facility-based services in general.
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\236\ https://www.cms.gov/icd10m/version37-fullcode-cms/fullcode_cms/Design_and_development_of_the_Diagnosis_Related_Group_(DRGs).pdf.
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While we considered including inpatient behavioral health services
as one of the proposed categories of services in the comparative
payment rate analysis, we ultimately did not because we already collect
and review Medicaid and Medicare payment rate data for inpatient
behavioral health services through annual UPL and supplemental payment
reporting requirements under section 1903(bb) of the Act. SMDL 13-003
discusses the annual submission of State UPL demonstrations for
inpatient hospital services, among other services, including a complete
data set of payments to Medicaid providers and a reasonable estimate of
what Medicare would have paid for the same services.^{237 238}
UPL requirements go beyond the proposed requirements by requiring
States to annually submit the following data for all inpatient hospital
services, depending on the State's UPL methodology, on a provider level
basis:

[[Page 40708]]

Medicaid charges, Medicaid base payments, Medicaid supplemental
payments, Medicaid discharges, Medicaid case mix index, Medicaid
inflation factors, other adjustments to Medicaid payments, Medicaid
days, Medicare costs, Medicare payments, Medicare discharges, Medicare
case mix index, Medicare days, UPL inflation factors, Medicaid provider
tax cost, and other adjustments to the UPL amount. If we proposed and
finalized inpatient behavioral health services as one of the categories
of services subject to the comparative payment rate analysis, then this
final rule would require States to biennially submit the following data
for only inpatient behavioral health services on a CPT/HCPCS code level
basis: base Medicaid FFS fee schedule payment rate for select E/M CPT/
HCPCS codes (accounting for rate variation based on population
(pediatric and adult), provider type, and geographical location, as
applicable), the corresponding Medicare payment rates, Medicaid base
payment rate as a percentage of Medicare payment rate, and the number
of Medicaid-paid claims. While the UPL requires aggregated total
payment and cost data at the provider level and the proposed
comparative payment rate analysis calls for more granular base payment
data at the CPT/HCPCS code level, the UPL overall requires aggregate
Medicaid provider payment data for both base and supplemental payments
as well as more detailed data for calculating what Medicare would have
paid as the upper payment amount. Therefore, we explained that
proposing to require States include Medicaid and Medicare payment rate
data for inpatient behavioral health services in the comparative
payment rate analysis would be duplicative of existing UPL requirements
that are inclusive of and more comprehensive than the payment
information proposed in the comparative payment rate analysis.
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\237\ https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/SMD-13-003-02.pdf.
\238\ If a State's payment methodology describes payment at no
more than 100 percent of the Medicare rate for the period covered by
the UPL, then the State does not need to submit a demonstration. See
FAQ ID: 92201. https://www.medicaid.gov/faq/index.html?search_api_fulltext=ID%3A92201&sort_by=field_faq_date&sort_order=DESC.
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Additionally, section 1903(bb) of the Act requires us to establish
a Medicaid supplemental payment reporting system that collects detailed
information on State Medicaid supplemental payments, including total
quarterly supplemental payment expenditures per provider; information
on base payments made to providers that have received a supplemental
payment; and narrative information describing the methodology used to
calculate a provider's payment, criteria used to determine which
providers qualify to receive a payment, and explanation describing how
the supplemental payments comply with section 1902(a)(30)(A) of the
Act. Section 1903(bb)(1)(C) of the Act requires us to make State-
reported supplemental payment information publicly available. For
States making or wishing to make supplemental payments, including for
inpatient behavioral health services, States must report supplemental
payment information to us, and we must make that information public
and, therefore, transparent. Although the proposed rule sought to
increase transparency, with the proposed provisions under Sec.
447.203(b)(1) through (5) focusing on transparency of FFS base Medicaid
FFS fee schedule payment rate, including inpatient behavioral health
services as a category of service in Sec. 447.203(b)(2) subject to the
comparative payment rate analysis would be duplicative of the existing
upper payment limit and supplemental payment reporting requirements,
which capture and make transparent base and supplemental payment
information for inpatient behavioral health services. However, we
solicited comments regarding our decision not to include inpatient
behavioral health services as one of the categories of services subject
to the comparative payment rate analysis requirements in proposed Sec.
447.203(b)(2) in the final rule, should we finalize the comparative
payment rate analysis proposal.
The AMRP process also previously included in Sec.
447.203(b)(5)(ii)(D) pre- and post-natal obstetric services including
labor and delivery; we proposed to include these services in the
comparative payment rate analysis requirements under proposed Sec.
447.203(b)(2)(ii), but we explained in the proposed rule that we
intended to broaden the scope of this category of services to include
both obstetrical and gynecological services. This expanded proposed
provision would capture a wider array of services, both obstetrical and
gynecological services, for States and CMS to assess and ensure access
to care in Medicaid FFS is at least as great for beneficiaries as is
generally available to the general population in the geographic area,
as required by with section 1902(a)(30)(A) of the Act. Lastly, similar
to previous Sec. 447.203(b)(5)(ii)(E), which specifies that home
health services were included in the previous AMRP process, we proposed
to include personal care, home health aide, and homemaker services,
provided by individual providers and providers employed by an agency.
This refined proposed provision would help ensure a more standardized
effort to monitor access across Medicaid delivery systems, including
for Medicaid-covered LTSS. We explained our belief that this proposal
also would address public comments received in response to the February
2022 RFI.\239\ Many commenters highlighted the workforce crisis among
direct care workers and the impact on HCBS. Specifically, commenters
indicated that direct care workers receive low payment rates, and for
agency-employed direct care workers, home health agencies often cite
low Medicaid payment as a barrier to raising wages for workers.
Commenters suggested that States should be collecting and reporting to
CMS the average of direct care worker wages while emphasizing the
importance of data transparency and timeliness. We explained that we
were responding to these public comments by proposing to require States
to transparently publish a payment rate disclosure that collects and
reports the average hourly rate paid to individual providers and
providers employed by an agency for services provided by certain direct
care workers (personal care, home health aide, and homemaker services).
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\239\ Summary of Public Comments in response to the CMS 2022
Request for Information: Access to Coverage and Care in Medicaid &
CHIP. December 2022. For the report, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-report.pdf.
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In public comments that we received during the public comment
period for the 2015 final rule with comment period, many commenters
requested that we require States to publish access to care analyses for
pediatric services, including pediatric primary care, behavioral
health, and dental care. At the time, we responded that pediatric
services did not need to be specified in the required service
categories because States were already required through Sec.
447.203(b)(1)(iv) to consider the characteristics of the beneficiary
population, ``including . . . payment variations for pediatric and
adult populations,'' within the previous AMRPs.\240\ Although we
proposed to eliminate the previous AMRP requirements, we noted that the
proposed rule would continue to include special considerations for
pediatric populations that are addressed in the discussion of proposed
Sec. 447.203(b)(2).
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\240\ 80 CFR 67576 at 67592.
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We proposed to eliminate the following from the previous AMRP
process without replacement in the comparative payment rate analysis
requirement, Sec. 447.203(b)(5)(ii)(F): Any additional types of
services for which a review is required under previous Sec.
447.203(b)(6); Sec. 447.203(b)(5)(ii)(G): Additional types of services
for which

[[Page 40709]]

the State or CMS has received a significantly higher than usual volume
of beneficiary, provider or other interested party access complaints
for a geographic area, including complaints received through the
mechanisms for beneficiary input consistent with previous Sec.
447.203(b)(7); and Sec. 447.203(b)(5)(ii)(H): Additional types of
services selected by the State.
We proposed to eliminate Sec. 447.203(b)(5)(ii)(F) and (G) without
a direct replacement because the proposed State Analysis Procedures for
Rate Reduction or Restructuring described in Sec. 447.203(c) are
inclusive of and more refined than the previous AMRP requirements for
additional types of services for which a review is required under
previous Sec. 447.203(b)(6). Specifically, as discussed later in this
section, we proposed in Sec. 447.203(c)(1) that States seeking to
reduce provider payment rates or restructure provider payments would be
required to provide written assurance and relevant supporting
documentation that three conditions are met to qualify for a
streamlined SPA review process, including that required public
processes yielded no significant access to care concerns for
beneficiaries, providers, or other interested parties, or if such
processes did yield concerns, that the State can reasonably respond to
or mitigate them, as appropriate. If the State is unable to meet all
three of the proposed conditions for streamlined SPA review, including
the absence of or ability to appropriately address any access concern
raised through public processes, then the State would be required to
submit additional information to support that its SPA is consistent
with the access requirement in section 1902(a)(30)(A) of the Act, as
proposed in Sec. 447.203(c)(2). We proposed to modify this aspect of
the previous AMRP process, because our implementation experience since
the 2017 SMDL has shown that States typically have been able to work
directly with the public (including beneficiaries and beneficiary
advocacy groups, and providers) to resolve access concerns, which
emphasizes that public feedback continues to be a valuable source of
knowledge regarding access in Medicaid. We explained our belief that
this experience demonstrates that public processes that occur before
the submission of a payment SPA to CMS often resolve initial access
concerns, and where concerns persist, they will be addressed through
the SPA submission and our review process, as provided in proposed
Sec. 447.203(c). Rather than services affected by proposed provider
rate reductions or restructurings (previous Sec. 447.203(b)(5)(ii)(F))
and services for which the State or CMS received significantly higher
than usual volume of complaints (previous Sec. 447.203(b)(5)(ii)(G))
being addressed through the previous AMRP process, these services
subject to rate reductions or restructurings and services where a high
volume of complaints have been expressed would now be addressed by the
State analysis procedures in proposed Sec. 447.203(c). We noted our
belief that this approach would ensure public feedback is fully
considered in the context of a payment SPA, without the need to
specifically require a comparative payment rate analysis for the
service(s) subject to payment rate reduction or restructuring under
proposed Sec. 447.203(b)(2).
Lastly, we proposed to eliminate previous Sec.
447.203(b)(5)(ii)(H), requiring the previous AMRP process to include
analysis regarding ``Additional types of services selected by the
State,'' without a direct replacement because our implementation
experience has shown that the majority of States did not select
additional types of service to include in their previous AMRPs beyond
the required services Sec. 447.203(b)(5)(ii)(A) through (G). When
assessing which services to include in the proposed rule, we determined
that the absence of an open-ended type of service option, similar to
Sec. 447.203(b)(5)(ii)(H) is unlikely to affect the quality of the
analysis we proposed to require and therefore, we did not include it in
the proposed set of services for the comparative payment rate analysis.
These proposed shifts in policy were informed by our implementation
experience and our consideration of State concerns about the burden and
value of the previous AMRP process.
In paragraph (b)(3), we proposed that the State agency would be
required to develop and publish, consistent with the publication
requirements described in proposed Sec. 447.203(b)(1) for payment rate
transparency data, a comparative payment rate analysis and payment rate
disclosure. This comparative payment rate analysis is divided into two
sections based on the categories of services and the organization of
each analysis or disclosure. Paragraph (b)(3)(i) describes the
comparative payment rate analysis for the categories of services
described in paragraphs (b)(2)(i) through (iii): primary care services,
obstetrical and gynecological services, and outpatient behavioral
health services. Paragraph (b)(3)(ii) describes the payment rate
disclosure for the categories of service described in paragraphs
(b)(2)(iv): personal care, home health aide, and homemaker services
provided by individual providers and providers employed by an agency.
Specifically, in paragraph (b)(3)(i), we proposed that for the
categories of service described in paragraphs (b)(2)(i) through (iii),
the State's analysis would compare the State's Medicaid FFS payment
rates to the most recently published Medicare payment rates effective
for the same time period for the E/M CPT/HCPCS codes applicable to the
category of service. The proposed comparative payment rate analysis of
FFS Medicaid payment rates to FFS Medicare payment rates would be
conducted on a code-by-code basis at the CPT/HCPCS code level using the
most current set of codes published by us. We explained that this
proposal is intended to provide an understanding of how Medicaid
payment rates compare to the payment rates established and updated
under the FFS Medicare program.
We stated that we would expect to publish the E/M CPT/HCPCS codes
to be used for the comparative payment rate analysis in subregulatory
guidance along with the final rule, if this proposal is finalized. We
proposed that we would identify E/M CPT/HCPCS codes to be included in
the comparative payment rate analysis based on the following criteria:
the code is effective for the same time period of the comparative
payment rate analysis; the code is classified as an E/M CPT/HCPCS code
by the American Medical Association (AMA) CPT Editorial Panel; the code
is included on the Berenson-Eggers Type of Service (BETOS) code list
effective for the same time period as the comparative payment rate
analysis and falls into the E/M family grouping and families and
subfamilies for primary care services, obstetrics and gynecological
services, and outpatient behavioral services (now called outpatient
mental health and substance use disorder services in this final rule);
and the code has an A (Active), N (Non-Covered), R (Restricted), or T
(Injections) code status on the Medicare PFS with a Medicare
established relative value unit (RVU) and payment amount for the same
time period of the comparative payment rate
analysis.^{241 242 243}
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\241\ https://www.ama-assn.org/practice-management/cpt/cpt-evaluation-and-management.
\242\ https://data.cms.gov/provider-summary-by-type-of-service/provider-service-classifications/restructured-betos-classification-system.
\243\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/physicianfeesched.
---------------------------------------------------------------------------

The CMS-published list of E/M CPT/HCPCS codes subject to the
comparative

[[Page 40710]]

payment rate analysis would classify each E/M CPT/HCPCS code into a
corresponding category of service as described in proposed Sec.
447.203(b)(2)(i) through (iii). As previously discussed, by narrowing
the comparative payment rate analysis to CMS-specified E/M CPT/HCPCS
codes, we proposed States' analyses include a broad range of core
services that would cover a variety of commonly provided services that
fall into the categories of service proposed in paragraphs (b)(2)(i)
through (iii), while also limiting the services to those delivered
primarily by physicians and NPPs in an office-based setting. Based on
the categories of services specified in proposed Sec. 447.203(b)(2)(i)
through (iii), we stated that we would expect the selected E/M CPT/
HCPCS codes to fall under mandatory Medicaid benefit categories, and
therefore, that all States would cover and pay for the selected E/M
CPT/HCPCS codes. To clarify, we did not narrow the list of E/M CPT/
HCPCS codes on the basis of Medicare coverage of a particular code. We
are cognizant that codes with N (Non-Covered), R (Restricted), or T
code statuses have limited or no Medicare coverage; however, Medicare
may establish RVUs, and payment amounts for these codes. Therefore,
when Medicare does establish RVUs and payment amounts for codes with N
(Non-Covered), R (Restricted), or T (Injections) code statuses on the
Medicare PFS, we proposed to include these codes in the comparative
payment rate analysis to ensure the analysis includes a comprehensive
set of codes, for example pediatric services, including well child
visits (for example, 99381 through 99384), that are commonly provided
services that fall into the categories of service proposed in
paragraphs (b)(2)(i) through (iii) and delivered primarily by
physicians and NPPs in an office-based setting, as previously
described.
We proposed that the comparative payment rate analysis would be
updated no less than every 2 years. Therefore, prior to the start of
the calendar year in which States would be required to update their
comparative payment rate analysis, we noted our intent to publish an
updated list of E/M CPT/HCPCS codes for States to use for their
comparative payment rate analysis updates through subregulatory
guidance. The updated list of E/M CPT/HCPCS codes would include changes
made by the AMA CPT Editorial Panel (such as additions, removals, or
amendments to a code definition where there is a change in the set of
codes classified as an E/M CPT/HCPCS code billable for primary care
services, obstetrics and gynecological services, or outpatient
behavioral services) and changes to the Medicare PFS based on the most
recent Medicare PFS final rule (such as changes in code status or
creation of Medicare-specific codes).\244\
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\244\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
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We explained that we would intend to publish the initial and
subsequent updates of the list of E/M CPT/HCPCS codes subject to the
comparative payment rate analysis in a timely manner that allows States
approximately one full calendar year between the publication of the
CMS-published list of E/M CPT/HCPCS codes and the due date of the
comparative payment rate analysis. We may issue a correction to the
Medicare PFS after the final rule is in effect, and this correction may
impact our published list of E/M CPT/HCPCS codes. In this instance, for
codes included on our published list of E/M CPT/HCPCS codes that are
affected by a correction to the most recent Medicaid PFS final rule, we
may add or remove an E/M CPT/HCPCS code from the published list, as
appropriate, depending on the change to the Medicare PFS.
Alternatively, depending on the nature of the change, we stated that we
would expect States to accurately identify which code(s) are used in
the Medicaid program during the relevant period that best correspond to
the CMS-identified E/M CPT/HCPCS code(s) affected by the Medicare PFS
correction. We would expect States to rely on the CMS published list of
E/M CPT/HCPCS codes subject to the comparative payment rate analysis
for complying with the proposed requirements in paragraphs (b)(2)
through (4).
We acknowledged that there are limitations to relying on E/M CPT/
HCPCS codes to select payment rates for comparative payment rate
analysis to aid States, CMS, and other interested parties in assessing
if payments are consistent with efficiency, economy, and quality of
care and are sufficient to enlist enough providers so that care and
services are available under the plan at least to the extent that such
care and services are available to the general population in the
geographic area. Providers across the country and within each State
deliver a variety of services to patients, including individuals with
public and private sources of coverage, and then bill them under a
narrow subset of CPT/HCPCS codes that fit into the E/M classification
as determined by the AMA CPT Editorial Panel. The actual services
delivered can require a wide array of time, skills, and experience of
the provider which must be represented by a single five-digit code for
billing to receive payment for the services delivered. While there are
general principles that guide providers in billing the most
representative E/M CPT/HCPCS code for the service they delivered, two
providers might perform substantially similar activities when
delivering services and yet bill different E/M CPT/HCPCS codes for
those activities, or bill the same E/M CPT/HCPCS code for furnishing
two very different services. The E/M CPT/HCPCS code itself is not a
tool for capturing the exact service that was delivered, but medical
documentation helps support the billing of a particular E/M CPT/HCPCS
code.
Although they do not encompass all Medicaid services covered and
paid for in the Medicaid program which are subject to the requirements
in section 1902(a)(30)(A) of the Act, E/M CPT/HCPCS codes are some of
the most commonly billed codes and including them in the comparative
payment rate analysis would allow us to uniformly compare Medicaid
payment rates for these codes to Medicare PFS rates. As such, to
balance administrative burden on States and our enforcement
responsibilities, we proposed to use E/M CPT/HCPCS codes in the
comparative payment rate analysis to limit the analysis to how much
Medicaid and the FFS Medicare program would pay for services that can
be classified into a particular E/M CPT/HCPCS code. We solicited
comments on the proposed comparative payment rate analysis requirement
in Sec. 447.203(b)(3)(i), including the proposed requirement to
conduct the analysis at the CPT/HCPCS code level, the proposed criteria
that we would apply in selecting E/M CPT/HCPCS codes for inclusion in
the required analysis, and the proposed requirement for States to
compare Medicaid payment rates for the selected E/M CPT/HCPCS codes to
the most recently published Medicare non-facility payment rate as
established in the annual Medicare PFS final rule effective for the
same time period, which is discussed in more detail later in this rule
when describing the proposed provisions of Sec. 447.203(b)(3)(i)(C).
In paragraph (b)(3)(i), we further proposed that the State's
comparative payment rate analysis would be required to meet the
following requirements: (A) the analysis must be organized by category
of service as described in Sec. 447.203(b)(2)(i) through (iii); (B)
the analysis must clearly identify the base Medicaid FFS fee

[[Page 40711]]

schedule payment rate for each E/M CPT/HCPCS code identified by us
under the applicable category of service, including, if the rates vary,
separate identification of the payment rates by population (pediatric
and adult), provider type, and geographical location, as applicable;
(C) the analysis must clearly identify the Medicare PFS non-facility
payment rates effective for the same time period for the same set of E/
M CPT/HCPCS codes, and for the same geographical location as the base
Medicaid FFS fee schedule payment rate, that correspond to the Medicaid
payment rates identified under paragraph (b)(3)(i)(B); (D) the analysis
must specify the Medicaid payment rate identified under paragraph
(b)(3)(i)(B) as a percentage of the Medicare payment rate identified
under paragraph (b)(3)(i)(C) for each of the services for which the
Medicaid payment rate is published under paragraph (b)(3)(i)(B); and
(E) the analysis must specify the number of Medicaid-paid claims within
a calendar year for each of the services for which the Medicaid payment
rate is published under paragraph (b)(3)(i)(B). We solicited comments
on the proposed requirements and content of the items in proposed Sec.
447.203(b)(3)(i)(A) through (E).
In paragraph (b)(3)(i)(A), we proposed to require States to
organize their comparative payment rate analysis by the service
categories described in paragraphs (b)(2)(i) through (iii). We
explained that this proposed requirement is included to ensure the
analysis breaks out the payment rates for primary care services,
obstetrical and gynecological services, and outpatient behavioral
health services separately for individual analyses of the payment rates
for each CMS-selected E/M CPT/HCPCS code, grouped by category of
service. We solicited comments on the proposed requirement for States
to break out their payment rates at the CPT/HCPCS code level for
primary care services, obstetrical and gynecological services, and
outpatient behavioral health services, separately, in the comparative
payment rate analysis as specified in proposed Sec.
447.203(b)(3)(i)(A).
In paragraph (b)(3)(i)(B), after organizing the analysis by Sec.
447.203(b)(2)(i) through (iii) categories of service and CMS-specified
E/M CPT/HCPCS code, we proposed to require States to clearly identify
the Medicaid base payment rate for each code, including, if the rates
vary, separate identification of the payment rates by population
(pediatric and adult), provider type, and geographical location, as
applicable. We proposed that the Medicaid base payment rate in the
comparative payment rate analysis would only include the State's
Medicaid fee schedule rate, that is, the State's Medicaid base rate for
each E/M CPT/HCPCS code. By specifying the services included in the
comparative payment rate analysis by E/M CPT/HCPCS code, we noted that
we would expect the Medicaid base payment rate in the comparative
payment rate analysis to only include the State's Medicaid fee schedule
rate for that particular E/M CPT/HCPCS code as published on the State's
Medicaid fee schedule effective for the same time period covered by the
comparative payment rate analysis. As an example, the State's Medicaid
fee schedule rate as published on the Medicaid fee schedule effective
for the time period of the comparative payment rate analysis for 99202
is listed as $50.00. This rate would be the Medicaid base payment rate
in the State's comparative payment rate analysis for comparison to the
Medicare non-facility rate, which is discussed later in this section.
Medicaid base payment rates are typically determined through one of
three methods: the resource-based relative value scale (RBRVS), a
percentage of Medicare's fee, or a State-developed fee schedule using
local factors.\245\ The RBRVS system, initially developed for the
Medicare program, assigns a relative value to every physician procedure
based on the complexity of the procedure, practice expense, and
malpractice expense. States may also adopt the Medicare fee schedule
rate, which is also based on RBRVS, but select a fixed percentage of
the Medicare amount to pay for Medicaid services. States can develop
their own PFSs, typically determined based on market value or an
internal process, and often do this in situations where there is no
Medicare or private payer equivalent or when an alternate payment
methodology is necessary for programmatic reasons. States often adjust
their payment rates based on provider type, geography, site of
services, patient age, and in-State or out-of-State provider status.
Additionally, base Medicaid FFS fee schedule payment rate can be paid
to physicians in a variety of settings, including clinics, community
health centers, and private offices.
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\245\ https://www.macpac.gov/wp-content/uploads/2017/02/Medicaid-Physician-Fee-for-Service-Payment-Policy.pdf.
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We acknowledged that only including Medicaid base payments in the
analysis does not necessarily represent all of a provider's revenues
that may be related to furnishing services to Medicaid beneficiaries,
and that other revenues not included in the proposed comparative
analysis may be relevant to a provider's willingness to participate in
Medicaid (such as beneficiary cost sharing payments, and supplemental
payments). We discussed that public comments we received on the 2011
proposed rule and responded to in the 2015 final rule with comment
period regarding the previous AMRPs expressed differing views regarding
which provider ``revenues'' should be included within comparisons of
Medicaid to Medicare payment rates. One commenter ``noted that the
preamble of the 2011 proposed rule refers to `payments' and `rates'
interchangeably but that courts have defined payments to include all
Medicaid provider revenues rather than only Medicaid FFS rates.'' The
commenter stated that if the final rule consider[ed] all Medicaid
revenues received by providers, States may be challenged to make any
change to the Medicaid program that might reduce provider revenues.''
\246\ We proposed to narrow the base Medicaid FFS fee schedule payment
rate to the amount listed on the State's fee schedule in order for the
comparative payment rate analysis to accurately and analogously compare
Medicaid fee schedule rates to Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year.
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\246\ 80 FR 67576 at 67581.
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We explained our belief that this approach would represent the best
way to create a consistent metric across States against which to
evaluate access. Specifically, we did not propose to include
supplemental payments in the comparative payment rate analysis.
Requiring supplemental payment data be collected and included under
this rule would be duplicative of existing requirements. State
supplemental payment and DSH payment data are already subject to our
review in various forms, such as through DSH audits for DSH payments,
and through annual upper payment limits demonstrations, and through
supplemental payment reporting under section 1903(bb) of the
Act.^{247 248} As such, we explained that

[[Page 40712]]

we do not see a need to add additional reporting requirements
concerning supplemental payments as part of the proposals in this
rulemaking to allow us the opportunity to review the data. Also,
supplemental payments are often made for specific Medicaid-covered
services and targeted to a subset of Medicaid-participating providers;
not all Medicaid-participating providers, and not all providers of a
given Medicaid-covered service, may receive supplemental payments in a
State. Therefore, including supplemental payments in the comparative
payment rate analysis would create additional burden for States without
then also providing an accurate benchmark of how payments may affect
beneficiary access due to the potentially varied and uneven
distribution of supplemental payments. Accordingly, we proposed to
require that States conduct the comparative payment rate analysis for
only Medicaid base payment rates for selected E/M CPT/HCPCS codes. For
each proposed category of service listed in paragraphs (b)(2)(i)
through (iii), this would result in a transparent and parallel
comparison of Medicaid base payment rates that all Medicaid-
participating providers of the service would receive to the payment
rates that Medicare would pay for the same E/M CPT/HCPCS codes.
---------------------------------------------------------------------------

\247\ CMS State Medicaid Director Letter: SMDL 13-003. March
2013. Federal and State Oversight of Medicaid Expenditures.
Available at https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/SMD-13-003-02.pdf.
\248\ CMS State Medicaid Director Letter: SMDL 21-006. December
2021. New Supplemental Payment Reporting and Medicaid
Disproportionate Share Hospital Requirements under the Consolidated
Appropriations Act, 2021. Available at https://www.medicaid.gov/federal-policy-guidance/downloads/smd21006.pdf.
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Additionally, in paragraph (b)(3)(i)(B), we proposed that, if the
States' payment rates vary, the Medicaid base payment rates must
include a breakdown by payment rates paid to providers delivering
services to pediatric and adult populations, by provider type, and
geographical location, as applicable, to capture this potential
variation in the State's payment rates. This proposed provision to
breakdown the Medicaid payment rate is first stated in proposed
paragraph (b)(2) and carried through in proposed paragraph (b)(3)(i)(B)
to provide clarity to States about how the Medicaid payment rate should
be reported in the comparative payment rate analysis.
In paragraph (b)(3)(i)(C), we proposed to require States'
comparative payment rate analysis clearly identify the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule effective for the same time period for the same set of E/M CPT/
HCPCS codes, and for the same geographical location, that correspond to
the Medicaid payment rates identified under paragraph (b)(3)(i)(B),
including separate identification of the payment rates by provider
type. We did not propose to establish a threshold percentage of
Medicare non-facility payment rates that States would be required to
meet when setting their Medicaid payment rates. Rather, we proposed to
use Medicare non-facility payment rates as established in the Medicare
PFS final rule for a calendar year as a benchmark to which States would
compare their Medicaid payment rates to inform their and our assessment
of whether the State's payment rates are compliant with section
1902(a)(30)(A) of the Act. We explained that benchmarking against FFS
Medicare, another of the nation's large public health coverage
programs, serves as an important data point in determining whether
payment rates are likely to be sufficient to ensure access for Medicaid
beneficiaries at least as great as for the general population in the
geographic area, and whether any identified access concerns may be
related to payment sufficiency. Similar to Medicaid, Medicare provides
health coverage for a significant number of Americans across the
country. In December 2023, total Medicaid enrollment was at 77.9
million individuals \249\ while total Medicare enrollment was at 66.8
million individuals.^{250 251} Both the Medicare and Medicaid
programs cover and pay for services provided to beneficiaries residing
in every State and territory of the United States. As previously
described, Medicare non-facility payment rates as established in the
annual Medicare PFS final rule for a calendar year for covered, non-
covered, and limited coverage services generally are determined on a
national level as well as adjusted to reflect the variation in practice
costs from one geographical location to another. Medicare also ensures
that their payment rate data are publicly available in a format that
can be analyzed. The accessibility and consistency of the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule for a calendar year, compared to negotiated private health
insurance payment rates that typically are considered proprietary
information and, therefore, not generally available to the public,
makes Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year an available and reliable
comparison point for States to use in the comparative payment rate
analysis.
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\249\ https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/December-2022-medicaid-chip-enrollment-trend-snapshot.pdf.
\250\ Total Medicare enrollment equals the Tot_Benes variable in
the Medicare Monthly Enrollment Data for December (Month) 2023
(Year) at the national level (Bene_Geo_Lvl). Tot_Benes is a count of
all Medicare beneficiaries, including beneficiaries with Original
Medicare and beneficiaries with Medicare Advantage and Other Health
Plans. We utilized the count of all Medicare beneficiaries because
Original Medicare, Medicare Advantage, and other Health Plans offer
fee-for-service payments to providers. See the Medicare Monthly
Enrollment Data Dictionary for more information about the variables
in the Medicare Monthly Enrollment Data: https://data.cms.gov/sites/default/files/2023-02/1ec24f76-9964-4d00-9e9a-78bd556b7223/Medicare%20Monthly%20Enrollment_Data_Dictionary%2020230131_508.pdf.
\251\ https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-monthly-enrollment.
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Additionally, Medicare is widely accepted nationwide according to
recent findings from the National Electronic Health Records Survey. In
2019, 95 percent of physicians accepting new patients overall, and 89
percent of office-based physicians, were accepting new Medicare
patients, and the percentage of office-based physicians accepting new
Medicare patients has remained stable since 2011 when the value was 88
percent, with modest fluctuations in the years in between.\252\ In
regards to physician specialties that align with the categories of
services in this rule, 81 percent of general practice/family medicine
physicians and 81 percent of physicians specializing in internal
medicine were accepting new Medicare patients, 93 percent of physicians
specializing obstetrics and gynecology were accepting new Medicare
patients, and 60 percent of psychiatrists were accepting new Medicare
patients in 2019. Although the percentage of psychiatrists who accept
Medicare is lower than other types of physicians providing services
included in the comparative payment rate analysis, this circumstance is
not unique to Medicare amongst payers. For example, 60 percent of
psychiatrists were also accepting new privately insured patients in
2019.\253\ Therefore, the decreased rate of acceptance by psychiatrists
relative to certain other physician specialists does not make Medicare
an inappropriate benchmark when evaluated against other options for
comparison.\254\
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\252\ https://www.kff.org/medicare/issue-brief/most-office-based-physicians-accept-new-patients-including-patients-with-medicare-and-private-insurance/.
\253\ https://www.kff.org/medicare/issue-brief/most-office-based-physicians-accept-new-patients-including-patients-with-medicare-and-private-insurance/.
\254\ https://www.kff.org/medicare/issue-brief/faqs-on-mental-health-and-substance-use-disorder-coverage-in-medicare/.
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Historically, Medicare has low rates of physicians formally opting
out of the Medicare program with 1 percent of physicians consistently
opting out between 2013 and 2019 and of that 1 percent of physicians
opting out of Medicare, 42 percent were

[[Page 40713]]

psychiatrists.\255\ This information suggests that Medicare's payment
rates generally are consistent with a high level of physician
willingness to accept new Medicare patients, with the vast majority of
physicians willing to accept Medicare's payment rates. For the reasons
previously described, we proposed to use Medicare non-facility payment
rates as established in the annual Medicare PFS final rule for a
calendar year as a national benchmark for States to compare their
Medicaid payment rates in the comparative payment rate analysis because
we believe that the Medicare payment rates for these services are
likely to serve as a reliable benchmark for a level of payment
sufficient to enlist providers to furnish the relevant services to an
individual. We solicited comments on the proposed use of Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule for a calendar year as a benchmark for States to compare their
Medicaid payment rates to in the comparative payment rate analysis
requirements in proposed Sec. 447.203(b)(3)(i) to help assess if
Medicaid payments are consistent with efficiency, economy, and quality
of care and are sufficient to enlist enough providers so that care and
services are available under the plan at least to the extent that such
care and services are available to the general population in the
geographic area.
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\255\ Physicians and practitioners who do not wish to enroll in
the Medicare program may ``opt-out'' of Medicare. This means that
neither the physician, nor the beneficiary submits the bill to
Medicare for services rendered. Instead, the beneficiary pays the
physician out-of-pocket and neither party is reimbursed by Medicare.
A private contract is signed between the physician and the
beneficiary that states that neither one can receive payment from
Medicare for the services that were performed. See 2022 opt-out
affidavit data published by the Centers for Medicare & Medicaid
services: https://data.cms.gov/provider-characteristics/medicare-provider-supplier-enrollment/opt-out-affidavits.
---------------------------------------------------------------------------

In paragraph (b)(3)(i)(C), we proposed to require States to compare
their Medicaid payment rates to the Medicare non-facility payment rates
as established in the annual Medicare PFS final rule effective for the
same time period as the same set of E/M CPT/HCPCS codes paid under
Medicaid as specified under paragraph (b)(3)(i)(B) of this section,
including separate identification of the payment rates by provider
type. We proposed to require States to compare their payment rates to
the corresponding Medicare PFS non-facility rates because we are
seeking a payment analysis that compares Medicaid payment rates to
Medicare payment rates at comparable location of service delivery (that
is, in a non-clinic, non-hospital, ambulatory setting such as a
physician's office). States often pay physicians operating in an office
based on their Medicaid fee schedule whereas they may pay physicians
operating in hospitals or clinics using an encounter rate. The Medicaid
fee schedule rate typically reflects payment for an individual service
that was rendered, for example, an office visit that is billed as a
single CPT/HCPCS code. An encounter rate often reflects reimbursement
for total facility-specific costs divided by the number of encounters
to calculate a per visit or per encounter rate that is paid to the
facility for all services received during an encounter, regardless of
which specific services are provided during a particular encounter. For
example, the same encounter rate may be paid for a beneficiary who has
an office visit with a physician, a dental examination and cleaning
from a dentist, and laboratory tests and for a beneficiary who receives
an office visit with a physician and x-rays. Encounter rates are
typically paid to facilities, such as hospitals, FQHCs, RHCs, or
clinics, many of which function as safety net providers that offer a
wide variety of medical services. Within the Medicaid program,
encounter rates can vary widely in the rate itself and services paid
for through the encounter rate. We explained that States demonstrating
the economy and efficiency of their encounter rates would be an
entirely different exercise to the fee schedule rate comparison
proposed in this rule because encounter rates are often based on costs
unique to the provider, and States often require providers to submit
cost reports to States for review to support payment of the encounter
rate. Comparing cost between the Medicaid and Medicare program would
require a different methodology, policies, and oversight than the
comparative payment rate analysis requirement that we proposed due to
the differences within and between each program. While the Medicare
program has a broad, national policy for calculating encounter rates
for providers, including prospective payment systems for hospitals,
FQHCs, and other types of facilities, Medicare calculates these
encounter rates differently than States may calculate analogous rates
in Medicaid. Therefore, we explained that disaggregating each of their
encounter rates and services covered in each encounter rate to compare
to Medicare's encounter rates would be challenging for States.
From that logic, we likewise determined that the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule for a calendar year would afford the best point of comparison
because it is the most accurate and most analogous comparison of a
service-based access analysis using Medicare non-facility payment rates
as established in the annual Medicare PFS final rule for a calendar
year as a benchmark to compare Medicaid fee schedule rates on a CPT/
HCPCS code level basis, as opposed to an encounter rate which could
include any number of services or specialties. The Medicare non-
facility payment rate as established in the annual Medicare PFS final
rule for a calendar year is described as ``. . . the fee schedule
amount when a physician performs a procedure in a non-facility setting
such as the office'' and ``[g]enerally, Medicare gives higher payments
to physicians and other health care professionals for procedures
performed in their offices [compared to those performed elsewhere]
because they must supply clinical staff, supplies, and equipment.''
\256\ As such, we stated our belief that the Medicaid fee schedule best
represents the payment intended to pay physicians and non-physician
practitioners for delivery of individual services in an office (non-
facility) setting, and the Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
represents the best equivalent to that amount and consideration.
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\256\ https://www.cms.gov/files/document/physician-fee-schedule-guide.pdf.
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For the purposes of the comparative payment rate analysis, we
explained in the proposed rule that we would expect States to source
the Medicare non-facility payment rate from the published Medicare fee
schedule amounts that are established in the annual Medicare PFS final
rule through one or both of the following sources: the Physician Fee
Schedule Look-Up Tool \257\ on cms.gov or Excel file downloads of the
Medicare PFS Relative Value with Conversion Factor files \258\ for the
relevant calendar year from cms.gov. We acknowledge that the Physician
Fee Schedule Look-Up Tool is a display tool that functions as a helpful
aid for physicians and NPPs as a way to quickly look up PFS payment
rates, but does not provide official payment rate information. While we
encouraged States to begin sourcing Medicare non-facility payment rates
from the Physician Fee Schedule Look-Up Tool and utilize the Physician
Fee

[[Page 40714]]

Schedule Guide for instructions on using the Look-Up Tool in the
proposed rule, we would like to clarify in this final rule that States
should first download and review the Medicare PFS Relative Value with
Conversion Factor File where States can find the necessary information
for calculating Medicare non-facility payment rates as established in
the annual Medicare PFS final rule for a calendar year. With the
publication of this final rule, we have also issued subregulatory
guidance, which includes an instructional guide for identifying,
downloading, and using the relevant Excel files for calculating the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year that States will need to
include in their comparative payment rate analysis.
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\257\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup.
\258\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/physicianfeesched/pfs-relative-value-files.
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Statutory provisions at section 1848 of the Act and regulatory
provisions at 42 CFR 414.20 \259\ require that most physician services
provided in Medicare are paid under the Medicare PFS. The fee schedule
amounts are established for each service, generally described by a
particular procedure code (including HCPCS, CPT, and CDT) using
resource-based inputs to establish relative value units (RVUs) in three
components of a procedure: work, practice expense, and malpractice. The
three component RVUs for each service are adjusted using CMS-calculated
geographic practice cost indexes (GPCIs) that reflect geographic cost
differences in each fee schedule area as compared to the national
average.^{260 261}
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\259\ The Medicare Claims Processing Manual contains additional
information about physician service payments in Medicare that are
based on the cited statutory and regulatory requirements. https://www.cms.gov/regulations-and-guidance/guidance/manuals/internet-only-manuals-ioms-items/cms018912.
\260\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c12.pdf.
\261\ https://www.cms.gov/medicare/physician-fee-schedule/search/overview.
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For many services, the Medicare PFS also includes separate fee
schedule amounts based on the site of service (non-facility versus
facility setting). The applicable PFS the rate for a service, facility
or non-facility, is based on the setting where the beneficiary received
the face-to-face encounter with the billing practitioner, which is
indicated on the claim form by a place of service (POS) code. We
proposed States use the Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
in the comparative payment rate analysis. We directed States to the
Excel file downloads of the ``PFS Relative Value Files'' which include
the RVUs, GPCIs, and the ``National Physician Fee Schedule Relative
Value File Calendar Year 2023'' file which contains the associated
relative value units (RVUs), a fee schedule status indicator, and
various payment policy indicators needed for payment adjustment (for
example, payment of assistant at surgery, team surgery, or bilateral
surgery). We stated that we would expect States to use the formula for
the Non-Facility Pricing Amount in ``National Physician Fee Schedule
Relative Value File Calendar Year 2023'' file to calculate the ``Non-
Facility Price'' using the RVUs, GPCIs, and conversion factors for
codes not available in the Look-Up Tool.
We explained that Medicaid FFS fee-schedule payment rates should be
representative of the total computable payment amount a provider would
expect to receive as payment-in-full for the provision of Medicaid
services to individual beneficiaries. Section 447.15 defines payment-
in-full as ``the amounts paid by the agency plus any deductible,
coinsurance or copayment required by the plan to be paid by the
individual.'' Therefore, the State's Medicaid base payment rates used
for comparison should be inclusive of total base payment from the
Medicaid agency plus any applicable coinsurance and deductibles to the
extent that a beneficiary is expected to be liable for those payments.
If a State Medicaid fee schedule does not include these additional
beneficiary cost-sharing payment amounts, then the Medicaid fee
schedule amounts would need to be modified to align with the inclusion
of expected beneficiary cost sharing in Medicare's non-facility payment
rates as established in the annual Medicare PFS final rule for a
calendar year.\262\
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\262\ According to the Medicare Physician Fee Schedule Guide,
for most codes, Medicare pays 80% of the amount listed and the
beneficiary is responsible for 20 percent.
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In paragraph (b)(3)(i)(C), we proposed that the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule must be effective for the same time period for the same set of E/M
CPT/HCPCS codes that correspond to the base Medicaid FFS fee schedule
payment rate identified under paragraph (b)(3)(i)(B). We included this
language to ensure the comparative payment rate analysis is as accurate
and analogous as possible by proposing that the Medicaid and Medicare
payment rates that are effective during the same time period for the
same set of E/M CPT/HCPCS codes. As later described in this rule, in
paragraph (b)(4), we proposed the initial comparative payment rate
analysis and payment rate disclosure of Medicaid payment rates would be
a retroactive analysis of payment rates that are in effect as of
January 1, 2025, with the analysis and disclosure published no later
than January 1, 2026. For example, the first comparative payment rate
analysis a State develops and publishes would compare base Medicaid FFS
fee schedule payment rate in effect as of January 1, 2025, to the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule effective January 1, 2025, to ensure the
Medicare non-facility payment rates are effective for the same time
period for the same set of E/M CPT/HCPCS codes that correspond to the
Medicaid FFS fee schedule payment rate identified under paragraph
(b)(3)(i)(B).
Additionally, in paragraph (b)(3)(i)(C), we proposed that the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule used for the comparison must be for the same
geographical location as the Medicaid FFS fee schedule payment rate.
For States that pay Medicaid payment rates based on geographical
location (for example, payment rates that vary by rural or non-rural
location, by zip code, or by metropolitan statistical area), we
proposed that States' comparative payment rate analyses would need to
use the Medicare non-facility payment rates as established in the
annual Medicare PFS final rule for a calendar year for the same
geographical location as the Medicaid FFS fee schedule payment rate to
achieve an equivalent comparison. We stated that we would expect States
to review Medicare's published listing of the current PFS locality
structure organized by State, locality area, and when applicable,
counties assigned to each locality area and identify the comparable
Medicare locality area for the same geographical area as the Medicaid
FFS fee schedule payment rate.\263\
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\263\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Locality.
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We recognized that States that make Medicaid payment based on
geographical location may not use the same locality areas as Medicare.
For example, a State may use its own State-determined geographical
designations, resulting in 5 geographical areas in the State for
purposes of Medicaid payment while Medicare recognizes 3 locality areas
for the State based on Metropolitan Statistical Area (MSA) delineations
determined by the US Office of Management and Budget (OMB) that are the
result of the application of published standards to

[[Page 40715]]

Census Bureau data.\264\ In this instance, we would expect the State to
determine an appropriate method to accomplish the comparative payment
rate analysis that aligns the geographic area covered by each payer's
rate as closely as reasonably feasible. For example, if the State
identifies two geographic areas for Medicaid payment purposes that are
contained almost entirely within one Medicare geographic area, then the
State reasonably could determine to use the same Medicare non-facility
payment rate as established in the annual Medicare PFS final rule in
the comparative payment rate analysis for each Medicaid geographic
area. As another example, if the State defined a single geographic area
for Medicaid payment purposes that contained two Medicare geographic
areas, then the State might determine a reasonable method to weight the
two Medicare payment rates applicable within the Medicaid geographic
area, and then compare the Medicaid payment rate for the Medicaid-
defined geographic area to this weighted average of Medicare payment
rates. Alternatively, as discussed in the next paragraph, the State
could determine to use the unweighted arithmetic mean of the two
Medicare payment rates applicable within the Medicaid-defined
geographic area. We solicited comments on the proposed use of Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule for a calendar year as a benchmark for States to compare
their Medicaid payment rates to in the comparative payment rate
analysis requirements in proposed Sec. 447.203(b)(3)(i) to help assess
if Medicaid payments are consistent with efficiency, economy, and
quality of care and are sufficient to enlist enough providers so that
care and services are available under the plan at least to the extent
that such care and services are available to the general population in
the geographic area.
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\264\ https://www.census.gov/programs-surveys/metro-micro/about/delineation-files.html.
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We noted our awareness that States may not determine their payment
rates by geographical location. For States that do not pay Medicaid
payment rates based on geographical location, we proposed that States
compare their Medicaid payment rates (separately identified by
population, pediatric and adult, and provider type, as applicable) to
the Statewide average of Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year
for a particular CPT/HCPCS code. The Statewide average of the Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule for a calendar year for a particular CPT/HCPCS code would be
calculated as a simple average or arithmetic mean where all Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule for a calendar year for a particular CPT/HCPCS code for a
particular State would be summed and divided by the number of all
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year for a particular CPT/HCPCS
code for a particular State. This calculated Statewide average of the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year would be calculated for
each CPT/HCPCS code subject to the comparative payment rate analysis
using the Non-Facility Price for each locality in the State as
established in the annual Medicare PFS final rule for a calendar year.
As previously mentioned, Medicare has published a listing of the
current PFS locality structure organized by State, locality area, and
when applicable, counties assigned to each locality area, and we would
expect States to use this listing to identify the Medicare locality
areas in their State. For example, the Specific Medicare Administrative
Contractor (MAC) for Maryland is 12302 and there are two Specific
Locality codes, 1230201 for BALTIMORE/SURR. CNTYS and 1230299 for REST
OF STATE. After downloading and reviewing the CY 2023 Medicare PFS
Relative Value Files to identify the Medicare Non-Facility Price(s) for
CY 2023 for 99202 in the Specific MAC locality code for Maryland (12302
MARYLAND), the following information can be obtained: Medicare Non-
Facility Price of $77.82 for BALTIMORE/SURR. CNTYS and $74.31 for REST
OF STATE.\265\ These two Medicare Non-Facility Price(s) would be
averaged to obtain a calculated Statewide average for Maryland of
$76.07.
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\265\ https://www.cms.gov/medicare/physician-fee-schedule/search?Y=0&T=4&HT=0&CT=1&H1=99202&C=43&M=5.
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For States that do not determine their payment rates by
geographical location, we proposed that States would use the Statewide
average of the Medicare Non-Facility Price(s) as listed on the PFS, as
previously described, because it ensures consistency across all States'
comparative payment rate analysis, aligns with the geographic area
requirement of section 1902(a)(30)(A) of the Act, and ensures the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year that States use in their
comparative payment rate analysis accurately reflect how Medicare pays
for services. We explained that this proposal would ensure that all
States' comparative payment rate analyses consistently include Medicare
geographical payment rate adjustments as proposed in paragraph
(b)(3)(i)(C). As previously discussed, we proposed that States that do
pay varying rates by geographical location would need to identify the
comparable Medicare locality area for the same geographical area as
their Medicaid FFS fee schedule payment rate. However, for States that
do not pay varying rates by geographical location, at the operational
level, the State is effectively paying a Statewide Medicaid payment
rate, regardless of geographical location, that cannot be matched to a
Medicare non-facility payment rate as established in the annual
Medicare PFS final rule for a calendar year in a comparable Medicare
locality area for the same geographical area as the Medicaid FFS fee
schedule payment rate. Therefore, to consistently apply the proposed
provision that the Medicare non-facility payment rate as established in
the annual Medicare PFS final rule for a calendar year must be for the
same geographical location as the Medicaid FFS fee schedule payment
rate, States that do not pay varying rates by geographical location
would be required to calculate a Statewide average of the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule for a calendar year to compare the State's Statewide Medicaid
payment rate.
Additionally, we proposed that States that do not determine their
payment rates by geographical location should use the Statewide average
of the Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year to align the implementing
regulatory text with the statute's geographic area requirement in
section 1902(a)(30)(A) of the Act. Section 1902(a)(30)(A) of the Act
requires that Medicaid payments are sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area. Therefore, the proposed
provisions of this rule, which are implementing section 1902(a)(30)(A)
of the Act, must include a method of ensuring we have sufficient
information for determining sufficiency of access to care as compared
to the general population in the geographic area. As we have

[[Page 40716]]

proposed to use Medicare non-facility payment rates as a benchmark for
comparing Medicaid FFS fee schedule payment rate, we believe that
utilizing a Statewide average of Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year
for States that do not pay varying rates by geographical location would
align the geographic area requirement of section 1902(a)(30)(A) of the
Act, treating the entire State (throughout which the Medicaid base
payment rate applies uniformly) as the relevant geographic area.
We considered requiring States weight the Statewide average of the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year by the proportion of the
Medicare beneficiary population covered by each rate, but we did not
propose this due to the additional administrative burden this would
create for States complying with the proposed comparative payment rate
analysis as well as limited availability of Medicare beneficiary and
claims data necessary to weight the Statewide average of the Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule for a calendar year in this manner. As proposed, States that
do not determine their payment rates by geographical location would be
required to consider Medicare's geographically determined payment rates
by Statewide average of the Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year.
We explained our belief that an additional step to weight the Statewide
average by the proportion of the Medicare beneficiary population
covered by each rate would not result in a practical version of the
Medicare non-facility payment rate as established in the annual
Medicare PFS final rule for a calendar year for purposes of the
comparative payment rate analysis. Additionally, requiring only States
that do not determine their payment rates by geographical location to
weight Medicare payment rates in this manner would result in additional
administrative burden for such States that is not imposed on States
that do determine their Medicaid payment rates by geographical
location. Additionally, in order to accurately weight the Statewide
average of the Medicare non-facility payment rates as established in
the annual Medicare PFS final rule for a calendar year by the
proportion of the Medicare beneficiary population covered by each rate,
States would likely require Medicare-paid claims data for each code
subject to the comparative payment rate analysis, broken down by each
of the comparable Medicare locality areas for the same geographical
area as the Medicaid FFS fee schedule payment rate that are included in
the Statewide average of Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year.
While total Medicare beneficiary enrollment data broken down by State
and county level is publicly available on data.cms.gov, Medicare-paid
claims data broken down by the Medicare locality areas used in the
Medicare PFS and by code level is not published by CMS and would be
inaccessible for the State to use in weighting the Statewide average of
the Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year by the proportion of the
Medicare beneficiary population covered by each rate. Accordingly, we
explained our belief that, for States that do not determine their
Medicaid payment rates by geographical location, calculating a simple
Statewide average of the Medicare non-facility rates in the State would
ensure consistency across all States' comparative payment rate
analyses, align with the geographic area requirement of section
1902(a)(30)(A) of the Act, and ensure the Medicare non-facility payment
rates as established in the annual Medicare PFS final rule for a
calendar year that States use in their comparative payment rate
analyses accurately reflect how Medicare pays for services. We
solicited comments regarding our decision not to propose requiring
States that do not pay varying Medicaid rates by geographical location
to weight the Statewide average of the Medicare non-facility payment
rates as established in the annual Medicare PFS final rule for a
calendar year by the distribution of Medicare beneficiaries in the
State.
Furthermore, in paragraph (b)(3)(i)(C), we proposed that the
Medicare non-facility payment rate as established in the annual
Medicare PFS final rule must separately identify the payment rates by
provider type. We previously discussed that some States and Medicare
pay a percentage less than 100 percent of their fee schedule payment
rates to NPPs, including, for example, nurse practitioners, physician
assistants, and clinical nurse specialists. To ensure a State's
comparative payment rate analysis is as accurate as possible when
comparing their Medicaid payment rates to Medicare, we proposed that
States include a breakdown of Medicare's non-facility payment rates by
provider type. The proposed breakdown of Medicare's payment rates by
provider type would be required for all States, regardless of whether
or how the State's Medicaid payment rates vary by provider type,
because it ensures the comparative payment rate analysis accurately
reflects this existing Medicare payment policy on the Medicare side of
the analysis. Therefore, every comparative payment rate analysis would
include the following Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year
for the same set of E/M CPT/HCPCS codes paid under Medicaid as
described in Sec. 447.203(b)(3)(i)(B): the non-facility payment rate
as established in the annual Medicare PFS rate as the Medicare payment
rate for physicians and the non-facility payment rate as listed on
Medicare PFS rate multiplied by 0.85 as the Medicare payment rate for
NPPs.
As previously mentioned in this final rule, Medicare pays nurse
practitioners, physician assistants, and clinical nurse specialists at
85 percent of the Medicare PFS rate. Medicare implements a payment
policy where the fee schedule amounts, including the Medicare non-
facility payment rates as established in the annual Medicare PFS final
rule for a calendar year, are reduced to 85 percent when billed by
NPPs, including nurse practitioners, physician assistants, and clinical
nurse specialists, whereas physicians are paid 100 percent of the fee
schedule amounts Medicare non-facility payment rate as established in
the annual Medicare PFS final rule for a calendar year.\266\ As
proposed, States' comparative payment rate analysis would need to match
their Medicaid payment rates for each provider type to the
corresponding Medicare non-facility payment rates as established in the
annual Medicare PFS final rule for a calendar year for each provider
type, regardless of the State paying varying or the same payment rates
to their providers for the same service. As an example of a State that
pays varying rates based on provider type, if a State's Medicaid fee
schedule lists a rate of $100.00 when a physician delivers and bills
for 99202, then the $100.00 Medicaid base payment rate would be
compared to 100 percent of the Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year.
If the same State's Medicaid fee schedule lists a rate of $75 when a
nurse practitioner delivers and bills for 99202 (or the State's current
approved State plan

[[Page 40717]]

language states that a nurse practitioner is paid 75 percent of the
State's Medicaid fee schedule rate), then the $75 Medicaid base payment
rate would be compared to the Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
multiplied by 0.85. Both Medicare non-facility payments rates would
need to account for any applicable geographical variation, including
the Non-Facility Price Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
for each relevant locality area or the calculated Statewide average of
the Non-Facility Price Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
for all relevant areas of a State, as previously discussed in this
section, for an accurate comparison to the corresponding Medicaid
payment rate. Alternatively, if a State pays the same $80 Medicaid base
payment rate for the service when delivered by physicians and by nurse
practitioners, then the $80 would be listed separately for physicians
and nurse practitioners as the Medicaid base payment rate and compared
to the Medicare non-facility payment rate as established in the annual
Medicare PFS final rule for a calendar year for physicians and the
Medicare non-facility payment rate as established in the annual
Medicare PFS final rule for a calendar year multiplied by 0.85 for
nurse practitioners.
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\266\ https://www.cms.gov/files/document/physician-fee-schedule-guide.pdf.
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This granular level of comparison provides States with the
opportunity to benchmark their Medicaid payment rates against Medicare
as part of the State's and our process for ensuring compliance with
section 1902(a)(30)(A) of the Act. For example, a State's comparative
payment rate analysis may show that the State's Medicaid base payment
rate for physicians is 80 percent of the Medicare non-facility payment
rate as established in the annual Medicare PFS final rule for a
calendar year and their Medicaid base payment rate for nurse
practitioners is 71 percent of the Medicare non-facility payment rate
for NPPs, because the State pays a reduced rate to nurse practitioners.
Although Medicare also pays a reduced rate to nurse practitioners, the
reduced rate the State pays to nurse practitioners compared to
Medicare's reduced rate is still a lower percentage than the physician
rate. However, another State's comparative payment rate analysis may
show that the State's Medicaid base payment rate for physicians is 95
percent of the Medicare non-facility payment rate as established in the
annual Medicare PFS final rule for a calendar year and their Medicaid
base payment rate for nurse practitioners is 110 percent of the
Medicare non-facility payment rate because the State pays all providers
the same Medicaid base payment rate while Medicare pays a reduced rate
of 85 percent of the Medicare non-facility payment rate as established
in the annual Medicare PFS final rule for a calendar year when the
service is furnished by an NPP. By conducting this level of analysis
through the comparative payment rate analysis, States would be able to
pinpoint where there may be existing or potential future access to care
concerns rooted in payment rates. We solicited comments on the proposed
requirement for States to compare their Medicaid payment rates to the
Medicare non-facility payment rate as established in the annual
Medicare PFS final rule for a calendar year, effective for the same
time period for the same set of E/M CPT/HCPCS codes, and for the same
geographical location as the Medicaid FFS fee schedule payment rate,
that correspond to the Medicaid FFS fee schedule payment rate
identified under paragraph (b)(3)(i)(B) of this section, including
separate identification of the payment rates by provider type, as
proposed in Sec. 447.203(b)(3)(i)(C).
In paragraph (b)(3)(i)(D), we proposed to require States specify
the Medicaid base payment rate identified under proposed Sec.
447.203(b)(3)(i)(B) as a percentage of the Medicare non-facility
payment rate as established in the annual Medicare PFS final rule
identified under proposed Sec. 447.203(b)(3)(i)(C) for each of the
services for which the Medicaid base payment rate is published under
proposed Sec. 447.203(b)(3)(i)(B). For each E/M CPT/HCPCS code that we
select, we proposed that States would calculate each Medicaid base
payment rate as specified in paragraph (b)(3)(i)(B) as a percentage of
the corresponding Medicare non-facility payment rate as established in
the annual Medicare PFS final rule specified in paragraph (b)(3)(i)(C).
Both rates would be required to be effective for the same time period
of the comparative payment rate analysis. As previous components of the
proposed comparative payment rate analysis have considered variance in
payment rates based on population the service is delivered to (adult or
pediatric), provider type, and geographical location to extract the
most granular and accurate Medicaid and Medicare payment rate data, we
proposed that States would calculate the Medicaid base payment rate as
a percentage of the Medicare non-facility payment rate as established
in the annual Medicare PFS final rule in the comparative payment rate
analysis to obtain an informative metric that can be used in the
State's and our assessment of whether the State's payment rates are
compliant with section 1902(a)(30)(A) of the Act. As previously
discussed, benchmarking against Medicare serves as an important data
point in determining whether payment rates are likely to be sufficient
to ensure access for Medicaid beneficiaries at least as great as for
the general population in the geographic area, and whether any
identified access concerns may be related to payment sufficiency. We
proposed that States would calculate their Medicaid payment rates as a
percentage of the Medicare non-facility payment rate as established in
the annual Medicare PFS final rule because it is a common, simple, and
informative statistic that can provide us with a gauge of how Medicaid
payment rates compare to Medicare non-facility payment rates in the
same geographic area. Initially and over time, States, CMS, and other
interested parties would be able to compare the State's Medicaid
payment rates as a percentage of Medicare's non-facility payment rates
to identify how the percentage changes over time, in view of changes
that may take place to the Medicaid and/or the Medicare payment rate.
We explained that being able to track and analyze the change in
percentage over time would help States and CMS identify possible access
concerns that may be related to payment insufficiency.
We noted that the organization and content of the comparative
payment rate analysis, including the expression of the Medicaid base
payment rate as a percentage of the Medicare payment rate, can provide
us with a great deal of information about access in the State. For
example, we would be able to identify when and how the Medicaid base
payment rate as a percentage of the Medicare non-facility payment rate
as established in the annual Medicare PFS final rule for E/M CPT/HCPCS
codes for primary care services may decrease over time if Medicare
adjusts its rates and a State does not and use this information to more
closely examine for possible access concerns. This type of analysis
would provide us with actionable information to help ensure consistency
with section 1902(a)(30)(A) of the Act by using Medicare non-facility
payment rates as established in the annual Medicare PFS final rule for
a calendar year paid across the same geographical

[[Page 40718]]

areas of the State as a point of comparison for payment rate
sufficiency as a critical element of beneficiary access to care. When
explaining the rationale for proposing to use Medicare non-facility
payment rates as established in the annual Medicare PFS final rule for
a calendar year for comparison earlier in this rule, we emphasized the
ability to demonstrate to States that certain Medicaid payment rates
have not kept pace with changes to Medicare non-facility payment rates
and how the comparative payment rate analysis would help them identify
areas where they also might want to consider rate increases that
address market changes. We solicited comments on the proposed
requirement for States to calculate their Medicaid payment rates as a
percentage of the Medicare non-facility payment rate for each of the
services for which the Medicaid base payment rate is published under
proposed paragraph (b)(3)(i)(B), as described in proposed Sec.
447.203(b)(3)(i)(D). We also solicited comments on any challenges
States might encounter when comparing their Medicaid payment rates to
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year under proposed Sec.
447.203(b)(3)(i)(D), particularly for any of the proposed categories of
service in paragraphs (b)(2)(i) through (iii), as well as suggestions
for an alternative comparative analysis that might be more helpful, or
less burdensome and equally helpful, for States, CMS, and other
interested parties to assess whether a State's Medicaid payment rates
are consistent with the access standard in section 1902(a)(30)(A) of
the Act.
We noted our awareness in the proposed rule that provider payment
rates are an important factor influencing beneficiary access; as
expressly indicated in section 1902(a)(30)(A) of the Act, insufficient
provider payment rates are not likely to enlist enough providers
willing to serve Medicaid beneficiaries to ensure broad access to care;
however, there may be situations where access issues are principally
due to other causes. For example, even if Medicaid payment rates are
generally consistent with amounts paid by Medicare (and those amounts
have been sufficient to ensure broad access to services for Medicare
beneficiaries), Medicaid beneficiaries may have difficulty scheduling
behavioral health care appointments because the overall number of
behavioral health providers within a State is not sufficient to meet
the demands of the general population. Therefore, a State's rates may
be consistent with the requirements of section 1902(a)(30)(A) of the
Act even when access concerns exist, and States and CMS may need to
examine other strategies to improve access to care beyond payment rate
increases. By contrast, comparing a State's Medicaid behavioral health
payment rates to Medicare may demonstrate that the State's rates fall
far below Medicare non-facility payment rates as established in the
annual Medicare PFS final rule for a calendar year, which would likely
impede beneficiaries from accessing needed care when the demand already
exceeds the supply of providers within a State. In that case, States
may need to evaluate budget priorities and take steps to ensure
behavioral health rates are consistent with section 1902(a)(30)(A) of
the Act.
Lastly, in paragraph (b)(3)(i)(E), we proposed to require States to
specify in their comparative payment rate analyses the number of
Medicaid-paid claims and the number of Medicaid enrolled beneficiaries
who received a service within a calendar year for each of the services
for which the Medicaid base payment rate is published under paragraph
(b)(3)(i)(B). The previous components of the comparative payment rate
analysis focus on the State's payment rate for the E/M CPT/HCPCS code
and comparing the Medicaid base payment rate to the Medicare non-
facility payment rate as established in the annual Medicare PFS final
rule for a calendar year for the same code (separately, for each
Medicaid base payment rate by population (adult or pediatric), provider
type, and geographic area, as applicable). This component examines the
Medicaid-paid claims volume of each E/M CPT/HCPCS code included in the
comparative payment rate analysis relative to the number of Medicaid
enrolled beneficiaries receiving each service within a calendar year.
We proposed to limit the claims volume data to Medicaid-paid claims,
and the number of beneficiaries would be limited to Medicaid-enrolled
beneficiaries who received a service in the calendar year of the
comparative payment rate analysis, where the service would fall into
the list of CMS-identified E/M CPT/HCPCS code(s). In other words, a
beneficiary would be counted in the comparative payment rate analysis
for a particular calendar year when the beneficiary received a service
that is included in one of the categories of services described in
paragraphs (b)(2)(i) through (iii) for which the State has a Medicaid
base payment rate (the number of Medicaid-enrolled beneficiaries who
received a service). A claim would be counted in the comparative
payment rate analysis for a particular calendar year when that
beneficiary had a claim submitted on their behalf by a provider who
billed one of the codes from the list of CMS-identified E/M CPT/HCPCS
code(s) to the State and the State paid the claim (number of Medicaid-
paid claims). With the proposal, we explained that we were seeking to
ensure the comparative payment rate analysis reflects actual services
received by beneficiaries and paid for by the State or realized
access.\267\
---------------------------------------------------------------------------

\267\ Andersen, R.M., and P.L. Davidson (2007). Improving access
to care in America: Individual and contextual indicators. In
Changing the U.S. health care system: Key issues in health services
policy and management, 3rd edition, Andersen, R.M., T.H. Rice, and
G.F. Kominski, eds. San Francisco, CA: John Wiley & Sons.
---------------------------------------------------------------------------

We considered but did not propose requiring States to identify the
number of unique Medicaid-paid claims and the number of unique
Medicaid-enrolled beneficiaries who received a service within a
calendar year for each of the services for which the Medicaid base
payment rate is published pursuant to paragraph (b)(3)(i)(B). We
considered this detail in order to identify the unique, or
deduplicated, number of beneficiaries who received a service that falls
into one of the categories of services described in in paragraph
(b)(2)(i) through (iii) in a calendar year. For example, if a
beneficiary has 6 visits to their primary care provider in a calendar
year and the provider bills 6 claims with 99202 for the same
beneficiary, then the beneficiary and claims for 99202 would only be
counted as one claim and one beneficiary. Therefore, we chose not to
propose this aspect because we intend for the comparative payment rate
analysis to capture the total amount of actual services received by
beneficiaries and paid for by the State. We solicited comments
regarding our decision not to propose that States would identify the
number of unique Medicaid-paid claims and the number of unique Medicaid
enrolled beneficiaries who received a service within a calendar year
for each of the services for which the Medicaid base payment rate is
published pursuant to paragraph (b)(3)(i)(B) in the comparative payment
rate analysis as proposed in Sec. 447.203(b)(3)(i)(E).
We also considered but did not propose to require States to
identify the total Medicaid-enrolled population who could potentially
receive a service within a calendar year for each of the services for
which the Medicaid base

[[Page 40719]]

payment rate is published under paragraph (b)(3)(i)(B), in addition to
the proposed requirement for States to identify the number of Medicaid-
enrolled beneficiaries who received a service. This additional data
element in the comparative payment rate analysis would reflect the
number of Medicaid-enrolled beneficiaries who could have received a
service, or potential access, in comparison to the number of Medicaid-
enrolled beneficiaries who actually received a service. We did not
propose this aspect because this could result in additional
administrative burden on the State, as we already collect and publish
similar data through Medicaid and CHIP Enrollment Trends Snapshots
published on Medicaid.gov. We also solicited comments regarding our
decision not to propose that States would identify the total Medicaid-
enrolled population who could receive a service within a calendar year
for each of the services for which the Medicaid base payment rate is
published pursuant to paragraph (b)(3)(i)(B) in the comparative payment
rate analysis as proposed in Sec. 447.203(b)(3)(i)(E).
We proposed to include beneficiary and claims information in the
comparative payment rate analysis to contextualize the payment rates in
the analysis, and to be able to identify longitudinal changes in
Medicaid service volume in the context of the Medicaid beneficiary
population receiving services, since utilization changes could be an
indication of an access to care issue. For example, a decrease in the
number of Medicaid-paid claims for primary care services furnished to
Medicaid beneficiaries in an area (when the number of Medicaid-enrolled
beneficiaries who received primary care services in the area is
constant or increasing) could be an indication of an access to care
issue. Without additional context provided by the number of Medicaid
enrolled beneficiaries who received a service, changes in claims volume
could be attributed to a variety of changes in the beneficiary
population, such as a temporary loss of coverage when enrollees
disenroll and then re-enroll within a short period of time.
Further, if the Medicaid base payment rate for the services with
decreasing Medicaid service volume has failed to keep pace with the
corresponding Medicare non-facility payment rate as established in the
annual Medicare PFS final rule for a calendar year over the period of
decrease in utilization (as reflected in changes in the Medicaid base
payment rate expressed as a percentage of the Medicare non-facility
payment rate as required under proposed Sec. 447.203(b)(3)(i)(D)),
then we would be concerned and would further scrutinize whether any
access to care issue might be caused by insufficient Medicaid payment
rates for the relevant services. With each biennial publication of the
State's comparative payment rate analysis, as proposed in Sec.
447.203(b)(4), discussed later in this section, States and CMS would be
able to compare the number of paid claims in the context of the number
of Medicaid enrolled beneficiaries receiving services within a calendar
year for the services subject to the comparative payment rate analysis
with previous years' comparative payment rate analyses. Collecting and
comparing the number of paid claims data in the context of the number
of Medicaid enrolled beneficiaries receiving services alongside
Medicaid base payment rate data may reveal trends where an increase in
the Medicaid base payment rate is correlated with an increase in
service volume and utilization, or vice versa with a decrease in the
Medicaid base payment rate correlated with a decrease in service volume
and utilization. As claims utilization and number of Medicaid enrolled
beneficiaries receiving services are only correlating trends, we
acknowledge that there may be other contextualizing factors outside of
the comparative payment rate analysis that affect changes in service
volume and utilization, and we would (and would expect States and other
interested parties to) take such additional factors into account in
analyzing and ascribing significance to changes in service volume and
utilization. We are solicited comments on the proposed requirement for
States to include the number of Medicaid-paid claims and the number of
Medicaid enrolled beneficiaries who received a service within a
calendar year for which the Medicaid base payment rate is published
under proposed paragraph (b)(3)(i)(B), as specified in proposed Sec.
447.203(b)(3)(i)(E).
We noted our belief that the comparative payment rate analysis
proposed in paragraph (b)(3) is needed to best enable us to ensure
State compliance with the requirement in section 1902(a)(30)(A) of the
Act that payments are sufficient to enlist enough providers so that
care and services are available to Medicaid beneficiaries at least to
the extent they are available to the general population in the
geographic area. As demonstrated by the findings of Sloan, et al.,\268\
which have since been supported and expanded upon by numerous
researchers, multiple studies examining the relationship between
Medicaid payment and physician participation,^{269 270} at the
State level,\271\ and among specific provider types,^{272 273}
have found a direct, positive association between Medicaid payment
rates and provider participation in the Medicaid program. While
multiple factors may influence provider enrollment (such as
administrative burden), section 1902(a)(30)(A) of the Act specifically
concerns the sufficiency of provider payment rates. Given this
statutory requirement, a comparison of Medicaid payment rates to other
payer rates is an important barometer of whether State payment policies
are likely to support the statutory standard of ensuring access for
Medicaid beneficiaries such that covered care and services are
available to them at least to the extent that the same care and
services are available to the general population in the geographic
area.
---------------------------------------------------------------------------

\268\ Sloan, F. et al ``Physician Participation in State
Medicaid Programs.'' The Journal of Human Resources, Volume 13,
Supplement: National Bureau of Economic Research Conference on the
Economics of Physician and Patient Behavior, 1978, p. 211-245.
https://www.jstor.org/stable/145253?seq=1#metadata_info_tab_contents. Accessed August 16, 2022.
\269\ Chen, A. ``Do the Poor Benefit from More Generous Medicaid
Policies'' SSRN Electronic Journal, January 2014., p. 1-46. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2444286. Accessed June
16, 2022.
\270\ Holgash, K. and Martha Heberlein, ``Physician Acceptance
of New Medicaid Patients: What Matters and What Doesn't'' Health
Affairs, April 10, 2019. https://www.healthaffairs.org/do/10.1377/
forefront.20190401.678690/
#:~:text=Physicians%E2%80%99%20acceptance%20of%20new%20Medicaid%20pat
ients%20is%20only,of%20Medicaid%20patients%20already%20in%20the%20phy
sician%E2%80%99s%20care. Accessed June 16, 2022.
\271\ Fakhraei, H. ``Payments for Physician Services: An
analysis of Maryland Medicaid Reimbursement Rates'' International
Journal of Healthcare Technology and Management, Volume 7, Numbers
1-2, January 2005, p. 129-142. https://www.researchgate.net/publication/228637758_Payments_for_physician_services_An_analysis_of_Maryland_Medicaid_reimbursement_rates. Accessed June 16, 2022.
\272\ Berman, S., et al. ``Factors that Influence the
Willingness of Private Primary Care Pediatricians to Accept More
Medicaid Patients,'' Pediatrics, Volume 110, Issue 2, August 2002,
p. 239-248. https://publications.aap.org/pediatrics/article-abstract/110/2/239/64380/Factors-That-Influence-the-Willingness-of-Private?redirectedFrom=fulltext?autologincheck=redirected. Accessed
June 16, 2022.
\273\ Suk-fong S., Tang, et al ``Increased Medicaid Payment and
Participation by Office-Based Primary Care Pediatricians,''
Pediatrics, Volume 141, number 1, January 2018, p. 1-9. https://publications.aap.org/pediatrics/article/141/1/e20172570/37705/Increased-Medicaid-Payment-and-Participation-by. Accessed June 16,
2022.
---------------------------------------------------------------------------

The AMRP requirements previous addressed this standard under
section 1902(a)(30)(A) of the Act by requiring States to compare
Medicaid payment rates to the payment rates of other public and private
payers in current

[[Page 40720]]

Sec. 447.203(b)(1)(v) and (b)(3). While we proposed to eliminate the
previous AMRP requirements, we noted our belief that our proposal to
require States to compare their Medicaid payment rates for services
under specified E/M CPT/HCPCS codes against Medicare non-facility
payment rates as established in the annual Medicare PFS final rule for
a calendar year for the same codes, as described in Sec.
447.203(b)(3), would well position States and CMS to continue to meet
the statutory access requirement. Some studies examining the
relationship between provider payments and various access measures have
quantified the relationship between the Medicaid-Medicare payment ratio
and access measures. Two studies observed that increases in the
Medicaid-Medicare payment ratio is associated with higher physician
acceptance rates of new Medicaid patients and with an increased
probability of a beneficiary having an office-based physician as the
patient's usual source of care.^{274 275} We explained that
these studies led us to conclude that Medicare non-facility payment
rates as established in the annual Medicare PFS final rule for a
calendar year are likely to be a sufficient benchmark for evaluating
access to care, particularly ambulatory physician services, based on
provider payment rates.
---------------------------------------------------------------------------

\274\ Holgash, K. and Martha Heberlein, Health Affairs, April
10, 2019.
\275\ Cohen, J.W., Inquiry, Fall 1993.
---------------------------------------------------------------------------

By comparing FFS Medicaid payment rates to corresponding FFS
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year, where Medicare is a public
payer with large populations of beneficiaries and participating
providers whose payment rates are readily available, we aim to
establish a uniform benchmarking approach that allows for more
meaningful oversight and transparency and reduces the burden on States
and CMS relative to the previous AMRP requirements that do not impose
specific methodological standards for comparing payment rates and that
contemplate the availability of private payer rate information that has
proven difficult for States to obtain due to its often proprietary
nature. We noted that this aspect of the proposal specifically responds
to States' expressed concerns that the previous AMRP requirement to
include ``actual or estimated levels of provider payment available from
other payers, including other public and private payers'' was
challenging to accomplish based on the general unavailability of this
information, as discussed elsewhere in this final rule.
Following the 2011 proposed rule, and as addressed by us through
public comment response in the 2015 final rule with comment period,
States expressed concerns that private payer payment rates were
proprietary information and not available to them and that large
private plans did not exist within some States so there were no private
payer rates to compare to, therefore, the State would need to rely on
State employee health plans or non-profit insurer rates.\276\ States
also expressed that other payer data, including public and private
payers, in general may be unsound for comparisons because of a lack of
transparency about the payment data States would have compared their
Medicaid payment rates to. We discussed how, since 2016, we have
learned a great deal from our implementation experience of the previous
AMRP process. We have learned that very few States were able to include
even limited private payer data in their previous AMRPs. States that
were able include private payer data were only able to do so because
the State had existing Statewide all payer claiming or rate-setting
systems, which gave them access to private payer data in their State,
or the State previously based their State plan payment rates off of
information about other payers (such as the American Dental
Association's Survey of Dental Fees) that gave them access to private
payer data.\277\ Based on our implementation experience and concerns
from States about the previous requirement in Sec. 447.203(b)(1)(v) to
obtain private payer data, we proposed to require States only compare
their Medicaid payment rates to Medicare's, for which payment data are
readily and publicly available.
---------------------------------------------------------------------------

\276\ Alaska Department of Health and Social Services, Comment
Letter on 2011 Proposed Rule (July 7, 2011), https://www.regulations.gov/comment/CMS-2011-0062-0102.
\277\ https://www.medicaid.gov/sites/default/files/2019-12/co-amrp-2016.pdf, https://www.medicaid.gov/sites/default/files/2019-12/md-amrp-16.pdf, https://www.medicaid.gov/sites/default/files/2019-12/sd-amrp-16.pdf.
---------------------------------------------------------------------------

Next, in paragraph (b)(3)(ii), we proposed that for each category
of services described in proposed paragraph (b)(2)(iv), the State
agency would be required to publish a payment rate disclosure that
expresses the State's payment rates as the average hourly payment
rates, separately identified for payments made to individual providers
and to providers employed by an agency, if the rates differ. The
payment rate disclosure would be required to meet specified
requirements. We explained that we intended this proposal to remain
consistent with the proposed HCBS provisions at Sec. 441.311(d)(2) and
(e) and to take specific action regarding direct care workers per
Section 2402(a) of the Affordable Care Act. HCBS and direct care
workers that deliver these services are unique to Medicaid and often
not covered by other payers, which is why we proposed a different
analysis of payment rates for providers of these services that does not
involve a comparison to Medicare. As previously stated, Medicare covers
part-time or intermittent home health aide services (only if a Medicare
beneficiary is also getting other skilled services like nursing and/or
therapy at the same time) under Medicare Part A (Hospital Insurance) or
Medicare Part B (Medical Insurance); however, Medicare does not cover
personal care or homemaker services. Therefore, comparing personal care
and homemaker services to Medicare, as we proposed in paragraph
(b)(3)(i) for other specified categories of services, would not be
feasible for States, and a comparison of Medicaid home health aide
payment rates to analogous rates for Medicare would be of limited
utility given the differences in circumstances when Medicaid and
Medicare may pay for such services.
As previously discussed, private payer data are often considered
proprietary and not available to States, thereby eliminating private
payers as feasible point of comparison. Even if private payer payment
rate data were more readily available, like Medicare, many private
payers do not cover HCBS as HCBS is unique to the Medicaid program,
leaving Medicaid as the largest or the only payer for personal care,
home health aide, and homemaker services. Given Medicaid's status as
the most important payer for HCBS, we believe that scrutiny of Medicaid
HCBS payment rates themselves, rather than a comparison to other payer
rates that frequently do not exist, is most important in ascertaining
whether such Medicaid payment rates are sufficient to enlist adequate
providers so that the specified services are available to Medicaid
beneficiaries at least to the same extent as to the general population
in the geographic area. We acknowledge that individuals without
insurance may self-pay for medical services provided in their home or
community; however, similar to private payer data, self-pay data is
unlikely to be available to States. Because HCBS coverage is unique to
Medicaid, Medicaid beneficiaries are generally the only individuals in
a given geographic area with access to HCBS.

[[Page 40721]]

Through the proposed payment rate disclosure, Medicaid payments rates
would be transparent and comparable among States and would assist
States to analyze if and how their payment rates are compliant with
section 1902(a)(30)(A) of the Act.
As noted previously in this section, we proposed to require States
to express their rates separately as the average hourly payments made
to individual providers and providers employed by an agency, if the
rates differ, as applicable for each category of service specified in
proposed Sec. 447.203(b)(2)(iv). We noted our belief that expressing
the data in this manner would best account for variations in types and
levels of payment that may occur in different settings and employment
arrangements. Individual providers are often self-employed or contract
directly with the State to deliver services as a Medicaid provider
while providers employed by an agency are employed by the agency, which
works directly with the Medicaid agency to provide Medicaid services.
These differences in employment arrangements often include differences
in the hourly rate a provider would receive for services delivered, for
example, providers employed by an agency typically receive benefits,
such as health insurance, and the cost of those benefits is factored
into the hourly rate that the State pays for the services delivered by
providers employed by an agency (even though the employed provider does
not retain the entire amount as direct monetary compensation). However,
these benefits are not always available for individual providers who
may need to separately purchase a marketplace health plan or be able to
opt into the State-employee health plan, for example. Therefore, the
provider employed by an agency potentially could receive a higher
hourly rate because benefits are factored into the hourly rate they
receive for delivering services, whereas the individual provider might
be paid a rate that does not reflect employment benefits.
With States expressing their payment rates separately as the
average hourly payment rate made to individual and agency employed
providers for personal care, home health aide, and homemaker services,
States, CMS, and other interested parties would be able to compare
payment rates among State Medicaid programs. Such comparisons may be
particularly relevant for States in close geographical proximity to
each other or that otherwise may compete to attract providers of the
services specified in proposed paragraph (b)(2)(iv) or where such
providers may experience similar costs or other incentives to provide
such services. For example, from reviewing all States' payment rate
analyses for personal care, home health aide, and homemaker services,
we would be able to learn that two neighboring States have similar
hourly rates for providers of these services, but a third neighboring
State has much lower hourly rates than both of its neighbors. This
information could highlight a potential access issue, since providers
in the third State might have an economic incentive to move to one of
the two neighboring States where they could receive higher payments for
furnishing the same services. Such movement could result in
beneficiaries in the third State having difficulty accessing covered
services, compared to the general population in the tri-State
geographic area.
In paragraph (b)(3)(ii), we proposed that the State's payment rate
disclosure must meet the following requirements: (A) the State must
organize the payment rate disclosure by category of service as
specified in proposed paragraph (b)(2)(iv); (B) the disclosure must
identify the average hourly payment rates, including, if the rates
vary, separate identification of the average hourly payment rates for
payments made to individual providers and to providers employed by an
agency by population (pediatric and adult), provider type, and
geographical location, as applicable; and (C) the disclosure must
identify the number of Medicaid-paid claims and the number of Medicaid
enrolled beneficiaries who received a service within a calendar year
for each of the services for which the Medicaid base payment rate is
published under proposed paragraph (b)(3)(ii)(B). We solicited comments
on the proposed requirements and content of the items in proposed Sec.
447.203(b)(3)(ii)(A) through (C).
In paragraph (b)(3)(ii)(A), we proposed to require States to
organize their payment rate disclosures by each of the categories of
services specified in proposed paragraph (b)(2)(iv), that is, to break
out the payment rates for personal care, home health aide, and
homemaker services provided by individual providers and providers
employed by an agency, separately for individual analyses of the
payment rates for each category of service and type of employment
structure. We solicited comments on the proposed requirement for States
to break out their payment rates for personal care, home health aide,
and homemaker services separately for individual analyses of the
payment rates for each category of service in the comparative payment
rate analysis, as described in proposed Sec. 447.203(b)(3)(ii)(A).
In paragraph (b)(3)(ii)(B), we proposed to require States identify
in their disclosure the Medicaid average hourly payment rates by
applicable category of service, including, if the rates vary, separate
identification of the average hourly payment rates for payments made to
individual providers and to providers employed by an agency, as well as
by population (pediatric and adult), provider type, and geographical
location, as applicable. Given that direct care workers deliver unique
services in Medicaid that are often not covered by other payers, we
proposed to require a payment rate disclosure, instead of comparative
payment rate analysis. To be clear, we did not propose to require a
State's payment rate disclosure for personal care, home health aide,
and homemaker services be broken down and organized by E/M CPT/HCPCS
codes, nor did we propose States compare their Medicaid payment rates
to Medicare for these services.
We proposed to require States to calculate their Medicaid average
hourly payment rates made to providers of personal care, home health
aide, and homemaker services, separately, for each of these categories
of services, by provider employment structures (individual providers
and agency employed providers). For each of the categories of services
in paragraph (b)(3)(ii)(A), one Medicaid average hourly payment rate
would be calculated as a simple average (arithmetic mean) where all
payment rates would be adjusted to an hourly figure, summed, then
divided by the number of all hourly payment rates. As an example, the
State's Medicaid average hourly payment rate for personal care
providers may be $10.50 while the average hourly payment rate for a
home health aide is $15.00. A more granular analysis may show that
within personal care providers receiving a payment rate of $10.50, an
individual personal care provider is paid an average hourly payment
rate of $9.00, while a personal care provider employed by an agency is
paid an average hourly payment rate of $12.00 for the same type of
service. Similarly for home health aides, a more granular analysis may
show that within home health aides receiving a payment rate of $15.00,
an individual home health aide is paid an average hourly payment rate
of $13.00, while a home health aide employed by an agency is paid an
average hourly payment rate of $17.00.
We explained that we understand that States may set payment rates
for personal care, home health aide, and

[[Page 40722]]

homemaker services based on a particular unit of time for delivering
the service, and that time may not be in hourly increments. For
example, different States might pay for personal care services using
15-minute increments, on an hourly basis, through a daily rate, or
based on a 24-hour period. By proposing to require States to represent
their rates as an hourly payment rate, we would be able to standardize
the unit (hourly) and payment rate for comparison across States, rather
than comparing to Medicare. To the extent a State pays for personal
care, home health aide, or homemaker services on an hourly basis, the
State would simply use that hourly rate in its Medicaid average hourly
payment rate calculation of each respective category of service.
However, if for example a State pays for personal care, home health
aide, or homemaker services on a daily basis, we would expect the State
to divide that rate by the number of hours covered by the rate.
Additionally, and similar to proposed paragraph (b)(3)(i)(E), we
proposed in paragraph (b)(3)(ii)(B), that, if the States' Medicaid
average hourly payment rates vary, the rates must separately identify
the average hourly payment rates for payments made to individual
providers and to providers employed by an agency, by population
(pediatric and adult), provider type, and geographical location, as
applicable. We included this proposed provision with the intent of
ensuring the payment rate disclosure contains the highest level of
granularity in each element. As previously discussed, States may pay
providers different payment rates for billing the same service based on
the population being served, provider type, and geographical location
of where the service is delivered. We solicited comments on the
proposed requirement for States to calculate the Medicaid average
hourly payment rate made separately to individual providers and to
agency employed providers, which accounts for variation in payment
rates by population (pediatric and adult), provider type, and
geographical location, as applicable, in the payment rate disclosure.
In paragraph (b)(3)(ii)(C), we proposed to require that the State
disclosure must identify the number of Medicaid-paid claims and the
number of Medicaid enrolled beneficiaries who received a service within
a calendar year for each of the services for which the Medicaid payment
rate is published under proposed paragraph (b)(3)(ii)(B), so that
States, CMS, and other interested parties would be able to
contextualize the previously described payment rate information with
information about the volume of paid claims and number of beneficiaries
receiving personal care, home health aide, and homemaker services.
We proposed that the number of Medicaid-paid claims and number of
Medicaid enrolled beneficiaries who received a service be reported
under the same breakdown as paragraph (b)(3)(ii), where the State
provides the number of paid claims and number of beneficiaries
receiving services from individual providers versus agency-employed
providers of personal care, home health aide services, and homemaker
services. As with the comparative payment rate analysis, we proposed
the claims volume data would be limited to Medicaid-paid claims and the
number of beneficiaries would be limited to Medicaid enrolled
beneficiaries who received a service in the calendar year of the
payment rate disclosure, where the services fall into the categories of
service for which the average hourly payment rates are published
pursuant to paragraph (b)(3)(ii)(B). In other words, the beneficiary
would be counted in the payment rate disclosure for a particular
calendar year when the beneficiary received a service that is included
in one of the categories of services described in paragraph (b)(2)(iv)
for which the State has calculated average hourly payment rates (the
number of Medicaid enrolled beneficiaries who received a service). A
claim would be counted when that beneficiary had a claim submitted on
their behalf by a provider who billed for one of the categories of
services described in paragraph (b)(2)(iv) and the State paid the claim
(number of Medicaid-paid claims). We noted we were seeking to ensure
the payment rate disclosure reflects actual services received by
beneficiaries and paid for by the State, or realized access.\278\
---------------------------------------------------------------------------

\278\ Andersen, R.M., and P.L. Davidson. 2007. Improving access
to care in America: Individual and contextual indicators. In
Changing the U.S. health care system: Key issues in health services
policy and management, 3rd edition, Andersen, R.M., T.H. Rice, and
G.F. Kominski, eds. San Francisco, CA: John Wiley & Sons.
---------------------------------------------------------------------------

Similar to the comparative payment rate analysis, we considered but
did not propose requiring States to identify the number of unique
Medicaid-paid claims and the number of unique Medicaid enrolled
beneficiaries who received a service within a calendar year for each of
the services for which the average hourly payment rates are published
pursuant to paragraph (b)(3)(ii)(B). We also considered but did not
propose to require States to identify the total Medicaid enrolled
population who could receive a service within a calendar year for each
of the services for which the average hourly payment rates are
published pursuant to paragraph (b)(3)(ii)(B) in addition to proposing
States identify the number of Medicaid enrolled beneficiaries who
received a service. As discussed in the comparative payment rate
discussion, we solicited comments on our decision not to require these
levels of detail for the payment rate disclosure.
Also similar to the comparative payment rate analysis requirement
under proposed paragraph (b)(3)(i)(E), we explained that this
disclosure element would help States, CMS, and other interested parties
identify longitudinal changes in Medicaid service volume and
beneficiary utilization that may be an indication of an access to care
issue. Again, with each biennial publication of the State's comparative
payment rate analysis and payment rate disclosure, States and CMS would
be able to compare the number of Medicaid-paid claims and number of
Medicaid enrolled beneficiaries who received a service within a
calendar year for services subject to the payment rate disclosure with
previous years' disclosures. Collecting and comparing data on the
number of paid claims and number of Medicaid enrolled beneficiaries
alongside Medicaid average hourly payment rate data may reveal trends,
such as where a provider type that previously delivered a low volume of
services to beneficiaries has increased their volume of services
delivered after receiving an increase in their payment rate.
We acknowledged that one limitation of using the average hourly
payment rate is that the statistic is sensitive to highs and lows, so
one provider receiving an increase in their average hourly payment rate
would bring up the average overall while other providers may not see an
improvement. As these are only correlating trends, we also acknowledged
that there may be other contextualizing factors outside of the payment
rate disclosure that may affect changes in service volume and
utilization. We solicited comments on the proposed requirement for
States to include the number of Medicaid-paid claims and number of
Medicaid enrolled beneficiaries who received a service within a
calendar year for which the Medicaid payment rate is published under
paragraph (b)(3)(ii)(B), as specified in proposed Sec.
447.203(b)(3)(ii)(C).
Additionally, in recognition of the importance of services provided
to individuals with intellectual or

[[Page 40723]]

developmental disabilities and in an effort to remain consistent with
the proposed HCBS payment adequacy provisions at Sec. 441.302(k)
(discussed in section II.B.5 of this rule), we solicited comments on
whether we should propose a similar provision that would require at
least 80 percent of all Medicaid FFS payments with respect to personal
care, home health aide, and homemaker services provided by individual
providers and providers employed by an agency must be spent on
compensation for direct care workers. In this final rule, we want to
clarify that this request for comment was distinct from the proposal at
Sec. 441.302(k) as discussed in section II.B.5 of this rule. The
payment adequacy provision finalized in Sec. 441.302(k) is applicable
to rates for certain specified services authorized under section
1915(c) of the Act, as well as sections 1915(j), (k), and (i) of the
Act as finalized at Sec. Sec. 441.464(f), 441.570(f), and
441.745(a)(1)(vi), respectively. The request for comment in this
section of the rule considered expanding that requirement to Medicaid
FFS payments under FFS State plan authority.
In paragraph (b)(4), we proposed to require the State agency to
publish the initial comparative payment rate analysis and payment rate
disclosure of its Medicaid payments in effect as of January 1, 2025, as
required under Sec. 447.203(b)(2) and (b)(3), by no later than January
1, 2026. Thereafter, the State agency would be required to update the
comparative payment rate analysis and payment rate disclosure no less
than every 2 years, by no later than January 1 of the second year
following the most recent update. The comparative payment rate analysis
and payment rate disclosure would be required to be published
consistent with the publication requirements described in proposed
Sec. 447.203(b)(1) for payment rate transparency data.
As previously discussed in this final rule, we proposed that the
Medicaid payment rates included in the initial comparative payment rate
analysis and payment rate disclosure would be those in effect as of
January 1, 2025. Specifically, for the comparative payment rate
analysis, we proposed States would conduct a retrospective analysis to
ensure CMS can publish the list of E/M CPT/HCPCS codes for the
comparative payment rate analysis and States have timely access to all
information required to complete comparative payment rate analysis. As
described in paragraph (b)(3)(i)(C), we proposed States would compare
their Medicaid payment rates to the Medicare non-facility payment rates
as established in the annual Medicare PFS final rule effective for the
same time period for the same set of E/M CPT/HCPCS codes, therefore,
the Medicare non-facility payment rates as published on the Medicare
PFS for the same time period as the State's Medicaid payment rates
would need to be available to States in a timely manner for their
analysis and disclosure to be conducted and published as described in
paragraph (b)(4). Medicare publishes its annual PFS final rule in
November of each year and the Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year
are effective the following January 1. For example, the 2025 Medicare
PFS final rule would be published in November 2024 and the Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule would be effective January 1, 2025, so States would compare
their Medicaid payment rates effective as of January 1, 2025, to the
Medicare PFS payment rates effective January 1, 2025, when submitting
the initial comparative payment rate analysis that we proposed would be
due on January 1, 2026.
Also, previously discussed in this final rule, we noted our intent
to publish the initial and subsequent updates to the list of E/M CPT/
HCPCS codes subject to the comparative payment rate analysis in a
timely manner that allows States approximately one full calendar year
between the publication of the CMS-published list of E/M CPT/HCPCS
codes and the due date of the comparative payment rate analysis.
Because the list of E/M CPT/HCPCS codes is derived from the relevant
calendar year's Medicare PFS, the Medicare non-facility payment rates
as established in the annual Medicare PFS final rule that the State
would need to include in their comparative payment rate analysis would
also be available to States. We explained that we expect approximately
one full calendar year of the CMS-published list of E/M CPT/HCPCS codes
and Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year being available to States
would provide the States with sufficient time to develop and publish
their comparative payment rate analyses as described in paragraph
(b)(4). We considered proposing the same due date and effective time
period for Medicaid and Medicare payment rates where the initial
publication of the comparative payment rate analysis would be due
January 1, 2026, and would contain payment rates effective January 1,
2026; however, we believe a 2-month time period between Medicare
publishing its PFS payment rates in November and the PFS payment rates
taking effect on January 1 would be an insufficient amount of time for
CMS to publish the list of E/M CPT/HCPCS codes subject to the
comparative payment rate analysis and for States to develop and publish
their comparative payment rate analyses by January 1. While the
proposed payment rate disclosure would not require a comparison to
Medicare, we proposed to use the same due date and effective period of
Medicaid payment rates for both the proposed comparative payment rate
analysis and payment rate disclosure to maintain consistency.
We noted our expectation the proposed initial publication timeframe
would provide sufficient time for States to gather necessary data,
perform, and publish the first required comparative payment rate
analysis and payment rate disclosure. We determined this timeframe was
sufficient based on implementation experience from the previous AMRP
process, where we initially proposed a 6-month timeframe between the
January 4, 2016, effective date of the 2015 final rule with comment
period in the Federal Register, and the due date of the first AMRP,
July 1, 2016. At the time, we believed that this timeframe would be
sufficient for States to conduct their first review for service
categories newly subject to ongoing AMRP requirements; however, after
receiving several public comments from States on the 2015 final rule
with comment period that State agency staff may have difficulty
developing and submitting the initial AMRPs within the July 1, 2016
timeframe, we modified the policy as finalized in the 2016 final
rule.\279\ Specifically, we revised the deadline for submission of the
initial AMRP until October 1, 2016 and we made a conforming change to
the deadline for submission in subsequent review periods at Sec.
447.203(b)(5)(i) to October 1.\280\ We also found that, despite this
additional time, some State were still late in submitting their first
AMRP to us. Therefore, we noted our belief that a proposed initial
publication date of January 1, 2026, thereby providing States with
approximately 2 years between the effective date of the final rule and
the due date of the first comparative payment rate analysis and payment
rate disclosure, would be sufficient. In alignment with the proposed
payment rate transparency requirements, we proposed an alternate date
if this rule is finalized at a time that

[[Page 40724]]

does not allow for States to have a period of 2 years from the
effective date of the final rule and the proposed January 1, 2026, date
to publish the initial comparative payment rate analysis and payment
rate disclosure. We proposed an alternative date of July 1, 2026, for
the initial comparative payment rate analysis and payment rate
disclosure and for the initial comparative payment rate analysis and
payment rate disclosure to include Medicaid payment rates approved as
of July 1, 2025, to allow more time for States to comply with the
initial comparative payment rate analysis and payment rate disclosure
requirements. We acknowledged that the date of the initial comparative
payment rate analysis and payment rate disclosure publication would be
subject to change based on the final rule publication schedule and
effective date. If further adjustment is necessary beyond the July 1,
2026, timeframe to allow more time for States to comply with the
payment rate transparency requirements, then we proposed that we would
adjust date of the initial payment rate transparency publication in 6-
month intervals, as appropriate.
---------------------------------------------------------------------------

\279\ 81 FR 21479 at 21479-21480.
\280\ 81 FR 21479 at 21480.
---------------------------------------------------------------------------

Also, in Sec. 447.203(b)(4), we proposed to require the State
agency to update the comparative payment rate analysis and payment rate
disclosure no less than every 2 years, by no later than January 1 of
the second year following the most recent update. We proposed that the
comparative payment rate analysis and payment rate disclosure would be
required to be published consistent with the publication requirements
described in proposed paragraph (b)(1) for payment rate transparency
data. After publication of the 2011 proposed rule, and as we worked
with States to implement the previous AMRP requirements after
publication of the 2015 final rule with comment period, many States
expressed concerns that the previous requirements of Sec. 447.203,
specifically those in previous Sec. 447.203(b)(6) imposed additional
analysis and monitoring requirements in the case of provider rate
reductions or restructurings that could result in diminished access,
were overly burdensome. As described in the 2018 and 2019 proposed
rules, ``a number of States expressed concern regarding the
administrative burden associated with the requirements of Sec.
447.203, particularly those States with a very high beneficiary
enrollment in comprehensive, risk-based managed care and a limited
number of beneficiaries receiving care through a FFS delivery system.''
^{281 282} Additionally, from our implementation experience, we
learned that the triennial due date for updated AMRPs required by
previous Sec. 447.203(b)(5)(ii) was too infrequent for States or CMS
to identify and act on access concerns identified by the previous
AMRPs. For example, one State timely submitted its initial ongoing AMRP
on October 1, 2016, consistent with the requirements in Sec.
447.203(b)(1) through (5), and timely submitted its first AMRP update
(the next ongoing AMRP) 3 years later, on October 1, 2019. The 2016
AMRP included data about beneficiary utilization and Medicaid-
participating providers accepting new Medicaid patients from 2014 to
2015 (the most recent data available at the time the State was
developing the AMRP), while the 2019 AMRP update included similar data
for 2016 to 2017 (the most recent data then available). The 2019 AMRP
showed that the number of Medicaid-participating providers accepting
new Medicaid patients significantly dropped in 2016, and the State
received a considerable number of public comments during the 30-day
public comment period for the 2019 AMRP update prior to submission to
us per the requirements in Sec. 447.203(b) and (b)(2). This data lag
between a drop in Medicaid-participating providers accepting new
Medicaid patients in 2016 and CMS receiving the next AMRP update with
information about related concerns in 2019 illustrates how the
infrequency of the triennial due date for the AMRP updates could allow
a potential access concern to develop without notice by the State or
CMS in between the due dates of the ongoing AMRP updates. Although
Sec. 447.203(b)(7) previously required States to have ongoing
mechanisms for beneficiary and provider input on access to care, and
States are expected to promptly respond to concerns expressed through
these mechanisms that cite specific access problems, beneficiaries and
providers themselves may not be aware of even widespread access issues
if such issues are not noticed before published data reveal them.
---------------------------------------------------------------------------

\281\ 83 FR 12696 at 12697.
\282\ 84 FR 33722 at 33723.
---------------------------------------------------------------------------

We also learned from our previous AMRP implementation experience
that the timing of the ongoing AMRP submissions required by previous
Sec. 447.203(b)(5)(ii) and access reviews associated with rate
reduction or restructuring SPA submissions required by Sec.
447.203(b)(6) have led to confusion about the due date and scope of
routine, ongoing AMRP updates and SPA-connected access review
submissions, particularly when States were required to submit access
reviews within the 3-year period between AMRP updates when proposing a
rate reduction or restructuring SPA, per the requirements in previous
Sec. 447.203(b)(6). For example, one State timely submitted its
initial ongoing AMRP on October 1, 2016, consistent with the
requirements in Sec. 447.203(b)(1) through (5), then the State
submitted a SPA that proposed to reduce provider payment rates for
physical therapy services with an effective date of July 1, 2018, along
with an access review for the affected service completed within the
prior 12 months, consistent with the requirements in Sec.
447.203(b)(6). The State's access review submission consisted of its
2016 AMRP submission, updated with data from the 12 months prior to
this SPA submission, with the addition of physical therapy services for
which the SPA proposed to reduce rates. Because the State submitted an
updated version of its 2016 AMRP in 2018 in support of the SPA
submission, the State was confused whether its next AMRP update
submission was due in 2019 (3 years from 2016), or in 2021 (3 years
from 2018). Based on the infrequency of a triennial due date for AMRP
updates and the numerous instances of similar State confusion during
the implementation process for the previous AMRPs, we identified that
the triennial timeframe was insufficient for the proposed comparative
payment rate analysis and payment rate disclosure.
As we considered a new timeframe for updates to the comparative
payment rate analysis and payment rate disclosure to propose in this
rulemaking, we initially considered proposing to require annual
updates. However, we explained our belief that annual updates would add
unnecessary administrative burden as annual updates would be too
frequent because many States do not update their Medicaid fee schedule
rates for the codes subject to the comparative payment rate analysis
and payment rate disclosure on an annual basis. As proposed, the
categories of services subject to the proposed comparative payment rate
analysis and payment rate disclosure are for office-based visits and,
in our experience, the Medicaid payment rates generally do not change
much over time due to the nature of an office visit.\283\ Office visits
primarily

[[Page 40725]]

include vital signs being taken and the time a patient meets with a
physician or NPP; therefore, States would likely have a considerable
amount of historical payment data for supporting the current payment
rates for such services. Given the relatively stable nature of payment
rates for office visits, our proposal aimed to help ensure the impact
of the comparative payment rate analysis is maximized for ensuring
compliance with section 1902(a)(30)(A) of the Act while minimizing
unnecessary burden on States by holding all States to a proposed update
frequency of 2 years to capture all Medicaid (and corresponding
Medicare) payment rate changes.
---------------------------------------------------------------------------

\283\ We acknowledged that Medicaid primary care payment
increase, a provision in the Patient Protection and Affordable Care
Act (ACA, Pub. L. 111-148, as amended), temporarily raised Medicaid
physician fees for evaluation and management services (Current
Procedural Terminology codes 99201-99499) and vaccine administration
services and counseling related to children's vaccines (Current
Procedural Terminology codes 90460, 90461, and 90471-90474). This
provision expired on December 31, 2014. https://www.macpac.gov/wp-content/uploads/2015/03/An-Update-on-the-Medicaid-Primary-Care-Payment-Increase.pdf.
---------------------------------------------------------------------------

As the proposed rule sought to reduce the amount of administrative
burden from the previous AMRP process on States while also fulfilling
our oversight responsibilities, we explained our belief that updating
the comparative payment rate analysis and payment rate disclosure no
less than every 2 years would achieve an appropriate balance between
administrative burden and our oversight responsibilities with regard to
section 1902(a)(30)(A) of the Act. We noted our intent for the
comparative payment rate analysis and payment rate disclosure States
develop and publish to be time-sensitive and useful sources of
information and analysis to help ensure compliance with section
1902(a)(30)(A) of the Act. If this proposal is finalized, we stated
that both the comparative payment rate analysis and payment rate
disclosure would provide the State, CMS, and other interested parties
with cross-sectional data of Medicaid payment rates at various points
in time. This data could be used to track Medicaid payment rates over
time as a raw dollar amount and as a percentage of Medicare non-
facility payment as established in the annual Medicare PFS final rule
for a calendar year, as well as changes in the number of Medicaid-paid
claims volume and number of Medicaid enrolled beneficiaries who receive
a service over time. The availability of this data could be used to
inform State policy changes, to compare payment rates across States, or
for research on Medicaid payment rates and policies. While we noted our
belief that the comparative payment rate analysis and payment rate
disclosure would provide useful and actionable information to States,
we explained that we did not want to overburden States with annual
updates to the comparative payment rate analysis and payment rate
disclosure. As we proposed to replace the previous triennial AMRP
process with less administratively burdensome processes (payment rate
transparency publication, comparative payment rate analysis, payment
rate disclosure, and State analysis procedures for rate reductions and
restructurings) for ensuring compliance with section 1902(a)(30)(A) of
the Act, we stated our belief that annual updates to the comparative
payment rate analysis and payment rate disclosure would negate at least
a portion of the decrease in administrative burden from eliminating the
previous AMRP process.
With careful consideration, we stated our belief that our proposal
to require updates to the comparative payment rate analysis and payment
rate disclosure to occur no less than every 2 years is reasonable. We
noted our expectation that the proposed biennial publication
requirement for the comparative payment rate analysis and payment rate
disclosure after the initial publication date would be feasible for
State agencies, provide a straightforward timeline for updates, limit
unnecessary State burden, help ensure public payment rate transparency,
and enable us to conduct required oversight. We solicited comments on
the proposed timeframe for the initial publication and biennial update
requirements for the comparative payment rate analysis and payment rate
disclosure as proposed in Sec. 447.203(b)(4).
Lastly, we also proposed in paragraph (b)(4) to require States to
publish the comparative payment rate analysis and payment rate
disclosure consistent with the publication requirements described in
proposed paragraph (b)(1) for payment rate transparency data. Paragraph
(b)(1) would require the website developed and maintained by the single
State Agency to be accessible to the general public. We proposed States
utilize the same website developed and maintained by the single State
Agency to publish their Medicaid FFS payment rates and their
comparative payment rate analysis and payment rate disclosure. We
solicited comments on the proposed required location for States to
publish their comparative payment rate analysis and payment rate
disclosure proposed in Sec. 447.203(b)(4).
In Sec. 447.203(b)(5), we proposed a mechanism to ensure
compliance with paragraphs (b)(1) through (b)(4). Specifically, we
proposed that, if a State fails to comply with the payment rate
transparency and comparative payment rate analysis and payment rate
disclosure requirements in paragraphs (b)(1) through (b)(4) of proposed
Sec. 447.203, including requirements for the time and manner of
publication, that, under section 1904 of the Act and procedures set
forth in regulations at 42 CFR part 430 subparts C and D, future grant
awards may be reduced by the amount of FFP we estimate is attributable
to the State's administrative expenditures relative to the total
expenditures for the categories of services specified in paragraph
(b)(2) of proposed Sec. 447.203 for which the State has failed to
comply with applicable requirements, until such time as the State
complies with the requirements. We also proposed that unless otherwise
prohibited by law, FFP for deferred expenditures would be released
after the State has fully complied with all applicable requirements. We
explained that this proposed enforcement mechanism is similar in
structure to the mechanism that applies with respect to the Medicaid
DSH reporting requirements in Sec. 447.299(e), which specifies that
State failure to comply with reporting requirements will lead to future
grant award reductions in the amount of FFP CMS estimates is
attributable to expenditures made for payments to the DSH hospitals as
to which the State has not reported properly. We proposed this long-
standing and effective enforcement mechanism because we believed it is
proportionate and clear, and to remain consistent with other compliance
actions we take for State non-compliance with statutory and regulatory
requirements. We solicited comments on the proposed method for ensuring
compliance with the payment rate transparency and comparative payment
rate analysis and payment rate disclosure requirements, as specified in
proposed Sec. 447.203(b)(5).
We received public comments on these proposed provisions. The
following is a summary of the comments we received and our responses.
Comparative Payment Rate Analysis Comments and Responses
Comment: Among comments received on the comparative payment rate
analysis, the majority of commenters generally supported the proposal
to require States to develop and publish a comparative payment rate
analysis of Medicaid payment rates for certain categories of services.
These commenters specifically supported the proposed categories of
services, comparing only base payment rates,

[[Page 40726]]

breakdown of Medicaid payment rates by population (pediatric and
adult), use of Medicare non-facility rates as a benchmark for comparing
Medicaid rates, and number of Medicaid services as a data element in
the comparative payment rate analysis. Commenters in support of the
comparative payment rate analysis agreed with CMS that the analysis
requirement would help to ensure necessary information, specifically
Medicaid payment rates and the comparison to Medicare, is available to
CMS for ensuring compliance with section 1902(a)(30)(A) of the Act and
to interested parties for raising access to care concerns through
public processes.
However, a couple of commenters expressed opposition to the
proposed comparative payment rate analysis. Commenters in opposition
stated the proposed comparative payment rate analysis requirements
would be administratively burdensome on States and create challenges
for States in benchmarking services to Medicare because Medicare uses a
rate setting methodology that is different from each State's Medicaid
program. These commenters expressed concerns about the burden
associated with the comparative payment rate analysis, specifically
about further burden on States that do not use the same procedure/
diagnostics codes or same payment methodologies as Medicare, as well as
data challenges to stratify State payment rates by population, provider
type, and geographic location, and challenges of comparing community
mental health center payment rates to the Medicare equivalent.
Response: We appreciate the commenters' support of the comparative
payment rate analysis at Sec. 447.203(b)(3)(i). We are finalizing the
comparative payment rate analysis provisions as proposed apart from
some minor revisions that ensure clarity and consistent terminology
throughout Sec. 447.203(b), as well as update the name of ``outpatient
behavioral health services'' to ``outpatient mental health and
substance use disorder services'' and the compliance timeframe, as
discussed earlier in this section. We list and describe the specific
revisions we made to the regulatory language for the comparative
payment rate analysis provision at Sec. 447.203(b)(2) through (b)(5)
at the end of this section of responses to comments.
We disagree with commenters regarding burden of the comparative
payment rate analysis and challenges benchmarking services to Medicare.
As documented in section III. of this final rule, the FFS provisions,
including the payment rate transparency, comparative payment rate
analysis, and payment rate disclosure requirements (Sec. 447.203(b)(1)
through (5)), interested parties' advisory group requirements (Sec.
447.203(b)(6)), and State analysis procedures for payment rate
reductions or payment restructuring (Sec. 447.203(c)), are expected to
result in a net burden reduction on States compared to the previous
AMRP requirements. Additionally, as addressed in another comment
response generally discussing commenters' concerns about State burden,
we have described numerous flexibilities States have for compliance
with this final rule. Specifically for the comparative payment rate
analysis, States have flexibility to (1) utilize contractors or other
third party websites to publish the payment rate transparency
publication on (however, we remind States that they are still requiring
to publish the hyperlink to the website where the publication is
located on the State Medicaid agency's website as required in Sec.
447.203(b)(1)(ii) of this final rule); and (2) for the requirement that
States break down their payment rates by geographical location, as
applicable, States have the flexibility to determine an appropriate
method to accomplish the comparative payment rate analysis that aligns
the geographic area covered by each payer's rate as closely as
reasonably feasible. Additionally, we are providing an example list
that defines the categories of services subject to the comparative
payment rate analysis through the finite number of E/M CPT/HCPCS codes
in the list, if it were in effect for CY 2023 and an illustrative
example of a compliant comparative payment rate analysis (including to
meet accessibility standards) through subregulatory guidance that we
will issue prior to the effective date of this final rule.
We do not expect States to experience excessive burden or
challenges in benchmarking services to Medicare because we will issue
subregulatory guidance prior to the effective date of this final rule,
including a hypothetical example list of the CMS-published list of E/M
CPT/HCPCS codes that would be subject to the comparative payment rate
analysis, if the comparative rate analysis requirements were applicable
with respect to payment rates in effect for CY 2023, where all codes on
the CMS-published list of E/M CPT/HCPCS codes have an existing Medicare
payment rate. By ensuring there is an existing Medicare payment rate
for States to compare their Medicaid payment rate to and providing
States with information about where and how to find the Medicare non-
facility payment rate as established in the annual Medicare PFS final
rule for a calendar year for these codes to include in their analysis
(that is, through Excel file downloads of the Medicare PFS Relative
Value Files),\284\ we do not expect States to face challenges with
identifying the applicable Medicare benchmark rates.
---------------------------------------------------------------------------

\284\ 88 FR 27960 at 28012.
---------------------------------------------------------------------------

Regarding States that do not use same procedure/diagnostics codes
as Medicare, as described in the proposed rule, E/M CPT/HCPCS codes are
comprised of primarily preventive services which are generally some of
the most commonly billed codes in the U.S.,\285\ therefore, we do not
believe there will be issues with States not using the same procedure/
diagnostics codes as Medicare. However, we recognize that States may
amend existing CPT/HCPCS codes with additional numbers or letters for
processing in their own claims system. If a State does not use the
exact code included in the CMS-published list of E/M CPT/HCPCS codes,
then we expect the State to review the CMS-published list of E/M CPT/
HCPCS codes and identify which of their codes are most comparable for
purposes of the comparative payment rate analysis. We anticipate States
may need to review code descriptions as part of the process of
identifying which codes on the CMS-published list of E/M CPT/HCPCS
codes are comparable to the codes that States utilizes.
---------------------------------------------------------------------------

\285\ 88 FR 27960 at 28009.
---------------------------------------------------------------------------

Regarding States that expect to experience challenges benchmarking
services to Medicare because they do not use the same payment
methodologies as Medicare, while Medicare and State Medicaid agencies
may use different methodologies to determine the rate published on
their fee schedules, the comparative payment rate analysis only
requires the base Medicaid FFS fee schedule payment rates as published
on the State's fee schedule and Medicare's rate as published on the PFS
for a particular code to be published in the analysis. The methodology
to determine the payment rate is not relevant to the comparative
payment rate analysis, therefore, having different methodologies to
determine the rate does not affect a States' ability to comply with the
comparative payment rate analysis requirements. Under the comparative
payment rate analysis requirements we are finalizing in this final
rule, Medicare rates serve as a benchmark to which States will compare
certain of their base Medicaid FFS fee schedule payment rates to

[[Page 40727]]

inform their and our assessment of whether the State's payment rates
are compliant with section 1902(a)(30)(A) of the Act.
Regarding commenters' concerns about data challenges to stratify
State payment rates by population, provider type, and geographic
location for the comparative payment rate analysis, we acknowledge that
not all States pay varied payment rates by population (pediatric and
adult), provider type, and geographical location, which is why we
proposed and are finalizing language noting ``if the rates vary'' and
``as applicable'' in the regulatory text. Therefore, States that do not
pay varied payment rates by population (pediatric and adult), provider
type, and geographical location will not need to list varied rates
based on factors that the State does not use in its rates. For example,
a State that pays different rates by population (pediatric and adult)
but does not vary the rates by provider type or geographic location
will list separate payment rates for services furnished to a pediatric
and to an adult beneficiary, but will not list separate rates based on
provider type or geographical location. If the State pays a single
Statewide payment rate for a single service, the State will only
include the State's single Statewide payment rate in the comparative
payment rate analysis. For States that do pay varied payment rates by
population (pediatric and adult), provider type, and geographical
location, in accordance with Sec. 430.10 and given that States are the
stewards of setting and maintaining Medicaid FFS payment rates, States
are required to maintain sufficient records about current payment
rates, including when payment rates vary, to enable them to meet the
comparative payment rate analysis requirements of this final rule.
Regarding the commenter's concerns about comparing community mental
health center payments to Medicare rates, we would like to clarify that
mental health services provided in a facility-based setting, such as
FQHC, RHC, CCBHC, or clinics (as defined in Sec. 440.90) are excluded
from the comparative payment rate analysis due to the challenges we
expect States to face in disaggregating their rates (including PPS
rates paid to FQHCs or RHCs which are often paid encounter, per visit,
or provider-specific rates and all-inclusive per-visit rates, encounter
rates, per visit rates, or provider-specific rates paid to clinics (as
defined in Sec. 440.90)) for comparison to Medicare, as discussed in
the proposed rule.\286\
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\286\ 88 FR 27960 at 28011-28012.
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Comment: We received a comment requesting clarification about the
entity responsible for publishing the comparative payment rate
analysis.
Response: The State agency is required to publish a hyperlink where
the comparative, as well as the payment rate disclosure and payment
rate transparency publication, on the State Medicaid agency's website.
As finalized in this rule, Sec. 447.203(b)(3) requires that States'
comparative payment rate analysis, as well as payment rate disclosure,
must be published consistent with the publication requirements in
paragraphs (b)(1) and (b)(1)(ii). Paragraph (b)(1) requires the State
``. . . publish all Medicaid fee-for-service fee schedule payment rates
on a website that is accessible to the general public.'' As discussed
in an earlier response to comments in this section, this language has
been revised from what we originally proposed to permit States the
flexibility to continue to utilize contractors and other third parties
for developing and publishing their fee schedules on behalf of the
State. We continue to require that ``[t]he website where the State
agency publishes its Medicaid fee-for-service payment rates must be
easily reached from a hyperlink on the State Medicaid agency's
website.'' in Sec. 447.203(b)(1)(ii).
Comment: One commenter requested clarification regarding how the
comparative payment rate analysis will be organized, particularly if
the FFS rates included in the analysis would be organized by CPT code.
Response: As finalized by this rule, Sec. 447.203(b)(3)(i)
requires that ``State[s] must conduct the comparative payment rate
analysis at the Current Procedural Terminology (CPT) or Healthcare
Common Procedure Coding System (HCPCS) code level, as applicable, using
the most current set of codes published by CMS . . .'' As such, the
publication is required to be organized at the CPT level. However, to
the extent there are differences in a State's rates based on population
(pediatric and adult), provider type, and geographical location, the
publication may need to have multiple CPT-level rate comparisons to
account for each differing rate.
Comment: One commenter raised concerns regarding the accessibility
of the comparative payment rate analysis due to the extensive amount of
data, which may be overwhelming and difficult for individuals to
understand, for example individuals with disabilities and those who use
screen readers. The commenter recommended that CMS require the analysis
and disclosure be contained in a designated website, rather than linked
from the State Medicaid agency's website to avoid creating potential
confusion. They further recommended CMS require States include plain
language descriptions of the published payment rate data to ensure the
analysis is accessible for individuals with disabilities.
Response: We understand the concern that the amount of data in the
analysis could prove overwhelming to some individuals. However, we
believe it is important for these data to be easily reached for those
interested parties that are trying to locate it. Transparency,
particularly the requirement that States must publicly publish their
payment rates, helps to ensure that interested parties have basic
information available to them to understand Medicaid payment levels and
the associated effects of payment rates on access to care so that they
may raise concerns to State Medicaid agencies via the various forms of
public processes available to interested parties. Therefore, as
finalized in this rule, Sec. 447.203(b)(1) requires the State ``. . .
publish all Medicaid fee-for-service fee schedule payment rates on a
website that is accessible to the general public.'' As discussed in an
earlier response to comments in this section, this language has been
revised from what we originally proposed to permit States the
flexibility to continue to utilize contractors and other third parties
for developing and publishing their fee schedules on behalf of the
State. We continue to require at Sec. 447.203(b)(1)(ii) that the
website where the State agency publishes its Medicaid FFS payment rates
must be easily reached from a hyperlink on the State Medicaid agency's
website.
As described in the proposed rule, longstanding legal requirements
to provide effective communication with individuals with disabilities
and the obligation to take reasonable steps to provide meaningful
access to individuals with limited English proficiency also apply to
the State's website containing Medicaid FFS payment rate information.
We invite States to reach out to CMS for technical guidance regarding
compliance with the comparative payment rate analysis. We also
encourage States to review the subregulatory guidance, which includes
an example of what a compliant comparative payment rate analysis might
look like, that will be issued prior to the effective date of this
final rule.
Comment: A couple of commenters suggested that the proposed
breakdown of the comparative payment rate analysis would result in an

[[Page 40728]]

overwhelming volume of information for the average individual viewing
the data. One commenter suggested requiring States to report the
aggregate fee schedule rate, instead of breaking down a State's payment
rates by categories of services in addition to population, provider
type and geographic location to ensure data is accessible and
meaningful to someone viewing the data.
Response: We understand the commenters' concerns about the
potential for the comparative payment rate analysis to contain a large
amount of information. However, the level of detail we are requiring
will afford States, CMS, and the public the best opportunity to assess
individual rates and how they might impact access to certain services.
Our hope is that the requirements and guidance around the elements to
include, and the consistency this will create across States, will make
the data readily navigable and understandable, even though a high
volume of information may need to be presented to account for the array
of services subject to the comparative payment rate analysis
requirement and the potential complexity of the State's payment rate
structure.
We assume the commenter who suggested an aggregated fee schedule
rate meant we should only require States publish a single Statewide
payment rate or a calculated Statewide average Medicaid payment rate if
they do have varying payment rates for a service by population
(pediatric and adult), provider type, and/or geographic location. We
are not adopting this suggestion because only requiring an aggregated
fee schedule rate would lose the opportunity for States, CMS, and the
public to contextualize payment rates and how they might be impacting
access for different populations in different geographical areas, or
for beneficiaries seeking services from particular provider types.
However, we note that States have the flexibility to add an aggregated
fee schedule rate in addition to breaking down a State's payment rates
for a given service by population (pediatric and adult), provider type,
and geographic location, as applicable, with their comparative payment
rate analysis if they so choose. If a State utilizes this flexibility
to include this or optional additional information, then required data
elements in Sec. 447.203(b)(2) through (3) must be listed first on the
State's website to ensure the analysis presents payment rate
information in a clear and accurate way, particularly for States that
do pay varied rates based on population (pediatric and adult), provider
type, and/or geographic location and opted to include an aggregated fee
schedule rate (that is, a calculated Statewide average Medicaid payment
rate).
The previous AMRP process established a transparent data-driven
process to measure access to care in States; however, during the
implementation period, we found that States produced varied AMRPs that
were difficult to interpret or to use in assessing compliance with
section 1902(a)(30)(A) of the Act. With this final rule, we are
focusing on payment rate transparency and streamlining information
States are required to publish. Therefore, we expect the comparative
payment rate analysis to be easier to understand and more consistent
across States than the previous AMRPs.
Comment: A few commenters suggested narrowing the scope of the
comparative payment rate analysis to a representative subset of
services or commonly used services with a Medicare equivalent. On the
other hand, one commenter stated that limiting the scope of the
comparative payment rate analysis to E/M codes would not be adequate to
meaningfully assess access to care for all services under the proposed
categories of services.
Response: We appreciate the commenters' suggestions on the scope of
the comparative payment rate analysis. Prior to the effective date of
this final rule, we will issue subregulatory guidance, including a
hypothetical example list of the E/M CPT/HCPCS codes that would be
subject to the comparative payment rate analysis, if the comparative
rate analysis requirements were applicable with respect to payment
rates in effect for CY 2023. The initial CMS-published list of the E/M
CPT/HCPCS codes to be published no later than July 1, 2025, will
contain a finite number of E/M CPT/HCPCS codes subject to the initial
comparative payment rate analysis. While the commenters did not specify
their recommendation for what a representative subset of services would
include or how they would identify commonly provided services with a
Medicare equivalent, we believe the criteria we used to select the E/M
CPT/HCPCS codes for the comparative payment rate analysis \287\
fulfills these commenters' suggestion for a representative set of
commonly provided services with Medicare payment rates for comparison.
We believe the categories of services included in the rule (primary
care services, obstetrical and gynecological services, and outpatient
mental health and substance use disorder services) are a representative
subset of Medicaid services available to beneficiaries that are of
great importance to overall beneficiary health, as described in the
proposed rule.\288\ Additionally, E/M CPT/HCPCS codes are some of the
most commonly billed codes and one of the criteria in the CMS-published
list of the E/M CPT/HCPCS codes is that the Medicare PFS has a payment
amount on the fee schedule, therefore, we believe our list of codes
includes commonly used services with a Medicare equivalent payment
rate.
---------------------------------------------------------------------------

\287\ 88 FR 27960 at 28008.
\288\ 88 FR 27960 at 28003.
---------------------------------------------------------------------------

Also as previously discussed in detail in an earlier response to
comments in this section, for purposes of the payment rate transparency
provision in Sec. 447.203(b)(1), Medicaid FFS fee schedule payment
rates are FFS payment amounts made to a provider, and known in advance
of a provider delivering a service to a beneficiary by reference to a
fee schedule. For consistency, we are using the same description of
Medicaid FFS fee schedule payment rates to describe the payment rates
that need to be included in the comparative payment rate analysis in
paragraph (b)(3)(ii)(B) of this section which would also consider
bundled payment rates to be Medicaid FFS fee schedule payment rates for
the purposes of the comparative payment rate analysis. We would also
like to clarify that while prospective payment system rates for
services provided in inpatient hospitals, outpatient hospitals,
inpatient psychiatric facilities, inpatient rehabilitation facilities,
long-term care hospitals, and nursing facilities are subject to the
payment rate transparency publication, these rates are effectively
excluded from the comparative payment rate analysis because of the
criteria we discussed in the proposed rule that we used to identify
which CPT/HCPCS codes would be subject to the analysis (that is, the
code is classified as an E/M CPT/HCPCS code by the AMA CPT Editorial
Panel and the code has an A (Active), N (Non-Covered), R (Restricted),
or T (Injections) code status on the Medicare PFS with a Medicare
established RVU and payment amount for the same time period of the
comparative payment rate analysis).\289\ Prospective payment system
rates are generally used to pay for institutional services (for
example, hospitals and nursing facilities) where E/M services are not
provided. Prospective payment system rates are also not listed on the
Medicare PFS because they do not pay

[[Page 40729]]

for a single code, and therefore, they would not have a code or a
payment rate on the PFS. Also, as discussed in an earlier response to
comments, PPS rates for FQHCs and RHCs are not subject to the payment
rate transparency publication requirement under Sec. 447.203(b)(1).
Rather than further broadening the services subject to the comparative
payment rate analysis requirement, we want our initial focus of this
rulemaking to be on establishing the new payment rate transparency,
comparative payment rate analysis, and payment rate disclosure
requirements, providing States with support during the compliance
period, and ensuring these data are available to beneficiaries,
providers, CMS, and other interested parties for the purposes of
assessing access to care issues.
---------------------------------------------------------------------------

\289\ 88 FR 27960 at 28008.
---------------------------------------------------------------------------

We disagree with the commenter that our scope of services subject
to the comparative payment rate analysis will not provide a meaningful
assessment of access. To reemphasize, we believe this list of codes,
including primary care services, obstetrical and gynecological
services, and outpatient mental health and substance use disorder
services, are critical medical services and of great importance to
overall beneficiary health, as described in the proposed rule.\290\ We
acknowledge that the code list is limited to services delivered in an
ambulatory setting, such as a physician's office, and services that are
paid a Medicaid FFS fee schedule rate within the meaning of this final
rule. Therefore, the code list for the comparative payment rate
analysis excludes services delivered in a facility setting and/or
services States pay for using a prospective payment system, for example
hospitals, nursing facilities, FQHCs, and RHCs; however, we believe
these limitations are appropriate to balance administrative burden on
States and our enforcement responsibilities. As previously discussed,
we believe that asking States to disaggregate their prospective payment
system rates for facility-based services to compare to Medicare's
prospective payment system rates often would be challenging for States.
Given that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
---------------------------------------------------------------------------

\290\ 88 FR 27960 at 28003.
---------------------------------------------------------------------------

Comment: A couple of commenters suggested aligning the proposed
categories of services with Medicaid service categories as defined in
statute and regulation to minimize confusion and ambiguity about the
services subject to the comparative payment rate analysis. Another
commenter suggested, rather than requiring a specified set of services,
that CMS require the comparative payment rate analysis based on the
percentage of services paid for by the State (that is, each State would
include the services they pay the most for in their Medicaid program).
Response: We understand commenters' concerns about possible
confusion of the categories of services subject to the comparative
payment rate analysis that do not align directly with a Medicaid
services category. Prior to the effective date of this final rule, we
will issue subregulatory guidance including a hypothetical example list
of the E/M CPT/HCPCS codes that would be subject to the comparative
payment rate analysis, if the comparative rate analysis requirements
were applicable with respect to payment rates in effect for CY 2023.
This example list defines the categories of services subject to the
comparative payment rate analysis through the finite number of E/M CPT/
HCPCS codes in the list, if it were in effect for CY 2023. The initial
CMS-published list of the E/M CPT/HCPCS codes actually subject to the
comparative payment rate analysis will be published no later than July
1, 2025. We believe this list of codes will eliminate any confusion and
ambiguity commenters expressed in response to the proposed rule because
it will contain the actual E/M CPT/HCPCS codes subject to the initial
comparative payment rate analysis. We will only be including codes that
satisfy all the defined criteria set forth in this rule. This list will
be updated every other year after 2025, that is, July 1, 2027, 2029, so
on and so forth. We expect States to review the CMS-published list of
the E/M CPT/HCPCS codes to identify the base Medicaid FFS fee schedule
payment rate as specified in Sec. 447.203(b)(3)(i)(B) that is required
to be included in the comparative payment rate analysis.
We are not adopting the commenter's suggestion to require the
comparative payment rate analysis be based on the percentage of
services paid for by the State (that is, each State would include the
services they pay the most for in their Medicaid program), rather than
requiring a specified set of services. In the comparative payment rate
analysis, we are striving for consistency and comparability between
States and Medicare, therefore, we have decided to require States use
the same categories of services and CMS published list of E/M CPT/HCPCS
codes for the analysis.
Comment: A couple of commenters suggested alternative terms for the
categories of services in the proposed rule. One commenter recommended
using the terms ``substance use disorder and mental health services''
in place of ``behavioral health services'' and requiring the
comparative payment rate analysis include separate analyses for each
condition. Another commenter suggested using gender-inclusive language
such as ``reproductive and sexual health services'' in place of
``obstetrical and gynecological services'' as a category of services in
the comparative payment rate analysis.
Response: We appreciate the commenters' suggestions. We understand
and appreciate the commenter's request for further granularity in the
comparative payment rate analysis by specifying ``substance use
disorder and mental health services'' in place of ``behavioral health
services.'' We have decided to revise the outpatient behavioral health
services category of service in Sec. 447.203(b)(2)(iii) and finalize
it as ``Outpatient mental health and substance use disorder services.''
While this revision does not change the criteria used to identify the
discrete codes included in the BETOS E/M family grouping and families
and subfamilies for the CMS published list of E/M CPT/HCPCS subject to
the comparative payment rate analysis, this revision does ensure this
final rule is consistent with the services in the Managed Care final
rule (as published elsewhere in this Federal Register) for consistency
across Medicaid FFS and managed care delivery systems and reflects a
more granular level of service description as suggested by the
commenter.
We agree with the importance of gender-inclusive language, where
appropriate. However, current medical and procedural terminology
generally still uses the terminology ``obstetrical and gynecological
services.'' We determined consistent language would provide interested
parties the most clarity. Additionally, we selected obstetrical and
gynecological services as a category of service due Medicaid's key role
in providing and paying for maternity-related services for pregnant
women during a maternal health crisis in the US.\291\ We acknowledge
that using the term ``reproductive and sexual health services'' would
be inclusive of more services, that is, male reproductive services in
addition to pregnancy and female reproductive services. However, if we
were to utilize the term ``reproductive and sexual health

[[Page 40730]]

services'' then this would expand the number of services that would be
subject to comparative rate analysis and increase burden on States
complying with the analysis. We want our initial focus to be on
establishing the new payment rate transparency, comparative payment
rate analysis, and payment rate disclosure requirements, providing
States with support during the compliance period, and ensuring these
data are available to beneficiaries, providers, CMS, and other
interested parties for the purposes of assessing access to care issues.
Therefore, we are finalizing ``obstetrical and gynecological services''
as a category of service in Sec. 447.203(b)(2)(ii) subject to the
comparative payment rate analysis. Given that our work to better ensure
access in the Medicaid program is ongoing, we intend to gain
implementation experience with this final rule, and we will consider
the recommendations provided on the proposed rule to help inform any
future rulemaking in this area, as appropriate.
---------------------------------------------------------------------------

\291\ 88 FR 27960 at 28004.
---------------------------------------------------------------------------

Comment: A couple of commenters raised concerns about inpatient
behavioral health services not being a category of service in the
comparative payment rate analysis. One of those commenters disagreed
with CMS' justification that including inpatient behavioral health
services would be duplicative of the information captured through UPL
demonstrations because UPL demonstrations do not include the same level
of analysis as proposed in the comparative payment rate analysis. In
particular, the commenter stated that UPL demonstrations do not ensure
hospital base payments are adequate, do not track if Medicaid payments
align with Medicare payment rate increases, and the new supplemental
payment reporting requirements established by the CAA, 2021 focus on
supplemental payments, rather than base payments. Additionally, one
commenter recommended that, if inpatient behavioral health services are
not subject to the comparative payment rate analysis, CMS take
alternative steps to assess access to inpatient behavioral health
services, such as monitoring care transitions between inpatient and
outpatient facilities during temporary or permanent transitions to
inpatient care.
Response: We understand the commenters' concerns about excluding
inpatient behavioral health services from the categories of services
subject to the comparative payment rate analysis. We acknowledge the
importance of inpatient behavioral health services in the spectrum of
behavioral health services for which coverage is available under the
Medicaid program. As discussed in the proposed rule, we recognize that
Medicaid plays a crucial role in mental health care access as the
single largest payer of these services with a growing role in payment
for substance use disorder services, in part due to Medicaid expansion
and various efforts by Congress to improve access to mental health and
substance use disorder services.\292\ In this final rule, we are
revising the outpatient behavioral health services category of service
in Sec. 447.203(b)(2)(iii) and finalizing it as ``Outpatient mental
health and substance use disorder services.'' While the scope of the
comparative payment rate analysis requirement is limited to outpatient
mental health and substance use disorder services, to the extent States
pay for inpatient behavioral health services (including inpatient
services furnished in psychiatric residential treatment facilities,
institutions for mental diseases, and psychiatric hospitals) with a
Medicaid FFS fee schedule payment rate that falls within the meaning of
this rule, as discussed in an earlier response to comments in this
section, then those payment rates would be subject to the payment rate
transparency publication. In addition to subjecting certain inpatient
behavioral health payment rates to the payment rate transparency
publication requirement, we already collect and review Medicaid and
Medicare payment rate data for inpatient behavioral health services
through annual UPL demonstrations and supplemental payment reporting
requirements under section 1903(bb) of the Act. We recognize UPL data
are not an exact duplicate of the data required under the policies we
are finalizing in this rule. With this final rule, our focus is on
improving our oversight of Medicaid payment rates to identify where
rates may be negatively impacting access to care while minimizing
burden imposed on States, which requires us to prioritize areas of
focus. Although the UPL and the supplemental payment reporting
requirements under section 1903(bb) of the Act represent a different
array of data, they still afford us an opportunity for payment
oversight. Therefore, we chose to focus on services and rates not
covered by those requirements.
---------------------------------------------------------------------------

\292\ 88 FR 27960 at 28004.
---------------------------------------------------------------------------

We disagree with the commenter that UPL demonstrations do not
ensure hospital base payments are adequate and do not track if Medicaid
payments align with Medicare payment rate increases. We began requiring
annual UPL demonstrations in 2013 to ensure CMS and States have a
better understanding of the variables surrounding rate levels,
supplemental payments and total providers participating in the Medicare
and Medicaid programs and the funding supporting each of the payments
subject to UPL demonstrations.\293\ UPL demonstrations are a comparison
of total Medicaid payments for a particularly benefit category to a
reasonable estimate of what Medicare would have paid. Therefore, UPL
demonstrations fundamentally track if Medicaid payments align with
Medicare payment rates at an aggregate level and provide CMS with
important information for assessing if payment rates comply with
economy and efficiency provisions at section 1902(a)(30)(A) of the Act,
specifically how total Medicaid payments compare to what Medicare would
have paid for similar services where Medicare acts as a payment limit,
or ceiling, for economic and efficient. We do acknowledge that the new
supplemental payment reporting requirements under section 1903(bb) of
the Act focus on supplemental payments, rather than base payments;
however, base payment data continues to be collected through UPL
demonstrations, providing us, in the aggregate, with detailed
information about both base and supplemental payments for hospitals.
---------------------------------------------------------------------------

\293\ https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/Downloads/SMD-13-003-02.pdf.
---------------------------------------------------------------------------

Additionally, the comparative payment rate analysis utilizes
Medicare rates as a benchmark to which States will compare their
Medicaid FFS fee schedule payment rate to inform their and our
assessment of whether the State's payment rates are compliant with
section 1902(a)(30)(A) of the Act. We are not requiring States to meet
a threshold percentage of Medicare non-facility payment rates as
established in the annual Medicare PFS final rule for a calendar year
or align with Medicare payment rate increases.
We acknowledge the commenter's request for CMS to take alternative
steps to assess access to inpatient behavioral health services, such as
monitoring care transitions between inpatient and outpatient facilities
during temporary or permanent transitions to inpatient care. We want
our initial focus to be on establishing the new payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure requirements, providing States with support during the
compliance period, and ensuring these data are available to
beneficiaries, providers, CMS, and other interested parties for the
purposes of

[[Page 40731]]

assessing access to care issues. Given that our work to better ensure
access in the Medicaid program is ongoing, we intend to gain
implementation experience with this final rule, and we will consider
the recommendations provided on the proposed rule to help inform any
future rulemaking in this area, as appropriate. We are committed to
helping States and their providers undertake efforts to improve
transitions and improve medical and LTSS coordination by providing
technical assistance, resources, and facilitating the exchange of
information about promising practices of high quality, high impact, and
effective care transition models and processes and we encourage States
to review existing resources about improving care transitions on
Medicaid.gov.\294\
---------------------------------------------------------------------------

\294\ https://www.medicaid.gov/medicaid/quality-of-care/quality-improvement-initiatives/improving-care-transitions/index.html.
---------------------------------------------------------------------------

Comment: Some commenters submitted comments about behavioral health
services as a category of service in the comparative payment rate
analysis. A few commenters suggested particular or additional
categories of services for behavioral health services, including
inpatient behavioral health services, substance use disorder services,
mental health services, intensive outpatient services, partial
hospitalization care, opioid treatment programs, services delivered by
providers who do not bill E/M codes, and specialist services provided
to individuals with chronic diseases and disabilities. These commenters
also suggested including codes outside of the E/M category, such as
``H'' HCPCS codes that psychologists, social workers, and marriage and
family therapists often bill to ensure a comprehensive analysis of
behavioral health services in the comparative payment rate analysis.
Response: We appreciate commenters' suggestion for the comparative
payment rate analysis. As stated previously, we are excluding inpatient
behavioral health services because existing UPL and supplemental
payment reporting requirements under section 1903(bb) of the Act
provide for payment oversight for inpatient behavioral health services,
and with the provisions of this final rule, we chose to focus on
services and payment rates not covered by those requirements.
Additionally, we are not considering behavioral health services, now
called outpatient mental health and substance use disorder services in
this final rule, outside the E/M category as suggested by commenters
because E/M CPT/HCPCS codes are some of the most commonly billed codes
and including them in the comparative payment rate analysis would allow
us to uniformly compare Medicaid payment rates for these codes to
Medicare PFS rates. If we were to expand outside of E/M category of
codes, then it is possible Medicare may not have rates established on
the Medicare PFS for States to compare their base Medicaid FFS fee
schedule payment rates too in the comparative payment rate analysis.
Based on the criteria used to narrow the scope of the comparative
payment rate analysis, we are requiting that the code has an A
(Active), N (Non-Covered), R (Restricted), or T (Injections) code
status on the Medicare PFS with a Medicare established RVU and payment
amount for the same time period of the comparative payment rate
analysis as well as the code must be included in the BETOS
Classification System which only includes Psychotherapy--Group and
Psychotherapy--Nongroup (family) under the E/M (category), Behavioral
Health Services (subcategory). Psychotherapy is a type of treatment, or
service, that can help individuals experiencing a wide array of mental
health conditions and emotional challenges, including substance use
disorder and mental health.\295\ While the CMS published list of E/M
CPT/HCPCS codes will not specifically include intensive outpatient
services, partial hospitalization care, opioid treatment programs,
services delivered by providers who do not bill E/M codes, specialist
services provided to individuals with chronic diseases and
disabilities, or H codes for Alcohol and Drug Abuse Treatment \296\ as
suggested by commenters, we believe the services included on the CMS
published list of E/M CPT/HCPCS codes are critical medical services and
of great importance to overall beneficiary health, as described in the
proposed rule.\297\ As previously discussed, the CMS published list of
E/M CPT/HCPCS codes narrows the scope of the comparative payment rate
analysis to selected services delivered in an ambulatory setting, such
as a physician's office, and services that are paid a Medicaid FFS fee
schedule rate within the meaning of this final rule to balance
administrative burden on States and our enforcement responsibilities.
Given that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
---------------------------------------------------------------------------

\295\ https://www.psychiatry.org/patients-families/psychotherapy.
\296\ https://www.aapc.com/codes/hcpcs-codes-range/.
\297\ 88 FR 27960 at 28003.
---------------------------------------------------------------------------

Comment: A couple of commenters expressed concerns regarding the
exclusion of facility-based services from the comparative payment rate
analysis. These commenters requested CMS consider additional provisions
for services that are delivered by facility-based providers, which are
often paid via an encounter rate, reimbursement of actual cost, or
cost-based payment methodologies. One commenter suggested requiring
States that pay for behavioral health services using cost-based payment
methodologies publish the provider's payment rate compared to
provider's actual incurred cost because States are already collecting
this information from providers as it is necessary for the State's
cost-based payment methodology.
Response: We appreciate the commenter's suggestions. We assume by
encounter rate that the commenters were referring more broadly to PPS
rates paid to both institutional facilities, such as hospitals and
nursing facilities which are often paid encounter or per diem rates, as
well as non-institutional facilities, such as FQHCs or RHCs which are
often paid encounter, per visit, or provider-specific rates, as
discussed in detail in an earlier response to comments in this section.
We did not propose and are not finalizing in this rule the requirement
that States disaggregate each of their PPS rates (including encounter,
per diem, per visit, and provider-specific rates) and services covered
in each rate to compare to Medicare's prospective payment system rates
when Medicare pays a prospective payment system rate for the same
service. Likewise, we also did not propose and are not finalizing in
this rule the requirement that States publish cost reports or
provider's unique cost information when the State's methodology is
reimbursement of actual cost or cost-based methodologies and services
covered in the reimbursement methodology to compare to actual incurred
cost. Therefore, any policies that require States to disaggregate each
of their PPS rates and services covered in each PPS rate or publish
cost reports or provider's unique cost information in order to compare
to Medicare's prospective payment system rates or the commenter's
suggestion to compare to actual incurred cost, would be challenging for
States because we would require a different methodology, policies, and
oversight relative to the comparative payment rate analysis, as

[[Page 40732]]

discussed in the proposed rule.\298\ As we are seeking an appropriate
balance between administrative burden and our oversight
responsibilities with regard to section 1902(a)(30)(A) of the Act,
requiring States to publish cost-based Medicaid payments as well as
actual, incurred cost for each unique provider would impose more burden
on States that was not accounted for in the proposed rule. Given that
our work to better ensure access in the Medicaid program is ongoing, we
intend to gain implementation experience with this final rule, and we
will consider the recommendations provided on the proposed rule to help
inform any future rulemaking in this area, as appropriate.
---------------------------------------------------------------------------

\298\ 88 FR 27960 at 28012.
---------------------------------------------------------------------------

Comment: Several commenters recommended changes to the analysis,
such as additional categories of services or revisions to the proposed
categories of services subject to the comparative payment rate
analysis. While some commenters generally recommended expanding the
categories of services, including all mandatory Medicaid services,
other commenters recommended specific additional categories of
services, provider types, or costs such as supplies. Those
recommendations included: physician specialist services and specialty/
specialist care (for example, cancer care); subspecialty services (for
example, pediatric ophthalmology); services provided by NPPs; services
delivered in clinics and other settings; prosthetic supplies (for
example, ostomy and urological supplies), home health services (for
example, homemaker and home health aide), sexual and reproductive
health services (for example, midwives, doulas, providers who primarily
serve the sexual and reproductive health needs of people assigned male
at birth, etc.); dental and oral health services (including pediatric
dentistry), ground emergency medical transportation services; cell and
gene therapies; hospital and emergency department services; vaccine
administration services; and habilitation and rehabilitation services
provided by physical therapists. Commenters also suggested processes to
add services when certain criteria are met, for example, adding any
service to the comparative payment rate analysis when access concerns
are raised or identified.
Response: We thank the commenters for the many recommendations for
additional or alternate categories of service. In order to balance
Federal and State administrative burden with our shared obligation to
ensure compliance with section 1902(a)(30)(A) of the Act (and our
obligation to oversee State compliance with the same), we are
finalizing this rule with a narrow scope of categories of services
subject to the comparative payment rate analysis and not including
additional categories of services suggested by commenters. As discussed
in the proposed rule, we chose primary care services, obstetrical and
gynecological services, and outpatient behavioral health services
(which we are finalizing as outpatient mental health and substance use
disorder services) because they are critical medical services and of
great importance to overall beneficiary health.\299\ Primary care
providers often deliver preventative health care services, write
referrals or recommendations to schedule an appointment with physician
specialists, and write orders for lab and x-ray services and
prescriptions that a beneficiary would not be able to access without
the primary care provider, therefore, access to a primary care provider
is often a gateway to accessing other care. Obstetrical and
gynecological providers and behavioral health providers also deliver
preventive services respective to their field, such as well-woman
visits and screenings for behavioral health conditions (such as alcohol
disorders, anxiety, and eating disorders), respectively. As described
in the proposed rule, the U.S. is simultaneously experiencing a
maternal health crisis and mental health crisis, putting providers of
obstetrical and gynecological and mental health and substance use
disorder services at the forefront.\300\
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\299\ 88 FR 27960 at 28003.
\300\ 88 FR 27960 at 28004.
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We clarify that we did propose to include in the comparative
payment rate analysis a couple of the services commenters suggested:
care delivered by NPPs, and sexual and reproductive health services (to
the extent these are included within the category of obstetrical and
gynecological services). If a State's base Medicaid FFS fee schedule
payment rate varies by provider type for a particular code subject to
the comparative payment rate analysis, then the payment rates must be
separately identified by provider type, including, but not limited to,
physician, nurse practitioner, and physician assistant, as specified in
Sec. 447.203(b)(3)(i)(B). While we are not including the broader
category of sexual and reproductive health services, obstetrical and
gynecological services are one of the categories of services subject to
the analysis. Lastly, homemaker and home health aide services are
subject to the payment rate disclosure, but not the comparative payment
rate analysis because of a lack of comparable Medicare payment rate.
Finally, we are not including the following services suggested by
commenters in the comparative payment rate analysis: services delivered
in clinics and other settings (as the commenter did not specify, we
assume the commenter meant settings similar to clinics (as defined in
Sec. 440.90)), sexual and reproductive health services (for example,
midwives, doulas, providers who primarily serve the sexual and
reproductive health needs of people assigned male at birth, etc.) to
the extent these are not included within the category of obstetrical
and gynecological services, hospital and emergency department services,
and medical supplies. Our current access strategy focuses broadly on
Medicaid FFS fee schedule payment rates for outpatient practitioner
services. As described in the proposed rule, encounter rates (generally
based on total facility-specific costs divided by the number of
encounters to calculate a per visit or per encounter rate that is paid
to the facility for all services received during an encounter,
regardless of which specific services are provided during a particular
encounter) are typically paid to facilities, such as hospitals, FQHCs,
RHCs, and clinics, and proposing States demonstrate the economy and
efficiency of their encounter rates would be an entirely different
exercise to the comparative payment rate analysis.\301\ Therefore, we
are not including services delivered in clinics and other settings (as
the commenter did not specify, we assume the commenter meant settings
similar to clinics (as defined in Sec. 440.90)) or hospital and
emergency department services in the comparative payment rate analysis.
As previously stated, obstetrical and gynecological services are one of
the categories of services subject to the analysis, but we are not
including the broader category of sexual and reproductive health
services because our focus in this rule is ensuring access to care to
services that can most directly respond to the maternal health crisis
occurring the U.S. As Medicaid plays a key role in providing and paying
for maternity-related services for pregnant women, obstetrical and
gynecological services generally represent the services received
before, during, and after pregnancy.\302\

[[Page 40733]]

We note that one of the criteria used to narrow the CMS published list
of E/M CPT/HCPCS codes requires that the code is included on the
Berenson-Eggers Type of Service (BETOS) code list effective for the
same time period as the comparative payment rate analysis and falls
into the E/M family grouping and families and subfamilies for
obstetrics and gynecological services; this includes prostate cancer
screenings (G0102). Additionally, our current access strategy focuses
on Medicaid FFS fee schedule payment rates for the provision of
outpatient practitioner services, rather than medical supplies.
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\301\ 88 FR 27960 at 28012.
\302\ 88 FR 27960 at 28004.
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We are also not including the suggestion to create processes to add
services to the comparative payment rate analysis when certain criteria
are met, for example, adding any service to the comparative payment
rate analysis when access concerns are raised or identified, because
these situations will generally trigger the processes in Sec.
[thinsp]447.203(c) which include similar requirements to the
comparative payment rate analysis (that is, requiring State publish or
submit information to CMS about Medicaid payment rates, number of
Medicaid beneficiaries receiving services, and number of Medicaid
services furnished/paid claims). Given that our work to better ensure
access in the Medicaid program is ongoing, we intend to gain
implementation experience with this final rule, and we will consider
the recommendations provided on the proposed rule to help inform any
future rulemaking in this area, as appropriate.
Comment: A few commenters submitted specific CPT/HCPCS codes and
services for CMS' consideration when developing the CMS-published list
of E/M CPT/HCPCS codes subject to the comparative payment rate
analysis. These codes and services included specific obstetric codes
including surgical procedures billed by providers of obstetric-
gynecological services, reproductive care codes, pediatric
ophthalmology codes including surgical procedures and clinical
evaluations, vaccine administration, and other E/M codes. We also
received requests to require analysis of the most frequently billed
surgical codes for obstetrical-gynecological services, as well as
behavioral health services that do not have E/M codes or a Medicare
analog.
Response: We appreciate the commenters' suggestions. Prior to the
effective date of this final rule, we will issue subregulatory guidance
including a hypothetical example list of the E/M CPT/HCPCS codes that
would be subject to the comparative payment rate analysis, if the
comparative rate analysis requirements were applicable with respect to
payment rates in effect for CY 2023. This example list defines the
categories of services subject to the comparative payment rate analysis
through the finite number of E/M CPT/HCPCS codes in the list, if it
were in effect for CY 2023. Several of the commenter's suggested codes
are included in the example list; however, this list is subject to
change when the first CMS-published list of the E/M CPT/HCPCS codes
subject to the comparative payment rate analysis for CY 2025 is
published no later than July 1, 2025. Of the specific codes suggested
by commenters, we can confirm that the following codes would be
included in the CMS published list of E/M CPT/HCPCS codes subject to
the analysis, if it were in effect for CY 2023: CPT 59400-59612, 58300-
58301, 59120-59160, 59812-59857, 99401-99404, 90832-90853, 90791-90792,
96158, and 96165. Because of the criteria outlined in the proposed rule
intended to narrow the scope of codes subject to the comparative
payment rate analysis, CPT 59852 and 59857, peer support services,
psychosocial rehab, and assertive community treatment, as well as
vaccine administration codes are excluded from the comparative payment
rate analysis due to their classification outside of the BETOS
Classification System as E/M codes that are primary care, obstetrical
and gynecological services, or outpatient mental health and substance
use disorder services. Additionally, pediatric ophthalmology surgical
procedures and the top 10 surgical codes billed by obstetrician-
gynecologists to the Medicaid program are excluded from the analysis
because one of the criteria used to narrow the scope of the comparative
payment rate analysis was that for a code to be included on the CMS
published list of E/M CPT/HCPCS codes, the code has to be included on
the Berenson-Eggers Type of Service (BETOS) code list effective for the
same time period as the comparative payment rate analysis and falls
into the E/M family grouping and families and subfamilies for primary
care services, obstetrics and gynecological services, and outpatient
behavioral services (now called outpatient mental health and substance
use disorder services in this final rule). E/M CPT/HCPCS codes are some
of the most commonly billed codes and including them in the comparative
payment rate analysis would allow us to uniformly compare Medicaid
payment rates for these codes to Medicare PFS rates. Therefore, we
narrowed the scope of codes to just E/M codes and surgical codes fall
outside of this scope. As described in the proposed rule, the following
criteria were used to identify the E/M CPT/HCPCS codes to be included
in the comparative payment rate analysis: the code is effective for the
same time period of the comparative payment rate analysis; the code is
classified as an E/M CPT/HCPCS code by the AMA CPT Editorial Panel; the
code is included on the Berenson-Eggers Type of Service (BETOS) code
list effective for the same time period as the comparative payment rate
analysis and falls into the E/M family grouping and families and
subfamilies for primary care services, obstetrics and gynecological
services, and outpatient behavioral services (now called outpatient
mental health and substance use disorder services in this final rule);
and the code has an A (Active), N (Non-Covered), R (Restricted), or T
(Injections) code status on the Medicare PFS with a Medicare
established RVU and payment amount for the same time period of the
comparative payment rate analysis. As discussed in an earlier response
to comments in this section, the revision from outpatient behavioral
services to outpatient mental health and substance use disorder
services does not change the criteria used to identify the discrete
codes included in the BETOS E/M family grouping and families and
subfamilies for the CMS published list of E/M CPT/HCPCS subject to the
comparative payment rate analysis. While the payment rate transparency
publication does not require a comparison to the Medicare non-facility
payment rate as established in the annual Medicare PFS final rule for a
calendar year, it does require transparency of Medicaid payment rates
by requiring States publicly publish all Medicaid FFS fee schedule
payment rates, which will often include a number of the services
requested by commenters to be subject to the comparative payment rate
analysis. Our primary goal with the payment rate transparency
publication is ensuring Medicaid payment rates are publicly available
in such a way that a member of the public can readily determine the
amount that Medicaid would pay for a given service. Transparency helps
to ensure that interested parties have basic information available to
them to understand Medicaid payment levels and the associated effects
of payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public process
available to interested parties. Given that our work to better ensure
access in the Medicaid program is

[[Page 40734]]

ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
Comment: A few commenters suggested additional data elements and
analyses for the comparative payment rate analysis. A couple of
commenters suggested data elements specifically for comparing FQHC and
non-FQHC settings: number of primary care claims provided in FQHC and
non-FQHC settings, number of patients served in FQHC and non-FQHC
settings, total spending in FQHC and non-FQHC settings. Commenters also
suggested data elements specifically for nursing facility payments,
such as comparing payments to total cost of care, examining the
relationship between payments and quality of care and health
disparities in nursing facilities, and trend data on medical inflation
and practice costs.
Response: We appreciate commenters' suggestions for the comparative
payment rate analysis. As described in the proposed rule, we excluded
encounter rates often paid for facility-based services, including FQHC
and nursing facility services, from the comparative payment rate
analysis due to the challenges we expect States to face in
disaggregating encounter rates for comparison to Medicare. While we are
not adopting these suggestions, we note that States have the
flexibility to add the elements described to their comparative payment
rate analysis if they so choose. We would encourage any State choosing
to disclose additional comparative payment rate analysis for facility-
based services also to publish detailed information about the State's
methodology for disaggregating its payment rates, as applicable, and
identifying analogous Medicare payment rates for comparison.
Comment: We received a few comments in response to our
consideration of requiring States to identify the number of unique
Medicaid-paid claims and the number of unique Medicaid-enrolled
beneficiaries who received a service within a calendar year for each of
the services for which the Medicaid base payment rate is published
pursuant to paragraph (b)(3)(i)(B). We received one comment that
opposed requiring the unique number of claims and beneficiaries while a
few commenters encouraged CMS to require this data element to improve
the collection and quality of data on Medicaid service utilization.
Response: We appreciate the commenters' feedback. As described in
the proposed rule, we considered but did not propose requiring States
to identify the number of unique Medicaid-paid claims and the number of
unique Medicaid-enrolled beneficiaries who received a service within a
calendar year.\303\ Upon further review, we determined the request
regarding unique beneficiaries was inaccurately framed, as a
beneficiary would not duplicate. Nevertheless, we decided not to
require States to identify the number of Medicaid-paid claims (bold
added to highlight the difference between data element we considered
and the data element we are finalizing in this rule). Instead, we are
finalizing the comparative payment rate analysis to require States to
include the number of Medicaid-paid claims (which may duplicate codes)
and the number of Medicaid-enrolled beneficiaries who received a
service within a calendar year for each of the services for which the
base Medicaid FFS fee schedule payment rate is published pursuant to
paragraph (b)(3)(i)(B) of this section, as proposed. Although we do see
value in obtaining unique, or deduplicated, claims counts, we did not
propose this data element because we intend for the comparative payment
rate analysis to capture the total amount of actual services received
by beneficiaries and paid for by the State. To illustrate, and to
correct the example provided in the proposed rule, for a beneficiary
with 6 visits to their primary care provider in a calendar year where
the provider bills 6 claims with CPT code 99202 for the same
beneficiary, the State is required to report 6 claims for CPT code
99202. The beneficiary count would remain 1. If 6 separate
beneficiaries each received a service and the provider bills CPT code
99202 for all of them, the claims count would still be 6, but the
beneficiary count would also be 6. Given that our access work is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule for any additional changes we may propose through future
rulemaking.
---------------------------------------------------------------------------

\303\ 88 FR 27960 at 28016.
---------------------------------------------------------------------------

Comment: One commenter recommended CMS allow States to have a 6-
month period to account for lags in claims reporting by providers and
States paying providers' claims for codes required to be in the
comparative payment rate analysis.
Response: We believe the commenter was referring to the claims run
out period where a State may not have received all of their providers'
claims for the codes subject to the comparative payment rate analysis
by the time the analysis is due, which could result in an undercount of
both claims for services furnished and beneficiaries who received a
service during the year. In response to comments and based on the
timing of this final rule, we have revised the timeframes for the
comparative payment rate analysis. The regulatory language finalized in
this rule at paragraph (b)(4) now states the following, ``[t]he State
agency must publish the initial comparative payment rate analysis and
payment rate disclosure of its Medicaid payment rates in effect as of
July 1, 2025, as required under paragraphs (b)(2) and (3) of this
section, by no later than July 1, 2026. Thereafter, the State agency
must update the comparative payment rate analysis and payment rate
disclosure no less than every 2 years, by no later than July 1 of the
second year following the most recent update.'' Therefore, for the
initial comparative payment rate analysis, States will need to include
their claims and beneficiary data required in paragraph (b)(3)(i)(E)
for CY 2025 in the analysis to be published no later than July 1, 2026.
This timing provides a 6-month period for claims run out, as requested
by the commenter.
Comment: One commenter raised concerns regarding the requirement to
separately identify the base Medicaid FFS fee schedule payment rate by
provider type without the inclusion of an additional analysis to assess
whether the State's rate setting process complies with the Mental
Health Parity and Addiction Equity Act (MHPAEA or the Parity Act).
Response: CMS works closely with State Medicaid agencies to ensure
compliance with MHPAEA in Medicaid managed care arrangements, Medicaid
alternative benefit plans (managed care and FFS), and CHIP benefits
(managed care and FFS) whenever changes to coverage of mental health or
SUD benefits are proposed by States. Parity requirements do not apply
to MH or SUD benefits for enrollees who receive only Medicaid non-ABP
FFS State plan coverage; however, CMS encourages States to comply with
parity for all Medicaid beneficiaries.\304\ \305\ Congress has not
extended MHPAEA requirements to non-ABP Medicaid benefits provided
solely through FFS delivery systems. Nonetheless, we encourage our
State Medicaid agency

[[Page 40735]]

partners to ensure their non-ABP FFS benefits voluntarily comply with
MHPAEA. Moreover, CMS reviews State proposals regarding rate reductions
or restructuring to ensure compliance with overarching requirements
under section 1902(a)(30)(A) of the Social Security Act ``to assure
that payments are consistent with efficiency, economy, and quality of
care and are sufficient to enlist enough providers so that care and
services are available under the plan, at least to the extent that such
care and services are available to the general population in the
geographic area.'' This review thus helps promote the fundamental
objective of MHPAEA to ensure access to mental health and substance use
disorder treatment services.
---------------------------------------------------------------------------

\304\ https://www.medicaid.gov/medicaid/benefits/behavioral-health-services/parity/index.html.
\305\ https://www.medicaid.gov/sites/default/files/2023-09/cmcs-mental-health-parity-092023.pdf.
---------------------------------------------------------------------------

Comment: One commenter requested clarification about the Medicare
rate to be used in the comparative payment rate analysis.
Response: As finalized by this rule, Sec.
[thinsp]447.203(b)(3)(i)(C) requires States to compare their base
Medicaid FFS fee schedule payment rate to the Medicare non-facility
payment rates as established in the annual Medicare PFS final rule
effective for the same time period for the same set of E/M CPT/HCPCS
codes, and for the same geographical location as the base Medicaid FFS
fee schedule payment rate, that correspond to the base Medicaid FFS fee
schedule payment rate rates identified under paragraph (b)(3)(i)(B) of
this section, including separate identification of the payment rates by
provider type. That is, States are required to compare their base
Medicaid FFS fee schedule payment rates to the corresponding Medicare
non-facility payment rate as established in the annual Medicare PFS
final rule for a calendar year. As described in the proposed rule, we
expected States to source the Medicare non-facility payment rate as
established in the annual Medicare PFS final rule for a calendar year
from the published Medicare fee schedule amounts on the Medicare PFS
through one or both of the following sources: the Physician Fee
Schedule Look-Up Tool \306\[thinsp]on cms.gov or Excel file downloads
of the Medicare PFS Relative Value Files \307\ for the relevant
calendar year from cms.gov. We acknowledge that the Physician Fee
Schedule Look-Up Tool is a display tool that functions as a helpful aid
for physicians and NPPs as a way to quickly look up PFS payment rates,
but does not provide official payment rate information. While we
encouraged States to begin sourcing Medicare non facility payment rates
from the Physician Fee Schedule Look-Up Tool and utilize the Physician
Fee Schedule Guide for instructions on using the Look-Up Tool in the
proposed rule, we would like to clarify in this final rule that States
should first by downloading and reviewing the Medicare PFS Relative
Value with Conversion Factor File where States can find the necessary
information for calculating Medicare non facility payment rates. Prior
to the effective date of this final rule, we will issue subregulatory
guidance, which includes an instructional guide for identifying,
downloading, and using the relevant Excel files for calculating the
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year that States will need to
include in their comparative payment rate analysis. Therefore, for the
initial comparative payment rate analysis, after Medicare's publication
of the CY 2025 Physician Fee Schedule rate by November 2024, we
encourage States to begin sourcing Medicare non-facility payment rates
as established in the annual Medicare PFS final rule for CY 2025 by
downloading and reviewing the CY 2025 Medicare PFS Relative Value with
Conversion Factor File from cms.gov.\308\
---------------------------------------------------------------------------

\306\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PFSlookup.
\307\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/physicianfeesched/pfs-relative-value-files.
\308\ https://www.cms.gov/medicare/medicare-fee-for-service-payment/physicianfeesched/pfs-relative-value-files.
---------------------------------------------------------------------------

Comment: While we received overwhelming support from commenters for
proposing to use Medicare non-facility rates for comparison to Medicaid
rates in the comparative payment rate analysis, some commenters
expressed concerns or suggested alternative comparison points. Many
commenters stated that Medicare payment rates are low and have not kept
up with inflation; therefore, these commenters stated that Medicare is
not an appropriate comparison point for payment rates for many
services, including dental, anesthesiology, and physical therapy. Some
commenters stated that there is limited comparability between Medicaid
and Medicare due to the differences in coverage of services and
populations (for example, Medicare's limited coverage of pediatric
services, behavioral health services (including substance use disorder
and mental health care), and dental care) which results in
fundamentally different payment rate methodologies. A few commenters
expressed that Medicare is not a perfect comparator and should not be
used as the standard for adequacy of Medicaid payment rates, but agreed
it was a useful starting place because Medicare rates are publicly
available. One commenter stated that States aligning Medicaid payment
rates with Medicare rates for psychiatrist services as well as
decreasing administrative burden could help encourage more providers to
enroll in Medicaid.
Many commenters who opposed using Medicare non-facility rates for
the comparative payment rate analysis offered alternative suggestions
for States to compare their payment rates to. Several commenters
suggested private payer rates. One commenter suggested Medicaid rates
from geographically similar States that CMS identifies for States. A
few commenters suggested rates from Federal or State employee dental
plans. Two commenters suggested FAIR Health data \309\ (particularly
for dental services). One commenter suggested Medicare Advantage for
dental, vision, and hearing services. We also received a comment
suggesting CMS develop an alternative to Medicare as a point of
comparison in the comparative payment rate analysis, particularly for
inpatient administered therapies that are paid using DRGs.
---------------------------------------------------------------------------

\309\ We assume the commenter was referring to https://www.fairhealth.org/.
---------------------------------------------------------------------------

Response: We thank the commenters for their support of using the
Medicare non-facility rates for comparison to Medicaid rates in the
comparative payment rate analysis. We understand the commenters'
concerns about using Medicare as a benchmark for Medicaid rates to be
compared to in the comparative payment rate analysis; however, we do
not agree that Medicare payment rates are low and have not kept up with
inflation. As described in the proposed rule, Medicare PFS payment
rates are established for each service, generally described by a
particular procedure code (including HCPCS, CPT, and CDT),) using
resource-based inputs to establish RVUs in three components of a
procedure: work, practice expense, and malpractice. The three component
RVUs for each service are adjusted using CMS-calculated geographic
practice cost indexes (GPCIs) that reflect geographic cost differences
in each fee schedule area as compared to the national average.\310\ The
Medicare PFS is revised annually by CMS ensure that our payment systems
are updated to reflect changes in medical practice and the

[[Page 40736]]

relative value of services, as well as changes in the statute.\311\
---------------------------------------------------------------------------

\310\ 88 FR 27960 at 28012. Note this language has been revised
for accuracy in this final rule,
\311\ https://www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.
---------------------------------------------------------------------------

With regard to commenters who raised concerns about using Medicare
as a point of comparison, we disagree with the commenter that
differences in coverage and populations limits comparability between
Medicare and Medicaid in any way that would make Medicare an
inappropriate comparator. As described in the proposed rule, Medicare
non-facility payment rates as established in the annual Medicare PFS
final rule for a calendar year are utilized in this rule as a benchmark
to compare Medicaid fee schedule rates on a CPT/HCPCS code level
basis.\312\ Medicare PFS payment rates simply serve as a point of
comparison for CMS to consider in assessing if Medicaid payments are
consistent with section 1902(a)(30)(A) of the Act. Differences in the
methodology that Medicare uses and States use to determine their FFS
fee schedule payment rates does not compromise the value of Medicare as
a reliable benchmark for assessing payment rate sufficiency for
enlisting providers to furnish services to an individual, as required
by section 1902(a)(30)(A) of the Act. As described in the proposed
rule, Medicare and Medicaid programs cover and pay for services
provided to beneficiaries residing in every State and territory of the
United States, Medicare payment rates are publicly available, and broad
provider acceptance of Medicare makes Medicare non-facility payment
rates as established on the Medicare PFS for a calendar year an
available and reliable comparison point for States to use in the
comparative payment rate analysis.\313\ Also as described in the
proposed rule, base Medicaid FFS fee schedule payment rate are
typically determined through one of three methods: the resource-based
relative value scale (RBRVS), a percentage of Medicare's fee, or a
State-developed fee schedule using local factors.\314\ The RBRVS
system, initially developed for the Medicare program, assigns a
relative value to every physician procedure based on the complexity of
the procedure, practice expense, and malpractice expense. States may
also adopt the Medicare fee schedule rate, which is based on RBRVS, but
select a fixed percentage of the Medicare amount to pay for Medicaid
services. States can develop their own fee schedules, typically
determined based on market value or an internal process, and often do
this in situations where there is no Medicare or private payer
equivalent or when an alternate payment methodology is necessary for
programmatic reasons. Again, one of the criteria for including codes on
the CMS-published list of E/M CPT/HCPCS codes subject to the
comparative payment rate analysis is that there must be a payment rate
on the Medicare PFS so States have a Medicare payment rate to compare
their Medicaid base payment to.
---------------------------------------------------------------------------

\312\ 88 FR 27960 at 28012.
\313\ 88 FR 27960 at 28011.
\314\ 88 FR 27960 at 28010.
---------------------------------------------------------------------------

We also disagree with commenters that there is limited
comparability between Medicaid and Medicare due to the differences in
coverage of services and populations. We acknowledge that Medicare and
Medicaid vary in terms of covered services and populations served;
however, the Medicare PFS includes payment rates for covered, non-
covered, and limited coverage services and applies the same resource-
based formula to ensure all PFS rates are determined on a national
level as well as adjusted to reflect the variation in practice costs
from one geographical location to another. As described in the proposed
rule, Medicare PFS non-facility rates serves as a reliable benchmark
for assessing the level of payment sufficiency to enlist providers to
furnish the relevant services to an individual for the following
reasons.\315\ As we have narrowed the scope of the comparative payment
rate analysis to E/M CPT/HCPCS codes, Medicare PFS non-facility payment
rates are comparable to Medicaid FFS fee schedule payment rates because
both fee schedule rates are generally for services provided in a
physician's office and specify the rate paid to a provider for
delivering an individual service (that is, a single FFS payment for a
single service, rather than an encounter rate paying for any number for
services). The accessibility and consistent format of the published
Medicare non-facility payment rates as established in the annual
Medicare PFS final rule for a calendar year makes these rates an
available and reliable comparison point for States to use in the
comparative payment rate analysis for the foreseeable future as the
Medicare PFS is free to the public, updated on an annual basis, and
posted online on an easily located website, relative to private payer
rates that States would need to request access to and perhaps pay for
the information. Medicare also has a low rate of physicians formally
opting out of the program, suggesting that Medicare's payment rates
generally are consistent with a high level of physician willingness to
furnish services to Medicare patients, with the vast majority of
physicians willing to accept Medicare's payment rates. Additionally,
Medicare is another of the nation's large public health coverage
programs which serves as an important data point in determining whether
payment rates are likely to be sufficient to ensure access for Medicaid
beneficiaries at least as great as for the general population in the
geographic area, and whether any identified access concerns may be
related to payment sufficiency.
---------------------------------------------------------------------------

\315\ 88 FR 27960 at 28011.
---------------------------------------------------------------------------

We appreciate commenters' alternative suggestions to using Medicare
as a benchmark in the comparative payment rate analysis; however, we
are not incorporating these suggestions due to the following reasons.
As discussed in the proposed rule, we learned from our implementation
experience with the previous AMRP process that very few States were
able to include even limited private payer data in their AMRPs due to
the payment data being proprietary or unsound due to a lack of
transparency about the construction of the payment data or because
States did not have large private plans in their State so there were no
private payer rates to compare to. This resulted in States being unable
fully to comply with the previous AMRP regulations, to the extent they
required an analysis that included private payer rate information.\316\
Without this final rule, requiring States to compare their Medicaid
rates to geographically similar States would not be possible because
not all States currently post their Medicaid FFS fee schedule payment
rates in a transparent and consistent format that would permit data
analysis among States. While some States were able to compare their
payment rates to other States' rates in their previous AMRPs, this was
inconsistent across AMRPs and risked a subjective comparison where
States selected which rates and States they compared themselves to.
Requiring a comparison to Medicare ensures all States are using the
same consistent data point to compare their rates to. Regarding the
suggestion that CMS could identify the geographically similar States
for States to compare their payment rates to, this would require a
different approach than what we proposed due to the variation across
State Medicaid programs and would require careful consideration and
policy development to ensure that any proposal would be consistent with
the statutory requirement in section

[[Page 40737]]

1902(a)(30)(A) of the Act that looks to the ``geographic area'' in
determining whether payment rates are sufficient. Similarly, we would
also not require States compare their rates to rates from Federal or
State employee dental plans because this information might not be
generally available to State Medicaid agencies.
---------------------------------------------------------------------------

\316\ 88 FR 27960 at 28018.
---------------------------------------------------------------------------

At this time and for the purposes of the comparative payment rate
analysis, we are not advocating or requiring States source payment rate
information from any particular data source other than the State's own
Medicaid agency (who is responsible for setting and paying the payment
rates required in the analysis and, therefore has direct access to base
Medicaid FFS fee schedule payment rates required in the analysis) and
publicly available Medicare fee schedule rates (which we have
previously described as an available and reliable comparison point for
States to use in the comparative payment rate analysis). Therefore, we
are not requiring States compare their rates to FAIR Health data
because this data source is outside of the State agency and Medicare's
publicly available fee schedule rates. We would also not require States
compare their rates to Medicare Advantage for dental, vision, and
hearing services because these are not categories of services subject
to the comparative payment rate analysis. As previously stated, only
codes listed on the CMS-published list of E/M CPT/HCPCS codes are
subject to the comparative payment rate analysis. The list does not
include dental, anesthesiology, physical therapy, vision, and hearing
services and these services, among others not on the CMS-published list
of E/M CPT/HCPCS codes, are not subject to the comparative payment rate
analysis requirement. Given that our work to better ensure access in
the Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will consider the
recommendations provided on the proposed rule to help inform any future
rulemaking in this area, as appropriate.
For the previously stated reasons, we believe the Medicare payment
rates for the categories of services subject to the comparative payment
rate analysis are likely to serve as a reliable benchmark for a level
of payment sufficient to enlist providers to furnish the relevant
services to an individual. Therefore, we are finalizing this rule with
the requirement that States use the Medicare non-facility payment rates
as established in the annual Medicare PFS final rule for a calendar
year as the comparison point for States to compare their Medicaid
payment rates to in the comparative payment rate analysis.
We would also like to clarify that the provisions in this final
rule do not require States to change their payment rates, including
requiring States to align their Medicaid payment rates with Medicare
rates for psychiatrist services. Although we intend for States to
consider the information produced for the payment rate transparency
publication, comparative payment rate analysis, and payment rate
disclosure in an ongoing process of evaluating the State's payment rate
sufficiency and when considering changing payment rates or
methodologies (and we intend to make similar use of the information in
performing our oversight activities and in making payment SPA approval
decisions, for example), we did not propose and are not finalizing that
any payment rate changes necessarily would be triggered by the proposed
requirements.
Comment: Some commenters were concerned about how States would be
expected to conduct the comparative payment rate analysis for services
that Medicaid pays for, but Medicare does not. A few commenters
suggested CMS develop a methodology for calculating a proxy rate for
Medicaid services with no equivalent Medicare rate or Medicaid services
that are provided very infrequently in Medicare, so Medicare rates are
not a reliable comparison. Two commenters suggested working with MedPAC
or MACPAC to set appropriate comparison points for services that are
not covered by Medicare, for example contraceptive and pregnancy-
related services.
Response: To clarify, only codes listed on the CMS-published list
of E/M CPT/HCPCS codes are subject to the comparative payment rate
analysis. All codes on this list have an existing Medicare payment
rate, therefore, the development of a proxy rate is unnecessary. Codes
outside of this list, including services that Medicaid pays for, but
Medicare does not, are not subject to the comparative payment rate
analysis requirement. Given that our work to better ensure access in
the Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will consider the
recommendations provided on the proposed rule to help inform any future
rulemaking in this area, as appropriate.
We disagree with the commenter that Medicare rates are not a
reliable comparison when services are provided infrequently to Medicare
beneficiaries. As previously described, Medicare PFS payment rates are
computed using a resource-based formula made up of three components of
a procedure's RVU: physician work, practice expense, and malpractice as
well as geographical differences in each locality area of the
country.\317\ The Medicare PFS is revised annually by CMS to ensure
that our payment systems are updated to reflect changes in medical
practice and the relative value of services, as well as changes in the
statute.\318\ Despite a service being covered and paid for infrequently
by Medicare, the payment rates on the Medicare PFS are consistently
updated with relevant data on a frequent, annual basis.
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\317\ 88 FR 27960 at 28012.
\318\ https://www.federalregister.gov/documents/2023/11/16/2023-24184/medicare-and-medicaid-programs-cy-2024-payment-policies-under-the-physician-fee-schedule-and-other.
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Comment: A few commenters suggested alternative update frequencies
for the comparative payment rate analysis. Commenter suggestions
included updates annually, every 3 years, and every 4 years.
Commenters' justification ranged from more frequent than 2 years due to
the need for timely publication of Medicaid data to less frequent to
align with the State's existing rate study schedule or because they did
not believe rates would change significantly during a 2-year period.
Additionally, one commenter suggested CMS require States to document
when rates have not changed between comparative payment rate analysis
biennial publications.
Response: We are finalizing the payment rate transparency
requirements, including the comparative payment rate analysis, with an
applicability date of July 1, 2026; however, we are not changing the
proposed timeframe of 2 years for States to update their publications.
We believe requiring updates to the comparative payment rate analysis
every 2 years balances State burden with maintaining up-to-date
information. Given that our work to better ensure access in the
Medicaid program is ongoing, we intend to gain implementation
experience with this final rule, and we will consider the
recommendations provided on the proposed rule to help inform any future
rulemaking in this area, as appropriate.
Comment: One commenter expressed concerns about cross walking a
State's geographical areas to Medicare in the comparative payment rate
analysis. The commenter stated that States may define a geographical
region differently than Medicare and result in a complex and confusing
analysis that would be contrary to CMS' transparency goals.
Response: As discussed in the proposed rule, we recognize that
States

[[Page 40738]]

that make Medicaid payment based on geographical location may not use
the same locality areas as Medicare.\319\ We expect the State to
determine an appropriate method to accomplish the comparative payment
rate analysis that aligns the geographic area covered by each payer's
rate as closely as reasonably feasible. For example, if the State
identifies two geographic areas for Medicaid payment purposes that are
contained almost entirely within one Medicare geographic area, then the
State reasonably could determine to use the same Medicare non-facility
payment rate as established in the annual Medicare PFS final rule in a
calendar year in the comparative payment rate analysis for each
Medicaid geographic area. As another example, if the State defined a
single geographic area for Medicaid payment purposes that contained two
Medicare geographic areas, then the State might determine a reasonable
method to weight the two Medicare payment rates applicable within the
Medicaid geographic area, and then compare the Medicaid payment rate
for the Medicaid-defined geographic area to this weighted average of
Medicare payment rates. States could also calculate the unweighted
arithmetic mean of the two Medicare payment rates applicable within the
Medicaid-defined geographic area. While States have flexibility in
mapping their geographical areas to Medicare's for the comparative
payment rate analysis, we invite States to reach out to CMS for
technical assistance.
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\319\ 88 FR 27960 at 28013
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Comment: A few commenters stated that other factors besides rates
impact access to care. Commenters suggested CMS consider regional cost
differences, provider shortages (including number of providers and
their location), and the unique needs of specific populations (such as
dually eligible beneficiaries, or beneficiaries in rural areas of a
State) as factors that impact access to care.
Response: We agree with commenters that other factors besides rates
impact access to care.\320\ After considering feedback received from
States and other interested parties about the previous AMRP process
issued through the 2015 final rule with comment period, as well as our
obligation to ensure continued compliance with section 1902(a)(30)(A)
of the Act, we are finalizing a streamlined and standardized process to
assess access to care that focuses on payment rate transparency. Given
that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
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\320\ 88 FR 27960 at 28016-28017.
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Comment: A couple of commenters expressed concerns regarding the
privacy of beneficiary information when it comes to the requirement
that the comparative payment rate analysis and payment rate disclosure
must specify the number of Medicaid-paid claims and the number of
Medicaid enrolled beneficiaries who received a service. Commenters
suggested CMS provide an exception when the volume of claims or
beneficiaries is small.
Response: We take privacy and our obligations to protect
beneficiary information very seriously. We remind States of their
obligations to comply with applicable Federal and State privacy laws
with respect to such information, such as the HIPAA Privacy Rule and
Federal Medicaid requirements in section 1902(a)(7) of the Social
Security Act and 42 CFR part 431, subpart F. We are not requiring
States to publish any beneficiary-identifiable information in the
comparative payment rate analysis or payment rate disclosure. We expect
States will ensure that any claims and Medicaid beneficiary data made
publicly available under these requirements have been de-identified in
accordance with the HIPAA Privacy Rule at 45 CFR 164.514(b).
We strongly encourage States to have policies to ensure that all
information, particularly claims and beneficiary data, published in
their comparative payment rate analysis and payment rate disclosure is
de-identified prior to publishing on July 1, 2026. Such policies should
address circumstances in which the number of Medicaid-paid claims and/
or Medicaid enrolled beneficiaries is small. For example, States may
consider implementing a small cell size suppression policy for
publishing data on the State's website, similar to CMS' cell size
suppression policy that no cell (for example, admissions, discharges,
patients, services, etc.) containing a value of 1 to 10 can be reported
directly.\321\ We invite States to reach out to CMS regarding any data
privacy concerns that may impact a States' compliance with the
comparative payment rate analysis or payment rate disclosure
requirements.
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\321\ https://resdac.org/articles/cms-cell-size-suppression-policy.
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Additionally, to address privacy concerns at the individual level,
we would like to share the following resources for filing civil rights
and HIPAA complaints with the Office for Civil Rights:
Filing a civil rights complaint; \322\ and
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\322\ https://www.hhs.gov/civil-rights/filing-a-complaint/index.html.
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Filing a health information privacy or security
complaint.\323\
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\323\ https://www.hhs.gov/hipaa/filing-a-complaint/complaint-process/index.html.
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Comment: A commenter raised concerns that the comparative payment
rate analysis would incentivize States to raise payment rates for the
categories of services subject to the analysis, but might also lead or
contribute to rate cuts for other services, since the proposed rule
would not provide that States may not cut some rates to make funds
available to raise other rates.
Response: We understand the commenter's concerns about the effects
of the comparative payment rate analysis in practice. We emphasize that
the comparative payment rate analysis will afford more transparency to
CMS and the public about rates for primary care, obstetrical and
gynecological, and outpatient mental health and substance use disorder
services, and will also provide States with an opportunity to identify
where existing rates could create an access issue for the services
subject to the comparative payment rate analysis requirement. If a
State chooses to raise payment rates for the categories of services
subject to the analysis, and in order to do so seeks to reduce rates
for other services, then the State would be required to follow the
State Analysis Procedures for Rate Reduction or Restructuring in Sec.
447.203(c) to ensure the proposed rate reductions do not reduce access
to care to the services for which payment rates would be reduced below
the statutory standard. A public input process to raise access concerns
with States is described in Sec. 447.203(c)(4) of this final rule. We
are confident our policies finalized in this rule will work in
conjunction with each other to ensure ongoing and improved access to
care.
Comment: A couple of commenters requested clarification regarding
the circumstance whereby a comparative payment rate analysis reveals
that a State's Medicaid payment rates are significantly below Medicare
rates. One commenter suggested requiring States to submit a corrective
action plan in those instances.
Response: Transparency, particularly the requirement that States
must publicly publish their payment rates and compare their payment
rates to Medicare, helps to ensure that interested parties have basic

[[Page 40739]]

information available to them to understand Medicaid payment levels and
the associated effects of payment rates on access to care so that they
may raise concerns to State Medicaid agencies via the various forms of
public process available to interested parties. We intend to utilize
the information published by States in their payment rate transparency
publication and comparative payment rate analysis whenever the
provisions of Sec. 447.203(c) are invoked, when a State submits a SPA
that proposes to reduce provider payment rates or restructure provider
payments in circumstances when the changes could result in diminished
access. We did not propose and are not requiring States to submit a
corrective action plan when Medicaid payment rates included in the
comparative payment rate analysis are lower than Medicare payment
rates. While the results of a comparative payment rate analysis would
not themselves require a corrective action plan, Sec. 447.203(c)(5)
does require a State to submit a corrective action plan to remedy an
access deficiency within 90 days from when it is identified to the
State.
Comment: One commenter requested that CMS make UPL demonstration
data and methodologies publicly available for purposes of data
analysis, particularly for inpatient behavioral health services as CMS
did not propose to include these services in the comparative payment
rate analysis.
Response: While the comparative payment rate analysis is limited in
scope to base Medicaid FFS fee schedule payment rates, the payment rate
transparency publication does include PPS rates that are considered fee
schedules payment rates within the meaning of this final rule,
including for inpatient hospital, outpatient hospital, and nursing
facility services. The PPS rates, which are generally the base payment
for these services, and reported through UPLs, will be publicly
available through the payment rate transparency publication. We
acknowledge that supplemental payments as well as UPL data and
methodologies typically are not publicly available currently.
Nevertheless, UPL demonstrations provide us with an opportunity for
payment oversight and we consider UPL demonstrations in assessing State
compliance with the access requirement in section 1902(a)(30)(A) of the
Act.\324\ As previously discussed in an earlier response to comments,
we stated that UPL demonstrations provide CMS with important
information for assessing if payment rates comply with economy and
efficiency provisions at section 1902(a)(30)(A) of the Act,
specifically how total Medicaid payments compare to what Medicare would
have paid for similar services where Medicare acts as a payment limit,
or ceiling, for economic and efficient. Requiring supplemental payments
as well as UPL data and methodologies be publicly available would
contribute to our transparency efforts; however, the current reporting
format of UPL data would not align with Sec. 447.203(b)(1)(iii) which
requires Medicaid FFS fee schedule payment rates be published and
organized in such a way that a member of the public can readily
determine the amount that Medicaid would pay for a given service.
Therefore, we would need to develop a different methodology, policies,
and oversight than what is being finalized in this rule to ensure UPL
data is transparent. With this final rule, our focus is on improving
our oversight of Medicaid payment rates to identify where rates may be
negatively impacting access to care while minimizing burden imposed on
States, which requires us to prioritize areas of focus. We want our
initial focus to be on establishing the new payment rate transparency,
comparative payment rate analysis, and payment rate disclosure
requirements, providing States with support during the compliance
period, and ensuring the data required under this final rule are
available to beneficiaries, providers, CMS, and other interested
parties for the purpose of assessing access to care issues.
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\324\ 88 FR 27960 at 28006.
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Payment Rate Disclosure Comments and Responses
Comment: We received general support for our proposal to require
States to develop and publish a payment rate disclosure for certain
HCBS. Commenters specifically expressed support for the proposed
categories of services and calculation of the average hourly payment
rate.
However, a couple of comments expressed opposition of the payment
rate disclosure provision. Commenters in opposition stated the proposed
payment rate disclosure requirements would be administratively
burdensome for States and that it was unclear how calculating an
average hourly payment rate along with publishing data about claims and
beneficiaries would be valuable and informative for payment policy
purposes.
Response: We appreciate the commenters' support of the payment rate
disclosure provision at Sec. [thinsp]447.203(b)(3)(ii). We are
finalizing the payment rate disclosure provisions with an additional
category of service, habilitation, a few minor revisions for
clarification purposes and consistent terminology usage within Sec.
447.203(b), and an update to the compliance timeframe, the latter of
which was discussed earlier in this section. The addition of
habilitation services to the payment rate disclosure is further
discussed in a later response to comments in this section. In this
final rule, we are revising the regulatory language to clarify which
services and payment rates are subject to this requirement. We proposed
in Sec. [thinsp]447.203(b)(3)(ii) that the State would be required to
publish the ``average hourly payment rate, separately identified for
payments made to individual providers and to providers employed by an
agency, if the rates vary'' for each category of service specified in
paragraph (b)(2)(iv). We are finalizing in Sec.
[thinsp]447.203(b)(3)(ii) that States are required to publish the
``average hourly Medicaid fee-for-service fee schedule payment rates,
separately identified for payments made to individual providers and
provider agencies, if the rates vary.'' (new language identified in
bold). We proposed in Sec. [thinsp]447.203(b)(3)(ii)(B) that the State
would be required to ``identify the average hourly payment rates by
applicable category of service, including, if the rates vary, separate
identification of the average hourly payment rates for payments made to
individual providers and to providers employed by an agency, by
population (pediatric and adult), provider type, and geographical
location, as applicable.'' We are finalizing in Sec.
[thinsp]447.203(b)(3)(ii)(B) that the States are required to ``identify
the average hourly Medicaid fee-for-service fee schedule payment rates
by applicable category of service, including, if the rates vary,
separate identification of the average hourly Medicaid fee-for-service
fee schedule payment rates for payments made to individual providers
and provider agencies, by population (pediatric and adult), provider
type, geographical location, and whether the payment rate includes
facility-related costs, as applicable.'' (new language identified in
bold). For clarification and consistent terminology usage of ``Medicaid
fee-for-service fee schedule payment rates,'' similar revisions were
made in Sec. 447.203(b)(2)(iv) and (b)(3)(ii)(B) and (C) and described
in detail at the end of responses to comments in this section. We
utilized the term ``average hourly Medicaid fee-for-service fee
schedule payment rates'' in the payment rate disclosure for

[[Page 40740]]

consistency throughout Sec. [thinsp]447.203(b) where the term Medicaid
FFS fee schedule payment rates is used to describe what payment rates
are subject to the payment rate transparency publication in Sec.
[thinsp]447.203(b)(1)(i). Additionally, we are incorporating the term
``provider agencies'' for clarification purposes to more accurately
reflect what payment rate we are requiring be published. Lastly, we
added the requirement that payments that include facility-related costs
must be separately identified to ensure transparency of payment rates
that may differ due to the inclusion of facility-related costs.
Additional information about these regulatory language changes is
discussed in later responses to comments in this section.
We disagree with the commenters regarding administrative burden of
the payment rate disclosure. As documented in section III. of this
final rule, the FFS provisions, including the payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure requirements (Sec. [thinsp]447.203(b)(1) through (5)),
interested parties' advisory group requirements (Sec.
[thinsp]447.203(b)(6)), and State analysis procedures for payment rate
reductions or payment restructuring (Sec. [thinsp]447.203(c)), are
expected to result in a net burden reduction on States compared to the
previous AMRP requirements. Additionally, as addressed in another
comment response generally discussing commenters' concerns about State
burden, we have described numerous flexibilities States will have for
compliance with this final rule. Specifically for the payment rate
disclosure, and as discussed in a later response to comments, States
have flexibility to (1) utilize contractors or other third party
websites to publish the payment rate disclosure on (however, we remind
States that they are still requiring to publish the hyperlink to the
website where the publication is located on the State Medicaid agency's
website as required in Sec. 447.203(b)(1)(ii) of this final rule), (2)
format and organize the payment rate disclosure how they chose (that
is, we are not requiring certain codes be included as required in the
comparative payment rate analysis) (however, we remind States that the
disclosure is still subject to the publication requirements described
in proposed paragraphs (b)(1) and (b)(1)(ii) for payment rate
transparency data), and (3) calculate the average hourly Medicaid FFS
fee schedule payment rate as a simple average or arithmetic mean where
all payment rates would be adjusted to an hourly figure, summed, then
divided by the number of all hourly payment rates, rather than a
weighted average which would impose more burden on States to calculate.
Additionally, we are providing an illustrative example of a compliant
payment rate disclosure (including to meet accessibility standards)
through subregulatory guidance that we will issue prior to the
effective date of this final rule.
We are not identifying codes for the categories of services subject
to the payment rate disclosure. We are providing States with
flexibility in determining which codes to include in the calculated
average hourly Medicaid FFS fee schedule payment rate for the payment
rate disclosure because States may use a wide variety of codes to bill
and pay for personal care, home health aide, homemaker, and
habilitation services, such as HCPCS codes T1019-T1022 and/or CPT codes
99500- 99602. For example, HCPCS codes T1019-T1022 for home health
services includes T1019 (personal care services that are part of the
individualized plan of treatment, per 15 minutes), T1020 (personal care
services that are part of the individualized plan of treatment, per
diem), T1021 (home health aide or certified nurse assistant, per
visit), and T1022 (contracted home health agency services, all services
provided under contract, per day). One State may use T1019 or T1020
depending on the unit (daily or per diem), a second State may only use
T1021, and a third State may use none of these codes. We expect States
to review their Medicaid FFS fee schedule payment rates for the payment
rate and unit the State uses to pay for each of category of service and
calculate the Medicaid average hourly Medicaid FFS fee schedule payment
rate for personal care, home health aide, homemaker, and habilitation
services, separately by service and provider employment structure as
well as for payments that include facility-related costs, as provided
in this final rule and discussed in later responses to comments in this
section.
Additionally, the list of possible codes States may pay for
personal care, home health aide, homemaker, and habilitation services
is already limited by the available CPT/HCPCS codes, so we did not see
a need to narrow the codes with a CMS-published list of E/M CPT/HCPCS
like the comparative payment rate analysis. As previously discussed, we
recognize that States may amend existing CPT/HCPCS codes with
additional numbers or letters for processing in their own claims
system. If a State does not use CPT or HCPCS codes as published by AMA
and CMS, then we expect the State to review the published lists of CPT
or HCPCS codes and identify which of their codes are most comparable
for purposes of the payment rate disclosure. We anticipate States may
need to review code descriptions of CPT and HCPCS codes for personal
care, home health aide, homemaker, and habilitation services as part of
the process of identifying which CPT and HCPCS codes are comparable to
the codes that States utilizes. We want to ensure the full scope of
personal care, home health aide, homemaker, and habilitation services,
and providers of these services, are included in the payment rate
disclosure for transparency purposes, rather than narrowing the scope
to certain codes and/or provider types, which would result in a limited
disclosure of provider payment rates.
Regarding commenters that were unclear how calculating an average
hourly payment rate along with publishing data about claims and
beneficiaries would be valuable and informative for payment policy
purposes, we are requiring States to separately identify the average
hourly Medicaid FFS fee schedule payment rates for personal care, home
health aide, homemaker, and habilitation services by population
(pediatric and adult), provider type, geographical location, and
whether the payment rate includes facility-related costs, as
applicable, and by provider employment structures (individual providers
and provider agencies). Calculating an average hourly Medicaid FFS fee
schedule payment rate for categories of services subject to the payment
rate disclosure will ensure a standardized unit and permit States, CMS,
and other interested parties to compare payment rates among State
Medicaid programs. As discussed in the proposed rule, HCBS and direct
care workers that deliver these services are unique to Medicaid and
often not covered by other payers, which is why we are proposing a
different disclosure of payment rates for providers of these services
that does not involve a comparison to Medicare. Additionally, private
payer data and self-pay data are often considered proprietary and not
available to States, thereby eliminating private payers as feasible
point of comparison. Because HCBS coverage is unique to Medicaid,
Medicaid beneficiaries are generally the only individuals in a given
geographic area with access to HCBS that is covered by a third-party
payer.\325\
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\325\ 88 FR 27960 at 28019

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[[Page 40741]]

Comment: Some commenters requested CMS clarify and add to the
proposed categories of services included in the payment rate disclosure
requirements. A few commenters requested clarification regarding
whether services covered under waiver authority or State plan authority
are subject to the disclosure requirements. A couple of commenters
suggested adding regulatory language to explicitly include services
provided through State plan and waiver authority in the payment rate
disclosure. Another couple of commenters requested clarification
specifically about self-directed services when an individual has budget
authority and residential services. A few commenters encouraged CMS to
require States to report payment rate variations by populations served
(that is, populations receiving services under a waiver versus State
plan authority) due to States varying rates for the same service
furnished to different targeted populations under different coverage
authorities.
A few commenters recommended additional categories of services to
the proposed categories of services subject to the payment rate
disclosure. While some commenters recommended expanding the categories
of services generally, a number of commenters specifically recommended
expanding the categories of service to include habilitation services
(including residential habilitation services, day habilitation
services, and home-based habilitation services).
Response: Personal care, home health aide, homemaker, and
habilitation services provided under FFS State plan authority,
including sections 1915(i), 1915(j), 1915(k) State plan services;
section 1915(c) waiver authority; and under section 1115 demonstration
authority are subject to the payment rate disclosure described in Sec.
[thinsp]447.203(b)(3)(ii). We are clarifying that, consistent with the
applicability of other HCBS regulatory requirements to such
demonstration projects, the requirements for section 1915(c) waiver
programs and section 1915(i), (j), and (k) State plan services included
in this final rule, apply to such services included in approved section
1115 demonstration projects, unless we explicitly waive or identify as
not applicable one or more of the requirements as part of the approval
of the demonstration project. Please see section II.B for additional
information on the inclusion of section 1115 demonstrations under the
provisions of this final rule. While we appreciate the commenters'
suggestion to add regulatory language to explicitly include services
provided through State plan and waiver authority in the payment rate
disclosure, we are not incorporating this suggestion as we previously
provided clarification on which authorities are subject to the
disclosure.
As previously discussed, self-directed services delivery models
under which an individual beneficiary has budget authority do not
constitute a fee schedule payment methodology for purposes of the
payment rate transparency publication requirement, as well as the
payment rate disclosure. Generally, under such self-directed services
delivery models, the individual beneficiary determines a reasonable
payment rate for the service in the State-authorized budget for that
beneficiary. As such, these types of payment rates are excluded from
the disclosure requirement. Regarding commenters' request for
clarification about residential services being subject to the
disclosure, as discussed in a later response to comments, personal
care, home health aide, homemaker, and habilitation services, are
inherently delivered in a home or community setting, outside of an
institutional or residential facility. However, we acknowledge that the
addition of habilitation services to the disclosure would now include
residential habilitation services and we further address this in the
later portion of this comment response.
We appreciate commenters' suggestion to require States report
payment rate variations by populations served (that is, populations
receiving services under a waiver versus State plan authority).
However, that level of detailed reporting is beyond the scope of what
we are seeking to implement in this current rulemaking, and would
represent additional burden to States. We are requiring States to
separately identify the average hourly Medicaid FFS fee schedule
payment rates for personal care, home health aide, homemaker, and
habilitation services by various factors that we believe will provide
beneficial insights into these rates.
As stated in the proposed rule, we intend to standardize data and
monitoring across service delivery systems with the goal of improving
access to care, to the extent possible, and particularly for the
payment rate disclosure requirements in Sec. [thinsp]447.203(b)(2)(iv)
and (3)(ii), we intend to remain consistent with the HCBS provisions we
are finalizing at Sec. [thinsp]441.311(d)(2) and (e).\326\ Given the
addition of habilitation services to these HCBS provisions in this
final rule as well as the Managed Care final rule (as published
elsewhere in this Federal Register) provisions at Sec.
[thinsp]438.207(b)(3)(ii) and after consideration of comments, we are
adding habilitation services, including residential habilitation, day
habilitation, and home-based habilitation services, to the payment rate
disclosure requirements in Sec. [thinsp]447.203(b)(2)(iv) and (3)(ii).
Specifically, the regulatory language finalized in this rule at Sec.
[thinsp]447.203(b)(2)(iv) requires States to publish the average hourly
Medicaid FFS payment rate for personal care, home health aide,
homemaker, and habilitation services, as specified in Sec.
440.180(b)(2) through (4) and (6) in the payment rate disclosure. We
note that Sec. 447.203(b)(2)(iv) refers to ``habilitation'' services,
without distinguishing between residential habilitation services, day
habilitation services, and home-based habilitation services. As
previously discussed in section II.B., these categories will be further
described in subregulatory guidance. As discussed in a later response
to comments in this section, we also adding a requirement in the
payment rate disclosure that States must separately identify the
Medicaid FFS fee schedule payment rates for services that include
facility-related costs. We believe this distinction will generally only
arise for habilitation service rates, but we are applying it across all
four service categories to remain consistent with the amended
provisions at Sec. [thinsp]441.311(e)(2), and for consistency in
reporting across all four services within the payment rate disclosure.
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\326\ 88 FR 27960 at 28005.
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As discussed in the proposed rule, we initially proposed to include
in the payment rate disclosure requirement only personal care, home
health aide, and homemaker services because they are most commonly
conducted in beneficiaries' homes and general community settings and,
therefore, constituted the majority of FFS payments for direct care
workers delivering services under FFS.\327\ However, and as previously
stated, we agree with commenters' recommendation that the payment rate
disclosure should include payment rates for habilitation services. As
such, and to remain consistent with the HCBS provisions at Sec.
[thinsp]441.311(d)(2) and (e) finalized in this rule, we are adding
habilitation services as a category of service subject to the payment
rate disclosure.
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\327\ 88 FR 27960 at 28005.
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We acknowledge that habilitation services are also generally high-
volume,

[[Page 40742]]

high-cost services particularly in States where individuals with
intellectual or developmental disabilities receive personal care
services through habilitation. In other words, we acknowledge that some
States design the delivery of and payment rates for habilitation
services to include personal care services in these instances. If we
were to exclude habilitation services from the payment rate disclosure
provisions, then we would effectively exclude an important component of
personal care services provided to individuals with intellectual or
developmental disabilities from the payment rate disclosure, which
would not align with our intent to ensure transparency of payment rates
of personal care services within this provision. In instances where
States combine the delivery and payment of habilitation services with
personal care services, requiring reporting on both services supports
our goal of enhancing the transparency of payment rates that support
the delivery of personal care services while accommodating the
potential variation in classification a State utilizes. We want to note
a State has the option to indicate when a habilitation service rate
includes personal care services or otherwise provide further data
nuances while meeting the requirements of this final rule. In addition,
this change provides clarity to States that might have reported on
habilitation services under the personal care category of services in
the payment rate disclosure were it not for this revision to the
disclosure. Given the variation in how States deliver and pay for
habilitation services, separately identifying habilitation as a
category of service supports our payment rate transparency goals to
ensure that interested parties have basic information available to them
to understand Medicaid payment levels and the associated effects of
payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public process
available to interested parties.
As previously discussed in detail in an earlier response to
comments in section II. of this final rule, including habilitation
services in HCBS reporting requirements at Sec. [thinsp]441.311(d)(2)
and (e), as well as the payment rate disclosure at Sec.
[thinsp]447.203(b)(2) and (3)(ii), will ensure that services of
particular importance to certain beneficiary populations, namely
individuals with intellectual or developmental disabilities, are not
excluded from our efforts to promote payment rate transparency in the
interest of ensuring adequate access to care. As previously stated, in
accordance with commenters' recommendation, and to remain consistent
with the proposed HCBS provisions at Sec. [thinsp]441.311(d)(2) and
(e) as stated in the proposed rule,\328\ we are adding habilitation
services to the payment rate disclosure to ensure transparency of rates
that disproportionately affect access to services required by a unique
population, individuals with intellectual or developmental
disabilities.
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\328\ 88 FR 27960 at 28005.
---------------------------------------------------------------------------

Comment: A few commenters expressed concern over certain terms used
in the proposed rule. Two commenters noted the terms ``rates,''
``payments,'' ``wage,'' and ``compensation'' were used throughout the
rule and were concerned about potential confusion about complying with
the payment rate disclosure with the terms not clearly defined. One
commenter was concerned the payment rate disclosure required States to
request detailed financial records and information from provider
organizations/agencies, which are often private businesses. Another
couple of commenters requested a Federal-level definition or
description of ``provider type'' and ``geographical location'' in the
context of the payment rate disclosure.
Response: The payment rate disclosure requires States to separately
identify the average hourly Medicaid FFS fee schedule payment rates for
personal care, home health aide, homemaker, and habilitation services
by population (pediatric and adult), provider type, geographical
location, and whether the payment rate includes facility-related costs,
as applicable, and by provider employment structures (individual
providers and provider agencies). We are not requiring in the payment
rate disclosure provisions at Sec. 447.203(b)(3)(ii) that States
collect wage, compensation (including benefits), or financial records
and information from provider agencies or to publish information about
the compensation the provider agency pays to its employee, where
applicable. In section II.C. of this final rule, wage is only mentioned
while summarizing comments received on the February 2022 RFI.\329\
Likewise, compensation is only mentioned in section II.C. of this final
rule while describing the difference between individual providers and
provider agencies and when requesting public comments on whether we
should have proposed a provision similar to the HCBS provisions we
proposed at Sec. 441.302(k)(3)(i) (where we proposed to require at
least 80 percent of all Medicaid FFS payments for certain services be
spent on compensation for direct care workers). Therefore, we are not
requiring that States collect wage or compensation (including benefits)
information from provider agencies to publish information about the
compensation that the provider agency pays to its employee in the
payment rate disclosure provisions at Sec. 447.203(b)(3)(ii). We
consistently used average hourly payment rate to refer to the payment
rate that States are required to publish in the payment rate
disclosure. As finalized in this rule, we are replacing the term
``average hourly payment rate'' with ``average hourly Medicaid FFS fee
schedule payment rate'' for clarity and consistency throughout Sec.
447.203(b).
---------------------------------------------------------------------------

\329\ Summary of Public Comments in response to the CMS 2022
Request for Information: Access to Coverage and Care in Medicaid &
CHIP. December 2022. For the report, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-report.pdf.
---------------------------------------------------------------------------

We are not specifying a Federal definition for provider type
because of the variety of provider types a State could license and pay
for delivering Medicaid services. States are responsible for licensing
providers in their State and have the flexibility to license a wide
variety of provider types for personal care, home health aide,
homemaker, and habilitation services, including, but not limited to,
personal care attendants, home health aides, certified nursing
assistants, or registered nurses. We would like to ensure the full
scope of providers of personal care, home health aide, homemaker, and
habilitation services across States are included in the payment rate
disclosure for transparency purposes.
Finally, we also are not providing a Federal definition of
geographical location. Because the payment rate disclosure does not
involve a comparison to Medicare (or other payer), the data need only
reflect the State's specific circumstances. Different States have
different methods of assigning payment rates to particular regions and
are therefore best situated to determine how rates must reflect their
State-determined geographical designations.
Comment: A few commenters requested clarification regarding what
CMS meant by ``individual providers'' and ``providers employed by an
agency'' in the payment rate disclosure. Commenters were generally
unsure if States are required to publish the average hourly payment
rate paid to the agency or the compensation the agency pays to its
employee. One commenter

[[Page 40743]]

requested clarification on what CMS considers ``payments made to
individual providers'' and ``payments made. . .to providers employed by
an agency.'' Another commenter noted an example where agencies have
multiple direct care workers as employees and was unsure from the
language in the proposed rule (``providers employed by agency'') what
CMS considered to be the payment rate, either total compensation
(including benefits) divided by total hours, or the hourly base wage of
the direct care workers. One commenter specifically noted the use of
the terms ``direct care worker'' and ``provider'' are both used in 42
CFR 447.203(b)(3)(ii) and stated these terms are often misaligned. The
commenter explains that ``direct care worker'' or ``home care worker''
refers to personal care aides and home health aides, who provide hands-
on services to those in need while ``providers'' are the agencies that
employ direct care workers, train and screen them (health status and
background checks), supervise them, schedule their services, reimburse
their travel expenses, and support their professional development as
well as liaise with service recipients and their families, handle all
service billing, prepare for and respond to emergencies, and ensure
day-to-day compliance with State and Federal standards.
Response: We appreciate the commenters' examples to illustrate the
requested areas of clarification in the rule. As previously stated, in
this final rule, we are revising the language ``to providers employed
by an agency'' in Sec. 447.203(b)(2)(iv), (b)(3)(ii), and
(b)(3)(ii)(B) and finalizing the language as ``provider agencies'' for
clarification purposes to more accurately reflect what payment rate we
are requiring be published which is discussed shortly in this response
to comments. To clarify, in the payment rate disclosure, we are
requiring States to calculate and publish the average hourly Medicaid
FFS fee schedule payment rate that States pay to individual providers
and provider agencies, if the rates vary, and for payments that include
facility-related costs. As described in the proposed rule and this
final rule, individual providers in the context of the payment rate
disclosure at Sec. 447.203(b)(3)(ii) refers to individuals that are
direct care workers and often self-employed or contract directly with
the State to deliver services as a Medicaid provide; additionally, the
individual provider bills the States directly and is paid directly by
the State for services provided. To clarify, individual providers does
not refer to providers delivering services through self-directed models
with service budget authorized under 42 CFR 441.545, as these are not
considered Medicaid FFS fee schedule payment rates for the purposes of
the payment rate transparency publication, as well as the payment rate
disclosure at Sec. 447.203(b)(3)(ii), which was discussed in an
earlier response to commenters.
Provider agency in the context of the payment rate disclosure at
Sec. 447.203(b)(3)(ii) refers to the agency contracted or enrolled
with the State to deliver Medicaid services and the agency in turn
employs or contracts with direct care workers as employees of the
agency that works directly with the Medicaid agency to provide Medicaid
services; additionally, the agency bills the State directly and is paid
directly by the State for services their employees or contractors
provide. Also, as previously stated, to the extent a State pays a
provider agency a Medicaid FFS fee schedule payment rate (as discussed
in detail in an earlier response to comments in this section), then
those payment rates are subject to the payment rate disclosure
requirements at Sec. 447.203(b)(3)(ii).
As previously discussed in an earlier response to comments in this
section, we are not requiring in the payment rate disclosure provisions
at Sec. 447.203(b)(3)(ii) that States collect wage or compensation
(including benefits) information from provider agencies to publish
information about the compensation the provider agency pays to its
employee. While the comment focuses on the daily work of a ``direct
care worker'' and the functions of a ``provider'' to distinguish these
terms, for the purposes of this rule, we focused on the type of
employment structure (that is, individual provider or provider agency)
to best account for variations in types and levels of payment that may
occur for different provider types. We clarify that the codified
regulation text for Sec. 447.203(b)(3)(ii) does not include the phrase
``direct care worker.''
Comment: Many commenters raised concerns and requested
clarification regarding CMS requiring the payment rate being an hourly
unit in the payment rate disclosure. A few commenters requested CMS
clearly define what to include in the average hourly payment rate (for
example, wages or benefits) to ensure the average hourly payment rates
are comparable across States. A couple of commenters requested
clarification on how States should convert half day, per diem, or per
visit payment rates into an average hourly payment rate while one
commenter requested CMS permit States to publish an average payment
rate in the unit the State pays to ease burden on States. Lastly, one
commenter stated that services, such as adult day habilitation or
assisted living waiver, that cannot be calculated as an hourly rate
should be reported as daily rates.
Response: For personal care, home health aide, homemaker, or
habilitation services under FFS State plan authority, including
sections 1915(i), 1915(j), 1915(k) State plan services; section 1915(c)
waiver authority; and under section 1115 demonstration authority, this
final rule requires States to publish a payment rate disclosure that
expresses the State's payment rates as the average hourly Medicaid FFS
fee schedule payment rates, separately identified for payments made to
individual providers and provider agencies, if the rates vary, and for
payments that include facility-related costs, as applicable. States
have flexibility in operating their Medicaid programs to set payment
rates and payment policies for services that cover a particular unit of
time for delivering the service and, therefore, States currently pay
for these services in a wide range of units, from minutes to hourly to
daily to monthly units. As described in the proposed rule, because of
Medicaid's status as the most important payer for HCBS and lack of
other points of comparison (that is, Medicare, private payers, self-
pay), transparency and comparability among States is most important for
assessing compliance with section 1902(a)(30)(A) of the Act. To ensure
the payment rate disclosure supports our transparency efforts to help
ensure that interested parties have basic information available to them
to understand Medicaid payment levels and the associated effects of
payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public processes
available to interested parties, we are requiring States publish their
payment rates in a uniform and comparable format, that is, an average
hourly Medicaid FFS fee schedule payment rate. As previously discussed
in an earlier response to comments in this section, we are not
requiring in the payment rate disclosure provisions at Sec.
447.203(b)(3)(ii) that States to collect wage, compensation (including
benefits), or financial records and information from provider agencies
or to publish information about the compensation the provider agency
pays to its employee, where applicable.
Regarding commenters requesting clarification on how States should
convert half day, per diem, or per visit payment rates into an average
hourly

[[Page 40744]]

payment rate, we would like to clarify that States that pay for the
categories of services specified in paragraph (b)(2)(iv) in a unit
other than an hourly payment rate are expected to calculate an hourly
payment rate using the unit of the rate the State pays for the service
and the number of hours covered by that unit. For example, if a State
provides home health aide services as a half day or on a per diem
(daily) or per visit basis, then the State would be expected to divide
their payment rate for a half day, day, or visit by the number of hours
covered by the rate, such as 8 hours for a full day, to calculate an
average hourly Medicaid FFS fee schedule payment rate for the payment
rate disclosure. States have flexibility in operating their Medicaid
programs to set payment rates and payment policies for services that
cover a particular unit of time for delivering the service. We expect
States have a maximum number of hours factored into their payment rate
for services set on a per diem or per visit basis and States should use
that maximum number in calculating the average hourly Medicaid FFS fee
schedule payment rate, which is a simple average (arithmetic mean)
where all payment rates are summed, then divided by the number of all
hourly payment rates. Regarding commenters who stated that services,
such as adult day habilitation or assisted living waiver, that cannot
be calculated as an hourly rate should be reported as daily rates, we
are not incorporating this suggestion into the final rule as we would
expect States to use the previously described process to calculate an
hourly payment rate from a per diem (daily) rate.
As previously mentioned in an earlier response to comments, this
final rule adds habilitation services to the categories of services
subject to the payment rate disclosure. This final rule is also adding
a requirement that States must separately identify whether the average
hourly Medicaid FFS fee schedule payment rate for services includes
facility-related costs in Sec. 447.203(b)(2) and (3)(ii)(B) to remain
consistent with HCBS provisions finalized in this rule at Sec.
441.311(e)(2). We recognize that habilitation services can mean
residential habilitation, day habilitation, or home-based habilitation
services; as such, payment rates for habilitation services generally
may include facility-related costs, as in the case of residential or
day habilitation services delivered in a residential group home or day
center, whereas home-based habilitation would not include facility-
related costs.\330\ We remind States that we proposed an ``as
applicable'' clause in Sec. 447.203(b)(3)(ii)(B) that applies to the
ways payment rates can vary (that is, by employment structure,
population (pediatric and adult), provider type, geographical
location). The requirement to identify whether a payment rate includes
facility-related costs would also be covered by the ``as applicable''
clause. As such, we would not expect States to identify facility-
related costs for personal care, home health aide, homemaker, and
habilitation service payment rates when they are delivered in a home-
based setting. While Sec. 447.203(b)(2) and (3)(ii)(B) requires that
States must separately identify whether the average hourly Medicaid FFS
fee schedule payment rate includes facility-related costs may not apply
to all services and delivery sites (that is, in home or community
settings), we believe this provision will help to ensure transparency
of payment rates that may differ due to the inclusion of facility-
related costs.
---------------------------------------------------------------------------

\330\ We remind States that room and board is generally only
coverable and payable to an individual who has been admitted to a
medical institution as an ``inpatient'' as defined in 42 CFR 440.2
and 435.1010. Therefore, room and board in a facility setting that
provides residential or day habilitation service must be excluded
from the average hourly Medicaid FFS fee schedule payment rate for
habilitation services.
---------------------------------------------------------------------------

Comment: One commenter requested clarification regarding
individually negotiated rates and bundled rates being included in the
average hourly payment rate calculation in the payment rate disclosure.
Response: As previously described in detail in an earlier response
to comments in this section, we interpret the commenter's reference to
``negotiated rates'' to mean a provider payment rate where the
individual provider's final payment rate is agreed upon through
negotiation with the State Medicaid agency. For consistency with the
payment rate transparency publication requirement, negotiated rates are
not subject to the payment rate disclosure provision because these
payment rates are not subject to the payment rate transparency
publication as negotiated rates are not Medicaid FFS fee schedule
payment rates that are known in advance of a provider delivering a
service to a beneficiary.
Also, as previously discussed in detail in an earlier response to
comments in this section, for purposes of the payment rate transparency
provision in Sec. [thinsp]447.203(b)(1), Medicaid FFS fee schedule
payment rates are FFS payment amounts made to a provider, and known in
advance of a provider delivering a service to a beneficiary by
reference to a fee schedule. For consistency, we are using the same
description of Medicaid FFS fee schedule payment rates to describe the
payment rates that need to be included in the payment rate disclosure
in paragraph (b)(3)(ii)(B) of this section which would also consider
bundled payment rates to be Medicaid FFS fee schedule payment rates for
the purposes of the payment rate disclosure.
We also clarify that while PPS rates for services provided in
inpatient hospitals, outpatient hospitals, inpatient psychiatric
facilities, inpatient rehabilitation facilities, long-term care
hospitals, and nursing facilities are subject to the payment rate
transparency publication, these PPS rates are effectively excluded from
the payment rate disclosure because the categories of services
specified in Sec. [thinsp]447.203(b)(2)(iv), personal care, home
health aide, homemaker, and habilitation services, inherently delivered
in a home or community setting, outside of an institutional facility.
Comment: Many commenters suggested additional data elements and
levels of analysis for the payment rate disclosure. A couple of
commenters suggested additional breakdowns of the average hourly
payment rates, including when a State pays different rates for higher
level of need or complexity (such as paying tiered rates for a single
service when provided on nights, weekends, or in a particular
geographical area), demographic information (such as gender and race of
the direct care worker), and type of service provided. Another
commenter suggested CMS require States to identify the average portion
of the average payment rate that is used for compensation to pay the
direct care worker in the payment rate disclosure to enable easier
comparison of compensation between individual providers and to
providers employed by an agency. One commenter suggested requiring
States to publish the rates that provider agencies pay their employees
to ensure payment rates are fully disclosed at the State and provider
levels. One commenter suggested additional data elements be reported by
States in the payment rate disclosure: Medicaid-authorized payment
rates; minimum base wages that would be paid to direct care workers if
the proposed 80 percent requirement is met; average Medicaid payment
rates and average direct care worker wages; the minimum, maximum, and
median rates of wages; and number of direct care workers employed by
the agency.

[[Page 40745]]

Response: We appreciate commenters' suggestions for the payment
rate disclosure. As previously discussed in an earlier response to
commenters, in this final rule, we are revising the proposed language
``to providers employed by an agency'' in in Sec. 447.203(b)(2)(iv),
(b)(3)(ii), and (b)(3)(ii)(B) and finalizing it as ``provider
agencies'' for clarification purposes to more accurately reflect what
payment rate we are requiring be published, that is, the payment rate
the State pays a provider agency for services its employees have
delivered. While the commenters did not provide additional explanation
or examples of what they meant by requiring an additional break down of
the average hourly payment rate by ``type of service provided,'' we
clarify that the payment rate disclosure requires States to publish the
average hourly Medicaid FFS fee schedule payment rate for personal
care, home health aide, homemaker, and habilitation services, which are
types of services, separately. Additionally, while we are not
explicitly requiring States break down their payment rates by higher
level of need or complexity, we did propose and are finalizing the
requirement to break down the average hourly Medicaid FFS fee schedule
payment rate by geographical location, which was one of the examples of
additional criteria the commenter provided for suggested further
breakdown.
However, we are not incorporating the other suggestions to require
the other, additional breakdowns of the average hourly payments rates
as suggested by commenters or to require additional data elements be
reported by States in the payment rate disclosure, to remain consistent
across provisions of this final rule. If we were to include these
suggestions only for the payment rate disclosure, then the payment rate
breakdowns would be inconsistent with the payment rate transparency
publication and comparative payment rate analysis in terms of
requiring, for example, demographic information about the direct care
worker. During the initial compliance period of this final rule and in
consideration of the numerous, concurrent regulatory changes States are
facing, we believe consistency, where possible, across provisions will
contribute to our goal to standardize data and monitoring across
service delivery systems with the goal of improving access to care.
Likewise, we are not incorporating the suggestion to identify the
average portion of the average payment rate that is used for
compensation to pay the direct care worker in the payment rate
disclosure. While the suggestion aligns with the intent of HCBS
provisions we are finalizing in this rule at Sec. 441.302(k) as
discussed in section II.B.5 of this rule, we did not propose to require
80 percent of all payments with respect to services at Sec.
[thinsp]440.180(b)(2) through (4) must be spent on compensation for
direct care workers within the payment rate disclosure, as discussed in
a later response to comments in this section. As we remain focused on
consistency, because we are not requiring a certain percentage of all
payments be spent on compensation for direct care workers, we are also
not requiring at Sec. [thinsp]447.203(b)(3)(ii) that States to
identify the average portion of the average payment rate that is used
for compensation to pay the direct care worker.
We are also not incorporating the suggestion to require States
publish the rates that provider agencies pay their employees because,
similar to private payer data as a point of rate comparison, rates that
provider agencies pay their employees is generally considered
proprietary and this information may not be available to States. As
previously discussed in an earlier response to comments in this
section, we are not requiring in the payment rate disclosure provisions
at Sec. 447.203(b)(3)(ii) that States to collect wage, compensation
(including benefits), or financial records and information from
provider agencies or to publish information about the compensation the
provider agency pays to its employee, where applicable.
We want our initial focus to be on establishing the new payment
rate transparency, comparative payment rate analysis, and payment rate
disclosure requirements, providing States with support during the
compliance period, and ensuring these data are available to
beneficiaries, providers, CMS, and other interested parties for the
purposes of assessing access to care issues. While we are not adopting
these suggestions, we note that States have the flexibility to add the
elements described to their payment rate disclosure publication if they
so choose. We will also review how our finalized policies work in
conjunction with other policies finalized in this rule to identify any
potential areas for future enhancements suggested by the commenters.
Comment: One commenter suggested CMS could ease burden on States by
collecting State payment rates from Dual Special Needs Plans (D-SNPs)
through Medicare Advantage, rather than requiring States to calculate
and publish their average hourly payment rate for the payment rate
disclosure.
Response: We appreciate the commenters' suggestion; however, D-SNPs
do not provide us with the specific data elements (that is, State
Medicaid payment rates, number of Medicaid-paid claims, and number of
Medicaid enrolled beneficiaries) we are requiring in this rule. Some D-
SNPs only cover Medicare services and do not directly pay for Medicaid
services. Other D-SNPs do cover Medicaid services (either directly or
through an affiliated Medicaid managed care plan), but this rule only
applies to Medicaid FFS payment rates. Therefore, as D-SNPs do not
collect or provide us with Medicaid payment rate information that is
relevant to this rule, we will not be incorporating this suggestion.
Additionally, we believe that the States, as stewards of Medicaid
payment rates in the Medicaid program, would be the party best situated
to publish and analyze their own payment rate information for the
payment rate transparency requirements finalized in this rule,
including the payment rate disclosure. States' ownership of payment
rate information will ensure accurate payment rate transparency
publications, comparative payment rate analyses, and payment rate
disclosures.
Comment: A few commenters suggested alternative timelines for
States updating their payment rate disclosures. One commenter suggested
extending the requirement for updates to the payment rate disclosure to
every 3 years, instead of the proposed 2 years, to align with the
State's existing data publication cycle. However, another commenter
suggested the update frequency of the payment rate disclosure be every
year.
Response: We are finalizing the payment rate transparency
requirements, including the payment rate disclosure, with an
applicability date of July 1, 2026; however, we are not changing the
proposed timeframe of 2 years for States to update their payment rate
disclosure. We believe requiring updates to the payment rate disclosure
every 2 years appropriately balances State burden and maintaining up-
to-date information in the payment rate disclosure.
Comment: Most commenters were supportive in response to our request
for public comment on whether we should propose a provision to what we
proposed at Sec. [thinsp]441.302(k) (where we proposed to require that
at least 80 percent of all Medicaid FFS payments with respect to
personal care, home health aide, and homemaker services provided by
individual providers and providers employed by an agency must be spent
on compensation for direct care

[[Page 40746]]

workers) in Sec. [thinsp]447.203(b) on the basis that this provision
would help address the direct care workforce crisis and access issues.
One commenter suggested that if such a provision were proposed and
implemented, then CMS should implement an accountability requirement
where States would be required to validate that direct care workers are
receiving 80 percent of all Medicaid FFS payments.
Some commenters opposed this consideration and suggested that, if
this provision is finalized, the requirement would negatively affect
access to care. These commenters aligned with those in opposition to
the proposed HCBS provisions at Sec. 441.302(k), as discussed in
section II.B.5 of this rule. These commenters opposed this because the
policy does not consider that given low levels of payment for relevant
services, the remaining 20 percent of the payment rate would be
insufficient for the administrative costs (that is, staff, technology,
training, travel, oversight) of running a business, provider agencies
are already challenged by worker shortages, providers would withdraw
from the Medicaid program or stop serving Medicaid beneficiaries, and
the requirement would be ineffective without supportive policies in
place to implement standards for determining sufficient Medicaid
payment rates that provide competitive wages, promote quality services,
and ensure compliance with all State and Federal regulations.
Commenters in opposition recommended alternatives including: a lower
percentage than 80 percent of all Medicaid FFS payments going to
compensation for direct care workers, establishing quality outcome
metrics, and focusing on wage review and transparency.
Response: We thank commenters for their input and suggestions. We
also understand the commenters' concerns. Given that our work to better
ensure access in the Medicaid program is ongoing, we intend to gain
implementation experience with this final rule, particularly from the
HCBS provisions finalized in this rule at Sec. 441.302(k) as discussed
in section II.B.5, and we will consider the recommendations provided on
the proposed rule to help inform any future rulemaking in this area, as
appropriate.
Comment: Many commenters expressed concerns about requiring States
to publish the average hourly payment rate that States pay for personal
care, home health aide, and homemaker services. These commenters were
generally concerned that requiring States to publish this information
could result in unintended consequences or be ineffective for assessing
and improving access to care. The unintended consequences commenters
were primarily concerned about included contributing to providers
leaving areas where there are low Medicaid payment rates which could
create or exacerbate access to care issues in that area and
misunderstandings of the required average hourly payment rate without
additional context about employee benefits (for example, paid time off,
health insurance, pension, employee assistance program) that are not
easily disaggregated from an hourly Medicaid service payment rate.
Regarding commenter concerns that publishing the average hourly rate
would be ineffective, one commenter stated that their State already
publishes provider rates, and it has not resolved issues with low and
unequal payment rates among providers employed by agencies.
Response: We understand commenters' concerns about the effects of
the payment rate disclosure in practice. Regarding commenters' concerns
that providers could leave an area where there are low Medicaid payment
rates, we would like to emphasize that the payment rate disclosure
requirements will afford more transparency to CMS and the public about
rates for HCBS, but they will also provide States with an opportunity
to identify where existing rates could create an access issue. If the
difference in rates between two areas enlists more providers to one
area over another, States may need to consider revisions to their
payment rates to comply with section 1902(a)(30)(A) of the Act to
``assure that payments . . . are sufficient to enlist enough providers
so that care and services are available under the plan at least to the
extent that such care and services are available to the general
population in the geographic area.'' Therefore, if the transparency
created by the payment rate disclosure requirements induces providers
to switch locations, affecting access to care, we would expect States
to address the rate disparities that the commenter has correctly
identified are negatively impacting access.
Regarding commenters' concerns that there could be
misunderstandings of the published average hourly payment rate without
additional context about employee benefits, the payment rate disclosure
provisions at Sec. 447.203(b)(3)(ii) requires States to separately
identify the average hourly Medicaid FFS fee schedule payment rates for
personal care, home health aide, homemaker, and habilitation services
by population (pediatric and adult), provider type, geographical
location, and whether the payment rate includes facility-related costs,
as applicable, and by provider employment structures (individual
providers and provider agencies). As previously discussed in an earlier
response to comments in this section, we are not requiring in the
payment rate disclosure provisions at Sec. 447.203(b)(3)(ii) that
States to collect wage, compensation (including benefits), or financial
records and information from provider agencies or to publish
information about the compensation the provider agency pays to its
employee, where applicable. In other words, we are focused on payment
rate transparency for personal care, home health aide, homemaker, and
habilitation services rather than what the providers of these services
does with their payment rate (that is, pay for employee benefits).
Given that our work to better ensure access in the Medicaid program is
ongoing, we intend to gain implementation experience with this final
rule, and we will consider the recommendations provided on the proposed
rule to help inform any future rulemaking in this area, as appropriate.
We disagree with the commenters that publishing the average hourly
Medicaid FFS fee schedule payment rate of personal care, home health
aide, homemaker, and habilitation providers through the payment rate
disclosure requirement will be ineffective, including because one
commenter's State already publishes this information, and the commenter
has not seen improvement in low and unequal payment rates among
providers employed by agencies. We believe a broad requirement for all
States that provide personal care, home health aide, homemaker, and
habilitation services through the FFS delivery system will help ensure
consistency across delivery systems in monitoring and ensuring access
to care, particularly with the HCBS provisions at Sec.
[thinsp]441.311(d)(2) and (e), which require annual State reporting on
access and payment adequacy metrics for the same set of services as the
payment rate disclosure as well as with the Managed Care final rule (as
published elsewhere in this Federal Register) provisions at Sec.
[thinsp]438.207(b)(3)(ii) for Medicaid to require a payment analysis of
the total amount paid for homemaker services, home health aide
services, and personal care services and the percentage that results
from dividing the total amount paid by the amount the State's Medicaid
FFS program would have paid for the same claims. While the commenter
did not provide additional details about

[[Page 40747]]

their State's publication of payment rates, we believe that with a
broad rate transparency requirement across delivery systems, we can
reasonably expect that States, CMS, and interested parties will have
transparent payment rate information available to them across delivery
systems. Transparency would continually help States and CMS to ensure
that their Medicaid payment rates are set at a level that is likely
sufficient to meet the statutory access standard under section
1902(a)(30)(A) of the Act that payments be sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area. Transparency also helps to
ensure that interested parties have basic information available to them
to understand Medicaid payment levels and the associated effects of
payment rates on access to care so that they may raise concerns to
State Medicaid agencies via the various forms of public process
available to interested parties.
Comment: Several commenters expressed concern over low payment
rates in Medicaid, particularly for HCBS, dental services, and
behavioral health care, and the negative impact on access to care. Many
commenters suggested that the primary causes of these low payment rates
in Medicaid are stagnant and insufficient payment rates left unadjusted
for rising costs, inflation, new regulatory requirements, and increased
service expectations over time, particularly for the HCBS direct care
workforce.
A few of these commenters suggested CMS could address these issues
directly by requiring States conduct regular rate reviews (for example,
annual, biennial, triennial, or when a programmatic change occurs),
publish the results, and update their payment rates, when necessary,
based on criteria that CMS sets. One commenter suggested this could be
achieved thorough regular SPA and waiver reviews where CMS could
prevent stagnant and insufficient rates from being maintained.
Particularly for HCBS, one commenter recommended setting a national
standard base pay rate for direct care workers as determined by the
States' cost of living index or requiring States have parity for all
State payment rates, regardless of geographic location, but allow
differences in payment rates for services provided to pediatric and
adult populations.
Response: We appreciate the commenters' suggestions. However, we
are limited in our authority to directly address the commenters'
concerns regarding stagnant and insufficient payment rates. With
limited statutory exceptions (such as for hospice services under
section 1902(a)(13)(B) of the Act and FQHC/RHC services under section
1902(bb) of the Act, which each establish a floor for provider payment
rates which prohibits States from implementing rate reductions below
the amount calculated through the methodology provided in the statute),
we do not have the authority to require States update their payment
rates to a particular level. Section 1902(a)(30)(A) of the Act requires
that State plans assure that payments are consistent with efficiency,
economy, and quality of care and are sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area. Under the statutory
authority at section 1902(a)(30)(A) of the Act and through this final
rule, we are requiring States to develop and publish a payment rate
transparency publication, comparative payment rate analysis of certain
services, and payment rate disclosure for certain HCBS, which are
directed at helping the States and CMS ensure that State payment rates
are consistent with the payment standards under section 1902(a)(30)(A)
of the Act.
While we are not explicitly requiring that States update their
payment rates to a particular level or regularly submit SPAs and/or
waivers (except where desired by the State to implement a programmatic
change, consistent with existing requirements) waivers in this
rulemaking, we believe there are three requirements within our
statutory authority and finalized by this rule that effectively address
the concerns raised by commenters. First, this final rule requires
States to review their payment rates during the development and
publication of their payment rate transparency publications,
comparative payment rate analyses, and payment rate disclosures.
Specifically, the payment rate transparency publication requires States
to regularly review their rates in the course of publishing them and
maintaining the current accuracy of the publication, including
publishing the date the payment rate publication website was last
updated, which will reveal any rates that may be stagnant and
potentially insufficient. States must also ensure the data in the
publication is kept current (that is, updates must be made within 1
month of a rate change). With this final rule, we focused on
transparency to help ensure that interested parties have basic
information available to them to understand Medicaid payment levels and
the associated effects of payment rates on access to care so that they
may raise concerns to State Medicaid agencies via the various forms of
public process available to interested parties. We acknowledge the
provisions finalized in this rule do not specifically require rate
reviews to ensure payment rates are adjusted for rising costs,
inflation, new regulatory requirements, and increased service
expectations that commenters suggested are factors contributing to a
crisis in the HCBS direct care workforce. However, this provision
creates a process to help validate that payment rates are compliant
with section 1902(a)(30)(A) of the Act.
Second, this final rule requires States to establish an advisory
group for interested parties to advise and consult on certain current
and proposed Medicaid provider payment rates to ensure the relevant
Medicaid payment rates are sufficient to ensure access to homemaker
services, home health aide services, and personal care services for
Medicaid beneficiaries at least as great as available to the general
population in the geographic area. We strongly encourage States to use
this group as part of a process to conduct rate reviews and encourage
eligible participants (including direct care workers, beneficiaries,
beneficiaries' authorized representatives, and other interested parties
impacted by the services rates in question, as determined by the State)
to join their State's interested parties advisory group once
established to bring their concerns directly to States that are setting
the payment rates for HCBS.
Third, this final rule establishes a two-tiered approach for
determining the level of access analysis States would be required to
conduct when proposing provider payment rate reductions or payment
restructurings. The first tier of this approach, Sec.
[thinsp]447.203(c)(1), sets out three criteria for States to meet when
proposing payment rate reductions or payment restructurings in
circumstances when the changes could result in diminished access that,
if met, would not require a more detailed analysis to establish that
the proposal meets the access requirement in section 1902(a)(30)(A) of
the Act. However, meeting the three criteria described in the first
tier does not guarantee that the SPA would be approved, if other
applicable Federal requirements are not met. The second tier of this
approach, Sec. [thinsp]447.203(c)(2) requires the State to conduct a
more extensive access analysis in addition to providing the results of
the analysis in the first tier. We believe this two-tiered approach, in

[[Page 40748]]

combination with updated public process requirements in Sec.
447.203(c)(4) (which this final rule relocates from Sec.
447.203(b)(7)) will help us ensure that a State's proposed Medicaid
payment rates and/or payment structure are consistent with the access
requirement in section 1902(a)(30)(A) of the Act at the time the State
proposes a payment rate reduction or payment restructuring in
circumstances when the changes could result in diminished access.
After consideration of public comments, we are finalizing all
provisions under Sec. 447.203(b)(2) to (4) as proposed, apart from the
following changes.
Deleted the word ``following'' in two places in the
following sentence in Sec. 447.203(b)(2) ``The State agency is
required to develop and publish a comparative payment rate analysis of
Medicaid payment rates for each of the following categories of services
in paragraphs (b)(2)(i) through (iii) of this section and a payment
rate disclosure of Medicaid payment rates for each of the following
categories of services in paragraph (b)(2)(iv) of this section, as
specified in paragraph (b)(3) of this section.'' The finalized language
now states ``The State agency is required to develop and publish a
comparative payment rate analysis of Medicaid payment rates for each of
the categories of services in paragraphs (b)(2)(i) through (iii) of
this section and a payment rate disclosure of Medicaid payment rates
for each of the categories of services in paragraph (b)(2)(iv) of this
section, as specified in paragraph (b)(3) of this section.'' (bold
added to emphasize the deleted word).
Replaced ``Medicaid payment rates'' with ``Medicaid fee-
for-service fee schedule payment rates'' in Sec. 447.203(b)(2) with
regard to the comparative payment rate analysis. The finalized language
now states ``. . . publish a comparative payment rate analysis of
Medicaid fee-for-service fee schedule payment rates. . .'' for
clarification and consistent terminology usage within Sec. 447.203(b).
Replaced ``Medicaid payment rates'' with ``average hourly
Medicaid fee-for-service fee schedule payment rates'' in Sec.
447.203(b)(2) with regard to the payment rate disclosure. The finalized
language now states ``. . . [publish] . . . payment rate disclosure of
the average hourly Medicaid fee-for-service fee schedule payment
rates'' for clarification and consistent terminology usage within Sec.
447.203(b).
Revised sentence structure organization and added
clarifying language to the proposed language stating how the Medicaid
FFS payment rates published in the comparative payment rate analysis
and the payment rate disclosure need to be listed, if the rates vary.
The proposed language in Sec. [thinsp]447.203(b)(2) stated ``The State
agency is required to develop and publish a comparative payment rate
analysis of Medicaid payment rates for each of the following categories
of services in paragraphs (b)(2)(i) through (iii) of this section and a
payment rate disclosure of Medicaid payment rates for each of the
following categories of services in paragraph (b)(2)(iv) of this
section, as specified in paragraph (b)(3) of this section. If the rates
vary, the State must separately identify the payment rates by
population (pediatric and adult), provider type, and geographical
location, as applicable.''
++ Added the following sentence to address payment rate variation
for the comparative payment rate analysis: ``If the rates vary, the
State must separately identify the payment rates by population
(pediatric and adult), provider type, and geographical location, as
applicable.'' in Sec. [thinsp]447.203(b)(2).
++ Revised the following sentence to add payment rate variation
related to facility-related costs for the payment rate disclosure: ``If
the rates vary, the State must separately identify the payment rates by
population (pediatric and adult), provider type, geographical location,
and whether the payment rate includes facility-related costs, as
applicable.'' (new language identified in bold).
The language is finalized as ``The State agency is required to
develop and publish a comparative payment rate analysis of Medicaid
fee-for-service fee schedule payment rates for each of the categories
of services in paragraphs (b)(2)(i) through (iii) of this section. If
the rates vary, the State must separately identify the payment rates by
population (pediatric and adult), provider type, and geographical
location, as applicable. The State agency is further required to
develop and publish a payment rate disclosure of the average hourly
Medicaid fee-for-service fee schedule payment rates for each of the
categories of services in paragraph (b)(2)(iv) of this section, as
specified in paragraph (b)(3) of this section. If the rates vary, the
State must separately identify the payment rates by population
(pediatric and adult), provider type, geographical location, and
whether the payment rate includes facility-related costs, as
applicable.'' in paragraph (b)(2). (new language identified in bold).
Updated ``Outpatient behavioral health services'' as a
category of service in Sec. [thinsp]447.203(b)(2)(iii) to ``Outpatient
mental health and substance use disorder services.''
Added ``habilitation'' as a category of service in the
payment rate disclosure described in Sec. [thinsp]447.203(b)(2)(iv)
and added a reference to Sec. 440.180(b)(6). The finalized language
now states ``Personal care, home health aide, homemaker, and
habilitation services, as specified in Sec. 440.180(b)(2) through (4)
and (6), provided by individual providers and provider agencies (new
language identified in bold).
Clarified which publication requirements apply to the
comparative payment rate analysis and payment rate disclosure in Sec.
[thinsp]447.203(b)(3) and (b)(4) to align with a previously described
update to the organizational structure of paragraph (b)(1) to add
romanettes to specify the ``publication requirements described in
paragraph (b)(1) through (b)(1)(ii) of this section.'' (new language
identified in bold).
Replaced ``Medicaid base payment rates'' with ``base
Medicaid fee-for-service fee schedule payment rates'' in Sec.
447.203(b)(3)(i)(B) through (E) for clarification and consistent
terminology usage within Sec. 447.203(b).
Replaced ``Medicare non-facility payment rate'' with
``Medicare non-facility payment rate as established in the annual
Medicare Physician Fee Schedule final rule'' in Sec.
447.203(b)(3)(i)(C) and (D) for clarification.
Added ``and whether the payment rate includes facility-
related costs'' in Sec. 447.203(b)(3)(ii)(B) to account for facility-
related costs in habilitation settings, particularly residential
habilitation or day habilitation. The finalized language now states,
``[t]he disclosure must identify the average hourly Medicaid fee-for-
service fee schedule payment rates by applicable category of service,
including, if the rates vary, separate identification of the average
hourly Medicaid fee-for-service fee schedule payment rates for payments
made to individual providers and provider agencies, by population
(pediatric and adult), provider type, geographical location, and
whether the payment rate includes facility-related costs, as applicable
in Sec. 447.203(b)(3)(ii)(B) (new language identified in bold).
Replaced ``average hourly payment rate'' with ``average
hourly Medicaid fee-for-service fee schedule payment rates'' in Sec.
447.203(b)(3)(ii) and (ii)(B) and (C) for clarification and consistent
terminology usage within Sec. 447.203(b).
Replaced ``to providers employed by an agency'' with
``provider agencies''

[[Page 40749]]

in Sec. 447.203(b)(2)(iv), (b)(3)(ii), and (b)(3)(ii)(B) for
clarification.
Replaced ``Medicaid payment rates'' with ``Medicaid fee-
for-service fee schedule payment rates'' in Sec. 447.203(b)(4) for
clarification and consistent terminology usage within Sec. 447.203(b).
Updated the applicability date in Sec. 447.203(b)(4) from
January 1, 2026 and effective date of the Medicaid payment rates
subject to the comparative payment rate analysis and payment rate
disclosure from January 1, 2025 to read: ``The State agency must
publish the initial comparative payment rate analysis and payment rate
disclosure of its Medicaid fee-for-service fee schedule payment rates
in effect as of July 1, 2025, as required under paragraphs (b)(2) and
(b)(3) of this section, by no later than July 1, 2026. Thereafter, the
State agency must update the comparative payment rate analysis and
payment rate disclosure no less than every 2 years, by no later than
July 1 of the second year following the most recent update.''
c. Interested Parties Advisory Group Sec. 447.203(b)(6)
In the proposed rule, we noted that a fundamental element of
ensuring access to covered services is the sufficiency of a provider
network.\331\ As discussed elsewhere in this rule, the HCBS direct care
workforce is currently experiencing notable worker shortages.\332\ A
robust workforce providing HCBS allows more beneficiaries to obtain
necessary services in home and community-based settings. We proposed to
use data-driven benchmarks in requiring comparative payment rate
analyses relative to Medicare non-facility payment rates as established
in the annual Medicare PFS final rule for a calendar year for the
categories of service specified in proposed Sec. 447.203(b)(2)(i)
through (iii), but Medicare non-facility payment rates are generally
not relevant in the context of HCBS, as discussed earlier in this
section. Furthermore, data alone cannot replace the lived experience of
direct care workers and recipients of the services they provide.
---------------------------------------------------------------------------

\331\ 88 FR 27960 at 28023.
\332\ https://www.macpac.gov/wp-content/uploads/2022/03/MACPAC-brief-on-HCBS-workforce.pdf.
---------------------------------------------------------------------------

Understanding how Medicaid payment rates compare in different
geographic areas of a State and across State programs is also an
important access to care data point for covered benefits where Medicaid
is a predominant payer of services, as in the case of HCBS. In the
absence of HCBS coverage and a lack of available payment rate and
claims utilization data from other health payers, such as Medicare or
private insurers, and with the significant burden and potential
infeasibility associated with gathering payment data for individuals
who pay out of pocket (that is, self-pay), we noted our belief that it
would be a reasonable standard for States to compare their rates to
geographically similar State Medicaid program payment rates as a basis
for understanding compliance with section 1902(a)(30)(A) of the Act for
those services. In addition, even for services where other payers
establish payment rates, comparisons to rates paid by other
geographically similar States could be important to understanding
compliance with section 1902(a)(30)(A) of the Act since Medicaid
beneficiaries may have unique health care needs that are not typical of
the general population in particular geographic areas.
Section 2402(a) of the Affordable Care Act directs the Secretary to
issue regulations ensuring that all States develop service systems
that, among other things, improve coordination and regulation of
providers of HCBS to oversee and monitor functions, including a
complaint system, and ensure that there are an adequate number of
qualified direct care workers to provide self-directed services. This
statutory mandate, coupled with the workforce shortages exacerbated by
the COVID-19 pandemic, necessitates action specific to direct care
workers. As such, we proposed to require States to establish an
interested parties advisory group to advise and consult on FFS rates
paid to direct care workers providing self-directed and agency-directed
HCBS, at a minimum for personal care, home health aide, and homemaker
services as described in Sec. 440.180(b)(2) through (4), and States
may choose to include other HCBS.
We proposed the definition of direct care workers under Sec.
441.302(k)(1)(ii), which is being finalized under Sec.
441.311(e)(1)(ii) in this final rule. We proposed to use that
definition to consider a direct care worker a registered nurse,
licensed practical nurse, nurse practitioner, or clinical nurse
specialist who provides nursing services to Medicaid-eligible
individuals receiving HCBS; a licensed nursing assistant who provides
such services under the supervision of a registered nurse, licensed
practical nurse, nurse practitioner, or clinical nurse specialist; a
direct support professional; a personal care attendant; a home health
aide; or other individuals who are paid to provide services to address
activities of daily living or instrumental activities of daily living
directly to Medicaid-eligible individuals receiving HCBS available
under part 441, subpart G. A direct care worker may be employed by a
Medicaid provider, State agency, or third party; contracted with a
Medicaid provider, State agency, or third party; or delivering services
under a self-directed service model.
We proposed that the group would consult on rates for service
categories under the Medicaid State plan, section 1915(c) waiver and
demonstration programs, as applicable, where payments are made to
individual providers or providers employed by an agency for, at a
minimum, the previously described types of services, including for
personal care, home health aide, and homemaker services provided under
sections 1905(a), 1915(i), 1915(j), and 1915(k) State plan authorities,
and section 1915(c) waivers. These proposed requirements also would
extend to rates for HCBS provided under section 1115 demonstrations, as
is typical for rules pertaining to HCBS authorized using demonstration
authority. We proposed that the interested parties advisory group may
consult on other HCBS, at the State's discretion.
In this final rule, we are adding an additional service to the
group's purview, habilitation services as found under Sec.
440.180(b)(6). In the proposed rule, we proposed an alignment of
services subject to the requirements between the HCBS payment adequacy
and access to care metrics requirements, and the payment rate
disclosure and interested parties advisory group provisions. Within the
payment adequacy and access to care metrics provisions of the proposed
rule, we requested comment on whether to expand services subject to
those requirements to include habilitation services from the proposed
personal care, home health aide, and homemaker services. In this final
rule, we are adding habilitation services to the reporting requirements
for direct care worker compensation data under Sec. 441.311(e) and
access to care metrics under Sec. 441.311(d)(2), and therefore are
adding habilitation services to the interested parties' advisory
group's purview (and, as previously discussed, to the payment rate
disclosure requirements). This addition will create consistency between
HCBS-related provisions of this final rule. It will also simplify the
process for States to provide the relevant materials to members of the
interested parties advisory group, and avoid any confusion on the scope
of review. We also want to note the point made in earlier provisions of
this final

[[Page 40750]]

rule, that habilitation services can mean residential habilitation, day
habilitation, or home-based habilitation services. All three types are
included within the ``habilitation services'' we are adding to this
provision.
In Sec. 447.203(b)(6), we proposed that the State agency would be
required to establish an advisory group for interested parties to
advise and consult on provider rates with respect to service categories
under the Medicaid State plan, section 1915(c) waiver and demonstration
programs, as applicable, where payments are made to the direct care
workers specified in Sec. 441.311(e)(1)(ii) for the self-directed or
agency-directed services found at Sec. 440.180(b)(2) through (4). In
this final rule, as noted, we are adding habilitation services as found
at Sec. 440.180(b)(6). The interested parties advisory group would be
required to include, at a minimum, direct care workers, beneficiaries
and their authorized representatives, and other interested parties. We
explained that ``authorized representatives'' refers to individuals
authorized to act on the behalf of the beneficiary, and other
interested parties may include beneficiary family members and advocacy
organizations. To the extent a State's MAC established under proposed
Sec. 431.12, if finalized, meets these requirements of this
regulation, we proposed that the State could use that committee for
this purpose. However, we noted the roles of the MAC under proposed
Sec. 431.12 and the interested parties advisory group under proposed
Sec. 447.203(b)(6) would be distinct, and the existence or absence of
one committee or group (for example, if one of these proposals is not
finalized) would not affect the requirements with respect to the other
as established in a final rule.
We further proposed in Sec. 447.203(b)(6)(iii) that the interested
parties advisory group would advise and consult with the Medicaid
agency on current and proposed payment rates, HCBS payment adequacy
data as required at Sec. 441.311(e), and access to care metrics
described in Sec. 441.311(d)(2), associated with services found at
Sec. 440.180(b)(2) through (4), to ensure the relevant Medicaid
payment rates are sufficient to ensure access to homemaker services,
home health aide services, and personal care services for Medicaid
beneficiaries at least as great as available to the general population
in the geographic area and to ensure an adequate number of qualified
direct care workers to provide self-directed personal assistance
services. We want to clarify that the group would not be required to
advise and consult on the HCBS payment adequacy data as required under
Sec. 441.311(e), and access to care metrics under Sec. 441.311(d)(2),
until such a time as those data are available under the newly
established requirements. We also want to note again here that we are
expanding the service categories to include habilitation services as
found at Sec. 440.180(b)(6).
In Sec. 447.203(b)(6)(iv), we proposed that the interested
parties' advisory group would meet at least every 2 years and make
recommendations to the Medicaid agency on the sufficiency of State
plan, 1915(c) waiver, and demonstration direct care worker payment
rates, as applicable. The State agency would be required to ensure the
group has access to current and proposed payment rates, HCBS provider
payment adequacy minimum performance and reporting standards as
described in Sec. 441.311(e), and applicable access to care metrics
for HCBS as described in Sec. 441.311(d)(2) to produce these
recommendations. These materials would be required to be made be
available with sufficient time for the advisory group to consider them,
formulate recommendations, and transmit those recommendations to the
State. If the State has asked the group to consider a proposed rate
change, the State would need to provide the group with sufficient time
to review and produce a recommendation within the State's intended rate
adjustment schedule. We noted that this would be necessary because the
group's recommendation would be considered part of the interested
parties input described in proposed Sec. Sec. 447.203(c)(4) and
447.204(b)(3), which States would be required to consider and analyze.
The interested parties advisory group would make recommendations to the
Medicaid agency on the sufficiency of the established and proposed
State plan, section 1915(c) waiver and demonstration payment rates, as
applicable. In other words, the group would provide information to the
State regarding whether, based on the group's knowledge and experience,
current payment rates are sufficient to enlist a sufficiently large
work force to ensure beneficiary access to services, and whether a
proposed rate change would be consistent with a sufficiently large work
force or would disincentivize participation in the work force in a
manner that might compromise beneficiary access. We clarify here, as
well that the State would not be required to make available the HCBS
provider payment adequacy minimum performance and reporting standards
under Sec. 441.311(e), and applicable access to care metrics for HCBS
under Sec. 441.311(d)(2), until such a time as those data are
available per the applicable applicability dates of those respective
provisions in this final rule.
We proposed to require States to convene this interested parties'
advisory group every 2 years, at a minimum, to advise and consult on
current and suggested payment rates and the sufficiency of these rates
to ensure access to HCBS for beneficiaries consistent with section
1902(a)(30)(A) of the Act. This timing aligns with the comparative
payment rate analysis and payment rate disclosure publication
requirements proposed in Sec. 447.203(b)(4), although we noted that
this would be a minimum requirement and a State may find that more
frequent meetings would be necessary or helpful for the advisory group
to provide meaningful and actionable feedback. We further proposed that
the process by which the State selects its advisory group members and
convenes meetings would be required to be made publicly available, but
other matters, such as the tenure of members, would be left to the
State's discretion. We want to note that the 2-year cadence could
require the group to convene its first meeting and produce a
recommendation before the HCBS payment adequacy data as required under
Sec. 441.311(e), and access to care metrics under Sec. 441.311(d)(2),
will be available. We do not expect the State to furnish information to
the group that is not yet available or for the group to comment on
those topics for which the State has not yet provided data. We
nevertheless are maintaining the 2-year cadence that would require a
recommendation 2 years from the effective date of this final rule, as
we believe the benefits to the State and group in convening that
initial time, even with a limited availability of data for the first
meeting, will be beneficial for getting the group to be operational.
States have the flexibility to convene the group within a shorter
timeframe to adjust the future cadence to align with other publication
schedules, if desired.
Finally, in Sec. 447.203(b)(6)(v), we proposed that the Medicaid
agency would be required to publish the recommendations of the
interested parties' advisory group consistent with the publication
requirements described in paragraph (b)(1) of this section for payment
rate transparency data, within 1 month of when the group provides the
recommendation to the agency. We intend that States would consider, but
not be required to adopt, the recommendations of the advisory group.
Under this proposal, the work of the

[[Page 40751]]

advisory group would be regarded as an element of the State's overall
rate-setting process. Additionally, the feedback of this advisory group
would not be required for rate changes. That is to say, should a State
need or want to adjust rates and it is not feasible to obtain a
recommendation from the advisory group in a particular instance, the
State would still be permitted to submit its rate change SPA to CMS.
However, to the extent the group comments on proposed rate changes, its
feedback would be considered part of the interested parties input
described in proposed Sec. Sec. 447.203(c)(4) and 447.204(b)(3), which
States would be required to consider and analyze, and submit such
analysis to us, in connection with any SPA submission that proposes to
reduce or restructure Medicaid service payment rates. In addition, by
way of clarification, we noted our intent that the advisory group would
be permitted to suggest alternate rates besides those proposed by the
State for consideration.
We solicited comments on the proposed interested parties' advisory
group and about whether other categories of services should be included
in the requirement for States to consult with the interested parties
advisory group. We received public comments on these proposals. The
following is a summary of the comments we received and our responses.
Comment: We received many comments expressing general support for
the establishment of the interested parties advisory group. Commenters
agreed that individuals with lived experience would provide invaluable
insight into appropriate rates for direct care services, including both
beneficiaries and direct care workers, which the proposed group would
include. Commenters also pointed to a number of anticipated benefits,
such as helping to increase pay for these valuable workers, giving
beneficiaries a voice on decisions that impact them, providing
additional insights into a unique area of the healthcare market,
identifying what can attract workers, and addressing an area of
critical concern for staffing, which is necessary for the stability of
access to HCBS. Multiple commenters stated it was important to have
payment rate decisions focus on community needs rather than be
determined solely by a State's budget, and thus better meeting the
needs of beneficiaries. One commenter stated this group would be
valuable for staying abreast of the day-to-day provision of services as
it relates to current pay rates, while another noted how it is
important to focus on rates in a service area for which there is no
Medicare comparison. Another stated this proposal should be used as the
template for group feedback and reporting for all provider payment
systems in a State.
Some commenters also chose to specifically highlight aspects of the
proposals for this group they agreed with. These include having a group
to advise on wages, the cadence of group meetings, the publication
requirements, the composition of the group members, and allowing States
to set the tenure for members. One commenter also pointed out how this
group will complement payment adequacy requirements by identifying
rates that may meet a set threshold for direct compensation but remains
low generally.
Response: We thank commenters for taking the time to express
support for the provision and for highlighting many of the areas where
we expect this group will add value. We are finalizing the provisions
related to the interested parties' advisory group as proposed, with the
addition of habilitation services. The shortage of direct care workers
demands special attention, and we hope that finalizing these
requirements will be one of several steps contained in this final rule
toward addressing those concerns.
Comment: A very large proportion of commenters on these provisions
had recommendations for changes or enhancements to the interested
parties advisory group. A number of those comments related to the
composition of the group, with commenters requesting certain
proportions for types of members, or specific member positions be added
generally or defined as an interested party. Specifically, various
commenters recommended a required composition of 25 percent beneficiary
representation, 25 percent direct care workers, and 25 percent provider
employers, such as representatives from an agency providing HCBS and
employing direct care workers. Some commenters expressed similar
sentiments without precise numbers, instead recommending representation
by various individuals: agency-based model providers; consumer-directed
model providers; union representatives; patient advocates; program
administrators; politicians; or members of the general public. Some
commenters recommended that a majority of members be beneficiaries,
unpaid beneficiary caregivers, and advocacy organizations. These
commenters had concerns about the possibility that certain key voices
could be silenced if not sufficiently represented within the overall
composition of the group.
A number of commenters stated that the regulations should require
other specific member types without defining in what proportion. There
were multiple requests to require members from unions, worker advocacy
organizations, consumer advocates, and representatives from provider
agencies and provider State associations. These commenters wanted to
ensure certain technical expertise would be available amongst the group
members. For example, a qualified consumer advocate may have knowledge
of technical program aspects that other members may not.
One commenter requested nurses be included in the group, and
another requested physician anesthesiologists, noting that they are
subject to a uniquely structured payment system. Several commenters
stated the group should bar employees of the State agency to ensure
independence in developing the recommendations.
Finally, a few commenters requested members who were already among
those included in the proposed regulation. Specifically, one commenter
stated the group should include paid direct service workers, while
another stated HCBS providers should be included.
Response: As stated, we are finalizing the interested party
advisory group requirement as proposed apart from the addition of
habilitation services, and that includes the provisions defining the
membership of the group without specifying particular proportions of
required membership. We agree generally that additional types of
members such as those suggested by commenters could bring unique
perspectives or expertise to the group. Nevertheless, we are finalizing
as proposed the membership requirements, because we intentionally
proposed a great deal of flexibility for States in recognition of the
unique circumstances of State Medicaid programs. We also want to ensure
States can meaningfully implement the requirements for this group, and
every additional member or type of member presents additional
considerations for recruitment needed to set up the group, as well as
logistical considerations for coordinating meetings. We believe a
limited but inclusive list, with considerable State flexibility in
determining the composition of the group, will ensure that interested
parties' voices are heard and not silenced, but as with any new policy,
we will monitor implementation to identify if adjustments may be needed
through future rulemaking.
As the proposed rule contained many changes to existing
requirements and processes, we were mindful at every

[[Page 40752]]

step of the burden this would place on States, and balanced potential
State burden against the proposal's potential to help ensure and
improve access. After careful consideration, we determined it was more
important to implement a basic framework for the interested party
advisory group and leave many details of its precise composition and
operation to the States. Our access work is ongoing, and we will
consider the recommendations provided on the proposed rule for any
additional changes we may propose through future rulemaking.
We would encourage States, when recruiting members, to consider the
composition of members that would best satisfy the goals of this group
and identify where there is a need for technical expertise, sufficient
representation, etc., and work to establish the group in a manner that
promotes its efficient functioning and meaningful contribution to
Medicaid policies in the State. The inclusion of ``other interested
parties'' affords States the flexibility to do so. We believe the lived
experiences of the members of this group when coupled with the
requirements for States to provide relevant documents and reports for
the group's consideration, will be adequate to provide the type of
perspective on rates we are seeking through this group.
Finally, we want to clarify which members States are required to
include as part of the interested parties advisory group. States are
required to include direct care workers, beneficiaries, beneficiaries'
authorized representatives, and other interested parties impacted by
the rates in question, as determined by the State, which may include
beneficiary family members (other than those who may be authorized
representatives for beneficiaries) and advocacy organizations.
Representation from each type of individual specified on this list is
required. As such, the group could not be solely beneficiaries, or
solely direct care workers, or solely other individuals meeting neither
of those criteria but whom a State would deem an interested party.
Comment: Another area where many commenters made suggestions was
with respect to the scope of the group's work and the requirements
related to consideration of the group's recommendations. Many
commenters recommended that CMS require States to consult with the
group for any rate or payment methodology changes, highlighting the
value of the group's input, and to require a written, public response
to the recommendation of the group, with evidence and rationale, where
the final rates differ from what the group recommended. One commenter
also requested a public comment process for the group's
recommendations. Some emphasized the importance of transparency of this
process, and one suggested recommendations and responses be made public
for a minimum of 30 days prior to the effective date of a new rate.
Several commenters, noting the proposal made the group advisory in
nature, recommended that States be required to justify when they choose
to go against the recommendation of the group, with some of those
commenters offering that at a minimum the State must engage again with
the group when intending to finalize rates that differ from the group's
recommendation, including meaningful negotiations with the providers
represented on the group, perhaps with steps defined by CMS to reach
consensus. One commenter wanted the public process regulations at Sec.
447.204(a)(2) updated to explicitly include obtaining and considering
the interested parties advisory group's input. The importance of the
group's recommendation came up in multiple comments, with one stating
it is not enough merely to require the State to receive, and provide a
written response to, the advisory groups' input, but that we should
ensure the group has authority to shape policy.
Some commenters had detailed recommendations for additional
requirements related to the group's output. One suggested a structured
and routine process for regular review and approval of new rates or
changes, with meaningful input from beneficiaries. The commenter
requested the structured process to be coupled with a requirement for
States to explain the roles and responsibilities of a rate review
advisory body. Another wanted CMS to require States to clearly
delineate how a proposed rate change has factored in inflation and any
unfunded mandates on providers. One commenter stated that the group's
recommendations should go to the State Medicaid director, as well as to
the governor, the State legislature, and HHS. Like other commenters,
this commenter wanted the State to communicate acceptance or denial of
recommendations to the group, with explanations of the State's
decisions in writing, but also stressed that CMS must monitor the State
advisory committees as part of accountability and transparency and
provide feedback to the State.
Some comments also contained other, related recommendations for the
group's purview. Two commenters recommended the group be allowed to
advise and comment on a broad range of HCBS provider rates, with one
suggesting CMS consider leveraging the group for feedback on HCBS
access issues more broadly. That commenter stressed the importance to
the Medicaid program to evaluate rates and access for HCBS, especially
considering the unique market power of Medicaid for HCBS
infrastructure. A commenter requested the group's rate review consider
the experience of individuals dually eligible for Medicare and Medicaid
and factors related to Medicare coverage. One commenter stated the
group should advocate for creating a sustainable wage program to
attract and retain staff to benefit both recipients and providers of
the specified services. Another commenter recommended that the group
should review and comment on provider payment rates in managed care
delivery systems. One commenter, in response for our request for
comment on the services under review, stated the group should focus on
direct care work across all waiver categories. Finally, a couple
commenters sought clarity on how States must acknowledge or respond to
the group's recommendations.
Response: We are finalizing as proposed the advisory nature of the
interested parties advisory group. We agree that the group's input will
be valuable in setting rates, assessing payment adequacy and applicable
access to care metrics, and may provide a perspective on rates and
access that could be lacking in existing processes. As one commenter
noted, Medicaid has an important and large role in the market for HCBS.
However, we believe the policies as we are finalizing them strike the
right balance of accountability and flexibility for a wholly new rate
advisory group process. The State will be required to publish the
recommendations of the interested parties advisory group for
transparency, under Sec. 447.203(b)(6)(v). In addition, when the group
has a recommendation on a proposed rate change, the State will be
required to consider and respond to that recommendation as it would be
deemed part of the input of interested parties described in Sec. Sec.
447.203(c)(4) and 447.204(b)(3). In light of the public notice and
public input requirements already in place when a State proposes a rate
change, and treatment of the recommendation as public input to which a
State is required to consider and address under these requirements, we
are not establishing any specific, new public notice or comment process
requirements for the recommendations

[[Page 40753]]

of the interested parties advisory group. The group could recommend a
sustainable wage program, but we are not adding a requirement to
develop one. We intend for the group to have broad discretion, within
their remit, to make recommendations to the State, which could thereby
result in such recommendations. We encourage the group to provide
feedback to assist the State in implementing a sustainable HCBS
program.
By keeping the group's recommendations recommendation advisory only
(that is, non-binding on the State), we intend for the State to give
serious consideration to the group's recommendations while avoiding the
imposition of policy strictures on the State that could require sudden
shifts in budget priorities or create conflicts, for example, with the
State legislature. Fundamentally, the single State Medicaid agency must
maintain ultimate responsibility to operate the State's Medicaid
program. Also, because the group is advisory only, we are not including
requirements for the State to negotiate with providers or the group on
rate changes, or justify when a rate change is made that is not
consistent with the recommendation of the group. However, we remind
States that the group's recommendation, to the extent it has commented
on rates included in a SPA, would be considered part of the public
feedback to which the State must respond, under Sec. Sec.
447.203(c)(4) and 447.204.
As part of the requirement to establish the interested parties'
advisory group in this final rule, States will be responsible for
giving appropriate guidance to the group so that it understands its
role and responsibilities in producing recommendations. We defer to
States on how to best communicate this information to the group. We
also want to emphasize for States that the information they provide the
group can be expected to shape the nature of the group's
recommendations. As such, although we are not requiring the State to
explain if and how inflation has factored in to a proposed rate, for
example, or provide information to the group on costs imposed on
providers beyond what is required under the payment adequacy metrics
required under 441.311(e), it would benefit a State to provide as much
context as possible to the group so that it can produce the strongest,
best-informed, most useful recommendations. Because the group's
recommendations must be published publicly, interested parties such as
State legislators and HHS will be able to see and review any
recommendations.
In addition, with the meeting cadence we are finalizing (at least
every 2 years), and with recent examples of when a rate change may be
needed to be enacted quickly (for example, to address urgent
programmatic needs in connection with the COVID-19 pandemic and public
health emergency), it is not feasible to require consultation with the
group for every possible rate change. We also note that the mandate of
the group and the minimum required meeting cadence should not be viewed
as limitations, and States have flexibility to rely on this group in
ways that will best help to enhance HCBS or Medicaid more broadly.
States may have the group review broader HCBS issues or rates if it so
chooses; we merely focused the required scope on the most frequently
used HCBS. They can also have the group advise on provider payment
rates in managed care delivery systems even though that was not our
prioritized focus in this new requirement, under the flexibility States
have to direct the work of the group. We also note that although we are
not requiring dually eligible beneficiaries specifically in the group
to maximize the available pool for recruiting beneficiary members of
the group, the majority of HCBS recipients are dually eligible.
Finally, we appreciate the many recommendations and suggestions that we
will consider if and when we examine the regulations for this group for
potential changes through future rulemaking as part of our ongoing
access work.
Comment: Several commenters had recommendations for the nature of
materials, data, explanations, and information the group should have
access to, to ensure the group's input could be fully informed by data,
both public and internal to the agency, as to how any rates were
calculated. These comments included advice on what materials the group
should have access to or suggestions of sources the group should be
required to review and consider. Specifically, a couple of commenters
wanted the group to be required to consult any analyses performed
pursuant to the requirements we are finalizing in Sec. 447.203(c),
since those analyses would include valuable data on the number of home
care claims, the number of enrollees receiving home care services, and
the number of providers furnishing such services. Another commenter
recommended the group to be required to consult wage data, such as data
from the Bureau of Labor Statistics or from unions, to use as a basis
of rate recommendations. Another commenter encouraged CMS to partner
with the Department of Labor to provide States with data on competitive
wages for other occupations with similar low entry level requirements,
to avoid putting burden on States while providing the advisory group
with State-level economic data to assess the competitiveness of direct
care worker wages.
One commenter provided a detailed recommendation for data to
provide the group, including explanations and supporting information on
how any proposed rates were calculated, in addition to the metrics
required under the payment adequacy and reporting requirements
provisions of this final rule. Specifically, the commenter stated this
information should include clear, consistent definitions of the cost
elements that are considered in establishing a rate, noting that if the
definitions of cost components such as employee travel or training are
not clear and the bases for these calculations are not shared with
sufficient granularity, then the advisory group will not be able to
meaningfully comment. Similarly, a commenter urged CMS to ensure that
the interested parties advisory group have access to both public-facing
reports that States are required to produce and publish described in
payment transparency provisions of this rule, and to the underlying
data that States use to prepare these reports, which may allow the
interested parties advisory group to identify trends or access issues
that are not readily apparent in the public reports. One commenter
recommended that States be required, through a phase-in, to both
collect and provide to the group data on turnover and vacancy rates for
direct care workers. The commenter explained that tools currently used
by States, such as the National Core Indicators-Intellectual and
Developmental Disabilities Staff Stability Survey, or the National Core
Indicators-Aging and Physical Disabilities tool currently being
piloted, only provide data for agency-directed workers, and as such,
more information was needed about independent providers in self-
directed programs. The commenter noted these are important data
elements to assess the adequacy of wages and compensation.
Finally, a few commenters stated that States should make
compensation, including information on median wages and historic trends
in compensation, available to all members of the public, for
transparency and to assist current or future members of the group
itself.
Response: We are finalizing as proposed, apart from the addition of
habilitation services, the regulation requiring that the group will
advise and consult on current and proposed

[[Page 40754]]

payment rates, HCBS provider payment adequacy reporting information
under Sec. 441.311(e),), and applicable access to care metrics under
Sec. 441.311(d)(2), associated with services found at Sec.
440.180(b)(2) through (4) and (6). The responsibility for the group to
advise and consult on these matters necessarily implies that the State
must ensure that the group is provided access to current and proposed
rate information, HCBS provider payment adequacy data, and applicable
access to care metrics. We believe that these requirements, coupled
with requirements we are finalizing for payment rate disclosures for
HCBS at Sec. 447.203(b)(2) through (3), will provide the group with
sufficient data to develop and support their recommendations, and we
also believe those additional finalized provisions will provide
reassurance to commenters interested in more publicly available data.
We further note that certain data, such as certain BLS wage data, are
already publicly available and can be used by the group. We remind
States that they are not limited to the requirements we are finalizing
and are free to consider and provide as much data that the State
considers relevant and reasonably available to support the group in its
work.
We did not propose and are not finalizing any data collection
requirements specifically with respect to the interested parties'
advisory group to inform their consideration of Medicaid payment rates
for certain HCBS, although we understand that currently available tools
and data may have some gaps. In view of the otherwise existing
information sources just discussed, we do not believe the value of
requiring States to identify or develop and make available additional
data sources, such as reporting on independent providers in self-
directed programs, would outweigh the added burden of a new data
collection. We are similarly not taking on any additional data
collection to support these efforts, again noting that we think the
policies in this final rule will be sufficient, but as with any new or
existing policy we will work with our State partners to assist them in
establishing these groups and identifying where we can support State
efforts that may extend beyond the requirements in this final rule.
Comment: We received a number of comments around various
administrative aspects of Sec. 447.203(b)(6), from member recruitment
to the meeting cadence. Several commenters stated that the State should
publicly recruit members and requested States to publicly disclose the
process of how those members are recruited and the process to convene
meetings. A few commenters recommended the members have term-limits,
coupled with the protection to only be removed for cause during a term,
in order to protect the individuals and the group from reprisal or
disbandment.
Comments about the meeting cadence varied. A few recommended the
group should meet for every rate change proposed by the State, one
agreed with a biannual cadence, while another suggested to increase the
cadence to annually in addition to meeting for every rate change.
Another commenter supported annual meetings and noted that issues
impacting the lives of beneficiaries and workers that should be
addressed by rates can happen at a more frequent rate than biannual
State budget cycles. One commenter stated the meeting cadence should be
every 6 months.
A few commenters suggested a number of additional recommendations
such as the regulation should include a requirement of recordkeeping,
and the regulation should focus on the distinction between independent
and agency-employed workers. Finally, one commenter suggested a name
change for the group, ``direct care workforce payment advisory
committee,'' to clarify the role and importance of the group.
Response: We appreciate the feedback about the specifics of the
administration of the interested parties advisory group. We are
finalizing these aspects as proposed. The meeting cadence, as noted by
the commenter, is intended to align with usual State budgetary cycles.
While other factors may impact the needs of beneficiaries, providers
and direct care workers, the State budget creates the framework in
which decisions and recommendations can be made, and we believe
aligning with that cycle appropriately balances the value gained from
the interested parties advisory group's recommendations with burden on
States. Similarly, we are finalizing the ability of States to determine
the tenure of members, as States are best situated to assess their
beneficiaries' and workers' ability to participate in an advisory group
and for what length of time. Term limits and removal for cause will be
at the State's discretion to ensure the effective operation of the
group. We note that the regulation does specify that the process by
which the State selects interested parties advisory group members and
convenes its meetings must be made publicly available, which aligns
with recommendations from some commenters.
States have requirements to maintain records of public input under
Sec. 447.203(c)(4)(iii), and as stated we would regard the
recommendation of the group a form of public input to the extent the
group comments on proposed rates.
With respect to individual and agency-employed providers, the
payment rate disclosure requirements under Sec. 447.203(b)(3)(ii2)(iv)
require States to publish average hourly Medicaid FFS fee schedule
payment rates for individual providers and provider agencies separately
to the extent they differ, creating a new method through which the
State, CMS, and the public can scrutinize any rate difference between
individual providers and provider agencies. We are not adding
additional requirements for the group to examine further distinctions
between individual and provider agencies, but as the group will be
reviewing current and proposed rates, they will have the opportunity to
see where such rates differ and make recommendations accordingly.
Finally, we appreciate the suggestion to change the name of the
group, but we want to remind that the purview of this group is not
solely payments for HCBS, although that is the primary focus. The work
includes access metrics, specifically HCBS payment adequacy data as
required at Sec. 441.311(e), and access to care metrics under Sec.
441.311(d)(2). We understand the name is rather generic, and we will
make every effort to ensure any materials or communications are clear
about when an ``interested parties advisory group'' is in reference to
Sec. 447.203(b)(6).
Comment: We received some comments in opposition to an interested
parties advisory group. A primary, recurring element of these comments
was related to the burden of establishing this group relative to the
value the commenters thought the group would add. One commenter stated
this group would be duplicative of other State efforts, without adding
value. Another was concerned that the group would establish a pattern
for more, similar groups to be created, resulting in significant State
burden. Another stated the group would create undue interference in a
State's ability to manage its Medicaid program. One commenter stated
that limiting the group's purview to three services would create
disjointedness in discussions about HCBS or broader rates in general.
One commenter stated that their MCAC (or, following the effective
date of this final rule, their MAC), already performs the same
functions as the

[[Page 40755]]

proposed interested parties advisory group. Another requested an
exception to the requirement for States that already have a group
established for similar topics. Two commenters in opposition to the
requirement had recommendations for adjustments. One commenter stated
that the group should not include members who have a conflict of
interest because they stand to receive a financial benefit from the
decisions of the group, or that the scope of the group's
recommendations should exclude payment rates if group members have
financial conflicts of interest. Another commenter, who thought the
group was unworkable and likely would not be productive, indicated it
would be more productive to require States to establish a separate
advisory group for each rate setting activity they undertake and to
include both industry and consumer (beneficiary) representatives.
Response: We understand that there will be costs and work for
States to set up a new advisory group. We do not take lightly the
decision to finalize this policy. However, the circumstance of HCBS and
the direct care workforce shortage described earlier in this section
demand immediate action. We kept the required scope of the group's
remit narrow to allow States that need to minimize the work of the
group the ability to focus most acutely on certain services and certain
topics around rates, access, and payment adequacy. However, we also
wrote into these regulations a great deal of flexibility for States. We
understand the burden our requirements put on States, which is why we
take steps to create and highlight flexibility for States to minimize
the burden of new requirements and help ensure that States are able to
comply with new requirements in a manner likely to result in the
greatest benefit given the particular circumstances of the State and
its provider and beneficiary communities. We make these assessments
with every rulemaking proposal. The creation of this group does not
mean that we necessarily will propose to require the formation of
additional similar, discrete groups in the future; we are mindful that
any such proposal would be likely to involve additional burden on
States, and analysis of that burden would inform any future proposal.
If a State believes the group, in the form which we are finalizing
in this final rule, will not add value, there is room to expand and
enhance the group to a point where that State realizes value to its
program. The group's purview includes the requirement to examine rates
for three services, but States can always have the group advise on
more. In addition, the group will not be in a position to unduly
influence the State's Medicaid program, as its role is only advisory in
nature and the single State agency will maintain full responsibility to
administer the State's Medicaid program. We also want to remind States
what we included in the proposed rule, that to the extent a State's MAC
established under Sec. 431.12 meets the requirements of this
regulation, the State could utilize that committee for this purpose,
thereby eliminating duplication between these entities. Furthermore,
while we are unaware of specific examples, if a State has another,
extant group that meets the requirements of Sec. 447.203(b)(6), then
we expect the State could use that group for this purpose as well,
similar to what we indicated for MACs. Finally, we do not agree that
having members in the group with a financial interest, such as the
direct care workers whose wages may be impacted, and advising on rates
creates a problematic conflict of interest. Rather, in the case of
direct care workers, we believe their lived experience will supply a
valuable perspective, and their input on rates specifically could be
useful to the State agency that (although operating under a fiduciary
obligation to administer the Medicaid program in the best interest of
beneficiaries under section 1902(a)(19) of the Act) also has a fiscal
interest in a proposed rate change. This final rule leaves States free
to establish conflict of interest policies applicable to the members of
the interested parties' advisory group, which we expect States will do
in a manner that protects the integrity of the group while not unduly
restricting input from individuals with perspectives the final rule is
intended to ensure are heard.
Comment: Several commenters responded to language included in the
proposed rule that, to the extent a State's MAC established under
proposed Sec. 431.12 also meets the requirements of this advisory
group regulation, the State could utilize that committee for this
purpose. The majority of those comments recommended keeping the MAC
separate. These commenters explained that the work involved merits two
groups and any overlap of membership between the groups would be
acceptable and potentially beneficial. One of those commenters stated
that the work of the interested parties' advisory group was much more
specialized than that of the MAC. One suggested the interested parties'
advisory group be a subgroup of the MAC, similar to the BAG. Finally,
one commenter suggested that the MAC and interested parties' advisory
group meetings be kept separate, or the MAC could have a dedicated
subgroup responsible for HCBS, to ensure adequate attention to the
topic. There were a few commenters who appreciated the flexibility to
allow for the MAC to serve this dual purpose of meeting both the MAC
requirements and the interested parties' advisory group requirements,
and one expected some States may pursue this flexibility.
Response: When we were developing the proposed rule, which included
proposals under Sec. 431.12 to reconfigure the MCAC as the MAC and BAG
(now BAC), we noted that the membership and scope of the MAC could
potentially align with what we were proposing for the interested
parties' advisory group. While we agree that the work of each is
distinct and important, deserving of dedicated time and focus, we also
seek to avoid duplication where possible. If a MAC has membership that
includes direct care workers, beneficiaries, beneficiaries' authorized
representatives, and other interested parties impacted by the services
and rates of focus in the interested parties' advisory group, then we
believe it would be unnecessarily duplicative to require a separate
group and deny the State the ability to include the remit of the
interested parties' advisory group in the work of the MAC under the
flexibility given to States and their MACs under Sec. 431.12(g)(8),
which we are finalizing to include in the MAC's scope ``[o]ther issues
that impact the provision or outcomes of health and medical care
services in the Medicaid program as determined by the MAC, BAC, or
State.'' States potentially also could establish the interested
parties' advisory group as a subgroup of the MAC, similar to the BAC,
consistent with the requirements of this final rule. States will have
the discretion to determine if the groups and/or their meetings need to
be kept distinct in order best to fulfil the obligations of each.
However, we caution States that this flexibility is not creating
any type of exception. The cadence of required meetings, focus, and
work products of the interested parties advisory group are distinct,
and States wishing to utilize their MAC will need to take adequate
steps to ensure the MAC is meeting the regulatory requirements for both
entities. Some States may find keeping the interested parties group
distinct will allow for easier recruitment, retention, and focus on the
relevant subject matter. We also want to highlight the concerns
expressed by commenters requesting the groups be kept distinct and
emphasizing

[[Page 40756]]

the specialized work of this interested parties advisory group.
Although we did not elect to add requirements to keep the groups or
meetings distinct, States should do so if combining the groups or their
meetings would hinder the work of either the MAC or interested parties
advisory group.
Comment: A few commenters requested additional clarity about what
support would be available for States to establish the advisory group.
A couple of commenters requested CMS confirm that States can claim FFP
for activities related to establishing and running this group, similar
to the confirmation provided in the MAC/BAG provisions explicitly
saying FFP would be available.\333\ Others requested CMS make States
aware of any available funding streams or opportunities for enhanced
match.
---------------------------------------------------------------------------

\333\ 88 FR 27960 at 27967.
---------------------------------------------------------------------------

Response: In the proposed rule, we specified that ``FFP would be
available for expenditures that might be necessary to implement the
activities States would need to undertake to comply with the provisions
of the proposed rule, if finalized.'' \334\ As we are finalizing the
requirements related to this advisory group, FFP will be available for
States claiming qualifying expenditures for related activities. We note
that generally, the applicable matching rate will be the general 50
percent administrative matching rate, but to the extent a State incurs
expenditures it believes qualify for a higher match rate, higher
statutory matching rates potentially could be available to the extent
the expenditures meet applicable Federal requirements. There is not a
separate, unique funding source for this provision of the final rule.
---------------------------------------------------------------------------

\334\ 88 FR 27960 at 27962.
---------------------------------------------------------------------------

After consideration of public comments, we are finalizing all
provisions under Sec. 447.203(b)(6) with the following changes:
Added a regulatory reference for habilitation services as
a category of service in Sec. 447.203(b)(6)(i). The finalized language
now states ``. . . for the self-directed or agency-directed services
found at Sec. 440.180(b)(2) through (4) and (6).'' (new language
identified in bold).
Added a regulatory reference for habilitation services and
``habilitation'' as a category of service in Sec. 447.203(b)(6)(iii).
The finalized language now states ``. . . associated with services
found at Sec. 440.180(b)(2) through (4) and (6), to ensure the
relevant Medicaid payment rates are sufficient to ensure access to
personal care, home health aide, homemaker, and habilitation services''
(new language identified in bold).
Added language to clarify the ``. . . publication
requirements described in paragraph (b)(1) through (b)(1)(ii) of this
section . . .'' (new language identified in bold).
Minor technical changes to wording.
3. State Analysis Procedures for Rate Reduction or Restructuring (Sec.
447.203(c))
As stated previously, the Supreme Court's Armstrong decision
underscored the importance of CMS' administrative review of Medicaid
payment rates to ensure compliance with section 1902(a)(30)(A) of the
Act. CMS' oversight role is particularly important when States propose
to reduce provider payment rates or restructure provider payments,
since provider payment rates can affect provider participation in
Medicaid, and therefore, beneficiary access to care. In Sec.
447.203(c), we proposed a process for State access analyses that would
be required whenever a State submits a SPA proposing to reduce provider
payment rates or restructure provider payments.
As noted previously, the 2015 final rule with comment period
required that, for any SPA proposing to reduce provider payment rates
or restructure provider payments in circumstances when the changes
could result in diminished access, States must submit a detailed
analysis of access to care under previous Sec. Sec. 447.203(b)(1) and
(b)(6) and 447.204(b)(1). This analysis includes, under previous Sec.
447.203(b)(1), the extent to which beneficiary needs are fully met; the
availability of care through enrolled providers to beneficiaries in
each geographic area, by provider type and site of service; changes in
beneficiary utilization of covered services in each geographic area;
the characteristics of the beneficiary population (including
considerations for care, service and payment variations for pediatric
and adult populations and for individuals with disabilities); and
actual or estimated levels of provider payment available from other
payers, including other public and private payers, by provider type and
site of service. Previously, this information was required for any SPA
that proposes to reduce provider payment rates or restructure provider
payments in circumstances when the changes could result in diminished
access, regardless of the provider payment rates or levels of access to
care before the proposed reduction or restructuring.
Following the implementation of the 2015 final rule with comment
period, as we worked with States to implement the previous AMRP
requirements, many States expressed concerns that the requirements that
accompany proposed rate reductions or restructurings are overly
burdensome. Specifically, States pointed to instances where proposed
reductions or restructurings are nominal, or where rate changes are
made via the application of a previously approved rate methodology,
such as when the State's approved rate methodology ties Medicaid
payment rates to a Medicare fee schedule and the Medicare payment rate
is reduced. We acknowledged these concerns through previous proposed
rulemaking. In the 2018 proposed rule, we agreed that our experience
implementing the previous AMRP process from the 2015 final rule with
comment period raised questions about the benefit of the access
analysis when proposed rate changes include nominal rate reductions or
restructurings that are unlikely to result in diminished access to
care.\335\
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\335\ 83 FR 12696 at 12697.
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We did not finalize the 2018 proposed rule; instead, in response to
feedback, we proposed a rescission of the previous AMRP process in the
2019 proposed rule.\336\ In that proposed rule, we indicated that
future guidance would be forthcoming to provide information on the
required data and analysis that States might submit with rate reduction
or restructuring SPAs in place of the previous AMRP process to support
compliance with section 1902(a)(30)(A) of the Act.\337\ We did not
finalize the rescission proposed in the 2019 proposed rule. Although we
were concerned that the previous AMRP process was overly burdensome for
States and CMS in relation to the benefit obtained in helping ensure
compliance with the access requirement in section 1902(a)(30)(A) of the
Act, our 2018 and 2019 proposed rules did not adequately consider our
need for information and analysis from States seeking to reduce
provider payment rates or restructure provider payments to enable us to
determine that the statutory access requirement is met when making SPA
approval decisions.
---------------------------------------------------------------------------

\336\ 84 FR 3372.2.
\337\ Id at 33723.
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To improve the efficiency of our administrative procedures and
better inform our SPA approval decisions, we proposed to establish
standard information that States would be required to submit with any
proposed rate reductions or proposed payment restructurings in
circumstances when

[[Page 40757]]

the changes could result in diminished access, including a streamlined
set of data when the reductions or restructurings are nominal, the
State rates are above a certain percentage of Medicare payment rates,
and there are no evident access concerns raised through public
processes; and an additional set of data elements that would be
required when States propose FFS provider payment rate reductions or
restructurings in circumstances when the changes could result in
diminished access and these criteria are not met. For both sets of
required or potentially required elements, we proposed to standardize
the data and information States would be required to submit with rate
reduction or restructuring SPAs. Although the previous AMRP process has
helped to improve our administrative reviews and helped us make
informed SPA approval determinations, we explained that the proposed
procedures would provide us with similar information in a manner that
reduces State burden. Additionally, the proposed procedures would
provide States increased flexibility to make program changes with
submission of streamlined supporting data to us when current Medicaid
rates and proposed changes fall within specified criteria that create a
reasonable presumption that proposed reductions or restructuring would
not reduce beneficiary access to care in a manner inconsistent with
section 1902(a)(30)(A) of the Act.
This final rule seeks to achieve a more appropriate balance between
reducing unnecessary burden for States and CMS and ensuring that we
have the information necessary to make appropriate determinations for
whether a rate reduction or restructuring SPA might result in
beneficiary access to covered services failing to meet the standard in
section 1902(a)(30)(A) of the Act. In Sec. 447.203(c), we proposed to
establish analyses that States would be required to perform, document,
and submit concurrently with the submission of rate reduction and rate
restructuring SPAs, with additional analyses required in certain
circumstances due to potentially increased access to care concerns.
We proposed a two-tiered approach for determining the level of
access analysis States would be required to conduct when proposing
provider payment rate reductions or payment restructurings. The first
tier of this approach, proposed at Sec. 447.203(c)(1), sets out three
criteria for States to meet when proposing payment rate reductions or
payment restructurings in circumstances when the changes could result
in diminished access that, if met, would not require a more detailed
analysis to establish that the proposal meets the access requirement in
section 1902(a)(30)(A) of the Act. The State agency would be required
to provide written assurance and relevant supporting documentation that
the three criteria specified in those paragraphs are met, as well as a
description of the State's procedures for monitoring continued
compliance with section 1902(a)(30)(A) of the Act. As explained in more
detail later in this section, these criteria proposed in Sec.
447.203(c)(1) represent thresholds we believe would be strong
indicators that Medicaid payment rates would continue to be sufficient
following the change to enlist enough providers so that care and
services are available under the plan at least to the extent that such
care and services are available to the general population in the
geographic area.
We noted that, in the course of our review of a payment SPA that
meets these criteria, as with any SPA review, we may need to request
additional information to ensure that all Federal SPA requirements are
met. We also note that meeting the three criteria described in proposed
Sec. 447.203(c)(1) does not guarantee that the SPA would be approved,
if other applicable Federal requirements are not met. Furthermore, if
any criterion in the first tier is not met, we proposed a second tier
in Sec. 447.203(c)(2), which would require the State to conduct a more
extensive access analysis in addition to providing the results of the
analysis in the first tier. A detailed discussion of the second tier
follows the details of the first tier in this section.
Under proposed Sec. 447.203(c)(1)(i), the State would be required
to provide a supported assurance that Medicaid payment rates in the
aggregate (including base and supplemental payments) following the
proposed reduction or restructuring for each benefit category affected
by the proposed reduction or restructuring would be at or above 80
percent of the most recently published Medicare payment rates for the
same or a comparable set of Medicare-covered services. While we
acknowledge that 80 percent of Medicare rates may not provide absolute
assurance that providers will participate in the Medicaid program, we
proposed to use 80 percent as a threshold to help determine the level
of analysis and information a State must provide to CMS to support
consistency with section 1902(a)(30)(A) of the Act. Establishing this
threshold will allow CMS to focus its resources on reviewing payment
proposals that are at highest risk for access to care concerns.
Notably, there are other provisions of the proposal that would provide
opportunities for the public to raise access to care concerns to State
agencies and to CMS should the 80 percent prove insufficient to provide
for adequate access to care for certain care and services.
In proposed Sec. 447.203(c)(1)(i), we explained that we mean for
``benefit category'' to refer to all individual services under a
category of services described in section 1905(a) of the Act for which
the State is proposing a payment rate reduction or restructuring.
Comparing the payment rates in the aggregate would involve first
performing a comparison of the Medicaid to the Medicare payment rate on
a code-by-code basis, meaning CPT, CDT, or HCPCS as applicable, to
derive a ratio for individual constituent services, and then the ratios
for all codes within the benefit category would be averaged by summing
the individual ratios then dividing the sum by the number of ratios.
For example, if the State is seeking to reduce payment rates for a
subset of physician services, the State would review all current
payment rates for all physician services and determine if the proposed
reduction to the relevant subset of codes would result in an average
Medicaid payment rate for all physician services that is at or above 80
percent of the average corresponding Medicare payment rates. For
supplemental payments, we are relying upon the definition of
supplemental payments in section 1903(bb)(2) of the Act, which defines
supplemental payments as ``a payment to a provider that is in addition
to any base payment made to the provider under the State plan under
this title or under demonstration authority . . . [b]ut such term does
not include a disproportionate share hospital payment made under
section 1923 [of the Act].'' With the inclusion of supplemental
payments, States would need to aggregate the supplemental payments paid
to qualifying providers during the State fiscal year and divide by all
providers' total service volume (including service volume of providers
that do not qualify for the supplemental payment) to establish an
aggregate, per-service supplemental payment amount, then add that
amount to the State's fee schedule rate to compare the aggregate
Medicaid payment rate to the corresponding Medicare payment rate. As
this supported assurance in proposed Sec. 447.203I(1)(i) is expected
to be provided with an accompanying

[[Page 40758]]

SPA, we noted that CMS may ask the State to explain how the analysis
was conducted if additional information is needed as part of the
analysis of the SPA. We solicited comments on the proposed Sec.
447.203I(1)(i) supported assurance that Medicaid payment rates in the
aggregate (including base and supplemental payments) following the
proposed reduction or restructuring for each benefit category affected
by the proposed reduction or restructuring would be at or above 80
percent of the most recently published Medicare payment rates for the
same or a comparable set of Medicare-covered services should include a
weighted average of the payment rate analysis by service volume, number
of beneficiaries receiving the service, and total amount paid by
Medicaid for the code in a year using State's Medicaid utilization data
from the MMIS claims system rather than using a straight code-by-code
analysis.
We explained that we understand this approach may have a smoothing
effect on the demonstrated overall levels of Medicaid payment within a
benefit category under the State plan. In many circumstances, only a
subset of providers are recipients of Medicaid supplemental payments
with the rest of the providers within the benefit category simply
receiving the State plan fee schedule amount. This could result in a
demonstration showing the Medicaid payments being high relative to
Medicare, but the actual payments to a large portion of the providers
would be less than the overall demonstration would suggest. As an
alternative, we considered whether to adopt separate comparisons for
providers who do and who do not receive supplemental payments, where a
State makes supplemental payments for a service to some but not all
providers of that service. We solicited comments on the proposed
approach and this alternative.
We selected FFS Medicare, as opposed to Medicare Advantage, as the
proposed payer for comparison for a number of reasons. A threshold
issue is payment rate data availability: private payer data may be
proprietary or otherwise limited in its availability for use by States.
In addition, Medicare sets its prices rather than negotiating them
through contracts with providers, and is held to many similar statutory
standards as Medicaid with respect to those prices, such as efficiency,
access, and quality.\338\ For example, section 1848(g)(7) of the Act
directs the Secretary of HHS to monitor utilization and access for
Medicare beneficiaries provided through the Medicare fee schedule
rates, and directs that the Medicare Payment Advisory Commission
(MedPAC) shall comment on the Secretary's recommendations. In
developing its comments, MedPAC convenes and consults a panel of
physician experts to evaluate the implications of medical utilization
patterns for the quality of and access to patient care. In a March 2001
report, MedPAC summarized its evaluation of Medicare rates, stating
``Medicare buys health care products and services from providers who
compete for resources in private markets. To ensure beneficiaries'
access to high-quality care, Medicare's payment systems therefore must
set payment rates for health care products and services that are: high
enough to stimulate adequate numbers of providers to offer services to
beneficiaries, sufficient to enable efficient providers to supply high-
quality services, given the trade-offs between cost and quality that
exist with current technology and local supply conditions for labor and
capital, and low enough to avoid imposing unnecessary burdens on
taxpayers and beneficiaries through the taxes and premiums they pay to
finance program spending.'' \339\ Medicare's programmatic focus on
beneficiary access aligns with the requirements of section
1902(a)(30)(A) of the Act.
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\338\ https://www.healthcarevaluehub.org/advocate-resources/publications/medicare-rates-benchmark-too-much-too-little-or-just-right.
\339\ MedPAC. Report to the Congress: Medicare Payment Policy,
March 2001. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/Mar01Ch1.pdf. Accessed
December 20, 2022.
---------------------------------------------------------------------------

In addition, Medicare PFS fee schedule rates are stratified by
geographic areas within the States, which we seek to consider as well
to ensure that payment rates are consistent with section 1902(a)(30)(A)
of the Act. The fee schedule amounts are established for each service,
generally described by a particular procedure code (including HCPCS,
CPT, and CDT),) using resource-based inputs to establish relative value
units (RVUs) in three components of a procedure: work, practice
expense, and malpractice. The three component RVUs for each service are
adjusted using CMS-calculated geographic practice cost indexes (GPCIs)
that reflect geographic cost differences in each fee schedule area as
compared to the national average. The current Medicare PFS locality
structure was implemented in 2017 in accordance with the Protecting
Access to Medicare Act of 2014 (PAMA 2014). Under the current locality
structure, there are 112 total PFS localities.\340\
---------------------------------------------------------------------------

\340\ Section 220(b) of PAMA 204 added section 1848(e)(6) of the
Act, which requires that, for services furnished on or after January
1, 2017, the locality definitions for California, which has the most
unique locality structure, be based on the Metropolitan Statistical
Area (MSA) delineations as defined by the Office of Management and
Budget (OMB). The resulting modifications to California's locality
structure increased its number of localities from 9 under the
previous structure to 27 under the MSA-based locality structure
(operational note: for the purposes of payment the actual number of
localities under the MSA-based locality structure is 32). Of the 112
total PFS localities, 34 localities are Statewide areas (that is,
only one locality for the entire State). There are 75 localities in
the other 16 States, with 10 States having 2 localities, 2 States
having 3 localities, 1 State having 4 localities, and 3 States
having 5 or more localities. The District of Columbia, Maryland, and
Virginia suburbs, Puerto Rico, and the Virgin Islands are additional
localities that make up the remainder of the total of 112
localities. Medicare PFS Locality Configuration. https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Locality. Accessed December 21, 2022.
---------------------------------------------------------------------------

When considering geography in their rate analyses, we noted that we
expect States to conduct a code-by-code analysis of the ratios of
Medicaid-to-Medicare provider payment rates for all applicable codes
within the benefit category, either for each of the GPCIs within the
State, or by calculating an average Medicare rate across the GPCIs
within the State (such as in cases where a State does not vary its
rates by region). In cases where a State does vary its Medicaid rates
based on geography, but that variation does not align with the Medicare
GPCI, we explained that the State should utilize the Medicare payment
rates as published by Medicare for the same geographical location as
the base Medicaid FFS fee schedule payment rate to achieve an
equivalent comparison and align the Medicare GPCI to the locality of
the Medicaid payment rates, using the county and locality information
provided by Medicare for the GPCIs, for purposes of creating a
reasonable comparison of the payment rates.\341\ To conduct such an
analysis that meets the requirements of proposed Sec.
447.203(c)(1)(i), States may compare the Medicaid payment rates
applicable to the same Medicare GPCI to each Medicare rate by GPCI
individually, and then aggregate that comparison into an average rate
comparison for the benefit category. To the extent that Medicaid
payment rates do not vary by geographic locality within the State, the
State may also calculate a Statewide average Medicare rate based upon
all of the rates applicable to the GPCIs within that State and compare
that average Medicare rate

[[Page 40759]]

to the average Medicaid rate for the benefit category.
---------------------------------------------------------------------------

\341\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Locality.
---------------------------------------------------------------------------

Once we decided to propose using Medicare payment rates as a point
of comparison, we needed to decide what threshold ratio of proposed
Medicaid to Medicare payment rates should trigger additional
consideration and review for potential access issues. First, we
considered how current levels of Medicaid payment compares to the
Medicare payment for the same services. In a 2021 Health Affairs
article, Zuckerman, et al, found that ``Medicaid physician fees were 72
percent of Medicare physician fees for twenty-seven common procedures
in 2019.'' \342\ This ratio varied by service type. For example, ``the
2019 Medicaid-to-Medicare fee index was lower for primary care (0.67)
than for obstetric care (0.80) or for other services (0.78).'' The
authors also found that ``between 2008 and 2019 Medicare and Medicaid
fees both increased (23.6 percent for Medicare fees and 19.9 percent
for Medicaid fees), leaving the fee ratios similar.'' \343\
---------------------------------------------------------------------------

\342\ Zuckerman, S. et al. ``Medicaid Physician Fees Remained
Substantially Below Fees Paid By Medicare in 2019,'' Health Affairs,
Volume 40, Number 2, February 2021. Available at https://doi.org/10.1377/hlthaff.2020.00611 (accessed December 23, 2022).
\343\ Id.
---------------------------------------------------------------------------

Next, considering that Medicaid rates are generally lower than
Medicare, we wanted to examine the relationship between these rates and
a beneficiary's ability to access covered services. This led us to
first look into a comparison of physician new patient acceptance rates
based on a prospective new patient's payer. In a June 2021 fact sheet,
MACPAC found ``in 2017 (the most recent year available), physicians
were significantly less likely to accept new patients insured by
Medicaid (74.3 percent) than those with Medicare (87.8 percent) or
private insurance (96.1 percent).'' \344\ MACPAC found this to be true
``regardless of physician demographic characteristics (age, sex, region
of the country); and type and size of practice.'' \345\
---------------------------------------------------------------------------

\344\ MACPAC. ``Physician Acceptance of New Medicaid Patients:
Finding from the National Electronic Health Records Survey.'' June.
2021. Available at https://www.macpac.gov/wp-content/uploads/2021/06/Physician-Acceptance-of-New-Medicaid-Patients-Findings-from-the-National-Electronic-Health-Records-Survey.pdf (accessed December 23,
2023).
\345\ Id.
---------------------------------------------------------------------------

We then wanted to confirm whether this was related to the rates
themselves. In a 2019 Health Affairs article, the authors found that,
``higher payment continues to be associated with higher rates of
accepting new Medicaid patients. . .physicians most commonly point to
low payment as the main reason they choose not to accept patients
insured by Medicaid.'' \346\ The study found that physicians in States
that pay above the median Medicaid-to-Medicare fee ratio accepted new
Medicaid patients at higher rates than those in States that pay below
the median, with acceptance rates increasing by nearly 1 percentage
point (0.78) for every percentage point increase in the fee ratio.\347\
---------------------------------------------------------------------------

\346\ Holgash, K. and Martha Heberlein, ``Physician Acceptance
Of New Medicaid Patients: What Matters And What Doesn't.'' Health
Affairs, April 10, 2019. Available at https://www.healthaffairs.org/do/10.1377/forefront.20190401.678690/full/ (accessed February 22,
2023).
\347\ Id.
---------------------------------------------------------------------------

Similarly, in a 2020 study published by the National Bureau of
Economic Research, researchers found that there was a positive
association between increasing Medicaid physician fees and increased
likelihood of having a usual source of care, improved access to
specialty doctor care, and large improvements in caregivers'
satisfaction with the adequacy of health coverage, among children with
special health care needs with a public source of health coverage.\348\
Further, Berman, et al, focused on pediatricians and looked at
Medicaid-Medicare fee ratio quartiles, finding that the percent of
pediatricians accepting all Medicaid patients and relative pediatrician
participation in Medicaid increased at each quartile, but improvement
was most significant up to the third quartile.\349\ According to the
Kaiser Family Foundation, in 2016, following the expiration of section
1202 of the Affordable Care Act (Pub. L. 111-148), which amended
section 1902(a)(13) of the Act to implement a temporary payment floor
for certain Medicaid primary care physician services, the third
quartile of States had Medicaid-Medicare fee ratios of between 79 and
86 percent for all services provided under all State Medicaid FFS
programs.\350\ Importantly, considering the proposed requirements at
paragraph (c) would pertain to proposed payment rate reductions or
payment restructurings in circumstances when the changes could result
in diminished access, multiple recent studies have also shown that the
association between Medicaid physician fees and measures of beneficiary
access are consistent whether physician payments are increased or
decreased to reach a particular level at which access is assessed.\351\
---------------------------------------------------------------------------

\348\ Chatterji, P. et al. ``Medicaid Physician Fees and Access
to Care Among Children with Special Health Care Needs'' National
Bureau of Economic Research, Working Paper 26769, February 2020, p.
2-54. Medicaid Physician Fees and Access to Care among Children with
Special Health Care Needs [verbar] NBER. Accessed June 16, 2022.
\349\ Berman, S., et al. ``Factors that Influence the
Willingness of Private Primary Care Pediatricians to Accept More
Medicaid Patients'' Pediatrics.
\350\ https://www.kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index.
\351\ Candon, M., et al. ``Declining Medicaid Fees and Primary
Care Appointment Availability for New Medicaid Patients'' JAMA
Internal Medicine, Volume 178, Number 1, January 2018, p. 145-146.
Available at https://jamanetwork.com/journals/jamainternalmedicine/fullarticle/2663253. Accessed June 16, 2022.
---------------------------------------------------------------------------

The Kaiser Family Foundation found that 23 States have Medicaid-to-
Medicare fee ratios of at least 80 percent for all services, 17 States
have fee ratios of 80 percent for primary care services, 32 States have
fee ratios of 80 percent for obstetric care, and 27 States have fee
ratios of 80 percent for other services.\352\ Additional studies
support the Holgash and Heberlein findings that physicians most
commonly point to low payment as the main reason they choose not to
accept patients insured by Medicaid, showing that States with a
Medicaid to Medicare fee ratio at or above 80 percent show improved
access for children to a regular source of care,\353\ and decreased use
of hospital-based facilities, versus States with a lower Medicaid to
Medicare fee ratio.
---------------------------------------------------------------------------

\352\ https://www.kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index.
\353\ Chatterji, P. et al. ``Medicaid Physician Fees and Access
to Care Among Children with Special Health Care Needs'' National
Bureau of Economic Research, Working Paper 26769, February 2020, p.
2-54. Available at https://www.nber.org/papers/w26769. Accessed
August 16, 2022.
---------------------------------------------------------------------------

We noted our concern that higher rates of acceptance by some
providers of new patients with payers other than Medicaid
(specifically, Medicare and private coverage), and indications by some
providers that low Medicaid payments are a primary reason for not
accepting new Medicaid patients, may suggest that some beneficiaries
could have a more difficult time accessing covered services than other
individuals in the same geographic area. We are encouraged by findings
that suggest that some increases in Medicaid payment rates may drive
increases in provider acceptance of new Medicaid patients, with one
study finding that new Medicaid patient acceptance rates increased by
0.78 percent for every percentage point increase in the Medicaid-to-
Medicare fee ratio, for certain providers for certain States above the
median Medicaid-to-Medicare fee ratio.^{354 355} In line with
the Berman

[[Page 40760]]

study, which found that increases in the percentage of pediatricians
participating in Medicaid and of pediatricians accepting new Medicaid
patients occurred with Medicaid payment rate increases at each quartile
of the Medicaid-to-Medicare fee ratio but were most significant up to
the third quartile, we believe that beneficiaries in States that
provide this level of Medicaid payment generally may be less likely to
encounter access to care issues at rates higher than the general
population.\356\ In line with the Kaiser Family Foundation reporting of
the Medicaid-to-Medicare fee ratio third quartile as ranging from 79 to
86 percent in 2016, depending on the service, we stated our belief that
a minimum 80 percent Medicaid-to-Medicare fee ratio is a reasonable
threshold to propose in Sec. 447.203(c)(1)(i) as one of three criteria
State proposals to reduce or restructure provider payments would be
required to meet to qualify for the proposed streamlined documentation
process.\357\ As documented by the Kaiser Family Foundation, many
States currently satisfy this ratio for many Medicaid-covered services,
and according to findings by Zuckerman, et al. in Health Affairs, in
2019, the average nationwide fee ratio for obstetric care met this
proposed threshold.^{358 359} We proposed that this percentage
would hold across benefit categories, because we did not find any
indication that a lower threshold would be adequate, or that a higher
threshold would be strictly necessary, to support a level of access to
covered services for Medicaid beneficiaries at least as great as for
the general population in the geographic area. We noted that the
disparities in provider participation for some provider types may be
larger than this overview suggests, as such we proposed a uniform
standard in the interest of administrative simplicity but cautioned
that States must meet all three of the criteria in proposed paragraph
(c)(1) to qualify for the streamlined analysis process; otherwise, the
additional analysis specified in proposed paragraph (c)(2) would be
required.
---------------------------------------------------------------------------

\354\ MACPAC. ``Physician Acceptance of New Medicaid Patients:
Finding from the National Electronic Health Records Survey.'' June.
2021. Available at https://www.macpac.gov/wp-content/uploads/2021/06/Physician-Acceptance-of-New-Medicaid-Patients-Findings-from-the-National-Electronic-Health-Records-Survey.pdf (accessed December 23,
2023).
\355\ Holgash, K. and Martha Heberlein, ``Physician Acceptance
Of New Medicaid Patients: What Matters And What Doesn't.'' Health
Affairs, April 10, 2019. Available at https://www.healthaffairs.org/do/10.1377/forefront.20190401.678690/full/ (accessed February 22,
2023).
\356\ Berman, S., et al. ``Factors that Influence the
Willingness of Private Primary Care Pediatricians to Accept More
Medicaid Patients'' Pediatrics.
\357\ https://www.kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index.
\358\ Id.
\359\ Zuckerman, S. et al. ``Medicaid Physician Fees Remained
Substantially Below Fees Paid By Medicare in 2019,'' Health Affairs,
Volume 40, Number 2, February 2021. Available at https://doi.org/10.1377/hlthaff.2020.00611 (accessed December 23, 2022).
---------------------------------------------------------------------------

Given the results of this literature review, and by proposing this
provision as only one part of a three-part assessment of the likely
effect of a proposed payment rate reduction or payment restructuring on
access to care, as further discussed in this section, we proposed 80
percent of the most recently published Medicare payment rates, as
identified on the applicable Medicare fee schedule for the same or a
comparable set of Medicare-covered services, as a benchmark for the
level of Medicaid payment for benefit categories that are subject to
proposed provider payment reductions or restructurings that is likely
to enlist enough providers so that care and services are available to
Medicaid beneficiaries at least to the extent as to the general
population in the geographic area, where the additional tests in
proposed Sec. 447.203(c)(1) also are met. While we acknowledge that 80
percent of Medicare rates may not provide absolute assurance that
providers will participate in the Medicaid program, we proposed to use
80 percent as a threshold to help determine the level of analysis and
information a State must provide to CMS to support consistency with
section 1902(a)(30)(A) of the Act. Establishing this threshold will
allow CMS to focus its resources on reviewing payment proposals that
are at highest risk for access to care concerns. Notably, there are
other provisions of the proposal that would provide opportunities for
the public to raise access to care concerns to State agencies and to
CMS should the 80 percent prove insufficient to provide for adequate
access to care for certain care and services.
We explained that the published Medicare payment rates means the
amount per applicable procedure code identified on the Medicare fee
schedule. The established Medicare fee schedule rate includes the
amount that Medicare pays for the claim and any applicable co-insurance
and deductible amounts owed by the patient. Medicaid fee-schedule rates
should be representative of the total computable payment amount a
provider would expect to receive as payment-in-full for the provision
of Medicaid services to individual beneficiaries. Section 447.15
defines payment-in-full as ``the amounts paid by the agency plus any
deductible, coinsurance or copayment required by the plan to be paid by
the individual.'' Therefore, State fee schedules should be inclusive of
total base payments from the Medicaid agency plus any applicable
coinsurance and deductibles to the extent that a beneficiary is
expected to be liable for those payments. If a State Medicaid fee
schedule does not include these additional beneficiary cost-sharing
payment amounts, then the Medicaid fee schedule amounts would need to
be modified to include expected beneficiary cost sharing to align with
Medicare's fee schedule.
We noted that Medicaid benefits that do not have a reasonably
comparable Medicare-covered analogue, and for which a State proposes a
payment rate reduction or payment restructuring in circumstances when
the changes could result in diminished access, would be subject to the
expanded review criteria proposed in Sec. 447.203(c)(2), because the
State would be unable to demonstrate its Medicaid payment rates are at
or above 80 percent of Medicare payment rates for the same or a
comparable set of Medicare-covered services after the payment rate
reduction or payment restructuring. For identifying a comparable set of
Medicare-covered services, we stated that we would expect to see
services that bear a reasonable relationship to each other. For
example, the clinic benefit in Medicaid does not have a directly
analogous clinic benefit in Medicare. In Medicaid, clinic services
generally are defined in Sec. 440.90, as ``preventive, diagnostic,
therapeutic, rehabilitative, or palliative services that are furnished
by a facility that is not part of a hospital but is organized and
operated to provide medical care to outpatients.'' This can include a
number of primary care services otherwise available through physician
practices and other primary care providers, such as nurse
practitioners. Therefore, in seeking to construct a comparable set of
Medicare-covered services to which the State could compare its proposed
Medicaid payment rates, the State reasonably could include Medicare
payment rates for practitioner services, such as physician and nurse
practitioner services, or payments for facility-based services that
bear a reasonable similarity to clinic services, potentially including
those provided in Ambulatory Surgical Centers. We would expect the
State to develop a reasonably comparable set of Medicare-covered
services to which its proposed Medicaid payment rates could be compared
and to include with its submission an explanation of its reasoning and
methodology for

[[Page 40761]]

constructing the Medicare rate to compare to Medicaid payment rates.
In Sec. 447.203(c)(1)(ii), we proposed that the State would be
required to provide a supported assurance that the proposed reduction
or restructuring, including the cumulative effect of all reductions or
restructurings taken throughout the State fiscal year, would result in
no more than a 4 percent reduction in aggregate FFS Medicaid
expenditures for each benefit category affected by proposed reduction
or restructuring within a single State fiscal year. We explained that
the documentation will need to show the change stated as a percentage
reduction in aggregate FFS Medicaid expenditures for each affected
benefit category. We recognized that the effects of payment rate
reductions and payment restructurings on beneficiary access generally
cannot be determined through any single measure, and applying a 4
percent threshold without sufficient additional safeguards would not be
prudent. Therefore, we proposed to limit the 4 percent threshold as the
cumulative percentage of rate reductions or restructurings applied to
the overall FFS Medicaid expenditures for a particular benefit category
affected by the proposed reduction(s) or restructuring(s) within each
State fiscal year. We proposed the cumulative application of the
threshold to State plan actions taken within a State fiscal year as
opposed to a SPA-specific application to avoid circumstances where a
State may propose rate reductions or restructurings that cumulatively
exceed the 4 percent threshold across multiple SPAs without providing
additional analysis.
For example, if a State proposed to reduce payment rates for a
broad set of obstetric services by 3 percent in State fiscal year 2023
and had not proposed any other payment changes affecting the benefit
category of obstetric care during the same State fiscal year, that
payment change would meet the criterion proposed in Sec.
447.203(c)(1)(ii) because it would be expected to result in no more
than a 3 percent reduction in aggregate Medicaid expenditures for
obstetric care within a State fiscal year. However, if the State had
received approval earlier in the State fiscal year to revise its
obstetric care payment methodology to include value-based arrangements
expected to reduce overall Medicaid expenditures for obstetric care by
2 percent per State fiscal year, then it is likely that the cumulative
effect of the proposal to reduce payment rates for a broad set of
obstetric services by 3 percent and the Medicaid obstetric care
expenditure reductions under the earlier-approved payment restructuring
would result in an aggregate reduction to FFS Medicaid expenditures for
obstetric services of more than 4 percent in a State fiscal year. If
so, the State's proposal would not meet the criterion proposed in Sec.
447.203(c)(1)(ii), and the proposal would be subject to the additional
review criteria proposed in Sec. 447.203(c)(2). The State would need
to document for our review whether the three percent payment rate
reduction proposal for the particular subset of obstetric services
would be likely to result in a greater than 2 percent further reduction
in aggregate FFS Medicaid expenditures for obstetric care as compared
to the expected expenditures for such services for the State fiscal
year before any payment rate reduction or payment restructuring; if
this expected aggregate reduction is demonstrated to be 2 percent or
less, then the proposal still could meet the criterion proposed in
Sec. 447.203(c)(1)(ii).
We proposed to codify a 4 percent reduction threshold for aggregate
FFS Medicaid expenditures in each benefit category affected by a
proposed payment rate reduction or payment restructuring within a State
fiscal year. This threshold is consistent with one we proposed in the
2018 proposed rule, which proposed to require the States to submit an
AMRP with any SPA that proposed to reduce provider payments by greater
than 4 percent in overall service category spending in a State fiscal
year or greater than 6 percent across 2 consecutive State fiscal years,
or restructure provider payments in circumstances when the changes
could result in diminished access.\360\ The proposed rule received
positive feedback from States regarding its potential for mitigating
administrative burden, and providing States with flexibility to
administer their programs and make provider payment rate changes. Some
States and national organizations requested that we increase the rate
reduction threshold to 5 percent and increase the consecutive year
threshold to 8 percent.^{361 362} Non-State commenters
cautioned CMS against providing too much administrative flexibility and
to not abandon the Medicaid access analysis the previous AMRP
regulations required. Commenters also raised that 4 and 6 percent may
seem nominal for larger medical practices and health care settings, but
for certain physician practices or direct care workers a 6 percent
reduction in payment could be considerable.\363\ This feedback has been
essential in considering how we proceed with this rulemaking, in which
we emphasize that the size of the rate reduction threshold proposed in
Sec. 447.203(c)(1)(ii) would operate in conjunction with the two other
proposed elements in Sec. 447.203(c)(1)(i) and (iii) to qualify the
State for a streamlined analysis process and would not exempt the
proposal from scrutiny for compliance with section 1902(a)(30)(A) of
the Act.
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\360\ 83 FR 12696 at 12698.
\361\ Connecticut Department of Social Services. Comment Letter
on 2018 Proposed Rule (May 21, 2018), https://downloads.regulations.gov/CMS-2018-0031-0021/attachment_1.pdf.
\362\ National Association of Medicaid Directors. Comment Letter
on 2018 Proposed rule (June 1, 2018), https://downloads.regulations.gov/CMS-2018-0031-0115/attachment_1.pdf.
\363\ American Academy of Family Physicians, Comment Letter on
2018 Proposed Rule (May 21, 2018), https://downloads.regulations.gov/CMS-2018-0031-0017/attachment_1.pdf.
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We proposed a 4 percent threshold on cumulative provider payment
rate reductions throughout a single State fiscal year as one of the
criteria of the streamlined process in proposed paragraph (c)(1), and
therefore, emphasizing that while we believe this payment threshold to
be nominal and unlikely to diminish access to care, we proposed to
include paragraph (c)(1)(i) to require States to review current levels
of provider payment in relation to Medicare and proposed to include
paragraph (c)(1)(iii) to require that States rely on the public process
to inform the determination on the sufficiency of the proposed payment
rates after reduction or restructuring, with consideration for
providers and practice types that may be disproportionately impacted by
the State's proposed rate reductions or restructurings.
As previously noted, we would not consider any payment rate
reduction or payment rate restructuring proposal to qualify for the
streamlined analysis process in the proposed paragraph (c)(1) unless
all three of the proposed paragraph (c)(1) criteria are met. Using
information from the Kaiser Family Foundation's Medicaid-to-Medicare
fee index \364\ as an example, only 15 States could have reduced
primary care service provider payment rates by up to 4 percent in 2019
and continued to meet the 80 percent of Medicare threshold in proposed
paragraph (c)(1). Even those 15 States with rates above the 80 percent
of Medicare threshold would be subject to proposed paragraph (c)(2)
requirements if the State received significant public feedback that the
proposed payment reduction or restructuring would result in an access

[[Page 40762]]

to care concern, if the State were unable to reasonably respond to or
mitigate such concerns. All States with primary care service payment
rates below the 80 percent of Medicare threshold, no matter the size of
the payment rate reduction or restructuring and no matter whether
interested parties expressed access concerns through available public
processes, would have to conduct an additional access analysis required
under proposed paragraph (c)(2).
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\364\ https://www.kff.org/medicaid/state-indicator/medicaid-to-medicare-fee-index/.
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We issued SMDL #17-004 to provide States with guidance on complying
with regulatory requirements to help States avoid unnecessary burden
when seeking approval of and implementing payment changes, because
States often seek to make payment rate and/or payment structure changes
for a variety of programmatic and budgetary reasons with limited or
potentially no effect on beneficiary access to care, and we recognized
that State legislatures needed some flexibility to manage State budgets
accordingly. We discussed a 4 percent spending reduction threshold with
respect to a particular service category in SMDL #17-004 as an example
of a targeted reduction where the overall change in net payments within
the service category would be nominal and any effect on access
difficult to determine (although we reminded States that they should
document that the State followed the public process under Sec.
447.204, which could identify access concerns even with a seemingly
nominal payment rate reduction). To our knowledge, since the release of
SMDL #17-004, the 4 percent threshold for regarding a payment rate
reduction as nominal has not resulted in access to care concerns in
State Medicaid programs, and it received significant State support for
this reason in comments submitted in response to the 2018 proposed
rule.\365\
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\365\ See, for example: Indiana Family and Social Services
Administration. Comment Letter on 2018 Proposed Rule (May 24, 2018),
https://downloads.regulations.gov/CMS-2018-0031-0055/attachment_1.pdf; Colorado Department of Health Care Policy and
Financing. Comment Letter on 2018 Proposed Rule (May 24, 2018),
https://downloads.regulations.gov/CMS-2018-0031-0087/attachment_1.pdf; The Commonwealth of Massachusetts Executive Office
of Health and Human Services Office of Medicaid. Comment Letter on
2018 Proposed Rule (May 21, 2018), https://downloads.regulations.gov/CMS-2018-0031-0020/attachment_1.pdf.
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In instances where States submitted payment rate reduction SPAs
after the publication of SMDL #17-004, we routinely have asked the
State for an explanation of the purpose of the proposed change, whether
the FFS Medicaid expenditure impact for the service category would be
within a 4 percent reduction threshold, and for an analysis of public
comments received on the proposed change, and approved those SPAs to
the extent that the State was able to resolve any potential access to
care issues and determined that access would remain consistent for the
Medicaid population. For example, in the proposed rule, we stated that,
of the 849 SPAs approved in 2019, there were 557 State payment rate
changes. Of those, 39 were classified as payment rate reductions or
methodology changes that resulted in a reduction in overall provider
payment. Within those 39, there were 18 SPAs that sought to reduce
payments by less than 4 percent of overall spending within the benefit
category, most of which were decreases related to changes in Medicare
payment formulas. Sixteen of the remaining 21 SPAs fell into an area
discussed in SMDL #17-004 as being unlikely to result in diminished
access to covered services, where with the State's analytical support,
we were able to determine that the payment rates would continue to
comply with section 1902(a)(30)(A) of the Act without the State
submitting an AMRP with the SPA. Six of these SPAs represented rate
freezes meant to continue forward a prior year's rates or eliminate an
inflation adjustment. Six SPAs reduced a payment rate to comply with
Federal requirements, such as the Medicaid UPLs in Sec. Sec. 447.272
and 447.321, the Medicaid DME FFP limit in section 1903(i)(27) of the
Act, or the Medicaid hospice rate, per section 1902(a)(13)(B) of the
Act. Four SPAs contained reductions that resulted from programmatic
changes such as the elimination of a Medicaid benefit or shifting the
delivery system for a benefit to coverage by a pre-paid ambulatory
health plan. Finally, we identified five SPAs for which States were
required to submit AMRPs. In each instance, the SPAs were approved by
CMS, with three of the SPAs being submitted to us in 2017 and updated
for 2019 with the appropriate AMRP data submission required by the 2015
final rule with comment period. Overall, our review of SPAs revealed
that smaller reductions may often be a result of elements or other
requirements that may be outside of the State's control, such as
Federal payment limits or changes in the Medicare payment rate that
might be included in a State's proposed payment methodology (such as
where some Medicare payment rates for certain services increased and
others decreased as a result of the Medicare payment formulas, which
may disproportionately impact one benefit category), or coding changes
that might affect the amount of payment related to the unit of service.
We determined, using this information, that it is necessary to provide
States with some degree of flexibility in making changes, even if that
change is a reduction in provider payment. For example, if a State
submits a SPA to reduce or restructure inpatient hospital base or
supplemental payments, where inaction on the State's part would result
in the State exceeding the applicable UPL, the State will need to
reduce inpatient hospital payments or risk a compliance action against
the State for violating Medicaid UPL requirements authorized under
section 1902(a)(30)(A) of the Act and implementing regulations in 42
CFR 447 subparts C and F. We recognized that this flexibility does not
eliminate the need to monitor or consider access to care when making
payment rate decisions, but also recognized the need to provide some
relief in circumstances where the State must take a rate action to
address an issue of compliance with another statutory or regulatory
requirement.
Accordingly, we proposed that, where a State has provided the
information required under proposed paragraphs (c)(1)(i) through (iii),
we would consider that the proposed reduction would result in a nominal
payment adjustment unlikely to diminish access below the level
consistent with section 1902(a)(30)(A) of the Act and would approve the
SPA, provided all other criteria for approval also are met, without
requiring the additional analysis that otherwise would be required
under proposed Sec. 447.203(c)(2).
Finally, in Sec. 447.203(c)(1)(iii), we proposed that the State
would be required to provide a supported assurance that the public
processes described in Sec. 447.203(c)(4) yielded no significant
access to care concerns or yielded concerns that the State can
reasonably respond to or mitigate, as appropriate, as documented in the
analysis provided by the State under Sec. 447.204(b)(3). The State's
response to any access concern identified through the public processes,
and any mitigation approach, as appropriate, would be expected to be
fully described in the State's submission to us.
We noted that the proposed requirement in Sec. 447.203(c)(4) would
not duplicate the requirements in previous Sec. 447.204(a)(2), as the
previous Sec. 447.204(a)(2) required States to consider provider and
beneficiary input as part of the information that States are required
to consider prior to the submission of any SPA that proposes to

[[Page 40763]]

reduce or restructure Medicaid service payment rates. The proposed
Sec. 447.203(c)(4) describes material that States would be required to
include with any SPA submission that proposes to reduce or restructure
provider payment rates. As discussed in the CMCS informational bulletin
dated June 24, 2016,\366\ before submitting SPAs to us, States were
required under previous Sec. 447.204(a)(2) to make information
available so that beneficiaries, providers, and other interested
parties may provide input on beneficiary access to the affected
services and the impact that the proposed payment change would have, if
any, on continued service access. We explained that States are expected
to obtain input from beneficiaries, providers, and other interested
parties, and analyze the input to identify and address access to care
concerns. States must obtain this information prior to submitting a SPA
to us and maintain a record of the public input and how the agency
responded to the input. When a State submits the SPA to us, Sec.
447.204(b)(3) requires the State to also submit a specific analysis of
the information and concerns expressed in input from affected
interested parties. We would rely on this and other documentation
submitted by the State, including under proposed Sec.
447.203(c)(1)(iii), (c)(2)(vi), and (c)(4), to inform our SPA approval
decisions.
---------------------------------------------------------------------------

\366\ CMCS Informational Bulletin, ``Federal public notice and
public process requirements for changes to Medicaid payment rates.''
Published June 24, 2016. https://www.medicaid.gov/federal-policy-guidance/downloads/cib062416.pdf. Accessed November 3, 2022.
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In addition, we noted that States are required to use the
applicable public process required under section 1902(a)(13) of the
Act, as applicable, and follow the public notice requirement in Sec.
447.205, as well as any other public processes required by State law
(for example, State-specified budgetary process requirements), in
setting payment rates and methodologies in view of potential access to
care concerns. States have an important role in identifying access to
care concerns, including through ongoing and collaborative efforts with
beneficiaries, providers, and other interested parties. We acknowledged
that not every concern would be easily resolvable, but we anticipate
that States would be meaningfully engaged with their beneficiary,
provider, and other interested party communities to identify and
mitigate issues as they arise. We explained that we would consider
information about access concerns raised by beneficiaries, providers,
and other interested parties when States propose SPAs to reduce
Medicaid payment rates or restructure Medicaid payments and would not
approve proposals that do not comport with all applicable requirements,
including the access standard in section 1902(a)(30)(A) of the Act.
In feedback received regarding implementation of the previous AMRP
requirements in the 2015 final rule with comment period, States
expressed concern about burdensome requirements to draft, solicit
public input on, and update their AMRPs after receiving beneficiary or
provider complaints that were later resolved by the State's engagement
with beneficiaries and the provider community. we explained that our
proposal to require access review procedures specific to State
proposals to reduce payment rates or restructure payments would provide
an opportunity for the State meaningfully to address and respond to
interested parties' input, and seeks to balance State burden concerns
with the clear need to understand the perspectives of the interested
parties most likely to be affected by a Medicaid payment rate reduction
or payment restructuring. Previously, Sec. 447.203(b)(7) requires
States to have ongoing mechanisms for beneficiary and provider input on
access to care through various mechanisms, and to maintain a record of
data on public input and how the State responded to such input, which
must be made available to us upon request. We proposed to retain this
important mechanism and to relocate it to Sec. 447.203(c)(4). Through
the cross reference to proposed Sec. 447.203(c)(4) in proposed Sec.
447.203(c)(1)(iii), we would require States to use the ongoing
beneficiary and provider feedback mechanisms to aid in identifying and
assessing any access to care issues in cooperation with their
interested parties' communities, as a component of the streamlined
access analysis criteria in proposed Sec. 447.203(c)(1).
Together, we stated our belief that the proposed criteria of Sec.
447.203(c)(1)(i) through (iii), where all are met, would establish that
a State's proposed Medicaid payment rates and/or payment structure are
consistent with the access requirement in section 1902(a)(30)(A) of the
Act at the time the State proposes a payment rate reduction or payment
restructuring in circumstances when the changes could result in
diminished access. Importantly, as noted above, proposed Sec.
447.203(c)(4) (proposed to be relocated from previous Sec.
447.203(b)(7)) would ensure that States have ongoing procedures for
compliance monitoring independent of any approved Medicaid payment
changes.
We previously outlined in SMDL #17-004 several circumstances where
Medicaid payment rate reductions generally would not be expected to
diminish access: reductions necessary to implement CMS Federal Medicaid
payment requirements; reductions that will be implemented as a decrease
to all codes within a service category or targeted to certain codes,
but for services where the payment rates continue to be at or above
Medicare and/or average commercial rates; and reductions that result
from changes implemented through the Medicare program, where a State's
service payment methodology adheres to the Medicare methodology. We did
not propose to codify this list of policies that may produce payment
rate reductions unlikely to diminish access to Medicaid-covered
services. However, as a possible addition to the proposed streamlined
access analysis criteria in proposed Sec. 447.203(c)(1), we solicited
comments on whether this list of circumstances discussed in SMDL #17-
004 should be included in a new paragraph under proposed Sec.
447.203(c)(1) and, if one or more of these circumstances were
applicable, the State's proposal would be considered to qualify for the
streamlined analysis process under proposed Sec. 447.203(c)(1)
notwithstanding the other criteria in proposed paragraph(c)(1).
In proposed paragraph (c)(1), we specified the full set of written
assurances and relevant supporting documentation that States would be
required to submit with a proposed payment rate reduction or payment
restructuring SPA in circumstances when the changes could result in
diminished access, where the requirements in proposed paragraphs
(c)(1)(i) through (c)(1)(iii) are met. The inclusion of documentation
that confirms all criteria proposed in paragraph (c)(1) are met would
exempt the State from the requirements in proposed Sec. 447.203(c)(2),
discussed later in this section; however, it would not guarantee SPA
approval. Proposed payment rate reduction SPAs and payment rate
restructuring SPAs meeting the requirements in proposed Sec.
447.203(c)(1) would still be subject to CMS' standard review
requirements for all proposed SPAs to ensure compliance with section
1902(a) of the Act, including implementing regulations in part 430.
Specifically, and without limitation, we noted that this includes
compliance with section 1902(a)(2) of the Act, requiring financial
participation

[[Page 40764]]

by the State in payments authorized under section 1903 of the Act. We
review SPAs involving payments to ensure that the State has identified
an adequate source of non-Federal share financing for payments under
the SPA so that section 1902(a)(2) of the Act is satisfied; in
particular, section 1903(w) of the Act and its implementing regulations
establish requirements for certain non-Federal share financing sources
that CMS must ensure are met. We further noted that a proposed SPA's
failure to meet the criteria in proposed paragraph (c)(1) would not
result in automatic SPA disapproval; rather, such proposals would be
subject to additional documentation and review requirements, as
specified in proposed Sec. 447.203(c)(2).
In paragraph (c)(2), we proposed the additional, more rigorous
State access analysis that States would be required to submit where the
State proposes to reduce provider payment rates or restructure provider
payments in circumstances when the changes could result in diminished
access where the requirements in paragraphs (c)(1)(i) through (iii) are
not met. We explained our belief that this more rigorous access
analysis should be required where the State is unable to demonstrate
that the proposed paragraph (c)(1) criteria are met, because more
scrutiny then is needed to ensure that the proposed payment rates and
structure would be sufficient to enlist enough providers so that
covered services would be available to beneficiaries at least to the
same extent as to the general population in the geographic area.
Accordingly, we proposed in Sec. 447.203(c)(2) to have States document
current and recent historical levels of access to care, including a
demonstration of counts and trends of actively participating providers,
counts and trends of FFS Medicaid beneficiaries who receive the
services subject to the proposed payment rate reduction or payment
restructuring; and service utilization trends, all for the 3-year
period immediately preceding the submission date of the proposed rate
reduction or payment restructuring SPA, as a condition for approval. As
with the previous AMRP process, the information provided by the State
would serve as a baseline of understanding current access to care
within the State's program, from which the State's payment rate
reduction or payment restructuring proposal would be scrutinized.
The 2015 final rule with comment period included requirements that
the previous AMRP process include data on the following topics, in
previous Sec. 447.203(b)(1)(i) through (v): the extent to which
beneficiary needs are fully met; the availability of care through
enrolled providers to beneficiaries in each geographic area, by
provider type and site of service; changes in beneficiary utilization
of covered services in each geographic area; the characteristics of the
beneficiary population (including considerations for care, service and
payment variations for pediatric and adult populations and for
individuals with disabilities); and actual or estimated levels of
provider payment available from other payers, including other public
and private payers, by provider type and site of service. The
usefulness of the previous ongoing AMRP data was directly related to
the quality of particular data measures that States selected to use in
their AMRPs, and one of the biggest concerns we heard about the process
was that States were not always certain that they were providing us
with the relevant data that we needed to make informed decisions about
Medicaid access to care because the 2015 final rule provided States
with a considerable amount of flexibility in determining the type of
data that may be provided in support of the State's access analysis
included in their AMRP. In addition, States were required to consult
with the State's medical advisory committees and publish the draft AMRP
for no less than 30 days for public review and comment, per Sec.
447.203(b). Therefore, the final AMRP, so long as the base data
elements were met and supported the State's conclusion that access to
care in the Medicaid program met the requirements of section
1902(a)(30)(A) of the Act, then the AMRP was accepted by us. As a
result, the previous AMRPs were often very long and complex documents
that sometimes included data that was not necessarily useful for
understanding the extent of beneficiary access to services in the State
or for making administrative decisions about SPAs. In an effort to
promote standardization of data measures and limit State submissions to
materials likely to assist in ensuring consistency of payment rates
with the requirements of section 1902(a)(30)(A) of the Act, we proposed
to maintain a number of the previously required data elements from the
previous AMRP process but to be more precise about the type of
information that would be required.
In Sec. 447.203(c)(2), we proposed that, for any SPA that proposes
to reduce provider payment rates or restructure provider payments in
circumstances when the changes could result in diminished access, where
the requirements in paragraphs (c)(1)(i) through (iii) are not met, the
State would be required to also provide specified information to us as
part of the SPA submission as a condition of approval, in addition to
the information required under paragraph (c)(1), in a format prescribed
by us. Specifically, in Sec. 447.203(c)(2)(i), we proposed to require
States to provide a summary of the proposed payment change, including
the State's reason for the proposal and a description of any policy
purpose for the proposed change, including the cumulative effect of all
reductions or restructurings taken throughout the current State fiscal
year in aggregate FFS Medicaid expenditures for each benefit category
affected by proposed reduction or restructuring within a State fiscal
year. We proposed to collect this information for SPAs that require a
Sec. 447.203(c)(2) analysis, but for those that meet the criteria
proposed under Sec. 447.203(c)(1), we did not proposed to require a
summary of the proposed payment change, including the State's reason
for the proposal and a description of any policy purpose for the
proposed change beyond that which is already provided as part of a
normal State plan submission or as may be requested by CMS through the
normal State plan review process; we solicited comments whether these
elements should apply to both proposed Sec. 447.203(c)(1) and (c)(2)
equally.
In Sec. 447.203(c)(2)(ii), we proposed to require the State to
provide Medicaid payment rates in the aggregate (including base and
supplemental payments) before and after the proposed reduction or
restructuring for each benefit category affected by proposed reduction
or restructuring, and a comparison of each (aggregate Medicaid payment
before and after the reduction or restructuring) to the most recently
published Medicare payment rates for the same or a comparable set of
Medicare-covered services and, as reasonably feasible, to the most
recently available payment rates of other health care payers in the
State or the geographic area for the same or a comparable set of
covered services. We noted that this proposed element is similar to the
previous Sec. 447.203(b)(1)(v) rate comparison requirement, which
required the previous AMRPs to include ``[a]ctual or estimated levels
of provider payment available from other payers, including other public
and private payers, by provider type and site of service.'' However,
the proposed analysis specifically would require an aggregate
comparison including Medicaid base and supplemental

[[Page 40765]]

payments, as applicable, before and after the proposed reduction or
restructuring are implemented, compared to the most recently published
Medicare payment rates for the same or comparable set of Medicare-
covered services and, as reasonably feasible, to the most recently
available payment rates of other health care payers in the State or the
geographic area for the same or a comparable set of covered services.
We found that, first, States struggled with obtaining and providing
private payer data as contemplated by the 2015 final rule with comment
period, and second, States were confused about how to compare Medicaid
rates to Medicare rates where there were no comparable services between
Medicare and Medicaid. We wanted to acknowledge the feedback we
received from States during the previous AMRP process and modify the
requirements in the final rule by focusing on the more readily
available Medicare payment data as the most relevant payment comparison
for Medicaid, as discussed in detail above. We explained that the E/M
CPT/HCPCS code comparison methodology included in the proposed Sec.
447.203(b)(3)(i) and the payment rate disclosure in proposed Sec.
447.203(b)(3)(ii) could serve, at a minimum, as frameworks for States
that struggled to compare Medicaid rates to Medicare where there may be
no other comparable services between the two programs. Otherwise, where
comparable services exist, States would be required to compare all
applicable Medicaid payment rates within the benefit category to the
Medicare rates for the same or comparable services under proposed Sec.
447.203(c)(2)(ii). For reasons mentioned previously in this section,
Medicare through MedPAC engages in substantial analysis of access to
care as it reviews payment rates for services, so we noted our belief
that this is a sufficient benchmark for the Medicaid payment rate
analysis.
In Sec. 447.203(c)(2)(iii), we proposed to require States to
provide information about the number of actively participating
providers of services in each benefit category affected by the proposed
reduction or restructuring. For this purpose, we stated that an
actively participating provider is a provider that is participating in
the Medicaid program and actively seeing and providing services to
Medicaid beneficiaries or accepting Medicaid beneficiaries as new
patients. The State would be required to provide the number of actively
participating providers of services in each affected benefit category
for each of the 3 years immediately preceding the SPA submission date,
by State-specified geographic area (for example, by county or parish),
provider type, and site of service. The State would be required to
document observed trends in the number of actively participating
providers in each geographic area over this period. The State could
provide estimates of the anticipated effect on the number of actively
participating providers of services in each benefit category affected
by the proposed reduction or restructuring, by geographic area. This
data element is similar to previous Sec. 447.203(b)(1)(ii), under
which States must analyze the availability of care through enrolled
providers to beneficiaries in each geographic area, by provider type
and site of service, in the previous AMRP process; however, the
proposal would require specific quantitative information describing the
number of providers, by geographic area, provider type, and site of
service available to furnish services to Medicaid beneficiaries and
would leave less discretion to the States on specific data measures.
With all of the data elements included in proposed paragraph (c)(2), we
proposed that the data come from the 3 years immediately preceding the
State plan amendment submission date, as this would provide us with the
most recent data and would allow for considerations for data anomalies
that might otherwise distort a demonstration of access to care if only
1 year of data was used.
In Sec. 447.203(c)(2)(iv), we proposed to require States to
provide information about the number of Medicaid beneficiaries
receiving services through the FFS delivery system in each benefit
category affected by the proposed reduction or restructuring. The State
would be required to provide the number of beneficiaries receiving
services in each affected benefit category for each of the 3 years
immediately preceding the SPA submission date, by State-specified
geographic area (for example, by county or parish). The State would be
required to document observed trends in the number of Medicaid
beneficiaries receiving services in each affected benefit category in
each geographic area over this period. The State would be required to
provide quantitative and qualitative information about the beneficiary
populations receiving services in the affected benefit categories over
this period, including the number and proportion of beneficiaries who
are adults and children and who are living with disabilities, and a
description of the State's consideration of the how the proposed
payment changes may affect access to care and service delivery for
beneficiaries in various populations. The State would be required to
provide estimates of the anticipated effect on the number of Medicaid
beneficiaries receiving services through the FFS delivery system in
each benefit category affected by the proposed reduction or
restructuring, by geographic area. We explained that this proposed
provision is a combination of previous Sec. 447.203(b)(1)(i) and (iv),
which require States to provide an analysis of the extent to which
beneficiary needs are met, and the characteristics of the beneficiary
population (including considerations for care, service, and payment
variations for pediatric and adult populations and for individuals with
disabilities). Even though we did not propose to require this analysis
to be updated broadly with respect to many benefit categories on an
ongoing basis, we proposed to require current information on the number
of beneficiaries currently receiving services through the FFS delivery
system in each benefit category affected by the proposed reduction or
restructuring to inform our SPA review process to ensure that the
statutory access standard is met. The inclusion of this beneficiary
data is relevant because it provides information about the recipients
of Medicaid services and where, geographically, these populations
reside to ensure that the statutory access standard is met.
In Sec. 447.203(c)(2)(v), we proposed to require information about
the number of Medicaid services furnished through the FFS delivery
system in each benefit category affected by the proposed reduction or
restructuring. The State would be required to provide the number of
Medicaid services furnished in each affected benefit category for each
of the 3 years immediately preceding the SPA submission date, by State-
specified geographic area (for example, by county or parish), provider
type, and site of service. The State would be required to document
observed trends in the number of Medicaid services furnished in each
affected benefit category in each geographic area over this period. The
State would be required to provide quantitative and qualitative
information about the Medicaid services furnished in the affected
benefit categories over this period, including the number and
proportion of Medicaid services furnished to adults and children and
who are living with disabilities, and a description of the State's
consideration of the how the proposed payment

[[Page 40766]]

changes may affect access to care and service delivery. The State would
be required to provide estimates of the anticipated effect on the
number of Medicaid services furnished through the FFS delivery system
in each benefit category affected by the proposed reduction or
restructuring, by geographic area. We noted that this proposed data
element was similar to that previously required in Sec.
447.203(b)(1)(iii), which required an analysis of changes in
beneficiary utilization of covered services in each geographic area.
However, as stated earlier, the difference here is that this proposed
analysis would be limited to the beneficiary populations impacted by
the rate reduction or restructuring, for a narrower set of data points,
rather than requiring the State to conduct a full review of the
Medicaid beneficiary population every 3 years on an ongoing basis. Even
though we did not propose to require this analysis to be updated
broadly with respect to many benefit categories on an ongoing basis, we
proposed to require current information on the number and types of
Medicaid services being delivered to Medicaid beneficiaries through the
FFS delivery system in each benefit category affected by the proposed
reduction or restructuring to inform our SPA review process to ensure
that the statutory access standard is met. The inclusion of this data
is relevant because it provides information about the actual
distribution of care received by Medicaid beneficiaries and where,
geographically, these services are provided to ensure that the
statutory access standard is met.
Finally, in Sec. 447.203(c)(2)(vi), we proposed to require a
summary of, and the State's response to, any access to care concerns or
complaints received from beneficiaries, providers, and other interested
parties regarding the service(s) for which the payment rate reduction
or restructuring is proposed as required under Sec. 447.204(a)(2). We
noted that this proposed requirement mirrors the requirement in Sec.
447.204(b)(3), which requires that for any SPA submission that proposes
to reduce or restructure Medicaid service payment rates, a specific
analysis of the information and concerns expressed in input from
affected interested parties must be provided at the time of the SPA
submission. The new proposed Sec. 447.203(c)(2)(vi) would require the
same analysis while providing more detail as to what we expect the
State to provide. Proposed Sec. 447.203(c)(2)(vi) would require
information about concerns and complaints from beneficiaries and
providers specifically, as well as from other interested parties, and
would underscore that the required analysis would be required to
include the State's responses.
Where any of the previously discussed proposed data elements
requires an analysis of data over a 3-year period, we proposed this
time span to smooth statistical anomalies, and so that data variations
can be understood. For example, any 3-year period look-back that
includes portions of time during a public health emergency, such as
that for the COVID-19 pandemic, might include much more variation in
the access to care measures than periods before or after the public
health emergency. By using a 3-year period, it is more likely that the
State, CMS, and other interested parties would be able to identify and
appropriately account for short term disruptions in access-related
measures, for example, when the number of services performed dropped
precipitously in 2020 as elective visits and procedures were postponed
or canceled due to the public health emergency.\367\ If the proposed
rule only included a 12-month period, for example, it might not be
clear that the data represent an accurate reflection of access to care
at the time of the proposed reduction or restructuring. For example, a
State may see variation in service utilization if there have been
programmatic changes that are introduced over time, such as a move to
increase care provided through a managed care delivery system in the
State through which the FFS utilization declines steadily until managed
care enrollment targets are achieved, but a one-time review of that FFS
utilization capturing just a 12-month period might not capture data
most reflective of the current FFS utilization demonstrating access to
care consistent with section 1902(a)(30)(A) of the Act. We solicited
comments on the proposed use of a 3-year period where the proposed rule
would require data about trends over time in the data elements proposed
to be required under Sec. 447.203(c)(2). We also solicited comments on
the data elements required in Sec. 447.203(c)(2) as additional State
rate analysis.
---------------------------------------------------------------------------

\367\ Stuart, B. ``How The COVID-19 Pandemic Has Affected
Provision Of Elective Services: The Challenges Ahead.'' Health
Affairs, October 8, 2020. Available at https://www.healthaffairs.org/do/10.1377/forefront.20201006.263687 (accessed
February 27, 2023).
---------------------------------------------------------------------------

Proposed paragraph (c)(2) would require that States conduct and
provide to us a rigorous analysis of a proposed payment rate
reduction's or payment restructuring's potential to affect beneficiary
access to care. However, by limiting these analyses to only those
proposed payment rate reductions and payment restructurings in
circumstances when the changes could result in diminished access that
do not meet the criteria in proposed paragraph (c)(1), we believe that
the requirements proposed in paragraph (c)(2) would help to enable us
to determine whether the proposed State Medicaid payment rates and
payment methodologies are consistent with section 1902(a)(30)(A) of the
Act while minimizing State and Federal administrative burden, to the
extent possible. We would use this State-provided information and
analysis to help us understand the current levels of access to care in
the State's program, and determine, considering the provider,
beneficiary, and other interested party input collected through
proposed Sec. 447.203(c)(4), whether the proposed payment rate
reduction or payment restructuring likely would maintain access to care
for the particular service(s) consistent with the statutory standard in
section 1902(a)(30)(A) of the Act. If we approve the State's proposal,
the data provided would serve as a baseline for prospective monitoring
of access to care within the State.
We explained that the proposed analysis and documentation
requirements in paragraph (c)(2) draw, in part, from the requirements
of the previous AMRP process in the previous Sec. 447.203(b)(1) and
reflect the diverse methods and measures that are and can be used to
monitor access to care. We also drew on some of the comments received
on the 2011 proposed rule, as discussed in the 2015 final rule with
comment period, where several commenters recommended that CMS consider
identifying a set of uniform measures that States must collect data on
or that CMS weighs more heavily in its analysis.\368\ We proposed to
provide more specificity on the types of uniform data elements in Sec.
447.203(c) than is provided under previous Sec. 447.203(b)(1). States
have shown that they have access to the data listed in the proposed
Sec. 447.203(c)(2) when we have requested it during SPA reviews and
through the previous AMRP process, and through this proposed rule, we
proposed to specify the type of data that we would expect States to
provide with rate reduction or restructuring SPAs that do not meet the
proposed criteria for streamlined analysis under Sec. 447.203(c)(1).
As noted elsewhere in the preamble, the ongoing AMRP requirements
previously presented an administratively burdensome process for States
to follow every 3 years,

[[Page 40767]]

particularly where we did not provide States with the specific
direction on the types of data elements we preferred for States to
include. However, the data elements involved in the previous AMRP
process in Sec. 447.203(b)(1) can provide useful information about
beneficiary access to care in previous Sec. 447.203(b)(1)(i), (iii),
and (iv); Medicaid provider availability in previous Sec.
447.203(b)(1)(ii); and about payment rates available from other payers,
which may affect Medicaid beneficiaries' relative ability to access
care, in previous Sec. 447.203(b)(1)(v). We found that the previous
AMRPs were most relevant when updated to accompany a submission of rate
reduction or restructuring SPAs as specified in the previous Sec.
447.203(b)(6); accordingly, to better balance ongoing State and Federal
administrative burden with our need to obtain access-related
information to inform our approval decisions for payment rate reduction
or restructuring SPAs, we proposed to end the ongoing AMRP requirement
but maintain a requirement that States include similar data elements
when submitting such SPAs to us that do not qualify for the proposed
streamlined analysis process under Sec. 447.203(c)(1).
---------------------------------------------------------------------------

\368\ 80 FR 67576 at 67590.
---------------------------------------------------------------------------

We explained that the proposed analyses in paragraph (c)(2) would
enable us to focus our review of Medicaid access to care on proposals
that are at highest risk to result in diminished access to care,
enabling us to more substantively review a proposed rate reduction's or
restructuring's potential impact on access (for example, counts of
participating providers), realized access (for example, service
utilization trends), and the beneficiary experience of care (for
example, characteristics of the beneficiary population, beneficiary
utilization data, and information related to feedback from
beneficiaries and other interested parties collected during the public
process and through ongoing beneficiary feedback mechanisms, along with
the State's responses to that feedback), while also being able to more
quickly work through a review of nominal rate reduction SPAs for which
States have demonstrated certain levels of payment and for which the
public process did not generate access to care concerns. By including
information on provider type and site of service, we believe States
would be able to demonstrate access to the services provided under a
specific benefit category within a number of different settings across
the Medicaid program, such as the availability of physician services
delivered in a physician practice, clinic setting, FQHC or RHC, or even
in a hospital-based office setting. We noted our belief that defining
specific data elements that must be provided to support a payment rate
reduction SPA would create a more predictable process for States and
for CMS in conducting the SPA review than under the previous AMRP
process in Sec. 447.203(b)(6).
Furthermore, data elements proposed to be required under proposed
Sec. 447.203(c)(2) would be based on State-specified geographic
stratifications, to help ensure we can perform access review consistent
with the requirements of section 1902(a)(30)(A) of the Act. We expect
that States would have readily available access to geographically
differential beneficiary and provider data. We observed that some of
this information is available through CMS-maintained resources, such as
the Transformed Medicaid Statistical Information System (T-MSIS), and
other data is available through the National Plan and Provider
Enumeration System (NPPES), but States should have their own data
systems that would allow them to generate the most up-to-date
beneficiary utilization and provider enrollment data, stratified by
geographic areas within the State. States should use the most recent
complete data available for each of the proposed data elements, and
each would be required to be demonstrated to CMS by State-specified
geographic area. We noted our belief that the geographic stratification
would enable CMS to establish a baseline for Medicaid access to care
within the geographic areas so that we can determine if current levels
of access to care are consistent with section 1902(a)(30)(A) of the Act
and can make future determinations if access is diminished subsequently
within the geographic area. For all of the data elements in proposed
Sec. 447.203(c)(2), we stated that the more geographic differentiation
that can be provided (that is, the smaller and more numerous the
distinct geographic areas of the State that are selected for separate
analysis), the more we believe that the State can meaningfully
demonstrate that the proposed rate changes are consistent with the
access standard in section 1902(a)(30)(A) of the Act, which requires
that States assure that payments are sufficient to enlist enough
providers so that care and services are available under the plan at
least to the extent that such care and services are available to the
general population in the geographic area.
If finalized, we stated that we would anticipate releasing
subregulatory guidance, including a template to support completion of
the analysis that would be required under paragraph (c)(2), prior to
the beginning date of the Comparative Payment Rate Analysis Timeframe
proposed in Sec. 447.203(b)(4). In the intervening period, we would
anticipate working directly with States through the SPA review process
to ensure compliance with section 1902(a)(30)(A) of the Act.
In Sec. 447.203(c)(3), we proposed mechanisms for ensuring
compliance with requirements for State analysis for rate reduction or
restructuring, as specified in proposed paragraphs (c)(1) and (c)(2),
as applicable. We proposed that a State that submits a SPA that
proposes to reduce provider payments or restructure provider payments
that fails to provide the required information and analysis to support
approval as specified in proposed paragraphs (c)(1) and (2), as
applicable, may be subject to SPA disapproval under Sec. 430.15(c).
Additionally, States that submit relevant information, but where there
are unresolved access to care concerns related to the proposed SPA,
including any raised by CMS in our review of the proposal and any
raised through the public process as specified in proposed paragraph
(c)(4) of this section, or under Sec. 447.204(a)(2), may be subject to
SPA disapproval under Sec. 430.15(c). Disapproving a SPA means that
the State would not have authority to implement the proposed rate
reduction or restructuring and would be required to continue to pay
providers according to the rate methodology described in the approved
State plan. Proposed paragraph (c)(3) would further provide that if,
after approval of a proposed rate reduction or restructuring, State
monitoring of beneficiary access shows a decrease in Medicaid access to
care, such as a decrease in the provider-to-beneficiary ratio for any
affected service, or the State or CMS experiences an increase in the
number of beneficiary or provider complaints or concerns about access
to care that suggests possible noncompliance with the access
requirements in section 1902(a)(30)(A) of the Act, we may take a
compliance action. As described in Sec. 447.204(d), compliance actions
would be carried out using the procedures described in Sec. 430.35.
As discussed in the prior section, we proposed to move previous
Sec. 447.203(b)(7) to Sec. 447.203(c)(4) as finalized in this rule.
We did not propose any changes to the public process described in
paragraph (b)(7). We proposed that if the other provisions of the
proposed rule are finalized, we would redesignate paragraph (b)(7) as
paragraph (c)(4). The ability for

[[Page 40768]]

providers and beneficiaries to provide ongoing feedback to the State
regarding access to care and a beneficiary's ability to access Medicaid
services is essential to the Medicaid program in that it provides the
primary interested parties the opportunity to communicate with the
State and for the State to track and take account of those interactions
in a meaningful way. We stated that the ongoing mechanisms for provider
and beneficiary feedback must be retained, as this process serves an
important role in determining whether or not the public has raised
concerns regarding access to Medicaid-covered services, which would
inform the State's approach to ongoing Medicaid provider payment rates
and methodologies, and whether related proposals would be approvable.
We proposed to move previous Sec. 447.203(b)(8) to Sec.
447.203(c)(5), as finalized in this rule, to better organize Sec.
447.203 to reflect the policies in the proposed rule. We did not
propose any changes to the methods for addressing access questions and
remediation of inadequate access to care, as described in paragraph
(b)(8). We proposed that if the other provisions of the proposed rule
are finalized, we would redesignate paragraph (b)(8) as paragraph
(c)(5). We stated that it is important to retain this provision because
we acknowledge that there may be access issues that come about apart
from a specific State payment rate action, and there must be mechanisms
through which those issues can be identified, and corrective action
taken.
Finally, we proposed to move previous Sec. 447.204(d) to proposed
Sec. 447.203(c)(6). We noted our belief that the subject matter, of
compliance actions for an access deficiency, is better aligned to the
proposed changes in Sec. 447.203. We did not propose any changes to
the remedy for the identification of an unresolved access deficiency,
as described in Sec. 447.204(d). We proposed that if the other
provisions of this proposed rule are finalized, we would redesignate
Sec. 447.204(d) as paragraph (c)(6).
We solicited public comment on our proposed procedures and
requirements for State analysis when submitting payment rate reduction
or payment restructuring SPAs. We received public comments on these
proposals. The following is a summary of the comments we received and
our responses, organized by regulatory section.
a. General Comments
Comment: Many commenters supported the approaches to reviewing rate
changes. Specifically, a number of commenters noted support for the
two-tiered process to provide specific levels of information and data
with a request to reduce or restructure payment rates in circumstances
where such changes could result in diminished access to care, with some
commenters specifically supporting the inclusion of concerns raised
during the public comment process. Other commenters noted general
support for requiring State justification for rate reductions and
restructurings as it would provide greater transparency and
accountability into State justifications for potentially harmful rate
reductions. A couple commenters noted support for CMS' administrative
review of rate changes to ensure continued access. One commenter was
encouraged that CMS proposed to include protections to mitigate the
risk that payment reductions will translate into reduced access.
Another commenter agreed with CMS that additional scrutiny is warranted
when a rate reduction is more than nominal, and when public concerns
are raised regarding the rate. Finally, one commenter expressed
appreciation for CMS' detailed review and summary of the literature on
the impact of payment rates for providers on access to care for
beneficiaries.
Response: We appreciate the support of the commenters on both our
overall approach and for certain specific aspects of our proposed
policies, which we are finalizing as proposed. We agree that the public
process is an important component of Medicaid program changes.
Comment: One commenter supported requiring States to demonstrate
that a reduction in payment rates will not adversely impact access to
care. The commenter stated that the effort required for States to make
such a showing will guard against rate reductions that would be
detrimental to Medicaid recipients' ability to access care.
Response: We appreciate the support of the commenter. We believe
there will be States, in certain circumstances, that will be able to
meet the requirements of the streamlined access process under Sec.
447.203(c)(1). The intention of the Sec. 447.203(c) provisions is to
balance the requirement that State's ensure compliance with section
1902(a)(30)(A) of the Act with reducing unnecessary burden in the
State's administration of their Medicaid programs. We believe that the
streamlined process under Sec. 447.203(c)(1) is itself consistent with
the statutory access standard, because the policies in this final rule
ensure that only rate reductions or restructurings that are likely to
be consistent with that standard will be approvable under this
streamlined process.
Comment: One commenter stated that in some States, there is high
potential for interruption in access due to delays created by the SPA
process. The commenter was concerned that long delays caused by the SPA
process can interrupt access to the latest standard of care. They
stated that clarification on CMS regulations for SPAs for changes that
increase access to the standard of care could reduce the risk of care
interruptions.
Similarly, another commenter recommended that CMS give States the
flexibility to increase rates to 100 percent of the equivalent Medicare
rate without a SPA, and to make midyear adjustments to rates without a
SPA. The commenter also indicated SPAs should only be required beyond
specified thresholds.
Response: We appreciate the concern of the commenter related to any
delays in the approval of SPAs. We are interested in approving
approvable SPAs as expeditiously as possible, which is one of the
reasons for issuing this final rule with an included template. SPAs
generally may be effective no earlier than the first day of the quarter
in which they are submitted per 42 CFR 430.20. The policies in this
final rule and the template process provide States with clear
documentation requirements for SPAs proposing to reduce or restructure
provider payment rates. Without exception, our policy, as set forth in
Sec. 447.201(b), is that States must receive approval through the SPA
process to modify Medicaid payment methodologies. CMS approval ensures
that the changes in service payment methodologies comply with all
applicable regulatory and statutory requirements and that resulting
State expenditures are eligible for FFP. Changes to these requirements
are beyond the scope of this rulemaking. In addition, regardless of
this final rule, all SPAs are reviewed using the criteria and
timeframes outlined in 42 CFR part 430 subpart B.
Comment: One commenter requested that CMS clarify how the Sec.
447.203(c) provisions would apply to performance-based incentives,
withholds, and alternative payment models, indicating that States
should not be penalized for moving away from a FFS model that is not
tied to performance.
Response: Performance-based incentives, innovative care models, and
alternative payment models are often designed to improve quality of
care, promote better patient outcomes, and reward providers for
improvements to quality of care and patient outcomes,

[[Page 40769]]

while lowering the cost of care. In the 2015 final rule with comment
period, we signaled our interest in working with States in promoting
innovative patient care models and delivery system changes that seek to
reward the provision of quality patient care that also lowered cost to
the Medicaid program.\369\
---------------------------------------------------------------------------

\369\ 80 FR 67578 and 67579.
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The provisions of the final rule in Sec. 447.203(c) provide
processes for rate reductions or restructurings, with the goal of
determining when those changes could result in diminished access. In
most instances, a performance-based incentive, innovative care models,
or alternative payment models that restructure provider payments do so
in a manner that would not result in diminished access and that we
would not regard as a restructuring subject to Sec. 447.203(c). For
example, a State may propose an episode of care arrangement that
bundles all of the care related to a defined medical event, including
the care for the event itself, any precursors to the event and follow-
up care. As a component of this methodology, the State would make one
payment for the whole episode that is meant to encompass the medical
event including the precursors and follow-up care, with up-side and
down-side incentives paid or collected based on the providers'
performance against the mean. Providers must volunteer to enroll in
this program, and any other provider would continue to be paid as they
normally would under the State plan. Such a restructuring proposal does
not diminish access because the providers are electing to participate
and understand the risk, but since care must be provided for the
performance incentives to be determined and non-participating providers
would not experience a change in payment, Medicaid beneficiaries will
not experience diminished access to services. We also note that other
simple add-on payments for achievement of specified quality targets
where there is no possibility of a reduction to any provider's payment
would not be considered a restructuring subject to the requirements of
Sec. 447.203(c).
However, to the extent that a State implements a performance-based
incentive, withhold, or alternative payment model would reduce payment
rates, such as models that involve down-side risk arrangements where
provider payments could decrease from current levels in certain
circumstances, these changes likely would have the potential to result
in diminished access to care and therefore would be a restructuring
that would fall under the requirements of Sec. 447.203(c). For
example, if a State proposed to implement a quality improvement payment
arrangement involving downside risk, meaning that providers could their
payment rates reduced the State's quality improvement proposal, for
which providers were required to participate then CMS could view this
arrangement as being a payment reduction or restructuring that could
affect access to care. The State in this instance would be expected to
conduct the appropriate level(s) of analysis required under Sec.
447.203(c).
We want to note that the requirement to perform an initial or
initial and additional analysis under Sec. 447.203(c) does not mean
the State will be unable to enact the proposed payment arrangement; it
simply means CMS wants to verify that access will not be negatively
impacted with additional documentation to demonstrate this fact. As
such, this final rule does not limit a State's ability to reduce or
restructure rates based on information that the rates are not economic
and efficient; rather, it ensures that States take appropriate measures
to document access to care consistent with section 1902(a)(30)(A) of
the Act. We do not view this as a penalty, as the commenter suggested,
but rather a documentation of consistency with the statute. Under the
Act, rates must be both economic and efficient, and they also must
ensure that individuals have sufficient access to covered services. We
interpret section 1902(a)(30)(A) of the Act as requiring a balanced
approach to Medicaid rate-setting and we encourage States to use
appropriate information and program experience to develop rates to meet
all of its requirements. Further, we expect States to document that
Medicaid rates are economic and efficient when the State submits
changes to payment methodologies through a SPA. If a State is unsure
whether its proposed performance-based incentive, innovative care
model, or alternative payment models contains a restructuring subject
to Sec. 447.203(c), they can engage with CMS prior to submission of a
SPA. CMS can and may request Sec. 447.203(c) analyses upon receipt of
a proposal as well.
Comment: A few commenters expressed concern that the provisions of
Sec. 447.203(c) appear to be operating under the assumption that
current payment rates are adequate, with some commenters focusing on
HCBS service payment, and concern that there is no express requirement
to regularly review the payment methodology to account for inflationary
updates. For example, one commenter indicated that there would be no
analysis required by a State that today pays less than the cost of
delivering care and does not increase rates for the next 5 years, but
also does not propose any rate reductions. Another indicated that the
new rate review process requires no accountability from a State that
may currently have rates below the cost of care or where rates remain
static for several years. These commenters strongly encouraged CMS to
include provisions that would require States to review current payment
rates for adequacy and update payment rates immediately and on an
ongoing basis either annually or up to every 2 years to account for
inflation, new regulatory requirements that impose costs on providers,
and other changes that may impact the cost of doing business.
Response: We agree with the commenter on the importance of States
having adequate rates, even when they are not proposing to reduce or
restructure those provider payment rates. We direct the commenter to
the other provisions of this final rule, including the payment rate
transparency publication in Sec. 447.203(b)(1), comparative rate
analysis in Sec. 447.203(b)(2), and payment rate disclosure in Sec.
447.203(b)(3), which are intended to make available readily accessible
information relevant to whether the rates States currently are paying
(beginning with the initial publications on or before July 1, 2026) are
adequate. We also note that beneficiaries and providers have
opportunities to raise access to care concerns to the State through the
State's mechanisms for ongoing beneficiary and provider input described
in Sec. 447.203(c)(4). This final rule addresses how States can
demonstrate sufficient access to care as required by section
1902(a)(30)(A) of the Act when submitting SPAs that propose to reduce
or restructure provider payment rates. Neither provider cost nor
inflation is a required review element in meeting the requirements of
the final rule. States may certainly consider these elements when
engaging in rate setting or conducting rate reviews, but it is not a
required component of this final rule.
Comment: Two commenters supported the proposal to revamp previous
requirements in effect for SPAs that propose to reduce rate or
restructure payments and strongly urged CMS to consider changes to the
final rule to ensure the new proposed structure does not permit States
to alter rates in ways that negatively impact beneficiary access.

[[Page 40770]]

Response: We appreciate the commenters' support. We are finalizing
the provisions as proposed. The final rule provides CMS with an
administrative process through which States can demonstrate that they
have considered access to care and responded to public concerns in the
implementation of payment rate reduction or restructuring SPAs. We are
confident these steps will ensure rate changes do not impact access in
a manner inconsistent with section 1902(a)(30)(A) of the Act.
Comment: Some commenters supported efforts to bring more
transparency to the rate-setting process but did not support CMS'
proposed change to replace the current rate reduction review process
for one that examines proposed rate reductions on a State fiscal year
basis. One commenter expressed concern that the proposal to establish
an across-the-board threshold for provider payment rate reductions
subject to the access review process fails to recognize the need for
variable rate assumptions consistent with the characteristics of
different Medicaid eligibility groups. The commenters expressed concern
that it is not always appropriate to use the same assumptions for all
populations or providers serving these eligibility groups, especially
for complex populations, and noted that this proposal fails to
recognize the impact individual provider rate reductions may have on a
class of providers, noting that it is not appropriate to aggregate the
impact of provider rate reductions, particularly for services provided
to complex populations served under the Temporary Aid for Needy
Families; Aged, Blind, and Disabled; and LTSS eligibility groups.
Response: We understand the commenters' concerns. States, under the
finalized Sec. 447.203(c)(1) and (2), as applicable, will be required
to analyze the impact on provider payments based on the affected
benefit category, but we acknowledge that particular services within a
benefit category may be provided across different provider classes or
settings. For example, physicians may provide services in an office
setting, a hospital setting, or a clinic setting. The provider may
receive a different payment rate for physician services depending upon
the setting where services are performed as a result of differences
between facility and non-facility payment rate types, which account for
the difference in provider overhead cost assumptions based on the
setting where the services occur.
We also note, as the commenter specifically raised concerns
regarding complex populations and eligibility groups, that CMS policy
has long established policy, consistent with statutory requirements for
comparability in amount, duration, or scope of medical assistance, that
States may not establish differential rates based upon an individual's
eligibility category. States are able to set rates based on a patient's
acuity, service complexity, or other service-related consideration, but
to set different rates for different eligibility categories could
promote inequity across the Medicaid program if providers were offered
greater financial incentives to furnish services to beneficiaries in
some eligibility groups than others. Such differentiation of payment
rates would also not be considered economic and efficient in a manner
consistent with section 1902(a)(30)(A) of the Act because some payment
rates would be higher than necessary considering relevant service-
related factors, for example, if rates were higher for certain
eligibility groups than others in relation to the Federal matching rate
available for expenditures for the respective groups.
Comment: One commenter recommended CMS clarify that FQHC services
are included in protections for payment rate reductions in Sec.
477.203(c).
Response: The requirements in Sec. 447.203(c) are applicable to
all Medicaid FFS services under the Medicaid State plan, including
services furnished by FQHCs.
Comment: One of the commenters recommended that CMS consider
proposals to address stagnant and insufficient Medicaid payment rates
that are not high enough to support paying competitive wages. One
commenter recommended that CMS require States to perform a one-time
rate review analysis (requiring States to submit the data described in
paragraph (c)(1) and, if not all three of the requirements are met,
(c)(2)) upon implementation of this rule to ensure payment adequacy
necessary to support access to quality care.
Response: We understand the commenters' concerns regarding stagnant
provider payment rates and rates that may not support competitive
wages. We encourage providers to engage with their State Medicaid
programs through forums available to them, such as the interested
parties advisory group and the mechanisms for ongoing beneficiary and
provider input, described in Sec. 447.203(c)(4). In addition, we
direct the commenter to the other provisions of this final rule,
including the payment rate transparency publication in Sec.
447.203(b)(1), comparative rate analysis in Sec. 447.203(b)(2), and
payment rate disclosure in Sec. 447.203(b)(3), which are intended to
make available readily accessible information relevant to whether the
rates States currently are paying (beginning with the initial
publications on or before 7/1/26) are adequate.
We explained in the proposed rule that our primary objective was to
replace the previous AMRP process with something that could better
assess access while decreasing burden on States. Requiring the analysis
described by the commenters would represent an enormous one-time burden
on States. We note that we are finalizing the rate transparency and
analysis requirements proposed under Sec. 447.203(b), which we expect
will provide greater insight into rates relative to access issues,
while maintaining a scope that seeks to minimize unnecessary burden on
States.
Comment: A few commenters noted how CMS indicated in the preamble
of the proposed rule that the term ``benefit category'' under Sec.
447.203(c) would refer to services under a category of services as
described in section 1905(a) of the Act. One commenter stated that CMS
has declined to define ``benefit category'' in a meaningful way and
requested clarification. The commenter was concerned that extremely
large swaths of services can be grouped together for the purposes of
conducting the analysis, which could circumvent the analysis of real-
world impact of payment cuts on specific provider types. Another
commenter requested that CMS clarify that the required analyses apply
to both home care services (that is, personal care and home health
services) provided under section 1905(a) of the Act and to services
provided under 1915 authorities. However, rather than treating (for
example) personal care services as a single benefit category across all
authorities for the purpose of the required analysis, the commenter
suggested that CMS view 1905(a) PCS as one benefit and treat the set of
HCBS coverable under 1915 and other authorities as a separate single
benefit.
Response: Reiterating the definition in the preamble, we mean for
``benefit category'' to refer to all individual services under a
category of services described in the Medicaid State plan for which the
State is proposing a payment rate reduction or restructuring. Just as
with our review of Medicaid payment rates, we do not review the
inclusion of individual services within a benefit category unless the
intention of a SPA is to specifically add or remove coverage for a
particular service from the State plan. Further, we have concerns about
the usefulness of information that

[[Page 40771]]

would inform our SPA review as the relevant unit of analysis becomes
smaller (from benefit category to individual service level). For
example, it is unclear that a reduction in the number of group
occupational therapy services furnished by therapy providers during a
given time frame would indicate that there is an issue with provider
payment rates being insufficient to support adequate beneficiary
access, or if the reduction merely represented a data anomaly that is
unrelated to the rate of payment. We believe that the higher level of
review of payment rate sufficiency at the benefit category level is
consistent with the requirement in section 1902(a)(30)(A) of the Act
that rates be sufficient to ensure that ``care and services are
available under the plan at least to the extent that such care and
services are available to the general population in the geographic
area.''
That being said, if a State proposes to group together services
together that are not reasonably considered to be within the same
benefit category (including where the grouping is not consistent with
how the State covers and/or pays for the services under the State plan)
to attempt to meet the paragraph (c)(1) thresholds and avoid the need
to submit additional analysis under paragraph (c)(2), we will request
additional information from the State including demonstrations that the
paragraph (c)(1) criteria are met using a reasonable benefit category
definition, or the additional analysis required under paragraph (c)(2),
to support SPA approval.
Finally, in response to the commenter that requested that CMS
clarify that the required analyses apply to home care services
(including personal care and home health services) under section
1905(a) of the Act and to those covered under section 1915 authorities,
we affirm that the analyses apply to both types of home care services
under State plan, section 1915(c) waiver and demonstration payment
rates, as applicable. To the extent that it is applicable, the 1905(a)
PCS is one benefit category and the set of HCBS coverable PCS under
1915 and other authorities are considered as individual benefits as the
payment methodologies for these services of often distinct
methodologies across the different State plan or waiver authorities.
Comment: One commenter suggested CMS provide a template for the
code-by-code analysis level to support the State analysis procedures
for rate reductions or restructurings.
Response: We produced and are finalizing a template for States to
ease the administration of the requirements of this final rule,
including a code-by-code analysis to the support the payment analysis.
The template will assist the States with meeting the Sec.
447.203(c)(1)(i) and (c)(2)(ii) requirements for an aggregate analysis
of Medicaid base and supplemental payments relative to Medicare, but it
is important for us to clarify that these provisions do not necessarily
require submission to CMS of a code-by-code analysis as suggested by
the commenter. Section 447.203(c)(1)(i) requires States to provide
written assurance and relevant supporting documentation that Medicaid
payment rates in the aggregate (including base and supplemental
payments) following the proposed reduction or restructuring for each
benefit category affected by the proposed reduction or restructuring
would be at or above 80 percent of the most recently published Medicare
payment rates for the same or a comparable set of Medicare-covered
services. Section 447.203(c)(2)(ii) requires States to provide Medicaid
payment rates in the aggregate (including base and supplemental
payments) before and after the proposed reduction or restructuring for
each benefit category affected by proposed reduction or restructuring,
and a comparison of each (aggregate Medicaid payment before and after
the reduction or restructuring) to the most recently published Medicare
payment rates for the same or a comparable set of Medicare-covered
services and, as reasonably feasible, to the most recently available
payment rates of other health care payers in the State or the
geographic area for the same or a comparable set of covered services.
In each case, the analysis performed would be an aggregate comparison
of the State's proposed Medicaid rates to Medicare; however, CMS may
request that the State provide supporting documentation, for example,
where CMS has concerns with the accuracy of the analysis performed.
Comment: One commenter stated that, while imperfect as a point of
comparison, Medicare is at least a reliable source of data that
utilizes cost studies and other factors in its own rate setting
processes. The commenter stated that if Medicare is retained as the
benchmark, they would endorse use of an aggregate, as opposed to code-
by-code, comparison with Medicaid rates. They explained that a code-by-
code analysis would be extremely difficult, as CMS would need to define
a methodology to determine if there is a one-to-one match between
service descriptions and procedural codes in Medicare and Medicaid;
Medicaid agencies report significant variation in codes and service
descriptions.
Response: We agree with the commenter and note that the final rule
in Sec. 447.203(c)(1)(i), and the similar provision in Sec.
447.203(c)(2)(ii), require that Medicaid payment rates in the aggregate
(including base and supplemental payments) following the proposed
reduction or restructuring for each benefit category affected by the
proposed reduction or restructuring be compared to the most recently
published Medicare payment rates for the same or a comparable set of
Medicare-covered services. For this purpose, the Medicare services
selected for comparison should align reasonably with the Medicaid
services covered by the State within the affected Medicaid benefit
category. We would expect the State to develop a reasonably comparable
set of Medicare-covered services to which its proposed Medicaid payment
rates could be compared and to include with its submission an
explanation of its reasoning and methodology for constructing the
comparison of Medicaid to Medicare payment rates.
Comment: A few commenters opposed the two-tiered approach,
believing that this approach is insufficient to ensure access. Those
commenters urged CMS to only use the tier two (Sec. 447.203(c)(2))
analysis on any SPA that proposes to reduce or restructure provider
payment rates. One of the commenters opposed the two-tiered system on
the basis that it would result in States implementing significant cuts
to Medicaid rates without scrutiny for prolonged periods of time as
long as they are exempt from second-tier analysis.
Response: We appreciate the commenters' viewpoints, but we are
finalizing the two-tiered analysis as proposed. We do not agree that
the two-tiered system would result in States implementing significant
cuts to Medicaid without scrutiny for prolonged periods of time. We are
finalizing Sec. 447.203(c)(1) to require that all three provisions of
Sec. 447.203(c)(1) must be met in order for the SPA to qualify for the
streamlined analysis provision of the final rule. In our view, the
streamlined review for qualifying SPAs under Sec. 447.203(c)(1) is
sufficient because the State's payment rates would remain at or above
80 percent of the Medicare rate; the proposed reduction or
restructuring would be likely to result in no more than a 4 percent
reduction in aggregate FFS Medicaid expenditures for each benefit
category affected by

[[Page 40772]]

proposed reduction or restructuring within a State fiscal year; and the
public process yielded no significant access to care concerns from
beneficiaries, providers, or other interested parties regarding the
service(s) for which the payment rate reduction or payment
restructuring is proposed, or if such processes did yield concerns, the
State can reasonably respond to or mitigate the concerns, as
appropriate. Taken together, the streamlined State analysis provides
safeguards to mitigate the impact of State rate reductions while also
providing protection for compounding reductions that could occur over a
prolonged period of time. We anticipate that compounding rate
reductions or restructurings would lower the possibility that a State's
payment rates remain at or above 80 percent of Medicare and the public
input process would generate significant provider and beneficiary
feedback in the event that such reductions are taken at 4 percent per
State fiscal year which would disqualify a State Plan rate reduction or
restructuring proposal from meeting the requirements for the
streamlined Sec. 447.203(c)(1) process. We included this aspect of the
analysis, in part, to protect against a large reduction spread over
time through smaller reductions that pass initial scrutiny having an
unacceptable negative impact on beneficiary access. As noted above, we
anticipate that any State that is making significant cuts to provider
payment rates over time will have a significant challenge in meeting
the requirements for the initial State analysis in Sec. 447.203(c)(1).
Comment: One commenter noted that the proposed rule would require
States to provide additional information to justify their requests for
reduced or restructured payment rates in SPAs, but the commenter noted
that CMS does not commit to denying the requests where the State
proposes payment rates below 80 percent of Medicare and did not agree
with CMS's lack of commitment to disapprove such requested rate
actions. The commenter did not believe this would sufficiently dissuade
rate reductions, and that the language indicating CMS might not approve
such proposed payment rate reduction or restructuring SPAs would just
generate confusion, as well as attempts by States to ``game the
system'' to try to figure out what language they should submit to win
approval of their applications.
Response: Much like the previous AMRP process from the 2015 final
rule with comment period, the access provisions contained in Sec.
447.203(c) are intended to create a baseline measurement from which the
State rate reduction or restructuring proposals may be evaluated. CMS
has not taken the position that State payment rate proposals that set
provider payment rates below 80 percent of Medicare are to be
automatically disapproved, but instead we are committing States to a
process by which they demonstrate that access is sufficient in their
State so the agency can properly evaluate these State proposals under
the section 1902(a)(30)(A) of the Act requirements. SPAs that fail to
include the information required under the applicable provisions of
Sec. 447.203(c) will be disapproved by CMS. For proposals that do not
meet the streamlined State analysis requirements under Sec.
447.203(c)(1), States are required to provide the following with all
payment rate reduction or restructuring SPAs: a summary of the proposed
change, including the State's reason for the proposal and a description
of any policy purpose for the proposed change, including the cumulative
effect of all reductions or restructurings taken throughout the current
State fiscal year in aggregate FFS Medicaid expenditures for each
benefit category affected by proposed reduction or restructuring within
a State fiscal year; Medicaid payment rates in the aggregate (including
base and supplemental payments) before and after the proposed reduction
or restructuring for each benefit category affected by proposed
reduction or restructuring, and a comparison of each (aggregate
Medicaid payment before and after the reduction or restructuring) to
the most recently published Medicare payment rates for the same or a
comparable set of Medicare-covered services and, as reasonably
feasible, to the most recently available payment rates of other health
care payers in the State or the geographic area for the same or a
comparable set of covered services; information about the number of
actively participating providers of services in each benefit category
affected by the proposed reduction or restructuring; information about
the number of Medicaid beneficiaries receiving services through the FFS
delivery system in each benefit category affected by the proposed
reduction or restructuring; information about the number of Medicaid
services furnished through the FFS delivery system in each benefit
category affected by the proposed reduction or restructuring; and a
summary of, and the State's response to, any access to care concerns or
complaints received from beneficiaries, providers, and other interested
parties regarding the service(s) for which the payment rate reduction
or restructuring is proposed, as required under Sec. 447.204(a)(2). In
addition to being used to establish a baseline, as mentioned above, CMS
will use the information in determining whether access is sufficient
based on the State's submission of the required data and analysis,
including of Medicaid provider enrollment, service utilization, and
number of beneficiaries receiving affected services (including observed
trends). We expect State proposals to be accompanied by documentation
of meaningful engagement with providers, beneficiaries, and potentially
other interested parties, to ensure that the proposed payment rate
reductions or restructurings will not reduce access to care for
Medicaid beneficiaries below the standard set in section 1902(a)(30)(A)
of the Act. However, we acknowledge that the individual circumstances
of the SPA proposal will inform the precise information required to be
submitted under this final rule. We are confident that the provisions
of the final rule are clear and outline a process which States will be
required to follow when reducing or restructuring provider payment
rates which CMS will review on a case-by-case basis, but we are
confident that the documentation requirements will not allow States to
game the system, as the commenter contends.
Comment: One commenter urged CMS to take an approach that is more
straightforward than the two-tiered proposal to better monitor provider
payment adequacy. For example, the commenter stated that payment
reductions in excess of 5 percent for any given service or CPT code
should be reviewed by CMS to determine if beneficiary access is at
risk. Another commenter was concerned that CMS' proposed ``aggregate''
standard, reviewing rates across a benefit category rather than at the
service-specific level, could mean that some Medicaid services may be
paid well below the percentage threshold even if the overall benefit
category achieves the threshold. They recommended setting the threshold
on a disaggregated basis to protect access to key services and avoid
permitting States to obscure low payment rates.
Response: We approve States' rate methodologies for compliance with
regulation and statute, but may not approve individual service rates
unless a State presents a final rate, or a fee schedule, as the output
of a rate methodology. This final rule does not change that policy or
imply that CMS will review individual rates for sufficiency in all
cases. Reviewing individual rates within a fee schedule

[[Page 40773]]

would not necessarily provide a better determination of whether the
rates are adequate to enlist sufficient providers into the Medicaid
program or not, provided that the State is using a consistent payment
rate methodology for the entirety of the fee schedule, since we do not
believe that providers generally make decisions about whether to
participate with a payer (and accept the payer's rates) based on the
rate for a single service. However, we will review individual payment
rate codes to the extent that the rate changes fall outside of the
typical methodology used by the State in their payment rate setting
methodology under the State plan. For example, if the State uses the
Medicare fee schedule for items of DME under the Medicaid State plan
but decides to alter the payment rate for the oxygen codes (E0441, for
example) to set Medicaid-specific rates, we will review those
individual payment rate changes as they fall outside of the State's
payment rate setting methodology under the State plan. Further, the
payment rate transparency publication in Sec. 447.203(b)(1) will
require States to publish their fee schedule rates for services
specified in that section of the final rule, which will include
individual fee schedule payment rates for services for CMS and public
review.
b. Initial State Analysis for Rate Reduction or Restructuring (Sec.
447.203(c)(1))
Comment: One commenter stated their general support for the
streamlined initial review process, noting it provides States with
clear safe harbor guidelines.
Response: We appreciate the support of the commenter. However, we
note that section 447.203(c)(1) does not necessarily provide a ``safe
harbor'' guaranteeing approval of a SPA. All applicable Federal
requirements must be met for SPA approval. And even where paragraph
(c)(1)(i) and (ii) are met because the aggregate Medicaid payment rates
for the benefit category after reduction or restructuring would be at
or above 80 percent of the most recently published Medicare rates for
the same or a comparable set of Medicare-covered services, and the
cumulative effect of all reductions or restructurings throughout the
current State fiscal year would be likely to result in no more than a 4
percent reduction in aggregate FFS Medicaid expenditures for the
benefit category, paragraph (c)(1)(iii) still must be met. That is to
say, even when the quantitative standards of the first two prongs of
the (c)(1) test are satisfied, we will carefully review the information
the State provides to us under section 447.204(b)(3) specifically
analyzing any information and concerns expressed in input from affected
interested parties in connection with the proposed SPA. As specified in
section 447.203(c)(1)(iii), there must be no significant access to care
concerns from beneficiaries, providers, or other interested parties
regarding the service(s) for which the payment rate reduction or
payment restructuring is proposed, or if public processes did yield
such concerns, the State must be able to reasonably respond to or
mitigate them, as appropriate.
Comment: One commenter noted their support of CMS' first-tier
proposal for handling rate reductions. However, they recommended that
CMS establish a process for granting States flexibility from the
requirements under unique circumstances. For example, a reduction may
occur as the result of a decrease in CMS' RVUs or Medicare payment
schedules. Some State fee schedules are indirectly tied to CMS RVUs or
other Medicare payment schedules, and decreases occurring there are
likely to also occur on the State's fee schedule. The commenter stated
that an exemption from rate reduction requirements would be justified
in this circumstance.
Response: For States that have set their approved State plan
payment methodology at the current Medicare RVU prices, CMS would
interpret such a methodology as accounting for changes that Medicare
makes to components of their RVU-based methodology without the need for
additional SPA action on the State's part. This would only include
scenarios where the State has specifically indicated that the payment
rates for Medicaid services are set at the current Medicare price for
the State plan services and would not apply to circumstances where the
State creates a static fee schedule that simply relies on a particular
snapshot of Medicare prices to inform a State fee schedule, or for
methodologies that rely upon a prior iteration of the Medicare prices
for the current Medicaid payment rates.
Comment: One commenter suggested that provider associations and
participant representatives be part of reviewing and analyzing the
impacts on rate reductions and access that would be required under
Sec. 447.203(c)(1) and (2).
Response: Section 447.203(c)(4) as finalized in this final rule
provides that States must have ongoing mechanisms for beneficiary and
provider input (through hotlines, surveys, ombudsman, review of
grievance and appeals data, or another equivalent mechanism), through
which interested parties can raise concerns about access, including
payment sufficiency. Provider associations and participant
representatives, which we understand to be representatives of
beneficiaries that may be under the age of 21, are able to participate
in public engagement through these mechanisms, related to State actions
that could result in a reduction or restructuring of State plan payment
rates. To be clear, the public process in Sec. 447.203(c)(4) serves as
a means for the State to receive feedback on real-time access to care
issues that may be addressed on an ad hoc basis; interested parties do
not need to wait for the State to develop a payment SPA to raise access
to care issues through mechanisms under Sec. 447.203(c)(4). This
input, as well as input collected through the public input process
under Sec. 447.204, will be considered under Sec. 447.203(c)(1)(iii)
and used to determine whether or not the proposed reduction or
restructuring SPA is consistent with section 1902(a)(30)(A) of the Act.
Comment: A few commenters suggested CMS use its authority to
encourage States toward a national floor for rates, with some stating
the Medicaid-to-Medicare fee ratio threshold proposed in Sec.
447.203(c)(1)(i) should become a Federal floor for all SPA and waiver
approvals. For example, they recommended that CMS could phase-in an
explicit regulatory floor or implement standards tying improvements in
Medicaid rates to approvals of related Medicaid flexibilities, such as
section 1115 approvals, SDPs, etc. One commenter pointed out that some
States have rates well below Medicare levels and change rates
infrequently. This means that, assuming a State does nothing, currently
inadequate rates could simply persist for decades more under CMS'
approach, and in fact regress relative to inflation. Another commenter
specifically recommended that CMS require both an initial in-depth
analysis of access metrics as well as an analysis over time for any
State that implements payment rates lower than Medicare.
Response: Unless explicitly authorized by statute, CMS does not
have the authority to establish a national floor for Medicaid payment
rates. Refusing to approve any payment rate reductions or
restructurings that do not specifically meet the thresholds in Sec.
447.203(c)(1)(i) could be construed as setting a national floor for
rates. We understand that some States may infrequently update their
payment rates, but section 1902(a)(30)(A) of the Act provides States
with flexibility to establish payment rates in a manner that

[[Page 40774]]

balances consideration of State budgetary needs and restrictions with
the obligation to provide medical assistance under the State plan in
accordance with Federal requirements. With the policies finalized
throughout this final rule, we hope that both States and the public
will more closely examine existing rates. Our policies around rate
transparency and adequacy will enhance opportunities to determine where
an existing rate may negatively impact access to care and identify for
States where a need should be addressed by providing beneficiaries,
providers, other and interested parties with easier access to State
plan payment rates through payment rate transparency publications,
comparative payment rate analyses, and payment rate disclosures. Our
policies around the mechanisms for ongoing beneficiary and provider
input in Sec. 447.203(c)(4) and addressing access questions and
remediation of inadequate access to care in Sec. 447.203(c)(5) will
further provide beneficiaries and providers opportunities to engage
with States where existing payment rates may have an impact on
beneficiaries' access to care.
The purpose of this final rule is to create a process that is less
administratively burdensome than the previous, ongoing AMRP process
under the 2015 final rule with comment period, while also maintaining a
data submission process for payment rate reduction and restructuring
SPAs that do not meet the thresholds set out in Sec. 447.203(c)(1),
and note that the FFS provisions, including the payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure requirements (Sec. 447.203(b)(1) through (5)), interested
parties' advisory group requirements (Sec. 447.203(b)(6)), and State
analysis procedures for payment rate reductions or payment
restructuring (Sec. 447.203(c)), finalized in this rule are expected
to result in a net burden reduction on States compared to the previous
AMRP requirements, as discussed in the proposed rule and in section
III. of this final rule. This final rule provides CMS and States with
an administrative process through which rate reductions or
restructurings can be reviewed and approved, so long as the proposed
SPA satisfactorily includes the information required under this final
rule and meets all applicable Federal requirements.
We note that the policies finalized in Sec. 447.203(c)(2) do
include an analysis of data that looks back at a 3-year period of time
to help ascertain whether access to care for the relevant services is
consistent with the statutory access standard. Further, the rule
includes a requirement for ongoing access monitoring to the extent that
access issues are identified that require State intervention, as
provided in Sec. 447.203(c)(5), which requires the State to take
corrective action resulting in measurable and sustainable access
improvements.
Comment: One commenter recommended that CMS amend Sec.
447.203(c)(1) and (2) to require States to demonstrate compliance with
the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as
applicable, for any proposed rate reduction or restructuring and
provide technical assistance to States on compliance with this
provision that would include guidance on the required comparative
analysis both for the standard as written and in operation.
Response: CMS works closely with State Medicaid agencies to ensure
compliance with MHPAEA in Medicaid managed care arrangements, Medicaid
alternative benefit plans (managed care and FFS), and CHIP benefits
(managed care and FFS) whenever changes to coverage of mental health or
SUD benefits are proposed by States. We did not specifically require
that States demonstrate compliance with the MHPAEA as part of this
final rule, as the final rule focuses on payment rates established by
the State Medicaid agencies to pay for allowable Medicaid services
under the Medicaid State plan through FFS. Congress has not extended
MHPAEA requirements to Medicaid benefits provided solely through FFS
delivery systems. Nonetheless, we encourage our State Medicaid and CHIP
agency partners to ensure their FFS benefits comply with MHPAEA.
Moreover, CMS reviews State proposals regarding rate reductions or
restructuring to ensure compliance with the requirements of section
1902(a)(30)(A) of the Social Security Act ``to assure that payments are
consistent with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and services are
available under the plan, at least to the extent that such care and
services are available to the general population in the geographic
area.'' This review thus includes the fundamental objective of MHPAEA--
to ensure access to mental health and substance use disorder treatment.
Comment: One commenter requested further information on what
circumstances CMS would expect to result in diminished access for a SPA
that would restructure, but not reduce, rates.
Response: We acknowledge that there may be any number of payment
methodology changes that could harm access to care even when there is a
restructuring but not reduction in rates, and unfortunately, we are
unable to identify all such circumstances in advance. However, as
discussed previously, one common type of restructuring is a change in
the targeting of supplemental payments. States may alter payments,
including in ways that are budget neutral for a benefit category as a
whole (that is, they do not decrease overall Medicaid spending for the
benefit category), but the changes would reduce payments for some
providers, potentially harming beneficiary access.
Comment: One commenter requested that CMS clarify what is meant by
``restructure'' and confirm that this would not include any type of
rate increase.
Response: A rate restructuring is a payment action where a State
amends its methodology for an interrelated set of rates whereby
individual rates may increase, decrease, or remain the same, which the
State typically undertakes to achieve some programmatic purpose, such
as achieving more efficient payment for services that frequently are
furnished together. While a rate restructuring potentially could
include rate increases, if increasing rates is the only effect of the
rate restructuring, then we generally would not expect these to be
circumstances when the changes could result in diminished access, and
the requirements of Sec. 447.203(c)(1) through (3) would not have to
be met. Although we cannot set forth an exhaustive list of rate
restructurings, one common type of restructuring is a change in the
targeting of supplemental payments, under which the set of providers
qualifying for a supplemental payment might change and/or the amounts
received by each provider might increase or decrease. States may use a
methodology to identify amounts that a provider would receive, which
would not require a SPA to initiate a change in the amounts providers
receive. For example, a State sets up supplemental payment pools of $10
million for trauma care centers in the State and that payment pool is
distributed based upon a provider's pro rata share of Medicaid
services. The amounts paid to providers eligible for that pool may vary
from year to year based upon each providers' relative Medicaid
utilization within the State, but the total amount of available funds
remains the same. If that State submits a SPA to change the
distribution methodology or to add more qualifying providers to the
payment methodology,

[[Page 40775]]

but not change the $10 million pool, then this change would be
considered a payment restructuring. If the State were to reduce the
total pool from $10 million to $8 million, then that would be
considered a reduction. A change in supplemental payments that reduces
the total amounts that providers receive or shifts funds from one
provider to another could result in access to care issues and is one
example of a potential payment restructuring that could negatively
impact access to care. Where there is uncertainty, we will work with
States to help identify situations where a rate restructuring could
diminish access to care such that the processes under Sec.
447.203(c)(1) through (3) will apply.
Comment: One commenter suggested streamlined approval should apply
to any rate reduction that meets any one of the three criteria listed
in the proposed rule. The commenter specifically recommended providing
streamlined approval for rate reductions that result in the rates being
100 percent or higher of the comparable Medicare rate regardless of the
reduction in overall expenditures for the benefit category (otherwise
stated, without the application of Sec. 447.203(c)(1)(ii)).). Another
commenter recommended that CMS' primary goal should be to encourage
increasing rates to Medicare levels and generating feedback through
processes with interested parties.
Response: To the extent a State proposes a payment rate reduction
or restructuring which results in payment rates at or above 100 percent
of Medicare, it would certainly meet one of the three criteria in Sec.
447.203(c)(1) for the initial State analysis for rate reduction or
restructuring, but would still require that the other two criteria in
Sec. 447.203(c)(1) be met. We are requiring all three criteria in
Sec. 447.203(c)(1) be satisfied for the State to qualify for the
streamlined process, to protect access across varied circumstances. For
example, a proposed rate may be 100 percent of Medicare, but if the
currently approved Medicaid payment rate is higher such that the change
represents a payment reduction, then the proposed rate reduction still
could harm beneficiary access to the relevant services and potentially
reduce access to below the statutory standard.
Although we generally believe that setting rate thresholds at a
level recommended by the commenter (100 percent of the corresponding
Medicare rate, or higher) could help support adequate access to care
for Medicaid beneficiaries, we believe there are circumstances where
balancing State budgetary considerations, and the willingness of
providers to accept a given level of payment for services provided to
the Medicaid population, will suggest a Medicaid payment rate that
diverges from a corresponding Medicare rate but is still consistent
with the access requirement under section 1902(a)(30)(A) of the Act.
Comment: One commenter requested that CMS provide additional
guidance about how to conduct the Medicaid to Medicare comparison
required under Sec. 447.203(c)(1) and (2).
Response: As part of the proposed rule PRA process, we proposed a
template for States to use to complete the analyses under Sec.
447.203(c). The template includes detailed instructions for how States
should complete each tier and component of the analysis, as applicable.
We are finalizing that template as proposed.
Comment: Several commenters inquired about whether the guidance
provided in SMDL #17-004 \370\ would remain applicable under the new
proposals, wherein CMS determined that there were circumstances
unlikely to diminish access, and as such, would not invoke the
requirements of Sec. 447.203(b)(6) of the 2015 final rule with comment
period: reductions necessary to implement CMS Federal Medicaid payment
requirements (for example, Federal upper payment limits and financial
participation limits), but only in circumstances under which the State
is not exercising discretion as to how the requirement is implemented
in rates; reductions that will be implemented as a decrease to all
codes within a service category or targeted to certain codes, but for
services where the payment rates continue to be at or above Medicare
and/or average commercial rates; and reductions that result from
changes implemented through the Medicare program, where a State's
service payment methodology adheres to the Medicare methodology (For
example, modifications to diagnostic related groups and the resource
based relative value scale, adoption of new Medicare payment systems,
consistency with value-based purchasing initiatives, etc.). One
commenter specifically inquired about circumstances where payment rates
would be below the threshold of 100 percent of the most recently
published Medicare rates for the same or comparable services in the
impacted benefit area before and after the proposed restructuring. A
few other commenters encouraged CMS to allow a tier 1 review for rate
reductions in circumstances where rate reductions: (1) are necessary to
implement CMS Medicaid payment requirements (for example, UPL); (2)
result in payment rates that remain at or above Medicare or average
commercial rate amounts; or (3) are prompted by a change in Medicare
payment rates when the State's rate methodology adheres to Medicare
methodology. One commenter specifically recommended that the exemptions
provided under SMDL #17-004 be included in the exemptions under Sec.
447.203(c)(1), specifically citing circumstances in the SMDL where
Medicaid payment rate reductions generally would not be expected to
diminish access, such as: reductions necessary to implement CMS Federal
Medicaid payment requirements; reductions that will be implemented as a
decrease to all codes within a service category or targeted to certain
codes, but for services where the payment rates continue to be at or
above Medicare and/or average commercial rates; and reductions that
result from changes implemented through the Medicare program, where a
State's service payment methodology adheres to the Medicare
methodology.
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\370\ SMDL #17-004. November 16, 2017. https://www.medicaid.gov/sites/default/files/federal-policy-guidance/downloads/smd17004.pdf.
---------------------------------------------------------------------------

Response: We did specifically request comment on whether and how
the policies discussed in SMDL #17-004 should be included in the final
rule, and we thank the commenters for their helpful suggestions. As
stated, we are finalizing Sec. 447.203(c)(1) as proposed, and we are
not finalizing any exceptions to the tier 1 (or tier 2) analysis. We
believe the analysis is warranted under any rate reduction or
restructuring. The three circumstances described by commenters from
SMDL #17-004 are either inapplicable to this final rule or already
accounted for. Specifically, in the first circumstance, where Federal
Medicaid payment requirements are otherwise established in statute or
regulation, we recognize that States often have multiple ways of
complying with multiple Federal requirements that may bear upon payment
rates, and the review required in this final rule in Sec. 447.203(c)
is necessary to ensure that the State's programmatic decisions are
consistent with all applicable Federal requirements including that they
ensure sufficient beneficiary access to care. In the third
circumstance, reductions that result from changes implemented through
the Medicare program, where such a change does not require a SPA to
implement would also fall outside of Sec. 447.203(c)(1) through (3),
which are only applicable when a State must submit a SPA. The final
rule provisions only apply to the extent that a SPA is

[[Page 40776]]

needed to implement the proposed reduction or restructuring.
The second circumstance is the only one subject to the provisions
of this final rule, for reductions that will be implemented as a
decrease to all codes within a service category or targeted to certain
codes, but for services where the payment rates continue to be at or
above Medicare and/or average commercial rates. These reductions or
restructurings would need to meet all of the requirements of Sec.
447.203(c)(1) in order to be eligible for the streamlined access review
criteria. We decided not to include this criterion from SMDL #17-004 in
this final rule because we received a number of comments on this final
rule that suggested that providers and beneficiaries should have input
where non-nominal rate reductions or restructurings may occur,
regardless of the current or proposed payment level. Including this
particular provision could provide a State with a means to
significantly reduce provider payment rates without needing to engage
with the provider and beneficiary community on the impact such a
reduction might have on access to care.
Comment: One commenter expressed concern that CMS' proposals would
slow or in some cases prevent altogether the adoption of VBP
arrangements or other alternative payment models. Under these models,
the commenter stated that it is common for some providers to experience
increases in payment reflective of outcomes attributable to those
providers, and it is also common for some providers to experience
decreases in payment, including when aggregate levels of payment are
increasing for a relevant service or services. Given that any SPA
proposing to implement or substantially modify a VBP payment
arrangement could reasonably be considered a proposal to
``restructure'' payments, the commenter was concerned that the proposed
rule essentially would treat all VBP payment arrangements as inherently
suspect and as requiring additional scrutiny and administrative burden.
The commenter encouraged CMS to continue to identify ways to support
and encourage the adoption of VBP models in Medicaid, noting that CMS
should not adopt rules that create additional obstacles for States
seeking to implement VBP models. A few other commenters suggested that
streamlined review should be available in situations where rate
reductions are used to implement VBPs through a withhold payment rate
restructuring that does not reduce the total payments within the
overall service category, because the withheld amounts subsequently are
paid out based on performance.
Response: We agree with the commenter that VBP arrangements can be
useful tools to promote high-quality services for Medicaid
beneficiaries while promoting efficient and economic care delivery,
fully consistent with beneficiary access to covered services that meets
the statutory standard. Although a proposed SPA seeking to implement or
significantly modify a VBP arrangement likely may be considered a
payment rate restructuring, nothing in the final rule would prohibit or
is intended to discourage States from adopting such structures.
Performance-based incentives, innovative care models, and alternative
payment models are often designed to improve quality of care, promote
better patient outcomes, and reward providers for improvements to
quality of care and patient outcomes, while lowering the cost of care.
In the 2015 final rule with comment period, we signaled our interest in
working with States in promoting innovative patient care models and
delivery system changes that seek to reward the provision of quality
patient care that also lowered cost to the Medicaid program.\371\
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\371\ 80 FR 67578-67579.
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[[Page 40777]]

States to document that Medicaid rates are economic and efficient when
the State submits changes to payment methodologies through a SPA. If a
State is unsure whether its proposed performance-based incentive,
innovative care model, or alternative payment models contains a
restructuring subject to Sec. 447.203(c), they can engage with CMS
prior to submission of a SPA. CMS can and may request Sec. 447.203(c)
analyses upon receipt of a proposal as well.
Comment: One commenter strongly suggested that the State rate
analysis be required on an annual basis, not only upon rate reductions
or restructuring, and further suggested that any rate examinations by
CMS should also include rates paid in managed care, noting the volume
of HCBS provided under managed care, and as such, focusing only on FFS
rates is a disservice to much of the industry.
Response: We intend for the payment rate transparency provisions in
Sec. 447.203(b) to provide interested parties with insight into State
plan payment rates relative to the Medicare payment rates for the same
services. While these payment analyses will be updated every other
year, as opposed to annually as mentioned by the commenter, the Sec.
447.203(b) analysis will be available for CMS and for interested
parties to review, while the Sec. 447.203(c) analysis will apply only
to SPA submissions that propose to reduce or restructure provider
payment rates. The Sec. 447.203(c) provisions of this final rule
concern SPAs proposing to reduce or restructure payment rates in
Medicaid FFS. Other components of this final rule address payment rate
adequacy and transparency for HCBS specifically, and access to care in
managed care is being addressed through the Managed Care final rule (as
published elsewhere in this Federal Register).
Comment: One commenter stated that SPAs that would result in
Medicaid payments that are at or above 80 percent of Medicare rates for
the same or comparable services should be approvable without resorting
to the larger access analysis described in proposed Sec.
447.203(c)(2). The commenter noted that it is common for Medicaid to
pay a percentage of Medicare rates (for example, 85 percent of
Medicare) and stated that a proposed payment methodology should not
have to result in Medicaid payments that are exactly the same as
Medicare rates to avoid access concerns.
Response: This final rule does not require that the proposed
payment methodology result in payments that are exactly the same as
Medicare rates, or any specific percentage of the Medicare rates for
the same or a comparable set of services. States that have rates at or
above 80 percent of Medicare in the aggregate, including base and
supplemental payments, can qualify for the streamlined initial State
analysis for rate reduction or restructuring in Sec. 447.203(c)(1) of
the final rule, provided that the other criteria of Sec. 447.203(c)(1)
are met. As discussed in an earlier response to comment in this final
rule; however, we do not agree that State payment proposals that meet
the 80 percent of Medicare threshold should be exempt from the other
qualification criteria specified in Sec. 447.203(c)(1)(ii) and (iii),
nor the additional analysis elements in Sec. 447.203(c)(2) if all the
criteria for the streamlined process are not met.
Comment: One commenter commended CMS for moving towards more clear
and transparent processes for rate analyses associated with State-
proposed payment changes. However, the commenter indicated that the
first tier's streamlined requirements are unlikely to ever be met, as
the commenter noted that there are rarely any changes in rates that are
proposed that do not elicit complaints and/or concerns about impacts to
access from the public and/or interested parties, even in such
circumstances as rate increases. The commenter suggested that CMS
reconsider the tier guidelines to make it more feasible for a State to
meet the requirements of the initial, streamlined tier.
Response: We disagree that the streamlined requirements are
unlikely to ever be met. We discussed a State's ability to meet the
streamlined criteria in the preamble, and direct the commenter to
sections II.C.3 and III.C.11.d.i. of the final rule, which discusses
the overall impact of this policy on State proposals to reduce or
restructure provider payment rates. Similar to our experience after the
issuance of SMDL #17-004, as discussed in the above referenced sections
of the final rule, we anticipate that there will be States that propose
rate reductions or restructurings that will be able to demonstrate
compliance with Sec. 447.203(c)(1). The final rule provides that
significant access concerns can be raised, and the proposal can still
meet the (c)(1) threshold, provided that the State can reasonably
respond to or mitigate the concerns, as appropriate. States should be
working with their provider and beneficiary communities and engaging
with constructive criticism and complaints, and provide justification
to those interested parties as to why the reductions are necessary, and
discuss alternatives considered. An important purpose of Sec.
447.203(c)(1)(iii) is to encourage meaningful engagement between States
and s interested parties.
Comment: Multiple commenters recommended that CMS increase the
proposed threshold to qualify for the streamlined payment SPA analysis
proposed at Sec. 447.203(c)(1)(i) from 80 percent of Medicare, with
some commenters suggesting that the threshold be changed to 100 percent
of Medicare to make the streamlined process more meaningful. These
commenters noted that, although Medicare FFS pays physicians
considerably more, on average, than Medicaid, it is not competitive in
markets with a large percent of commercial payers and Medicare
Advantage plans, which typically pay more than traditional Medicare.
Therefore, these commenters stated that setting a benchmark at 80
percent of a rate that is not competitive in many parts of the country
would undermine efforts to ensure Medicaid payments comply with section
1902(a)(30)(A) of the Act. Another commenter stated that many people
cannot access Medicaid acute-care services of the types that Medicare
pays for because States do not pay providers adequate rates to induce
them to accept Medicaid as payment, and the commenter noted that this
problem has existed for a very long time, and it is not related to
whether a State wants to reduce or restructure rates from their current
levels. One commenter noted that many providers are already paid at 80
percent of Medicare and thus recommended that it seems appropriate to
select a higher standard by which to assess whether a reduction would
diminish access. Further, a couple of commenters suggested that if
access problems persist after a State has achieved the 80 percent
threshold for a suitable period of time, and those problems can be
traced to inadequate rates, then the State should be required to raise
those rates to 85 percent, then 90 percent and so on until the rates
reach 100 percent of the Medicare rate. One commenter suggested that
such a graduated approach to the Sec. 447.203(c)(1)(i) threshold
should be included regardless of whether there are persistent
documented access to care issues. Some commenters had similar
recommendations to increase the threshold without recommending a
specific number, noting that Medicare payments are often low relative
to provider costs, and one of these

[[Page 40778]]

commenters also recommended a phase-in approach.
Some commenters suggested that CMS take a different approach for
different services where the commenters suggested that Medicare may
undervalue a service, such as mental health, or where certain service
providers do not take insurance, which leads to higher charges in the
private market. One specifically suggested a 100 percent threshold for
behavioral health, for these reasons.
Response: We appreciate the viewpoints and suggestions of the
commenters. First, where the commenters suggested raising the 80
percent threshold to a higher level, such as a 100 percent threshold,
to make the streamlined process more protective of beneficiary access,
we believe the 80 percent threshold continues to present a meaningful
threshold, particularly as it is coupled with the other standards in
Sec. 447.203(c)(1). As we discussed in the preamble, after careful
review of the literature, we determined that 80 percent of Medicare
would be a reasonable payment rate threshold to aid States' and our
assessment of compliance with section 1902(a)(30)(A) of the Act. Based
on a review of evidence discuss elsewhere in the proposed rule and
preamble of this final rule, we do not currently have evidence that a
ratio higher than 80 percent is necessary to ensure compliance with the
statutory access standard.\372\ However, we are committed to monitoring
implementation and would consider proposing a sliding percentage
threshold for the Streamlined analysis required under Sec.
447.203(c)(1) through future rulemaking, if it is determined that such
a change would be appropriate. The threshold is not a level set for
approval (or disapproval) of a SPA, but merely to inform the level of
analysis would be required. Additionally, the other commenter's
assertion that many providers are already paid at 80 percent of
Medicare does not, in our view, indicate a need for stricter
thresholds, but rather provides that some States may simply be able to
meet the Sec. 447.203(c)(1)(i) threshold. If these providers, the
beneficiaries they serve, and/or other interested parties have access-
related concerns about current or proposed payment rates in their
State, they may raise those concerns to the State through the various
available forms of public process, which the State would need to
address consistent with Sec. 447.203(c)(1)(iii) to qualify for the
streamlined analysis process in the event of a payment SPA that would
reduce or restructure rates in circumstances that could result in
diminished access. We note that, in general, there is no requirement
that payment rates for Medicaid services include explicit consideration
of a provider's cost of care. The level of payment rates in relation to
provider costs is not necessarily the only or the decisive factor in
ensuring access to care consistent with the statutory standard, and we
do not require that States establish that rates are sufficient to
ensure access by reviewing the relationship of payment rates to
provider costs.
---------------------------------------------------------------------------

\372\ 88 FR 28027 through 28029.
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Second, we agree that Medicare payment rates are typically higher
than Medicaid, but do not agree the fact that some private payer rates
and Medicare Advantage rates are higher than Medicare FFS rates
requires that we select a threshold rate of higher than 80 percent of
the Medicare FFS rate to achieve a meaningful comparison that helps
ensure that Medicaid rates are adequate to meet the statutory access
standard. In addition, regarding the comment that certain providers
that do not take insurance, which leads to higher charges, we do not
consider a charged amount to be comparable to a payment rate unless the
provider actually receives the charged amount as payment amount from a
payer (including self-pay individuals). Some providers bill patients on
a sliding fee scale, dependent on factors like the individual's income
level, even if the provider does not take insurance. This does not mean
that using a provider's customary charge is a reasonable proxy for an
economic and efficient payment rate or for a payment level that is
necessary to support adequate access to care, because not all providers
receive payment at their charge rate, even if they bill the patient
directly.
We are finalizing the Sec. 447.203(c)(1)(i) threshold at 80
percent of Medicare FFS because we wanted to balance an achievable
threshold for States while also establishing a threshold that we
believe would be strongly indicative that Medicaid payment rates would
be likely to comply with section 1902(a)(30)(A) of the Act. While we
acknowledge that 80 percent of Medicare rates may not provide absolute
assurance that a given provider, or a sufficient number of providers,
will participate in the Medicaid program, we are using 80 percent as a
threshold to determine the level of analysis and information a State
must provide to CMS to support consistency of payment rates with
section 1902(a)(30)(A) of the Act. Notably, there are other provisions
of the final rule that provide opportunities for the public to raise
access to care concerns to State agencies and to CMS should Medicaid
payment rates be insufficient to ensure adequate provider participation
so that the statutory access standard is met, as provided in Sec. Sec.
447.203(c)(4) and 447.204.
Finally, we acknowledge the commenter that suggested that 80
percent of Medicare does not take into account circumstances in which
Medicare may undervalue a service, such as mental health. In the 2024
Medicare PFS final rule, Medicare did finalize an adjustment to the
payment for certain timed behavioral health services paid under the
PFS.\373\ In the same rule, we acknowledged the systemic valuation
problem and finalized an adjustment to help mitigate the impact which
is scheduled to be phased-in over 4 years. While there are certainly
going to be issues within any selected rate comparison approach, do not
believe that Medicare payment rates for certain services or in general
are insufficient in a manner that would suggest a need to use a
threshold higher than 80 percent of the Medicare PFS rate. We
acknowledge that the reluctance of some provider types to accept
payment from various payers, including public and private payers, is
concerning, as this can have a negative effect on access to needed care
for Medicaid and Medicare beneficiaries, as well as the public at
large, including those who are privately insured. However, to the
extent the broader public has difficulty accessing a particular service
due to high levels of refusal among providers of that service to accept
payment offered by public and private payers, then it is possible that
the access standard under section 1902(a)(30)(A) of the Act could be
met even if Medicaid beneficiaries are experiencing significant
difficultly obtaining services from these providers. Although CMS would
encourage States in such circumstances to explore all available options
to encourage greater provider participation in Medicaid, we have not
seen evidence that leads us to believe this circumstance warrants a
different approach to evaluating the sufficiency of payment rates for
behavioral health services that is different than the approach for
physical health services.
---------------------------------------------------------------------------

\373\ 88 FR 79006.
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Comment: One commenter recommended that CMS establish a minimum
payment threshold that States must adhere to if there are significant,
demonstrated access problems, noting

[[Page 40779]]

that States where the 80 percent threshold has been met or exceeded
have significantly fewer problems with access to Medicaid services than
States where that has not happened. Therefore, the commenter
recommended that CMS require States to set all rates under the Medicaid
State plan to at least 80 percent of the comparable Medicare rate,
unless the State can demonstrate that it does not have a significant
access problem with the services for which Medicaid payment rates are
below that threshold.
Response: We appreciate the recommendations of the commenters, but
the statute does not provide CMS with the authority to establish a
floor for Medicaid payment rates as recommended by the commenter, with
limited statutory exceptions (such as for hospice services under
section 1902(a)(13)(B) of the Act and FQHC/RHC services under section
1902(bb) of the Act, which each establish a floor for provider payment
rates which prohibits States from implementing rate reductions below
the amount calculated through the methodology provided in the statute).
We are finalizing the Sec. 447.203(c)(1) and (2) provisions as
proposed. Payment rates are not the sole indicators of access to care,
and States should pursue any means to improve access to care to the
extent that they are able. To the extent that there are significant
access issues where the provider payment rates are at least 80 percent
of Medicare, the other components of Sec. 447.203(c)(1) would also be
reviewed to determine if the payment rate reductions or restructurings
meet the Sec. 447.203(c)(1) thresholds. If there are access to care
issues, then in following the process described in this final rule, we
anticipate that the public processes in paragraph (c)(4) and Sec.
447.204 may yield significant access to care concerns from
beneficiaries, providers, or other interested parties regarding the
service(s) for which the payment rate reduction or payment
restructuring is proposed. We would only consider approving a payment
SPA in such circumstances under the streamlined process under Sec.
447.203(c)(1) if the State were able to reasonably respond to or
mitigate the concerns, as appropriate, as documented in the analysis
provided by the State pursuant to Sec. 447.204(b)(3).
Comment: One commenter encouraged CMS to conduct enhanced reviews,
consistent with Sec. 447.203(c)(2), of payment rates for States that
are already below the 80 percent threshold, even if the State has not
submitted a triggering rate reduction SPA.
Response: We appreciate the suggestion of the commenter. The
payment rate transparency publication, comparative payment rate
analysis, and payment rate disclosure requirements we are finalizing in
Sec. 447.203(b) will allow States, CMS, and the public a better
insight into rates regardless of whether a SPA is submitted. However,
we are not requesting a Sec. 447.203(c)(2) analysis where the State
has not submitted a SPA because we are moving away from the previous
AMRP process from the 2015 final rule with comment period and replacing
that process with the new Sec. 447.203 provisions of this final rule.
We will continue in our oversight role of the Medicaid program and note
that we can initiate a State plan compliance action if we have evidence
that the State's Medicaid payment rates do not meet the access
standards in section 1902(a)(30)(A) of the Act, regardless of whether
the State is seeking to change them with a SPA.
Comment: For the 80 percent of Medicare analysis, two commenters
recommended weighting codes in the analysis by service volume to
reflect payment levels more meaningfully across the benefit category.
These commenters were concerned that CMS' proposed ``aggregate''
standard, reviewing rates across a benefit category rather than at the
service-specific level, will mean that some Medicaid services are paid
below 80 percent (including frequently provided services) even if the
overall benefit category (including equally weighted but infrequently
provided services) achieves the 80 percent threshold. They recommended
that CMS set the threshold on a disaggregated basis to avoid permitting
States to obscure low payment rates for key services.
Response: We approve States' rate methodologies for compliance with
regulation and statute, but may not approve individual service rates
unless a State presents a final rate, or a fee schedule, as the output
of a rate methodology. This final rule does not change that policy or
imply that CMS will review individual rates for sufficiency in all
cases. Reviewing individual rates within a fee schedule would not
necessarily provide a better determination of whether the rates are
adequate to enlist sufficient providers into the Medicaid program or
not, since we do not believe that providers generally make decisions
about whether to participate with a payer (and accept the payer's
rates) based on the rate for a single service. However, we will review
individual payment rate codes to the extent that the rate changes fall
outside of the typical methodology used by the State in their payment
rate setting methodology under the State plan, or to the extent that we
have reason to believe that common billing codes most frequently used
by providers within the State are disproportionately impacted, as
determined by the State's public input process, by the payment rate
reduction or restructuring proposal. Further, the payment rate
transparency publication in Sec. 447.203(b)(1) will require States to
publish their fee schedule rates for services specified in that section
of the final rule, which will include individual fee schedule payment
rates for services for CMS and public review.
Comment: One commenter recommended that, for services for which the
State does not use a cost-based payment methodology, CMS should require
States to transition to a cost-based methodology. Alternatively, they
recommended that CMS require Medicaid rates be no less than 80 percent
of Medicare, private insurance, private payment (which we interpret to
mean self-pay), or rates for State-furnished or paid services or other
comparable service rates.
Response: We appreciate the recommendations of the commenter, but
with limited statutory exceptions (such as for hospice services under
section 1902(a)(13)(B) of the Act and FQHC/RHC services under section
1902(bb) of the Act, which each establish a floor for provider payment
rates which prohibits States from implementing rate reductions below
the amount calculated through the methodology provided in the statute),
the statute does not provide CMS with the authority to establish a
floor or a particular payment methodology for Medicaid payment rates as
recommended by the commenter. There is also no statutory requirement to
pay providers at the cost of providing services or rates that are
equivalent to cost. Prior to 1997, the Omnibus Reconciliation Act of
1980 included the ``Boren Amendment'' which required under then section
1902(a)(13) of the Act that some institutional providers, in particular
nursing facilities and intermediate care facilities, receive payments
were reasonable and adequate to meet the costs which much be incurred
by efficiently and economically operated facilities in order to provide
care and services in conformity with applicable State and Federal laws,
regulations, and quality and safety standards. In 1997, through the
Balance Budget Act of 1997, the Boren Amendment was repealed and
replaced with the current section 1902(a)(13) of Act to instead require
States to use a public process to set

[[Page 40780]]

institutional provider payment rates. Since these statutory changes
have occurred, States are not required to consider the cost of care in
the development of provider payment rates, but instead rely on input
from those providers in their rate setting, which input also is
important under the requirements set forth in this final rule. We are
finalizing the Sec. 447.203(c)(1) and (2) provisions as proposed.
Comment: A couple of commenters questioned the use of Medicare
rates as the basis for comparison in Sec. 447.203(c), as it is not a
significant payor of certain Medicaid-covered services and serves a
significantly different population. These commenters suggested that
services such as substance-use disorder services, facility-based
treatment, dental services, and certain LTSS lack a comparable set of
Medicare-covered services that would ``bear a reasonable similarity''
to the Medicaid-covered services. One commenter expressed concern about
whether States may compare against Medicare rates that are perhaps
similar in concept but not in practice. Specifically, the commenter
noted that Medicare Home Health Aides and Medicare in-home skilled
nursing services seem like they might be comparable to certain Medicaid
HCBS and LTSS, but in practice serve different populations in vastly
different volumes and as such are not appropriate comparisons.
Commenters urged CMS to issue guidance to States on service categories
that would require the submission of additional data under this
circumstance. One commenter acknowledged that the aggregate comparison,
rather than a rate-by-rate comparison, alleviated some of the
challenges of finding a Medicare equivalent for certain services.
Further, one commenter suggested a more nuanced approach to
examining payment rates as they relate to access, such as benchmarking
against rates for a subset of the highest performing States in terms of
access to care for these service categories. That commenter cited
recent research from the American Dental Association's Health Policy
Institute, which does not suggest a strong relationship between the
ratio of Medicaid-to-private payer rates and dental provider
participation in Medicaid, meaning that a comparison to private payer
rates is not necessarily instructive for all services in the absence of
Medicare comparator rates.
Response: We are finalizing Sec. 447.203(c)(1) and (2) as
proposed. The regulations account for circumstances where Medicare does
not cover comparable services, by requiring States to compare, ``as
reasonably feasible, to the most recently available payment rates of
other health care payers in the State or the geographic area for the
same or a comparable set of covered services, ``which comparison is
required even if it is impossible to compare'' to the most recently
published Medicare payment rates for the same or a comparable set of
Medicare-covered services because no such set of Medicare-covered
services exists. We also agree with the commenter who pointed out that
the aggregate comparison at the level of the benefit category makes it
more feasible to find a reasonable Medicare comparison. While the
regulations allow States some flexibility in determining how to perform
the required comparison in developing and submitting their SPA
analysis, all State-submitted information will be reviewed by CMS
through the SPA process, and we reserve the right to request any
additional information necessary to further understand the SPA or the
accompanying analysis, which may include a request for additional rate
comparison information.
Although we appreciate the concern of the commenter about
circumstances where neither Medicare nor private payer rates provide a
reasonable analog to assess access to care, we have to balance our
requirements against the feasibility of obtaining data for comparison.
Although the rate transparency requirements we are finalizing in this
rule will increase the availability of State rate data, determining the
highest performing States for use as the commenter suggested would
require additional burden on both States and the Federal Government to
determine which States would be benchmark States for which services. In
addition, it is not necessarily clear that this approach would be
appropriate to ensure compliance with the statutory access standard,
which looks to whether beneficiaries have access to covered services at
least as great as that enjoyed by the general population in the same
geographic area. We believe the policies we are finalizing strike an
appropriate balance that reasonably considers availability of data and
State burden, as well as the need to ensure sufficient beneficiary
access.
We acknowledge the commenters' concern that services such as
substance-use disorder services, facility-based treatment, dental
services, and certain LTSS lack a comparable set of Medicare-covered
services that would ``bear a reasonable similarity'' to the Medicaid-
covered services, and the concern about whether States may compare
against Medicare rates that are perhaps similar in concept but not in
practice. Particularly for facility-based services, we recognize that
Medicare and Medicaid provider types may not be identical in certain
cases. However, often, facility-based services furnished by a provider
type enrolled in one program are covered when furnished in a different
setting or by a provider with a different enrollment type in the other
program. In such cases, States should look to the nature of the service
rather than, for example, the enrollment type of the provider, to
identify a reasonably similar set of Medicare-covered services for
comparison. We acknowledge that Medicare also establishes payment rates
for certain services for which Medicare seldom pays; however, States
still should consider these rates when constructing their comparisons
to Medicare in accordance with the provisions of this final rule.
Comment: Some commenters requested that CMS remove the 4 percent
threshold under 447.203(c)(1), noting that a 4 percent, or even lower,
standard would in most cases be reducing a rate which is already far
below Medicare levels. One commenter suggested that if a 1 or 2 percent
threshold is not feasible for every State, then CMS should use this
standard (that is, 1 or 2 percent, instead of 4 percent) for States
whose aggregate Medicaid FFS payments average less than the national
average of 72 percent for the most common E/M services.
One of these commenters supported CMS' proposal to assess such rate
reductions on a cumulative basis over the course of a State fiscal
year. Another commenter urged CMS to consider designing a limit to
ensure that States could not implement a large cut (for example, 20
percent) to payments for a particular service, which the commenter
perceived as a risk due to our proposal to analyze changes at the
benefit category level, where we proposed to examine whether aggregate
payment rate changes for the benefit category as a whole would exceed
the 4 percent threshold. The commenter also suggested that CMS could
also consider disaggregating service analysis in future rulemaking.
Response: We are finalizing Sec. 447.203(c)(1) and (2) as
proposed. As discussed previously, the 4 percent threshold is one of
three criteria identified in Sec. 447.203(c)(1), which, if not met,
will require the State to submit additional information required under
Sec. 447.203(c)(2). Where a State's payment rates are already below 80
percent of the Medicare FFS payment rate for the same or a comparable
set of services, then any rate reductions from that State would be
subject to the requirements of

[[Page 40781]]

Sec. 447.203(c)(2). This feature will ensure States with rates already
below 80 percent of comparable Medicare FFS rate levels will have to
take additional steps to establish that the rate change will not result
in access below the level required under section 1902(a)(30)(A) of the
Act. We declined to include a lower threshold because we believe that
the 4 percent is sufficient based upon our experience with State
proposals received after the publication of SMDL #17-004. State
proposals that included a reduction less than or equal to 4 percent of
the aggregate FFS Medicaid expenditures for each benefit category
impacted by the reduction or restructuring generally did not result in
access to care issues for affected services.
Comment: Multiple commenters were concerned that the 4 percent
reduction criterion is not nominal, as CMS had described it. These
commenters urged CMS to re-assess the appropriateness of the 4 percent
threshold.
Response: As discussed in the proposed rule, States often seek to
make payment rate and/or payment structure changes for a variety of
programmatic and budgetary reasons with limited or potentially no
effect on beneficiary access to care, and we recognized that State
legislatures needed some flexibility to manage State budgets
accordingly.\374\ We discussed a 4 percent spending reduction threshold
with respect to a particular service category in SMDL #17-004 as an
example of a targeted reduction where the overall change in net
payments within the service category would be nominal and any effect on
access difficult to determine (although we reminded States that they
should document that the State followed the public process under Sec.
447.204, which could identify access concerns even with a seemingly
nominal payment rate reduction). To our knowledge, since the release of
SMDL #17-004 six years ago, the 4 percent threshold for regarding a
payment rate reduction as nominal has not resulted in access to care
concerns in State Medicaid programs, and it received significant State
support for this reason in comments submitted in response to the 2018
proposed rule, as well as in response to the proposed rule in this
rulemaking. The provisions of the final rule in Sec. 447.203(c)(1) are
not intended to be individually applicable, as they were under the SMDL
#17-004, and are instead intended for each element of Sec.
447.203(c)(1) to be met in order for the rate reduction or
restructuring SPA to be considered consistent with section
1902(a)(30)(A) of the Act under the streamlined analysis process. In
each instance, the State's proposal would need to demonstrate that
Medicaid payment rates in the aggregate (including base and
supplemental payments) following the proposed reduction or
restructuring for each benefit category affected by the proposed
reduction or restructuring would be at or above 80 percent of the most
recently published Medicare payment rates for the same or a comparable
set of Medicare-covered services; the proposed reduction or
restructuring, including the cumulative effect of all reductions or
restructurings taken throughout the current State fiscal year, would be
likely to result in no more than a 4 percent reduction in aggregate FFS
Medicaid expenditures for each benefit category affected by proposed
reduction or restructuring within a State fiscal year; and the public
processes described in paragraph (c)(4) and Sec. 447.204 yielded no
significant access to care concerns from beneficiaries, providers, or
other interested parties regarding the service(s) for which the payment
rate reduction or payment restructuring is proposed, or if such
processes did yield concerns, the State can reasonably respond to or
mitigate the concerns, as appropriate, as documented in the analysis
provided by the State pursuant to Sec. 447.204(b)(3).
---------------------------------------------------------------------------

\374\ 88 FR 28030.
---------------------------------------------------------------------------

Comment: One commenter noted that the 4 percent reduction threshold
is consistent with the 2018 proposed rule, but suggested that CMS
assess any rate reduction compared to broader trends in the economy,
particularly when considering rising medical cost and adjusting for
inflation, a 4 percent payment cut should not be considered nominal,
especially in States where Medicaid payments are already low.
Furthermore, the accumulating effect of yearly cuts to provider
payments, which could still meet the thresholds of the rule, would be
extremely detrimental to access for beneficiaries in the Medicaid
program. For example, the Medicare Economic Index (MEI) measures the
impact of inflation faced by physicians with respect to practice costs
and general wage levels, and as such show the year-over-year change in
cost of providing the same basket of services. The commenter stated
that rate reductions should be compared against this type of measure
rather than against an arbitrary percentage. The commenter also noted
that the 4 percent rate reduction threshold would operate in
conjunction with the other criteria in Sec. 447.203(c)(1), and
therefore not exempt a State proposal from compliance with the broader
access framework in the rule, but expressed concern about the
disproportionate impact a 4 percent reduction can have on certain
practice types, such as pediatric.
Response: We appreciate the suggestion of the commenter. We are
finalizing Sec. 447.203(c)(1)(ii) as proposed. We did not want to rely
upon the MEI to supply an inflation factor that must be considered in
examining the approvability of payment rate changes or restructurings
because we wanted to provide flexibility for States within their
budgetary constraints. We also note that the comparison of State
payment rates to Medicare would accomplish a similar goal to that
stated by the commenter. By requiring State rate actions be compared to
the most recently published Medicare rate, which are trended forward
annually, the (c)(1)(i) threshold does take into account inflation that
may occur in the health care industry.
We reiterate the statement of the commenter that the provisions of
the final rule in Sec. 447.203(c)(1) are not intended to be
individually applicable, as they were under the SMDL #17-004, and are
instead intended for each element of Sec. 447.203(c)(1) to be met in
order for the rate reduction or restructuring SPA to be considered
consistent with section 1902(a)(30)(A) of the Act under the streamlined
analysis process. In each instance, the State's proposal would need to
demonstrate that Medicaid payment rates in the aggregate (including
base and supplemental payments) following the proposed reduction or
restructuring for each benefit category affected by the proposed
reduction or restructuring would be at or above 80 percent of the most
recently published Medicare payment rates for the same or a comparable
set of Medicare-covered services; the proposed reduction or
restructuring, including the cumulative effect of all reductions or
restructurings taken throughout the current State fiscal year, would be
likely to result in no more than a 4 percent reduction in aggregate FFS
Medicaid expenditures for each benefit category affected by proposed
reduction or restructuring within a State fiscal year; and the public
processes described in paragraph (c)(4) and Sec. 447.204 yielded no
significant access to care concerns from beneficiaries, providers, or
other interested parties regarding the service(s) for which the payment
rate reduction or payment restructuring is proposed, or if such
processes did yield concerns, the State can reasonably

[[Page 40782]]

respond to or mitigate the concerns, as appropriate, as documented in
the analysis provided by the State pursuant to Sec. 447.204(b)(3).
We disagree that 4 percent is an arbitrary threshold. As noted in a
prior response, States often seek to make payment rate and/or payment
structure changes for a variety of programmatic and budgetary reasons
with limited or potentially no effect on beneficiary access to care,
and we recognized that State legislatures needed some flexibility to
manage State budgets accordingly. We discussed a 4 percent spending
reduction threshold with respect to a particular service category in
SMDL #17-004 as an example of a targeted reduction where the overall
change in net payments within the service category would be nominal and
any effect on access difficult to determine (although we reminded
States that they should document that the State followed the public
process under Sec. 447.204, which could identify access concerns even
with a seemingly nominal payment rate reduction). To our knowledge,
since the release of SMDL #17-004, the 4 percent threshold for
regarding a payment rate reduction as nominal has not resulted in
access to care concerns in State Medicaid programs, and it received
significant State support for this reason in comments submitted in
response to the 2018 proposed rule and the proposed rule in this
rulemaking. In addition, we did not receive comments indicating that
specific State rate reductions that were less than 4 percent had an
impact on beneficiary access to care in their State Medicaid programs.
In addition, the 4 percent threshold is then a measure to ensure that
payment rates are not reduced by too significant of an amount over a
single State fiscal year. The two quantitative thresholds in paragraphs
(c)(1)(i) and (ii), taken together with the public input requirements
in paragraph (c)(1)(iii), work in conjunction to ensure that State
payment rates are consistent with section 1902(a)(30)(A) of the Act.
Comment: One commenter suggested where States make changes to a
cost-related payment methodology that may result in diminished access
(for example, by placing a new cap on administrative costs, requiring a
``rebase,'' or otherwise altering cost-reporting procedures), it may be
challenging to determine whether the change would result in a 4 percent
or more decrease in payment.
Response: We understand the commenter's concern and note that the 4
percent threshold is a cumulative percentage of rate reductions or
restructurings applied to the overall FFS Medicaid expenditures for a
particular benefit category affected by the proposed reduction(s) or
restructuring(s) within each State fiscal year. During the SPA process,
States are required to estimate the amount of the financial impact on
their CMS form 179 and in their public notice as required by Sec.
447.205(c)(2), which states that the public notice must ``give an
estimate of any expected increase or decrease in annual aggregate
expenditures.'' Where States are unsure how they should demonstrate
whether the proposed change meets the 4 percent threshold in Sec.
447.203(c)(1)(ii), they should look to existing criteria and
methodologies used to estimate financial impacts for the CMS form 179
and public notice under Sec. 447.205.
Comment: One commenter noted that Sec. 447.203(c)(1)(iii) requires
an assessment of ``significant concerns'' from providers and others,
and requested additional detail regarding the definition of
``significant concern,'' and what the State's response to significant
concerns must entail. A couple of commenters stated that requiring
States to demonstrate that no concerns were raised or to ``address''
concerns raised in public comment would be a difficult requirement to
meet, noting that any proposed rate reduction is likely to result in
significant public comment. One of these commenters stated it is
unclear what level of concern or complaint would shift a State from one
tier (that is, the streamlined process under Sec. 447.203(c)(1)) to
the next (that is, to requiring the additional analysis under Sec.
447.203(c)(2)). The other of these commenters added that, as CMS does
not define the term ``address'' in the rule, it is concerning that a
State must meet all of the criteria in Sec. 447.203(c)(1) to qualify
for the streamlined analysis.
Response: The term ``significant'' can be dependent upon the
circumstances, but we generally consider ``significant concerns'' to
mean those that are not easily resolvable through engagement with
beneficiaries, providers, and other interested parties. We also note
that the regulation does not actually use the word ``address'' but
rather requires that, to the extent that States received public input
on their proposed SPA to reduce or restructure payment rates that
``yielded . . . significant access to care concerns from beneficiaries,
providers, or other interested parties,'' the State must demonstrate
that it is able to ``respond to or mitigate the concerns, as
appropriate.'' For example, a State may receive a large number of
public comments on a proposed rate change, but if all the comments
merely seek to clarify an aspect of the change, this situation, despite
the high volume of comments, would not be a significant concern,
because no concern has been raised other than a request for
clarification of the proposal As an alternative example, where
providers are raising concerns about the level of payment they would
receive under a State's new payment rate proposal, the State could
discuss with interested parties other legislative initiatives underway
or programmatic goals that might be considered as offsetting any
decrease in provider payments that might be expected from the proposed
rate action. This is common with value-based purchasing initiatives in
States. Section 447.203(c)(4), where we are recodifying Sec.
447.203(b)(7) as finalized in the 2015 final rule with comment period,
continues to require that ``States have ongoing mechanisms for
beneficiary and provider input on access to care (through hotlines,
surveys, ombudsman, review of grievance and appeals data, or another
equivalent mechanism), consistent with the access requirements and
public process described in Sec. 447.204.'' Furthermore, Sec.
447.203(c)(4)(ii) provides that ``States should promptly respond to
public input through these mechanisms . . . with an appropriate
investigation, analysis, and response,'' and ``States must maintain a
record of data on public input and how the State responded to this
input,'' which record the State must make available to us upon request.
If the State is not able to demonstrate that its proposal will not
decrease access below the statutory standard, including by credibly
refuting any reasonable, supported concern raised in public comments
that it will harm access excessively, then the proposed rate reduction
or restructuring will not meet the requirements for the streamlined
(c)(1) process and will be subject to the tier 2 process in paragraph
(c)(2), where additional data and analysis will be required to be
submitted. In all cases, we will review to ensure that statutory access
standard and all other applicable Federal requirements are met.
Comment: A few commenters commended CMS for including the third
criterion, which centers the importance of public concerns about rate
reductions or restructuring, but these commenters opposed CMS
implementing any threshold for rate reduction or restructuring SPAs
under Sec. 447.203(c)(1).
Response: We appreciate the support of the commenters. With respect
to the inclusion of this criterion as one of three

[[Page 40783]]

requirements needed to qualify for a streamlined access analysis and in
response to the commenters' opposition to implementing any threshold
for rate reductions or restructuring SPAs under Sec. 447.203(c)(1), we
note that the intention of this final rule is to balance the
administrative burden on the States associated with rate reduction or
restructuring SPAs with the need to have sufficient information to make
an administrative decision on State payment rate proposals, and whether
they satisfy the access standard in section 1902(a)(30)(A) of the Act,
while also providing providers, beneficiaries, and interested parties
to raise concerns directly to the State through the mechanisms for
ongoing beneficiary and provider feedback in Sec. 447.203(c)(4) of the
final rule.
Comment: A few commenters strongly supported the public input
process provision in Sec. 447.203(c), particularly in Sec.
447.203(c)(1)(iii), since developing robust mechanisms for States to
hear feedback from providers and interested parties about access
concerns will be critical to assuring that access analysis in
connection with payment SPAs has its intended effect. One commenter
suggested that CMS should further consider formalizing a specific role
for the MAC/BAG in this process.
Response: We appreciate the support of the commenters and note that
the public input processes defined in Sec. 447.203(c)(4), where we are
recodifying requirements previously located in Sec. 447.203(b)(7),
requires that States have ongoing mechanisms for beneficiary and
provider input on access to care (through hotlines, surveys, ombudsman,
review of grievance and appeals data, or another equivalent mechanism),
consistent with the access requirements and public process described in
Sec. 447.204. We did not specifically provide a defined role for the
MAC or BAC in the regulatory rate reduction or restructuring process,
but States are not prohibited from including such entities in their
public input process to the extent that they believe it would be
valuable. However, if the MAC/BAC under Sec. 431.12 of this final
rule, or the interested parties' advisory group under Sec.
447.203(b)(6) produces a comment on a State proposal to reduce or
restructure payment rates, then the State would be required to consider
and respond to it as public input under Sec. 447.204.
Comment: A few commenters stated that providers that receive
Medicaid payments always raise concerns about any proposed rate
reduction or restructuring. These concerns are typically framed as
concerns about access. While one commenter reiterated the value of the
input of providers and other interested parties in the rate-setting
process, a requirement to conduct an access analysis any time a
provider voices concerns during the public input process is a de facto
requirement to conduct an access analysis for all SPAs. The commenter
stated that this will increase the administrative burden for States and
CMS and undermine the two-tiered level of analysis envisioned by CMS.
Response: We understand the viewpoint of the commenter and can
affirm that the mere existence of one or more comments is not in and of
itself a measure of whether the comments have raised a significant
access to care concern or whether the State is able to respond to and
mitigate any significant concern, as appropriate. If comments received
do not raise any significant access to care concern, or if they do but
the State documents a reasonable response to all significant concerns
that demonstrates that the proposal will not reduce access below the
statutory standard notwithstanding the concerns, or that mitigations
identified by the State will prevent such a degradation of access, then
the proposed reduction or restructuring will qualify for the
streamlined initial State analysis under Sec. 447.203(c)(1). We also
point out that the requirement that States provide adequate notice and
consider public comment for payment rate changes is a long-standing
requirement of the Medicaid program in 42 CFR part 447, subpart B.
Comment: One commenter expressed concern that Sec.
447.203(c)(1)(iii), which states as a criterion that ``public feedback
yielded no significant access to care concerns or yielded concerns that
the State can reasonably respond to or mitigate, as appropriate,''
presents a dangerous loophole through which States can drastically cut
payment for services, including, for example, specialist office visits,
without triggering additional regulatory scrutiny. The commenter
expressed doubt that the subjective inquiry on whether State efforts
might be reasonable coupled with the non-specific activity the State
would undertake (``respond'' or ``mitigate'') would provide an actual
hurdle to payment cuts, including cuts that could constrict access for
beneficiaries with rare and ultra-rare conditions.
Response: We disagree that this provision provides States with a
loophole enact drastic cuts for services. First and foremost, the
provision in question is just one of three criteria a State must meet
in order to perform only a streamlined access analysis under Sec.
447.203(c)(1). Second, qualification for the streamlined analysis does
not result in automatic approval of the SPA. We will still review both
the SPA itself and the streamlined analysis as submitted by the State
to determine accuracy and whether the State has met all applicable
Federal requirements. We fully expect that some States may submit
documentation for the streamlined analysis, and CMS will determine that
a more extensive analysis under Sec. 447.203(c)(2) is necessary. For
example, if we disagreed that a State's streamlined access analysis
submission adequately documented that the State had reasonably
responded to or mitigated all significant access concerns raised
through public processes in connection with a SPA to reduce or
restructure payment rates, we would require the State to submit the
additional access analysis provided for in this final rule to enable us
to verify that the SPA satisfies the access standard in section
1902(a)(30)(A) of the Act.
To be clear, the State's response to any significant access concern
identified through the public processes, and any mitigation approach,
as appropriate, would be expected to be fully described in the State's
submission to us. In addition, Sec. 447.203(c)(4), where we are
recodifying Sec. 447.203(b)(7), continues to require that ``States
have ongoing mechanisms for beneficiary and provider input on access to
care (through hotlines, surveys, ombudsman, review of grievance and
appeals data, or another equivalent mechanism), consistent with the
access requirements and public process described in Sec. 447.204.''
Furthermore, Sec. 447.203(c)(4)(ii) provides that ``States should
promptly respond to public input through these mechanisms . . . with an
appropriate investigation, analysis, and response,'' and ``States must
maintain a record of data on public input and how the State responded
to this input,'' which record the State must make available to us upon
request. A major benefit and intent of this repeated emphasis on public
process is to protect against the situation the commenter describes.
Our regulations ensure other parties besides the State have visibility
into a proposed rate reduction or restructuring, and are able to voice
related concerns, so we do not need to rely solely on a State's
assertion that there are no access-related concerns or that all such
concerns have been addressed.

[[Page 40784]]

c. Additional State Rate Analysis (Sec. 447.203(c)(2))
Comment: One commenter expressed support for the proposed changes
to strengthen and clarify requirements for the analysis required for
reductions in rates or restructuring of provider payments under Sec.
447.203(c)(2); however, the commenter raised concerns about comparing
Medicaid rates solely to Medicare rates, as Medicare does not have
comparable services for every benefit category in Medicaid. As such,
the commenter suggested using private pay where no Medicare payment
rates are available.
Response: We appreciate the support of the commenter and point out
that a comparison to Medicare payment rates is not the sole means of
assessing access to care in this final rule. This final rule requires
that, for States submitting a proposed rate reduction or restructuring,
the proposed reduction or restructuring must meet all three criteria
set out in Sec. 447.203(c)(1), which include the 80 percent of
Medicare comparison, or else the additional analysis under Sec.
447.203(c)(2) would be required. We also finalized in in Sec.
447.203(c)(2)(ii) to require a comparison of Medicaid payment rates to
Medicare ``and, as reasonably feasible, to the most recently available
payment rates of other health care payers in the State or the
geographic area for the same or a comparable set of covered services''
but note that the availability of private payer rate information that
has proven difficult for States to obtain due to its often proprietary
nature. Similarly, under Sec. 447.203(c)(2), a comparison to Medicare
rates is just one part of the full, required analysis for States that
must complete the tier 2 analysis. The full tier 2 analysis, which we
are finalizing as proposed, requires the following in addition to the
full tier 1 analysis: a summary of the proposed payment change
including the cumulative effect of all reductions or restructurings
taken throughout the current State fiscal year in aggregate FFS
Medicaid expenditures for each benefit category affected by proposed
reduction or restructuring; an analysis of the Medicaid payment rates
in the aggregate (including base and supplemental payments) before and
after the proposed reduction or restructuring for each benefit category
affected by the proposed reduction or restructuring and a comparison of
each to the most recently published Medicare payment rates for the same
or a comparable set of Medicare-covered services and, as reasonably
feasible, to the most recently available payment rates of other health
care payers in the State or geographic area; information about the
number of actively participating providers of services in each benefit
category affected by the proposed reduction or restructuring for each
of the immediately preceding 3 years including trend information;
information about the number of Medicaid beneficiaries receiving
services through the FFS delivery system in each benefit category
affected by the proposed reduction or restructuring for each of the
immediately preceding 3 years including trend and beneficiary
population information and anticipated effects; information about the
number of Medicaid services furnished through the FFS delivery system
in each benefit category affected by the proposed reduction or
restructuring for each of the immediately preceding 3 years including
trend and service-recipient beneficiary population information and
anticipated effects; and a summary of, and the State's response to, any
access to care concerns or complaints received from beneficiaries,
providers, and other interested parties regarding the service(s) for
which the payment rate reduction or restructuring is proposed as
required under Sec. 447.204(a)(2). For services for which a Medicare
comparator is not available, the Sec. 447.203(c)(2) analysis is
required to be submitted by the State along with the SPA proposing to
reduce or restructure provider payment rates as the State is unable to
demonstrate compliance with Sec. 447.203(c)(1). The regulations being
finalized in Sec. 447.203(c)(2)(ii) account for circumstances where
Medicare does not cover comparable services, by requiring States to
compare, ``as reasonably feasible, to the most recently available
payment rates of other health care payers in the State or the
geographic area for the same or a comparable set of covered services to
the most recently published Medicare payment rates for the same or a
comparable set of Medicare-covered services because no such set of
Medicare-covered services exists.
Comment: One commenter expressed concern that, while CMS
understandably seeks to clarify which SPAs are subject to heightened
scrutiny under the tier 2 analysis requirements in Sec. 447.203(c)(2),
the criteria are skewed toward services that are paid for off a fee
schedule, and which correspond to Medicare-covered services.
Response: We acknowledge that there is an administrative ease
associated with meeting the requirements of Sec. 447.203(c) where
States pay according to a fee schedule. However, it is also possible to
compare payment amounts where no such fee schedule exists. State UPL
demonstrations are a valuable resource in determining level of payment
of both base and supplemental payments compared to a reasonable
estimate of the amount that Medicare would pay for the same services,
and our experience has shown that States are able to make these
comparisons on both a provider-specific level and in the aggregate. The
methodology States use for required UPL demonstrations would support
the analysis required under Sec. 447.203(c) of this final rule, even
where the payment methodology is not based on a fee schedule.
Comment: One commenter noted that the proposed first-tier analysis
requires States to compare proposed Medicaid rates to Medicare rates,
but as CMS acknowledges in the preamble, the absence of a comparable
Medicare service for some services would mean the State would need to
perform the full two-step access analysis, since they would not be able
to meet all three criteria in Sec. 447.203(c)(1). The commenter stated
that this expectation is not clearly reflected in proposed Sec.
447.203(c) and suggested that CMS add language clarifying that when
there is no comparable set of Medicare services, the State must perform
the second tier of analysis under Sec. 447.203(c)(2). Another
commenter expressed support for CMS's preamble provision that, for
services in which a reasonably comparable Medicare-covered analogue is
not available, the State would be obligated to support its rate
reduction or restructuring proposal through the submission of
additional information under Sec. 447.203(c)(2).
Response: We reiterate that we are finalizing Sec. 447.203(c)(1)
and (2) as proposed. In addition, we are finalizing our statement in
preamble that for any service for which the State has proposed to
reduce or restructure the Medicaid payments in circumstances when the
changes could result in diminished access, for which there are no
comparable Medicare services that would enable the State to make the
showing required under Sec. 447.203(c)(1)(i), the State is required to
conduct the secondary analysis required under Sec. 447.203(c)(2). For
example, where Medicare does not cover routine dental care, payment
rate reductions or restructurings of such services would be subject to
Sec. 447.203(c)(2) since comparable Medicare payment information
required under Sec. 447.203(c)(1)(i) of the final rule would be
unavailable.
Comment: One commenter stated that the information States are
required to

[[Page 40785]]

collect and examine, especially the number of providers, beneficiaries,
and services, will be particularly valuable in assessing the impact of
rate changes on access to home care services. One commenter
specifically expressed support for the Sec. 447.203(c)(2)(iii)
proposal to require States to provide the number of actively
participating providers of services in each affected benefit category
for each of the 3 years immediately preceding the SPA submission date,
by State-specified geographic area, provider type, and site of service.
That commenter acknowledged that this would be valuable information to
be made publicly available. Another agreed, saying CMS should require
States to publicly post the enhanced analysis, including data
submissions, to ensure full transparency.
Response: We appreciate the support of the commenters. At this
time, there is no plan for CMS to make the information States provide
in these analyses publicly available. Approved SPAs are public facing
documents and are posted on Medicaid.gov after they are approved by
CMS. Payment rates used to provide the Sec. 447.203(b) and (c) of the
final rule should come from these approved SPAs, and these SPAs should
help to clarify questions about the State's particular rate model. We
further note that the requirements we are finalizing at Sec. Sec.
447.203(c)(1)(iii), (c)(4), and 447.204 regarding public process and
mechanisms for ongoing beneficiary and provider input should provide
interested parties opportunity for meaningful input on State rate
actions. Otherwise, information may be available upon request from
either States or CMS, and we note that some of this information may be
subject to Freedom of Information Act (FOIA) disclosure requirements.
Comment: Several commenters expressed that States should be
required to provide detailed information described in Sec.
447.203(c)(2)(i) through (vi) about proposed rate reductions or
restructuring any time it proposes to reduce rates or restructure rates
in a way that could result in diminished access, and not only when the
proposed rate fails to meet certain criteria such as those specified in
Sec. 447.203(c)(1). These commenters stated concern that the proposed
two-tier structure would still permit States to alter rates in ways
that harm beneficiary access.
Response: The purpose of this final rule is to create a process
that is less administratively burdensome than the previous, ongoing
AMRP process outlined in the 2015 final rule with comment period, while
also maintaining a data submission process for payment rate reduction
and restructuring SPAs that do not meet the thresholds set out in Sec.
447.203(c)(1). The commenters' recommendation seems to suggest
something closer to a continuation of the previous AMRP process,
whereas we believe this final rule strikes a more appropriate balance
of easing State burden where SPAs meet the Sec. 447.203(c)(1) criteria
(making them unlikely to result in reducing beneficiary access to care
to a level inconsistent with section 1902(a)(30)(A) of the Act), and
requiring more rigorous data and analysis requirements for SPAs that do
not meet the Sec. 447.203(c)(1) criteria and may present more cause
for concern related to beneficiary access to care.
Comment: A commenter recommended that, in addition to requiring
States to provide summary information about proposed changes, and
information about the rates in aggregate in Sec. 447.203(c), CMS
should require States to provide the specific range of rates, including
any variation in rates (for example, regional differences, or
differences based on provider specialty).
Response: We approve States' rate methodologies for compliance with
regulation and statute, but may not approve individual service rates
unless a State presents a final rate, or a fee schedule, as the output
of a rate methodology. This final rule does not change that policy or
imply that CMS will review individual rates for sufficiency in all
cases. Reviewing individual rates within a fee schedule would not
necessarily provide a better determination of whether the rates are
adequate to enlist sufficient providers into the Medicaid program or
not, provided that the State is using a consistent payment rate
methodology for the entirety of the fee schedule, since we do not
believe that providers generally make decisions about whether to
participate with a payer (and accept the payer's rates) based on the
rate for a single service. However, we will review individual payment
rate codes to the extent that the rate changes fall outside of the
typical methodology used by the State in their payment rate setting
methodology under the State plan, or to the extent that we have reason
to believe that common billing codes most frequently used by providers
within the State are disproportionately impacted by the payment rate
reduction or restructuring proposal. Further, the payment rate
transparency publication in Sec. 447.203(b) will require States to
publish their fee schedule rates for services specified in that section
of the final rule, which will include individual fee schedule payment
rates for services for CMS and public review.
Comment: Several commenters noted appreciation that the additional
information that would be required from States that seek to reduce
payment rates or restructure payments in a manner that could result in
decreased access noting their belief that the Sec. 447.203(c)(2)
provision will create important safeguards to prevent decisions that
are solely based on State budgetary concerns rather than an actual
analysis of the cost of providing services in the Medicaid program. A
few commenters noted that they were glad to see that, because of the
nature of HCBS, the majority of rate reductions for home care services
and supports would always be subject to the provisions mandating
greater scrutiny under Sec. 447.203(c)(2), because Medicare rates for
the same or a reasonably similar set of services generally will not be
available to make such SPAs eligible for the streamlined access review
process under Sec. 447.203(c)(1).
Response: We appreciate the support of the commenters, but note for
clarity, as discussed earlier in this preamble, there is no requirement
in the Medicaid program that payment rates be based on provider cost.
Comment: A few commenters recommended that, at a minimum, CMS
should require all States to complete the more extensive access
analysis under Sec. 447.203(c)(2) shortly after publication of the
final rule to establish a baseline assessment of access to care for
Medicaid beneficiaries. Such analysis should include FFS as well as
managed care, enabling comparison of payment and access within and
across delivery systems. These commenters urged that this baseline
analysis should serve as a comparison point for future access
monitoring. Other commenters suggested that the requirement for the
analysis in Sec. 447.203(c) should be decoupled from a State's
intention to reduce or restructure rates, suggesting instead that all
States should be required to conduct this analysis annually, every 2
years, or at least every 3 years across all rates for all Medicaid FFS
and managed care programs for which a Medicare comparison is possible.
Response: We appreciate the suggestion of the commenters. The
purpose of this final rule is to create a process that is less
administratively burdensome than the previous, ongoing AMRP process
outlined in the 2015 final rule with comment period, while also
maintaining a data submission process for payment rate reduction and

[[Page 40786]]

restructuring SPAs that do not meet the thresholds set out in Sec.
447.203(c)(1), and note that the FFS provisions, including the payment
rate transparency, comparative payment rate analysis, and payment rate
disclosure requirements (Sec. 447.203(b)(1) through (5)), interested
parties' advisory group requirements (Sec. 447.203(b)(6)), and State
analysis procedures for payment rate reductions or payment
restructuring (Sec. 447.203(c)), finalized in this rule are expected
to result in a net burden reduction on States compared to the previous
AMRP requirements, as discussed in the proposed rule and in section
III. of this final rule. This final rule provides CMS and States with
an administrative process through which rate reductions or
restructurings can be reviewed and approved, so long as the proposed
SPA satisfactorily includes the information required under this final
rule and meets all applicable Federal requirements. CMS is
discontinuing the previous AMRP process in this final rule, and did not
propose and is not finalizing a substantially similar process, as we
believe doing so would impose a great deal of burden on States and CMS
without commensurate programmatic value, as discussed in the proposed
rule and in this final rule (88 FR 27965). We note that the Sec.
447.203(c)(4) mechanisms for ongoing beneficiary and provider input
provide impacted parties opportunities to raise access concerns or
issues to the State at any point through State-provided input
processes.
Comment: One commenter requested that CMS clarify the criteria in
both tiers which CMS will use to determine the appropriate level of
access on which to provide analyses and documentation of adequate
access, claiming there are no details available on the criteria. The
commenter requested that CMS define a measurable methodology with which
to determine and demonstrate adequacy of access to care in relation to
the criteria of the analysis required in the applicable provisions of
Sec. 447.203(c).
Response: We are finalizing Sec. 447.203(c)(1) and (2) as
proposed, and are providing a template which will assist States with
the data demonstrations which will be used to comply with the
provisions of the final rule. We produced a template that was submitted
to OMB for public review under control number 0938-1134 (CMS-10391) and
will be submitted for approval with this final rule and a final
template will be available shortly thereafter. Between the regulation
text, the preamble of this final rule, and the components of the
analysis template, we believe that the criteria we will use to evaluate
SPA proposals are clear. We are electing not to otherwise define
adequate levels of access to care under Sec. 447.203(c) because
section 1902(a)(30)(A) of the Act establishes that a measure for access
is that payment rates are ``sufficient to enlist enough providers so
that care and services are available under the plan at least to the
extent that such care and services are available to the general
population in the geographic area,'' which level of access (based on
whatever metric might be selected) will vary based on geographic area
and the level of access available to the general population for a given
service. Although CMS reserves the right to request additional
information, we have developed the template to ensure that a State has
a mechanism through which all of the data elements in Sec. 447.203(c)
can be gathered and presented in a straightforward format. Completing
the applicable fields of the template will ensure that the State
provides all required data elements of under Sec. 447.203(c), and we
will review the materials provided by the State to determine that the
State has demonstrated current and anticipated levels of access under
the SPA in a manner demonstrates compliance with section 1902(a)(30)(A)
of the Act. CMS will review each proposal and the State-provided
supporting information to ensure compliance with section 1902(a)(30)(A)
of the Act and all other applicable Federal requirements before
approving any SPA.
Comment: One commenter urged CMS to require States to identify the
unique number of Medicaid-paid claims for beneficiaries (in addition to
the full number of services required in the regulations as proposed)
and the unique number of beneficiaries who received services. The
commenter also stated that measuring providers' capacity to provide
Medicaid services, by including an estimated number of beneficiaries
who could have received the respective services, would allow States to
fully assess the gaps in service and number of providers required to
meet the need, noting that this assessment would be needed to assess
proposed rate reductions or restructuring under proposed Sec.
447.203(c).
Response: We are finalizing Sec. 447.203(c)(2)(v) as proposed. The
measures mentioned by the commenter are often associated with health
care system capacity by looking at enrolled providers with open panels,
which is very useful in addressing individual beneficiary requests for
services, or finding care for individuals within a geographic area,
which are the type of request we would expect to be made through the
Sec. 447.203(c)(4) mechanisms for ongoing beneficiary and provider
input, and States should be using any information they can to address
beneficiary needs in this way. We encourage any interested parties to
engage with their State partners to ensure that real-time access to
care concerns are able to be addressed by the State as applicable.
Further, the provisions of Sec. 447.203(c)(2) are designed to present
an overall picture of access to care for each affected benefit category
in the State's program. States are welcome to use any additional
measures the State believes would be helpful to assess access to care
within each affected benefit category, above and beyond the
requirements of this final rule.
Comment: One commenter, citing the 3-year period where the proposed
rule would require data about trends over time in the data elements
proposed to be required under Sec. 447.203(c)(2), supported the use of
statistical methods that provide an accurate picture of utilization
trends, but recommended that CMS use its discretion in analyzing the
information States provide to meet the required data elements. The
commenter stated use of a 3-year analysis as a blanket approach may not
be required in periods of stable utilization.
Response: The requirements in Sec. 447.203(c)(2)(iii), (iv), and
(v) to use 3-year periods are being finalized as proposed. The purpose
of the 3-year analysis is to help identify and appropriately account
for statistical anomalies that might appear in the data demonstration.
Further, we wanted to provide a clear expectation for what States would
be required to provide and thereby remove ambiguity, which we believe
existed in the previous AMRP process from the 2015 final rule with
comment period. In the 2015 final rule with comment period, the
previous AMRP data elements were limited to those specified in Sec.
447.203(b)(1)(i) through 447.203(b)(1)(v), which stated that the AMRP
and monitoring analysis will consider: the extent to which beneficiary
needs are fully met; the availability of care through enrolled
providers to beneficiaries in each geographic area, by provider type
and site of service; changes in beneficiary utilization of covered
services in each geographic area; the characteristics of the
beneficiary population (including considerations for care, service and
payment variations for pediatric and adult populations and for
individuals with disabilities); and actual or estimated levels of
provider payment available from other payers, including

[[Page 40787]]

other public and private payers, by provider type and site of service.
Within the final rule with comment period, there was discussion
regarding the types of data States might use to provide the required
information, but much of the final rule with comment period left the
specifics of the particular data elements up to the States. In this
rulemaking, we proposed and are finalizing considerably more detail in
Sec. 447.203(c)(2) than was present in the previous AMRP requirements
in the former 447.203(b)(1).
We are also finalizing the 3-year time frame for data analysis in
this final rule in Sec. 447.203(c)(2) because we determined that a 3-
year look back on provider enrollment, beneficiary enrollment, and
beneficiary utilization provides sufficient data to show trends in the
data while also helping to identify data anomalies. Where the commenter
stated that the use of a 3-year analysis as a blanket approach may not
be required in periods of stable utilization, we disagree. The
commenter's statement implies that a determination would still need to
be made that utilization was stable, therefore by requiring 3 years'
worth of data, CMS and the State will be able to document that
utilization was stable during the prior 3 years.
Comment: One commenter opposed the requirement to provide an
additional summary of the proposed payment change, as described in
Sec. 447.203(c)(2)(i), to both Sec. 447.203(c)(1) and (2) equally.
The commenter was concerned about the administrative burden these
requirements place on States, which could delay SPA submission and in
turn affect access to services. The commenter also specifically pointed
out that SPAs for services without comparable Medicare rates would, by
default, need to complete the additional analysis under Sec.
447.203(c)(2), adding administrative burden. The commenter further
recommended CMS implement a form similar to the Standard Funding
Questions submitted for Medicaid payment SPAs, in which the State would
be able to answer a specific set of questions that would capture the
analysis that is being sought. Another commenter noted that the Sec.
447.203(c)(2) data submission requirements may impact significant
portions of Medicaid services, such as LTSS, and creates administrative
burdens, disincentivizing States from modernizing rate methodologies
for these services. This commenter recommended that for services
without comparable Medicare rates, the initial analysis be sufficient
if all other criteria of the initial review (that is, Sec.
447.203(c)(1)(ii) and (iii)) are satisfied.
Response: States are responsible to ensure that their proposed
reduction or restructuring SPA submission includes all of the
information required under Sec. 447.203(c)(1) prior to submission. If
the proposed reduction or restructuring SPA does not meet all of the
paragraph (c)(1) requirements, then the State would need to provide the
additional analysis required under Sec. 447.203(c)(2).
We understand that there is burden associated with these new
requirements. However, as discussed in the proposed rule in section
III.C.11.d, this new process will be less burdensome on States than the
previous AMRP process. We also do not believe a State could adequately
demonstrate access by answering a standard set of questions as
suggested by the commenter, as we would be concerned that static
questions may not be well suited to solicit the full scope of data
elements that could be necessary to evaluate a particular proposal and
therefore prefer to keep data submission requirements open-ended so
that States are able to provide the most complete and appropriate
information possible to stablish that their proposal satisfies section
1902(a)(30)(A) of the Act as implemented in this final rule. We
anticipate providing a considerable amount of technical assistance and
templates to assist States with the preparation and submission of data
and analysis required under Sec. 447.203(c)(1) and (2).
The rule does not limit a State's ability to reduce or restructure
rates where the State believes it appropriate to do so, for example,
based on information that the rates are not economic and efficient;
rather, it ensures that States take appropriate measures to document
access to care consistent with section 1902(a)(30)(A) of the Act. This
includes efforts to modernize rates, as noted by the commenter,
including by implementing or adjusting. VBP arrangements. While we
appreciate that the analysis creates a burden for States, we note that
we are replacing a process that was more burdensome. For services for
which a Medicare comparator is not available, the Sec. 447.203(c)(2)
analysis is required to be submitted by the State along with the SPA
proposing to reduce or restructure provider payment rates. As the Sec.
447.203(c)(2) elements are based upon and similar to the elements
included in the former Sec. 447.203(b)(1) of the 2015 final rule with
comment period, we do not believe the new requirements are more
burdensome than the 2015 final rule with comment period which created
the previous AMRP process. Therefore, we do not believe this final rule
disincentivizes States from modernizing payment rates or methodologies
as compared to the previous requirements under the 2015 final rule with
comment period. For some services, particularly for those for which the
State can demonstrate that the Sec. 447.203(c)(1) requirements are
met, the final rule considerably reduces burden on States.
Comment: A few commenters urged caution not to impose overly rigid
restrictions on States' and CMS' ability to adjust provider payment
rates, noting that State Medicaid programs are constrained by the same
factors that constrain all State spending, including general economic
conditions, State balanced budget requirements, and State general fund
revenue. One commenter noted that requiring a significant analysis for
proposed reductions in Medicaid FFS payment rates will create
administrative burden for States that have been mandated by their
legislatures to reduce certain rates or Medicaid spending in general.
The commenter noted that in such circumstances, States have a limited
number of ``levers'' at their disposal--(1) they can reduce the number
of individuals enrolled in Medicaid, (2) they can impose reductions on
the covered services that Medicaid beneficiaries receive, or (3) they
can adjust provider payment rates. If CMS makes it impossible (or
inordinately difficult) to restructure provider payment rates, then
States may be forced to make other undesirable reductions to coverage
and/or eligibility in order to cope with difficult economic conditions.
Response: We understand the concerns of the commenters. States are
required to operate their Medicaid programs within their budgetary
constraints, and we agree with the commenter that, of the options
available for States facing budgetary issues, none of the available
approaches typically is ideal. However, we also note that States are
also obligated to comply with section 1902(a)(30)(A) of the Act, which
requires States to ``assure that payments are consistent with
efficiency, economy, and quality of care and are sufficient to enlist
enough providers so that care and services are available under the plan
at least to the extent that such care and services are available to the
general population in the geographic area.'' The requirement
specifically references payment rates for ``care and services available
under the plan'' such that the services that are covered under the
State plan as both mandatory and optional

[[Page 40788]]

benefits, must be supported by adequate payment rates for those
services. We anticipate providing a considerable amount of technical
assistance to ease the administrative burden on States that both need
to reduce rates and need to satisfy the requirements of Sec.
447.203(c) to ensure that the statutory access standard is met. We are
also finalizing the template we proposed to accompany these
requirements and assist States with supplying the necessary data to
fulfil these requirements.
Comment: One commenter recommended that CMS build into the review
and approval of all SPAs, waiver amendments, and waiver renewals a
process for the review of payment rates. The commenter further
suggested that CMS require adequate payment rates prior to approving
these amendments and renewals. The commenter indicated that this would
allow CMS to review rates more often and prevent years or decades
passing without rates being reviewed or adjusted.
Response: CMS reviews all SPAs affecting Medicaid payment for
compliance with section 1902(a)(30)(A) of the Act. Outside of the SPA
process, the corrective action plan process under Sec. 447.203(c)(5)
(which we are recodifying from Sec. 447.203(b)(8)) is available to
address access issues that may arise even when the State has not
submitted a payment SPA. Further, to the extent that a State submits a
SPA that updates coverage of a Medicaid service but does not amend
Medicaid payment rates or the rate methodology in the Attachment 4.19A
(for Medicaid inpatient services such as inpatient hospital services),
4.19B (for Medicaid non-institutional services such as physician
services), or 4.19D (for Medicaid nursing facility services) State plan
pages, CMS will not necessarily disapprove that SPA on the basis of
insufficient Medicaid payment rates as the payment rates were not
submitted along with the corresponding coverage and benefit changes for
our consideration. States certainly can submit payment rate information
to CMS of the State's own volition or upon request during review of a
coverage SPA; however, CMS provides States in this situation (where the
SPA would amend State plan coverage, but not payment, pages) with an
option to instead defer review of the payment rate compliance issue
through a mechanism called a ``companion letter,'' as noted in the 2010
SMDL #10-0020.\375\ As noted above, even in the absence of a SPA, the
corrective action plan process under Sec. 447.203(c)(5) (which we are
recodifying from Sec. 447.203(b)(8)) is available to for CMS to take
compliance action where it is aware of an access problem due to
insufficient rates.
---------------------------------------------------------------------------

\375\ SMDL #10-020, ``Revised State Plan Amendment Review
Process.'' Published October 1, 2010. https://www.medicaid.gov/sites/default/files/Federal-Policy-Guidance/downloads/SMD10020.pdf.
---------------------------------------------------------------------------

With the policies finalized throughout this final rule, we hope and
anticipate that both States and the public will more closely examine
existing rates. Our policies around payment rate transparency
publications, comparative payment rate analyses, and payment rate
disclosures will enhance opportunities to determine where an existing
rate may not be supporting adequate access to care and identify for
States where a need for increased payments and/or updated payment
methodologies should be addressed. Our policies around the mechanisms
for ongoing beneficiary and provider input in Sec. 447.203(c)(4) and
addressing access questions and remediation of inadequate access to
care in Sec. 447.203(c)(5) will further provide beneficiaries,
providers, and other interested parties opportunities to engage with
States on existing payment rates and their impact on beneficiaries'
access to care.
d. Compliance With Requirements for State Analysis for Rate Reduction
or Restructuring (Sec. 447.203(c)(3))
Comment: A few commenters applauded CMS for including a clear
enforcement mechanism for these provisions at Sec. 447.203(c)(3). One
of the commenters specifically offered that this provision helpfully
codifies CMS's longstanding authority to enforce access standards under
section 1902(a)(30)(A) of the Act by denying SPAs or taking compliance
action to protect access for Medicaid enrollees.
Response: We appreciate the support of the commenters.
Comment: One commenter opposed the provision at Sec. 447.203(c)(3)
that SPAs may be subject to disapproval. The commenter did not believe
that approval of a SPA should be contingent on the submission of a
satisfactory access analysis required under paragraphs (c)(1) and
(c)(2) of this section of the final rule.
Response: The final rule requires States to submit information with
their payment rate reduction or restructuring SPAs in circumstances
where those types of rate changes may result in diminished access to
care. We are requiring this information in order to determine
compliance with section 1902(a)(30)(A) of the Act, which requires that
a State plan for medical assistance ``assure that payments are
consistent with efficiency, economy, and quality of care and are
sufficient to enlist enough providers so that care and services are
available under the plan at least to the extent that such care and
services are available to the general population in the geographic
area.'' In the event that a State does not provide the information
required under this final rule, we would be unable to determine that
the State's proposal is consistent with the statute, and therefore, we
would be unable to approve the SPA.
e. Public Input Process (Sec. 447.203(c)(4))
Comment: Several commenters supported the proposal at Sec.
447.203(c)(4) regarding ongoing mechanisms for beneficiary and provider
input on access. One commenter specifically appreciated CMS'
recognition of the importance of ongoing feedback from providers and
beneficiaries to the State regarding access to care and for the State
to track and take account of those interactions in a meaningful way.
Another commenter supported this requirement, noting that HCBS
recipients enrolled in managed care are currently provided with a
grievance system and indicating that FFS recipients must be afforded
this same right.
Response: We appreciate the support of the commenters. We believe
that the provision in Sec. 447.203(c)(4) of this final rule provides
beneficiaries with opportunities to raise their concerns through
hotlines, surveys, ombudsman, grievance, and appeals processes that the
State makes available, or other equivalent mechanisms offered by the
State.
Comment: One commenter recommended that CMS update the public
notice requirements in Sec. 447.205 to require notice 30 days before
the effective date in order to increase the transparency of the
proposed SPA process and ensure that States provide interested parties
with meaningful notice and opportunity to provide feedback.
Response: Changes to the public notice requirements in Sec.
447.205 are outside the scope of this rulemaking.
Comment: One commenter recommended that CMS change ``should'' to
``must'' at Sec. 447.203(c)(4)(ii). They pointed out that Sec.
447.203(c)(4)(i) and (iii) under ``Mechanisms for ongoing beneficiary
and provider input,'' both use ``must,'' while item (ii) notes States
``should promptly respond to public input through these mechanisms
citing specific access problems, with an appropriate investigation,
analysis, and

[[Page 40789]]

response.'' The commenter stated this provision is important and that
if it is not mandated on States, some States may ignore it.
Response: This provision is being finalized as proposed because
this section is carried over from prior regulatory language at Sec.
447.203(b)(7) and was proposed to be recodified without change. We
acknowledge that responses to public input can take time and resources
to manage, and point out that this final rule provision is carrying
forward the same regulatory language from the 2015 final rule with
comment period. In our experience, States do respond timely and
appropriately, and therefore did not think it necessary to propose a
change to this provision. We note that Sec. 447.203(c)(4)(iii)
requires States to maintain a record of data on public input and how
the State responded to this input, and the record of input and
responses ``will be made available to CMS upon request.''
Comment: One commenter supported requiring States to maintain a
record of data on public input and how the State responded to this
input, which will be made available to CMS upon request.
Response: We thank the commenter for their support and are
finalizing the recodification of Sec. 447.203(b)(7) at Sec.
447.203(c)(4) as proposed.
Comment: One commenter stated that States should establish
mechanisms for ongoing monitoring, evaluation, and feedback from
beneficiaries, direct care workers, and underserved communities, and
that States should create opportunities for meaningful engagement
through advisory boards, focus groups, public comment periods, and
partnerships with advocacy organizations. The commenter suggested that
such an approach ensures that the perspectives and needs of these
interested parties are considered in policy development and
implementation.
Response: We are finalizing the provisions of Sec. 447.203(c)(4)
as proposed, as we believe that the mechanisms for ongoing beneficiary
and provider input in paragraph (c)(4) provide opportunities for
meaningful engagement by requiring States to develop some of the
mechanisms suggested by the commenter. However, in addition to the
mechanisms required under Sec. 447.203(c)(4) for ongoing beneficiary
and provider input, States are welcome to develop additional processes
to facilitate beneficiary and provider feedback, as well as feedback
from other interested parties.
Comment: One commenter stated that the mechanisms for ongoing
beneficiary and provider input provision in Sec. 447.203(c)(4) lack
enforcement to get States to respond in a meaningful way to concerns
about access, noting that the question of whether there is a
``deficiency'' will be left to the States themselves to determine. The
commenter suggested that there needs to be some way for interested
parties to elevate concerns to CMS in a formal fashion when this
process does not work at the State level.
Response: The steps States must take to respond to concerns about
access raised through input pursuant to Sec. 447.203(c)(4) are
detailed in Sec. 447.203(c)(5), which we are finalizing as proposed as
a recodification from Sec. 447.203(b)(8). Section 447.203(c)(5)
requires States to develop and submit a corrective action plan to CMS
within 90 days of discovery of an access deficiency. The submitted
action plan must aim to remediate the access deficiency within 12
months. This requirement ensures that the access deficiency is
addressed in a timely manner while allowing the State time to address
underlying causes of the access issue, be it payment rates, provider
participation, etc. These remediation efforts can include but are not
limited to: increasing payment rates; improving outreach to providers;
reducing barriers to provider enrollment; providing additional
transportation to services; or improving care coordination.
Because each State designs and administers its own Medicaid program
within the Federal framework, we believe it is most appropriate for
beneficiaries and interested parties to raise access concerns with the
State directly, rather than to CMS. To the extent that a beneficiary or
interested parties' access concerns are not addressed by the State
adequately, we continue to urge interested parties to elevate concerns
to the State through the Sec. 447.203(c)(4) mechanisms for ongoing
beneficiary and provider feedback. We further note that we are
finalizing as proposed compliance actions for access deficiencies that
have not been remedied under Sec. 447.203(c)(6), as recodified from
Sec. 447.204(d).
Comment: One commenter noted that some of the proposed policies,
such as strengthening the role of Medicaid beneficiaries in the
policymaking process, have been pioneered at the State level.
Response: We appreciate the perspective of the commenter and agree
that many of these activities have been pioneered at the State level.
We often look to actions undertaken by our State partners to identify
areas of policy that may be appropriate to enact at the Federal level.
f. Addressing Access Questions and Remediation of Inadequate Access to
Care (Sec. 447.203(c)(5))
Comment: A couple commenters strongly supported the retention of
Sec. 447.203(b)(8) language concerning a State's response to problems
with access to Medicaid services, which now appears in Sec.
447.203(c)(5). However, one commenter also expressed concerns about
whether that requirement has historically served to require States to
make meaningful efforts to correct access issues, considering that the
commenter stated there are serious problems with access to Medicaid
services in many States today, which the commenter asserted CMS has
also acknowledged. The commenter suggested this may be a problem of the
resources that CMS devotes to enforcement and insisted that CMS needs
to commit to stricter and more effective enforcement of this language.
Response: We appreciate the support of the commenters and the
sentiment expressed in the comment. CMS is committed to an agency-wide
strategy for oversight and enforcement of Federal requirements
concerning access to care. Although the language pointed out by the
commenter is unchanged from how it previously appeared in Sec.
447.203(b)(8), we are confident the changes to Sec.
447.203(c)(1)(iii), Sec. 447.203(c)(2)(vi), and Sec. 447.203(c)(4) in
this final rule will enhance oversight of access and work to enhance
the importance of input from beneficiaries, providers, and other
interested parties.
Comment: One commenter noted that concerns around timely access may
be identified by enrollees, patient advocacy organizations, or
providers long before they become apparent to Medicaid managed care
plans or State officials, particularly if those access challenges are
specific to a disease group such as complex and rare cancers. The
commenter urged CMS to clarify that, if such groups present plausible
access concerns to State officials, that can be sufficient to make the
State aware of the access issue, such that the State must submit a
proposed remedy plan to CMS within 90 days of receiving a report of
such concern.
Response: We encourage beneficiaries, patient advocacy
organizations, and providers to work closely with States in order to
raise issues such as inability to connect patients to care, or
inability to find an appointment within the patient's geographic area,
through the mechanisms for ongoing beneficiary and provider input the
State established under Sec. 447.203(c)(4). Section

[[Page 40790]]

447.203(c)(5), which was formerly Sec. 447.203(b)(8), then requires
States to submit a corrective action plan to remedy the access
deficiency within 90 days from when it is identified to the State. We
agree with the commenters that beneficiaries, patient advocacy
organizations, and providers raising plausible access concerns to State
officials would be considered as identifying an access deficiency when
raised to the State through appropriate State channels.
g. Compliance Actions for Access Deficiencies (Sec. 447.203(c)(6))
Comment: One commenter supported the proposal to clarify that CMS
may use the procedures set forth in Sec. 430.35 when necessary to
ensure compliance with access requirements.
Response: We appreciate the support of the commenter. We are
finalizing as proposed to recodify Sec. 447.204(d) at Sec.
447.203(c)(6).
After consideration of public comments, we are finalizing the
provisions of Sec. 447.203(c) as proposed aside from minor
typographical corrections.
4. Medicaid Provider Participation and Public Process To Inform Access
to Care (Sec. 447.204)
In Sec. 447.204, we proposed conforming changes to reflect
proposed changes in Sec. 447.203, if finalized. These conforming edits
are limited to Sec. 447.204(a)(1) and (b) and are necessary for
consistency with the newly proposed changes in Sec. 447.203(b). The
remaining paragraphs of Sec. 447.204 would be unchanged.
Specifically, we proposed to update the language of Sec.
447.204(a)(1), which previously referenced Sec. 447.203, to reference
Sec. 447.203(c). Because we proposed wholesale revisions to Sec.
447.203(b) and the addition of Sec. 447.203(c), the proposed data and
analysis referenced in the previous citation to Sec. 447.203 would be
located more precisely in Sec. 447.203(c). Previous Sec.
447.204(b)(1) referred to the State's most recent AMRP performed under
previous Sec. 447.203(b)(6) for the services at issue in the State's
payment rate reduction or payment restructuring SPA; we proposed to
remove this requirement to align with our proposal to rescind the
previous AMRP requirements in Sec. 447.203(b). Previous Sec.
447.204(b)(2) and (3) required the State to submit with such a payment
SPA an analysis of the effect of the change in the payment rates on
access and a specific analysis of the information and concerns
expressed in input from affected interested parties; we noted our
belief that the previous requirements are addressed in proposed Sec.
447.203(c)(1) and (2), as applicable. We explained our belief that the
continued inclusion of these paragraphs (b)(2) and (3) would be
unnecessary or redundant in light of the proposals in Sec.
447.203(c)(1) and (2), if finalized. The objective processes proposed
under Sec. 447.203(c)(1) and (2), which would require States to submit
quantitative and qualitative information with a proposed payment rate
reduction or payment restructuring SPA, would be sufficient for us to
obtain the information necessary to assess the State's proposal with
the same or similar information as previously required under Sec.
447.204(b)(2) and (3).
With the removal of Sec. 447.204(b)(1) through (b)(3), we proposed
to revise Sec. 447.204(b) to read, ``[t]he State must submit to us
with any such proposed State plan amendment affecting payment rates
documentation of the information and analysis required under Sec.
447.203(c) of this chapter.''
Finally, as noted in the previous section, we proposed to remove
and relocate Sec. 447.204(d), as we believed the nature of that
provision is better suited to codification in Sec. 447.203(c)(6).
We solicited comments on the proposed amendments to Sec. 447.204.
We received public comments on these proposals. The following is a
summary of the comments we received and our responses.
Comment: One commenter supported the conforming edits to Sec.
447.204. Another commenter specifically supported the proposal to make
technical changes to Sec. 447.204(a) to cross-reference the analysis
that CMS proposes to require under Sec. 447.203(c).
Response: We appreciate the support of the commenters.
Comment: One commenter recommended that CMS amend Sec.
447.204(a)(2) to specifically include reference to the interested
parties advisory group described in Sec. 447.203(b)(6).
Response: We appreciate the recommendation of the commenter. We are
confident that the mechanisms for ongoing beneficiary and provider
input in Sec. 447.203(c)(4) of the final rule will provide interested
parties opportunity for meaningful input on State rate actions.
After consideration of public comments, we are finalizing the
provisions of Sec. 447.204 as proposed.

III. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), we are required to provide 60-day notice in the Federal Register
and solicit public comment before a ``collection of information''
requirement is submitted to the Office of Management and Budget (OMB)
for review and approval. For the purpose of the PRA and this section of
the rule, collection of information is defined under 5 CFR 1320.3(c) of
the PRA's implementing regulations.
To fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we
solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
In the proposed rule (88 FR 28037 through 28066) we solicited
public comment on each of these issues for the following sections of
the proposed rule (CMS-2442-P, RIN 0938-AU68) that contained collection
of information requirements. Comments were received with respect to ICR
#4 (Incident Management System). A summary of the comment and our
response is set out below.

A. Wage Estimates

States and the Private Sector: To derive average costs, we used
data from the U.S. Bureau of Labor Statistics' (BLS') May 2022 \376\
National Occupational Employment and Wage Estimates for all salary
estimates (http://www.bls.gov/oes/2022/may/oes_nat.htm). In this
regard, Table 2 presents BLS' mean hourly wage, our estimated cost of
fringe benefits and other indirect costs \377\ (calculated at 100
percent of salary), and our adjusted hourly wage.
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\376\ In this final rule, we used the most recently available
data, May 2022, from the BLS. This is an update from the proposed
rule, (88 FR 27960), which used data from the BLS' May 2021 National
Occupational Employment and Wage Estimates for salary estimates.
\377\ https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.

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[[Page 40791]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.024

For States and the private sector, the employee hourly wage
estimates have been adjusted by a factor of 100 percent. This is
necessarily a rough adjustment, both because fringe benefits and other
indirect costs vary significantly across employers, and because methods
of estimating these costs vary widely across studies. Nonetheless, we
believe that doubling the hourly wage to estimate total cost is a
reasonably accurate estimation method.
Beneficiaries: We believe that the costs for beneficiaries
undertaking administrative and other tasks on their own time is a post-
tax hourly wage rate of $20.71/hr.
We adopt an hourly value of time based on after-tax wages to
quantify the opportunity cost of changes in time use for unpaid
activities. This approach matches the default assumptions for valuing
changes in time use for individuals undertaking administrative and
other tasks on their own time, which are outlined in an ASPE report on
``Valuing Time in U.S. Department of Health and Human Services
Regulatory Impact Analyses: Conceptual Framework and Best Practices.''
[*] We start with a measurement of the usual weekly earnings of wage
and salary workers of $998. [**] We divide this weekly rate by 40 hours
to calculate an hourly pre-tax wage rate of $24.95. We adjust this
hourly rate downwards by an estimate of the effective tax rate for
median income households of about 17 percent, resulting in a post-tax
hourly wage rate of $20.71. We adopt this as our estimate of the hourly
value of time for changes in time use for unpaid
activities.^{378 379} 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.
---------------------------------------------------------------------------

\378\ Department of Health and Human Services, Office of the
Assistant Secretary for Planning and Evaluation. 2017. ``Valuing
Time in U.S. Department of Health and Human Services Regulatory
Impact Analyses: Conceptual Framework and Best Practices.'' https://aspe.hhs.gov/reports/valuing-time-us-department-health-human-services-regulatory-impact-analyses-conceptual-framework.
\379\ U.S. Bureau of Labor Statistics. Employed full time:
Median usual weekly nominal earnings (second quartile): Wage and
salary workers: 16 years and over [LEU0252881500A], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/LEU0252881500A. Annual Estimate, 2021.
---------------------------------------------------------------------------

B. Adjustment to State Cost Estimates

To estimate the financial burden on States, it was important to
consider the Federal government's contribution to the cost of
administering the Medicaid program. For medical assistance services,
the Federal government provides funding based on an 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 83
percent in States with lower per capital incomes. For Medicaid, all
States receive a 50 percent Federal matching rate for most
administration expenditures. States also receive higher Federal
matching rates for certain systems improvements, redesign, or
operations. As such, and taking into account the Federal contribution
to the costs of administering the Medicaid programs for purposes of
estimate 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 would likely be
smaller.

C. Information Collection Requirements (ICRs)

1. ICRs Regarding Medicaid Advisory Committee and Beneficiary Advisory
Council (Sec. 431.12)
The following changes will be submitted to OMB for approval under

[[Page 40792]]

control number 0938-TBD (CMS-10845).
Currently, most States have an established Medical Care Advisory
Committee (MCAC), which we are renaming the Medicaid Advisory Committee
(MAC), whereby each State has the discretion on how to operate its
MCAC. A small number of States also use consumer advisory subcommittees
as part of their current MCACs, similar to the Beneficiary Advisory
Council (BAC) in Sec. 431.12. We reviewed data from 10 States to
determine the current status of MCACs and to determine the burden
needed to comply with the Sec. 431.12 requirements across 50 States
and the District of Columbia.
Under the provision, States will be required to:
Select members to the MAC and BAC on a rotating and
continuous basis.
Develop and publish a process for MAC and BAC member
recruitment and selection of MAC and BAC leadership.
Develop and publish:
++ Bylaws for governance of the MAC.
++ A current list of MAC and BAC membership.\380\
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\380\ BAC members may choose to not have their names listed on
the publicly posted membership list.
---------------------------------------------------------------------------

++ Past meeting minutes, including a summary from the most recent
BAC Meeting.
Develop, publish, and implement a regular meeting schedule
for the MAC and BAC.
Additionally, the State must provide and post to its website an
annual report written by the MAC to the State describing its
activities, topics discussed, recommendations. The report must also
include actions taken by the State based on the MAC recommendations.
The requirements will require varying levels of effort by States.
For example, a handful of States already have a BAC. However, we
believe that most States will be required to create new structures and
processes. The majority of States reviewed are already meeting some of
the new requirements for MACs, such as publication of meeting
schedules, publication of membership lists, and publication of bylaws.
However, all MAC bylaws will need to be updated to meet the new
requirements. Our review showed that most States are not currently
publishing their recruitment and appointment processes for MAC members,
and those that did will need to update these processes to meet the new
requirements. About half of the States reviewed published meeting
minutes with responses and State actions, as required under the new
requirements. However, only one State reviewed published an annual
report, so this will likely be a new requirement for almost all State
MACs. States will not need to modify or build reporting systems to
create and post these annual reports. Due to the wide range in the use
and maturity of current MCACs across the States, we are providing a
range of estimates to address these variations.
We recognize that some States, which do not currently operate a
MCAC, will have a higher burden to implement the requirements of Sec.
431.12 to shift to the MAC and BAC structure. However, our research
showed that the majority of States do have processes and procedures for
their current MCACs, which will require updating, but at a much lower
burden. Therefore, we believe it is appropriate to offer average low
and high burden estimates.
For a low estimate, we estimate it will take a team of business
operations specialists 120 hours at $79.50/hr to develop and publish
the processes and report. In aggregate, we estimate an annual burden of
6,120 hours (120 hr/response x 51 responses) at a cost of $486,540
(6,120 hr x $79.50/hr). Taking into account the Federal administrative
match of 50 percent, the requirement will cost States $243,270
($486,540 x 0.50). We also estimate that it will take 40 hours at
$140.14/hr for a human resources manager to review and approve bylaws
and help with recruitment and appointment and selection of MAC and BAC
leadership which will occur every 2 years. In aggregate, we estimate a
biennial burden of 2,040 hours (40 hr/response x 51 responses) at a
cost of $285,885 (2,040 hr x $140.14/hr). Taking into account the
Federal administrative match of 50 percent, the requirement will cost
States $142,942 ($285,885 x 0.50). Additionally, we estimate it will
take 10 hours at $118.14/hr for an operations manager to review the
updates and prepare the required reports for annual publication. In
aggregate, we estimate an annual burden of 510 hours (10 hr/response x
51 responses) at a cost of $60,251 (510 hr x $118.14/hr). Taking into
account the Federal administrative match of 50 percent, the requirement
will cost States $30,125 ($60,251 x 0.50).
We derived the high estimate by doubling the hours from the low
estimate. We used this approach because all States already have a MCAC
requirement which means the type of work being discussed is already
underway in most States and that there is reference point for the type
of work described. For example, we estimate it will take a team of
business operations specialists 240 hours at $79.50/hr to develop and
publish the processes and annual report. In aggregate, we estimate an
annual burden of 12,240 hours (240 hr/response x 51 responses) at a
cost of $973,080 (12,240 hr x $79.50/hr). Taking into account the
Federal administrative match of 50 percent, the requirement will cost
States $486,540 ($973,080 x 0.50). We also estimate that it will take
80 hours at $140.14/hr for a human resources manager to review and
approve bylaws and help with recruitment and appointment and selection
of MAC and BAC leadership which will occur every 2 years. In aggregate,
we estimate a biennial burden of 4,080 hours (80 hr/response x 51
responses) at a cost of $571,771 (4,080 hr x $140.14). Taking into
account the Federal administrative match of 50 percent, the requirement
will cost States $285,885 ($571,771 x 0.50). Additionally, we estimate
it will take 20 hours at $118.14/hr for an operations manager to review
the updates and prepare the required annual report for publication. In
aggregate, we estimate an annual burden of 1,020 hours (20 hr/response
x 51 responses) at a cost of $120,503 (1,020 hr x $118.14/hr). Taking
into account the Federal administrative match of 50 percent, the
requirement will cost States $60,251 ($120,503 x 0.50).
We have summarized the total burden in Table 3. To be conservative
and not underestimate our burden analysis, we are using the high end of
our estimates to score the PRA-related impact of the finalized
requirements.

[[Page 40793]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.025

While a few commenters made general or high-level comments
regarding concerns about burden (which are addressed in section II.A of
this final rule) we did not receive specific comments on this ICR. The
general comments we received were about the overall burden related to
the MAC and BAC provisions and not about the burden estimated in the
ICR Table 3 nor the information outlined in this section. In this rule
we are finalizing the MAC and BAC reporting requirements and burden
estimates as proposed.
2. ICRs Regarding Person-Centered Service Plans (Sec. 441.301(c)(3);
Applied to Other HCBS Authorities at Sec. Sec. 441.450(c), 441.540(c),
and 441.725(c), and 438.72(b) and to Managed Care at Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
this final rule is finalized and our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10854 (OMB
control number 0938-TBD). Since this will be a new collection of
information request, the OMB control number has yet to be determined
(TBD) but will be issued by OMB upon their approval of the new
collection of information request.
Section 1915(c)(1) of the Act requires that services provided
through section 1915(c) waiver programs be provided under a written
plan of care (hereinafter referred to as ``person-centered service
plans'' or ``service plans''). Existing Federal regulations at Sec.
441.301(c)(1) through (3) address the person-centered planning process
and include a requirement at Sec. 441.301(c)(3) that the person-
centered service plan be reviewed and revised upon reassessment of
functional need, at least every 12 months, when the individual's
circumstances or needs change significantly or at the request of the
individual.
In 2014, we released guidance for section 1915(c) waiver programs
\381\ (hereinafter the ``2014 guidance'') that included expectations
for State reporting of State-developed performance measures to
demonstrate compliance with section 1915(c) of the Act and the
implementing regulations in part 441, subpart G through six assurances,
including assurances related to person-centered service plans. The 2014
guidance also indicated that States should conduct systemic remediation
and implement a Quality Improvement Project when they score below an 86
percent threshold on any of their performance measures.
---------------------------------------------------------------------------

\381\ Modifications to Quality Measures and Reporting in Sec.
1915(c) Home and Community-Based Waivers. March 2014. Accessed at
https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_2.pdf.
---------------------------------------------------------------------------

In this rule, we are finalizing a new requirement at Sec.
441.301(c)(3)(i) to specify that States demonstrate that the person-
centered service plan for every individual is reviewed, and revised, as
appropriate, based upon the reassessment of functional need as required
by Sec. 441.365(e), at least every 12 months, when the individual's
circumstances or needs change significantly, or at the request of the
individual. At Sec. 441.301(c)(3)(ii)(A) we are finalizing a
requirement that States demonstrate that a reassessment of functional
need was conducted at least annually for at least 90 percent of
individuals continuously enrolled in the waiver for at least 365 days.
We are also finalizing, at new Sec. 441.301(c)(3)(ii)(B), that States
demonstrate that they reviewed for every individual the person-centered
service plan and revised the plan as appropriate based on the results
of the required reassessment of functional need at least every 12
months for at least 90 percent of individuals continuously enrolled in
the waiver for at least 365 days.
We are finalizing the application of these requirements to services
delivered under FFS or managed care delivery systems. Further, we are
finalizing the application of the finalized requirements sections
1915(j), (k), and (i) State plan services by cross-referencing at
Sec. Sec. 441.450(c), 441.540(c), and 441.725(c), respectively.
In addition, we also proposed (and are finalizing) several changes
to current regulations for person-centered planning at Sec.
441.301(c)(1) to reposition, clarify, and remove extraneous language
from Sec. 441.301(c)(1).
We are finalizing the person-centered planning requirements at
Sec. 441.301(c)(1) and (3) without substantive changes. Below are our
burden estimates for these requirements.

[[Page 40794]]

a. One Time Person-Centered Service Plan Requirements: State (Sec.
441.301(c)(3))
As discussed above, at new Sec. 441.301(c)(3)(ii)(A), we are
finalizing a requirement that States demonstrate that a reassessment of
functional need was conducted at least annually for at least 90 percent
of individuals continuously enrolled in the waiver for at least 365
days. We are also finalizing, at Sec. 441.301(c)(3)(ii)(B), a
requirement that States demonstrate for every individual that they
reviewed the person-centered service plan and revised the plan as
appropriate based on the results of the required reassessment of
functional need at least every 12 months for at least 90 percent of
individuals continuously enrolled in the waiver for at least 365 days.
The burden associated with the person-centered service plan reporting
requirements at Sec. 441.301(c)(3)(ii)(A) and (B) affects the 48
States (including the District of Columbia) that deliver HCBS under
sections 1915(c), (i), (j), or (k) authorities.\382\ We anticipate that
States will need to update State policy, as well as oversight and
monitoring processes related to the codification of the new 90 percent
minimum performance level associated with these requirements.
---------------------------------------------------------------------------

\382\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
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However, because we are codifying a minimum performance level
associated with existing regulations but not otherwise changing the
regulatory requirements under Sec. 441.301(c)(3)(ii)(A) and (B), we do
not estimate any additional burden related to those requirements. We
also hold that there is no additional burden associated with
repositioning, clarifying, and removing extraneous language from the
regulatory text at Sec. 441.301(c)(1). In this regard we are only
estimating burden for updating State policy and oversight and
monitoring processes related to the codification of the finalized 90
percent minimum performance level requirement.
We estimate it will take 8 hours at $111.18/hr for an
administrative services manager to update State policy and oversight
and monitoring processes, 2 hours at $118.14/hr for a general and
operations manager to review and approve the updates to State policy
and oversight and monitoring processes, and 1 hour at $236.96/hr for a
chief executive to review and approve the updates to State policy and
oversight and monitoring processes. In aggregate, we estimate a one-
time burden of 528 hours (48 States x [8 hr + 2 hr + 1 hr]) at a cost
of $65,409 (48 States x [(8 hr x $111.18/hr) + (2 hr x $118.14/hr) + (1
hr x $236.96/hr)]). Taking into account the Federal contribution to
Medicaid administration, the estimated State share of this cost is
$32,704 ($65,409 x 0.50).
[GRAPHIC] [TIFF OMITTED] TR10MY24.026

b. One Time Person-Centered Service Plan Requirements: Managed Care
Plans (Sec. 441.301(c)(3))
As discussed above, we are requiring managed care delivery systems
to also comply with the requirements finalized at Sec. 441.301(c)(3)
to demonstrate that a reassessment of functional need was conducted at
least annually for at least 90 percent of individuals continuously
enrolled in the waiver for at least 365 days and to demonstrate that
they reviewed the person centered service plan and revised the plan as
appropriate based on the results of the required reassessment of
functional need at least every 12 months for at least 90 percent of
individuals continuously enrolled in the waiver for at least 365 days.
As with the burden estimate for States, we do not estimate an ongoing
burden related to the codification of a minimum performance level
associated with the requirements at Sec. 441.301(c)(3).
For managed care plans, we estimate it would take 5 hours at
$111.18/hr for an administrative services manager to update
organizational policy and oversight and monitoring processes related to
the codification of a new minimum performance level and 1 hour at
$236.96/hr for a chief executive to review and approve the updates to
organizational policy and oversight and monitoring processes. In
aggregate, we estimate a one-time burden of 966 hours (161 managed care
plans x [5 hr + 1 hr]) at a cost of $127,650 (161 managed care plans x
[(5 hr x $111.18/hr) + (1 hr x $236.96/hr)]).

[[Page 40795]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.027

3. ICRs Regarding Grievance System (Sec. 441.301(c)(7); Applied to
Other HCBS Authorities at Sec. Sec. 441.464(d)(2)(v),
441.555(b)(2)(iv), and 441.745(a)(1)(iii))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our reporting tools and survey
instrument has been developed. The survey instrument and burden will be
made available to the public for their review under the standard non-
rule PRA process which includes the publication of 60- and 30-day
Federal Register notices. In the meantime, we are setting out our
burden figures (see below) as a means of scoring the impact of this
rule's changes. The availability of the survey instrument and more
definitive burden estimates will be announced in both Federal Register
notices. The CMS ID number for that collection of information request
is CMS-10854 (OMB control number 0938-TBD). Since this will be a new
collection of information request, the OMB control number has yet to be
determined (TBD) but will be issued by OMB upon their approval of the
new collection of information request.
At Sec. 441.301(c)(7), we are finalizing requirements that States
establish grievance procedures for Medicaid beneficiaries receiving
section 1915(c) waiver program services through a FFS delivery system
to file a complaint or expression or dissatisfaction related to the
State's or a provider's compliance with the person-centered planning
and service plan requirements at Sec. 441.301(c)(1) through (3) and
the HCBS settings requirements at Sec. 441.301(c)(4) through (6).
We are finalizing at Sec. 441.301(c)(7)(vii) a list of
recordkeeping requirements related to grievances. Specifically, at
Sec. 441.301(c)(7)(vii)(A), we are finalizing that States maintain
records of grievances and review the information as part of their
ongoing monitoring procedures. At Sec. 441.301(c)(7)(vii)(B)(1)
through (7), we are finalizing that the record of each grievance must
contain the following information at a minimum: a general description
of the reason for the grievance, the date received, the date of each
review or review meeting (if applicable), resolution and date of the
resolution of the grievance (if applicable), and the name of the
beneficiary for whom the grievance was filed. Further, at Sec.
441.301(c)(7)(vii)(C), we are finalizing that grievance records be
accurately maintained and in a manner that would be available upon our
request.
We are finalizing the application of these requirements in Sec.
441.301(c)(7) to sections 1915(j), (k), and (i) State plan services by
cross-referencing at Sec. Sec. 441.464(d)(2)(v), 441.555(b)(2)(iv),
and 441.745(a)(1)(iii), respectively. However, to avoid duplication
with the grievance requirements for managed care plans at part 438,
subpart F, we did not propose to apply these requirements to managed
care delivery systems.
We are finalizing the grievance process requirements we proposed at
Sec. 441.301(c)(7) with one substantive change. As discussed in
section II.B.2. of this final rule, we are not finalizing the
requirements we proposed at Sec. 441.301(c)(7)(iv)(B) that States must
have a 14-day expedited resolution process in addition to a standard
90-day resolution process for grievances. We do not anticipate that
this change affects the burden estimates, as it does not change the
recordkeeping requirements finalized at Sec. 441.301(c)(7)(vii). In
general, even with this change, the States will still have to perform
all activities described below in order to establish and maintain the
standard grievance process outlined in Sec. 441.301(c)(7).
Additionally, as we encourage States to develop their own expedited
grievance process, we are calculating the burden estimate with the
assumption that all States will choose to create their own version of
an expedited resolution process within the grievance process required
at Sec. 441.301(c)(7).
We are finalizing the other grievance process proposals without
substantive changes. Burden estimates for our finalized grievance
process requirements are below.
a. States
The burden associated with the grievance system requirements
finalized at Sec. 441.301(c)(7) affect the 48 States (including the
District of Columbia) that deliver at least some HCBS under sections
1915(c), (i), (j), or (k) authorities through FFS delivery
systems.^{383 384}

[[Page 40796]]

While some States may have existing grievance systems in place for
their FFS delivery systems, we were unable to determine the number of
States with existing grievance systems or whether those grievance
systems would meet the finalized requirements at Sec. 441.301(c)(7).
As a result, we do not take this information into account in our burden
estimate calculated below. We estimate a one-time and ongoing burden to
implement these requirements at the State level.
---------------------------------------------------------------------------

\383\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
\384\ While some States deliver the vast majority of HCBS
through managed care delivery systems, States would be subject to
these requirements if they deliver any HCBS under section 1915(c),
(i), (j), or (k) authorities through a fee-for service delivery
system. Based on data showing that the percent of LTSS expenditures
delivered through managed LTSS delivery systems varied between 3
percent and 93 percent in 2019 across all States with managed LTSS,
we assume that all States deliver at least some HCBS through fee-
for-service delivery systems (https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltssexpenditures2019.pdf). We
anticipate that the burden associated with implementing these
requirements will be lower for States that deliver the vast majority
of HCBS through managed care delivery systems.
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Specifically, States will have to: (1) develop and implement
policies and procedures; (2) establish processes and data collection
tools for accepting, tracking, and resolving, within required
timeframes, beneficiary grievances, including processes and tools for:
providing beneficiaries with reasonable assistance with filing a
grievance, for accepting grievances orally and in writing, for
reviewing grievance resolutions with which beneficiaries are
dissatisfied, and for providing beneficiaries with a reasonable
opportunity to present evidence and testimony and make legal and
factual arguments related to their grievance; (3) inform beneficiaries,
providers, and subcontractors about the grievance system; and (4)
develop beneficiary notices; and (5) collect and maintain information
on each grievance, including the reason for the grievance, the date
received, the date of each review or review meeting (if applicable),
resolution and date of the resolution of the grievance (if applicable),
and the name of the beneficiary for whom the grievance was filed.
i. One-Time Grievance System Requirements: States (Sec. 441.301(c)(7))
With regard to the one-time requirements, we estimate it will take:
240 hours at $111.18/hr for an administrative services manager to draft
policy and procedure content, prepare notices and informational
materials, draft rules for publication, and conduct public hearings;
100 hours at $98.84/hr for a computer programmer to build, design, and
operationalize internal systems for data collection and tracking; 120
hours at $67.18/hr for a training and development specialist to develop
and conduct training for staff; 40 hours at $118.14/hr for a general
and operations manager to review and approve policies, procedures,
rules for publication, notices, and training materials; and 20 hours at
$236.96/hr for a chief executive to review and approve all operations
associated with this collection of information requirement. In
aggregate, we estimate a one-time burden of 24,960 hours (520 hr x 48
States) at a cost of $2,596,493 (48 States x [(240 hr x $111.18/hr) +
(100 hr x $98.84/hr) + (120 hr x $67.18/hr) + (40 hr x $118.14/hr) +
(20 hr x $236.96/hr)]). Taking into account the Federal contribution to
Medicaid administration, the estimated State share of this cost would
be $1,298,246 ($2,596,493 x 0.50).
[GRAPHIC] [TIFF OMITTED] TR10MY24.028

[[Page 40797]]

ii. Ongoing Grievance System Requirements: States (Sec. 441.301(c)(7))
With regard to the on-going requirements, we estimate that
approximately 2 percent of 1,460,363 Medicaid beneficiaries who receive
HCBS under section 1915(c), (i), (j), or (k) authorities through FFS
delivery systems annually \385\ will file a grievance or appeal (29,207
grievances = 1,460,363 x 0.02).\386\ We estimate it will take: 0.333
hours or 20 minutes at $79.50/hr for a business operations specialist
to collect the required information for each grievance from the
beneficiary (29,207 total grievances), 0.166 hours or 10 minutes at
$36.52/hr for a data entry worker to record the required information on
each grievance (29,207 total grievances), 20 hours at $98.84/hr for a
computer programmer to maintain the system for storing information on
grievances (48 States), 12 hours at $118.14/hr for a general and
operations manager to monitor and oversee the collection and
maintenance of the required information (48 States), and 2 hours at
$236.96/hr for a chief executive to review and approve all operations
associated with this collection of information requirement (48 States).
In aggregate, we estimate an on-going burden of 16,206 hours at a cost
of $1,135,949 ([(29,207 grievances x 0.333 hr x $79.50/hr) + (29,207
grievances x 0.166 hr x $36.52/hr) + (48 States x 20 hr x $98.84/hr) +
(48 States x 12 hr x $118.14/hr) + (48 States x 2 hr x $236.96/hr)]).
Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost is $567,975
($1,135,949 x 0.50) per year.
---------------------------------------------------------------------------

\385\ https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-user-brief-2019.pdf.
\386\ We based this percent on an estimate of the percent of
Medicaid beneficiaries that file appeals and grievances in Medicaid
managed care in Supporting Statement A for the information
collection requirements for the Medicaid Managed Care file rule
(CMS-2408-F, RIN 0938-AT40). See https://omb.report/icr/202205-0938-015/doc/121334100 for more information.
[GRAPHIC] [TIFF OMITTED] TR10MY24.029

[[Page 40798]]

4. ICRs Regarding Incident Management System (Sec. 441.302(a)(6);
Applied to Other HCBS Authorities at Sec. Sec. 441.464(e), 441.570(e),
441.745(a)(1)(v), and to Managed Care at Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
this final rule is finalized and our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10854 (OMB
control number 0938-TBD). Since this would be a new collection of
information request, the OMB control number has yet to be determined
(TBD) but will be issued by OMB upon their approval of the new
collection of information request.
At Sec. 441.302(a)(6), we are finalizing a requirement that States
provide an assurance that they operate and maintain an incident
management system that identifies, reports, triages, investigates,
resolves, tracks, and trends critical incidents. At Sec.
441.302(a)(6)(i)(A), we are finalizing that States must establish a
minimum standard definition of a critical incident. At Sec.
441.302(a)(6)(i)(B) we are finalizing a requirement that States must
have electronic incident management systems that, at a minimum, enable
electronic collection, tracking (including tracking of the status and
resolution of investigations), and trending of data on critical
incidents.
We are finalizing the requirements we proposed at Sec.
441.302(a)(6)(i) without substantive changes, but we are finalizing a
change to the applicability date for the electronic management system
requirement. We had proposed that States would need to comply with the
requirements at Sec. 441.302(a)(6) in 3 years. We are finalizing the
3-year applicability date for the requirements at Sec. 441.302(a)(6)
with the exception of the electronic incident management system
finalized at Sec. 441.302(a)(6)(i)(B), which has a finalized
applicability date of 5 years. We do not anticipate that this change
will affect the activities described in these burden estimates; the
primary effect of this change is to grant States two additional years
in which to develop electronic incident management systems, for which
they will perform the same activities.
At Sec. 441.302(a)(6)(i)(C), we finalized that States require
providers to report to States any critical incidents that occur during
the delivery of section 1915(c) waiver program services as specified in
a waiver participant's person-centered service plan or are a result of
the failure to deliver authorized services. At Sec.
441.302(a)(6)(i)(D), we finalized that States must use claims data,
Medicaid Fraud Control Unit data, and data from other State agencies
such as Adult Protective Services or Child Protective Services to the
extent permissible under applicable State law to identify critical
incidents that are unreported by providers and occur during the
delivery of section 1915(c) waiver program services, or as a result of
the failure to deliver authorized services. At Sec.
441.302(a)(6)(i)(E) we finalized a new requirement that the State must
ensure medical records being used as part of the incident management
system are handled in compliance with 45 CFR 164.510(b) to ensure that
records with protected health information used during critical incident
review are obtained and used with beneficiaries' consent. We are
finalizing at Sec. 441.302(a)(6)(i)(F) a requirement that States share
information on the status and resolution of investigations if the State
refers critical incidents to other entities for investigation. We are
finalizing at Sec. 441.302(a)(6)(i)(G) a requirement that States
separately investigate critical incidents if the investigative agency
fails to report the resolution of an investigation within State-
specified timeframes. We are finalizing at Sec. 441.302(a)(6)(i)(H) a
requirement that States meet the reporting requirements at Sec.
441.311(b)(1) related to the performance of their incident management
systems.
At Sec. 441.302(a)(6)(iii), we are the application of these
requirements to services delivered under FFS or managed care delivery
systems. We also finalized the application of the requirements
finalized at Sec. 441.302(a)(6) to sections 1915(j), (k), and (i)
State plan services by cross-referencing at Sec. Sec. 441.570(e),
441.464(e), and 441.745(a)(1)(v), respectively.
With the exception of the change to the effective date for
electronic incident management systems noted above, we are finalizing
the requirements described herein without substantive modification.
Burden estimates for these requirements are discussed below.
We received one comment on the proposed burden estimate for the
incident management provision. This comment, and our response, is
summarized below.
Comment: One commenter noted that when their State investigated
developing a single electronic incident management system in 2014, the
State estimated the cost of consolidating multiple State systems into a
single system would be $100 million and believed that it would be even
more expensive to create such a system now.
Response: We thank the commenter for their feedback. Without more
detailed information, provided, we decline to update our burden
estimate for the incident management ICR based on this comment. We
believe most States that require upgrades to their system could do so
within the costs that we estimated; we will provide technical
assistance on an as-need basis for States to identify efficient ways to
upgrade their systems.
We also note that according to the finalized requirements in Sec.
441.302(a)(6), States must have electronic critical incident systems
that, at a minimum, enable electronic collection, tracking (including
of the status and resolution of investigations), and trending of data
on critical incidents. We are recommending, but not requiring, that
States develop a single electronic critical incident system for all of
their HCBS programs under sections 1915(c), (i), (j), and (k)
authorities, as we believe that a single system will best enable States
to prevent the occurrence of critical incidents and protect the health
and safety of beneficiaries across their lifespan. We recognize that
States may have to make certain decisions about the development of
their electronic incident management system according to current system
constraints.
a. States
The burden associated with the incident management system
requirements proposed at Sec. 441.302(a)(6) will affect the 48 States
(including Washington DC) that deliver HCBS under section 1915(c), (i),
(j), or (k) authorities.\387\ We estimate a one-time and on-going
burden to implement these requirements at the State level. The burden
for the reporting requirements at Sec. 441.311(b)(1) is included in
the ICR #8, which is the ICRs Regarding Compliance Reporting (Sec.
441.311(b)).
---------------------------------------------------------------------------

\387\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
---------------------------------------------------------------------------

All of the States impacted by Sec. 441.302(a)(6)(i)(B), requiring
that States use an information system, as

[[Page 40799]]

defined in 45 CFR 164.304 and compliant with 45 CFR part 164, have
existing incident management systems in place. However, we assume that
all States will need to make at least some changes to their existing
systems to fully comply with the proposed requirements. Specifically,
States will have to update State policies and procedures; implement new
or update existing electronic incident management systems; publish
revised provider requirements through State notice and publication
processes; update provider manuals and other policy guidance; amend
managed care contracts; collect required information from providers;
use other required data sources to identify unreported incidents; and
share information with other entities in the State responsible for
investigating critical incidents.
i. One Time Incident Management System Requirements: States (Sec.
441.302(a)(6))
With regard to the one-time requirements related to Sec.
441.302(a)(6), we estimate it will take: 120 hours at $111.18/hr for an
administrative services manager to draft policy content, prepare
notices and draft rules for publication, conduct public hearings, and
draft contract modifications for managed care plans; 20 hours at
$100.64/hr for a management analyst to update provider manuals; 80
hours at $67.18/hr for a training and development specialist to develop
and conduct training for providers; 80 hours at $79.50/hr for a
business operations specialist to establish processes for information
sharing with other entities; 80 hours at $106.30/hr for a computer and
information analyst to build, design, and implement reports for using
claims and other data to identify unreported incidents; 24 hours at
$118.14/hr for a general and operations manager to review and approve
managed care contract modifications, policy and rules for publication,
and training materials; and 10 hours at $236.96/hr for a chief
executive to review and approve all operations associated with this
requirement.
In aggregate, we estimate a one-time burden of 19,872 hours (414 hr
x 48 States) at a cost of $1,958,292 (48 States x [(120 hr x $111.18/
hr) + (20 hr x $100.64/hr) + (80 hr x $67.18/hr) + (80 hr x $79.50/hr)
+ (80 hr x $106.30/hr) + (24 hr x $118.14/hr) + (10 hr x $236.96/hr)]).
Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost would be
$979,146 ($1,958,292 x 0.50).
In addition, we estimate that States, based on the results of the
incident management system assessment discussed earlier in section
II.B.3. of this preamble, that 82 percent of States, or 39 States (48
States x 0.82), will need to update existing electronic incident
management systems, while the remaining 9 States would need to
implement new electronic incident management systems, to meet the
proposed requirement at Sec. 441.302(a)(6)(i)(B). We estimate based on
information reported by some States in spending plans for section 9817
of the American Rescue Plan Act of 2021 that the cost per State to
update existing electronic systems is $2 million while the cost per
State to implement new electronic systems is $5 million.\388\ In
aggregate, we estimate a one-time technology burden of $123,000,000
[($2,000,000 x 39 States) + ($5,000,000 x 9 States)]. Taking into
account the Federal contribution to Medicaid administration, the
estimated State share of this cost would be $61,500,000 ($123,000,000 x
0.50).
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\388\ Enhanced Federal Financial Participation (FFP) is
available at a 90 percent Federal Medical Assistance Percentage
(FMAP) rate for the design, development, or installation of
improvements of mechanized claims processing and information
retrieval systems, in accordance with applicable Federal
requirements. Enhanced FFP at a 75 percent FMAP rate is also
available for operations of such systems, in accordance with
applicable Federal requirements. However, the receipt of these
enhanced funds is conditioned upon States meeting a series of
standards and conditions to ensure investments are efficient and
effective. As a result, we do not assume for the purpose of this
burden estimate that States will qualify for the enhanced Federal
match. This estimate overestimates State burden to the extent that
States qualify for the enhanced Federal match.
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[[Page 40801]]

ii. Ongoing Incident Management System Requirements: States (Sec.
441.302(a)(6))
With regard to the ongoing requirements Sec. 441.302(a)(6), we
estimate that there are 0.5 critical incidents annually \389\ for each
of the 1,889,640 Medicaid beneficiaries who receive HCBS under sections
1915(c), (i), (j), or (k) authorities annually, or 944,820 (1,889,640 x
0.5) critical incidents annually.\390\ We further estimate that, based
on data on unreported incidents, these requirements will result in the
identification of 30 percent more critical incidents annually, or
283,446 (944,820 x 0.3) critical incidents; \391\ that 76 percent, or
215,419 (283,446 x 0.76) will be reported for individuals enrolled in
FFS delivery systems; \392\ and that 10 percent of those for
individuals enrolled in FFS delivery systems (21,542 = 215,419 x 0.1)
will be made through provider reports and 90 percent (193,877 = 215,419
x 0.9) through claims identification and other sources.\393\ We
estimate 0.166 hr or 10 minutes at $36.52/hr for a data entry worker to
record the information on each reported critical incident reported by
providers for individuals enrolled in FFS delivery systems. In
aggregate, we estimate an ongoing burden each year of 3,576 hours
(21,542 incidents x 0.166 hr) at a cost of $130,594 (3,576 hr x $36.52/
hr) to record the information on each reported critical incident
reported by providers for individuals enrolled in FFS delivery systems.
While States can establish different processes for the reporting of
critical incidents for individuals enrolled in managed care, we assume
for the purpose of this analysis that the States would delegate
provider reporting critical incidents and identification of critical
incidents through claims and other data sources to managed care plans
and that the managed care plans would be responsible for reporting the
identified critical incidents to the State.\394\ We further assume that
the information reported by managed care plans to the State and
identified by the State through claims and other data sources would be
in an electronic form. For the 68,027 more critical incidents for
individuals enrolled in managed care (283,446 more critical incidents
identified x 24 percent for individuals enrolled in managed care), and
the 193,877 more critical incidents identified through claims and other
data sources for individuals enrolled in FFS (283,446 more critical
incidents identified x 76 percent for individuals enrolled in FFS x 90
percent identified through claims and other sources), we estimate 2
minutes (0.0333 hr) at $36.52/hr for a data entry worker to record the
information on each of these 261,904 critical incidents (68,027 +
193,877). In aggregate, for Sec. 441.302(a)(6), we estimate an ongoing
annual burden of 8,721 hours (261,904 incidents x 0.0333 hr) at a cost
of $318,491 (8,721 hr x $36.52/hr) on these critical incidents.
---------------------------------------------------------------------------

\389\ Data on the number of critical incidents is limited. We
base our estimate on available public information, such as https://oig.hhs.gov/oas/reports/region7/71806081.pdf and https://dhs.sd.gov/servicetotheblind/docs/2015%20CIR%20Annual%20Trend%20Analysis.pdf.
\390\ https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-user-brief-2019.pdf.
\391\ Data on the number of unreported critical incidents is
limited. We base our estimate on available public information, such
as https://pennlive.com/news/2020/01/possible-abuse-of-group-home-residents-wasnt-adequately-tracked-in-pa-federal-audit.html and
https://www.kare11.com/article/news/local/federal-audit-finds-maine-dhhs-failed-to-investigate-multiple-deaths-critical-incidents/97-463258015.
\392\ https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-user-brief-2019.pdf.
\393\ Data is limited on the identification of critical
incidents through various data sources. We conservatively assume
that 25 percent of more critical incidents identified as a result of
these requirements will be reported by providers even though claims
data will likely identify a substantially higher of percentage of
claims than will be reported by providers.
\394\ Addressing Critical Incidents in the MLTSS Environment:
Research Brief, ASPE, https://aspe.hhs.gov/reports/addressing-critical-incidents-mltss-environment-research-brief-0.
---------------------------------------------------------------------------

In total, for Sec. 441.302(a)(6), we estimate an ongoing burden
each year of 12,297 hours (3,576 hr + 8,721 hr) at a cost of $449,085
($130,594 + $318,491) to record the information on all critical further
estimate it would take 12 hours at $79.50/hr for a business operations
specialist to maintain processes for information sharing with other
entities; 20 hours at $106.30/hr for a computer and information analyst
to update and maintain reports for using claims and other data to
identify unreported incidents; 24 hours at $118.14/hr for a general and
operations manager to monitor the operations associated with this
requirement; and 4 hours at $236.96/hr for a chief executive to review
and approve all operations associated with this collection of
information requirement in each State. In aggregate, we estimate an
ongoing burden of 15,177 hours ([60 hr x 48 States] + 12,297 hr) at a
cost of $778,520 ($449,085 + [48 States x ((12 hr x $79.50/hr) + (20 hr
x $106.30/hr) + (24 hr x $118.14/hr) + 4 hr x $236.96/hr)]). In
addition, we estimate an on-going annual technology-related cost of
$500,000 per State for States to maintain their electronic incident
management systems. In aggregate, we estimate an ongoing burden of
$24,000,000 ($500,000 x 48 States) for States to maintain their
electronic incident management systems. In total, we estimate an
ongoing annual burden of 15,177 hours at a cost $24,778,520 ($778,520 +
$24,000,000). Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost would be
$12,389,260 ($24,778,520 x 0.50).
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[[Page 40802]]

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[[Page 40803]]

b. Service Providers and Managed Care Plans
The burden associated with this final rule will affect service
providers that provide HCBS under sections 1915(c), (i), (j), and (k)
authorities, as well as managed care plans that States contract with to
provide managed long-term services and supports.
The following discussion estimates an ongoing burden for service
providers to implement these requirements and both a one-time and
ongoing burden for managed care plans.
i. On-Going Incident Management System Requirements: Service Provider
To estimate the number of service providers that will be impacted
by this final rule, we used unpublished data from the Provider Relief
Fund to estimate that there are 19,677 providers nationally across all
payers delivering the types of HCBS that are delivered under sections
1915(c), (i), (j), and (k) authorities. We then prorate the number to
estimate the number of providers in the 48 States that are subject to
this requirement (19,677 providers nationally x 48 States subject to
the proposed requirement/51 States = 18,520 providers). We used data
from the Centers for Disease Control and Prevention \395\ to estimate
the percentage of these HCBS providers that participate in Medicaid
and, due to uncertainty in the data and differences in provider
definitions, estimate both a lower and upper range of providers
affected. At a low end of 78 percent Medicaid participation, we
estimate that there are 14,446 providers impacted (18,520 providers x
0.78), while at a high end of 85 percent participation, we estimate
that there are 15,742 providers impacted (18,520 providers x 0.85). To
be conservative and not underestimate our projected burden analysis, we
are using the high end of our estimates to score the PRA-related impact
of the changes.
---------------------------------------------------------------------------

\395\ https://www.cdc.gov/nchs/data/series/sr_03/sr03_43-508.pdf.
---------------------------------------------------------------------------

As discussed earlier, we estimate that providers will report 10
percent, or 28,345, of the more critical incidents (283,446 more
critical incidents x 0.10) identified annually as a result of these
requirements. Based on these figures, we estimate that, on average,
each provider will report 1.8 (28,345 incidents/15,742 providers) more
critical incidents annually. We further estimate that, on average, it
would take a provider 1 hour at $118.14/hr for a general and operations
manager to collect the required information and report the information
to the State or to the managed care plan as appropriate for each
incident.\396\ In aggregate, for Sec. 441.302(a)(6), we estimate an
ongoing burden of 28,345 hours (28,345 incidents x 1 hr) at a cost of
$3,348,678 (28,345 hr x $118.14/hr).
---------------------------------------------------------------------------

\396\ The actual amount of time for each incident will vary
depending on the nature of the critical incident and the specific
reporting requirements of each State and managed care plan. This
estimate assumes that some critical incidents will take
substantially less time to report, while others could take
substantially less time.
[GRAPHIC] [TIFF OMITTED] TR10MY24.032

ii. One Time Incident Management System Requirements: Managed Care
Plans (Sec. 441.302(a)(6))
As required under Sec. 441.302(a)(6), while States can establish
different processes for the reporting of critical incidents for
individuals enrolled in managed care, we assume for the purpose of this
analysis that the States will delegate provider reporting of critical
incidents and identification of critical incidents through claims and
other data sources to managed care plans and that the plans will be
responsible for reporting the identified critical incidents to the
State.\397\ We further assume that the information reported by managed
care plans to the State would be in an electronic form.
---------------------------------------------------------------------------

\397\ Addressing Critical Incidents in the MLTSS Environment:
Research Brief, available at https://aspe.hhs.gov/reports/addressing-critical-incidents-mltss-environment-research-brief-0.
---------------------------------------------------------------------------

We estimated that there are 161 managed long-term services and
supports plans providing services across 25 States.\398\ With regard to
the one-time requirements at Sec. 441.302(a)(6), we estimate it would
take: 20 hours at $111.18/hr for an administrative

[[Page 40804]]

services manager to draft policy for contracted providers; 20 hours at
$100.64/hr for a management analyst to update provider manuals; 40
hours at $67.18/hr for a training and development specialist to develop
and conduct training for providers; 80 hours at $106.30/hr for a
computer and information analyst to build, design, and implement
reports for using claims and other data to identify unreported
incidents; and 6 hours at $236.96/hr for a chief executive to review
and approve all operations associated with this requirement. In
aggregate, we estimate a one-time burden of 26,726 hours (161 managed
care plans x 166 hr) at a cost of $2,712,747 (161 managed care plans x
[(20 hr x $111.18/hr) + (20 hr x $100.64/hr) + (40 hr x $67.18/hr) +
(80 hr x $106.30/hr) + (6 hr x $236.96/hr)]).
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\398\ ``A View from the States: Key Medicaid Policy Changes:
Results from a 50-State Medicaid Budget Survey for State Fiscal
Years 2019 and 2020,'' https://www.kff.org/report-section/a-view-from-the-states-key-medicaid-policy-changes-long-term-services-and-supports/.
[GRAPHIC] [TIFF OMITTED] TR10MY24.033

iii. Ongoing Incident Management System Requirements: Managed Care
Plans (Sec. 441.302(a)(6))
The ongoing burden to managed care plans consists of the collection
and maintenance of information on critical incidents. As noted earlier,
we estimate that these requirements will result in the identification
of 283,446 more critical incidents annually than are currently
identified by States. We further estimate that 24 percent, or 68,027
(283,446 x 0.24), will be reported for individuals enrolled in managed
care delivery systems \399\ and that 10 percent, or 6,803 (68,027 x
0.10), will be made through provider reports and 90 percent, or 61,224
(68,027 x 0.90), through claims identification and other sources.\400\
We estimate that it will take 0.166 hr at $36.52/hr for a data entry
worker to record the information on each reported critical incident
reported by providers (Sec. 441.302(a)(6)(i)(B)(2)). In aggregate, we
estimate an ongoing burden of 1,129 hours (6,803 critical incidents
made through provider reports x 0.166 hr) at a cost of $41,231 (1,129
hr x $36.52/hr). We also estimate that it will take: 20 hours at
$106.30/hr for a computer and information analyst to update and
maintain reports for using claims and other data to identify unreported
incidents (Sec. 441.302(a)(6)(i)(B)(3)); 6 hours at $118.14/hr for a
general and operations manager to monitor the operations associated
with this requirement and report the information to the State (Sec.
441.302(a)(6)(i)(E)); and 1 hour at $236.96/hr for a chief executive to
review and approve all operations associated with this collection of
information requirement (Sec. 441.302(a)(6)(i)(G)). In aggregate, we
estimate an ongoing burden of 5,476 hours (1,129 hr + [161 managed care
plans x 27 hr]) at a cost of $535,791 ($41,231 + (161 managed care
plans x [(20 hr x $106.30/hr) + (6 hr x $118.14/hr) + (1 hr x $236.96/
hr)]).
---------------------------------------------------------------------------

\399\ https://www.medicaid.gov/medicaid/long-term-services-supports/downloads/ltss-user-brief-2019.pdf.
\400\ Data is limited on the identification of critical
incidents through various data sources. We conservatively assume
that 25 percent of additional critical incidents identified as a
result of these requirements will be reported by providers even
though claims data will likely identify a substantially higher of
percentage of claims than will be reported by providers.
---------------------------------------------------------------------------

BILLING CODE 4120-01-P

[[Page 40805]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.034

BILLING CODE 4120-01-C
5. ICRs Regarding Payment Adequacy Reporting (Sec. 441.311(e); Applied
to Other HCBS Authorities at Sec. Sec. 441.474(c), 441.580(i), and
441.745(a)(1)(vii) and to Managed Care at Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument will be made available to the public
for their review under the standard non-rule PRA process which includes
the publication of 60- and 30-day Federal Register notices. In the
meantime, we are setting out our burden figures (see below) as a means
of scoring the impact of this rule's changes. The availability of the
survey instrument and more definitive burden estimates will be
announced in both Federal Register notices. The CMS ID number for that
collection of information request is CMS-10854 (OMB control number
0938-TBD). Since this would be a new collection of information request,
the OMB control number has yet to be determined (TBD) but will be
issued by OMB upon their approval of the new collection of information
request.
We finalized at Sec. 441.311(e)(2) a new requirement that States
report to us annually on the percentage of total payments (not
including excluded costs) for furnishing homemaker services, home
health aide services, personal care, and habilitation services, as set
forth in Sec. 440.180(b)(2) through (4) and (6), that are spent on
compensation for direct care workers.
Section 441.311(e)(1)(i), as finalized, defines compensation to
include salary, wages, and other remuneration as defined by the Fair
Labor Standards Act and implementing regulations (29 U.S.C. 201 et
seq., 29 CFR parts 531 and 778); benefits (such as health and dental
benefits, paid leave, and tuition reimbursement); and the employer
share of payroll taxes for direct care workers delivering services
authorized under section 1915(c) of the Act. Section 441.311(e)(1)(ii),
as finalized, defines direct care workers to include workers who
provide nursing services, assist with activities of daily living (such
as mobility, personal hygiene, eating), or provide support with
instrumental activities of daily living (such as cooking, grocery
shopping, managing finances). Specifically, direct care workers include
nurses (registered

[[Page 40806]]

nurses, licensed practical nurses, nurse practitioners, or clinical
nurse specialists) who provide nursing services to Medicaid-eligible
individuals receiving HCBS, licensed or certified nursing assistants,
direct support professionals, personal care attendants, home health
aides, and other individuals who are paid to directly provide services
to Medicaid beneficiaries receiving HCBS to address activities of daily
living or instrumental activities of daily living. Direct care workers
include individuals employed by a Medicaid provider, State agency, or
third party; contracted with a Medicaid provider, State agency, or
third party; or delivering services under a self-directed service
model. (Refer to section II.B.5. of this final rule for complete
discussion of these definitions.)
We are also finalizing Sec. 441.311(e) to include a definition of
excluded costs at Sec. 441.311ek)(1)(iii). Excluded costs are costs
that are not included in the calculation of the percentage of Medicaid
payments to providers that is spent on compensation for direct care
workers. Such costs are limited to: costs of required trainings for
direct care workers (such as costs for qualified trainers and training
materials); travel reimbursements (such as mileage reimbursement or
public transportation subsidies) provided to direct care workers; and
personal protective equipment for direct care workers. This policy was
not included in the NPRM calculations. While we do not believe the
policy of allowing providers to deduct excluded costs will affect the
activities described in this cost estimate, we acknowledge that they
may require additional time for some of the activities (such as
drafting policy manuals or training providers on the policy.) These
costs have been added to the revised burden estimate.
As discussed in section II.B.7. of this rule, we had initially
proposed at Sec. 441.311(e) that States would be required to report on
the percent of Medicaid compensation spent on compensation for direct
care workers providing homemaker, home health aide, and personal care
services as defined at Sec. 440.180(b)(2) through (4), and that the
State must report this data for each service, with self-directed
services reported separately. We are finalizing this requirement to
include reporting on an additional service (habilitation services, as
defined at Sec. 440.180(b)(6)). We are also finalizing a new
requirement that in addition to reporting by service, with separate
reporting for self-directed services, States must also report facility-
based services separately. Below, we include in our revised
calculations the increased anticipated burden associated with the
addition of reporting on habilitation services and separate reporting
for facility-based services in Sec. 441.311(e). We anticipate an
increased burden on States and managed care plans to address data
collection on the additional services. While we are increasing our
estimate of the number of impacted providers, we do not believe this
will change providers' activities associated with this requirement.
To ensure that States are prepared to comply with the reporting
requirement at Sec. 441.311(e)(2), we are finalizing a requirement at
Sec. 441.311(e)(3) to require that one year prior to the first payment
adequacy report, States must provide a status update on their readiness
to report the data required in Sec. 441.311(e)(2). This will allow us
to identify States in need of additional support to come into
compliance with Sec. 441.311(e)(2) and provide targeted technical
assistance to States as needed. Our burden estimate below has been
revised to include the activities associated with the State's one-time
submission of this report. We do not anticipate an additional burden on
managed care plans or providers associated with this requirement.
We also finalized at Sec. 441.311(e)(4) an exemption for the
Indian Health Service and Tribal health programs subject to 25 U.S.C.
1641, which exempts these providers from the requirements in Sec.
441.311(e). Based on internal figures, we believe that about 100 HCBS
provide As discussed in section II.B.7. of this final rule, we are
applying the finalized requirements at Sec. 441.311(e) to services
delivered in both FFS and managed care delivery systems. We are
applying the requirements to services that are delivered in 1915(c),
(i) and (k) programs. We note also that the reporting requirement will
go into effect 4 years after this rule is finalized.
We are finalizing the requirements at Sec. Sec. 441.311(e) with
the substantive modifications as described above. Burden estimates for
the finalized requirements are below. We note an additional change to
the burden estimates. As presented in the proposed rule at 88 FR 28047,
we had presented the burden estimate of both the payment adequacy
reporting requirement at Sec. 441.311(e) and the HCBS payment adequacy
minimum performance requirements at Sec. 441.302(k) in a single ICR.
Since the publication of the NPRM, upon further consideration we have
determined that as Sec. Sec. 441.302(k) and 441.311(e) represent
distinct sets of requirements, it is more appropriate to present the
costs associated with Sec. 441.302(k) under a separate ICR (ICR 11) in
this section IV. of the final rule.
However, while Sec. 441.311(e) represents a distinct set of
requirements from those in Sec. 441.302(k), we also expect that States
will employ certain efficiencies in complying with both Sec. Sec.
441.302(k) and 441.311(e). In particular, we expect that States will
build a single IT infrastructure and use the same processes both for
collecting data for the reporting requirement at Sec. 441.311(e) and
for determining providers' compliance with HCBS payment adequacy
performance requirements at Sec. 441.302(k). The burden associated
with States' development of infrastructure and processes to determine
what percentage of HCBS providers' Medicaid payments for certain HCBS
is spent on direct care worker compensation, as well as providers'
reporting of this information to the State, is included in this ICR for
Sec. 441.311(e). We believe representing these costs under only one
ICR avoids duplicative or inflated burden estimates. Burden estimates
associated specifically with the minimum performance requirements in
Sec. 441.302(k) are presented in ICR 11 of this Collection of
Information (section IV. of this final rule.)
a. State Burden
The burden associated with the requirements at Sec. 441.311(e)
will affect the 48 States (including Washington DC) that deliver HCBS
under sections 1915(c), (i), (j), or (k) authorities.^{401 402}
We estimate both a one-time and ongoing burden to implement these
requirements at the State level.
---------------------------------------------------------------------------

\401\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
\402\ For purposes of this burden analysis, we are not taking
into consideration temporary wage increases or bonus payments that
have been or are being made.
---------------------------------------------------------------------------

Under Sec. 441.311(e), we expect that States will have to: (1)
draft new policy (one-time); (2) update provider manuals and other
policy guidance to include reporting requirements (including
information regarding excluded costs) for each of the services subject
to the requirement (one-time); (3) inform providers of services through
State notification processes, both initially and annually of reporting
requirements (one-time and ongoing); (4) assess State systems and
submit a one-time report to us on the State's readiness to comply with
the ongoing reporting requirement at 441.311(e)(2) (one-time); (5)
collect the information from providers for each service required
(ongoing); (6) aggregate the data broken down by each service, as well
as self-directed services

[[Page 40807]]

(ongoing); (7) derive an overall percentage for each service including
self-directed services (ongoing); and (8) report to us on an annual
basis (ongoing).
i. One Time Payment Adequacy Reporting Requirements (Sec. 441.311(e)):
State Burden
With regard to the one-time requirements, we estimate it will take:
40 hours at $111.18/hr for an administrative services manager to: draft
policy content, and draft provider agreements and contract
modifications for managed care plans; 20 hours at $100.64/hr for a
management analyst to update provider manuals for each of the affected
services; 32 hours at $98.84/hr for a computer programmer to build,
design, and operationalize internal systems for collection,
aggregation, stratification by service, reporting, and creating
remittance advice; 50 hours at $67.18/hr for a training and development
specialist to develop and conduct training for providers on the
reporting elements and reporting process; 20 hours at $118.14/hr for a
general and operations manager to: review, approve managed care
contract modifications, policy and rules for publication, and training
materials, and to complete the annual reporting and complete the
reporting readiness report (required at Sec. 441.311(e)(3)) for
submission to CMS; and 10 hours at $236.96/hr for a chief executive to
review and approve all operations associated with these requirements.
In aggregate, we estimate a one-time burden of 7,776 hours (172 hr
x 48 States) at a cost of $850,285 (48 States x [(40 hr x $111.18/hr) +
(20 hr x $100.64/hr) + (32 hr x $98.84/hr) + (50 hr x $67.18/hr) + (20
hr x $118.14/hr) + (10 hr x $236.96/hr)]). Taking into account the
Federal contribution to Medicaid administration, the estimated State
share of this cost would be $425,143 ($850,285 x 0.50).
BILLING CODE 4120-01-P

[[Page 40808]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.035

ii. Ongoing Payment Adequacy Reporting Requirements (Sec. 441.311(e)):
State Burden
With regard to the ongoing requirements, we estimate it will take 8
hours at $98.84/hr for a computer programmer to: (1) collect the
information from all providers for each service required; (2) aggregate
and stratify by each service as well as self-directed services; (3)
derive an overall percentage for each service including self-directed
and facility-based services; and (4) develop the reports for CMS on an
annual basis. We also estimate it will take: 10 hours at $67.18 for a
training and development specialist to develop and conduct training for
providers on the reporting elements and reporting process; 5 hours at
$118.14/hr by a general and operations manager to

[[Page 40809]]

review, verify, and approve reporting required at Sec. 441.311(e)(2)
to CMS; and 2 hours at $236.96/hr for a chief executive to review and
approve all operations associated with these requirements.
In aggregate, we estimate an ongoing burden of 1,200 hours (25 hr x
48 States) at a cost of $121,302 (48 States x [(8 hr x $98.84/hr) + (10
hr x $67.18) + (5 hr x $118.14/hr) + (2 hr x $236.96/hr)]). Taking into
account the Federal contribution to Medicaid administration, the
estimated State share of this cost would be $60,651 ($121,302 x 0.50)
per year.
[GRAPHIC] [TIFF OMITTED] TR10MY24.036

BILLING CODE 4120-01-C
b. Service Providers and Managed Care Plans
The burden associated with this final rule will affect both service
providers that provide the services listed at Sec. 440.180(b)(2)
through (4) and (6) across HCBS programs as well as managed care plans
that contract with the States to provide managed long-term services and
supports. We estimate both a one-time and ongoing burden to implement
the reporting requirements Sec. 441.311(e) for both service providers
and managed care plans.
As noted in the proposed rule at 88 FR 28049, we had estimated an
impact on 11,155 HCBS providers that provided homemaker, home health
aide, or personal care services. We are adjusting this burden estimate
to account for the inclusion of providers that also provide
habilitation services in the finalized requirements in Sec.
441.311(e). To estimate the number of service providers that will be
impacted by this final rule, we used unpublished data from the Provider
Relief Fund to estimate that there are 19,677 providers nationally
across all payers delivering the types of HCBS that are delivered under
sections 1915(c), (i) and (k) authorities. We then prorate the number
to estimate the number of providers in the 48 States that are subject
to this requirement (19,677 providers nationally x 48 States subject to
the requirement/51 States = 18,520 providers). We used data from the
Centers for Disease Control and Prevention \403\ to estimate the
percentage of these HCBS providers that participate in Medicaid and,
due to uncertainty in the data and differences in provider

[[Page 40810]]

definitions, estimate both a lower and upper range of providers
affected. At a low end of 78 percent Medicaid participation, we
estimate that there are 14,446 providers impacted (18,520 providers x
0.78), while at a high end of 85 percent participation, we estimate
that there are 15,742 providers impacted (18,520 providers x 0.85). To
be conservative and not underestimate our projected burden analysis, we
are using the high end of our estimates to score the PRA-related impact
of the changes. We also note that it is possible that some of the
providers included in this count do not provide the services impacted
by Sec. 441.311(e) (homemaker, home health aide, personal care, or
habilitation services.) However, as we believe a significant number of
the providers included in this count do provide at least one of these
services. We note that from this number (15,742) we are subtracting 100
providers to represent the providers we believe will be eligible for
the exemption at Sec. 441.311(e)(4) for HIS and Tribal providers
subject to 25 U.S.C. 1641. This brings the estimated number of
providers impacted by the reporting requirement at Sec. 441.311(e) to
15,642.
---------------------------------------------------------------------------

\403\ https://www.cdc.gov/nchs/data/series/sr_03/sr03_43-508.pdf.
---------------------------------------------------------------------------

i. One Time HCBS Payment Adequacy Requirements: Service Providers
(Sec. 441.311(e))
With regard to the one-time requirements, we estimate it would
take: 35 hours at $73.00/hr for a compensation, benefits and job
analysis specialist to calculate compensation, as defined by Sec.
441.(311)(e)(1)(i) for each direct care worker defined at Sec.
441.311(e)(1)(ii); 40 hours at $98.84/hr for a computer programmer to
build, design and operationalize an internal system to calculate each
direct care worker's compensation as a percentage of total revenues
received, aggregate the sum of direct care worker compensation as an
overall percentage, and separate self-directed services to report to
the State; and 8 hours at $118.14/hr for a general and operations
manager to review and approve reporting to the State.
In aggregate, we estimate a one-time burden of 1,298,286 hours
(15,642 providers x 83 hr) at a cost of $116,591,088 (15,642 providers
x [(35 hr x $73.00/hr) + (40 hr x $98.84/hr) + (8 hr x $118.14/hr)]).
[GRAPHIC] [TIFF OMITTED] TR10MY24.037

ii. Ongoing Payment Adequacy Reporting Requirements (Sec. 441.311(e)):
Service Providers
With regard to the on-going requirements, we estimate it will take
8 hours at $73.00/hr for a compensation, benefits, and job analysis
specialist to account for new hires and/or contracted employees; 8
hours at $98.84/hr for a computer programmer to calculate compensation,
aggregate data, and report to the State as required; and 5 hours at
$118.14/hr for a general and operations manager to review and approve
reporting to the State. In aggregate, we estimate an on-going burden of
328,482 hours (15,742 providers x 21 hr) at a cost of $30,743,100
(15,642 providers x [(8 hr x $73.00/hr) + (8 hr x $98.84/hr) + (5 hr x
$118.14/hr)]).

[[Page 40811]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.038

iii. On-Time Payment Adequacy Reporting Requirements (Sec.
441.311(e)): Managed Care Plans
As noted earlier, the burden associated with this final rule will
affect managed care plans that contract with the States to provide
managed long-term services and supports. We estimate that there are 161
managed long-term services and supports plans providing services across
25 States.\404\ We estimate both a one-time and ongoing burden for
managed care plans to implement these requirements. Specifically,
managed care plans would have to: (1) draft new policy (one-time); (2)
update provider manuals for each of the services subject to the
requirement (one-time); (3) inform providers of requirements (one-time
and ongoing); (4) collect the information from providers for each
service required (ongoing); (5) aggregate the data as required by the
States (ongoing); and (6) report to the State on an annual basis
(ongoing).
---------------------------------------------------------------------------

\404\ https://www.kff.org/report-section/a-view-from-the-states-key-medicaid-policy-changes-long-term-services-and-supports/;
Profiles & Program Features [verbar] Medicaid.
---------------------------------------------------------------------------

With regard to the one-time requirements, we estimate it would take
50 hours at $111.18/hr for an administrative services manager to draft
policy for contracted providers; 32 hours at $98.84/hr for a computer
programmer to build, design, and operationalize internal systems for
data collection, aggregation, stratification by service, and reporting;
40 hours at $67.18/hr for a training and development specialist to
develop and conduct training for providers; and 4 hours at $236.96/hr
for a chief executive to review and approve reporting to the State. In
aggregate, we estimate a one-time burden of 20,286 hours (161 MCPs x
126 hr) at a cost of $1,989,464 (161 MCPs x [(50 hr x $111.18/hr) + (32
hr x $98.84/hr) + (40 hr x $67.18/hr) + (4 hr x $236.96/hr)]).

[[Page 40812]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.039

iv. Ongoing Payment Adequacy Reporting Requirements (Sec. 441.311(e)):
Managed Care Plans
With regard to the ongoing requirements, we estimate it will take:
8 hours at $98.84/hr for a computer programmer to: (1) collect the
information from all providers for each service required, (2) aggregate
and stratify data as required, and (3) develop report to the State on
an annual basis; and 2 hours at $236.96/hr for a chief executive to
review and approve the reporting to the State. In aggregate, we
estimate an ongoing burden of 1,610 hours (161 MCPs x 10 hr) at a cost
of $203,607 (161 MCPs x [(8 hr x $98.84/hr) + (2 hr x $236.96/hr)]).
[GRAPHIC] [TIFF OMITTED] TR10MY24.040

6. ICRs Regarding Supporting Documentation for HCBS Access (Sec. Sec.
441.303(f)(6) and 441.311(d)(1); Applied to Managed Care at Sec.
438.72(b)))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10854 (OMB
control number 0938-TBD). Since this will be a new collection of
information request, the OMB control number has yet to be determined
(TBD) but will be issued by OMB upon their approval of the new
collection of information request.
Section 1915(c) of the Act authorizes States to set enrollment
limits or caps

[[Page 40813]]

on the number of individuals served in a waiver, and many States
maintain waiting lists of individuals interested in receiving waiver
services once a spot becomes available. States vary in the way they
maintain waiting lists for section 1915(c) waivers, and if a waiting
list is maintained, how individuals may join the waiting list. Some
States permit individuals to join a waiting list as an expression of
interest in receiving waiver services, while other States require
individuals to first be determined eligible for waiver services to join
the waiting list. States have not been required to submit any
information on the existence or composition of waiting lists, which has
led to gaps in information on the accessibility of HCBS within and
across States. Further, feedback obtained during various interested
parties' engagement activities conducted with States and other
interested parties over the past several years about reporting
requirements for HCBS, as well as feedback received through the RFI
\405\ discussed earlier, indicate that there is a need to improve
public transparency and processes related to States' HCBS waiting
lists.
---------------------------------------------------------------------------

\405\ CMS Request for Information: Access to Coverage and Care
in Medicaid & CHIP. February 2022. For a full list of question from
the RFI, see https://www.medicaid.gov/medicaid/access-care/downloads/access-rfi-2022-questions.pdf.
---------------------------------------------------------------------------

In this final rule, we are finalizing an amendment to Sec.
441.303(f)(6) by adding language to the end of the regulatory text to
specify that if the State has a limit on the size of the waiver program
and maintains a list of individuals who are waiting to enroll in the
waiver program, the State must meet the reporting requirements at Sec.
441.311(d)(1). Per the finalized requirements at Sec. 441.311(d)(1),
for States that limit or cap enrollment in a section 1915(c) waiver and
maintain a waiting list, States will be required to provide a
description annually on how they maintain the list of individuals who
are waiting to enroll in a section 1915(c) waiver program. The
description must include, but not be limited to, information on whether
the State screens individuals on the waiting list for eligibility for
the waiver program, whether the State periodically rescreens
individuals on the waiver list for eligibility, and the frequency of
rescreening, if applicable. In addition, States will be required to
report on the number of people on the waiting list if applicable, as
well as the average amount of time that individuals newly enrolled in
the waiver program in the past 12 months were on the waiting list, if
applicable.
We are finalizing these proposals without substantive
modifications. Burden estimates for this requirement are presented
below.
a. One Time Waiting List Reporting Requirements: States (Sec.
441.311(d)(1))
The one-time State burden associated with the waiting list
reporting requirements in Sec. 441.311(d)(1) will affect the 39 State
Medicaid programs with waiting lists for section 1915(c) waivers.\406\
We estimate both a one-time and ongoing burden to implement these
requirements at the State level. Specifically, States will have to
query their databases or instruct their contractors to do so to collect
information on the number of people on existing waiting lists and how
long they wait; and write or update their existing waiting list
policies and the information collected. In some States, HCBS waivers
are administered by more than one operating agency, in these cases each
will have to report this data up to the Medicaid agency for submission
to us.
---------------------------------------------------------------------------

\406\ https://www.kff.org/report-section/state-policy-choices-about-medicaid-home-and-community-based-services-amid-the-pandemic-issue-brief/.
---------------------------------------------------------------------------

With regard to the one-time requirements, we estimate it will take:
16 hours at $111.18/hr for an administrative services manager to write
or update State policy, direct information collection, compile
information, and produce a report; 20 hours at $98.84/hr for a computer
programmer or contractor to query internal systems for reporting
requirements; 3 hours at $118.14/hr for a general and operations
manager to review and approve report; and 2 hours at $236.96/hr for a
chief executive to review and approve all reports associated with this
requirement. In aggregate, we estimate a burden of 1,599 hours (39
States x 41 hr) at a cost of $178,777 (39 States x [(16 hr x $111.18/
hr) + (20 hr x $98.84/hr) + (3 hr x $118.14/hr) + (2 hr x $236.96/
hr)]). Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost would be $89,388
($178,777 x 0.50).
Assuming no changes to the State waiting list policies, each year
States will only need to update the report to reflect the number of
people on the list of individuals who are waiting to enroll in the
waiver program and average amount of time that individuals newly
enrolled in the waiver program in the past 12 months were on the list.
BILLING CODE 4120-01-P

[[Page 40814]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.041

b. Ongoing Waiting List Reporting Requirements: States (Sec.
441.311(d)(1))
With regard to the on-going burden for the section 1915(c) waiver
waiting list reporting requirements at Sec. 441.311(d)(1), we estimate
it will take: 4 hours at $111.18/hr for an administrative services
managers across relevant operating agencies to direct information
collection, compile information, and produce a report; 6 hours at
$98.84/hr for a computer programmer or contractor to query internal
systems for reporting requirements; 3 hours at $118.14/hr for a general
and operations manager to review and approve report; and 2 hours at
$236.96/hr for a chief executive to review and approve all reports
associated with this requirement. In aggregate, we estimate a burden of
585 hours (39 States x 15 hr) at a cost of $72,778 (39 States x [(4 hr
x $111.18/hr) + (6 hr x $98.84/hr) + (3 hr x $118.14/hr) + (2 hr x
$236.96/hr)]. Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost will be $36,389
($72,778 x 0.50) per year.

[[Page 40815]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.042

BILLING CODE 4120-01-C
7. ICRs Regarding Additional HCBS Access Reporting (Sec.
441.311(d)(2)(i); Applied to Other HCBS Authorities at Sec. Sec.
441.474(c), 441.580(i), and 441.745(a)(1)(vii) and to Managed Care at
Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10854 (OMB
control number 0938-TBD). Since this will be a new collection of
information request, the OMB control number has yet to be determined
(TBD) but will be issued by OMB upon their approval of the new
collection of information request.
We proposed additional HCBS access reporting at Sec.
441.311(d)(2)(i). We proposed at Sec. 441.311(d)(2)(i) to require
States to report annually on the average amount of time from when
homemaker services, home health aide services, or personal care
services, listed in Sec. 440.180(b)(2) through (4), are initially
approved to when services began for individuals newly approved to begin
receiving services within the past 12 months. We also proposed at Sec.
441.311(d)(2)(ii) to require States to report annually on the percent
of authorized hours for homemaker services, home health aide services,
or personal care, as listed in Sec. 440.180(b)(2) through (4), that
are provided within the past 12 months. States are allowed to report on
a statistically valid random sample of individuals newly approved to
begin receiving these services within the past 12 months.
We are finalizing the requirements at Sec. 441.311(d)(2) with a
modification to add reporting on habilitation services as defined at
Sec. 440.180(b)(6), in addition to the other services. We have
adjusted our burden estimates below to reflect additional reporting on
habilitation services.
The burden associated with the additional HCBS access reporting
requirements at Sec. 441.311(d)(2) will affect the 48 States
(including Washington DC) that deliver HCBS under sections 1915I, (i),
(j), or (k) authorities.\407\ Specifically, States will have to query
their databases or instruct their contractors to do so to collect
information on the average amount of time from which homemaker
services, home health aide services, personal care, and habilitation
services, as listed

[[Page 40816]]

in Sec. 440.180(b)(2) through (4) and (6), are initially approved to
when services began, for individuals newly approved to begin receiving
services within the past 12 months, and the percent of authorized hours
for these services that are provided within the past 12 months. We
expect many States will need to analyze report this metric for a
statistically valid random sample of beneficiaries. They will then need
to produce a report for us within such information. For States with
managed long-term services and supports, they will need to direct
managed care plans to report this information up to them.
---------------------------------------------------------------------------

\407\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
---------------------------------------------------------------------------

We estimate one-time and ongoing burden to implement the
requirements at Sec. 441.311(d)(2) at the State level.
One-Time HCBS Access Reporting Requirements: States (Sec.
441.311(d)(2))
With regard to the one-time burden related to the HCBS access
reporting requirements, we estimate it will take: 30 hours at $111.18/
hr for an administrative services manager across relevant operating
agencies to direct information collection, compile information, and
produce a report; 80 hours at $98.84/hr for a computer programmer or
contractor to analyze service authorization and claims data; 50 hours
at $101.46/hr for a statistician to conduct data sampling; 4 hours at
$118.14/hr for a general and operations manager to review and approve
report; and 3 hours at $236.96/hr for a chief executive to review and
approve all reports associated with this requirement. In aggregate, we
estimate a one-time burden of 8,016 hours (48 States x 167 hr) at a
cost of $839,954 (48 States x [(20 hr x $111.18/hr) + (60 hr x $98.84/
hr) + (40 hr x $101.46/hr) + (3 hr x $118.14/hr) + (2 hr x $236.96/
hr)]). Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost will be $419,977
($839,954 x 0.50) per year.
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[GRAPHIC] [TIFF OMITTED] TR10MY24.043

[[Page 40817]]

b. Ongoing HCBS Access Reporting Requirements: States (Sec.
441.311(d)(2))
With regard to the on-going burden related to the HCBS access
reporting requirements for States, we estimate it will take: 15 hours
at $111.18/hr for an administrative services manager to direct
information collection, compile information, and produce a report; 30
hours at $98.84/hr for a computer programmer or contractor to analyze
service authorization and claims data; 15 hours at $101.46/hr for a
statistician to conduct data sampling; 4 hours at $118.14/hr for a
general and operations manager to review and approve report; and 2
hours at $236.96/hr for a chief executive to review and approve all
reports associated with this requirement. In aggregate, we estimate a
burden of 3,168 hours (48 States x 67 hr) at a cost of $340,861 (48
States x [(15 hr x $111.18/hr) + (30 hr x $98.84/hr) + (15 hr x
$101.46/hr) + (4 hr x $118.14/hr) + (2 hr x $236.96/hr)]). Taking into
account the Federal contribution to Medicaid administration, the
estimated State share of this cost will be $170,431 ($340,861 x 0.50)
per year.
[GRAPHIC] [TIFF OMITTED] TR10MY24.044

c. One-Time HCBS Access Reporting Requirements: Managed Care Plans
(Sec. 441.311(d)(2))
With regard to the one-time HCBS access reporting requirements at
Sec. 441.311(d)(2) for managed care plans, we estimate it will take:
15 hours at $111.18/hr for an administrative services manager to direct
information collection, compile information, and produce a report to
the State; 45 hours at $98.84/hr for a computer programmer to analyze
service authorization and claims data; 15 hours at $101.46/hr for a
statistician to conduct data sampling; and 2 hours at $236.96/hr for a
chief executive review and approval. In aggregate, we estimate a one-
time burden of 12,397 hours (161 MCPs x 77 hr) at a cost of $1,305,923
(161 MCPs x [(15 hr x $111.18/hr) + (45 hr x $98.84/hr) + (15 hr x
$101.46/hr) + (2 hr x $236.96/hr)]).

[[Page 40818]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.045

d. Ongoing HCBS Access Reporting Requirements: Managed Care Plans
(Sec. 441.311(d)(2))
With regard to the ongoing requirements associated with the annual
collection, aggregation, and reporting of the HCBS access measures at
Sec. 441.311(d)(2), we estimate it will require: 5 hours at $111.18/hr
for an administrative services manager to direct information
collection, compile information, and produce a report to the State; 25
hours at $98.84/hr for a computer programmer to analyze service
authorization and claims data; 10 hours at $101.46/hr for a
statistician to conduct data sampling; and 2 hours at $236.96/hr for a
chief executive to review and approve. In aggregate, we estimate a
burden of 6,762 hours (161 MCPs x 42 hr) at a cost of $726,983 (161
MCPs x [(5 hr x $111.18/hr) + (25 hr x $98.84/hr) + (10 hr x $101.46/
hr) + (2 hr x $236.96/hr)]).

[[Page 40819]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.046

BILLING CODE 4120-01-C
8. ICRs Regarding Compliance Reporting (Sec. 441.311(b); Applied to
Other HCBS Authorities at Sec. Sec. 441.474(c), 441.580(i), and
441.745(a)(1)(vii) and to Managed Care at Sec. 438.72(b))
a. Ongoing Incident Management System Assessment Requirements: States
(Sec. 441.311(b)(1)
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10692 (OMB
control number 0938-1362).
As discussed in II.B.3 of this final rule, we are finalizing at
Sec. 441.302(a)(6), a requirement that States provide an assurance
that they operate and maintain an incident management system that
identifies, reports, triages, investigates, resolves, tracks, and
trends critical incidents. We are finalizing at Sec. 441.311(b)(1)(i)
a requirement that States must report, every 24 months, on the results
of an incident management system assessment to demonstrate that they
meet the requirements in Sec. [thinsp]441.302(a)(6). We are also
finalizing at Sec. 441.311(b)(1)(ii) a flexibility in which we may
reduce the frequency of reporting to up to once every 60 months for
States with incident management systems that are determined by CMS to
meet the requirements in Sec. [thinsp]441.302(a)(6).
The reporting requirements finalized at Sec. 411.311(b)(1) are
intended to standardize our expectations and States' reporting
requirements to ensure that States operate and maintain an incident
management system that identifies, reports, triages, investigates,
resolves, tracks, and trends critical incidents. The requirements were
informed by the responses to the HCBS Incident Management Survey (CMS-
10692; OMB 0938-1362) recently released to States.
We estimate that the reporting requirement at Sec. 441.311(b)(1)
would apply to the 48 States (including Washington DC) that deliver
HCBS under sections 1915(c), (i), (j), or (k) authorities. Some States
employ the same incident management system across their waivers, while
others employ an incident management system specific to each waiver and
will require multiple assessments to meet the requirements at Sec.
441.311(b)(1). Based on the responses to the previously referenced
survey, we estimate that on average States will conduct assessments on
two incident management systems, totaling approximately 96 unique
required assessments (48 State Medicaid programs x 2 incident
management system assessments per State). Because the requirements
under Sec. 441.311(b)(1) are required every 24 months, we estimate 48
assessments on an annual basis (96 unique assessments every 2 years).
With regard to the ongoing requirements, we estimate that it will take
1.5 hours at $76.26/hr for a social/community service manager to gather
information and complete the required assessment; and 0.5 hours at
$118.14/hr for a general and operations manager to review and approve
the assessment. In aggregate, we estimate an ongoing annual burden of
96 hours (48 States x 2 hr) at a cost of $8,326 (48 States x [(1.5 hr x
$76.26/hr) + (0.5 hr x $118.14/hr)]). Taking into account the Federal
contribution to Medicaid administration, the estimated State

[[Page 40820]]

share of this cost would be $4,163 ($8,326 x 0.50) per year.
[GRAPHIC] [TIFF OMITTED] TR10MY24.047

b. Reporting on Critical Incidents (Sec. 441.311(b)(2)), Person-
Centered Planning (Sec. 441.311(b)(3)), and Type, Amount, and Cost of
Services (Sec. 441.311(b)(4))
The following changes will be submitted to OMB for approval after
our survey instrument has been developed. The survey instrument and
burden will be made available to the public for their review under the
standard non-rule PRA process which includes the publication of 60- and
30-day Federal Register notices. In the meantime, we are setting out
our burden figures (see below) as a means of scoring the impact of this
rule's changes. The availability of the survey instrument and more
definitive burden estimates will be announced in both Federal Register
notices. The CMS ID number for that collection of information request
is CMS 0938-0272 (CMS-372(S)).
This final rule codifies existing compliance reporting requirements
on critical incidents, person-centered planning, and type, amount, and
cost of services. At Sec. 441.311(b)(2), we are finalizing a reporting
requirement which requires States to report annually on the minimum
performance standards for critical incidents that are finalized at
Sec. 441.302(a)(6). At Sec. 441.311(b)(3), we are finalizing a
reporting requirement to require States to report annually on the
minimum performance standards for person-centered planning that are
finalized at Sec. 441.301(c)(3). Similar reporting requirements were
previously described in 2014 guidance.\408\ We are also finalizing a
redesignation of the existing requirement at Sec. 441.302(h)(1) to
report on type, amount, and cost of services as Sec. 441.311(b)(4), to
make the requirement part of the new consolidated compliance reporting
section finalized at Sec. 441.311.
---------------------------------------------------------------------------

\408\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_71.pdf.
---------------------------------------------------------------------------

This final rule removes our currently approved burden and replaces
it with the burden associated with the amendments to Sec.
441.311(b)(2) through (4). In aggregate, the change will remove 11,132
hours (253 waivers x 44 hr) and $891,451 (11,132 hr x $80.08/hr for a
business operations specialist). Taking into account the Federal
contribution to Medicaid administration, the estimated State share of
this cost reduction would be minus $445,725 (-$891,451 x 0.50).

[[Page 40821]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.048

We expect, as a result of the changes discussed in this section, to
revise the Form CMS-372(S) and the form's instructions based on the
reporting requirements. The consolidated reporting requirements at
Sec. 441.311(b)(2) through (4) also assume that 48 States (including
Washington DC) are required to submit the Form CMS-372(S) Report on an
annual basis. However, a separate form will no longer be required for
each of the 253 approved waivers currently in operation. We estimate a
burden of 50 hours at $80.08/hr for a business operations specialist to
draft each Form CMS-372(S) Report submission. The per response increase
reflects the increase to the minimum State quality performance level
for person-centered planning (finalized at Sec. 441.301(c)(3)(ii)) and
critical incident reporting (finalized at Sec. 441.302(a)(6)(ii)) from
the 86 percent threshold established by the 2014 guidance to 90 percent
in this final rule. This slight increase to the minimum performance
level will help ensure that States are sufficiently meeting all section
1915(c) waiver requirements but may also increase the evidence that
some States may need to submit to document that appropriate remediation
is being undertaken to resolve any compliance deficiencies. As a
result, we estimate a total of 50 hours for each Form CMS-372(S) Report
submission, comprised of 30 hours of recordkeeping, collection and
maintenance of data, and 20 hours of record assembly, programming, and
completing the Form CMS-372(S) Report in the required format. We also
estimate 3 hours at $118.14/hr for a general and operations manager to
review and approve the report to CMS; and 2 hours at $236.96/hr for a
chief executive to review and approve all reports associated with this
requirement.

[[Page 40822]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.049

The net change resulting from reporting requirements on critical
incidents, person-centered service planning, and type, amount, and cost
of services, finalized in Sec. 441.311(b)(2) through (4) is a burden
decrease of 8,492 hours (2,640 hr--11,132 hr) and $329,749 (State
share) ($115,976--$445,725).
9. ICRs Regarding Reporting on the Home and Community-Based Services
(HCBS) Quality Measure Set (Sec. 441.311(c); Applied to Other HCBS
Authorities at Sec. Sec. 441.474(c), 441.580(i), and
441.745(a)(1)(vii) and to Managed Care at Sec. 438.72(b)))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument and burden will be made available to
the public for their review under the standard non-rule PRA process
which includes the publication of 60- and 30-day Federal Register
notices. In the meantime, we are setting out our burden figures (see
below) as a means of scoring the impact of this rule's changes. The
availability of the survey instrument and more definitive burden
estimates will be announced in both Federal Register notices. The CMS
ID number for that collection of information request is CMS-10854 (OMB
control number 0938-TBD). Since this would be a new collection of
information request, the OMB control number has yet to be determined
(TBD) but will be issued by OMB upon their approval of the new
collection of information request.
a. States
At Sec. 441.311(c), we finalized a requirement that States report
every other year on the HCBS Quality Measure Set, which is described in
section II.B.8. of this final rule. The reporting requirement will
affect the 48 States (including Washington DC) that deliver HCBS under
section 1915(c), 1915(i), 1915(j), and 1915(k) authorities. We estimate
both a one-time and ongoing burden to implement these requirements at
the State level. Unlike other reporting requirements finalized at Sec.
441.311, the effective date of Sec. 441.311(c) will be 4 years, rather
than 3 years, after the effective date of the final rule.
As finalized at Sec. 441.311(c), the data collection includes
reporting every other year on all measures in the HCBS Quality Measure
Set that are identified by the Secretary.\409\ For certain measures
which are based on data already collected by us, the State can elect to
have the Secretary report on their behalf.
---------------------------------------------------------------------------

\409\ Available at https://www.medicaid.gov/federal-policy-guidance/downloads/smd22003.pdf.
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As finalized atSec. 441.312(c)(1)(iii), States are required to
establish performance targets, subject to our review and approval, for
each of the measures in the HCBS Quality Measure Set that are
identified as mandatory for States to report or are identified as
measures for which we will report on behalf of States, as well as to
describe the quality improvement strategies that they will pursue to
achieve the performance targets for those measures.
We are finalizing the requirements at Sec. 441.312 without
substantive modification. Our burden estimates are described below.
i. One Time HCBS Quality Measure Set Requirements: States (Sec.
441.311(c))
This one-time burden analysis assumes that States must newly adopt
one of the ``experience of care'' surveys cited in the HCBS Quality
Measure Set: The Consumer Assessment of Healthcare Providers and
Systems Home and Community-Based (HCBS CAHPS[supreg]) Survey, National
Core Indicators[supreg]-Intellectual and Developmental Disabilities
(NCI[supreg]-IDD), National Core Indicators-Aging and Disability (NCI-
AD)^TM, or Personal Outcome Measures (POM)[supreg] to fully
meet the HCBS Quality Measures Set mandatory requirements.

[[Page 40823]]

Currently most States use at least one of these surveys; however,
States may need to use multiple ``experience of care'' surveys,
depending on the populations served by the States' HCBS program and the
particular survey instruments that States select to use, to ensure that
all major population groups are assessed using the measures in the HCBS
Quality Measure Set.
The estimate of one-time burden related to the effort associated
with the requirements is for the first year of reporting. It assumes
that the Secretary will initially require 25 of the 97 measures
currently included in the HCBS Quality Measure Set. The estimate
disregards costs associated with the voluntary reporting of measures in
the HCBS Quality Measure Set that are not yet mandatory, and voluntary
stratification of measures ahead of the phase-in schedule, discussed
later in this section.
Additionally, we are finalizing a requirement at Sec. 441.312(f)
that the Secretary will require stratification by demographic
characteristics of 25 percent of the measures in the HCBS Quality
Measure Set for which the Secretary has specified that reporting should
be stratified 4 years after the effective date of these regulations, 50
percent of such measures by 6 years after the effective date of these
regulations, and 100 percent of measures by 8 years after the effective
date of these regulations. The burden associated with stratifying data
is considered in the ongoing cost estimate only. We anticipate that
certain costs will decline after the first year of reporting, but that
some of the reduction will be supplanted with costs associated with
stratifying data.
With regard to the one-time requirements at Sec. 441.311(c) for
reporting on the initial mandatory elements of the HCBS Quality Measure
Set, we estimate that will take: 540 hours at $111.18/hr for
administrative services managers to conduct project planning,
administer and oversee survey administration, compile measures,
establish and describe performance targets, describe quality
improvement strategies, and produce a report; 40 hours at $101.46/hr
for a statistician to determine survey sampling methodology; 500 hours
at $63.88/hr for survey researcher(s) to be trained in survey
administration and to administer an in-person survey; 200 hours at
$36.52/hr for a data entry worker to input the data; 60 hours at
$98.84/hr for a computer programmer to synthesize the data; and 5 hours
at $236.96/hr for a chief executive to verify, certify, and approve the
report. In aggregate, we estimate a one-time burden of 64,560 hours (48
States x 1,345 hr) at a cost of $5,301,830 (48 States x [(540 hr x
$111.18/hr) + (40 hr x $101.46/hr) + (500 hr x $63.88/hr) + (200 hr x
$36.52/hr) + (60 hr x $98.84/hr) + (5 hr x $236.96/hr)]) Taking into
account the Federal contribution to Medicaid administration, the
estimated State share of this cost will be $2,650,915 ($5,301,830 x
0.50).
BILLING CODE 4120-01-P

[[Page 40824]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.050

ii. Ongoing HCBS Quality Measure Set Requirements: States (Sec.
441.311(c))
With regard to the ongoing burden of fulfilling requirements at
Sec. 441.311(c), every other year, for reporting on mandatory elements
of the HCBS Quality Measure Set, including data stratification by
demographic characteristics, we estimate it will take: 520 hours at
$111.18/hr for administrative services managers to conduct project
planning, administer and oversee survey administration, compile
measures, update performance targets and quality improvement strategy
description, and produce a report; 80 hours at $101.46/hr for a
statistician to determine survey sampling methodology; 1,250 hours at
$63.88/hr for survey researcher(s) to be trained in survey
administration and to administer an in-person survey; 500 hours at
$36.52/hr for a data entry worker to input the data; 100 hours at
$98.84/hr for a computer programmer to synthesize the data; and 5 hours
at $236.96/hr for a chief executive to verify, certify, and approve a
State data submission to us. In aggregate, we estimate an ongoing
burden of 117,840 hours (48 States x 2,455 hr) at a cost of $8,405,242
(48 States x [(520 hr x $111.18/hr) + (80 hr x $101.46/hr) + (1,250 hr
x $63.88/hr) + (500 hr x $36.52/hr) + (100 hr x $98.84/hr) + (5 hr x
$236.96/hr)]). Given that reporting is every other year, the annual
burden will be 58,920 hours (117,840 hr/2 years) and $4,202,621
($8,405,242/2 years). Taking into account the Federal contribution to
Medicaid administration, the estimated State share of this cost would
be $2,101,310 ($4,202,621 x 0.50).

[[Page 40825]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.051

BILLING CODE 4120-01-C
b. HCBS Quality Measure Set Requirements: Beneficiary Experience Survey
(Sec. 441.311(c))
State adoption of existing beneficiary experience surveys,
contained in the HCBS Quality Measure Set, to fulfill the mandatory
reporting requirements includes a burden on beneficiaries. As finalized
in Sec. 441.312, a State must newly adopt one of the ``experience of
care'' surveys cited in the HCBS Quality Measure Set: The Consumer
Assessment of Healthcare Providers and Systems Home and Community Based
(HCBS CAHPS[supreg]) Survey, National Core Indicators[supreg]
Intellectual and Developmental Disabilities (NCI[supreg] IDD), National
Core Indicators Aging and Disability (NCI AD)^TM, or Personal
Outcome Measures (POM)[supreg].
With regard to beneficiary burden, we estimate it will take 45
minutes (0.75 hr) at $20.71/hr for a Medicaid beneficiary to complete a
survey every other year that will be used to derive one or more of the
measures in the HCBS Quality Measure Set. At 1,000 beneficiaries/State
and 48 States, we estimate an aggregate burden of 36,000 hours (1,000
beneficiary responses/State x 48 States x 0.75 hr/survey) at a cost of
$745,560 (36,000 hr x $20.71/hr). Given that survey is every other
year, the annual burden will be 18,000 hours (36,000 hr/2 years) and
$372,780 ($745,560/2 years).

[[Page 40826]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.052

10. ICRs Regarding Website Transparency (Sec. 441.313; Applied to
Other HCBS Authorities at Sec. Sec. 441.486, 441.595, and 441.750, and
to Managed Care at Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
our survey instrument has been developed. The survey instrument and
burden will be made available to the public for their review under the
standard non-rule PRA process which includes the publication of 60- and
30-day Federal Register notices. In the meantime, we are setting out
our burden figures (see below) as a means of scoring the impact of this
rule's changes. The availability of the survey instrument and more
definitive burden estimates will be announced in both Federal Register
notices. The CMS ID number for that collection of information request
is CMS-10854 (OMB control number 0938-TBD). Since this would be a new
collection of information request, the OMB control number has yet to be
determined (TBD) but will be issued by OMB upon their approval of the
new collection of information request.
We are finalizing a new section, at Sec. 441.313, titled,
``website Transparency, to promote public transparency related to the
administration of Medicaid-covered HCBS under section 1915(c) of the
Act.'' Specifically, at Sec. 441.313(a), we proposed to require States
to operate a website that meets the availability and accessibility
requirements at Sec. 435.905(b) and that provides the data and
information that States are required to report under the newly
finalized reporting section at Sec. 441.311. At Sec. 441.313(a)(1),
we proposed to require that the data and information that States are
required to report under Sec. 441.311 be provided on one website,
either directly or by linking to the web pages of the managed care
organization, prepaid ambulatory health plan, prepaid inpatient health
plan, or primary care case management entity that is authorized to
provide services. At Sec. 441.313(a)(2), we proposed to require that
the web page include clear and easy to understand labels on documents
and links.
At Sec. 441.313(a)(3), we proposed to require that States verify
the accurate function of the website and the timeliness of the
information and links at least quarterly. At Sec. 441.313(c), we
proposed to apply these requirements to services delivered under FFS or
managed care delivery systems. At Sec. 441.313(a)(4), we proposed to
require that States explain that assistance in accessing the required
information on the website is available at no cost and include
information on the availability of oral interpretation in all languages
and written translation available in each prevalent non-English
language, how to request auxiliary aids and services, and a toll-free
and TTY/TDY telephone number. Further, we proposed to apply the
proposed requirements at Sec. 441.313 to sections 1915(j), (k), and
(i) State plan services by finalizing Sec. Sec. 441.486, 441.595, and
441.750, respectively.
We are finalizing the requirements without substantive changes. Our
burden estimates are described below. The burden associated with the
website transparency requirements at Sec. 441.313 will affect the 48
States (including Washington, DC) that deliver HCBS under sections
1915(c), (i), (j), or (k) authorities. We are requiring at Sec.
441.313(c) to apply the website transparency requirements to services
delivered under FFS or managed care delivery systems, and we are
providing States with the option to meet the requirements at Sec.
441.313 by linking to the web pages of the managed care organization,
prepaid ambulatory health plan, prepaid inpatient health plan, or
primary care case management entity that are authorized to provide
services. However, we are not requiring managed care plans to report
the data and information required under Sec. 441.311 on their website.
As such, we estimate that there is no additional burden for managed
care plans associated with the requirements to link to the web pages of
the managed care organization, prepaid ambulatory health plan, prepaid
inpatient health plan, or primary care case management entity that are
authorized to provide services for Sec. 441.313. Further, the burden
associated with the requirements for managed care plans to report the
data and information required under Sec. 441.311 is estimated in the
ICRs Regarding Compliance Reporting (Sec. 441.311(b)).
If a State opts to comply with the requirements at Sec. 441.313 by
linking to the web pages of the managed care organization, prepaid
ambulatory health plan, prepaid inpatient health plan, or primary care
case management entity that are authorized to provide services, the
State will incur a burden. However, such burden will be less than the
burden associated with posting the information required under Sec.
441.311 on their own website. We are unable to estimate the number of
States that may opt to comply with the requirements at Sec. 441.313 by
linking to the web pages of the managed care organization, prepaid
ambulatory health plan, prepaid inpatient health plan, or primary care
case management entity that are authorized to provide services. As a
result, we do not take into account the option in our burden estimate
and conservatively assume that all States subject to the requirements
at Sec. 441.313 by posting the information required under Sec.
441.311 on their own website.
We estimate both a one-time and ongoing burden to implement these
requirements at the State level.

[[Page 40827]]

a. One Time Website Transparency Requirements: States (Sec. 441.313)
The burden associated with the website transparency requirements at
Sec. 441.313 will affect the 48 States (including Washington DC) that
deliver HCBS under sections 1915(c), (i), (j), or (k) authorities. We
estimate both a one-time and ongoing burden to implement these
requirements at the State level. In developing our burden estimate, we
assumed that States will provide the data and information that States
are required to report under newly proposed Sec. 441.311 through an
existing website, rather than develop a new website to meet this
requirement.
With regard to the one-time burden, based on the website
transparency requirements, we estimate it will take: 24 hours at
$111.18/hr for an administrative services manager to determine the
content of the website; 80 hours at $98.84/hr for a computer programmer
or contractor to develop the website; 3 hours at $118.14/hr for a
general and operations manager to review and approve the website; and 2
hours at $236.96/hr for a chief executive to review and approve the
website. In aggregate, we estimate a one-time burden of 5,232 hours (48
States x 109 hr) at a cost of $547,385 (48 States x [(24 hr x $111.18/
hr) + (80 hr x $98.84/hr) + (3 hr x $118.14/hr) + (2 hr x $236.96/
hr)]). Taking into account the Federal contribution to Medicaid
administration, the estimated State share of this cost will be $273,693
($547,385 x 0.50) per year.
[GRAPHIC] [TIFF OMITTED] TR10MY24.053

b. Ongoing Website Transparency Requirements: States (Sec. 441.313)
With regard to the State on-going burden related to the website
transparency requirement, per quarter we estimate it will take: 8 hours
at $111.18/hr for an administrative services manager to provide updated
data and information for posting and to verify the accuracy of the
website; 20 hours at $98.84/hr for a computer programmer or contractor
to update the website; 3 hours at $118.14/hr for a general and
operations manager to review and approve the website; and 2 hours at
$236.96/hr for a chief executive to review and approve the website. In
aggregate, we estimate an ongoing annual burden of 6,336 hours (33 hr x
48 States x 4 quarters) at a cost of $709,359 (48 States x 4 quarters x
[(8 hr x $111.18/hr) + (20 hr x $98.84/hr) + (3 hr x $118.14/hr) + (2
hr x $236.96/hr)]). Taking into account the Federal contribution to
Medicaid administration, the estimated State share of this cost would
be $354,680 ($709,359 x 0.50) per year.

[[Page 40828]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.054

11. ICRs Regarding HCBS Payment Adequacy (Sec. 441.302(k); Applied to
Other HCBS Authorities at Sec. Sec. 441.464(f), 441.570(f),
441.745(a)(1)(vi), and to Managed Care at Sec. 438.72(b))
The following changes will be submitted to OMB for approval after
this final rule is finalized and when our survey instrument has been
developed. The survey instrument will be made available to the public
for their review under the standard non-rule PRA process which includes
the publication of 60- and 30-day Federal Register notices. In the
meantime, we are setting out our burden figures (see below) as a means
of scoring the impact of this rule's changes. The availability of the
survey instrument and more definitive burden estimates will be
announced in both Federal Register notices. The CMS ID number for that
collection of information request is CMS-10854 (OMB control number
0938-TBD). Since this would be a new collection of information request,
the OMB control number has yet to be determined (TBD) but will be
issued by OMB upon their approval of the new collection of information
request.
We proposed, and are finalizing, a new policy at Sec.
441.302(k)(3)(i), which requires that 80 percent of Medicaid payments
for the following services for homemaker services, home health aide
services, and personal care services (as set forth in Sec.
[thinsp]440.180(b)(2) through (4)) be spent on compensation for direct
care workers. We proposed, and are finalizing, definitions for
compensation and direct care workers at Sec. Sec. 441.302(k)(1) and
(2), respectively, which are discussed in greater detail in section
II.B.5. of this final rule. As finalized, States must comply with the
requirements in Sec. 441.302(k) 6 years after this rule is finalized.
As discussed in greater detail in section II.B.5. of this final
rule, we are finalizing this policy with additional modifications which
have an impact on our burden estimates. We are finalizing a policy at
Sec. 441.302(k)(3)(ii) that allows States to apply a different minimum
performance threshold for small providers. We are finalizing a
requirement at Sec. 441.302(k)(4)(i) that allows States to develop
reasonable, objective criteria through a transparent process (which
includes public notice and opportunities for comment from interested
parties) to identify small providers that the State would require to
meet this alternative minimum performance requirement. We are
finalizing a requirement at Sec. 441.302(k)(4)(ii) that the State must
set the percentage for a small provider to meet the minimum performance
level based on reasonable, objective criteria that it develops through
a transparent process that includes public notice and opportunities for
comment from interested parties. The costs associated with establishing
the small provider threshold (including activities related to public
notice and opportunities for comment) have been added to this burden
estimate for States. We do not estimate an impact on managed care plans
associated with the small provider threshold. We estimate a small
impact on providers associated with this requirement; while we believe
providers' activities would remain the same whether they were complying
with the 80 percent threshold or a State-set small provider threshold,
we also assume an additional activity associated with demonstrating
eligibility for the State-set small provider threshold. We note that
while we have not specified a process by which a State would have
providers determine eligibility for a small provider threshold, we are
calculating a burden based on the assumption that States would have
such a process.

[[Page 40829]]

We are also finalizing at Sec. 441.302(k)(5) a flexibility to
allow States to offer certain providers temporary hardship exemptions.
As finalized, this requirement would allow States to develop
reasonable, objective criteria through a transparent process (which
includes public notice and opportunities for comment from interested
parties) to exempt from the minimum performance requirement at
paragraphs (k)(3) of this section a reasonable number of providers
determined by the State to be facing extraordinary circumstances that
prevent their compliance with either the 80 percent threshold
requirement or the State's small provider threshold. The costs
associated with establishing the hardship exemption (including
activities related to public notice and opportunities for comment) have
been added to this burden estimate for States. We do not anticipate a
specific impact on managed care plans as a result of this requirement.
We do not estimate an impact on managed care plans associated with the
hardship exemption. We estimate a small impact on providers associated
with this requirement, as we assume an additional activity associated
with demonstrating eligibility for the State-set hardship exemption. We
note that while we have not specified a process by which a State would
have providers determine eligibility for a hardship exemption, we are
calculating a burden based on the assumption that States would have
such a process.
We are finalizing at Sec. 441.302(k)(6) reporting requirements for
small provider minimum performance levels and hardship exemptions.
Under this requirement, States that establish a small provider minimum
performance level must report to CMS annually the following
information, in the form and manner, and at a time, specified by CMS:
the State's small provider criteria developed in accordance with
paragraph (k)(4)(i) of this section; the State's small provider minimum
performance level; the percentage of providers of services set forth at
Sec. [thinsp]440.180(b)(2) through (4) that qualify for the small
provider minimum performance level; and a plan, subject to CMS review
and approval, for small providers to meet the minimum performance
requirement at paragraph (k)(3)(i) of this section within a reasonable
period of time. States that provide a hardship exemption must report to
CMS annually the following information, in the form and manner, and at
a time, specified by CMS: the State's hardship criteria; the percentage
of providers of services set forth at Sec. [thinsp]440.180(b)(2)
through (4) that qualify for a hardship exemption; and a plan, subject
to CMS review and approval, for reducing the number of providers that
qualify for a hardship exemption within a reasonable period of time. We
also finalized a flexibility at Sec. 441.302(k)(6)(iii) that CMS may
waive the reporting requirements if the State demonstrates it has
applied the small provider minimum performance level or the hardship
exemption to less than 10 percent of the State's providers.
We have added the burden associated with the reporting requirement
finalized at Sec. 441.302(k)(6) to the burden estimate. We do not
expect that all States will need to submit such a report (because some
States will expect most, if not all, of their providers to comply with
the minimum performance threshold); we also expect that over time,
fewer States will need to submit such a report (again, as more States
begin to require that more than 90 percent of their providers comply
with the minimum performance threshold.) However, to avoid
underestimating burden, we have calculated the burden of this
requirement based on the assumption that all 48 States will submit such
a report annually. We do not anticipate an impact on managed care plans
or providers associated with this additional requirement.
We also finalized at Sec. 441.302(k)(7) an exemption for the
Indian Health Service and Tribal health programs subject to 25 U.S.C.
1641, which exempts these providers from the requirements in Sec.
441.302(k). Based on internal data, we believe that about 100 providers
would be eligible for this exclusion as Sec. 441.302(k)(7) requires no
additional action on the part of the State or providers impacted by
this exemption) we did not calculate a change in the burden activities
as a result of this exemption.
We are finalizing the application of these requirements to services
delivered under FFS or managed care delivery systems. Further, we are
finalizing the application of the finalized requirements sections
1915(j), (k), and (i) State plan services by cross-referencing at
Sec. Sec. 441.450(c), 441.540(c), and 441.725(c), respectively.
We are finalizing the requirements at Sec. Sec. 441.302(k) with
the substantive modifications as described above. Burden estimates for
the finalized requirements are below. We note an additional change to
the burden estimates. As presented in the proposed rule at 88 FR 28047,
we had presented the burden estimate of both the HCBS payment adequacy
provision at Sec. 441.302(k) and the payment adequacy reporting
requirement at Sec. 441.311(e) in a single ICR. Since the publication
of the NPRM, upon further consideration we have determined that as
Sec. Sec. 441.302(k) and 441.311(e) represent distinct sets of
requirements, it is more appropriate to present the costs associated
with Sec. 441.311(e) under a separate ICR in this section IV. of the
final rule.
However, while Sec. 441.311(e) represents a distinct set of
requirements from those in Sec. 441.302(k), we also expect that States
will employ certain efficiencies in complying with both Sec. Sec.
441.302(k) and 441.311(e). In particular, we expect that States will
build a single IT infrastructure and use the same processes both for
collecting data for the reporting requirement at Sec. 441.311(e) and
for determining providers' compliance with the 80 percent threshold at
Sec. 441.302(k)(3)(i) or the small provider threshold at Sec.
441.302(k)(3)(ii). The burden associated with States' development of
infrastructure and processes to determine what percentage of HCBS
providers' Medicaid payments for homemaker, home health aide, or
personal care services is spent on direct care worker compensation, as
well as providers' reporting of this information to the State, is
included in the ICR for Sec. 441.311(e) (ICR 5 of this section IV. of
the final rule). We believe representing these costs under only one ICR
avoids duplicative or inflated burden estimates.
The burden estimates below include costs associated specifically
with Sec. 441.302(k), namely: development and application of the small
provider threshold under Sec. 441.302(k)(3)(ii) and (4), development
and application of the hardship exemption under Sec. 441.302(k)(5),
and the reporting on the small provider threshold and hardship
exemption under Sec. 441.302(k)(6).
a. States
The burden associated with the requirements at Sec. 441.302(k)
will affect the 48 States (including Washington DC) that deliver HCBS
under sections 1915(c), (i), (j), or (k) authorities.^{410 411}
We estimate both a one-time and ongoing burden to implement these
requirements at the State level. Specifically, under Sec. Sec.
441.302(k) States will have to: (1) draft new policy regarding the
application of the 80 percent minimum performance level at

[[Page 40830]]

Sec. 441.302(k)(3), the small provider performance level and criteria
described in Sec. 441.302(k)(4), and the hardship exemptions described
in Sec. 441.302(k)(5) (one-time); (2) publish the proposed
requirements for the small provider performance level described in
Sec. 441.302(k)(4) and threshold and the hardship exemption described
in Sec. 441.302(k)(5) through State notice and publication processes
(one-time); (3) update provider manuals and other policy guidance
regarding the performance levels described in Sec. 441.302(k)(3) and
(4) and the hardship exemption described in Sec. 441.302(k)(5) for
each of the services subject to the requirement (one-time); (4) inform
providers of the process for demonstrating eligibility for the small
provider performance level described at Sec. 441.302(k)(4) or the
hardship exemption described at Sec. 441.302(k)(5) through State
notification processes, both initially and annually (one-time and
ongoing); (5) review providers' eligibility for the small provider
performance level described at Sec. 441.302(k)(4) or hardship
exemption described in Sec. 441.302(k)(5) (ongoing); and (6) provide
the report on the small provider performance level and the hardship
exemption required at Sec. 441.302(k)(6) to us on an annual basis
(ongoing).
---------------------------------------------------------------------------

\410\ Arizona, Rhode Island, and Vermont do not have HCBS
programs under any of these authorities.
\411\ For purposes of this burden analysis, we are not taking
into consideration temporary wage increases or bonus payments that
have been or are being made.
---------------------------------------------------------------------------

i. One Time HCBS Payment Adequacy Requirements (Sec. 441.302(k)):
State Burden
With regard to the one-time requirements, we estimate it will take
100 hours at $111.18/hr for an administrative services manager to:
draft policy content; prepare notices and draft rules for publication,
conduct public hearings on the small provider performance level and
hardship exemptions in accordance with Sec. 441.302(k)(4) and (5),
respectively. We estimate it will take 50 hours at $100.64/hr for a
management analyst to: update provider manuals for each of the affected
services (explaining the policies for Sec. 441.302(k) generally, and
the policies and criteria related to the small provider performance
level and hardship exemption described at Sec. 441.302(k)(4) and (5),
respectively; and draft provider agreement and managed care contract
amendments regarding the requirements at Sec. 441.302(k)(3), (4) and
(5). We estimate it will take 8 hours at $98.84/hr for a computer
programmer to build, design, and operationalize internal systems for
identifying providers falling under Sec. 441.302(k)(4) or (5). We
estimate it will take 40 hours at $67.18/hr for a training and
development specialist to: develop and conduct training for providers
specific to the requirements associated with Sec. 441.302(k)(3), (4),
and (5). We estimate it will take 20 hours at $118.14/hr for a general
and operations manager to: review and approve provider agreement
amendment sand managed care contract modifications; and to review and
approve policy guidance for publication. We estimate it will take 10
hours at $236.96/hr for a chief executive to review and approve all
operations associated with these requirements.
In aggregate, we estimate a one-time burden of 10,944 hours (228 hr
x 48 States) at a cost of $1,169,295 (48 States x [(100 hr x $111.18/
hr) + (50 hr x $100.64/hr) + (8 hr x $98.84/hr) + (40 hr x $67.18/hr) +
(20 hr x $118.14/hr) + (10 hr x $236.96/hr)]). Taking into account the
Federal contribution to Medicaid administration, the estimated State
share of this cost would be $584,648 ($1,169,295 x 0.50).
BILLING CODE 4120-01-P

[[Page 40831]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.055

ii. Ongoing HCBS Payment Adequacy Requirements (Sec. 441.302(k)):
State Burden
We also expect that States will have to review, on an ongoing
basis, providers' requests to be considered under the small provider
performance level at Sec. 441.302(k)(4) or the hardship exemption at
Sec. 441.302(k)(5). As noted in the Collection of Information in the
proposed rule at 88 FR 28049, we estimate that 11,555 HCBS providers
provide homemaker, home health aide, or personal care services and thus
are subject to the requirements at Sec. 441.302(k). We estimate that
around 15 percent of these providers will request consideration under
either the

[[Page 40832]]

small provider performance level or hardship exemption; 10 percent is
selected as we expect States will set criteria to apply to 10 percent
or less of providers. Thus, we expect that States (collectively) will
need to review 1,155 requests for flexibilities under Sec.
441.302(k)(4) or (5) on an ongoing, annual basis; we expect that it
will take 0.5 hours at $100.64/hr for a management analyst to review
each request.
With regard to additional ongoing requirements, we estimate it will
take 2 hours at $98.84/hr for a computer programmer to update
providers' status in any system that tracks providers subject to the
small provider performance level and hardship exemptions under Sec.
441.302(k)(4) or (5), respectively, and calculate the percent of
providers subject to 441.302(k)(4) or (5). We also estimate it will
take 2 hours at $118.14/hr by a general and operations manager to
generate the report required at Sec. 441.302(k)(6) for submission to
CMS. We estimate it will take 2 hours at $236.96/hr for a chief
executive to review and approve all operations associated with these
requirements.
In aggregate, we estimate an ongoing burden of 866 hours [(0.5 hr x
1,155 providers) + (6 hr x 48 States)] at a cost of $101,698 [1,155
providers x (0.5 hr x $100.65) + (48 States x [(2 hr x $98.84/hr) + (2
hr x $118.14/hr) + (2 hr x $236.96/hr)]). Taking into account the
Federal contribution to Medicaid administration, the estimated State
share of this cost would be $50,849 ($101,698 x 0.50) per year.
[GRAPHIC] [TIFF OMITTED] TR10MY24.056

BILLING CODE 4120-01-C
b. Service Providers
The burden associated with Sec. 441.302(k) being finalized in this
final rule will affect service providers that provide the services
listed at Sec. 440.180(b)(2) through (4) and (6). We estimate an
ongoing burden on providers to request, on an ongoing basis, either
qualification as a small provider under the small provider criteria (in
accordance with Sec. 441.302(k)(4)) or eligibility for the hardship
exemption (in accordance with Sec. 441.302(k)(5)). (We do also expect
there to be a burden on providers to implement the separate payment
adequacy reporting requirement at Sec. 441.311(e); these costs are
addressed in a separate ICR.)

[[Page 40833]]

As noted above, we expect that annually, we estimate that 1,155
providers will request consideration for eligibility for the small
provider performance level or the hardship exemption under Sec.
441.302(k)(4) or (5), respectively.
With regard to the ongoing requirement, we estimate it would take:
1 hour at $118.14/hr for a general and operations manager to file the
request for the State. In aggregate, we estimate an ongoing burden of
1,155 hours (1,155 providers x 1 hr) at a cost of $136,452 (1,155
providers x (1 hr x $118.14/hr).
[GRAPHIC] [TIFF OMITTED] TR10MY24.057

12. ICRs Regarding Payment Rate Transparency (Sec. 447.203)
The following changes will be submitted to OMB for approval under
control number 0938-1134 (CMS-10391).
This final rule will update documentation requirements in Sec.
447.203. To develop the burden estimates associated with these changes,
we account for the removal of existing information collection
requirements in current Sec. 447.203(b), and the introduction of new
requirements at 447.203(b) and (c). As described later in this section,
we estimate the impact of the revisions to Sec. 447.203 will result in
a net burden reduction. We do not anticipate any additional information
collection burden from the conforming edits finalized in Sec. 447.204,
as the conforming edits merely alter the items submitted as part of an
existing submission requirement, and the burden of producing those
items is reflected in the estimates related to Sec. 447.203, including
instances where we move language from Sec. 447.204 to Sec. 447.203.
a. Removal of Access Monitoring Review Plan: States (Sec.
447.203(b)(1) Through (8))
The burden reduction associated with the removal of Sec.
447.203(b)(1) through (8) consists of the removal of time and effort
necessary to develop and publish AMRPs, perform ongoing monitoring, and
corrective action plans.
Former Sec. 447.203(b)(1) and (2) described the minimum factors
that States must consider when developing an AMRP. Specifically, the
AMRP must include: input from both Medicaid beneficiaries and Medicaid
providers, an analysis of Medicaid payment data, and a description of
the specific measures the State will use to analyze access to care.
Section 447.203(b)(3) required that States include aggregate percentage
comparisons of Medicaid payment rates to other public (including, as
practical, provider payments rates in Medicaid managed care or Medicare
rates) and private health coverage rates within geographic areas of the
State. Section 447.203(b)(4) described the minimum content that must be
included in the monitoring plan. States were required to describe:
measures the State uses to analyze access to care issues, how the
measures relate to the overarching framework, access issues that are
discovered as a result of the review, and the State Medicaid agency's
recommendations on the sufficiency of access to care based on the
review. Section 447.203(b)(5) described the timeframe for States to
develop the AMRP and complete the data review for the following
categories of services: primary care, physician specialist services,
behavioral health, pre- and post-natal obstetric services including
labor and delivery, home health, any services for which the State has
submitted a SPA to reduce or restructure provider payments which
changes could result in diminished access, and additional services as
determined necessary by the State or CMS based on complaints or as
selected by the State. While the initial AMRPs have been completed, the
plan had to be updated at least every 3 years, but no later than
October 1 of the update year. Section 447.203(b)(6)(i) required that
any time a State submits a SPA to reduce provider payment rates or
restructure provider payments in a way that could diminish access, the
State must submit an AMRP associated with the services affected by the
payment rate reduction or payment restructuring that has been completed
within the prior 12 months.
Former Sec. 447.203(b)(6)(ii) required that States have procedures
within the AMRP to monitor continued access after implementation of a
SPA that reduces or restructures payment rates. The monitoring
procedures were required to be in place for a period of at least 3
years following the effective date of the SPA. However, States were
already required to submit information on compliance with section
1902(a)(30)(A) of the Act prior to the 2015 final rule with comment
period. Therefore, removal of Sec. 447.203(b)(6)(ii) results in a
burden reduction.
Finally, we note that this section references the rescission of the
AMRP process contained in Sec. 447.203(b)(1) through (b)(8). However,
the requirements of former paragraph (b)(7) are reflected in new
paragraph (b)(4), and the requirements of former paragraph (b)(8) are
reflected in new paragraph (c)(5). As such, there is not a change in
impact related to the rescission of these specific aspects of the AMRP
process and are not reflected in this section.
In our currently approved information collection request, we
estimated that the requirements to develop and make the AMRPs publicly
available for the specific categories of Medicaid services will affect
each of the 50 State Medicaid programs and the District of Columbia

[[Page 40834]]

(51 total respondents). We will use that estimate here as well,
although we note that the requirements may not be limited to solely
those States, as some territories may not be exempt under waivers;
however, because these figures fluctuate, we are maintaining the
estimate for consistency. As such, for consistency, we will maintain
the estimate of 51 respondents subject to this final rule. We further
note that the one-time cost estimates have already been met for AMRPs,
and the ongoing monitoring requirements are every 3 years. As such, the
estimates in this section for burden reduction are for 17 respondents,
which is one-third of the 51 affected respondents, to provide an annual
estimate of the reduced burden.
We estimated that every 3 years, it would take: 80 hours at $55.54/
hr for a social science research analyst to gather data, 80 hours at
$106.30/hr for a computer and information analyst to analyze the data,
100 hours at $100.64/hr for a management analyst to develop the content
of the AMRP, 40 hours at $80.08/hr for a business operations specialist
to publish the AMRP, and 10 hours at $118.14/hr for a general and
operations manager to review and approve the AMRP. In aggregate, and as
shown in Table 36, we estimate the reduced annual burden of the
rescission of the ongoing AMRP requirements would be minus 5,270 hours
(17 States x 310 hr) and minus $465,729 (17 States x [(80 hr x $55.54/
hr) + (80 hr x $106.30/hr) + (100 hr x $100.64/hr) + (40 hr x $80.08/
hr) + (10 hr x $118.14/hr)]). Taking into account the 50 percent
Federal contribution for administrative expenditures, the rescission
represents a saving to States of minus $232,865 ($465,729 x 0.50).
The currently approved ongoing burden associated with the
requirements under Sec. 447.203(b)(6)(ii) is the time and effort it
takes each of the State Medicaid programs to monitor continued access
following the implementation of a SPA that reduces or restructures
payment rates. In our currently approved information collection
request, we estimated that in each SPA submission cycle, 22 States will
submit SPAs to implement rate changes or restructure provider payments
based on the number of submissions received in FY 2010. Using our
currently approved burden estimates we estimate a reduction of: 40
hours at $100.64/hr for a management analyst to develop the monitoring
procedures, 24 hours at $100.64/hr for a management analyst to
periodically review the monitoring results, and 3 hours at $118.14/hr
for a general and operations manager to review and approve the
monitoring procedures. In aggregate, we estimate burden reduction of
minus 1,474 hours (22 responses x 67 hr) and minus $149,498 (22 States
x [(40 hr x $100.64/hr) + (24 hr x $100.64/hr) + (3 hr x $118.14/hr)]).
Accounting for the 50 percent Federal administrative match, the total
State cost reduction is adjusted to minus $74,749 ($149,498 x 0.50).
[GRAPHIC] [TIFF OMITTED] TR10MY24.058

b. Payment Rate Transparency (Sec. 447.203(b)(1) Through (5))
We proposed to replace the AMRP requirements with new payment rate
transparency and analysis requirements at Sec. 447.203(b)(1) through
(5), which we are finalizing as proposed apart from minor technical
adjustments. The burden associated with these requirements consists of
the time and effort to develop and publish a Medicaid FFS provider
payment rate information and analysis.
Section 447.203(b)(1) specifies that all FFS Medicaid payments must
be published on a publicly accessible website that is maintained by the
State. Section 447.203(b)(2) specifies the service types that are
subject to the proposed payment analysis, which include: primary care
services; obstetrical and gynecological services; outpatient mental
health and substance use disorder services; and certain HCBS. Section
447.203(b)(3) describes the required components of the payment analysis
to include, for services in Sec. 447.203(b)(2)(i) through (iii), a
percentage comparison of Medicaid payment rates to the most recently
published Medicare payment rates effective for the time period for each
of the service categories specified in paragraph (b)(2). We also
specify that the payment analysis must include percentage comparisons
made on the basis of Medicaid base payments. For HCBS described in
Sec. 447.203(b)(2)(iv), we require a State-based comparison of average
hourly payment rates. Section 447.203(b)(4) details the payment
analysis timeframe, with the first payment analysis required to be
published by the State agency by July 1, 2026, which is a change from
our proposed date of January 1, 2026, and updated every 2 years by July
1. Section 447.203(b)(5) describes our mechanism

[[Page 40835]]

for ensuring compliance and that we may take compliance action against
a State that fails to meet the requirements of the payment rate
transparency, comparative payment rate analysis, and payment rate
disclosure provisions in preceding paragraphs in Sec. 447.203(b),
including a deferral or disallowance of certain of the State's
administrative expenditures following the procedures described at part
430, subpart C.
We estimate that the requirements to complete and make publicly
available all FFS Medicaid payments and the comparative payment rate
analysis and payment rate disclosures under Sec. 447.203(b)(1) through
(5) for the specific categories of Medicaid services will affect 51
total respondents, based on the estimate in the prior section regarding
the variation in States and territories subject to these requirements.
We require applicable States and territories to publish all FFS
Medicaid payments initially by July 1, 2026, while future updates to
the payment rate transparency information would depend on when a State
submits a SPA updating provider payments and we have approved that SPA.
As such, we assume 51 one-time respondents for the initial rates
publication. Because the comparative payment rate analysis and payment
rate disclosure requirement is biennial, we assume 26 annual
respondents in any given year, and we will assume this figure would
account for the updates made following a rate reduction SPA or rate
restructuring SPA approval. The comparative payment rate analysis will
be similar to the prior requirement at Sec. 447.203(b)(3) that
required AMRPs to include a comparative payment rate analysis against
public or private payers. The inclusion of levels of provider payment
available from other payers is also one of five required components of
the AMRP as specified by current Sec. 447.203(b)(1). To estimate the
burden associated with our comparative payment rate analysis and
payment rate disclosure provisions, we assume this work will require
approximately 25 percent of the ongoing labor hour burden that we
previously estimated to be required by the entire AMRP, to account for
the service categories subject to the comparative payment rate analysis
and payment rate disclosure in Sec. 447.203(b)(2) as decreased from
the full body of AMRP service requirements. We invited comment on these
estimated proportions. We are finalizing this requirement to include
reporting on an additional service (habilitation services, as defined
at Sec. 440.180(b)(6)) in the payment rate disclosure. Below, we
include in our burden calculations the minimal increased anticipated
burden associated with the addition of reporting on habilitation
services.
With regard to the developing and publishing the payment rate
transparency data under Sec. 447.203(b)(1), we estimate a low one-time
and ongoing burden due to the data being available, and the main work
required to meet the proposed requirement would be formatting and web
publication. As such, we estimate it will initially take: 5 hours at
$55.54/hr for a research assistant to gather the data, 5 hours at
$80.08/hr for a business operations specialist to publish, and 1 hour
at $118.14/hr for a general and operations manager to review and
approve the rate transparency data. In aggregate, we estimate a one-
time burden of 561 hours (51 responses x 11 hr) at a cost of $40,608
(51 responses x [(5 hr x $55.54/hr) + (5 hr x $80.08/hr) + (1 hr x
$118.14/hr)]). Taking into account the Federal administrative match of
50 percent, the requirement will cost States $20,304 ($40,608 x 0.50).
For the ongoing cost to update assumed to take place every 2 years
(although we proposed that updates would only be required as necessary
to keep the data current, with any update made no later than 1 month
following the date of CMS approval of the SPA or similar amendment
providing for the change), we estimate an annualized impact on 26
respondents (51 respondents every 2 years) of: 2 hours at $55.54/hr for
a research assistant to update the data, 1 hour at $80.08/hr for a
business operations specialist to publish the updates, and 1 hour at
$118.14/hr for a general and operations manager to review and approve
the rate transparency update. In aggregate, we estimate an annualized
burden of 104 hours (26 responses x 4 hr) at a cost of $8,042 (26
responses x [(2 hr x $55.54/hr) + (1 hr x $80.08/hr) + (1 hr x $118.14/
hr)]). Taking into account the Federal administrative match of 50
percent, the requirement will cost States $4,021 ($8,042 x 0.50).
With regard to developing and publishing the comparative payment
rate analysis and payment rate disclosure at Sec. 447.203(b)(2), we
estimate it will take: 22 hours at $55.54/hr for a research assistant
to gather the data, 22 hours at $106.30/hr for an information analyst
to analyze the data, 25 hours at $100.64/hr for a management analyst to
design the comparative payment rate analysis, 11 hours at $80.08/hr for
a business operations specialist to publish the comparative payment
rate analysis and payment rate disclosure, and 3 hours at $118.14/hr
for a general and operations manager to review and approve the
comparative payment rate analysis and payment rate disclosure. In
aggregate, we estimate an annualized burden, based on 51 respondents
every 2 years, of 2,054 (26 responses x 79 hr) at a cost of $190,107
(26 States x [(22 hr x $55.54/hr) + (22 hr x $106.30/hr) + (25 hr x
$100.64/hr) + (11 hr x $80.08/hr) + (3 hr x $118.14/hr)]). We then
adjust the total cost to $95,053 ($190,107 x 0.50) to account for the
50 percent Federal administrative match. We have summarized the total
burdens in Table 37.

[[Page 40836]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.059

c. Medicaid Payment Rate Interested Parties' Advisory Group (Sec.
447.203(b)(6))
The burden associated with the recordkeeping requirements at Sec.
447.203(b)(6), specifically the online publication associated with the
reporting and recommendations of the interested parties advisory group,
will consist of the time and effort for all 50 States and the District
of Columbia to:
Appoint members to the interested parties' advisory group.
Provide the group members with materials necessary to:
++ Review current and proposed rates.
++ Hold meetings.
++ Provide a written recommendation to the State.
Publish the group's recommendations to a website
maintained by the single State agency.
The requirements will require varying levels of efforts for States
depending on the existence of groups that may fulfil the requirements
of this group. However, because it is unknown how many States will be
able to leverage existing practices, and to what extent, this estimate
does not account for those differences. We are finalizing the
requirements at Sec. 447.203(b)(6) with a modification to add
habilitation services as defined at Sec. 440.180(b)(6), in addition to
the previously identified services, to the group's purview. However,
this addition is not expected to create any additional burden. We
estimate that it will take 40 hours at $140.14/hr for a human resources
manager to recruit interested parties and provide the necessary
materials for the group to meet. In aggregate, we estimate a one-time
burden of 2,040 hours (51 responses x 40 hr) at a cost of $285,886
(2,040 hr x $140.14/hr). Taking into account the 50 percent
administrative match, the total one-time State cost is estimated to be
$142,943 ($285,886 x 0.50).
We believe the ongoing work to maintain the needs of this group
will take a human resources manager 5 hours at $140.14/hr annually.
Additionally, we estimate it will take 4 hours for the biennial
requirement, or 2 hours annually at $118.14/hr for an operations
manager to review and prepare the recommendation for publication. In
aggregate, we estimate an ongoing annualized burden of 182 hours (26
responses x 7 hr) at a cost of $24,361 (26 Respondents x [(5 hr x
$140.14/hr) + (2 hr x $118.14/hr)]). Accounting for the 50 percent
Federal administrative match, the total State cost is adjusted to
$12,181 ($24,361 x 0.50). We have summarized the total burden in Table
38.
[GRAPHIC] [TIFF OMITTED] TR10MY24.060

[[Page 40837]]

d. State Analysis Procedures for Payment Rate Reductions or Payment
Restructuring (Sec. 447.203(c))
The State analysis procedures for payment rate reductions and
payment restructurings at Sec. 447.203(c)(1) through (3) within this
final rule effectively will replace payment rate reduction or payment
restructuring procedures in current Sec. 447.203(b)(6). As noted, the
burden reduction associated with the removal of Sec. 447.203(b)(6)(i)
has already been accounted for in the recurring burden reduction
estimate shown in Table 36 for the removal of the AMRP requirements,
and the burden reduction associated with the removal of monitoring
requirements at current Sec. 447.203(b)(6)(ii) has been accounted for
in Table 36 as well. Our replacement procedures at Sec. 447.203(c)(1)
through (3) will introduce new requirements as follows.
i. Initial State Analysis for Rate Reduction or Restructuring (Sec.
447.203(c)(1))
Section 447.203(c)(1) will require that for States proposing to
reduce or restructure provider payment rates, the State must document
that their program and proposal meet all of the following requirements:
(1) Medicaid rates in the aggregate for the service category following
the proposed reduction(s) or restructurings are at or above 80 percent
of most recent Medicare prices or rates for the same or a comparable
set of services; (2) Proposed reductions or restructurings result in no
more than a 4 percent reduction of overall spending for each service
category affected by a proposed reduction or restructuring in a single
State fiscal year; and (3) Public process yields no significant access
concerns or the State can reasonably respond to concerns.
Section 447.203(c)(1) will apply to all States that submit a SPA
that proposes to reduce or restructure provider payment rates. We
limited our estimates for new information collection burden to the
requirements at Sec. 447.203(c)(1)(i) through (ii). Our estimates
assume States will build off the comparative analysis required by Sec.
447.203(b)(2) through (4) to complete the requirements by Sec.
447.203(c)(1)(i), which will limit the additional information
collection burden. We also assume no additional information collection
burden posed by the public review process required by Sec.
447.203(c)(1)(iii), as this burden is encapsulated by current public
process requirements at Sec. 447.204.
The requirements of Sec. 447.203(c) apply to all 50 States and the
District of Columbia, as well as US territories. We will again use the
estimate of 51 utilized in preceding sections, although we note some
territories may be subject to these requirements if not exempt under
waivers, and these figures fluctuate. As such, for consistency, we will
maintain the estimate of 51 respondents subject to this rule. While we
cannot predict how many States will submit a rate reduction SPA or rate
restructuring SPA in a given year, the figures from 2019 provide the
best recent estimate, as the years during the COVID pandemic do not
reflect typical behavior. In 2019, we approved rate reduction and rate
restructuring SPAs from 17 unique State respondents. Therefore, to
estimate the annualized number of respondents subject to this
information collection burden, we will utilize a count of 17
respondents.
With regard to the burden associated with completing the required
State analysis for rate reductions or restructurings at Sec.
447.203(c)(1), we estimate that it will take: 20 hours at $100.64/hr
for a management analyst to structure the rate reduction or
restructuring analysis, 25 hours at $106.30/hr for an information
analyst to complete the rate reduction or restructuring analysis, and 3
hours at $118.14/hr for a general and operations manager to review and
approve the rate reduction or restructuring analysis. In aggregate, we
estimate a burden of 816 hours (17 States x 48 hr) at a cost of $85,420
(17 States x [(20 hr x $100.64/hr) + (25 hr x $106.30/hr) + (3 hr x
$118.14/hr)]). Accounting for the 50 percent Federal administrative
reimbursement, this adjusts to a total State cost of $42,710 ($85,420 x
0.50).
[GRAPHIC] [TIFF OMITTED] TR10MY24.061

We solicited public comment on these estimates as well as relevant
State data to further refine the burden and time estimates. We did not
receive public comments on this issue, and therefore, we are finalizing
as proposed.
ii. Additional State Rate Analysis (Sec. 447.203(c)(2))
Section 447.203(c)(2) describes requirements for payment proposals
that do not meet the requirements in paragraph (c)(1), requiring the
State to provide the nature of the change and policy purpose, the rates
compared to Medicare and/or other payers pre- and post-reduction or
restructuring, counts/trends of actively participating providers by
geographic areas, counts of FFS Medicaid beneficiaries residing in
geographic areas/characteristics of the beneficiary population, service
utilization trends, access to care complaints from beneficiaries,
providers, and other interested parties, and the State's response to
access to care complaints.
The information collection requirements at Sec. 447.203(c)(2)
applies to those States that submit rate reduction or restructuring
SPAs that do not meet one or more of the criteria proposed by Sec.
447.203(c)(1). Using 2019 rate reduction and restructuring SPA figures,
we estimate that 17 States will submit rate reduction or restructuring
SPAs per year. Then, a 2019 Urban Institute analysis \412\ indicates
that 22 States (or 43 percent) have rates that meet the 80 percent fee
ratio threshold proposed in Sec. 447.203(c)(1)(i) across all services.
Although our proposal did not

[[Page 40838]]

include all services, using this all services amount is our best method
to estimate how many States may fall below on any given service without
knowing which. Because we cannot predict the amount a State may propose
to reduce, once or cumulatively for the SFY, and because failure of any
one criterion in Sec. 447.203(c)(1) will require additional analysis
under Sec. 447.203(c)(2), we will use that percentage to assess how
many States will need to perform additional analysis. Using this
percentage, we estimate that 7 (43 percent x 17) of the estimated 17
unique State respondents may submit rate reduction or restructuring
SPAs meet the criteria for the streamlined analysis process under
proposed Sec. 447.203(c)(1). Therefore, we assume that 10 out of 17
unique annual State respondents who submit rate reduction or
restructuring SPAs will also need to perform the additional analysis
Sec. 447.203(c)(2).
---------------------------------------------------------------------------

\412\ Zuckerman, S. et al. ``Medicaid Physician Fees Remained
Substantially Below Fees Paid By Medicare in 2019.'', Health
Affairs, Volume 40, Number 2, February 2021, p. 343-348, https://www.healthaffairs.org/doi/10.1377/hlthaff.2020.00611, accessed
August 31, 2022.
---------------------------------------------------------------------------

The required components of the review and analysis in Sec.
447.203(c)(2) are similar to the AMRP requirements found at current
Sec. 447.203(b)(1). However, due to the availability of a template for
States to facilitate completion of the required analysis, as well as
the lack of a requirement to publish the analysis, we anticipate a
moderately reduced burden associated with Sec. 447.203(c)(2) when
compared to the burden estimated for the AMRPs.
With regard to our requirements, we estimate that it would take: 64
hours at $55.54/hr for a social science research assistant to gather
data, 64 hours at $106.30/hr for a computer and information analyst to
analyze data, 80 hours at $100.64/hr for a management analyst to
structure the analyses and organize output, and 8 hours at $118.14/hr
for a general and operations manager to review and approve the rate
reduction or restructuring analysis. In aggregate, we estimate a burden
of 2,160 hours (10 States x 216 hr) at a cost of $193,541 (10 States x
[(64 hr x $55.54/hr) + (64 hr x $106.30/hr) + (80 hr x $100.64/hr) + (8
hr x $118.14/hr)]). The total cost is adjusted down to $96,771
($193,541 x 0.50) for States after accounting for the 50 percent
Federal administrative match. We solicited public comment on these
estimates as well as relevant State data to further refine the burden
and time estimates. We did not receive public comments on this issue,
and therefore, we are finalizing as proposed.
We do not assume any additional information collection imposed by
the compliance procedures at Sec. 447.203(c)(3).
Table 40 shows our estimated combined annualized burden for Sec.
447.203(c), which includes 17 States for Sec. 447.203(c)(1) and 10
States for Sec. 447.203(c)(2). In total, we estimate an annualized
burden of 2,976 (816 hours + 2,160 hours) hours at a cost of $278,961
($85,420 + $193,541). This cost to States is then adjusted to $139,481
after the 50 percent Federal administrative reimbursement is applied.
BILLING CODE 4120-01-P
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[[Page 40839]]

D. Burden Summary
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[GRAPHIC] [TIFF OMITTED] TR10MY24.066

BILLING CODE 4120-01-C

IV. Regulatory Impact Analysis

A. Statement of Need

1. Medicaid Advisory Committee
The changes to Sec. 431.12 are intended to provide beneficiaries a
greater voice in State Medicaid programs. In making policy and program
decisions, it is vital for States to include the perspective and
experience of those served by the Medicaid program. States are
currently required to operate a MCAC, made up of health professionals,
consumers, and State representatives to ``advise the Medicaid agency
about health and medical care services.'' This rule establishes new
requirements for a MAC in place of the MCAC, with additional membership
requirements to include a broader group of interested parties, to
advise the State Medicaid agency on matters related to the effective
administration of the Medicaid program. We seek to expand the
viewpoints represented on the MAC, to provider States with richer
feedback on Medicaid program and policy issues. States are already
required to set up and use MCACs. The changes will result in the State
also setting up a smaller group, the BAC, which will likely have a cost
implication. The additional cost will depend on whether or not States
already have a beneficiary committee--we know that many States already
do. This smaller group which feeds into the larger MAC will benefit the
Medicaid program by creating a forum for beneficiaries to weigh in on
key topics and share their unique views as Medicaid program
participants. The new provisions of Sec. 431.12 also enhance
transparency and accountability through public reporting requirements
related to the operation and activities of the MAC and BAC, and
guidelines for operation of both bodies.
2. Home and Community-Based Services (HCBS)
The proposed changes at part 441, subpart G, seek to amend and add
new Federal requirements, which are intended to improve access to care,
quality of care, and health outcomes, and strengthen necessary
safeguards that are in place to ensure health and welfare, and promote
health equity for people receiving Medicaid-covered HCBS. The
provisions in this final rule are intended to achieve a more consistent
and coordinated approach to the administration of policies and
procedures across Medicaid HCBS programs in accordance with section
2402(a) of the Affordable Care Act, and is made applicable to part 441,
subparts J, K, and M, as well as part 438 to achieve these goals.
Specifically, the proposed rule seeks to: strengthen person-
centered services planning and incident management systems in HCBS;
require minimum percentages of Medicaid payments for certain HCBS to be
spent on compensation for the direct care workforce; require States to
establish grievance systems in FFS HCBS programs; report on waiver
waiting lists in section 1915(c) waiver programs, service delivery
timeframes for certain HCBS, and a standardized set of HCBS quality
measures; and promote public transparency related to the administration
of Medicaid-covered HCBS through public reporting on measures related
to incident management systems, critical incidents, person-centered
planning, quality, access, and payment adequacy.
In 2014, we released guidance \413\ for section 1915(c) waiver
programs, which described a process in which States were to report on
State-developed performance measures to demonstrate that they meet the
six assurances that are required for section 1915(c) waiver programs.
Those six assurances include the following:
---------------------------------------------------------------------------

\413\ https://www.hhs.gov/guidance/sites/default/files/hhs-guidance-documents/3-cmcs-quality-memo-narrative_0_71.pdf.
---------------------------------------------------------------------------

1. Level of Care: The State demonstrates that it implements the
processes and instrument(s) specified in its approved waiver for
evaluating/reevaluating an applicant's/waiver participant's level of
care consistent with care provided in a hospital, nursing facility, or
Intermediate Care Facilities for Individuals with Intellectual
Disabilities.
2. Service Plan: The State demonstrates it has designed and
implemented an effective system for reviewing the adequacy of service
plans for waiver participants.
3. Qualified Providers: The State demonstrates that it has designed
and implemented an adequate system for assuring that all waiver
services are provided by qualified providers.
4. Health and Welfare: The State demonstrates it has designed and
implemented an effective system for assuring waiver participant health
and welfare.

[[Page 40843]]

5. Financial Accountability: The State demonstrates that it has
designed and implemented an adequate system for insuring financial
accountability of the waiver program.
6. Administrative Authority: The Medicaid Agency retains ultimate
administrative authority and responsibility for the operation of the
waiver program by exercising oversight of the performance of waiver
functions by other State and local/regional non-State agencies (if
appropriate) and contracted entities.
Despite these assurances, there is evidence that State HCBS systems
still need to be strengthened and that there are gaps in existing
reporting requirements. We believe that this final rule is necessary to
address these concerns and strengthen HCBS systems. The requirements in
this final rule are intended to supersede and fully replace reporting
and performance expectations described in the 2014 guidance for section
1915(c) waiver programs. They are also intended to promote consistency
and alignment across HCBS programs, as well as delivery systems, by
applying the requirements (where applicable) to sections 1915(i), (j),
and (k) authorities State plan benefits and to both FFS and managed
care delivery systems.
3. Fee-for-Service (FFS)
Provisions under Sec. 447.203 from this final rule will impact
States' required documentation of compliance with section
1902(a)(30)(A) of the Act to ``assure that payments are . . .
sufficient to enlist enough providers so that care and services are
available under the plan at least to the extent that such care and
services are available to the general population in the geographic
area.'' We have received comments from State agencies that the existing
AMRP requirement first established by the 2015 final rule with comment
period imposes excessive administrative burden for its corresponding
value in demonstrating compliance with section 1902(a)(30)(A) of the
Act.
This final rule will replace the existing AMRP requirement with a
more limited payment rate transparency requirement under proposed Sec.
447.203(b), while requiring a more detailed access impact analysis (as
described at proposed Sec. 447.203(c)(2)) when a State proposes
provider rate reductions or restructurings that exceed certain
thresholds for a streamlined analysis process under proposed Sec.
447.203(c)(1). By limiting the data collection and publication
requirements imposed on all States, while targeting certain provider
rate reductions or restructuring proposals for a more detailed
analysis, this final rule will provide administrative burden relief to
States while maintaining a transparent and data-driven process to
assure State compliance with section 1902(a)(30)(A) of the Act.

B. Overall Impact

We have examined the impacts of this rule as required by E.O. 12866
on Regulatory Planning and Review (September 30, 1993), E.O. 13563 on
Improving Regulation and Regulatory Review (January 18, 2011), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform
Act of 1995 (March 22, 1995; Pub. L. 104-4), E.O. 13132 on Federalism
(August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Pursuant to Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996 (also known as the Congressional Review Act, 5
U.S.C. 801 et seq.), OMB's Office of Information and Regulatory Affairs
has determined that this final rule does meet the criteria set forth in
5 U.S.C. 804(2).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Section
3(f) of Executive Order 12866 as amended by Executive Order 14094
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, or adversely and materially affecting a
sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local 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) raising legal or policy issues for which
centralized review would meaningfully further the President's
priorities, or the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for rules that
meet section 3(f)(1) of the Executive Order. This final rule does meet
that criterion as the aggregate amount of benefits and costs may meet
the $200 million threshold in at least 1 year.
Based on our estimates using a ``no action'' baseline in accordance
with OMB Circular A-4, (available at https://www.whitehouse.gov/wpcontent/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), OMB's
Office of Information and Regulatory Affairs has determined that this
rulemaking is significant or otherwise meets section 3(f)(1).
Therefore, OMB has reviewed these proposed regulations, and the
Departments have provided the following assessment of their impact.

C. Detailed Economic Analysis

As mentioned in the prior section, and in accordance with OMB
Circular A-4, the following estimates were determined using a ``no
action'' baseline. That is, our analytical baseline for impact is a
direct comparison between the provisions and not proposing them at all.
1. Benefits
a. Medicaid Advisory Committees (MAC)
We believe the changes to Sec. 431.12 will benefit State Medicaid
programs and those they serve by ensuring that beneficiaries have a
significant role in advising States on the experience of receiving
health care and services through Medicaid. These benefits cannot be
quantified. However, the BAC and a more diverse and transparent MAC
will provide opportunities for richer interested parties feedback and
expertise to positively impact State decision making on Medicaid
program and policy chances. For example, beneficiary feedback on
accessing health care services and the quality of those services can
inform decisions on provider networks and networks adequacy
requirements. Issues that States need to address, like cultural
competency of providers, language accessibility, health equity, and
disparities and biases in the Medicaid program, can be revealed through
beneficiary experiences. The MAC falls into the Public Administration
921 Executive, Legislative, and Other General Government Support.
b. Person-Centered Service Plans, Grievance Systems, Incident
Management Systems
The changes benefit Medicaid beneficiaries and States by requiring
States to demonstrate through reporting requirements that they provide
safeguards to assure eligibility for Medicaid-covered care and services
is determined and provided in a manner that is in the Medicaid
beneficiaries'

[[Page 40844]]

best interest, although these potential benefits cannot be monetarily
quantified at this time. The changes will provide further safeguards
that ensure health and welfare by strengthening the person-centered
service plan requirements, establishing grievance systems, amending
requirements for incident management systems, and establishing new
reporting requirements for States, and contracted managed care plans
identified by the North American Industry Classification System (NAICS)
industry code (Direct Health and Medical Insurance Carriers (524114).
These changes will benefit individuals on HCBS waiver wait lists,
and individuals who receive homemaker, home health aide, personal care,
and habilitation services under the finalized regulations found at
Sec. Sec. 441.301(c), 441.302(a)(6), 441.302(h), 441.303(f), 441.311,
441.725, and amended regulations in Sec. Sec. 441.464, 441.474,
441.540, 441.555, 441.570, 441.580, and 441.745. These benefits cannot
be monetarily quantified at this time.
c. Home and Community-Based Services (HCBS) Payment Adequacy and
Payment Adequacy Reporting
This final rule adds a new reporting requirement at Sec.
441.311(e) (and amends Sec. Sec. 441.474(c), 441.580(i), and
441.745(a)(1)(vii)) to require States to demonstrate through reporting
what percent of payments to providers of certain HCBS (homemaker, home
health aide, personal care, and habilitation services) are spent on
compensation to direct care workers. The goal of this requirement is to
promote transparency and to assure that payments are consistent with
efficiency, economy, and quality of care, in accordance with section
1902(a)(30)(A) of the Act. This final rule seeks to address access to
care that is being affected by direct care workforce shortages. States
will be required to report annually and will be required to separately
report on payments for services that are self-directed and services
that include facility costs. benefit from reporting in the aggregate
for each service subject to the requirement across HCBS programs and
delivery systems, which minimizes administrative burden while providing
us better oversight of compensation of the direct care workforce. These
potential benefits cannot be monetarily quantified at this time due to
the variety of State data collection approaches.
Additionally, through this final rule, we are finalizing Sec.
441.302(k), which establishes certain minimum thresholds for the
percent of Medicaid payments for certain HCBS must be spent on
compensation for direct care workers. We believe this requirement will
help to ensure that payments to workers are sufficient to provide
access to care that is at least comparable to that of the general
population in the same geographic location, in accordance with section
1902(a)(30)(A) of the Act. We are also finalizing a number of
flexibilities to allow States to address needs of specific providers,
such as providers that are small or rural, or are experiencing
particular hardship that would temporarily prevent the provider for
adhering to the minimum payment level. Through this requirement, we can
better ensure payment adequacy to a provider population experiencing
worker shortages that impact beneficiary access. While we believe this
requirement will promote increases in direct care worker compensation
in some regions, these potential benefits cannot be monetarily
quantified at this time due to the variety of State data collection
approaches.
d. Home and Community-Based Services (HCBS) Quality Measure Set
Reporting
As described in section II.B.8. of this final rule, on July 21,
2022, we issued State Medicaid Director Letter (SMDL) #22-003 \414\ to
release the first official version of the HCBS Quality Measure Set.
This final rule provides definitions and sets forth requirements at
Sec. 441.312 that expand on the HCBS Quality Measure Set described in
the SMDL. By expanding and codifying aspects of the SMDL, we can better
drive improvement in quality of care and health outcomes for
beneficiaries receiving HCBS. States will also benefit from the clarity
afforded by this final rule, and from the assurance that other States
they may be looking to for comparison are adhering to the same
requirements. The clarity and assurance, at this time, cannot be
measured.
---------------------------------------------------------------------------

\414\ https://www.medicaid.gov/federal-policy-guidance/downloads/smd22003.pdf.
---------------------------------------------------------------------------

e. Fee-for-Service (FFS) Payment Transparency
The changes to Sec. 447.203 will update requirements placed on
States to document access to care and service payment rates. The
updates create a systematic framework through which we can assess
compliance with section 1902(a)(30)(A) of the Act, while reducing
existing burden on States and maximizing the value of their efforts, as
described in section III.C.11.a. of this rule.
The payment rate transparency provisions at Sec. 447.203(b) create
a process that will facilitate transparent oversight by us and other
interested parties. By requiring States to calculate Medicaid payment
rates as a percent of corresponding Medicare payment rates, this
provision offers a uniform benchmark through which CMS and interested
parties can assess payment rate sufficiency. When compared to the
existing AMRP requirement, the rate analysis proposed by Sec.
447.203(b) should improve the utility of the reporting, while reducing
the associated administrative burden, as reflected in the Burden
Estimate Summary Table 38. Updates at Sec. 447.203(c) specify required
documentation and analysis when States propose to reduce or restructure
provider payment rates. By establishing thresholds at Sec.
447.203(c)(1), this final rule will generally limit the more extensive
access review prescribed by Sec. 447.203(c)(2) to those SPAs that we
believe more likely to cause access concerns. In doing so, these
proposed updates reduce the State administrative burden imposed by
existing documentation requirements for proposed rate reductions or
restructurings, without impeding our ability to ensure proposed rate
reduction and restructuring SPAs comply with section 1902(a)(30)(A) of
the Act. These burden reductions are reflected in the Collection of
Information section of this rule.
When considering the benefits of these regulatory updates, we
considered the possibility that the improved transparency required by
Sec. 447.203(b) could create upward pressure on provider payment
rates, and that the tiered nature of documentation requirements set by
Sec. 447.203(c) could create an incentive for States to moderate
proposed payment reductions or restructurings that were near the
proposed thresholds that would trigger additional analysis and
documentation requirements. If either of these rate impacts were to
occur, existing literature implies there could be follow-on benefits to
Medicaid beneficiaries, including but not limited to increased
physician acceptance rates,\415\ increased appointment
availability,\416\ and even improved self-reported health.\417\
However, nothing in this final rule will require States to directly
adjust payment

[[Page 40845]]

rates, and we recognize that multiple factors influence State rate-
setting proposals, including State budgetary pressures, legislative
priorities, and other forces. These competing influences create
substantial uncertainty about the specific impact of the provisions at
Sec. 447.203 on provider payment rate-setting and beneficiary access.
Rather, the specific intent and anticipated outcome of these provisions
is the creation of a more uniform, transparent, and less burdensome
process through which States can conduct required payment rate and
access analyses and we can perform our oversight role related to
provider payment rate sufficiency.
---------------------------------------------------------------------------

\415\ Holgash, K. and Martha Heberlein, Health Affairs, April
10, 2019.
\416\ Candon, M., et al. JAMA Internal Medicine, January 2018,
p. 145-146.
\417\ Alexander, D., and Molly Schnell. ``The Impacts of
Physician Payments on Patient Access, Use, and Health'', National
Bureau of Economic Research, Working Paper 26095, July 2019 (revised
August 2020), p. 1-74. https://www.nber.org/papers/w26095. Accessed
June 16, 2022.
---------------------------------------------------------------------------

2. Costs
a. Medicaid Advisory Committee (MAC)
In addition to the costs reflected in section III.C.1 of this final
rule, States will incur additional ongoing costs (estimated below in
Table 42) in appointing and recruiting members to the MAC and BAC and,
also developing and publishing bylaws, membership lists, and meeting
minutes for the MAC and BAC. All of these costs can be categorized
under the NAICS Code 921 (Executive, Legislative, and Other General
Government Support) since States are the only entity accounted for in
the MAC and BAC. How often these costs occur will also vary in how
often the State chooses to make changes such as add or replace members
of the MAC and BAC or change its bylaws. Additionally, there will be
new, ongoing costs, estimated below, for States related to meeting
logistics and administration for the BAC. All of these new costs can
also be categorized under the NAICS Code 921 (Executive, Legislative,
and Other General Government Support). To derive average costs, as in
the previous section of this final rule, we used data from the U.S.
Bureau of Labor Statistics' (BLS') May 2022 National Occupational
Employment and Wage Estimates for all salary estimates (http://www.bls.gov/oes/2022/may/oes_nat.htm). Costs include our estimated cost
of fringe benefits and other indirect costs, calculated at 100 percent
of salary, in our adjusted hourly wage.
Since most States are already holding MAC meetings under current
regulatory requirements, any new costs related to MAC requirements
would likely be minimal. In terms of the MAC and BAC meeting costs, we
estimate a total cost for 5 years of $3.414 million or $682,821
annually for States. We estimate it will take a business operations
specialist 10 hours to plan and execute each BAC meeting, at a total
cost of $162,180 ($79.50/hour x 10 hours x 4 meetings/year) x 51 States
and the District of Columbia). To satisfy the requirements of Sec.
431.12(h)(3)(i), a public relations specialist will spend an estimated
80 hours/year supporting Medicaid beneficiary MAC and BAC members at a
total cost of $308,122 ($75.50/hour x 80 hours) x 51 States and the
District of Columbia). A chief executive in State government, as
required by Sec. 431.12(h)(3)(iii) will spend a total of 8 hours a
year attending BAC meetings, which we estimate will be 2 hours in
duration, 4 times a year at a total cost of $ 49,319 ($120.88/hour x 2
hours/meeting x 4 meetings) x 51 States and the District of Columbia).
Each meeting of the BAC will cost States an estimated $200 in meeting
costs and telecommunication, at an annual total cost of $40,800 ($200 x
4 meetings) x 51 States and the District of Columbia). The meeting
costs are estimated by adding the average cost for telecommunications
(approximately $130 \418\ per meeting) to the average cost of meeting
supplies (approximately $70 per meeting for photocopies, name tags,
etc.). While we cannot estimate precisely the costs for meeting
materials and additional items to support meetings, we are including a
nominal estimate of $70 per meeting to acknowledge these costs.
---------------------------------------------------------------------------

\418\ Sources: https://www.usnews.com/360-reviews/business/best-conference-calling-services; https://money.com/best-conference-calling-services/.
---------------------------------------------------------------------------

There will also be a per meeting cost to States for financial
support for beneficiary members participating in MAC and BAC meetings,
as described in Sec. 431.12(h)(3)(ii). We estimate a cost of $75/
beneficiary/meeting in the form of transportation vouchers, childcare
reimbursement, meals, and/or other financial compensation. Assuming 4
meetings per year (with BAC and MAC meetings co-located and occurring
on the same day) and an average of 8 beneficiary members on the BAC and
MAC, the cost of financial support for beneficiary members across
States is estimated to cost approximately $122,400 annually (($75/
beneficiary x 8 beneficiaries x 4 meetings/year) x 51 States and the
District of Columbia). This cost will vary depending on the decisions
States make around financial support, the number of beneficiary members
of the BAC and MAC, and the number of meetings per year. We solicited
comment on the costs associated with planning, execution, and
participation in the MAC and BAC meetings.
We did not receive public comments specifically on these estimates,
and therefore, we are finalizing as proposed.

[[Page 40846]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.067

b. Home and Community-Based Services (HCBS)
Costs displayed in Table 43 are inclusive of both one-time and
ongoing costs. One-time costs are split evenly over the years leading
up to the provision's applicability date. For example, if a finalized
provision is applicable 3 years after the final rule's publication, the
one-time costs would be split evenly across each of the years leading
to that applicability date. Please note the following applicability
dates (beginning after the effective date of this final rule): 2 years
for the grievance process requirements finalized at Sec.
441.302(c)(7); 3 years for the person-centered planning, incident
management, changes to Form 372(S), access reporting, and website
transparency requirements finalized at Sec. Sec. 441.301(c)(3),
441.302(a)(6), 441.311(b), 441.311(d) and 441.313, respectively; 4
years for the reporting requirements for the HCBS Quality Measure Set
and for payment adequacy reporting finalized at Sec. 441.311(c) and
(e), respectively; 5 years for the electronic incident management
system requirement at Sec. 441.302(a)(6); and 6 years for the HCBS
payment adequacy requirements finalized at Sec. 441.302(k). The
estimates below do not account for higher costs associated with medical
care, as the costs are related exclusively to reporting costs. Costs to
States, the Federal government, and managed care plans do not account
for enrollment fluctuations, as they assume a stable number of States
operating HCBS programs and managed care plans delivering services
through these programs. Similarly, costs to providers and beneficiaries
do not account for enrollment fluctuations. In the COI section, costs
are based on a projected range of HCBS providers and beneficiaries.
Given this uncertainty, here, we based cost estimates on the mid-point
of the respective ranges and kept those assumptions consistent over the
course of the 5-year projection. Per OMB guidelines, the projected
estimates for future years do not include ordinary inflation. (that is,
they are reported in constant-year dollars).
Table 44 summarizes the estimated ongoing costs for States, managed
care plans (Direct Health and Medical Insurance Carriers (NAICS
524114)), and providers (Services for the Elderly and Persons with
Disabilities (NAICS 624120) and Home Health Care Services (NAICS
621610)) from the Collection of Information section (section III. of
this final rule) of the HCBS provisions of the final rule projected
over 10 years. This comprises the entirety of anticipated quantifiable
costs associated with changes to part 441, subpart G. It is also
possible that increasing the threshold from 86 percent to 90 percent
for compliance reporting at Sec. 441.311(b)(2) through (3) may lead to
additional costs to remediate issues pertaining to critical incidents
or person-centered planning. However, the various avenues through which
States could address these concerns creates substantial uncertainty as
to what those costs may be. While we acknowledge the potential for
increased costs in a limited number of States that may fall within the
gap between the existing and the compliance thresholds, we do not
quantify them here.
BILLING CODE 4120-01-P

[[Page 40847]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.068

The costs displayed in Table 44 are inclusive of costs anticipated
to be incurred by State Medicaid agencies, the Federal government,
providers, managed care plans, and beneficiaries.

[[Page 40848]]

Table 44 distributes those costs across these respective entities.
[GRAPHIC] [TIFF OMITTED] TR10MY24.069

c. Fee-for-Service (FFS) Payment Rate Transparency
The costs associated with the payment rate transparency proposals
are wholly associated with information collection requirements, and as
such those impacts are reflected in the COI section of this rule. For
ease of reference, and for projection purposes, we are including those
costs here in Table 45.
[GRAPHIC] [TIFF OMITTED] TR10MY24.070

[GRAPHIC] [TIFF OMITTED] TR10MY24.071

[[Page 40849]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.072

[[Page 40850]]

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[[Page 40851]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.074

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[[Page 40852]]

3. Transfers
Transfers are payments between persons or groups that do not
directly affect the total resources available to society. They are a
benefit to recipients and a cost to payers, with zero net effects.
Because this rule proposes changes to requirements to State agencies
without changes to payments from Federal to State governments, the
transfer impact is null, and cost impacts are reflected in the other
sections of this rule.
4. Regulatory Review Cost Estimation
If regulations impose administrative costs on private entities,
such as the time needed to read and interpret this proposed or final
rule, we should estimate the cost associated with regulatory review.
There is uncertainty involved with accurately quantifying the number of
entities that will review the rule. However, for the purposes of this
final rule we assume that on average, each of the 51 affected State
Medicaid agencies will have one contractor per State review this final
rule. This average assumes that some State Medicaid agencies may use
the same contractor, others may use multiple contractors to address the
various provisions within this final rule, and some State Medicaid
agencies may perform the review in-house. We also assume that each
affected managed care plan (estimated in the COI section to be 161
managed care plans) will review the final rule. Lastly, we assume that
an average of two advocacy or interest group representatives from each
State will review this final rule. In total, we are estimating that 314
entities (51 State Contractors + 161 Managed Care Plans + 102 Advocacy
and Interest Groups) will review this final rule. We acknowledge that
this assumption may understate or overstate the costs of reviewing this
rule. We did not receive public comment on this issue.
We also recognize that different types of entities are in many
cases affected by mutually exclusive sections of this final rule, and
therefore for the purposes of our estimate we assume that each reviewer
reads approximately 50 percent of the rule. We solicited comments on
this assumption.
We did not receive public comments on this provision, and
therefore, we are finalizing as proposed.
Using the wage information from the Bureau of Labor Statistics,
https://www.bls.gov/oes/current/oes_nat.htm, we are considering medical
and health service managers (Code 11-9111), as including the 51 State
Contractors, 161 Managed Care Plans and 102 Advocacy and Interest
Groups identified in this final rule, and we estimate that the cost of
reviewing this rule is $123.06 per hour, including fringe benefits and
other indirect costs. Assuming an average reading speed of 250 words
per minute, we estimate that it will take approximately 6.67 hours for
each individual to review half of this final rule ([200,000 words x
0.5]/250 words per minute/60 minutes per hour). For each entity that
reviews the rule, the estimated cost is $820.40 (6.67 hours x $123.06).
Therefore, we estimate that the total one-time cost of reviewing this
regulation is $257,605.60 ($820.40 per individual review x 314
reviewers).
D. Alternatives Considered
1. Medicaid Advisory Committee (MAC)
In determining the best way to promote beneficiary and interested
parties' voices in State Medicaid program decision making and
administration, we considered several ways of revising the MCAC
structure and administration. We considered setting minimum benchmarks
for each category of all types of MAC members, but we viewed it as too
restrictive. We ultimately concluded that only setting minimum
benchmarks (at least 25 percent) for beneficiary representation on the
MAC and requiring representation from the other MAC categories would
give States maximum flexibility in determining the exact composition of
their MAC. However, we understand that some States may want us to set
specific thresholds for each MAC category rather than determine those
categories on their own.
We also considered having not having a separate BAC, but we
ultimately determined that requiring States to establish a separate BAC
assures that there is a dedicated forum for States to receive
beneficiary input outside of the MAC. In the MAC setting, a beneficiary
might not feel as comfortable speaking up among other Medicaid program
interested parties. The BAC also provides an opportunity for
beneficiaries to focus on the issues that are most important to them,
and bring those issues to the MAC.
Finally, we also considered setting specific topics for the MAC to
provide feedback. However, due to the range of issues specific to each
State's Medicaid program, we determined it was most conducive to allow
States work with their MAC to identify which topics and priority issues
would benefit from interested parties' input.
2. Home and Community-Based Services (HCBS)
a. Person-Centered Service Plans, Grievance Systems, Incident
Management Systems
We considered whether to codify the existing 86 percent performance
level that was outlined in the 2014 guidance for both person-centered
service plans and incident management systems. We did not choose this
alternative due to feedback from States and other interested parties of
the importance of these requirements, as well as concerns that an 86
percent performance level may not be sufficient to demonstrate that a
State has met the requirements.
We considered whether to apply these requirements to section
1905(a) ``medical assistance'' State Plan personal care, home health,
and case management services. We decided against this alternative based
on State feedback that they do not have the same data collection and
reporting capabilities for these services as they do for HCBS delivered
under sections 1915(c), (i), (j), and (k) of the Act and because of
differences between the requirements of those authorities and section
1905(a) State Plan benefits.
Finally, we considered allowing a good cause exception to the
minimum performance level reporting requirements to both the person-
centered service plan and the incident management system. We decided
against this alternative because the 90 percent performance level is
intended to account for various scenarios that might impact a State's
ability to achieve these performance levels. Furthermore, there are
existing disaster authorities that States could utilize to request a
waiver of these requirements in the event of a public health emergency
or a disaster.
b. HCBS Payment Adequacy and Payment Adequacy Reporting
We considered several alternatives to this final rule. We
considered whether the requirements at Sec. 441.302(k) relating to the
percent of payments going to the direct care workforce should apply to
other services, such as adult day health, habilitation, day treatment
or other partial hospitalization services, psychosocial rehabilitation
services, and clinic services for individuals with mental illness. As
discussed in section II.B.5, we decided against these alternatives
because the services (homemaker, home health aide, and personal care)
are those for which the vast majority of payment should be comprised of
compensation for direct care workers and for which there will be low
facility or other indirect costs. We

[[Page 40853]]

also did not include other services for which the percentage might be
variable due to the diversity of services included or for which worker
compensation will be reasonably expected to comprise only a small
percentage of the payment.
As an alternative to the payment adequacy reporting requirement
finalized at Sec. 441.311(e), we considered whether other reporting
requirements such as a State assurance or attestation or an alternative
frequency of reporting could be used to collect data from States
regarding the percent of Medicaid payments is spent on compensation to
direct care workers. We determined, upon reviewing public comment, that
collecting the data is necessary to promote transparency and inform
future policymaking. We considered whether to require reporting at the
delivery system, HCBS waiver program, or population level but decided
against additional levels of reporting because it will increase
reporting burden for States without providing additional information
necessary for demonstrating that Medicaid payments are being allocated
efficiently in accordance with section 1902(a)(30)(A) of the Act.
We considered whether to apply both Sec. 441.302(k) and the
reporting requirements finalized at Sec. 441.311 to section 1905(a)
``medical assistance'' State Plan personal care and home health
services, but decided not to, largely due to concerns that the
statutory and regulatory requirements for section 1905(a) services are
different from the statutory and regulatory requirements for section
1915 services; these differences will require additional consideration
and rulemaking should the requirements be applied to section 1905(a)
services. States also provided feedback that, for the purposes of Sec.
441.311, they do not have the same data collection and reporting
capabilities for these services as they do for sections 1915(c), (i),
(j), and (k) HCBS.
c. Supporting Documentation Requirements
No alternatives were considered.
d. HCBS Quality Measure Set Reporting
We considered giving States the flexibility to choose which
measures they will stratify and by what factors but decided against
this alternative as discussed in the Mandatory Medicaid and CHIP Core
Set Reporting proposed rule (see 87 FR 51313). We believe that
consistent measurement of differences in health outcomes between
different groups of beneficiaries is essential to identifying areas for
intervention and evaluation of those interventions.\419\ Consistency
could not be achieved if each State made its own decisions about which
data, it would stratify and by what factors.
---------------------------------------------------------------------------

\419\ Schlotthauer AE, Badler A, Cook SC, Perez DJ, Chin MH.
Evaluating Interventions to Reduce Health Care Disparities: An RWJF
Program. Health Aff (Millwood). 2008;27(2):568-573.
---------------------------------------------------------------------------

3. Payment Rate Transparency
In developing this final rule, we considered multiple alternatives.
We considered not proposing this rule and maintaining the status quo
under current regulations at Sec. 447.203 and 204. However, as noted
throughout the Background and Provisions sections of this rule, since
the 2011 proposed rule, we have received concerns from interested
parties, including State agencies, about the administrative burden of
completing AMRPs and questioning whether they are the most efficient
way to determine access to care. These comments expressed particular
concern about the AMRPs' value when they are required to accompany a
proposed nominal rate reduction or restructuring, or where proposed
rate changes are made via application of a previously approved rate
methodology. At the same time, and as we have discussed, in Armstrong
v. Exceptional Child Care, Inc., 575 U.S. 320 (2015), the Supreme Court
held that Medicaid providers and beneficiaries do not have private
right of action against States to challenge State-determined Medicaid
payment rates in Federal courts. This decision made our administrative
review of SPAs proposing to reduce or restructure payment rates all the
more important. For both of these reasons, this rule includes
requirements that will create an alternative process that both reduces
the administrative burden on States and standardizes and strengthens
our review of payment rate reductions or payment restructurings to
ensure compliance with section 1902(a)(30)(A) of the Act.
We considered, but did not propose, adopting a complaint-driven
process or developing a Federal review process for assessing access to
care concerns. Although such processes could further our goals of
ensuring compliance with the access requirement in section
1902(a)(30)(A) of the Act, we concluded similar effects can be achieved
through methods that did not require the significant amount of Federal
effort that will be necessary to develop either or both of these
processes. Additionally, a complaint-driven process will not
necessarily ensure a balanced review of State-proposed payment rate or
payment structure changes, and it is possible that a large volume of
complaints could be submitted with the intended or unintended effect of
hampering State Medicaid program operations. Therefore, the impact of
adopting a complaint-driven process or developing a Federal review
process for assessing access to care concerns may be negligible given
existing processes. Instead, we believe that relying on existing
processes that States are already engaged in, such as the ongoing
provider and beneficiary feedback channels under paragraph (b)(7) in
Sec. 447.203 and the public process requirement for States submitting
a SPA that are required to reduce or restructure Medicaid service
payments in Sec. 447.204, will be more effective than creating a new
process. While we are relying on existing public feedback channels and
processes that States are already engaged in, we solicited public
comment regarding our alternative consideration to adopting a complaint
driven process or developing a Federal review process for assessing
access to care concerns.
We also considered numerous variations of the individual provisions
of the final rule. We considered, but did not propose, maintaining the
benefits outlined in the current Sec. 447.203(b)(5)(ii)(A) through (H)
or requiring all mandatory Medicaid benefit categories be included in
the comparative payment rate analysis proposed under Sec.
447.203(b)(2). We also considered, but did not propose, including
inpatient hospital behavioral health services and covered outpatient
drugs including professional dispensing fees as additional categories
of services subject to the comparative payment rate analysis proposed
under Sec. 447.203(b)(2). We considered, but did not propose,
requiring States whose Medicaid payment rates vary by provider type,
calculate an average Medicaid payment rate of all providers for each E/
M CPT code subject to the comparative payment rate analysis. We also
considered, but did not propose, different points of comparison other
than Medicare under the comparative payment rate analysis proposed
under Sec. 447.203(b)(2) or using a peer payment rate benchmarking
approach for benefit categories where Medicaid is the only or primary
payer, or there is no comparable Medicare rate under the comparative
payment rate analysis proposed under Sec. 447.203(b)(2) and (3). We
considered, but did not propose, varying timeframes for the comparative
payment rate analysis proposed under Sec. 447.203(b)(2). We also
considered not

[[Page 40854]]

proposing the payment rate transparency aspect of this rule proposed
under Sec. 447.203(b)(1), leaving the comparative payment rate
analysis to replace the AMRP process as proposed under Sec.
447.203(b)(2). With regard to the proposal in Sec. 447.203(c), we
considered, but did not propose, establishing alternative circumstances
from those described in the 2017 SMDL for identifying nominal payment
rate adjustments, establishing a minimum set of required data for
States above 80 percent of the most recent Medicare payment rates after
the proposed reduction or restructuring, using measures that are
different from the proposed measures that would be reflected in the
forthcoming template, allowing States to use their own unstructured
data for States that fail to meet all three criteria in Sec.
447.203(c)(1), and CMS producing and publishing the comparative payment
rate analysis proposed in Sec. 447.203(b).
We considered, but did not propose, maintaining the benefits
outlined in the current Sec. 447.203(b)(5)(ii)(A) through (H) or
requiring all mandatory Medicaid benefit categories be included in the
comparative payment rate analysis proposed under Sec. 447.203(b)(2).
Maintaining the benefits in previous Sec. 447.203(b)(5)(ii)(A) through
(H) might have simplified the transition from the AMRP process to the
payment rate transparency and comparative payment rate analysis
requirements. However, our experience implementing the 2015 final rule
with comment period, as well as interested parties' and States'
feedback about the AMRP process, encouraged us to review and reconsider
the current list of benefits subject to the AMRP process under current
regulations Sec. 447.203(b)(5)(ii)(A) through (H) to determine where
we could decrease the level of effort required from States while still
allowing ourselves an opportunity to review for access concerns. During
our review of the current list of benefits under Sec.
447.203(b)(5)(ii)(A) through (H), we considered, but did not propose,
requiring all mandatory Medicaid benefit categories be included in the
comparative payment rate analysis. However, when considering the
existing burden of the AMRP process under current Sec. 447.203)(b), we
believed that expanding the list of benefits to include under proposed
Sec. 447.203(b) and (c) would not support our goal to develop a new
access strategy that aims to balance Federal and State administrative
burden with our shared obligation to ensure compliance with section
1902(a)(30)(A) of the Act. As previously noted in section II. of this
rule, we solicited public comment on primary care services, obstetrical
and gynecological services, outpatient behavioral health services, and
personal care, home health aide, and homemaker services provided by
individual providers and providers employed by an agency as the
proposed categories of services subject to the comparative payment rate
analysis requirements in proposed Sec. 447.203(b)(2)(i). Additionally,
we solicited public comment regarding our alternative consideration to
propose maintaining the benefits outlined in the current Sec.
447.203(b)(5)(ii)(A) through (H) or propose requiring all mandatory
Medicaid benefit categories.
We considered, but did not propose, requiring States whose Medicaid
payment rates vary by provider type to calculate an average Medicaid
payment rate of all provider types for each E/M CPT code subject to the
comparative payment rate analysis. Rather than proposing States
distinguish their Medicaid payment rates by each provider type in the
comparative payment rate analysis, we considered proposing States
calculate an average Medicaid payment rate of all providers for each E/
M CPT code. This consideration would have simplified the comparative
payment rate analysis because States would include a single, average
Medicaid payment rate amount and only need to separately analyze their
Medicaid payment rates for services delivered to pediatric and adult
populations, if they varied. However, calculating an average for the
Medicaid payment rate has limitations, including sensitivity to extreme
values and inconsistent characterizations of the payment rate between
Medicaid and Medicare. In this rule, we propose to characterize the
Medicare payment rate as the non-facility payment rate listed on the
Medicare PFS for the E/M CPT/HCPCS codes subject to the comparative
payment rate analysis. If we were to propose the Medicaid payment rate
be calculated as an average Medicaid payment rate of all provider types
for the same E/M CPT/HCPCS code, then States' calculated average
Medicaid payment rate could include a wide variety of provider types,
from a single payment rate for physicians to an average of three
payment rates for physicians, physician assistants, and nurse
practitioners. This wide variation in how the Medicaid payment rate is
calculated among States would provide a less meaningful comparative
payment rate analysis to Medicare. The extremes and outliers that would
be diluted by using an average are not necessarily the same for both
Medicaid and Medicare, so even if both sides of the comparison used an
average, we would not be able to look more closely at specific large
differences between the respective rates. As previously noted in
section II. of this final rule, we solicited public comment on the
proposed characterization of the Medicaid payment rate, which accounts
for variation in payment rates for pediatric and adult populations and
distinguishes payment rates by provider type, in the comparative
payment rate analysis. Additionally, we solicited public comment
regarding our alternative consideration to propose requiring States
whose Medicaid payment rates vary by provider type to calculate an
average Medicaid payment rate of all provider types for each E/M CPT
code subject to the comparative payment rate analysis.
We considered, but did not propose, requiring States to use a
different point of comparison, other than Medicare, for certain
services where Medicare is not a consistent or primary payer, such as
pediatric dental services or HCBS. The impact of requiring a different
point of comparison, other than Medicare, would have carried forward
the current regulation requiring States to ``include an analysis of the
percentage comparison of Medicaid payment rates to other public
(including, as practical, provider payment rates in Medicaid managed
care) and private health insurer payment rates within geographic areas
of the State'' in their AMRPs. As previously discussed in this rule,
FFS States expressed concerns following the 2015 final rule with
comment period that private payer payment rates were proprietary
information and not available to them, therefore, the challenges to
comply with current regulations would be carried forward into the
proposed rule. Therefore, we also considered, but did not propose,
using various payment rate benchmarking approaches for benefit
categories where Medicaid is the only or primary payer, or there is no
comparable Medicare rate. As previously noted in section II. of this
final rule, we considered benchmarks based on national Medicaid payment
averages for certain services included within the LTSS benefit
category, benchmarks that use average daily rates for certain HCBS that
can be compared to other State Medicaid programs, and benchmarks that
use payment data specific to the State's Medicaid program for similarly
situated services so that the service payments may be benchmarked to
national average. Notwithstanding the

[[Page 40855]]

previously described limitations of the alternative considered for
situations where differences between Medicaid and Medicare coverage and
payment exists, we solicited public comment regarding our alternative
consideration to propose States use a different point of comparison,
other than Medicare, for certain services where Medicare is not a
consistent or primary payer or States use a payment rate benchmarking
approach for benefit categories where Medicaid is the only or primary
payer, or there is no comparable Medicare rate. Specifically, we
solicited public comment on the feasibility and burden on States to
implement these alternatives considered for the proposed comparative
payment rate analysis. For any comparison to other State Medicaid
programs or to a national benchmark, we also solicited public comment
on the appropriate role for such a comparison in the context of the
statutory requirement to consider beneficiary access relative to the
general population in the geographic area.
We considered, but did not propose, various timeframes for the
comparative payment rate analysis, including annual (every year),
triennial (every 3 years), or quinquennial (every 5 years) updates
after the initial effective date of January 1, 2026. As noted in
section II. of this final rule, we did not propose an annual timeframe
as we believed that an annual update requirement was too frequent due
to many States' biennial legislative sessions that provide the Medicaid
agency with authority it make Medicaid payment rate changes as well as
create more or maintain a similar level of administrative burden of the
AMRPs. While some States do have annual legislative sessions and may
have annual Medicaid payment rate changes, we believed that proposing
annual updates solely for the purpose of capturing payment rate changes
in States that with annual legislative sessions would be overly
burdensome and duplicative for States with biennial legislative
sessions who do not have new, updated Medicaid payment rates to update
in their comparative payment rate analysis. Therefore, for numerous
States with biennial legislative sessions, the resulting analysis would
likely not vary significantly from year to year. Additionally, the
comparative payment rate analysis proposes to use the most recently
published Medicare payment rates and we are cognizant that Medicare
payment rate updates often occur on a quarterly basis. While Medicare
often increases rates by the market basket inflation amount, as well as
through rulemaking, it does not always result in payment increases for
providers.^{420 421} We also considered, but did not propose,
maintaining the triennial (every 3 years) timeframe currently in
regulation, because we thought it necessary to make significant changes
to the non-SPA-related reported in Sec. 447.203(b) that would
represent a significant departure from the initial AMRP process in the
2015 final rule with comment in the current Sec. 447.203(b)(1) and
this new proposed approach did not lend itself to the triennial
timeframe of the current AMRP process. Lastly, we considered, but did
not propose, the comparative payment rate analysis be published on a
quinquennial basis (every 5 years), because this timeframe was too
infrequent for the comparative payment rate analysis to provide
meaningful, actionable information. As previously noted in section II.
of this rule, we are solicited public comment on the proposed timeframe
for the initial publication and biennial update requirements of the
comparative payment rate analysis as proposed in Sec. 447.203(b)(4).
Additionally, we solicited public comment regarding our alternative
consideration to propose an annual, triennial, or quinquennial
timeframe for the updating the comparative payment rate analysis after
the initial effective date.
---------------------------------------------------------------------------

\420\ Although ``market basket'' technically describes the mix
of goods and services used in providing health care, this term is
also commonly used to denote the input price index (that is, cost
category weights and price proxies combined) derived from that
market basket. Accordingly, the term ``market basket'' as used in
this document refers to the various CMS input price indexes. A CMS
market basket is described as a fixed-weight, Laspeyres-type index
because it measures the change in price, over time, of the same mix
of goods and services purchased in the base period. FAQ--Medicare
Market Basket Definitions and General Information, updated May 2022.
https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/Downloads/info.pdf
Accessed January 4, 2023.
\421\ Medicare Unit Cost Increases Reported as of April 2022.
https://www.cms.gov/files/document/ffs-trends-2021-2023-april-2022.pdf. Accessed January 4, 2023.
---------------------------------------------------------------------------

We considered, but did not propose, requiring the comparative
payment rate analysis be submitted directly to us, as this would not
achieve the public transparency goal of the proposed rule. As proposed
in Sec. 447.203(b)(3), we are requiring States develop and publish
their Medicaid comparative payment rate analysis on the State's website
in an accessible and easily understandable format. This proposal is
methodologically similar to the current regulation, which requires
AMRPs be submitted to us and publicly published by the State and CMS.
We found this aspect of the rule to be an effective method of publicly
sharing access to care information, as well as ensuring State
compliance. As previously noted in section II. of this rule, we
solicited public comment on the proposed requirement for States to
publish their Medicaid FFS payment rates for all services and
comparative payment rate analysis and payment rate disclosure
information on the State's website under the proposed Sec.
447.203(b)(1) and (3), respectively. Additionally, we solicited public
comment regarding our alternative consideration to propose requiring
the comparative payment rate analysis be submitted directly to us and
not publicly published.
We considered, but did not propose, that we produce and publish the
comparative payment rate analysis proposed in Sec. 447.203(b)(2)
through (3) whereby we would develop reports for all States
demonstrating Medicaid payment rates for all services or a subset for
Medicaid services as a percentage of Medicare payment rates. Shifting
responsibility for this analysis would remove some burden from States
and allow us to do a full cross-comparison of State Medicaid payment
rates to Medicare payment rates, while ensuring a consistent rate
analysis across States. However, this approach would rely on T-MSIS
data, which would increase the lag in available data due to the need
for CMS to prepare it, and introduce uncertainty into the results due
to ongoing variation in State T-MSIS data quality and completeness.
Although our proposed approach still relies on State-supplied data,
they are able to perform the comparisons on their own regardless of the
readiness and compliance of any other State. Furthermore, we would need
to validate its results with States and work through any discrepancies.
Ultimately, we determined the increased lag time and uncertainty in
results would diminish the utility of the rate analyses proposed in
Sec. 447.203(b), if performed by us instead of the States, to support
our oversight of State compliance with section 1902(a)(30)(A) of the
Act. As previously noted in section II. of this rule, we solicited
public comment on our proposal to require States to develop and publish
a comparative payment rate analysis and payment rate disclosure as
proposed in Sec. 447.203(b)(2) and (3). Additionally, we solicited
public comment regarding our alternative consideration to propose that
we produce and publish the comparative payment rate analysis and
payment rate disclosure proposed in Sec. 447.203(b)(2) and (3) for all
States.
We considered, but did not propose, establishing alternative
circumstances

[[Page 40856]]

from the 2017 SMDL for identifying nominal payment rate adjustments
when States propose a rate reduction or restructuring. We previously
outlined in SMDL #17-004 several circumstances where Medicaid payment
rate reductions generally would not be expected to diminish access:
reductions necessary to implement CMS Federal Medicaid payment
requirements; reductions that will be implemented as a decrease to all
codes within a service category or targeted to certain codes, but for
services where the payment rates continue to be at or above Medicare
and/or average commercial rates; and reductions that result from
changes implemented through the Medicare program, where a State's
service payment methodology adheres to the Medicare methodology. This
final rule will not codify this list of policies that may produce
payment rate reductions unlikely to diminish access to Medicaid-covered
services. We considered, but did not propose, setting a different
percentage for the criteria that State Medicaid rates for each benefit
category affected by the reductions or restructurings must, in the
aggregate, be at or above 80 percent of the most recent comparable
Medicare payment rates after the proposed reduction or restructuring as
a threshold. We considered setting the threshold at 100 percent of
Medicare to remain consistent with the 2017 SMDL. However, after
conducting a literature review, we determined that 80 percent of the
most recently published Medicare payment rates is currently the most
reliable benchmark of whether a rate reduction or restructuring is
likely to diminish access to care. We also considered, but did not
propose, setting a different percentage for the criteria that proposed
reductions or restructurings result in no more than 4 percent reduction
of overall FFS Medicaid expenditures for a benefit category. We
considered a variety of percentages, but determined that codifying the
4 percent threshold from the 2017 SMDL and proposed in the 2018
proposed rule \422\ was the best option based on our experience
implementing this established policy after the publication of the 2017
SMDL. Additionally, we received a significant number of comments in the
2018 proposed rule from State Medicaid agencies that signaled strong
support for this percentage threshold as a meaningful threshold for
future rate changes.^{423 424 425} Lastly, we considered, but
did not propose, defining what is meant by ``significant'' access
concerns received through the public process described in Sec. 447.204
when a State proposes a rate reduction or restructuring. As proposed,
we expect State Medicaid agencies to make reasonable determinations
about which access concerns are significant when raised through the
public process, and as part of our SPA review, may request additional
information from the State to better understand any access concerns
that have been raised through public processes and whether they are
significant. Based on our experience implementing the policies outlined
in the 2017 SMDL and a literature review of relevant research about
payment rate sufficiency, we proposed criteria for States proposing
rate reductions or restructurings that would reduce the SPA submission
requirements when those criteria are met. Additionally, each of these
thresholds is one of a three-part test where States must meet all
three, or else it will trigger a requirement for additional State
analysis of the rate reduction or restructuring. As previously noted in
section II. of this rule, we solicited public comment on the
streamlined criteria proposed in Sec. 447.203(c)(1). Additionally, we
solicited public comment regarding our alternative consideration to
propose establishing alternative circumstances from the 2017 SMDL for
identifying nominal payment rate adjustments when States propose a rate
reduction or restructuring.
---------------------------------------------------------------------------

\422\ 83 FR 12696 at 12705.
\423\ Connecticut Department of Social Services, Comment Letter
on 2018 Proposed Rule (May 21, 2018), https://downloads.regulations.gov/CMS-2018-0031-0021/attachment_1.pdf.
\424\ California Department of Health Care Services, Comment
Letter on 2018 Proposed Rule (May 24, 2018), https://downloads.regulations.gov/CMS-2018-0031-0090/attachment_1.pdf.
\425\ Florida Agency for Health Care Administration, Comment
Letter on 2018 Proposed Rule (May 24, 2018), https://downloads.regulations.gov/CMS-2018-0031-0083/attachment_1.pdf.
---------------------------------------------------------------------------

We considered, but did not propose, establishing a minimum set of
required data for States above 80 percent of the most recent Medicare
payment rates after the proposed reduction or restructuring regardless
of the remaining criteria. This requirement would minimize
administrative burden on States by not requiring States submit all
items in Sec. 447.203(c)(2) and establish a baseline for comparison if
future rate reductions or restructurings are proposed that may lower
the State's payment rates below 80 percent of the most recent Medicare
payment rates. However, we determined that, while we believe 80 percent
to be an effective threshold point, we did not want that to serve as
the only trigger for additional analysis. As proposed, only States that
do not meet all of the proposed requirements in Sec. 447.203(c)(1)
will have to submit the required data outlined in Sec. 447.203(c)(2).
As previously noted in section II. of this rule, we solicited public
comment on our proposal to require all three criteria described in
Sec. 447.203(c)(1)(i) through (iii) for assessing the effect of a
proposed payment rate reduction or payment restructuring on access to
care. Additionally, we solicited public comment regarding our
alternative consideration to propose establishing alternative
circumstances from the 2017 SMDL for identifying nominal payment rate
adjustments when States propose a rate reduction or restructuring.
We considered, but did not propose, allowing States to use their
own unstructured data, similar to the AMRP process, for States that
fail to meet all three criteria in Sec. 447.203(c)(1), thereby
eliminating the need for us to develop a template for States proposing
rate reductions or restructurings. While this would reduce
administrative burden on us and provide States with flexibility in
determining relevant data for complying with statutory and regulatory
requirements, we received feedback after the 2015 final rule with
comment period that States found developing an AMRP from scratch with
minimal Federal guidelines a challenging task and other interested
parties noted that States had too much discretion in documenting
sufficient access to care. Therefore, we proposed developing a template
to support State analyses of rate reduction or restructuring SPAs that
fail to meet the criteria in Sec. 447.203(c)(1). As noted elsewhere in
the preamble, we are releasing subregulatory guidance, including a
template to support completion of the analysis that would be required
under paragraph (c)(2), alongside this final rule. We also anticipate
working directly with States through the SPA review process to ensure
compliance with section 1902(a)(30)(A) of the Act. Additionally, we
solicited public comment regarding our alternative consideration to
propose allowing States to use their own unstructured data, similar to
the AMRP process, for States that fail to meet all three criteria in
Sec. 447.203(c)(1).
After careful consideration, we ultimately determined that the
requirements in proposed Sec. 447.203(b) and (c) would strike a more
optimal balance between alleviating State and Federal administrative
burden, while ensuring a transparent, data-driven, and consistent
approach to States' implementation and our oversight of

[[Page 40857]]

State compliance with the access requirement in section 1902(a)(30)(A)
of the Act.
We considered finalizing the payment rate transparency provisions
under 447.203(b)(1) as proposed, but in response to commenter concerns
about the requirement to breakdown bundled payment rates into
constituent services and rates, we added regulatory language to provide
States with flexibility in complying with the payment rate transparency
publication requirements when individual rates for constituent services
within a State's bundle payment rate do not exist. Specifically, we
added the following language: ``unless this information is not
reasonably available'' to the requirement that ``in the case of a
bundled or similar payment methodology'' States must ``identify each
constituent service included within the rate and how much of the
bundled payment is allocated to each constituent service under the
State's methodology.'' We also clarified in this final rule through a
previous comment response that facility payment rates (for example,
provider-specific rates and per diem rates) are not considered to be
bundled payment rates and are not subject to the payment rate
transparency provisions. We believe this additional regulatory language
and clarification will reduce administrative burden on States by
narrowing the scope of bundled payment rates subject to the payment
rate transparency requirements. While we still believe this requirement
is necessary to ensure maximum transparency of payment rates in the
case of bundled fee schedule payment rates, it is also necessary to
account for circumstances where a State does not have information
available to comply with this regulatory requirement.
We considered finalizing the payment rate transparency provisions
under 447.203(b)(1) as proposed, but in response to commenter concerns
about requiring States with prospective effective dates to publish
rates that are not yet in effect, we added regulatory language to
address this circumstance. Specifically, the regulation now states that
the agency is required to include the date the payment rates were last
updated on the State Medicaid agency's website and to ensure these data
are kept current, where any necessary update must be made no later than
either 1 month following the date of CMS approval of the State plan
amendment, section 1915(c) HCBS waiver amendment, or similar amendment
revising the provider payment rate or methodology, or 1 month following
the effective date of the approved amendment, whichever date occurs
latest. If we finalized the regulatory language as proposed, then
States would be required to update their payment rate transparency
publications with payment rates that are not yet in effect, and this
would not align with our transparency efforts to ensure a States'
payment rate transparency publication is as current as possible, and
accurate once published.
We considered finalizing the payment rate transparency provisions
under Sec. 447.203(b)(1) with a requirement to organize the payment
rate transparency publication by CPT/HCPCS code, similar to the
comparative payment rate analysis, but in response to commenter
concerns about administrative burden on States to comply with the
provisions as proposed, we did not require the payment rate
transparency publication to be organized in this manner. While we still
require both the payment rate transparency publication and comparative
payment rate analysis to be organized in such a way that a member of
the public can readily determine the amount that Medicaid would pay for
the service, requiring the publication to be organized by CPT/HCPCS
code would create substantial burden for States that do not current
organize their payment rates in this manner as all fee schedule payment
rates are subject to this provision. By not requiring the payment rate
transparency publication to be organized a particular way, we are
providing States with the flexibility to use existing fee schedule
publications for compliance with the regulations finalized in this
rule.
We considered, but did not finalize, an increase to the 80 percent
of Medicare threshold in Sec. 447.203(c)(1)(i) to 100 percent of
Medicare as suggested by some of the commenters. Taking such an action
would have increased the threshold for States to qualify for the
streamlined review process and increased administrative burden on the
States. We ultimately decided not to pursue this alternative because
this threshold was not intended to provide absolute assurance that a
provider would participate in the Medicaid program. Instead, we are
using 80 percent as a threshold to determine the level of analysis and
information a State must provide to CMS to support consistency with
section 1902(a)(30)(A) of the Act and allow CMS to focus its review
efforts on proposals at the highest risk of access concerns. We also
note that the 80 percent threshold was just one of three criteria that
must be met for a streamlined review. Our stated intention in this rule
was that we were intending this to provide States with relief from the
more burdensome AMRP process defined in the 2015 final rule with
comment period, and establishing a higher threshold would not fit
within that stated purpose.
We received public comments on several of these alternatives, but
many of those comments blended with discussion of the relevant
provisions, so in general our responses to those comments are contained
in section II.C. However, we did receive some comments on alternatives
not already addressed in this final rule.
Comment: One commenter responded to our decision not to propose
adopting a complaint-driven process or developing a Federal review
process for assessing access to care concerns. That commenter stated
that CMS' reliance on existing State processes, such as the ongoing
provider and beneficiary feedback channels and the public process
requirement for States submitting a SPA that proposed to reduce or
restructure Medicaid services would be acceptable if the existing
processes are responsive and delivered timely action when concerns are
raised.
Response: We agree with the commenter regarding existing processes
being responsive and timely. As described in the proposed rule, these
processes must meet requirements under newly finalized Sec.
447.203(c)(4) (which includes existing requirements from the 2015 final
rule with comment period that was relocated from Sec. 447.203(b)(7)),
as well as Sec. 447.204 (which includes existing requirements from the
2015 final rule with comment period with confirming changes to align
with this final rule). These existing regulatory requirements require
States have ongoing mechanisms for beneficiary and provider input on
access to care in which they promptly respond to public input and
maintain a record the public input, as well as how the State responded.
While this is a general requirement for ensuring States have a method
for collecting access to care issues from the public, these
requirements also specifically apply to States proposing a rate
reduction or restructuring.
Comment: One commenter agreed with CMS' decision to exclude
outpatient drugs from the proposed comparative payment rate analysis
under Sec. 447.203(b)(2) noting that, in addition to the reasons CMS
outlined in the proposed rule, the cost of outpatient drugs can change
weekly and there are anticipated cost differences compared to other
payers, such as Medicare or States. The commenter recommended that, if
CMS decides to subject outpatient drugs to the comparative payment rate

[[Page 40858]]

analysis, then CMS should develop a unique methodology for States to
follow in making the comparison to another payer.
Response: We appreciate the commenter's support for our decision,
as well as their recommendation for how we could subject outpatient
drugs to the comparative payment rate analysis if we did end up
deciding to include them. We are not changing the services subject to
the analysis in this final rule, although we note we have updated
``outpatient behavioral health services'' to ``outpatient mental health
and substance use disorder services.''

E. Accounting Statement and Table

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 48 showing the classification of the impact associated with the
provisions of this final rule. Note, Table 47 shown previously in this
final rule provides a summary of the one-time and annual costs
estimates.
[GRAPHIC] [TIFF OMITTED] TR10MY24.075

F. Regulatory Flexibility Act (RFA)

The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, we estimate that
almost all of Home Health Care Services, Services for the Elderly and
Persons with Disabilities, and Direct Health and Medical Insurance
Carriers are small entities as that term is used in the RFA (include
small businesses, nonprofit organizations, and small governmental
jurisdictions). The great majority of hospitals and most other health
care providers and suppliers are small entities, either by being
nonprofit organizations or by meeting the SBA definition of a small
business (having revenues of less than $9.0 million to $47 million in
any 1 year).
For purposes of the RFA, approximately 95 percent of the health
care industries impacted are considered small businesses according to
the Small Business Administration's size standards with total revenues
of $47 million or less in any 1 year.
According to the SBA's website at http://www.sba.gov/content/small-business-size-standards HCBS Provider Costs and Managed care Plan fall
in the North American Industrial Classification System 621610 Home
Health Care Services, 624120 Services for the Elderly and Persons with
Disabilities, and 524114 Direct Health and Medical Insurance Carriers.
BILLING CODE 4120-01-P
[GRAPHIC] [TIFF OMITTED] TR10MY24.076

[[Page 40859]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.077

[GRAPHIC] [TIFF OMITTED] TR10MY24.078

[[Page 40860]]

[GRAPHIC] [TIFF OMITTED] TR10MY24.079

Individuals and States are not included in the definition of a
small entity. This rule will not have a significant impact measured
change in revenue of 3 to 5 percent on a substantial number of small
businesses or other small entities. All the industries combined,
according to the 2017 Economic Census, earned approximately
$46,771,961,000.00. Hence, all the costs combined, amounts to about 1
percent.
[GRAPHIC] [TIFF OMITTED] TR10MY24.080

BILLING CODE 4120-01-C
Therefore, as its measure of significant economic impact on a
substantial number of small entities, HHS uses a change in revenue of
more than 3 to 5 percent.
According to Table 12, for Direct Health and Medical Insurance
Carriers (524114) and Elderly and Persons with Disabilities (624120),
we do not believe that the 3 to 5 percent threshold will be reached by
the requirements in this final rule. However, Home Health Care Services
(621610) has a substantial effect on its small businesses.
Therefore, the Secretary has certified that this final rule will
not have a significant economic impact on a substantial number of small
entities in

[[Page 40861]]

the Direct Health and Medical Insurance Carriers (524114) and Elderly
and Persons with Disabilities (624120) industries. However, the
Secretary cannot certify that this final rule will not have a
significant economic impact on the Home Health Care Services (621610)
industry.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the Act. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. This final rule will not
have a significant impact on the operations of small rural hospitals
since small hospitals are not affected by the proposed rule. Therefore,
the Secretary has certified that this final rule will not have a
significant impact on the operations of a substantial number of small
rural hospitals.

G. Unfunded Mandates Reform Act (UMRA)

Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2023, that
threshold is approximately $177 million. This final rule will impose a
mandate that will result in the expenditure by the private sector, of
more than $177 million in at least 1 year.
Several of the provisions in this final rule address gaps in
existing regulations. In these cases, the costs for States to implement
the changes to existing processes will likely be minimal. For the
remaining areas of the rule, we have sought to minimize burden whenever
possible, while still achieving the goals of this rulemaking, as
reflected in the burden analyses and estimates described in sections
III. and IV. of this final rule. We further note that, as reflected in
those sections, States would be able to claim administrative match for
the work required to implement the proposals.
We have described the projected paperwork costs to providers, as
well as to States, the Federal Government, and managed care plans (as
applicable) in the Collection of Information section (section III. of
this final rule.) We note that the requirements finalized at Sec.
441.302(k) regarding the HCBS payment adequacy requirements represent
the biggest impact on small entities. We have not calculated an
additional financial impact on providers beyond what is reflected in
the Collection of Information (in section III.) and the Regulatory
Impact Analysis (section (this section, section IV. of the final rule.)
The requirements finalized at Sec. 441.302(k) may require that a
number of HCBS providers ensure that they allocate more of their
Medicaid payments to direct care workers than they had prior to the
implementation of Sec. 441.302(k); this does not reflect a change in
the Medicaid payments. The underlying assumption of this requirement is
that providers are capable of allocating 80 percent their Medicaid
payments to direct care workers by ensuring that payments are allocated
efficiently and that overhead is kept to a minimum. Additionally, as
discussed in II.B.5. of this final rule, we have provided States with
several flexibilities for certain providers that would be unable to
operate successfully under this requirement. While we received
anecdotal data from public commenters regarding current Medicaid rates,
workforce shortages, and survey responses from providers regarding
their reaction to the proposal in the proposed rule, we did not receive
data (nor do we have other sources of data) on which to estimate
additional costs associated with Sec. 441.302(k) aside from what is
presented in the Collection of Information and Regulatory Impact
Analysis sections above.

H. Federalism

E.O. 13132 establishes certain requirements that an agency must
meet when it issues a proposed rule that imposes substantial direct
requirement costs on State and local governments, preempts State law,
or otherwise has Federalism implications. This rule does not impose
substantial direct costs on State or local governments, preempt State
law, or otherwise have Federalism implications. As mentioned in the
previous section of this rule, the costs to States by our estimate do
not rise to the level of specified thresholds for significant burden to
States. In addition, many proposals amend existing requirements or
further requirements that already exist in statute, and as such would
not create any new conflict with State law.

I. Conclusion

The policies in this final rule, will enable us to implement
enhanced access to health care services for Medicaid beneficiaries
across FFS, managed care, and HCBS delivery systems.
The analysis in section IV. of this final rule, together with the
rest of this preamble, provides a regulatory impact analysis. In
accordance with the provisions of E.O. 12866, this final rule was
reviewed by the Office of Management and Budget.
Chiquita Brooks-LaSure, Administrator of the Centers for Medicare &
Medicaid Services, approved this document on April 11, 2024.

List of Subjects

42 CFR Part 431

Administrative practice and procedure, Consumer protection, Grant
programs--health, Medicaid, Organization and functions (Government
agencies), Public assistance programs, Reporting and recordkeeping
requirement.

42 CFR Part 438

Administrative practice and procedure, Grant programs--health,
Health professions, Medicaid, Older adults, People with Disabilities,
Reporting and recordkeeping requirements.

42 CFR Part 441

Administrative practice and procedure, Consumer protection, Grant
programs--health, Health professions, Medicaid, Older adults, People
with Disabilities, Reporting and recordkeeping requirements.

42 CFR Part 447

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

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 431.12 is revised to read as follows:

Sec. 431.12 Medicaid Advisory Committee and Beneficiary Advisory
Council.

(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes State Plan requirements for establishment and
ongoing operation of a public Medicaid Advisory Committee

[[Page 40862]]

(MAC) with a dedicated Beneficiary Advisory Council (BAC) comprised of
current and former Medicaid beneficiaries, their family members, and
caregivers, to advise the State Medicaid agency on matters of concern
related to policy development, and matters related to the effective
administration of the Medicaid program.
(b) State plan requirement. The State plan must provide for a MAC
and a BAC that will advise the director of the single State Agency for
the Medicaid program on matters of concern related to policy
development and matters related to the effective administration of the
Medicaid program.
(c) Selection of members. The Director of the single State Agency
for the Medicaid program must select members for the MAC and BAC for a
term of length determined by the State, which may not be followed
immediately by a consecutive term for the same member, on a rotating
and continuous basis. The State must create a process for recruitment
and selection of members and publish this information on the State's
website as specified in paragraph (f).
(d) MAC membership and composition. The membership of the MAC must
be composed of the following percentage and representative categories
of interested parties in the State:
(1) For the period from July 9, 2024 through July 9, 2025, 10
percent of the MAC members must come from the BAC; for the period from
July 10, 2025 through July 9, 2026, 20 percent of MAC members must come
from the BAC; and thereafter, 25 percent of MAC members must come from
the BAC.
(2) The remaining committee members must include representation of
at least one from each of the following categories:
(A) State or local consumer advocacy groups or other community-
based organizations that represent the interests of, or provide direct
service, to Medicaid beneficiaries.
(B) Clinical providers or administrators who are familiar with the
health and social needs of Medicaid beneficiaries and with the
resources available and required for their care. This includes
providers or administrators of primary care, specialty care, and long-
term care.
(C) As applicable, participating Medicaid MCOs, PIHPs, PAHPs, PCCM
entities or PCCMs as defined in Sec. 438.2, or a health plan
association representing more than one such plans; and
(D) Other State agencies that serve Medicaid beneficiaries (for
example, foster care agency, mental health agency, health department,
State agencies delegated to conduct eligibility determinations for
Medicaid, State Unit on Aging), as ex-officio, non-voting members.
(e) Beneficiary Advisory Council. The State must form and support a
BAC, which can be an existing beneficiary group, that is comprised of:
individuals who are currently or have been Medicaid beneficiaries and
individuals with direct experience supporting Medicaid beneficiaries
(family members and paid or unpaid caregivers of those enrolled in
Medicaid), to advise the State regarding their experience with the
Medicaid program, on matters of concern related to policy development
and matters related to the effective administration of the Medicaid
program.
(1) The MAC members described in paragraph (d)(1) of this section
must also be members of the BAC.
(2) The BAC must meet separately from the MAC, on a regular basis,
and in advance of each MAC meeting to ensure BAC member preparation for
each MAC meeting.
(f) MAC and BAC administration. The State agency must create
standardized processes and practices for the administration of the MAC
and the BAC that are available for public review on the State website.
The State agency must--
(1) Develop and publish, by posting publicly on its website, bylaws
for governance of the MAC and BAC along with a current list of members.
States will also post publicly the past meeting minutes of the MAC and
BAC meetings, including a list of meeting attendees. States will give
BAC members the option to include their names in the membership list
and meeting minutes that will be posted publicly.
(2) Develop and publish by posting publicly on its website a
process for MAC and BAC member recruitment and selection along with a
process for selection of MAC and BAC leadership;
(3) Develop, publish by posting publicly on its website, and
implement a regular meeting schedule for the MAC and BAC; the MAC and
BAC must each meet at least once per quarter and hold off-cycle
meetings as needed. Each MAC and BAC meeting agenda must include a time
for members and the public (if applicable) to disclose conflicts of
interest.
(4) Make at least two MAC meetings per year open to the public and
those meetings must include a dedicated time during the meeting for the
public to make comments. BAC meetings are not required to be open to
the public, unless the State's BAC members decide otherwise. The public
must be adequately notified of the date, location, and time of each
public MAC meeting and any public BAC meeting at least 30 calendar days
in advance of the date of the meeting.
(5) Offer a rotating, variety of meeting attendance options. These
meeting options are: all in-person attendance, all virtual attendance,
and hybrid (in person and virtual) attendance options. Regardless of
which attendance type of meeting it is, States are required to always
have, at a minimum, telephone dial-in option at the MAC and BAC
meetings for its members. If the MAC or BAC meeting is deemed open to
the public, the State must offer at a minimum a telephone dial-in
option for members of the public;
(6) Ensure that the meeting times and locations for MAC and BAC
meetings are selected to maximize member attendance and may vary by
meeting; and
(7) Facilitate participation of beneficiaries by ensuring that that
meetings are accessible to people with disabilities, that reasonable
modifications are provided when necessary to ensure access and enable
meaningful participation, and communications with individuals with
disabilities are as effective as with others, that reasonable steps are
taken to provide meaningful access to individuals with Limited English
Proficiency, and that meetings comply with the requirements at Sec.
435.905(b) of this chapter and applicable regulations implementing the
ADA, Title VI of the Civil Rights Act of 1964, section 504 of the
Rehabilitation Act, and section 1557 of the Affordable Care Act at 28
CFR part 35 and 45 CFR parts 80, 84 and 92, respectively.
(g) MAC and BAC participation and scope. The MAC and BAC
participants must have the opportunity to advise the director of the
single State Agency for the Medicaid program on matters related to
policy development and matters related to the effective administration
of the Medicaid program. At a minimum, the MAC and BAC must determine,
in collaboration with the State, which topics to provide advice on
related to--
(1) Additions and changes to services;
(2) Coordination of care;
(3) Quality of services;
(4) Eligibility, enrollment, and renewal processes;
(5) Beneficiary and provider communications by State Medicaid
agency and Medicaid MCOs, PIHPs, PAHPs, PCCM entities or PCCMs as
defined in Sec. 438.2;

[[Page 40863]]

(6) Cultural competency, language access, health equity, and
disparities and biases in the Medicaid program;
(7) Access to services; and
(8) Other issues that impact the provision or outcomes of health
and medical care services in the Medicaid program as determined by the
MAC, BAC, or State.
(h) State agency staff assistance, participation, and financial
help. The single State Agency for the Medicaid program must provide
staff to support planning and execution of the MAC and the BAC to
include--
(1) Recruitment of MAC and BAC members;
(2) Planning and execution of all MAC and BAC meetings and the
production of meeting minutes that include actions taken or anticipated
actions by the State in response to interested parties' feedback
provided during the meeting. The minutes are to be posted on the
State's website within 30 calendar days following each meeting.
Additionally, the State must produce and post on its website an annual
report as specified in paragraph (i) of this section; and
(3) The provision of appropriate support and preparation (providing
research or other information needed) to the MAC and BAC members who
are Medicaid beneficiaries to ensure meaningful participation. These
tasks include--
(i) Providing staff whose responsibilities are to facilitate MAC
and BAC member engagement;
(ii) Providing financial support, if necessary, to facilitate
Medicaid beneficiary engagement in the MAC and the BAC; and
(iii) Attendance by at least one staff member from the single State
Agency for the Medicaid program's executive staff at all MAC and BAC
meetings.
(i) Annual report. The MAC, with support from the State, must
submit an annual report describing its activities, topics discussed,
and recommendations. The State must review the report and include
responses to the recommended actions. The State agency must then--
(1) Provide MAC members with final review of the report;
(2) Ensure that the annual report of the MAC includes a section
describing the activities, topics discussed, and recommendations of the
BAC, as well as the State's responses to the recommendations; and
(3) Post the report to the State's website. States have 2 years
from July 9, 2024 to finalize the first annual MAC report. After the
report has been finalized, States will have 30 days to post the annual
report.
(j) Federal financial participation. FFP is available at 50 percent
of expenditures for the MAC and BAC activities.
(k) Applicability dates. Except as noted in paragraphs (d)(1) and
(i)(3) of this section, the requirements in paragraphs (a) through (j)
of this section are applicable July 9, 2025.

0
3. Section 431.408 is amended by revising paragraph (a)(3)(i) to read
as follows:

Sec. 431.408 State public notice process.

(a) * * *
(3) * * *
(i) The Medicaid Advisory Committee and Beneficiary Advisory
Council that operate in accordance with Sec. 431.12 of this subpart;
or
* * * * *

PART 438--MANAGED CARE

0
4. The authority citation for part 438 continues to read as follows:

Authority: 42 U.S.C. 1302.

0
5. Section 438.72 is added to subpart B to read as follows:

Sec. 438.72 Additional requirements for long-term services and
supports.

(a) [Reserved]
(b) Services authorized under section 1915(c) waivers and section
1915(i), (j), and (k) State plan authorities. The State must comply
with the requirements at Sec. Sec. 441.301(c)(1) through (3),
441.302(a)(6), 441.302(k), 441.311, and 441.313 for services authorized
under section 1915(c) waivers and section 1915(i), (j), and (k) State
plan authorities.

PART 441--SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC
SERVICES

0
6. The authority citation for part 441 continues to read as follows:

Authority: 42 U.S.C. 1302.

0
7. Section 441.301 is amended by revising paragraphs (c)(1)
introductory text and (c)(3), and adding paragraph (c)(7) to read as
follows:

Sec. 441.301 Contents of request for a waiver.

* * * * *
(c) * * *
(1) Person-centered planning process. The individual, or if
applicable, the individual and the individual's authorized
representative, will lead the person-centered planning process. When
the term ``individual'' is used throughout Sec. 441.301(c)(1) through
(3), it includes the individual's authorized representative if
applicable. In addition, the person-centered planning process:
* * * * *
(3) Review of the person-centered service plan--(i) Requirement.
The State must ensure that the person-centered service plan for every
individual is reviewed, and revised as appropriate, based upon the
reassessment of functional need at least every 12 months, when the
individual's circumstances or needs change significantly, or at the
request of the individual.
(ii) Minimum performance at the State level. The State must
demonstrate, through the reporting requirements at Sec. 441.311(b)(3),
that it ensures the following minimum performance levels are met:
(A) Complete a reassessment of functional need at least every 12
months for no less than 90 percent of the individuals continuously
enrolled in the waiver for at least 365 days; and
(B) Review, and revise as appropriate, the person-centered service
plan, based upon the reassessment of functional need, at least every 12
months, for no less than 90 percent of the individuals continuously
enrolled in the waiver for at least 365 days.
(iii) Applicability date. States must comply with the performance
levels described in paragraph (c)(3)(ii) of this section beginning 3
years after July 9, 2024; and in the case of the State that implements
a managed care delivery system under the authority of sections 1915(a),
1915(b), 1932(a), or 1115(a) of the Act and includes HCBS in the MCO's,
PIHP's, or PAHP's contract, the first rating period for contracts with
the MCO, PIHP, or PAHP beginning on or after the date that is 3 years
after July 9, 2024.
* * * * *
(7) Grievance system--(i) Purpose. The State must establish a
procedure under which a beneficiary may file a grievance related to the
State's or a provider's performance of the activities described in
paragraphs (c)(1) through (6) of this section. This requirement does
not apply to a managed care delivery system under the authority of
sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act. The State
may have activities described in paragraph (c)(7) of this section
performed by contractors or other government entities, provided,
however, that the State retains responsibility for ensuring performance
of and compliance with these provisions.
(ii) Definitions. As used in this section:
Grievance means an expression of dissatisfaction or complaint
related to

[[Page 40864]]

the State's or a provider's performance of the activities described in
paragraphs (c)(1) through (6) of this section, regardless of whether
remedial action is requested.
Grievance system means the processes the State implements to handle
grievances, as well as the processes to collect and track information
about them.
(iii) General requirements. (A) The beneficiary or a beneficiary's
authorized representative, if applicable, may file a grievance. All
references to beneficiary include the role of the beneficiary's
representative, if applicable.
(1) Another individual or entity may file a grievance on behalf of
the beneficiary, or provide the beneficiary with assistance or
representation throughout the grievance process, with the written
consent of the beneficiary or authorized representative.
(2) A provider cannot file a grievance that would violate the
State's conflict of interest guidelines, as required in Sec.
441.540(a)(5).
(B) The State must:
(1) Base its grievance processes on written policies and procedures
that, at a minimum, meet the conditions set forth in this paragraph
(c)(7);
(2) Provide beneficiaries reasonable assistance in ensuring
grievances are appropriately filed with the grievance system,
completing forms and taking other procedural steps related to a
grievance. This includes, but is not limited to, ensuring the grievance
system is accessible to individuals with disabilities and providing
meaningful access to individuals with Limited English Proficiency,
consistent with Sec. 435.905(b) of this chapter, and includes
auxiliary aids and services where necessary to ensure effective
communication, such as providing interpreter services and toll-free
numbers that have adequate TTY/TTD and interpreter capability;
(3) Ensure that punitive or retaliatory action is neither
threatened nor taken against an individual filing a grievance or who
has had a grievance filed on their behalf;
(4) Accept grievances and requests for extension of timeframes from
the beneficiary;
(5) Provide to the beneficiary the notices and information required
under this subsection, including information on their rights under the
grievance system and on how to file grievances, and ensure that such
information is accessible for individuals with disabilities and
individuals with Limited English Proficiency in accordance with Sec.
435.905(b);
(6) Review any grievance resolution with which the beneficiary is
dissatisfied; and
(7) Provide information about the grievance system to all providers
and subcontractors approved to deliver services.
(C) The process for handling grievances must:
(1) Allow the beneficiary to file a grievance with the State either
orally or in writing;
(2) Acknowledge receipt of each grievance;
(3) Ensure that the individuals who make decisions on grievances
are individuals:
(i) Who were neither involved in any previous level of review or
decision-making related to the grievance nor a subordinate of any such
individual;
(ii) Who are individuals who have the appropriate clinical and non-
clinical expertise, as determined by the State; and
(iii) Who consider all comments, documents, records, and other
information submitted by the beneficiary without regard to whether such
information was submitted to or considered previously by the State;
(4) Provide the beneficiary a reasonable opportunity, face-to-face
(including through the use of audio or video technology) and in
writing, to present evidence and testimony and make legal and factual
arguments related to their grievance. The State must inform the
beneficiary of the limited time available for this sufficiently in
advance of the resolution timeframe for grievances as specified in
paragraph (c)(7)(v) of this section;
(5) Provide the beneficiary their case file, including medical
records in compliance with the HIPAA Privacy Rule (45 CFR part 160 and
part 164 subparts A and E), other documents and records, and any new or
additional evidence considered, relied upon, or generated by the State
related to the grievance. This information must be provided free of
charge and sufficiently in advance of the resolution timeframe for
grievances as specified in paragraph (c)(7)(v) of this section; and
(6) Provide beneficiaries, free of charge, with language services,
including written translation and interpreter services in accordance
with Sec. 435.905(b), to support their participation in grievance
processes and their use of the grievance system.
(iv) Filing timeframes. A beneficiary may file a grievance at any
time.
(v) Resolution and notification--(A) Basic rule. The State must
resolve each grievance, and provide notice, as expeditiously as the
beneficiary's health condition requires, within State-established
timeframes that may not exceed the timeframes specified in this
section.
(B) Resolution timeframes. For resolution of a grievance and notice
to the affected parties, the timeframe may not exceed 90 calendar days
from the day the State receives the grievance. This timeframe may be
extended under paragraph (c)(7)(v)(C) of this section.
(C) Extension of timeframes. The States may extend the timeframe
from that in paragraph (c)(7)(v)(B) of this section by up to 14
calendar days if -
(1) The beneficiary requests the extension; or
(2) The State documents that there is need for additional
information and how the delay is in the beneficiary's interest.
(D) Requirements following extension. If the State extends the
timeframe not at the request of the beneficiary, it must complete all
of the following:
(1) Make reasonable efforts to give the beneficiary prompt oral
notice of the delay;
(2) Within 2 calendar days of determining a need for a delay, but
no later than the timeframes in paragraph (c)(7)(v)(B) of this section,
give the beneficiary written notice of the reason for the decision to
extend the timeframe; and
(3) Resolve the grievance as expeditiously as the beneficiary's
health condition requires and no later than the date the extension
expires.
(vi) Format of notice. The State must establish a method to notify
a beneficiary of the resolution of a grievance and ensure that such
methods meet, at a minimum, the standards described at Sec. 435.905(b)
of this chapter.
(vii) Recordkeeping. (A) The State must maintain records of
grievances and must review the information as part of its ongoing
monitoring procedures.
(B) The record of each grievance must contain, at a minimum, all of
the following information:
(1) A general description of the reason for the grievance;
(2) The date received;
(3) The date of each review or, if applicable, review meeting;
(4) Resolution of the grievance, as applicable;
(5) Date of resolution, if applicable; and
(6) Name of the beneficiary for whom the grievance was filed.
(C) The record must be accurately maintained in a manner available
upon request to CMS.
(viii) Applicability date. States must comply with the requirement
at paragraph (c)(7) of this section beginning 2 years after July 9,
2024.

[[Page 40865]]

0
8. Section 441.302 is amended by--
0
a. Adding paragraph (a)(6);
0
b. Revising paragraph (h); and
0
c. Adding paragraph (k).
The additions and revision read as follows:

Sec. 441.302 State assurances.

* * * * *
(a) * * *
(6) Assurance that the State operates and maintains an incident
management system that identifies, reports, triages, investigates,
resolves, tracks, and trends critical incidents.
(i) Requirements. The State must:
(A) Define critical incident to include, at a minimum--
(1) Verbal, physical, sexual, psychological, or emotional abuse;
(2) Neglect;
(3) Exploitation including financial exploitation;
(4) Misuse or unauthorized use of restrictive interventions or
seclusion;
(5) A medication error resulting in a telephone call to, or a
consultation with, a poison control center, an emergency department
visit, an urgent care visit, a hospitalization, or death; or
(6) An unexplained or unanticipated death, including but not
limited to a death caused by abuse or neglect;
(B) Use an information system, as defined in 45 CFR 164.304 and
compliant with 45 CFR part 164, that, at a minimum, enables--
(1) Electronic critical incident data collection;
(2) Tracking (including of the status and resolution of
investigations); and
(3) Trending;
(C) Require providers to report to the State, within State-
established timeframes and procedures, any critical incident that
occurs during the delivery of services authorized under section 1915(c)
of the Act and as specified in the beneficiary's person-centered
service plan, or occurs as a result of the failure to deliver services
authorized under section 1915(c) of the Act and as specified in the
beneficiary's person-centered service plan;
(D) Use claims data, Medicaid fraud control unit data, and data
from other State agencies, such as Adult Protective Services or Child
Protective Services, to the extent permissible under applicable State
law to identify critical incidents that are unreported by providers and
occur during the delivery of services authorized under section 1915(c)
of the Act and as specified in the beneficiary's person-centered
service plan, or occur as a result of the failure to deliver services
authorized under section 1915(c) of the Act and as specified in the
beneficiary's person-centered service plan;
(E) Ensure that there is information sharing on the status and
resolution of investigations, such as through the use of information
sharing agreements, between the State and the entity or entities
responsible in the State for investigating critical incidents as
defined in paragraph (a)(6)(i)(A) of this section if the State refers
critical incidents to other entities for investigation;
(F) Separately investigate critical incidents if the investigative
agency fails to report the resolution of an investigation within State-
specified timeframes; and
(G) Demonstrate that it meets the requirements in paragraph (a)(6)
of this section through the reporting requirement at Sec.
441.311(b)(1).
(ii) Minimum performance at the State level. The State must
demonstrate, through the reporting requirements at Sec. 441.311(b)(2),
that it meets the following minimum performance levels:
(A) Initiate an investigation, within State-specified timeframes,
for no less than 90 percent of critical incidents;
(B) Complete an investigation and determine the resolution of the
investigation, within State-specified timeframes, for no less than 90
percent of critical incidents; and
(C) Ensure that corrective action has been completed within State-
specified timeframes, for no less than 90 percent of critical incidents
that require corrective action.
(iii) Applicability date. States must comply with the requirements
in paragraph (a)(6) of this section beginning 3 years after July 9,
2024; except for the requirement at paragraph (a)(6)(i)(B) of this
section, with which the State must comply beginning 5 years after July
9, 2024; and in the case of the State that implements a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's,
or PAHP's contract, the first rating period for contracts with the MCO,
PIHP, or PAHP beginning on or after 3 years after July 9, 2024, except
for the requirement at paragraph (a)(6)(i)(B) of this section, with
which the first rating period for contracts with the MCO, PIHP or PAHP
beginning on or after 5 years after July 9, 2024.
* * * * *
(h) Reporting. Assurance that the agency will provide CMS with
information on the waiver's impact, including the data and information
as required in Sec. 441.311.
* * * * *
(k) HCBS payment adequacy. Assurance that payment rates are
adequate to ensure a sufficient direct care workforce to meet the needs
of beneficiaries and provide access to services in the amount,
duration, and scope specified in beneficiaries' person-centered service
plans.
(1) Definitions. As used in this paragraph--
(i) Compensation means:
(A) Salary, wages, and other remuneration as defined by the Fair
Labor Standards Act and implementing regulations (29 U.S.C. 201 et
seq., 29 CFR parts 531 and 778);
(B) Benefits (such as health and dental benefits, life and
disability insurance, paid leave, retirement, and tuition
reimbursement); and
(C) The employer share of payroll taxes for direct care workers
delivering services authorized under section 1915(c) of the Act.
(ii) Direct care worker means any of the following individuals who
may be employed by a Medicaid provider, State agency, or third party;
contracted with a Medicaid provider, State agency, or third party; or
delivering services under a self-directed services delivery model:
(A) A registered nurse, licensed practical nurse, nurse
practitioner, or clinical nurse specialist who provides nursing
services to Medicaid beneficiaries receiving home and community-based
services available under this subpart;
(B) A licensed or certified nursing assistant who provides such
services under the supervision of a registered nurse, licensed
practical nurse, nurse practitioner, or clinical nurse specialist;
(C) A direct support professional;
(D) A personal care attendant;
(E) A home health aide; or
(F) Other individuals who are paid to provide services to address
activities of daily living or instrumental activities of daily living,
behavioral supports, employment supports, or other services to promote
community integration directly to Medicaid beneficiaries receiving home
and community-based services available under this subpart, including
nurses and other staff providing clinical supervision.
(iii) Excluded costs means costs that are not included in the
calculation of the percentage of Medicaid payments to providers that is
spent on compensation for direct care workers. Such costs are limited
to:
(A) Costs of required trainings for direct care workers (such as
costs for qualified trainers and training materials);
(B) Travel costs for direct care workers (such as mileage
reimbursement or public transportation subsidies); and

[[Page 40866]]

(C) Costs of personal protective equipment for direct care workers.
(2) Requirement. (i) Except as provided in paragraph (k)(2)(ii) of
this section, the State must demonstrate annually, through the
reporting requirements at paragraph (k)(6) of this section and Sec.
441.311(e), that it meets the minimum performance levels in paragraph
(k)(3) of this section for furnishing homemaker, home health aide, or
personal care services, as set forth at Sec. 440.180(b)(2) through
(4), that are delivered by direct care workers and authorized under
section 1915(c) of the Act.
(ii) Treatment of certain payment data under self-directed services
delivery models. If the State provides that homemaker, home health
aide, or personal care services, as set forth at Sec. 440.180(b)(2)
through (4), may be furnished under a self-directed services delivery
model in which the beneficiary directing the services sets the direct
care worker's payment rate, then the State does not include such
payment data in its calculation of the State's compliance with the
minimum performance levels at paragraph (k)(3) of this section.
(3) Minimum performance at the provider level. Except as provided
in paragraphs (k)(5) and (7) of this section, the State must meet the
following minimum performance level as applicable, calculated as the
percentage of total payment (not including excluded costs) to a
provider for furnishing homemaker, home health aide, or personal care
services, as set forth at Sec. 440.180(b)(2) through (4), represented
by the provider's total compensation to direct care workers:
(i) Except as provided in paragraph (k)(3)(ii) of this section, the
State must ensure that each provider spends 80 percent of total
payments the provider receives for services it furnishes as described
in paragraph (k)(3) of this section on total compensation for direct
care workers who furnish those services.
(ii) At the State's option, for providers determined by the State
to meet its State-defined small provider criteria in paragraph
(k)(4)(i) of this section, the State must ensure that each provider
spends the percentage set by the State in accordance with paragraph
(k)(4)(ii) of this section of total payments the provider receives for
services it furnishes as described in paragraph (k)(3) of this section
on total compensation for direct care workers who furnish those
services.
(4) Small provider minimum performance level--(i) Small provider
criteria. The State may develop reasonable, objective criteria through
a transparent process to identify small providers that the State would
require to meet the minimum performance requirement at paragraph
(k)(3)(ii) of this section. The transparent process for developing
criteria to identify providers that qualify for the minimum performance
requirement in paragraph (k)(3)(ii) of this section must include public
notice and opportunities for comment from interested parties.
(ii) Small provider minimum performance level. The State must set
the percentage for a small provider to meet the minimum performance
level at paragraph (k)(3)(ii) of this section based on reasonable,
objective criteria it develops through a transparent process that
includes public notice and opportunities for comment from interested
parties.
(5) Hardship exemption. The State may develop reasonable, objective
criteria through a transparent process to exempt from the minimum
performance requirement at paragraph (k)(3) of this section a
reasonable number of providers determined by the State to be facing
extraordinary circumstances that prevent their compliance with
paragraph (k)(3) of this section. The State must develop these criteria
through a transparent process that includes public notice and
opportunities for comment from interested parties. If a provider meets
the State's hardship exemption criteria, then the State does not
include that provider in its calculation of the State's compliance with
the minimum performance level at paragraph (k)(3) of this section.
(6) Reporting on small provider minimum performance level and
hardship exemption.
(i) States that establish a small provider minimum performance
level under paragraph (k)(4) of this section must report to CMS
annually the following information, in the form and manner, and at a
time, specified by CMS:
(A) The State's small provider criteria developed in accordance
with paragraph (k)(4)(i) of this section;
(B) The State's small provider minimum performance level developed
in accordance with paragraph (k)(4)(ii) of this section;
(C) The percentage of providers of services set forth at Sec.
[thinsp]440.180(b)(2) through (4) that qualify for the small provider
minimum performance level at paragraph (k)(4) of this section; and
(D) A plan, subject to CMS review and approval, for small providers
to meet the minimum performance requirement at paragraph (k)(3)(i) of
this section within a reasonable period of time.
(ii) States that provide a hardship exemption in accordance with
paragraph (k)(5) of this section must report to CMS annually the
following information, in the form and manner, and at a time, specified
by CMS:
(A) The State's hardship criteria developed in accordance with
paragraph (k)(5) of this section;
(B) The percentage of providers of services set forth at Sec.
[thinsp]440.180(b)(2) through (4) that qualify for a hardship exemption
as provided in paragraph (k)(5) of this section; and
(C) A plan, subject to CMS review and approval, for reducing the
number of providers that qualify for a hardship exemption within a
reasonable period of time.
(iii) CMS may waive the reporting requirements in paragraphs
(k)(6)(i)(D) or (k)(6)(ii)(C) of this section, as applicable, if the
State demonstrates it has applied the small provider minimum
performance level at paragraph (k)(4)(ii) of this section or the
hardship exemption at paragraph (k)(5) of this section to less than 10
percent of the State's providers.
(7) Exemption for the Indian Health Service and Tribal health
programs subject to 25 U.S.C. 1641. The Indian Health Service and
Tribal health programs subject to the requirements at 25 U.S.C. 1641
are exempt from the requirements at paragraph (k) of this section.
(8) Applicability date. States must comply with the requirements
set forth in paragraph (k) of this section beginning 6 years after July
9, 2024; and in the case of the State that implements a managed care
delivery system under the authority of section 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and includes homemaker, home health
aide, or personal care services, as set forth at Sec. 440.180(b)(2)
through (4) in the MCO's, PIHP's, or PAHP's contract, the first rating
period for contracts with the MCO, PIHP, or PAHP beginning on or after
the date that is 6 years after July 9, 2024.

0
9. Section 441.303 is amended by revising paragraph (f)(6) to read as
follows:

Sec. 441.303 Supporting documentation required.

* * * * *
(f) * * *
(6) The State must indicate the number of unduplicated
beneficiaries to which it intends to provide waiver services in each
year of its program. This number will constitute a limit on the size of
the waiver program unless the State requests and the Secretary approves
a greater number of waiver

[[Page 40867]]

participants in a waiver amendment. If the State has a limit on the
size of the waiver program and maintains a list of individuals who are
waiting to enroll in the waiver program, the State must meet the
reporting requirements at Sec. 441.311(d)(1).
* * * * *

0
10. Section 441.311 is added to subpart G to read as follows:

Sec. 441.311 Reporting requirements.

(a) Basis and scope. Section 1902(a)(6) of the Act requires State
Medicaid agencies to make such reports, in such form and containing
such information, as the Secretary may from time to time require, and
to comply with such provisions as the Secretary may from time to time
find necessary to assure the correctness and verification of such
reports. Section 1902(a)(19) of the Act requires States to provide
safeguards to assure that eligibility for Medicaid-covered care and
services will be determined and provided in a manner that is consistent
with simplicity of administration and the best interests of Medicaid
beneficiaries. This section describes the reporting requirements for
States for section 1915(c) waiver programs, under the authority at
section 1902(a)(6) and (a)(19) of the Act.
(b) Compliance reporting--(1) Incident management system. As
described in Sec. 441.302(a)(6)--
(i) The State must report, every 24 months, in the form and manner,
and at a time, specified by CMS, on the results of an incident
management system assessment to demonstrate that it meets the
requirements in Sec. 441.302(a)(6).
(ii) CMS may reduce the frequency of reporting to up to once every
60 months for States with incident management systems that are
determined by CMS to meet the requirements in Sec. 441.302(a)(6).
(2) Critical incidents. The State must report to CMS annually on
the following information regarding critical incidents as defined in
Sec. 441.302(a)(6)(i)(A), in the form and manner, and at a time,
specified by CMS:
(i) Number and percent of critical incidents for which an
investigation was initiated within State-specified timeframes;
(ii) Number and percent of critical incidents that are investigated
and for which the State determines the resolution within State-
specified timeframes;
(iii) Number and percent of critical incidents requiring corrective
action, as determined by the State, for which the required corrective
action has been completed within State-specified timeframes.
(3) Person-centered planning. To demonstrate that the State meets
the requirements at Sec. 441.301(c)(3)(ii) regarding person-centered
planning (as described in Sec. 441.301(c)(1) through (3)), the State
must report to CMS annually on the following, in the form and manner,
and at a time, specified by CMS--
(i) Percent of beneficiaries continuously enrolled for at least 365
days for whom a reassessment of functional need was completed within
the past 12 months. The State may report this metric using
statistically valid random sampling of beneficiaries.
(ii) Percent of beneficiaries continuously enrolled for at least
365 days who had a service plan updated as a result of a re-assessment
of functional need within the past 12 months. The State may report this
metric using statistically valid random sampling of beneficiaries.
(4) Annually, the State will provide CMS with information on the
waiver's impact on the type, amount, and cost of services provided
under the State plan, in the form and manner, and at a time, specified
by CMS.
(c) Reporting on the Home and Community-Based Services Quality
Measure Set, as described in Sec. 441.312.
(1) General rules. The State--
(i) Must report every other year, according to the format and
schedule prescribed by the Secretary through the process for developing
and updating the measure set described in Sec. 441.312(d), on all
measures in the Home and Community-Based Services Quality Measure Set
that are identified by the Secretary pursuant to Sec.
441.312(d)(1)(ii) of this subpart.
(ii) May report on all other measures in the Home and Community-
Based Services Quality Measure Set that are not described in Sec.
441.312(d)(1)(ii) and (iii) of this subpart.
(iii) Must establish, subject to CMS review and approval, State
performance targets for each of the measures in the Home and Community-
Based Services Quality Measure Set that are identified by the Secretary
pursuant to Sec. 441.312(d)(1)(ii) and (iii) of this subpart and
describe the quality improvement strategies that the State will pursue
to achieve the performance targets.
(iv) May establish State performance targets for each of the
measures in the Home and Community-Based Services Quality Measure Set
that are not identified by the Secretary pursuant to Sec.
441.312(d)(1)(ii) and (iii) of this subpart and describe the quality
improvement strategies that the State will pursue to achieve the
performance targets.
(2) Measures identified per Sec. 441.312(d)(1)(iii) of this
subpart will be reported by the Secretary on behalf of the State.
(3) In reporting on Home and Community-Based Services Quality
Measure Set measures, the State may, but is not required to:
(i) Report on the measures identified by the Secretary pursuant to
Sec. 441.312(c) of this subpart for which reporting will be, but is
not yet required (that is, reporting has not yet been phased-in).
(ii) Report on the populations identified by the Secretary pursuant
to Sec. 441.312(c) of this subpart for whom reporting will be, but is
not yet required.
(d) Access reporting. The State must report to CMS annually on the
following, in the form and manner, and at a time, specified by CMS:
(1) Waiver waiting lists. (i) A description of how the State
maintains the list of individuals who are waiting to enroll in the
waiver program, if the State has a limit on the size of the waiver
program, as described in Sec. 441.303(f)(6), and maintains a list of
individuals who are waiting to enroll in the waiver program. This
description must include, but is not limited to:
(A) Information on whether the State screens individuals on the
list for eligibility for the waiver program;
(B) Whether the State periodically re-screens individuals on the
list for eligibility; and
(C) The frequency of re-screening, if applicable.
(ii) Number of people on the list of individuals who are waiting to
enroll in the waiver program, if applicable.
(iii) Average amount of time that individuals newly enrolled in the
waiver program in the past 12 months were on the list of individuals
waiting to enroll in the waiver program, if applicable.
(2) Access to homemaker, home health aide, personal care, and
habilitation services. (i) Average amount of time from when homemaker
services, home health aide services, personal care services, and
habilitation services, as set forth in Sec. 440.180(b)(2) through (4)
and (6), are initially approved to when services began, for individuals
newly receiving services within the past 12 months. The State may
report this metric using statistically valid random sampling of
beneficiaries.
(ii) Percent of authorized hours for homemaker services, home
health aide services, personal care services, and habilitation
services, as set forth in Sec. 440.180(b)(2) through (4) and (6), that

[[Page 40868]]

are provided within the past 12 months. The State may report this
metric using statistically valid random sampling of beneficiaries.
(e) Payment adequacy--(1) Definitions. As used in this paragraph
(e)-
(i) Compensation means:
(A) Salary, wages, and other remuneration as defined by the Fair
Labor Standards Act and implementing regulations (29 U.S.C. 201 et
seq., 29 CFR parts 531 and 778);
(B) Benefits (such as health and dental benefits, life and
disability insurance, paid leave, retirement, and tuition
reimbursement); and
(C) The employer share of payroll taxes for direct care workers
delivering services authorized under section 1915(c) of the Act.
(ii) Direct care worker means any of the following individuals who
may be employed by a Medicaid provider, State agency, or third party;
contracted with a Medicaid provider, State agency, or third party; or
delivering services under a self-directed services delivery model:
(A) A registered nurse, licensed practical nurse, nurse
practitioner, or clinical nurse specialist who provides nursing
services to Medicaid beneficiaries receiving home and community-based
services available under this subpart;
(B) A licensed or certified nursing assistant who provides such
services under the supervision of a registered nurse, licensed
practical nurse, nurse practitioner, or clinical nurse specialist;
(C) A direct support professional;
(D) A personal care attendant;
(E) A home health aide; or
(F) Other individuals who are paid to provide services to address
activities of daily living or instrumental activities of daily living,
behavioral supports, employment supports, or other services to promote
community integration directly to Medicaid beneficiaries receiving home
and community-based services available under this subpart, including
nurses and other staff providing clinical supervision.
(iii) Excluded costs means costs that are not included in the
calculation of the percentage of Medicaid payments to providers that
are spent on compensation for direct care workers. Such costs are
limited to:
(A) Costs of required trainings for direct care workers (such as
costs for qualified trainers and training materials);
(B) Travel costs for direct care workers (such as mileage
reimbursement or public transportation subsidies); and
(C) Cost of personal protective equipment for direct care workers.
(2) Payment adequacy reporting. (i) Except as provided in
paragraphs (e)(2)(ii) and (e)(4) of this section, the State must report
to CMS annually on the percentage of total payments (not including
excluded costs) for furnishing homemaker services, home health aide
services, personal care, and habilitation services, as set forth in
Sec. 440.180(b)(2) through (4) and (6), that is spent on compensation
for direct care workers, at the time and in the form and manner
specified by CMS. The State must report separately for each service
and, within each service, must separately report services that are
self-directed and services delivered in a provider-operated physical
location for which facility-related costs are included in the payment
rate.
(ii) If the State provides that homemaker, home health aide,
personal care services, or habilitation services, as set forth at Sec.
440.180(b)(2) through (4) and (6), may be furnished under a self-
directed services delivery model in which the beneficiary directing the
services sets the direct care worker's payment rate, then the State
must exclude such payment data from the reporting required in paragraph
(e) of this section.
(3) Payment adequacy reporting readiness. One year prior to the
applicability date for paragraph (e)(2)(i) of this section, the State
must report on its readiness to comply with the reporting requirement
in (e)(2)(i) of this section.
(4) Exclusion of data from the Indian Health Service and Tribal
health programs that are subject to 25 U.S.C. 1641. States must exclude
the Indian Health Service and Tribal health programs subject to the
requirements at 25 U.S.C. 1641 from the reporting required in paragraph
(e) of this section, and not require submission of data by, or include
any data from, the Indian Health Service or Tribal health programs
subject to the requirements at 25 U.S.C. 1641 for the State's reporting
required under paragraph (e)(2) of this section.
(f) Applicability dates. (1) The State must comply with the
reporting requirements at paragraphs (b) and (d) of this section
beginning 3 years after July 9, 2024; and in the case of a State that
implements a managed care delivery system under the authority of
sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act and includes
HCBS in the MCO's, PIHP's, or PAHP's contract, the first rating period
for contracts with the MCO, PIHP, or PAHP beginning on or after the
date that is 3 years after July 9, 2024.
(2) The State must comply with the reporting requirements at
paragraphs (c) and (e) of this section beginning 4 years after July 9,
2024; and in the case of a State that implements a managed care
delivery system under the authority of sections 1915(a), 1915(b),
1932(a), or 1115(a) of the Act and includes HCBS in the MCO's, PIHP's,
or PAHP's contract, the first rating period for contracts with the MCO,
PIHP or PAHP beginning on or after the date that is 4 years after July
9, 2024.

0
11. Section 441.312 is added to subpart G to read as follows:

Sec. 441.312 Home and community-based services quality measure set.

(a) Basis and scope. Section 1102(a) of the Act provides the
Secretary of HHS with authority to make and publish rules and
regulations that are necessary for the efficient administration of the
Medicaid program. Section 1902(a)(6) of the Act requires State Medicaid
agencies to make such reports, in such form and containing such
information, as the Secretary may from time to time require, and to
comply with such provisions as the Secretary may from time to time find
necessary to assure the correctness and verification of such reports.
This section describes the Home and Community-Based Services Quality
Measure Set, which States are required to use in section 1915(c) waiver
programs to promote public transparency related to the administration
of Medicaid-covered HCBS, under the authority at sections 1102(a) and
1902(a)(6) of the Act.
(b) Definitions. As used in this subpart--
(1) Attribution rules means the process States use to assign
beneficiaries to a specific health care program or delivery system for
the purpose of calculating the measures on the Home and Community-Based
Services Quality Measure Set.
(2) Home and Community-Based Services Quality Measure Set means the
Home and Community-Based Services Quality Measures for Medicaid
established and updated by the Secretary through a process that allows
for public input and comment, including through the Federal Register,
as described in paragraph (d) of this section.
(c) Responsibilities of the Secretary. The Secretary shall--
(1) Identify, and update no more frequently than every other year,
beginning no later than December 31, 2026, the quality measures to be
included in the Home and Community-Based Services Quality Measure Set
as defined in paragraph (b) of this section.

[[Page 40869]]

(2) Make technical updates and corrections to the Home and
Community-Based Services Quality Measure Set annually as appropriate.
(3) Consult at least every other year with States and other
interested parties identified in paragraph (g) of this section to--
(i) Establish priorities for the development and advancement of the
Home and Community-Based Services Quality Measure Set;
(ii) Identify newly developed or other measures which should be
added including to address any gaps in the measures included in the
Home and Community-Based Services Quality Measure Set;
(iii) Identify measures which should be removed as they no longer
strengthen the Home and Community-Based Services Quality Measure Set;
and
(iv) Ensure that all measures included in the Home and Community-
Based Quality Measure Set reflect an evidenced-based process including
testing, validation, and consensus among interested parties; are
meaningful for States; and are feasible for State-level, program-level,
or provider-level reporting as appropriate.
(4) In consultation with States, develop and update, no more
frequently than every other year, the Home and Community-Based Services
Quality Measure Set Quality Measure Set using a process that allows for
public input and comment as described in paragraph (d) of this section.
(d) Process for developing and updating the HCBS Quality Measure
Set. The process for developing and updating the Home and Community-
Based Services Quality Measure Set Quality Measure Set will address all
of the following:
(1) Identification of all measures in the Home and Community-Based
Services Quality Measure Set, including:
(i) Measures newly added and measures removed from the prior
version of the Home and Community-Based Services Quality Measure Set;
(ii) The specific measures for which reporting is mandatory;
(iii) The measures for which the Secretary will complete reporting
on behalf of States and the measures for which States may elect to have
the Secretary report on their behalf; and
(iv) The measures, if any, for which the Secretary will provide
States with additional time to report, as well as how much additional
time the Secretary will provide, in accordance with paragraph (c) of
this section.
(2) Technical information to States on how to collect and calculate
the data on the Home and Community-Based Services Quality Measure Set.
(3) Standardized format and reporting schedule for reporting
measure data required under this section.
(4) Procedures that State agencies must follow in reporting measure
data required under this section.
(5) Identification of the populations for which States must report
the measures identified by the Secretary under paragraph (e) of this
section, which may include, but is not limited to beneficiaries--
(i) Receiving services through specified delivery systems, such as
those enrolled in a MCO, PIHP, or PAHP as defined in Sec. 438.2 or
receiving services on a fee-for-service basis;
(ii) Who are dually eligible for Medicare and Medicaid, including
beneficiaries whose medical assistance is limited to payment of
Medicare premiums or cost sharing;
(iii) Who are older adults;
(iv) Who have physical disabilities;
(v) Who have intellectual and development disabilities;
(vi) Who have serious mental illness; and
(vii) Who have other health conditions.
(6) Technical information on attribution rules for determining how
States must report on measures for beneficiaries who are included in
more than one population, as described in paragraph (d)(5) of this
section, during the reporting period.
(7) The subset of measures among the measures in the Home and
Community-Based Services Quality Measure Set that must be stratified by
race, ethnicity, sex, age, rural/urban status, disability, language, or
such other factors as may be specified by the Secretary and informed by
consultation every other year with States and interested parties in
accordance with paragraphs (b)(2) and (g) of this section.
(8) Describe how to establish State performance targets for each of
the measures in the Home and Community-Based Services Quality Measure
Set.
(e) Phasing in of certain reporting. As part of the process that
allows for developing and updating the Home and Community-Based
Services Quality Measure Set described in paragraph (d) of this
section, the Secretary may provide that mandatory State reporting for
certain measures and reporting for certain populations of beneficiaries
will be phased in over a specified period of time, taking into account
the level of complexity required for such State reporting.
(f) Selection of measures for stratification. In specifying which
measures, and by which factors, States must report stratified measures
consistent with paragraph (d)(7) of this section, the Secretary will
take into account whether stratification can be accomplished based on
valid statistical methods and without risking a violation of
beneficiary privacy and, for measures obtained from surveys, whether
the original survey instrument collects the variables necessary to
stratify the measures, and such other factors as the Secretary
determines appropriate; the Secretary will require stratification of 25
percent of the measures in the Home and Community-Based Services
Quality Measure Set for which the Secretary has specified that
reporting should be stratified by 4 years after July 9, 2024, 50
percent of such measures by 6 years after July 9, 2024, and 100 percent
of measures by 8 years after July 9, 2024.
(g) Consultation with interested parties. For purposes of paragraph
(c)(2) of this section, the Secretary must consult with interested
parties as described in this paragraph to include the following:
(1) State Medicaid Agencies and agencies that administer Medicaid-
covered home and community-based services.
(2) Health care and home and community-based services
professionals, including members of the allied health professions who
specialize in the care and treatment of older adults, children and
adults with disabilities, and individuals with complex medical needs.
(3) Health care and home and community-based services professionals
(including members of the allied health professions), providers, and
direct care workers who provide services to older adults, children and
adults with disabilities, and individuals with complex medical and
behavioral health care needs who live in urban and rural medically
underserved communities or who are members of distinct population sub-
groups at heightened risk for poor outcomes.
(4) Providers of home and community-based services.
(5) Direct care workers and national organizations representing
direct care workers.
(6) Consumers and national organizations representing older adults,
children and adults with disabilities, and individuals with complex
medical needs.
(7) National organizations and individuals with expertise in home
and community-based services quality measurement.
(8) Voluntary consensus standards setting organizations and other

[[Page 40870]]

organizations involved in the advancement of evidence-based measures of
health care.
(9) Measure development experts.
(10) Such other interested parties as the Secretary may determine
appropriate.

0
12. Section 441.313 is added to subpart G to read as follows:

Sec. 441.313 Website transparency.

(a) The State must operate a website consistent with Sec.
435.905(b) of this chapter that provides the results of the reporting
requirements specified at Sec. Sec. 441.302(k)(6) and 441.311. The
State must:
(1) Include all content on one website, either directly or by
linking to websites of individual MCO's, PIHP's, or PAHP's, as defined
in Sec. 438.2 of this chapter;
(2) Include clear and easy to understand labels on documents and
links;
(3) Verify no less than quarterly, the accurate function of the
website and the timeliness of the information and links; and
(4) Include prominent language on the website explaining that
assistance in accessing the required information on the website is
available at no cost and include information on the availability of
oral interpretation in all languages and written translation available
in each non-English language, how to request auxiliary aids and
services, and a toll-free and TTY/TDY telephone number.
(b) CMS must report on its website the results of the reporting
requirements specified at Sec. Sec. 441.302(k)(6) and 441.311 that the
State reports to CMS.
(c) The State must comply with these requirements beginning 3 years
after July 9, 2024; and in the case of the State that implements a
managed care delivery system under the authority of sections 1915(a),
1915(b), 1932(a), and 1115(a) of the Act and includes HCBS in the
MCO's, PIHP's, or PAHP's contract, the first rating period for
contracts with the MCO, PIHP, or PAHP beginning on or after the date
that is 3 years after July 9, 2024.

0
13. Section 441.450 is amended in paragraph (c) by revising the
definition of ``Service plan'' to read as follows:

Sec. 441.450 Basis, scope, and definitions.

* * * * *
(c) * * *
Service plan means the written document that specifies the services
and supports (regardless of funding source) that are to be furnished to
meet the needs of a participant in the self-directed PAS option and to
assist the participant to direct the PAS and to live in the community.
The service plan is developed based on the assessment of need using a
person-centered and directed process. The service plan supports the
participant's engagement in community life and respects the
participant's preferences, choices, and abilities. The participant's
representative, if any, families, friends, and professionals, as
desired or required by the participant, will be involved in the
service-planning process. Service plans must meet the requirements of
Sec. 441.301(c)(3), except that the references to section 1915(c) of
the Act are instead references to section 1915(j) of the Act.
* * * * *

0
14. Section 441.464 is amended by--
0
a. Adding paragraph (d)(5);
0
b. Redesignating paragraphs (e) and (f) as paragraphs (g) and (h); and
0
c. Adding new paragraphs (e) and (f).
The revisions and additions read as follows:

Sec. 441.464 State assurances.

* * * * *
(d) * * *
(5) Implement and maintain a grievance process in accordance with
Sec. 441.301(c)(7), except that the references to section 1915(c) of
the Act are instead references to section 1915(j) of the Act.
(e) Incident management system. The State operates and maintains an
incident management system that identifies, reports, triages,
investigates, resolves, tracks, and trends critical incidents and
adheres to requirements of Sec. 441.302(a)(6), except that the
references to section 1915(c) of the Act are instead references to
section 1915(j) of the Act.
(f) Payment rates. Payment rates are adequate to ensure a
sufficient direct care workforce to meet the needs of beneficiaries and
provide access to services in the amount, duration, and scope specified
in beneficiaries' person-centered service plans, in accordance with
Sec. 441.302(k), except that the references to section 1915(c) of the
Act are instead references to section 1915(j) of the Act.
* * * * *

0
15. Section 441.474 is amended by adding paragraph (c) to read as
follows:

Sec. 441.474 Quality assurance and improvement plan.

* * * * *
(c) The quality assurance and improvement plan must comply with all
components of Sec. Sec. 441.302(k)(6), 441.311 and 441.312 and related
reporting requirements relevant to the State's self-directed PAS
program, except that the references to section 1915(c) of the Act are
instead references to section 1915(j) of the Act.

0
16. Section 441.486 is added to subpart J to read as follows:

Sec. 441.486 Website transparency.

For States subject to the requirements of subpart J, the State must
operate a website consistent with Sec. 441.313, except that the
references to section 1915(c) of the Act are instead references to
section 1915(j) of the Act.

0
17. Section 441.540 is amended by revising paragraph (c) to read as
follows:

Sec. 441.540 Person-centered service plan.

* * * * *
(c) Reviewing the person-centered service plan. The State must
ensure that the person-centered service plan for every individual is
reviewed, and revised as appropriate, based upon the reassessment of
functional need at least every 12 months, when the individual's
circumstances or needs change significantly, and at the request of the
individual. States must adhere to the requirements of Sec.
441.301(c)(3), except that the references to section 1915(c) of the Act
are instead references to section 1915(k) of the Act.

0
18. Section 441.555 is amended by adding paragraph (e) to read as
follows:

Sec. 441.555 Support system.

* * * * *
(e) Implement and maintain a grievance process, in accordance with
Sec. 441.301(c)(7), except that the references to section 1915(c) of
the Act are instead references to section 1915(k) of the Act.

0
19. Section 441.570 is amended by adding paragraphs (e) and (f) to read
as follows:

Sec. 441.570 State assurances.

* * * * *
(e) An incident management system in accordance with Sec.
441.302(a)(6) is implemented, except that the references to section
1915(c) of the Act are instead references to section 1915(k) of the
Act.
(f) Payment rates are adequate to ensure a sufficient direct care
workforce to meet the needs of beneficiaries and provide access to
services in the amount, duration, and scope specified in beneficiaries'
person-centered service plans, in accordance with Sec. 441.302(k),
except that the references to section 1915(c) of the Act are instead
references to section 1915(k) of the Act.

0
20. Section 441.580 is amended by redesignating paragraph (i) as (j),
and adding a new paragraph (i) to read as follows:

[[Page 40871]]

Sec. 441.580 Data collection.

* * * * *
(i) Data and information as required in Sec. Sec. 441.302(k)(6)
and 441.311, except that the references to section 1915(c) of the Act
are instead references to section 1915(k) of the Act.
* * * * *

0
21. Section 441.585 is amended by adding paragraph (d) to read as
follows:

Sec. 441.585 Quality assurance system.

* * * * *
(d) The State must implement the Home and Community-Based Services
Quality Measure Set in accordance with Sec. 441.312, except that the
references to section 1915(c) of the Act are instead references to
section 1915(k) of the Act.

0
22. Section 441.595 is added to subpart K to read as follows-

Sec. 441.595 Website transparency.

For States subject to the requirements of subpart K, the State must
operate a website consistent with Sec. 441.313, except that the
references to section 1915(c) of the Act are instead references to
section 1915(k) of the Act.

0
23. Section 441.725 is amended by revising paragraph (c) to read as
follows:

Sec. 441.725 Person-centered service plan.

* * * * *
(c) Reviewing the person-centered service plan. The State must
ensure that the person-centered service plan for every individual is
reviewed, and revised as appropriate, based upon the reassessment of
functional need as required in Sec. 441.720, at least every 12 months,
when the individual's circumstances or needs change significantly, and
at the request of the individual. States must adhere to the
requirements of Sec. 441.301(c)(3), except that the references to
section 1915(c) of the Act are instead references to section 1915(i) of
the Act.

0
24. Section 441.745 is amended by-
0
a. Revising paragraph (a)(1)(iii) and adding (a)(1)(iv) through (vii);
0
b. Revising paragraph (b)(1)(i); and
0
c. Adding paragraph (b)(1)(v).
The revision and additions read as follows:

Sec. 441.745 State plan HCBS administration: State responsibilities
and quality improvement.

* * * * *
(a) * * *
(1) * * *
(iii) Grievances. A State must implement and maintain a grievance
process in accordance with Sec. 441.301(c)(7), except that the
references to section 1915(c) of the Act are instead references to
section 1915(i) of the Act.
(iv) Appeals. A State must provide individuals with advance notice
of and the right to appeal terminations, suspensions, or reductions of
Medicaid eligibility or covered services as described in part 431,
subpart E, of this chapter.
(v) A State must implement an incident management system in
accordance with Sec. 441.302(a)(6), except that the references to
section 1915(c) of the Act are instead references to section 1915(i) of
the Act.
(vi) A State must assure payment rates are adequate to ensure a
sufficient direct care workforce to meet the needs of beneficiaries and
provide access to services in the amount, duration, and scope specified
in beneficiaries' person-centered service plans, in accordance with
Sec. 441.302(k), except that the references to section 1915(c) of the
Act are instead references to section 1915(i) of the Act.
(vii) A State must assure the submission of data and information as
required in Sec. 441.302(k)(6) and Sec. 441.311, except that the
references to section 1915(c) of the Act are instead references to
section 1915(i) of the Act.
* * * * *
(b) * * *
(1) * * *
(i) Incorporate a continuous quality improvement process that
includes monitoring, remediation, and quality improvement, including
recognizing and reporting critical incidents, as defined in Sec.
441.302(a)(6)(i)(A), except that the references to section 1915(c) of
the Act are instead references to section 1915(i) of the Act.
* * * * *
(v) Implementation of the Home and Community-Based Services Quality
Measure Set in accordance with Sec. 441.312, except that the
references to section 1915(c) of the Act are instead references to
section 1915(i) of the Act.
* * * * *

0
25. Section 441.750 is added to subpart M to read as follows--

Sec. 441.750 Website transparency.

For States subject to the requirements of subpart M, the State must
operate a website consistent with Sec. 441.313, except that the
references to section 1915(c) of the Act are instead references to
section 1915(i) of the Act.

PART 447--PAYMENT FOR SERVICES

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

Authority: 42 U.S.C. 1302, and 1396r-8, and Pub. L. 111-148.

0
27. Section 447.203 is amended by revising paragraph (b) and adding
paragraph (c) to read as follows:

Sec. 447.203 Documentation of access to care and service payment
rates.

* * * * *
(b)(1) Payment rate transparency. The State agency is required to
publish all Medicaid fee-for-service fee schedule payment rates on a
website that is accessible to the general public.
(i) For purposes of this paragraph (b)(1), the payment rates that
the State agency is required to publish are Medicaid fee-for-service
fee schedule payment rates made to providers delivering Medicaid
services to Medicaid beneficiaries through a fee-for-service delivery
system.
(ii) The website where the State agency publishes its Medicaid fee-
for-service payment rates must be easily reached from a hyperlink on
the State Medicaid agency's website.
(iii) Medicaid fee-for-service payment rates must be organized in
such a way that a member of the public can readily determine the amount
that Medicaid would pay for a given service.
(iv) In the case of a bundled payment methodology, the State must
publish the Medicaid fee-for-service bundled payment rate and, where
the bundled payment rate is based on fee schedule payment rates for
each constituent service, must identify each constituent service
included within the rate and how much of the bundled payment is
allocated to each constituent service under the State's methodology.
(v) If the rates vary, the State must separately identify the
Medicaid fee-for-service payment rates by population (pediatric and
adult), provider type, and geographical location, as applicable.
(vi) The initial publication of the Medicaid fee-for-service
payment rates shall occur no later than July 1, 2026 and include
approved Medicaid fee-for-service payment rates in effect as of July 1,
2026. The agency is required to include the date the payment rates were
last updated on the State Medicaid agency's website and to ensure these
data are kept current where any necessary update must be made no later
than 1 month following the latter of the date of CMS approval of the
State plan amendment, section 1915(c) HCBS waiver amendment, or similar
amendment revising the provider payment rate or methodology, or the
effective date of the approved amendment. In the event of a payment
rate change that occurs in accordance with a previously approved rate
methodology, the State will ensure that its payment rate transparency

[[Page 40872]]

publication is updated no later than 1 month after the effective date
of the most recent update to the payment rate.
(2) Comparative payment rate analysis and payment rate disclosure.
The State agency is required to develop and publish a comparative
payment rate analysis of Medicaid fee-for-service fee schedule payment
rates for each of the categories of services in paragraphs (b)(2)(i)
through (iii) of this section. If the rates vary, the State must
separately identify the payment rates by population (pediatric and
adult), provider type, and geographical location, as applicable. The
State agency is further required to develop and publish a payment rate
disclosure of the average hourly Medicaid fee-for-service fee schedule
payment rates for each of the categories of services in paragraph
(b)(2)(iv) of this section, as specified in paragraph (b)(3) of this
section. If the rates vary, the State must separately identify the
payment rates by population (pediatric and adult), provider type,
geographical location, and whether the payment rate includes facility-
related costs, as applicable.
(i) Primary care services.
(ii) Obstetrical and gynecological services.
(iii) Outpatient mental health and substance use disorder services.
(iv) Personal care, home health aide, homemaker, and habilitation
services, as specified in Sec. 440.180(b)(2) through (4) and (6),
provided by individual providers and provider agencies.
(3) Comparative payment rate analysis and payment rate disclosure
requirements. The State agency must develop and publish, consistent
with the publication requirements described in paragraphs (b)(1)
through (b)(1)(ii) of this section, a comparative payment rate analysis
and a payment rate disclosure.
(i) For the categories of services described in paragraph (b)(2)(i)
through (iii) of this section, the comparative payment rate analysis
must compare the State agency's Medicaid fee-for-service fee schedule
payment rates to the most recently published Medicare payment rates
effective for the same time period for the evaluation and management
(E/M) codes applicable to the category of service. The State must
conduct the comparative payment rate analysis at the Current Procedural
Terminology (CPT) or Healthcare Common Procedure Coding System (HCPCS)
code level, as applicable, using the most current set of codes
published by CMS, and the analysis must meet the following
requirements:
(A) The State must organize the analysis by category of service as
described in paragraphs (b)(2)(i) through (iii) of this section.
(B) The analysis must clearly identify the base Medicaid fee-for-
service fee schedule payment rates for each E/M CPT/HCPCS code
identified by CMS under the applicable category of service, including,
if the rates vary, separate identification of the payment rates by
population (pediatric and adult), provider type, and geographical
location, as applicable.
(C) The analysis must clearly identify the Medicare non-facility
payment rates as established in the annual Medicare Physician Fee
Schedule final rule effective for the same time period for the same set
of E/M CPT/HCPCS codes, and for the same geographical location as the
base Medicaid fee-for-service fee schedule payment rates, that
correspond to the base Medicaid fee-for-service fee schedule payment
rates identified under paragraph (b)(3)(i)(B) of this section,
including separate identification of the payment rates by provider
type.
(D) The analysis must specify the base Medicaid fee-for-service fee
schedule payment rate identified under paragraph (b)(3)(i)(B) of this
section as a percentage of the Medicare non-facility payment rate as
established in the annual Medicare Physician Fee Schedule final rule
identified under paragraph (b)(3)(i)(C) of this section for each of the
services for which the base Medicaid fee-for-service fee schedule
payment rate is published pursuant to paragraph (b)(3)(i)(B) of this
section.
(E) The analysis must specify the number of Medicaid-paid claims
and the number of Medicaid enrolled beneficiaries who received a
service within a calendar year for each of the services for which the
base Medicaid fee-for-service fee schedule payment rate is published
pursuant to paragraph (b)(3)(i)(B) of this section.
(ii) For each category of services specified in paragraph
(b)(2)(iv) of this section, the State agency is required to publish a
payment rate disclosure that expresses the State's payment rates as the
average hourly Medicaid fee-for-service fee schedule payment rates,
separately identified for payments made to individual providers and
provider agencies, if the rates vary. The payment rate disclosure must
meet the following requirements:
(A) The State must organize the payment rate disclosure by category
of service as specified in paragraph (b)(2)(iv) of this section.
(B) The disclosure must identify the average hourly Medicaid fee-
for-service fee schedule payment rates by applicable category of
service, including, if the rates vary, separate identification of the
average hourly Medicaid fee-for-service fee schedule payment rates for
payments made to individual providers and provider agencies, by
population (pediatric and adult), provider type, geographical location,
and whether the payment rate includes facility-related costs, as
applicable.
(C) The disclosure must identify the number of Medicaid-paid claims
and the number of Medicaid enrolled beneficiaries who received a
service within a calendar year for each of the services for which the
average hourly Medicaid fee-for-service fee schedule payment rates are
published pursuant to paragraph (b)(3)(ii)(B) of this section.
(4) Comparative payment rate analysis and payment rate disclosure
timeframe. The State agency must publish the initial comparative
payment rate analysis and payment rate disclosure of its Medicaid fee-
for-service fee schedule payment rates in effect as of July 1, 2025 as
required under paragraphs (b)(2) and (b)(3) of this section, by no
later than July 1, 2026. Thereafter, the State agency must update the
comparative payment rate analysis and payment rate disclosure no less
than every 2 years, by no later than July 1 of the second year
following the most recent update. The comparative payment rate analysis
and payment rate disclosure must be published consistent with the
publication requirements described in paragraphs (b)(1)introductory
text, (b)(1)(i) and (b)(1)(ii) of this section.
(5) Compliance with payment rate transparency, comparative payment
rate analysis, and payment rate disclosure requirements. If a State
fails to comply with the payment rate transparency, comparative payment
rate analysis, and payment rate disclosure requirements in paragraphs
(b)(1) through (b)(4) of this section, including requirements for the
time and manner of publication, future grant awards may be reduced
under the procedures set forth at 42 CFR part 430, subparts C and D by
the amount of FFP CMS estimates is attributable to the State's
administrative expenditures relative to the total expenditures for the
categories of services specified in paragraph (b)(2) of this section
for which the State has failed to comply with applicable requirements,
until such time as the State complies with the requirements. Unless
otherwise prohibited by law, deferred FFP for those expenditures will
be released after the State has fully complied with all applicable
requirements.
(6) Interested parties advisory group for rates paid for certain
services. (i) The State agency must establish an advisory

[[Page 40873]]

group for interested parties to advise and consult on provider rates
with respect to service categories under the Medicaid State plan,
1915(c) waiver, and demonstration programs, as applicable, where
payments are made to the direct care workers specified in Sec.
441.311(e)(1)(ii) for the self-directed or agency-directed services
found at Sec. 440.180(b)(2) through (4), and (6).
(ii) The interested parties advisory group must include, at a
minimum, direct care workers, beneficiaries, beneficiaries' authorized
representatives, and other interested parties impacted by the services
rates in question, as determined by the State.
(iii) The interested parties advisory group will advise and consult
with the Medicaid agency on current and proposed payment rates, HCBS
payment adequacy data as required at Sec. 441.311(e), and access to
care metrics described in Sec. 441.311(d)(2), associated with services
found at Sec. 440.180(b)(2) through (4) and (6), to ensure the
relevant Medicaid payment rates are sufficient to ensure access to
personal care, home health aide, homemaker, and habilitation services
for Medicaid beneficiaries at least as great as available to the
general population in the geographic area and to ensure an adequate
number of qualified direct care workers to provide self-directed
personal assistance services.
(iv) The interested parties advisory group shall meet at least
every 2 years and make recommendations to the Medicaid agency on the
sufficiency of State plan, 1915(c) waiver, and demonstration direct
care worker payment rates, as applicable. The State agency will ensure
the group has access to current and proposed payment rates, HCBS
provider payment adequacy reporting information as described in Sec.
441.311(e), and applicable access to care metrics as described in Sec.
441.311(d)(2) for HCBS in order to produce these recommendations. The
process by which the State selects interested party advisory group
members and convenes its meetings must be made publicly available.
(v) The Medicaid agency must publish the recommendations produced
under paragraph (b)(6)(iv) of the interested parties advisory group
consistent with the publication requirements described in paragraph
(b)(1) through (b)(1)(ii) of this section, within 1 month of when the
group provides the recommendation to the agency.
(c)(1) Initial State analysis for rate reduction or restructuring.
For any State plan amendment that proposes to reduce provider payment
rates or restructure provider payments in circumstances when the
changes could result in diminished access where the criteria in
paragraphs (c)(1)(i) through (iii) of this section are met, the State
agency must provide written assurance and relevant supporting
documentation that the following conditions are met as well as a
description of the State's procedures for monitoring continued
compliance with section 1902(a)(30)(A) of the Act, as part of the State
plan amendment submission in a format prescribed by CMS as a condition
of approval:
(i) Medicaid payment rates in the aggregate (including base and
supplemental payments) following the proposed reduction or
restructuring for each benefit category affected by the proposed
reduction or restructuring would be at or above 80 percent of the most
recently published Medicare payment rates for the same or a comparable
set of Medicare-covered services.
(ii) The proposed reduction or restructuring, including the
cumulative effect of all reductions or restructurings taken throughout
the current State fiscal year, would be likely to result in no more
than a 4 percent reduction in aggregate fee-for-service Medicaid
expenditures for each benefit category affected by proposed reduction
or restructuring within a State fiscal year.
(iii) The public processes described in paragraph (c)(4) of this
section and Sec. 447.204 yielded no significant access to care
concerns from beneficiaries, providers, or other interested parties
regarding the service(s) for which the payment rate reduction or
payment restructuring is proposed, or if such processes did yield
concerns, the State can reasonably respond to or mitigate the concerns,
as appropriate, as documented in the analysis provided by the State
pursuant to Sec. 447.204(b)(3).
(2) Additional State rate analysis. For any State plan amendment
that proposes to reduce provider payment rates or restructure provider
payments in circumstances when the changes could result in diminished
access where the requirements in paragraphs (c)(1)(i) through (iii) of
this section are not met, the State must also provide the following to
CMS as part of the State plan amendment submission as a condition of
approval, in addition to the information required under paragraph
(c)(1) of this section, in a format prescribed by CMS:
(i) A summary of the proposed payment change, including the State's
reason for the proposal and a description of any policy purpose for the
proposed change, including the cumulative effect of all reductions or
restructurings taken throughout the current State fiscal year in
aggregate fee-for-service Medicaid expenditures for each benefit
category affected by proposed reduction or restructuring within a State
fiscal year.
(ii) Medicaid payment rates in the aggregate (including base and
supplemental payments) before and after the proposed reduction or
restructuring for each benefit category affected by proposed reduction
or restructuring, and a comparison of each (aggregate Medicaid payment
before and after the reduction or restructuring) to the most recently
published Medicare payment rates for the same or a comparable set of
Medicare-covered services and, as reasonably feasible, to the most
recently available payment rates of other health care payers in the
State or the geographic area for the same or a comparable set of
covered services.
(iii) Information about the number of actively participating
providers of services in each benefit category affected by the proposed
reduction or restructuring. For this purpose, an actively participating
provider is a provider that is participating in the Medicaid program
and actively seeing and providing services to Medicaid beneficiaries or
accepting Medicaid beneficiaries as new patients. The State must
provide the number of actively participating providers of services in
each affected benefit category for each of the 3 years immediately
preceding the State plan amendment submission date, by State-specified
geographic area (for example, by county or parish), provider type, and
site of service. The State must document observed trends in the number
of actively participating providers in each geographic area over this
period. The State may provide estimates of the anticipated effect on
the number of actively participating providers of services in each
benefit category affected by the proposed reduction or restructuring,
by geographic area.
(iv) Information about the number of Medicaid beneficiaries
receiving services through the FFS delivery system in each benefit
category affected by the proposed reduction or restructuring. The State
must provide the number of beneficiaries receiving services in each
affected benefit category for each of the 3 years immediately preceding
the State plan amendment submission date, by State-specified geographic
area (for example, by county or parish). The State must document
observed trends in the number of Medicaid beneficiaries receiving
services in each affected benefit category in each geographic area

[[Page 40874]]

over this period. The State must provide quantitative and qualitative
information about the beneficiary populations receiving services in the
affected benefit categories over this period, including the number and
proportion of beneficiaries who are adults and children and who are
living with disabilities, and a description of the State's
consideration of the how the proposed payment changes may affect access
to care and service delivery for beneficiaries in various populations.
The State must provide estimates of the anticipated effect on the
number of Medicaid beneficiaries receiving services through the FFS
delivery system in each benefit category affected by the proposed
reduction or restructuring, by geographic area.
(v) Information about the number of Medicaid services furnished
through the FFS delivery system in each benefit category affected by
the proposed reduction or restructuring. The State must provide the
number of Medicaid services furnished in each affected benefit category
for each of the 3 years immediately preceding the State plan amendment
submission date, by State-specified geographic area (for example, by
county or parish), provider type, and site of service. The State must
document observed trends in the number of Medicaid services furnished
in each affected benefit category in each geographic area over this
period. The State must provide quantitative and qualitative information
about the Medicaid services furnished in the affected benefit
categories over this period, including the number and proportion of
Medicaid services furnished to adults and children and who are living
with disabilities, and a description of the State's consideration of
the how the proposed payment changes may affect access to care and
service delivery. The State must provide estimates of the anticipated
effect on the number of Medicaid services furnished through the FFS
delivery system in each benefit category affected by the proposed
reduction or restructuring, by geographic area.
(vi) A summary of, and the State's response to, any access to care
concerns or complaints received from beneficiaries, providers, and
other interested parties regarding the service(s) for which the payment
rate reduction or restructuring is proposed as required under Sec.
447.204(a)(2).
(3) Compliance with requirements for State analysis for rate
reduction or restructuring. A State that submits a State plan amendment
that proposes to reduce provider payment rates or restructure provider
payments in circumstances when the changes could result in diminished
access that fails to provide the information and analysis to support
approval as specified in paragraphs (c)(1) and (2) of this section, as
applicable, may be subject to State plan amendment disapproval under
Sec. 430.15(c) of this chapter. Additionally, States that submit
relevant information, but where there are unresolved access to care
concerns related to the proposed State plan amendment, including any
raised by CMS in its review of the proposal and any raised through the
public process as specified in paragraph (c)(4) of this section or
under Sec. 447.204(a)(2), may be subject to State plan amendment
disapproval. If State monitoring of beneficiary access after the
payment rate reduction or restructuring takes effect shows a decrease
in Medicaid access to care, such as a decrease in the provider-to-
beneficiary ratio for any affected service, or the State or CMS
experiences an increase in beneficiary or provider complaints or
concerns about access to care that suggests possible noncompliance with
the access requirements in section 1902(a)(30)(A) of the Act, CMS may
take a compliance action using the procedures described in Sec. 430.35
of this chapter.
(4) Mechanisms for ongoing beneficiary and provider input. (i)
States must have ongoing mechanisms for beneficiary and provider input
on access to care (through hotlines, surveys, ombudsman, review of
grievance and appeals data, or another equivalent mechanism),
consistent with the access requirements and public process described in
Sec. 447.204.
(ii) States should promptly respond to public input through these
mechanisms citing specific access problems, with an appropriate
investigation, analysis, and response.
(iii) States must maintain a record of data on public input and how
the State responded to this input. This record will be made available
to CMS upon request.
(5) Addressing access questions and remediation of inadequate
access to care. When access deficiencies are identified, the State
must, within 90 days after discovery, submit a corrective action plan
with specific steps and timelines to address those issues. While the
corrective action plan may include longer-term objectives, remediation
of the access deficiency should take place within 12 months.
(i) The State's corrective actions may address the access
deficiencies through a variety of approaches, including, but not
limited to: Increasing payment rates, improving outreach to providers,
reducing barriers to provider enrollment, providing additional
transportation to services, providing for telemedicine delivery and
telehealth, or improving care coordination.
(ii) The resulting improvements in access must be measured and
sustainable.
(6) Compliance actions for access deficiencies. To remedy an access
deficiency, CMS may take a compliance action using the procedures
described at Sec. 430.35 of this chapter.

0
28. Section 447.204 is amended by--
0
a. Revising paragraphs (a)(1) and (b); and
0
b. Removing paragraph (d).
The revisions read as follows:

Sec. 447.204 Medicaid provider participation and public process to
inform access to care.

(a) * * *
(1) The data collected, and the State analysis performed, under
Sec. 447.203(c).
* * * * *
(b) The State must submit to CMS with any such proposed State plan
amendment affecting payment rates documentation of the information and
analysis required under Sec. 447.203(c) of this chapter.
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2024-08363 Filed 4-22-24; 4:15 pm]
BILLING CODE 4120-01-P