[Federal Register Volume 76, Number 75 (Tuesday, April 19, 2011)]
[Rules and Regulations]
[Pages 21950-21975]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9340]
[[Page 21949]]
Vol. 76
Tuesday,
No. 75
April 19, 2011
Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 433
Medicaid Program; Federal Funding for Medicaid Eligibility
Determination and Enrollment Activities; Final Rule
Federal Register / Vol. 76 , No. 75 / Tuesday, April 19, 2011 / Rules
and Regulations
[[Page 21950]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 433
[CMS-2346-F]
RIN 0938-AQ53
Medicaid Program; Federal Funding for Medicaid Eligibility
Determination and Enrollment Activities
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will revise Medicaid regulations for
Mechanized Claims Processing and Information Retrieval Systems. We are
also modifying our regulations so that the enhanced Federal financial
participation (FFP) is available for design, development and
installation or enhancement of eligibility determination systems until
December 31, 2015. This final rule also imposes certain defined
standards and conditions in terms of timeliness, accuracy, efficiency,
and integrity for mechanized claims processing and information
retrieval systems in order to receive enhanced FFP.
DATES: Effective Date: These regulations are effective on April 19,
2011.
FOR FURTHER INFORMATION CONTACT: Richard Friedman, (410) 786-4451.
SUPPLEMENTARY INFORMATION:
I. Background
A. The Current State of the Medicaid Management Information System
(MMIS)
A Medicaid management information system (MMIS) is a mechanized
system of claims processing and information retrieval used in State
Medicaid programs under title XIX of the Social Security Act (the Act).
The system is used to process Medicaid claims from providers and to
retrieve and produce utilization data and management information about
medical care and services furnished to Medicaid recipients. The system
also is potentially eligible to receive enhanced administrative funding
from the Federal government under section 1903(a)(3) of the Act.
Specifically, section 1903(a)(3)(A)(i) of the Act provides that Federal
financial participation (FFP) is available at 90 percent of
expenditures for the design, development, or installation of mechanized
claims processing and information retrieval systems as the ``Secretary
determines are likely to provide more efficient, economical and
effective administration of the plan and to be compatible with the
claims processing and information retrieval systems utilized in the
administration of title XVIII [Medicare].'' In addition, section
1903(a)(3)(B) of the Act provides for the availability of FFP at 75
percent of expenditures attributable to operating the ``systems * * *
of the type described in [section 1903(a)(3)] subparagraph (A)(i),''
which are approved by the Secretary and meet certain other requirements
(including requirements relating to explanations of benefits). For
purposes of this final rule, we refer to 90 percent and 75 percent FFP
as ``enhanced'' FFP since it is greater than the 50 percent FFP
available for most Medicaid administrative expenses. In addition,
section 1903(r) of the Act places conditions on a State's ability to
receive Federal funding for automated data systems in the
administration of the State plan.
To receive an enhanced match, the Secretary must find that the
mechanized claims and information retrieval system is adequate to
provide more efficient, economical, and effective administration of the
State plan. The Patient Protection and Affordable Care Act of 2010
(Pub. L. 111-148, enacted on March 23, 2010), as amended by the Health
Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted
on March 30, 2010) (collectively referred to as the Affordable Care
Act) also made additional changes to the requirements within section
1903(r) of the Act relating to the reporting of data to the Secretary;
guidance on these requirements will be issued in a separate rulemaking
document. Our Federal regulations concerning mechanized claims
processing and information retrieval systems are at 42 CFR part 433,
subpart C. A State that chooses to develop, enhance, or replace its
required system or subsystems must first submit for approval an
Advanced Planning Document (APD). The general Health and Human Services
(HHS) requirements for approval of APDs are found at 45 CFR part 95,
subpart F.
B. Availability of Enhanced FFP for Automated Eligibility Systems
Historically, Medicaid eligibility for many applicants and
recipients was determined by an agency other than the State Medicaid
agency. Under section 1902(a)(10)(A)(i) of the Act, States were
required to provide Medicaid to recipients under the Aid to Families
with Dependent Children (AFDC) program, as well as recipients of the
Supplemental Security Income (SSI) program. In these cases, eligibility
determinations were derived from the cash welfare-assistance
determination. As a result, States that maintained a Medicaid
eligibility determination system usually integrated these systems into
the public welfare systems. In the October 13, 1989 Federal Register
(54 FR 41966, effective November 13, 1989), we published a final rule
excluding eligibility determination systems from the enhanced funding
that was available under section 1903(a)(3) of the Act, reasoning that
the close interrelationship between these cash assistance programs and
Medicaid eligibility rendered such enhanced assistance redundant and
unnecessary (54 FR 41966 through 41974). As a result, we revised the
definition of mechanized claims processing and information retrieval
systems to exclude eligibility determination systems.
We also indicated in the 1989 final rule that to receive any FFP
for Medicaid purposes for an eligibility determination system after
November 13, 1989, a State must submit an APD for funding in accordance
with the requirements of 45 CFR Part 95, Subpart F. If we approved the
APD, the State agency would receive 50 percent FFP for administrative
costs under section 1903(a)(7) of the Act for the system's design,
development, and installation, and operation.
C. Changes in Medicaid Eligibility Policies
Since we issued the October 13, 1989 final rule, a series of
statutory changes have dramatically affected eligibility for Medicaid
and how Medicaid eligibility is determined. Among other things, new
eligibility coverage groups were created and expanded, and in 1996,
Medicaid eligibility was ``de-linked'' from the receipt of cash
assistance when the AFDC program was replaced by the Temporary
Assistance to Needy Families (Pub. L. 104-193, enacted on August 22,
1996) (TANF) program created by the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) (Pub. L. 104-193, enacted on
August 22, 1996).
With the passage of the Balanced Budget Act of 1997 (Pub. L. 105-
33, enacted on August 5, 1997) (BBA), States were required to
coordinate eligibility for and enrollment in Medicaid with the new
Children's Health Insurance Program (CHIP) to ensure enrollment of
children in the appropriate program. With passage of the ``Express Lane
Eligibility'' provisions in section 203 of the Children's Health
[[Page 21951]]
Insurance Program Reauthorization Act of 2009 (Pub. L. 111-3) (CHIPRA),
States were provided with the option, and are encouraged, to coordinate
and expedite eligibility for children in Medicaid and CHIP by using
findings regarding income and other eligibility criteria made by other
agencies, such as the Supplemental Nutrition Assistance Program (SNAP),
as the basis for Medicaid and CHIP eligibility adjudications.
With the passage of the Affordable Care Act, we expect that changes
to Medicaid eligibility policies and business processes need to be
adopted. States will need to apply new rules to adjudicate eligibility
for the program; enroll millions of newly eligible individuals through
multiple channels; renew eligibility for existing enrollees; operate
seamlessly with newly authorized Health Insurance Exchanges (see
section 1311 of the Affordable Care Act) whether run by the State or
the U.S. Department of Health and Human Services (HHS) if the State
chooses not to operate a State Exchange (hereafter referred to as
``Exchanges''); participate in a system to verify information from
applicants electronically; incorporate a streamlined application used
to apply for multiple sources of coverage and health insurance
assistance; and produce notices and communications to applicants and
beneficiaries concerning the process, outcomes, and their rights to
dispute or appeal. We further anticipate, following consultation with
States and other stakeholders, additional standard Federal requirements
for more timely and detailed reporting of eligibility and enrollment
status statistics, including breakdowns by eligibility group,
demographic characteristics, enrollment in managed care plans, and
participation in waiver programs.
System transformations will be needed in most States to accomplish
these changes. These systems transformations should be undertaken in
full partnership with Exchanges in order to meet coverage goals,
minimize duplication, ensure effective reuse of infrastructure and
applications, produce seamless enrollment for consumers, and ensure
accuracy of program placements (see sections 1413 and 2201 of the
Affordable Care Act). Extensive coordination and collaboration will be
required between Exchanges and Medicaid, including on oversight and
evaluation of the interoperability of the Exchange and Medicaid
systems. In addition, States may consider how to coordinate systems
changes with the eligibility determination systems used for other
health and human services programs, such as SNAP, because a large share
of individuals who are eligible for Medicaid also are eligible for
other programs as well.
II. Provisions of the Proposed Regulations
In the November 8, 2010 Federal Register (75 FR 68583), we
published a proposed rule that revised the Medicaid regulations for
Mechanized Claims Processing and Information Retrieval Systems.
Specifically, we proposed to amend the definition of Mechanized Claims
Processing and Information Retrieval Systems to include mechanized
eligibility determination systems, which would include the enrollment
and eligibility reporting activities associated with such systems. We
also proposed that the enhanced FFP would be available for design,
development and installation or enhancement of eligibility
determination systems until December 31, 2015.
III. Analysis of and Responses to Public Comments
We received 40 timely comments on the November 8, 2010 proposed
rule (75 FR 68583 through 68595).
Commenters expressed general support for the policies outlined in
the proposed rule. Specifically, commenters agreed that providing
enhanced matching funds for Medicaid eligibility systems is appropriate
and necessary. Commenters expressed almost universal agreement that
this enhanced match is critical to support State efforts to modernize
their eligibility systems, and will allow States to bring these systems
into the 21st Century so that they can provide cost-effective,
accurate, reliable, and beneficiary-friendly assessments of eligibility
for the Medicaid program. In light of the substantial changes made by
the Affordable Care Act, commenters agreed that it is more important
than ever to ensure that eligibility determination systems are designed
and operated using the most up-to-date technological and business
process solutions. With States expected to enroll millions of newly
eligible individuals into Medicaid and to ensure seamless coordination
with the new Exchanges, it is essential that States have modern and
cost-effective eligibility systems that will accurately enroll eligible
individuals, without unnecessarily cumbersome processes or delays.
Commenters also believed that such initial investments would ultimately
lower ongoing maintenance and operational expenses, driving savings for
both States and the Federal government.
Commenters also noted that HHS had released additional documents at
approximately the same time as the November 8, 2010 proposed rule,
which reinforced our strategic direction and received their support.
Specifically, commenters acknowledged the joint guidance released by
CMS and the Office of Consumer Information and Insurance Oversight (now
CMS' Center for Consumer Information and Insurance Oversight (CCIIO))
entitled, ``Exchange/Medicaid Information Technology Guidance, version
1.0,'' and the Funding Opportunity Announcement for Cooperative
Agreements to Support Early Innovator Grants for Exchanges. Commenters
indicated that they greatly appreciated the foresight of CMS and CCIIO,
and are supportive of the guidance providing direction towards a
service-oriented IT infrastructure based on interoperable systems and
that they fully support the concept of a collaborative IT development
approach among States, CMS and CCIIO.
A summary of additional major issues and our responses follow.
Since many of the comments were general in nature and not specific to
any particular regulatory provision, we have identified the comments by
nine categories:
Requests for enhanced Federal funding.
Requests for additional guidance.
Public feedback and suggestions related to the seven
standards and conditions.
Public feedback and suggestions related to the APD
process.
Issues related to the transition period for compliance.
Comments regarding CMS' strategy for monitoring and
oversight, including performance reviews.
Issues related to partial systems improvements or
modernizations.
Specific issues by regulatory provision.
Issues related to the Regulatory Impact Analysis including
the cost estimates, and information collection.
A. Requests for Enhanced Federal Funding
Comment: Numerous commenters requested that the enhanced FFP for
design, development, and installation or enhancement of eligibility
determination systems be extended beyond the December 31, 2015
deadline. Commenters indicated that new and significant enhancements
may be needed beyond December 31, 2015, particularly in order to affect
future legislative changes to Medicaid eligibility or to keep pace with
technological innovations. The
[[Page 21952]]
commenters noted that State budgets continue to be in a state of crisis
and State revenues may not fully recover until 2016 or later;
consequently, the Federal government must take responsibility for
ensuring adequate funding of the program infrastructure to ensure
compliance by January 1, 2014. Commenters recommended several different
options in this regard. Some commenters indicated that CMS should
consider that the requirement apply to funds allocated rather than
expended. Other commenters believed that CMS could allow for the
possibility of a continued enhanced match beyond the deadline in
specified circumstances (many outside the control of State
governments), such as new Federal requirements or major advances in
computer technology. Other exception categories suggested by commenters
included unforeseen issues in implementation and/or new opportunities
for interoperability with other health and human services programs.
Other commenters indicated that CMS should extend funding if States
have approved APDs on or before December 31, 2015 and the project has
not been completed or if States are planning to leverage improvements
from other State Medicaid eligibility systems. The commenters further
indicate that they are concerned that they will be unable to receive
legislative approval to begin their project, develop an APD, receive
Federal approval, and then complete work on the project while meeting
the standards and conditions before the enhanced FFP ends on December
31, 2015. Still other commenters believed the date should be changed to
coincide with the end of the Federal fiscal year 2015 and 2016, so that
enhanced funding would expire September 30, 2016. One commenter
suggests that the deadline should be interpreted to apply to costs for
projects receiving enhanced funding and obligated by that date rather
than expended by December 31, 2015. One commenter expressed concern
that a requirement for States to maintain existing eligibility
processes for pregnant women and children until September 30, 2019 will
mean States have to maintain dual eligibility systems during this time
period. At the end of 2019, the IT systems will need to be updated to
remove this function and that enhanced funding should be extended for
States to make changes to eligibility systems when this requirement
ends.
Response: We appreciate the significant number of comments we
received on this aspect of our proposed rule and the view of commenters
that we should eliminate, extend, or modify the deadline for expiration
of the enhanced match for eligibility systems. Nonetheless, while we
appreciate the opinions of commenters, we continue to believe that the
deadline we established in the proposed rule is appropriate and proper.
We believe it is within our authority to determine that by a certain
date, additional investments in eligibility determination systems will
no longer continue to result in ``more'' efficient, effective or
economical administration of the State Plan, as required by section
1903(a)(3)(A)(i) of the Act. Further, we continue to believe that
December 31, 2015 is a reasonable and proper end-point for when
investments cease to result in acceptable increases in efficiency,
economy, or effectiveness. Our reason is threefold: First, changes
imposed by the Affordable Care Act will require immediate attention and
commitment to new technologies for eligibility and enrollment systems.
Second, once appropriate systems are deployed to support the coverage
expansions and other eligibility changes required by the Affordable
Care Act, we anticipate significant efficiencies in both application
maintenance and business operations. Third, the additional 2 years we
provided to States after the Medicaid expansion goes into effect allows
ample time for States to refine and enhance the capability of the
systems, and to capitalize on the efficiencies of these investments.
We articulated in the proposed rule that additional investments are
unlikely to yield similar rates of improvement and a regular
administrative match should be sufficient for efficient and effective
administration of State Medicaid programs. We anticipate that the
improved underlying infrastructure supporting both Medicaid and
Exchanges will be strongly leveraged in support of a State's person-
centric outreach, eligibility and enrollment activities across the
health and human services spectrum.
With respect to the request made by some commenters to establish an
exceptions process, we believe this is already sufficiently provided
for through our extension of enhanced FFP for an additional 2 years
beyond the date for operation of the Exchanges. We are concerned that
broadening or codifying exceptions to the deadline in the way suggested
by the commenters would effectively render the deadline moot for many
purposes and projects.
The September 30, 2019 date noted by one commenter is the end-date
for maintenance of effort (MOE) provisions for children (not pregnant
women). Because of these MOE provisions, States must not have more
restrictive ``eligibility standards, methodologies, or procedures'' for
children than those in effect on March 23, 2010. The MOE requirement
does not mean that States must maintain identical standards,
methodologies or procedures as those in effect on March 23, 2010, and
it does not mean that the same IT system or IT system processes be
used. Rather, the MOE requires that the eligibility standards, methods,
and procedures be no more restrictive than those in effect on March 23,
2010.
We are not certain of what the commenter is concerned about in
terms of States' needing to maintain dual eligibility processes, but we
assume he or she may be concerned about the interaction of the MOE
requirements and the requirement under section 2002 of the Affordable
Care Act. The conversion to a MAGI-equivalent income standard required
under section 2002 of the Affordable Care Act is designed in the
statute to ensure that individuals who meet the eligibility
requirements in effect as of March 23, 2010 do not lose eligibility as
a result of the shift to MAGI. Guidance will be provided by the
Secretary regarding how States can accomplish the required conversion,
and once the new MAGI-equivalent income standard has been determined,
the MOE requirements will be applied to such converted standard, using
the MAGI methodologies to determine an individual's income, as required
under the Affordable Care Act. Therefore, the MOE requirements will not
require operating dual eligibility systems.
After consideration of the public comments received, we are
maintaining the December 31, 2015 deadline in our regulations for
eligibility determination systems.
Comment: One commenter requested that CMS consider interpreting the
deadline of December 31, 2015 for projects receiving enhanced Federal
funding to requiring the funds be obligated by that date rather than
expended.
Response: We indicated in the proposed rule (75 FR 68589) that
States would need to incur costs for goods and services furnished no
later than December 31, 2015 to receive 90 percent FFP for design,
development, installation, or enhancement of an eligibility system. For
further clarification, this means that States must ensure that goods
and services (for example, eligibility and enrollment modules,
applications, systems, etc.) are provided to States no later than close
of
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business December 31, 2015. Thus, for example, if an amount has been
obligated by December 31, 2015, but the good or service has not yet
been furnished by that date, then such expenditure would not be
eligible for enhanced FFP.
As a result of this comment, we are adding language to the
regulations text to clarify this point.
Comment: Numerous commenters asked whether enhanced funding is
available for subsystems that interface with and/or are part of the
eligibility process since such subsystems will require modifications to
meet the requirements of the Affordable Care Act. Additionally,
commenters sought enhanced FFP for projects that meet Medicaid
Information Technology Architecture (MITA) guidance, yet still may need
to integrate with legacy systems, with the understanding that, where
feasible, open rules and specifications developed for programs will be
used to read, insert, or update data into systems that currently do not
have the functionality of being interoperable. The commenters agreed
that APDs would need to be put in place and approved to modernize the
legacy systems/subsystems.
Response: We agree that enhanced funding can be available for
subsystems that meet the standards and conditions outlined in this
final rule. However, to the extent that such subsystems are reliant on
or tied to a larger legacy system or suite of systems that introduce
performance risk or ongoing costs to the operation of the subsystem, we
may find that the system as a whole is not meeting the standards and
conditions of this final rule and decline to approve enhanced match on
that basis. It is our desire to acknowledge that subsystem
modernization may be an entirely appropriate pathway to a high
performing Medicaid program, while at the same time not binding
ourselves to approve enhanced match for minor components of a large,
fragmented legacy system that has little chance of delivering to
expected business results. CMS will review APDs and make determinations
regarding such subsystems, and to the extent that such subsystems meet
with the standards and conditions outlined in this final rule and
States can document that there is no performance risk or ongoing
unnecessary costs, as a result of the subsystem being a part of larger
legacy system, CMS will make determinations regarding enhanced funding
accordingly.
Comment: Several commenters want to ensure that enhanced FFP is
available to States that are not completely MITA compliant, but rather
to States that can demonstrate efficiencies are being achieved,
redundancy is being decreased/eliminated, and system integration is
being realized through application programming interfaces (API). States
could demonstrate that APIs, in which a particular set of rules and
specifications for services and resources have been developed by one
software program that can be accessed and used by another software
program implementing the API, can be used and serve as an interface
between different software programs and facilitating their interaction,
and thus, leading to efficiencies. Commenters added that with an
approved APD reasonable and measureable milestones of system compliance
can be demonstrated.
Response: Enhanced FFP is available for those systems that comply
with the standards and conditions of this final rule. Aligning to, and
advancing increasingly, in MITA maturity for business, architecture,
and data is one of the standards and conditions that must be met. We
did not use the term ``MITA compliant'' in our proposed rule because
MITA maturity is by definition, a matter of degree. We agree that
achieving increasing levels and degrees of MITA maturity is likely to
happen in stages. Recognizing this, we will be requiring a MITA roadmap
that delineates how the proposed system enhancements for eligibility
and enrollment functions will fit into the States' greater MITA
framework. Such requirement will align with our expectations to see
States continuing to make measurable progress in implementing their
MITA roadmaps. We believe it is critical to build on and accelerate the
modernization we have collectively begun under MITA, so that States
achieve the final vision of MITA and have a comprehensive framework
with which to meet the technical and business demands required by an
environment that will increasingly rely on health information
technology and the electronic exchange of healthcare information to
improve health outcomes and lower program costs.
Comment: One commenter requested clarification as to whether
enhanced FFP will be available where a project has some components that
meet the standards and guidelines required for enhanced FFP, but may
include other components that do not.
Response: We believe it is entirely appropriate to accomplish
system modernization through phasing. In cases such as the one raised
by the commenter, the changes being made to various system components
will need to be reviewed through submission of an APD and review. We
will need to ensure that component-based development is on a path
toward an entire system or subsystem coming into compliance with the
standards and conditions of this final rule. We would expect that if
the components that do not meet the standards and conditions are
essentially preventing the entire system or subsystem from meeting the
standards and conditions, then the State would have a plan for updating
such components, even if all components are not updated at the same
time. For example, we do not expect that we would offer enhanced FFP
for improvements to just the reporting aspect of the traditional,
legacy eligibility system, if the State does not have a plan for
bringing this entire legacy system into compliance with the standards
and conditions. In addition, to receive enhanced FFP, States may not
ignore any single standard or condition regardless of the level or
breadth of their compliance with the remaining standards, although if a
State is weaker or more at risk with certain standards or conditions,
the State should include a roadmap in their APD demonstrating how they
intend to come into compliance. We intend to carefully track progress
against approved roadmaps when determining if system updates continue
to meet the standards and conditions for enhanced match.
Comment: One commenter suggests that CMS clarify that enhanced
funding is also available for ``traditional'' eligibility
determinations, such as those made on behalf of medically needy
clients, buy-in, elderly, disabled, long-term care and home and
community-based individuals.
Response: To the extent that eligibility systems meet all
requirements, standards, and conditions contained in this final rule,
States will be eligible for enhanced FFP, and such enhanced funding is
not dependent upon the eligibility group using the system.
Comment: One commenter recommended that CMS clarify that enhanced
funding is available for personnel costs, as well as the costs of
physical systems. Specifically, the commenter notes that Federal
regulations at Sec. 432.50(b) provide for enhanced funding at 75
percent for the costs of staff ``engaged directly in the operation of
mechanized claims processing and information retrieval systems'' and
for enhanced funding at 90 percent for staff costs related to the
design, development, and installation of these systems. FFP is provided
at 50 percent for the costs of training personnel when new systems are
developed.
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Response: We did not propose amendments to the regulations at Sec.
432.50(b); thus, enhanced funding is available for staff time spent on
mechanized eligibility determination systems in the same manner that
they apply to all mechanized claims processing and information
retrieval systems, since mechanized eligibility determination systems
are now considered to be part of such systems, assuming the
requirements of this section are met.
Comment: One commenter asked that we extend the enhanced funding to
encompass the testing of the effectiveness of the eligibility systems,
including testing beneficiary experience such as allowing States to
receive reimbursement for conducting focus groups with community-based
workers and/or beneficiaries who rely on the system to apply for and
renew Medicaid coverage.
Response: Again, to the extent these costs would be reimbursable
under Sec. 432.50(b), they would be eligible for reimbursement under
this rule as well (assuming all standards and conditions are met).
States would need to ensure that the expenditures are tied to the
mechanized eligibility determination system and follow all procedures
for seeking approval.
Comment: Several commenters requested that CMS require States to
pass enhanced match through to counties. The commenters stated that CMS
should ensure that if a State requires counties to contribute to the
non-Federal share of Medicaid and Medicaid administrative costs, and
that receives enhanced FFP; the State should be required to share the
enhanced FFP in proportion to the counties' contribution. The
commenters stated that this requirement would reflect the clear
Congressional intent as expressed in the enhanced Federal Medical
Assistance Percentage (FMAP) requirements for certain States in section
5001(g)(2) of the American Recovery and Reinvestment Act (Pub. L. 111-
5, enacted on February 17, 2009) and strengthened by section
10201(c)(6) of the Affordable Care Act.
Response: The commenters cite section 10201(c)(6) of the Affordable
Care Act, which added section 1905(cc) to the Act. Under this
provision, a State may not be eligible for certain increased FMAPs
associated with health care reform and disaster recovery if the State
``requires that political subdivisions pay a greater percentage of the
non-Federal share * * * than the respective percentages that would have
been required by the State under the State plan under this title, State
law, or both, as in effect on December 31, 2009.'' Since the level of
Federal funding available for the costs of the eligibility and
enrollment determination systems under this final rule will increase
and the level of the non-Federal share specific to such expenditures
will decrease, there could be an effect on the level of required
political subdivision contributions that would be subject to this
limitation. We already issued guidance on how the political subdivision
contribution limitations under section 1905(cc) apply in an SMD letter
issued November, 9, 2010 (see http://www.cms.gov/smdl/downloads/SMD10023.pdf). Rather than reiterate what is already in that guidance,
we refer States and counties to such guidance. States and counties may
also work with CMS to determine whether any required contributions by
political subdivisions toward the non-federal share of these
expenditures would be in compliance with political subdivision
contribution provision.
Comment: One commenter urged CMS to encourage States to consider in
establishing actuarially sound Medicaid managed care rates, the
additional systems-related investments by Medicaid health plans that
are likely to be needed to interface with new State systems.
Response: We believe this commenter is asking about managed care
rates, and not the proposal we issued with regard to mechanized claims
processing and information retrieval systems, and when they will be
eligible for enhanced FFP. As our proposed rule did not address
Medicaid managed care rates, we believe this comment is outside the
scope of the proposed rule.
Comment: One commenter asked for clarification on whether the
addition of eligibility determination and enrollment systems is limited
to stand-alone systems administered directly by the single State
Medicaid Agency. The commenter indicates that some State eligibility
systems are a joint venture with the HHS and the United States
Department of Agriculture and are used to determine eligibility for
financial assistance programs in addition to medical assistance
programs.
Response: The enhanced funding can apply to ``stand alone'' systems
or ``integrated eligibility'' systems, assuming they meet the standards
and conditions specified in this final rule. Many States are
considering ways to coordinate Medicaid, CHIP and Exchange eligibility
with other health and human services programs. However, we will only
provide enhanced funding for the portion of the costs that can be
directly attributed to Medicaid eligibility and enrollment functions.
We also direct the commenter to the discussion on cost-allocation in
OMB Circular A-87 (http://www.whitehouse.gov/omb/circulars_a087_2004)
specifying appropriate allocation of costs when the system includes
various benefiting programs.
Comment: Other commenters have asked whether the enhanced funding
can be used to support updating and completing the MITA assessment and
roadmap, and performance measurement.
Response: We agree with the commenters that it is appropriate to
request enhanced funding for updating the MITA assessment and the
roadmap, since one of the standards and conditions listed in Sec.
433.112 speaks directly to MITA maturity. Enhanced funding is available
assuming that updates are related to the standards and conditions and
the State's plan for meeting them. We are making no further additions
to the rule in response to this comment.
Comment: Some commenters believed the timeframes related to the
enhanced funding for the development of eligibility solutions seems to
be extremely aggressive. Many of the activities related to the
planning, design, development, and deployment of eligibility solutions
will be new activities for both State and vendor staff. States will
need to consider how they will integrate and leverage eligibility
solutions into their Health Insurance Exchanges, their integrated human
services eligibility solutions, their MMIS, and other points of
intersection. Just the planning phase leading up to an approved APD and
FFP release could easily consume more than a year. The commenters
suggested that CMS should consider lengthening the timeframes for the
completion of these efforts related to eligibility components.
Response: We recognize that the timelines for developing new
eligibility systems, and for submitting and approving new APDs, must be
greatly accelerated from historical and traditional experiences and
approaches in order to meet the timelines in the Affordable Care Act
and to take advantage of enhanced match prior to December 31, 2015. We
emphasize that we expect to operate efficiently in processing APDs and
work collaboratively with States to implement these changes, and we
expect States to operate quite differently in how they pursue new
development, share and reuse assets, and take advantage of
``lightweight'' applications and new technologies to meet these needs.
We
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noted in our proposed rule that dramatic systems transformations would
be necessary and while the timeframes may appear aggressive to some,
the Department is committed to providing leadership, technical
assistance, and financial support to produce the IT infrastructure
necessary to accomplish the tasks required by the Affordable Care Act
according to the timelines specified in the law. We note that the
Affordable Care Act requires that States be able to enroll the newly
eligible individuals and coordinate with Health Insurance Exchanges by
January 1 of 2014. Thus, our timeline accounts for this statutory
deadline, while still maintaining a period of two years (through
December 31, 2015) to account for potential delays or unforeseen
obstacles in developing new or improved eligibility determination
systems.
We are making no further revisions to the rule as a result of this
comment.
B. Requests for Additional Guidance
Comment: One commenter requested that CMS produce and make
available to the States a project planning template illustrating key
entry points to major phases of the projects.
Response: We will be providing a whole series of artifacts and
supporting tools, documentation, diagrams to States as part of our
technical assistance, collaboration, and governance. We will consider
the usefulness of a template for project planning as we develop and
publish these materials.
Comment: Several commenters requested additional guidance on the IT
enterprise.
Response: We will issue additional Guidance for Exchange and
Medicaid Information Technology Systems (IT guidance). We issued IT
guidance version 1.0 on November 30, 2010, and expect to issue, expand
and renew that guidance over time. These guidance documents will help
States with the business rules necessary to design, develop, and
implement State eligibility systems that can meet the requirements of
the Affordable Care Act.
Comment: Several commenters inquired about future guidance on MITA,
the MITA alignment process, and whether the process for certifying and/
or validating MITA alignment will be detailed in the final rule.
Response: We have provided continued guidance and artifacts
associated with MITA since the MITA Initiative began. We will continue
to provide that guidance and related toolsets and details. We will
consider a number of elements in reviewing states' alignment with MITA
and increasing MITA maturity, including States' self-assessments and
MITA roadmaps.
Comment: Several commenters inquired about the ``modular, flexible
approach to systems development'' and increasing MITA alignment
requirements, as well as whether such requirements apply to all MMISs
or only eligibility determination systems. The commenters believed that
to promote the feasibility of a ``modular, flexible approach to systems
development'' of Medicaid systems, CMS should continue to fund and
aggressively develop necessary interfaces and technical standards that
are required to facilitate MMIS interoperability.
Response: As stated in the above responses, we intend to issue a
series of tools for States to use in ensuring the facilitation of
interoperability. It should be noted that the requirements of this
final rule apply to all MMISs, not just eligibility determination
systems (which will now be considered part of the MMIS). We are making
no further additions to the rule as a result of this comment.
Comment: Several commenters urged CMS to develop stronger Federal
guidelines for enrollment and renewal procedures to accompany new
eligibility systems, including guidance on acceptable data matches
creating safe harbors for data sources used in electronic income
verification, to allow States to move to paperless income verification
with confidence that they comply with quality and accuracy standards.
In developing additional requirements, the commenters urged CMS to
ensure that Medicaid's application, renewal and verification procedures
are no more paperwork intensive or burdensome than those for Exchange
tax credit applicants.
Response: We agree with the commenters that simplification and
streamlining of the consumer experience are expected outcomes of the
Affordable Care Act. However, business process and policy requirements
for determining eligibility are outside the scope of this regulation
and will be addressed in separate rulemaking. As discussed later in the
response to comments concerning performance measures, we will also
publish measures concerning expected business outcomes in separate
notices. We are making no further additions to this section of the
final rule.
Comment: Some commenters requested reforms and clarifications
regarding cost allocation principles.
Response: Our proposed rule did not contain any proposals to alter
cost allocation principles, and we believe it is prudent that CMS and
the States continue to follow the cost allocation principles outlined
by OMB in Circular A-87. As stated in the proposed rule, for integrated
eligibility systems, assuming those systems meet the standards and
conditions outlined in the final rule, only the costs associated with
Medicaid eligibility and enrollment functions will be eligible for the
enhanced funding and funding for Exchange activities is fully Federally
funded through January 1, 2015. We discussed cost allocation and the
principles of cost allocation in guidance that was released on November
2010; that is, the IT guidance version 1.0 and in the Funding
Opportunity Announcement for the Early Innovator Grants. States can
access the OMB Circular A-87 at http://www.whitehouse.gov/omb/circulars_a087_2004.
Comment: Several commenters asked for guidance on commercial off-
the-shelf (COTS) software products, and indicated that such products
are often modular, reusable, sharable, leveraged, and aligned with
MITA. Commenters also stated that enhanced FFP should be available for
COTS initial licensing and implementation service costs as well as
ongoing software licensing and maintenance costs. Commenters also
questioned why there is no language confirming established protections
for COTS pre-existing intellectual property (IP) and newly developed IP
used in eligibility modernization initiatives.
Response: We are not dictating specific solutions to States as they
undertake their technology projects, as long as the standards and
conditions of this final rule are met and we expect to work with States
in an effort to share, reuse, and leverage other State solutions. For
COTS products, we have a longstanding rule that the State must own any
software that is designed, developed, installed or improved with 90
percent FFP (see Sec. 433.112(b)(5)). In other words, software that is
developed with public funds must be owned by the public and as a
``public product'' is available to be shared with other States. COTS-
based solutions may still receive a 75 percent enhanced funding (that
is, for licensing and implementation services costs), if they are
related to the MMIS (including the eligibility determination system)
and meet all the requirements of this final rule. In addition, current
rules protecting intellectual property (such as copyright and/or patent
laws) would simply apply in the way that they already do apply to
intellectual property. Nothing in this final rule is attempting to
alter those rules.
Comment: Several commenters asked that we define the terms
``modular'',
[[Page 21956]]
``modules'', ``models'', and ``successful models.'' Commenters
indicated they are unclear about whether a model is equivalent to an
architecture, reference model, process design, etc. for a given
customer or class of customers and consistent with MITA architecture
framework, process and planning guidelines, and maturity model.
Response: We believe it is important to frame our response in terms
of the IT Guidance jointly issued by CMS and CCIIO. This guidance
outlined a set of expectations and principles for sharing solutions and
approaches between both Medicaid and the Exchanges. Consequently, we
believe it is imperative for States and vendors to view all IT
activities much more broadly than a single physical implementation of a
set of technical capabilities.
``Modular'' means reducing the complexity of a larger problem by
breaking it down into small well defined pieces. For example, MITA
business architecture reduced the complexity of the Medicaid program
into eight high-level business areas. Each business area is further
broken down/decomposed into smaller and manageable business processes.
These business processes can be described as ``modules''. System
components can also perform tasks in a similar fashion. ``Modularity'',
if done right, accomplishes re-usability, maintainability, and
reliability. The term also underscores our strong desire for States and
the vendor community to develop ``lighter-weight'' and ``loosely-
coupled'' approaches to the design of health care systems, including,
but not limited to eligibility determination and enrollment functions.
In the MITA initiative, we have urged States to focus on designing
sets of overarching and reusable functions that traditionally might
have been included within one particular application and that would
have been specific to that particular application, but that now could
be used, in a consistent manner, by multiple applications used by the
State. Additionally, we want to emphasize that the rules for processing
data should be written in such a way as to be available to more than
just one application. For example, whether it is a Web service querying
for a response, or an Extract Transformation and Load (ETL) set of
tools to move data from a database to an external interface, the rules
that are invoked are the same, thus ensuring the underlying data
maintains its inherent ability to consistently transform to the same
information.
``Reference Models'' focus on classification and conceptual
structure. Typically, a Technical Reference Model, for example,
consists of infrastructure and business applications that interface
with a number of operating and network services through a variety of
specific applications such as graphics and imaging, data management,
data interchange, user interface, transaction processing, security and
system/network management.
``Reference Architecture'' is about proven solutions and best
practices, typically without being vendor/platform specific. Typically
arrayed in different tiers (access client tier, middle tier and data
tier, for example), a technical reference architecture includes a
client browser and an XML appliance to allow for access, a presentation
layer using a portal with HTML and an application/Web server, business
services applications, enterprise information integration, and
operational data storage facility typically through a data base with
data exploration capabilities sometimes arrayed via data marts.
We believe MITA 2.0 addresses all of the defined terms. We also
urge readers interested in these and related topics to familiarize
themselves with the MITA Framework, look for additional guidance in the
various iterations of the IT Guidance, and contact CMS staff for
additional clarifications related to specific circumstances.
Comment: Other commenters requested that the term ``eligibility
determination system'' be defined. The term should indicate that
eligibility determination system includes the technology interfaces for
program applicants and beneficiaries, such as Web sites that include
on-line applications and other Web features that allow individuals to
use eligibility estimators, to report changes, to renew eligibility, or
to seek information about their case status. Likewise, ``eligibility
determination system'' should be defined to include computer generated
notices and data.
Response: Our final rule considers systems that process claims for
eligibility to be part of mechanized claims processing and information
retrieval systems. Thus, to the extent that a function is part of
processing the claim for eligibility, we believe it could be eligible
for enhanced FFP under this final rule. We believe building an online
application would likely be part of the system that processes claims
and applications for eligibility. Additionally, we can envision how all
of the components identified by the commenters will be part of an
eligibility determination system, but we would need to understand more
fully how such components are integrated into a system that processes
claims for eligibility. States will explain in their APDs how the
various components are part of the mechanized claims processing and
information retrieval system and will meet with our standards and
conditions.
We are making no further additions to this section of the final
rule.
Comment: One commenter indicated that it would be helpful if CMS
provided additional leadership and technical assistance in further
standardizing data semantics and information nomenclature across the
eligibility function.
Response: We agree with the commenter and look forward to working
in close partnership with States, Exchanges, and the Office of the
National Coordinator for Health Information Technology, and the HIT
Policy and Standards Committees on this activity. We intend to enforce
industry standards as they develop in order to promote
interoperability, improve reliability of outputs and outcomes, and
reduce development costs.
Comment: A few commenters spoke of the importance of ensuring that
county governments act as full partners in the planning, design,
oversight and operations of necessary Medicaid eligibility system
transformations. To ensure that counties are poised to best assist
Medicaid applicants and recipients, the commenters suggested that the
Secretary develop model systems and deploy the necessary resources for
implementation including technical assistance and support for capital
investment.
Response: We agree with the commenter that States, Tribal
organizations, County governments, and Federal government agencies
should work together to ensure effective interoperability and to
develop model systems, as well as to deploy the necessary resources for
implementation including technical assistance and support for capital
investment. We recognize the historical contribution made by counties
to making eligibility determinations in most States. We look to States
to determine how best to deploy and optimize assets within the State to
accomplish the purpose and requirements of the Affordable Care Act.
Comment: Several commenters believe that, to support the one
application concept and streamlined eligibility determinations for
Medicaid and related programs (including CHIP, TANF, Food Stamps, and
WIC), CMS should work with other Federal agencies to obtain agreement
to allow sharing of data across those related programs.
[[Page 21957]]
Response: Our standard and condition regarding data exchange
requires seamlessness with the Exchanges and also requires that States
allow for interoperability with other health and human services
programs. We also note that our standards and conditions require
compliance with the standards and protocols adopted by the Secretary
under sections 1104 and 1561 of the Affordable Care Act. We expect that
such standards and protocols will promote reuse and data exchange.
Comment: One commenter believes that to support timely processing
of eligibility, CMS should work with other Federal agencies that
interface with State Medicaid agencies to allow a single point for
correction of client data errors, including birthdates and erroneously
posted death dates.
Response: We believe this comment addresses the actual program
instructions and policy requirements for eligibility systems, and not
the information technology solutions that will be needed for the
systems themselves. Our requirements regarding these matters will be
established in separate rulemaking.
Comment: One commenter requested that CMS offer strong guidance to
the States on privacy and confidentiality issues that need to be
observed in the new State systems.
Response: We agree that confidentiality and privacy are critical to
protecting beneficiaries and providers. The final rule includes as a
standard that systems ensure alignment with the HIPAA privacy, security
and transaction standards.
Comment: One commenter indicates that we should issue guidance more
definitively discussing the standards developed in response to section
1561 of the Affordable Care Act. The commenter noted that while section
1561 the Affordable Care Act is an outstanding source of ideas and
information, section 1561 the Affordable Care Act standards appear to
stop short of creating specific, concrete requirements.
Response: Section 1561 the Affordable Care Act requires HHS, in
consultation with the Health Information Technology (HIT) Policy
Committee and the HIT Standards Committee, to develop interoperable and
secure standards and protocols that facilitate electronic enrollment of
individuals in Federal and State health and human services programs.
The HIT Policy and Standards Committees approved initial
recommendations, and in September 2010, the Secretary adopted these
recommendations. The recommendations include initial standards and
protocols that encourage adoption of modern electronic systems and
processes that allow a consumer to seamlessly obtain and maintain the
full range of available health coverage and other human services
benefits.
The HIT Policy and Standards Committees recommendations are
available at http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=3161. We wish to note that one of the
seven standards and conditions specifically requires States to ensure
alignment with, and incorporation of, industry standards and specifies
several national standards including standards and protocols adopted by
the Secretary under section 1561 of the Affordable Care Act.
Comment: Another commenter suggested that we make all guidance
documents, including the State Medicaid manual readily available.
Response: We agree. We are currently working to gather all
applicable guidance documents on the CMS Web site. Guidance documents
are already posted to several web sites, including the proposed rule
(see regulations.gov), the IT guidance version 1.0, (see http://www.hhs.gov/ociio/regulations/joint_cms_ociio_guidance.pdf),
Overview on the MITA framework, (see http://www.cms.gov/MedicaidInfoTechArch), and Overview of the MMIS (see http://www.cms.gov/MMIS). Please note that Chapter 11 of the State Medicaid
Manual can be accessed electronically at http://www.cms.gov/Manuals/PBM/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=1&sortOrder=ascending&itemID=CMS021927.
In summary, we are making no revisions to regulation text as a
result of these comments.
Comment: Several commenters suggested that CMS provide educational
materials to ensure consumers get individualized assistance and have
their questions answered to assure enrollment in Medicaid and the
Exchanges.
Response: We believe this comment addresses the actual program
instructions and policy requirements for eligibility systems, and not
the information technology solutions that will be needed for the
systems themselves. Our requirements regarding these matters will be
established in separate rulemaking.
Comment: Commenters also requested that CMS issue ``Frequently
Asked Questions,'' establishing a direct contact line for assistance,
make available a complete contact list of all of the States and their
designated person/representatives, and develop a Webpage/module to the
existing Web site that will use this information and any ongoing data
exchange information for the State. Commenters further recommended that
CMS Regional Offices be fully trained and educated on the regulations
and standards.
Response: We will consider these recommendations as we begin
implementation of this final rule. We expect to provide numerous venues
for sharing of information, including conferences, information posted
to the CMS.gov Web site, letters, program memoranda, and training
materials. The final rule and additional IT guidance will provide
information regarding funding standards and conditions. We expect to
release additional guidance on performance matrices. We are currently
exploring several approaches to expedite the APD process and will be
providing guidance on this process soon after publication of this final
rule.
Additionally, we have recently awarded seven cooperative agreements
to help a group of ``Early Innovator'' States design and implement the
IT infrastructure needed to operate Exchanges. We expect to share
information among these Innovator States and, as Exchanges are being
developed, we expect to share information from these Innovator States
with other States as well through the use of the CMS.gov Web site,
conferences, and face-to-face meetings.
C. Public Feedback and Suggestions Related to the Seven Standard and
Conditions
Comment: Several commenters requested clarification on the
standards and conditions, and questioned how progress would be
measured. Specifically, several commenters were concerned about our
reference at Sec. 433.112(b)(13) to ``promoting sharing, leverage, and
reuse of Medicaid technologies and systems within and among States.''
Commenters requested that CMS define ``promoting'' and specify how
States will be required to leverage this information between States.
Further, the commenters questioned when CMS will provide States with
information regarding ``promising State systems that can be leveraged
and used by other States.'' They also questioned how these ``promising
State systems'' will be identified. The commenters noted that it will
be important for CMS to provide sufficient time for States to leverage
promising systems and qualify for enhanced FFP to fund the development
of those Medicaid eligibility systems. Other commenters expressed
concern
[[Page 21958]]
that to meet the standards and conditions required for the Medicaid
eligibility system to qualify for the enhanced funding, significant
systems changes will be necessary to integrate Medicaid/CHIP
eligibility and develop a single client identifier for all Medicaid and
CHIP members to establish seamless coordination for eligibility and
enrollment. Some commenters requested that CMS provide clarity on the
criteria CMS will use to assess how States have demonstrated compliance
with these standards and conditions including what documentation States
will be expected to provide.
Several commenters questioned the phrase ``seamless coordination.''
That is, Sec. 433.112(b)(16) requires seamless Medicaid coordination
and integration between Medicaid eligibility systems and the Exchange,
allowing for interoperability with the Exchanges, and other health
information systems. The required interoperability would involve the
exchange of eligibility and enrollment status to the health information
system, however, the rule did not specify the health information being
exchanged among the eligibility and enrollment systems. The commenters
believed it would be important for CMS to provide additional guidance
on the type of data to be exchanged between eligibility and enrollment
systems and other health information systems; thus, the commenters
requested a definition of ``seamless coordination.'' Additionally, the
commenters requested that CMS provide clarity around whether other
programs, such as the Supplemental Nutrition Assistance Program and the
Temporary Assistance for Needy Families Program, are considered part of
CMS' vision for ``seamless coordination'' and whether enhanced Medicaid
funds would be used to make related changes to eligibility systems for
these programs as well.
One commenter suggested that we add stronger language to the list
of standards and conditions in Sec. 433.112(b) consistent with the
preamble language included in the proposed rule regarding the emphasis
on the customer experience. Specifically, the commenter stated CMS
references the goal of creating an ecosystem designed to deliver
person- and citizen-centric services and benefits. The commenter
requested similar language be added in regulations text.
Numerous commenters were supportive of our proposed standards and
conditions. Specifically, several commenters have indicated they
welcome our efforts to identify ``promising State systems'' that can be
leveraged and used by other States. Commenters indicated that they
support our perspective that State eligibility and enrollment systems
must be conceived of as contributing to a ``system of systems.'' To
achieve interconnected, functional systems in time to implement the
Affordable Care Act, States must leverage existing systems to the
greatest extent possible and successfully connect across silos.
Commenters further stated that CMS should develop a repository or
method of sharing information and support the development of reference
applications. Additionally, commenters stated CMS should establish a
means for communication between agencies at the Federal level in a
manner that can be replicated at the State level. The commenters also
stated that CMS should also provide support to those States that choose
to ``phase in'' some of the changes, to ensure that they can proceed
while also receiving enhanced funds. Additionally, the commenters
requested that CMS should consider the MITA governance model for
disseminating more detailed specifications for the standards and
conditions; that is, the MITA governance model which includes the
Business, Information, and Technical Review Boards, organized to
support the MITA model for review, approval, and adoption of national
standards.
Response: All of these comments are specific to Sec. 433.112 and
Sec. 433.116 in which we have required that to receive enhanced
funding for development, design, installation or enhancement of
mechanized claims processing and information retrieval systems and
operation of such systems, the standards and conditions specified in
Sec. 433.112(b)(10) through (16) must be met. The standards and
conditions are prescriptive in nature; we did, however, recognize that
for State systems to meet these standards and conditions, it would be
necessary to provide additional guidance that clearly articulates our
criteria for meeting these standards and conditions, the performance
measures that we will use to ensure that State systems are complying
with these standards and conditions, and the collaboration efforts we
will take with CCIIO and other human services programs.
As mentioned previously, we released several guidance materials
last year including the proposed rule and the IT guidance version 1.0,
and we are committed to releasing additional guidance in the near
future which will detail our criteria for ensuring compliance with the
standards and conditions. States should consider that we will be
interested in partnering with them to ensure that they are making
progress and meeting measurable goals. We consider that States may
progress in several phases and ensure compliance by meeting goals along
the way. Some examples that States may wish to consider in meeting the
standards and conditions would be (1) That States should supply
roadmaps for major improvements in current systems based on ``as/is''
MITA assessments and demonstrate how they will increase in MITA
maturity by at least one maturity level; (2) States should identify how
they plan to achieve full MITA maturity and in what timeframe; (3)
States should ensure that their business architecture conforms to
concept of operation and business process models distributed by CMS for
specific business functions, or identify divergences to CMS; and (4)
States should use a business rules engine which is maintained and
operated separate from transactional programming language, which allow
for modification and updates on an emergency as well as a regularly
scheduled (at least quarterly) change control process.
Additionally, we will be releasing IT guidance version 2.0 soon and
we will be releasing future versions of IT guidance, as the January 1,
2014 deadline approaches. We will also be issuing guidance surrounding
APDs. We continue to work with the Early Innovator grant awardees to
ensure that State ``early innovator'' systems will meet the goal of
seamless coordination with the Exchange. Furthermore, we continue to
provide technical assistance and support to States through several
vehicles including CMS State calls, State workgroups, and conferences.
We will convene an annual MMIS conference in which States can share
their experiences and provide feedback and request assistance regarding
issues surrounding the implementation of the Affordable Care Act. We
have committed to providing leadership and technical assistance in not
only developing national standards and conditions but in ensuring
systems transformation will provide that the goals of the Affordable
Care Act goals can be met. That is, with systems transformation, States
can meet coverage goals, minimize duplication, ensure effective reuse
of infrastructure and applications, produce seamlessness for consumers,
and ensure accuracy of program placements.
In terms of our plans for use of the MITA governance model which
includes the Business, Information, and Technical Review Boards,
organized to support the MITA model for review, approval and adoption
of national
[[Page 21959]]
standards, it should be noted that the standards and conditions were
developed considering many perspectives; that is, the Office of the
National Coordinator's standards for enrollment, the HIPAA standards
for privacy and security, the Office of Civil Right's views on the
Rehabilitation Act and other accessibility standards, other Federal
government agencies, States and other stakeholders.
Comment: Several commenters requested that we promote transparency
and provide opportunities for beneficiary input since the proposed
Sec. 433.112(b)(14) would require effective communications with
providers, beneficiaries, and the public. The commenters believed that
States should be required to consult with beneficiaries, advocates,
provider groups, including safety net providers such as Federally
Qualified Health Centers, and public workers as they plan their new or
improved eligibility systems; to make public copies of the business
rules used to determine the decisions on eligibility that will be made
by their new systems; and to gather data directly from beneficiaries on
their experiences with eligibility determinations (for example, via
field-tested procedures such as focus groups or meetings with
beneficiaries or low-income advocates) on a periodic basis.
Additionally, commenters believed that States must demonstrate that
their modernized eligibility systems produce communications with
beneficiaries (regardless of whether they are distributed through the
mail, on-line, or through other alternative means) that are appropriate
for their literacy level and consider the needs of people with
disabilities. Commenters believed that policies regarding notices help
ensure user-friendly notices which should include involvement of
stakeholders, such as beneficiaries. Similarly, the commenters believed
that CMS should actively solicit and include data on beneficiaries'
perspectives when it conducts its periodic reviews of State's
eligibility systems. Lastly, commenters believed that this standard and
condition will be difficult to measure, and therefore, should include
definable metrics.
Response: We believe it is wise for States to consult with their
stakeholders as they implement the Affordable Care Act, and in
developing business process models and technology roadmaps. While we do
not intend to set Federal requirements regarding consultation in this
rule and specific to this activity, we do note that other eligibility
policy rulemaking may address this issue. One of our standards and
conditions specifically states the expectation that business rules
should be maintained in human readable form; we agree with the
recommendations of the HIT Policy and Standards Committees considering
the requirements of section 1561 of the Affordable Care Act that such
business rules should be submitted and maintained in a common
repository, and are designing approaches to support that activity.
These rules will be available to the public to the fullest extent
possible and practicable, and we urge States to make their business
rules public on the same basis. As for the request that we define the
metrics that will be used in periodic reviews of State systems, such
metrics will be published in a subsequent notice or notices. We will
consider the suggestion to add beneficiary feedback and user experience
in these measures.
Comment: One commenter questioned if the standards and conditions
for Medicaid eligibility systems apply also to MMISs and claims
adjudication and whether States have to meet the standards and
conditions for MMISs to collect the enhanced FFP.
Response: Yes, under our proposed and final regulations, a State's
entire MMIS (including its eligibility determination system) will be
required to comply with all of the standards and conditions outlined in
Sec. 433.112. Please see our proposed rule (75 FR 68585) where we
clarify that we were proposing standards and conditions that would
apply to both ``traditional claims processing systems, as well as
eligibility systems to be eligible for the enhanced match.''
We are making no further additions to this section of the final
rule.
Comment: Several commenters requested that CMS ensure eligibility
systems comply with all civil rights laws and provide beneficiaries
with the opportunity to secure information in a culturally and
linguistically appropriate manner. Commenters requested that CMS ensure
that the experiences of people with disabilities are considered when
CMS conducts its periodic reviews of the system. In addition,
commenters believed that CMS should more clearly delineate that
eligibility systems must be in compliance with all civil rights
protections based on race, color, and national origin and be designed
in a culturally and linguistically appropriate manner. Some commenters
expressed concern regarding eligible children in immigrant families and
individuals with limited English proficiency and the difficulties they
experience in communicating with public assistance caseworkers and in
navigating the Medicaid application process in general. Commenters
suggested that new systems and/or modifications to current systems
address these needs. Additionally, commenters suggest that the
eligibility systems qualifying for the enhanced match should be in
compliance with Title VI of the Civil Rights Act of 1964, section 1557
of the Affordable Care Act, and all related rules, regulations and
guidance, including the Department of Justice's policy document,
``Guidance to Federal Financial Assistance Recipients Regarding Title
VI Prohibition Against National Origin Discrimination Affecting Limited
English Proficient Persons.''
Response: While we believe the majority of these comments address
determinations of eligibility, but are not specifically addressed to
the actual systems technical requirements that are the subject of our
proposed and final rules, we wish to clarify that we are requiring that
States meet the standards and conditions outlined in Sec. 433.112 and
that one of the standards and conditions relates to effective
communication with beneficiaries. States should consider that State
systems should provide a 21st Century customer experience for all
individuals and should provide for person-centric outreach,
eligibility, and enrollment. In terms of determining eligibility, we
are happy to work with States regarding assistance to individuals with
limited English proficiency in the context of the Department's
``Guidance to Federal Financial Assistance Recipients Regarding Title
VI Prohibition Against National Origin Discrimination Affecting Limited
English Proficient Persons'' (``Revised HHS LEP Guidance'') accessible
at: http://www.hhs.gov/ocr/civilrights/resources/specialtopics/lep/policyguidancedocument.html. Additionally, we note that section 201(b)
of the Children's Health Insurance Program Reauthorization Act of 2009
(Pub. L. 111-3, enacted on February 4, 2009) (CHIPRA), added section
1903(a)(2)(E) to the Act to provide increased Federal funding for
translation and/or interpretation services provided in connection with
the enrollment of, retention of, and use of services by children of
families where English is not their primary language. Further, we note
that our current regulation at 45 CFR 95.633 holds that State agencies
that acquire automated data processing equipment and services are
subject to nondiscrimination requirements in 45 CFR parts 90, 84 and 80
(nondiscrimination on the basis of age; disability; and national
origin, race or color, respectively). Federal guidance
[[Page 21960]]
issued on September 21, 2000 by the Office of Civil Rights and the U.S.
Department of Agriculture, Administration for Children and Families and
the Health Care Financing Administration (as CMS was formerly known)
``Policy Guidance Regarding Inquiries into Citizenship, Immigration
Status and Social Security Numbers in State Applications for Medicaid,
State Children's Health Insurance program (SCHIP), Temporary Assistance
for Needy Families (TANF), and Food Stamp Benefits'' (``Tri-Agency
Guidance'') also discusses application practices involving the citizen/
legal immigrant children of immigrant parents, where questions asked of
nonapplicant parents may deter the eligible children from enjoying
equal participation in and access to the Medicaid program, thereby
potentially violating prohibitions on national origin discrimination in
Title VI of the Civil Rights Act). (See http://www.hhs.gov/ocr/civilrights/resources/specialtopics/tanf/triagencyletter.html). We also
will continue to consider the Institute of Medicine's, 2009 report,
``Race, Ethnicity, and Language Data: Standardization for Health Care
Quality Improvement,'' for collecting race, ethnicity, and language.
Finally, we expect to address section 1557 of the Affordable Care Act
in separate rulemaking.
Comment: One commenter suggested that, in considering the standard
and condition supporting accurate and timely processing and
adjudications/eligibility determinations and effective communications
with providers, beneficiaries, and the public, CMS should require
States to adopt and implement translated notices and taglines in their
eligibility systems to ensure effective communication with limited
English proficient applicants and enrollees.
Response: We will consider this suggestion as we develop further
technical guidance and additional rulemaking. We agree that such
practices are worthy of consideration in development activities.
Comment: Other commenters expressed concerns regarding current
barriers that immigrant families face when applying for public
assistance benefits. Some of the barriers identified include the
following: Requests for Social Security numbers in the application for
non-applicants (that is, undocumented parents that wish to apply on
behalf of their United States citizen children), requirements for
income verification that nontraditional workers cannot access; and lack
of translated forms and interpretive services for individuals with
limited English proficiency. Commenters wanted CMS to consider the
``Tri-Agency Guidance,'' discussed in the responses above and require
that eligibility determination systems should ensure that individuals
can seek all of the benefits for which they or their family members may
be eligible without providing unnecessary information.
Response: These comments address program and policy requirements,
and will be addressed in separate rulemaking.
Comment: One commenter wanted CMS to require that State systems
determine eligibility for low-income, lawfully present immigrants who
are income eligible for Medicaid but whose immigration status makes
them ineligible for Federal Medicaid. Specifically, since these
individuals would not be eligible for Federal Medicaid but may be
eligible for tax credits and Exchange coverage, their applications
should be delivered to the Exchange without requiring a new application
be submitted, while also providing the applicant clear notice of the
status of their application and eligibility.
Response: These comments address program and policy requirements,
and will be addressed in separate rulemaking. However, we wish to
clarify that one standard and condition that must be met to receive
enhanced match is seamless coordination and integration with the
Exchange.
Comment: One commenter requested that CMS require that eligibility
determination systems demonstrate how they will comply with sections
1411(e) and (g) of the Affordable Care Act. Section 1411(e) of the
Affordable Care Act provides that certain procedures governing
verification of eligibility in the Medicaid program, including its due
process protections, apply to the Exchange. Section 1411(g) of the
Affordable Care Act prohibits unnecessary questions during the
application process and limits the use of information provided to the
Exchange.
Response: These comments address program and policy requirements
and will be addressed in separate rulemaking.
Comment: One commenter suggested that CMS prohibit States from
delegating responsibility to private entities for administering on-line
Medicaid eligibility systems without the State accepting the legal
responsibility for the system.
Response: These comments address program and policy requirements,
and will be addressed in separate rulemaking.
Comment: A commenter suggested that CMS oversee providing periodic
notice to Medicaid beneficiaries for their individual use of medical
services, similar to an explanation of benefits (EOB). The commenter
believed this would alert Medicaid beneficiaries of fraud, provide
treatment history, and could help with redeterminations.
Response: While we appreciate the commenter's proposal, such
provisions are beyond the scope of the regulation of the final rule. As
such, we are making no changes in response to the comment.
Comment: The commenters believed that the requirements for timely
and accurate processing of claims and adjudications should take into
account what is known about the major factors that contribute to system
performance, such as system architecture, capacity, and usability by
workers. Commenters recommended that decision logic and coding used by
eligibility systems be publicly available, and States should be
required to have a process for identifying errors and promptly
correcting them. Further, the commenters believed that systems should
be capable of producing audit trails of decisions.
Response: We agree with the commenter. We expect to address these
issues when we issue performance metrics in a separate notice.
Comment: Several commenters agreed with our requirements that the
eligibility determination system produce performance data and reports
that contribute to program, evaluation, continuous improvement, and
transparency and accountability. The commenters suggested that we
further specify the minimum data and performance reports that the
system must generate and provide the specifications for these reports
and that we should aim for basic program and performance data that is
comparable across States and that addresses fundamental program
objectives and compliance with key requirements. Commenters believed
this information should be posted to Web sites on a regular and timely
basis.
Response: We agree with the commenters' suggestions, and further
clarify the applicability of this standard to all MMISs and not just
eligibility systems. While the regulation establishes standards and
conditions for transaction data, reports and performance information,
additional specifications will be addressed in future subregulatory IT
guidance continuously as the January 1, 2014 deadline approaches.
Comment: Some commenters stated that the proposed regulatory
changes
[[Page 21961]]
did not address the needs of Medicare beneficiaries for seamless
enrollment to Medicaid, Medicare Savings Programs (MSPs), and Part D
low income subsidy (LIS) support older people and people with
disabilities.
Response: Because the regulatory changes addressed availability of
enhanced Federal funding for Medicaid eligibility and enrollment
functions and necessary standards, specific provisions impacting
enrollment of Medicare recipients was outside the scope of these
changes. We would like to note that the newly established Federal
Coordinated Health Care Office within CMS, under section 2602 of the
Affordable Care Act, will be addressing administrative and regulatory
barriers between the Medicare and Medicaid programs in order to better
serve this population and it is our belief that improvements in
Medicaid eligibility systems will benefit many populations including
individuals that are dually eligible for Medicaid and Medicare.
Comment: Several commenters noted that the systems should be built
in a manner that allows for the effective expansion to other
populations.
Response: We agree that systems should be built to allow for
expansion and leverage, and indeed note that many of the standards and
conditions (such as separation of business rules, service-oriented
architecture, MITA, etc.) will effectively enable such downstream
activities and extensions.
Comment: Several commenters believed that CMS standards and
conditions should not be the only factor in considering enhanced FFP.
For example, commenters believed that Federal leadership, technical
assistance, and sub-regulatory guidance should focus on outcomes, as
well as the standards and conditions.
Response: We concur that Federal (and State) leadership, technical
assistance and subregulatory guidance needs to increasingly focus on
outcomes. One of the standards and conditions is that systems
effectively support and contribute to intended business results. We
expect to publish proposed performance measures to help assess
compliance with this condition and standard.
Comment: Commenters stated that the standard and condition
regarding use of a modular, flexible approach to systems development
and the separation of business rules from core programming available in
human and machine readable formats do not address the maintainability,
quality or governance process for changes to the rule sets which they
believe have a much greater effect on quality and timeliness than the
particular syntax structure of the rules source code.
Response: While we do not believe this particular standard and
condition will solve all of these challenges, we believe it will
significantly reduce maintenance costs and provide added systems
flexibility in an environment that is continually evolving. Use of a
modular, flexible approach to systems development and the separation of
business rules from core programming will allow States to make changes
more quickly and efficiently than the situation in place today for most
States. We did not attempt to tackle the governance process as we
believe that, while very important, the relationship between systems
performance and governance can be accommodated using different
approaches depending upon the specific conditions within the States.
Comment: Several commenters recommended that the separation of
business rules from core programming should recommend the use of
commercially available business rules engines as opposed to custom or
one-of-a-kind implementation of rules processing techniques.
Response: One of our standards and conditions focuses on reuse and
leveragability. This encourages and even demands consideration of
existing solutions, including proprietary and open source solutions,
solutions in place at other States, or solutions already in place
within a State, before embarking on ground up custom development. We
believe this standard and condition adequately ensures that States give
due attention and consideration to these options without dictating
specific solutions.
Comment: Several commenters requested that CMS provide additional
guidance on the business rules and specifically requested that since
every State will have to meet the business rules requirement, it might
be more efficient for CMS to develop a repository of business rules
along the lines of the recommendations transmitted to HHS
(recommendation 3.2) by the HIT Policy and Standards Committees. States
could then adopt and adapt the rules to their own systems.
Response: We agree with the commenters that we should provide
additional guidance on the business rules. As mentioned, we will
continue to provide leadership, technical assistance, and guidance with
an eye toward the January 1, 2014 date for required operation of the
Exchanges and Medicaid expansion. We have also provided that States
should consider other documents that articulate the Department's
strategy such as the IT guidance 1.0, Guidance for Exchange and
Medicaid Information Technology Systems, and continue to consider such
guidance in meeting the requirements of this final rule. As the
commenters stated, the HIT Policy and Standards Committees'
recommendations should be considered when developing systems that
comply with the standard and condition regarding ensuring alignment
with, and incorporation of, industry standards: HIPAA security,
privacy, and transaction standards; accessibility standards under
section 508 of the Rehabilitation Act and compliance with Federal civil
rights laws; and standards adopted by Secretary under sections 1104 and
1561 of the Affordable Care Act. Our final rules will require that
systems include usability features or functions that accommodate the
needs of persons with disabilities, including those who use assistive
technology. As noted in the IT guidance issued November 30, 2010, State
enrollment and eligibility systems already are subject to the program
accessibility provisions of section 504 of the Rehabilitation Act,
which include an obligation to provide individuals with disabilities an
equal and effective opportunity to benefit from or participate in a
program, including those offered through electronic and information
technology. The Department noted in that guidance that a State's Web
sites, interactive kiosks, and other information systems addressed by
section 508 Standards would be viewed as being in compliance with
section 504 if such technologies meet the 508 standards. The Department
also encouraged States to follow either the 508 guidelines or
guidelines that provider greater accessibility to individuals with
disabilities, and noted that States could consult the latest Section
508 guidelines issued by the US Access Board or W3C's Web Content
Accessibility Guidelines (WCAG) 2.0 (see http://www.access-board.gov/sec508/guide/index.htm). Therefore, we believe that as a result of
complying with section 504, many States will already be in or moving
toward compliance with the accessibility standards we have included in
this final rule.
Lastly, we will be developing a repository of business rules;
however, we wish to clarify that it may take some time to populate.
Considering the deadlines imposed by the Affordable Care Act, we
realize a repository of business rules may be helpful to some States
and not others depending upon a given State's IT configuration at the
time
[[Page 21962]]
it is in need of such rules. We are also considering the possibility of
the development of model rules, in a collaborative project with States.
Comment: One commenter requested further clarification for the
standards and conditions listed in Sec. 433.112(b)(2) that require
that the system meet the requirements of Part 11 of the State Medicaid
Manual, and Sec. 433.112(b)(12) that require that ensuring alignment
with, and incorporation of, industry standards: HIPAA security,
privacy, and transaction standards; accessibility standards under
section 508 of the Rehabilitation Act and compliance with Federal civil
rights laws; and standards adopted by Secretary under sections 1104 and
1561 of the Affordable Care Act. The commenter questioned how CMS will
measure compliance with these requirements and if States are found to
be out of compliance with this requirement in one area such as a small
part of the conversion to ICD-10 coding or revision of the 5010
transaction standards, will States risk losing all enhanced FFP.
Response: States are required to meet all conditions for their
mechanized claims processing and information retrieval system described
in Title XIX of the Act in order to receive FFP. We have the authority
to withhold enhanced FFP (or potentially all FFP) for issues of
noncompliance with the conditions listed in Title XIX of the Act. It is
not our intention to withhold FFP for a frivolous or insubstantial
reason. We will give States the opportunity to correct any failures
that might endanger FFP. However, a States' continued or persistent
failure to adopt industry standards in a timely and compliant way
would, in fact, place enhanced FFP at risk. We note that we have
outlined a transition period for State MMIS systems to come into
compliance that allows for up to 38 months of transition while, at the
same time, still ensuring that State systems move expeditiously towards
improvement and advanced technology (see our discussion below in
section III.E. regarding the transition period).
D. Public Feedback and Suggestions Related to the APD Process
Comment: Several commenters suggested that the APD process and the
Federal organizations responsible for its administration will likely be
taxed in an unprecedented way by the volume of work spurred by the
implementation of the Health Information Technology for Economic and
Clinical Health Act and the Affordable Care Act. The commenters noted
that even when applied to projects supporting a single program with a
fairly limited set of requirements, the many moving parts in the APD
process can work more slowly than anticipated and lead to unforeseen
outcomes. Consequently, the commenters suggested that the APD process
be reformed. Commenters suggested that CMS make the APD process more
transparent and that making the large history of APD documents and
outcomes available to other States would promote increased
collaboration. Other commenters agreed and indicate that with many
States submitting APDs for both eligibility and MMIS systems within the
same window of time, the APD approval process will put increased
pressure on both State and Federal agencies to meet deadlines. The
commenters urged CMS to provide an APD template and to examine ways to
expedite the APD process to make sure it can support the critical
timeframe and urged CMS to consult with States and the vendor community
to identify options to ensure timely approval of APDs. Additionally,
commenters recommended that CMS consider the waiver option in 45 CFR
95.627 as a method to streamline the enhanced funding approval process
during this time limited availability of enhanced funds. This could
allow States to submit alternative approaches to hasten implementation
of needed systems changes.
Response: On October 28, 2010, HHS released a final rule (75 FR
66319) that introduced a new concept of ``high risk'' APDs that
specified software development as a ``high risk'' trigger.
Additionally, the period for Federal review currently identified in 45
CFR 95.611(d) allows up to 60 days for APD approval, disapproval, or
requests for information.
We realize it will be important to conduct APD reviews quickly so
as not to delay the projects the States are pursuing. As we are issuing
this rule, we are also preparing additional guidance for APDs, and for
the governance and collaboration process we will use to work with
States to minimize project risk, optimize outcomes, and to ensure
successful compliance with the seven standards and conditions added by
this final rule. In response to the commenters' suggestions to make
APDs more transparent and public, we agree. We are evaluating how, and
in what form, to make APDs available as they are submitted.
E. Issues Related to the Transition Period for Compliance
Comment: One commenter proposed that the regulation not be
retroactive to initiatives with an APD already.
Response: While not directly suggested here, we believe it is
important to clarify that enhanced funding is currently not available
for eligibility initiatives that have already been approved by CMS.
However, we have provided that States currently receiving enhanced FFP
for MMIS have a period of transition to come into compliance with the
standards and conditions outlined in this rule. Specifically, for new
MMIS development (new APDs requesting 90 percent FFP for design,
development, installation, and enhancement), we provide for no
transition period. For MMIS development already underway (approved APDs
providing 90 percent enhanced FFP), we proposed a 12-month transition
period (beginning with the effective date of this final rule) in which
to submit an updated Implementation APD (IAPD) detailing how systems
would be modified to meet the required conditions and standards. For
maintenance and operations of MMIS currently receiving 75 percent FFP,
we proposed a 36-month transition period in which to submit an IAPD
with plans to upgrade or modify systems to meet the required conditions
and standards. Since we are providing that this final rule is effective
upon publication, we are revising the transition periods by 2 months
(to 14 and 38 months, respectively).
For new MMIS development (new APDs requesting 90 percent FFP for
design, development, installation, and enhancement), we will continue
to provide for no transition period. For MMIS development already
underway (approved APDs providing 90 percent enhanced FFP), we provide
for a 14-month transition period (beginning with the effective date of
this final rule) in which to submit an updated Implementation APD
(IAPD) detailing how systems would be modified to meet the required
conditions and standards. For maintenance and operations of MMIS
currently receiving 75 percent FFP, we provide for a 38-month
transition period (beginning with the effective date of this final
rule) in which to submit an IAPD with plans to upgrade or modify
systems to meet the required conditions and standards.
Additionally, we have discussed a period of transition to come into
compliance with the standards and conditions outlined in this rule for
eligibility systems as well. Specifically,
[[Page 21963]]
for eligibility systems (currently receiving 50 percent for development
and maintenance and operations), we are providing for no transition
period for new requests for enhanced funding for eligibility systems.
States with eligibility systems currently under development (approved
APDs providing 50 percent FFP) can update their APDs to reflect how
they would comply with these standards and conditions in order to begin
receiving 90 percent FFP. Similarly, eligibility systems currently
receiving 50 percent FFP for State expenditures would need to comply
with our final standards and conditions to receive a 75-percent FFP.
We are making no change to the transition period for eligibility
determination systems.
Comment: One commenter questioned whether CMS will impose
additional deadlines on States following the submission of an IAPD
requesting funding and specifying the plans for updating MMISs within
the 36 month (now 38 month) transition period.
Response: In the context of this regulation, any more standards and
conditions (in addition to the 7 finalized in this rule) would be
subject to notice and public comment. Consequently, States would have
an opportunity to provide CMS with feedback.
Comment: One commenter stated strong objections to the transition
period for existing development projects and established MMIS
applications for the submission of an IAPD to achieve CMS' proposed new
MMIS standards. The commenter believed that this time limitation is
extremely burdensome to States at a time when resources are already
strapped. The commenter believed the development of an IAPD will
require a planning period and this will be occurring at the same time
that States are overhauling their eligibility and determination
systems. Further, the commenter believed that States are already
struggling to meet the HIPAA 5010 and the ICD-10 mandates. The State
staff, contractors, and vendors conducting the work on these mandates
are the same ones who would be involved in the planning necessary to
submit an IAPD and they would be the same ones implementing the changes
to the MMIS. The commenter believed the rule requires adherence to
standards that don't exist and from the State's perspective the MMIS
requirements represent an unfunded mandate. The commenter expressed
concern that the requirement to ``hurry up and meet'' the new standards
and conditions will turn current MMISs into ``lame duck'' systems. The
commenter noted that with all States required to undertake major
eligibility systems projects, implement 5010 and ICD-10, and already
facing impossible budget constraints, now is not the time to mandate
onerous new requirements that in many cases require replacement of
perfectly workable MMIS systems.
Response: In the January 16, 2009 Federal Register, HHS published
two final rules: The ASC X12 Version 5010, NCPDP Version D.0, NCPDP
Version 3.0 (74 FR 3296) and the ICD-10 code sets (74 FR 3328) were
published by HHS on January 16, 2009 in 2 separate final rules. These
rules are available at www.regulations.gov. In NCPDP Version D.0, NCPDP
Version 3.0, HHS adopted ASC X12 Version 5010 and NCPDP Version D.0 for
the HIPAA transactions that currently require the use of the ASC X12
Version 4010/4010A and NCPDP Version 5.1 standards. In that rule, HHS
also adopts a new standard for Medicaid subrogation for pharmacy claims
transactions, known as NCPDP Version 3.0. For Version 5010 and Version
D.0, the compliance date for all covered entities is January 1, 2012.
This gives the industry enough time to test the standards internally,
to ensure that systems have been appropriately updated, and then to
test between trading partners before the compliance date. The
compliance date for the Medicaid subrogation standard is also January
1, 2012, except for small health plans, which have until January 1,
2013 to come into compliance.
In ICD-10 code sets final rule, HHS modified the standard medical
data code sets for coding diagnoses and inpatient hospital procedures
by concurrently adopting the International Classification of Diseases,
10th Revision, Clinical Modification (ICD-10-CM) for diagnosis coding
and the International Classification of Diseases, 10th Revision,
Procedural Coding System (ICD-10-PCS) for inpatient hospital procedure
coding. These new code sets replace the current International
Classification, 9th Revision, Clinical Modification, Volumes 1 and 2
and the International Classification, 9th Revision, Clinical
Modification, Volume 3 for diagnosis and procedure codes respectively.
The implementation date for ICD-10-CM and ICD-10-PCS is October 1, 2013
for all covered entities. Thus, we believe there has been ample time
and ample guidance to States so that they can move towards compliance
with these requirements.
We disagree that the new standards and conditions and the timeframe
for meeting them represent an ``unfunded mandate.'' We are not imposing
any mandate on the State, but rather are creating standards which
States will need to meet if they wish to receive an enhanced 90 or 75
percent FFP rate under the Act. States that do not wish to come up to
these standards would continue to be eligible for a 50 percent FFP.
Additionally, in considering the deadlines outlined in the
Affordable Care Act for operation of the Exchanges and the requirement
that Exchanges also determine Medicaid eligibility, we believe, and
States have agreed, that the procurement process for projects of the
size and scope required to meet the challenges of the Affordable Care
Act can take several months to complete. Thus, we considered these
challenges and determined it necessary to provide flexibility by
instituting a transition period and by providing additional financial
support, additional IT guidance, Federal technical assistance, and
leadership so that States can design systems that can meet the
requirements of the Affordable Care Act.
Comment: One commenter questioned whether MMIS upgrades and
modifications (as envisioned by a States IAPD) may be phased in over a
period of years, so that by a certain end-date, the MMIS is fully
compliant, or whether our final rule would require that the IAPD
provide that the MMIS actually meet all standards and conditions by the
end of the transition period.
Response: We believe the commenter is referring to the 36-month
(now 38-month) transition period that applies to current MMISs
receiving 75 percent FFP for maintenance and operations. For this
purpose, States will have up to 38 months to submit an IAPD. This
transition period ensures that new systems receiving Federal funding
are eventually designed in a manner that results in the most efficient
use of technology. In reviewing APDs, we will be considering individual
State factors such as budget, schedule and risk, and we will be
evaluating the State's proposed timeline and pathway in an effort to
ensure full compliance with the standards and conditions at the
earliest opportunity.
F. Comments Regarding CMS' Strategy for Monitoring and Oversight,
Including Performance Reviews
Comment: One commenter asked CMS to elaborate on how frequently the
agency will perform periodic reviews--such as would reviews occur every
6 months, every year, or less frequently.
Response: We are not, at this time, creating specific deadlines for
the periodic reviews. As mentioned earlier, large systems
transformations will be needed in order to accomplish the
[[Page 21964]]
requirements outlined in the Affordable Care Act. As such, we plan to
work with States, and as systems are designed and developed, we will be
conducting reviews on a continuous basis keeping in mind the January 1,
2014 and December 31, 2015 deadlines. We are making no further
revisions to the rule as a result of this comment.
Comment: A few commenters supported ``the back-end review'' of MMIS
solutions, including certification and on-going performance monitoring.
Many commenters requested to see more explicit details regarding
oversight, frequency of reporting, record layout, and the specific
performance metrics CMS will use to ensure ongoing successful
performance. Other commenters suggested a ``modernized'' approach to
the performance of these activities. Rather than basing the processes
on the 30-year old traditional review of output, the commenters
suggested focusing on whether ``the implementation achieves the
business goals that the funding was supposed to accomplish.'' The
commenters believed that aligning these reviews to the goals set forth
in the approved planning documents will result in solutions that more
closely align with program objectives and will result in substantial
reductions in burdens for both State and CMS staff.
Additionally, the commenters requested clarification on whether CMS
is considering adopting a modular certification process in order to
complement and align with the modular system development process.
Response: We appreciate the support for conducting periodic reviews
of MMISs. Our performance measures will tie directly to the standards
and conditions that are being issued in this final rule, and will be
communicated to States through subsequent documents. We intend to
publish performance metrics in a Federal Register notice, and then
allow a period for public comments. The performance results of States
and systems will be the primary driver of the periodicity and intensity
of any CMS reviews. We also intend to focus reviews on whole systems,
modules or components, based on those results.
Comment: Many commenters asked that CMS outline the expected
timeframe for setting up the performance measures. Commenters believed
that the timeframe could potentially impact the timeline for planning,
design, and implementation of system enhancements for compliance. The
commenters proposed an alignment of standards for ongoing review with
standards used to evaluate States' eligibility for enhanced funding, to
ensure that proposed systems modifications lead to achieving standards
established for ongoing monitoring.
Response: As stated above, we intend to publish performance metrics
in subsequent notices, with a request for comments. We will consult
with States and others prior to publishing metrics. To guide States in
their development activities, we will issue a series of documents in
concert with or shortly after publication of this rule, including IT
Guidance 2.0, sub-regulatory guidance on complying with the seven
standards and conditions, and instructions and protocols for APD
submission and review. MITA 3.0 guidance will follow later this year.
We emphasize to States that we expect to see a highly iterative and
fluid approach to business process development, blueprinting,
specifications, and development as we approach implementation of the
coverage expansions and eligibility simplifications within the
Affordable Care Act. We will give strong recognition of the iterative
and collaborative approach and we intend to support Affordable Care Act
implementation as we enforce the standards and conditions in this rule.
G. Issues Related to Partial Systems Improvements or Modernizations
Comment: One commenter recommended that the requirement for
tracking ongoing progress should be eliminated for enhancement(s) made
to address a specific requirement. These may be reviewed for
compliance, once after implementation of enhancement, and subsequently
any time changes are made that would impact the initial enhancement.
Response: We disagree with the commenter. To receive enhanced
funding, State systems must meet with the standards and conditions
outlined in this rule. We expect that a key outcome of our technology
investments is a much higher degree of interaction and interoperability
in order to maximize value and minimize burden and costs on providers,
beneficiaries, and States. Additionally, we wish to ensure that
enhanced FFP is approved only when infrastructure and application
projects maximize the extent to which they utilize current technology
development and deployment practices and produce reliable business
outputs and outcomes. Further, MITA principles also require ongoing
improvement--such that the system continues to meet certain milestones.
Thus, States making enhancements to address a specific requirement
would, in accordance with MITA principles, have to continue to look to
industry standards to ensure that the enhancement is evolving along
with such standards. Tracking ongoing progress is critical to success.
H. Specific Issues by Regulatory Provision
Comment: One commenter noted that CMS has removed the authority in
Sec. 433.110(a)(2)(iii) and Sec. 433.130 to provide for waivers of
conditions of approval, conditions of re-approval, and FFP reductions
in certain circumstances. The commenter expressed concern that removal
of the current waiver flexibility to take into account State-specific
circumstances will increase the potential for loss of enhanced Federal
match with catastrophic budget impact to States.
Response: We agree with the commenter that language in sections
433.110(a)(2)(iii) and 433.130 is removed. These sections implemented
section 1903(r) of the Act which requires reductions in FFP due to a
State under section 1903(a) of the Act if a State fails to meet certain
deadlines for operating a mechanized claims processing and information
retrieval systems or if the system fails to meet certain conditions of
approval or re-approval. We determined it is necessary to delete the
waiver authority in Sec. 433.110(a)(2)(iii) and Sec. 433.130 since it
is redundant and we noted in the preamble of the proposed rule to make
conforming changes to 42 CFR part 433, subpart C in an effort to remove
redundancy. We have, however, retained the authority in Sec. 433.131
which provides for waivers of an FFP reduction in certain circumstances
if the State is unable to comply with the conditions of approval or of
reapproval.
Comment: One commenter requests that we clarify whether the intent
of striking Sec. 433.111(b)(3) includes deleting approved enhancements
to mechanized systems, including claims processing and information
retrieval systems, rather than merely removing the exclusion for
eligibility determination systems.
Response: To clarify the striking of Sec. 433.111(b)(3), we
intended to specifically remove the language indicating that
eligibility determination systems are not part of mechanized claims
processing and information retrieval systems. However, in doing so, we
realized that some may question our removal of the language in Sec.
433.111(b)(3) relating to enhancements; and since we agree with the
commenter that enhancements are
[[Page 21965]]
necessary to ensure that technology continues to improve, we are
revising the regulation text in this final rule to include this
language relating to enhancements.
Comment: One commenter remarked that in Sec. 433.112, we have
linked paragraph (a) with paragraph (c) thus creating, in the
commenter's view, the elimination of the current opportunity for
enhanced FFP at 90 percent for MMIS development and enhancements. The
commenter believed that we have failed to recognize the true status of
States' claims processing systems and future evolution.
Response: We disagree with the commenter. While States will
continue to have an opportunity to receive enhanced FFP at 90 percent
for most MMIS development and enhancements, assuming such systems meet
the regulatory standards and conditions, Sec. 433.112(c) simply
indicates the more limited rule for eligibility determination systems
that funding at enhanced rates will not be available for the design,
development, installation or enhancement of such State eligibility
determination systems after December 31, 2015. However, this deadline
applies only to the eligibility component of MMIS, not the entire MMIS.
Comment: One commenter is concerned that we have not clearly
defined the regulatory requirements specified in Sec. 433.112(b)(10),
(11), and (13) through (16) and that these regulatory requirements lack
explicit and nationally-recognized standards for measuring achievement.
Response: In proposing the 7 standards and conditions that States
must meet in order to receive enhanced funding, we included information
as to the importance of each of the standards and conditions. In
addition, in some cases, we provided examples of how we will ensure
that State systems meet the standards and conditions. For example, for
the standard and condition that speaks to promoting sharing, leverage,
and reuse of Medicaid technologies and systems within and among States,
we specified that we would examine APDs to ensure that States make
appropriate use and reuse of components and technologies available off
the shelf or with minimal customization to maximize return on
investment and minimize project risk. Further, we indicated in the
proposed rule that we intend to issue further interpretations regarding
each standard. In our preamble, we also provided an example of
measurement; that is; we indicated that we would measure how a system
meets requirements for providing notices to beneficiaries, claims, and
applications and renewals, proper determinations, and experience with
appeals, interoperability with Exchanges, as well as traditional
systems standards such as availability and down time. Thus, while we
have provided detailed information regarding the standards and
conditions, we also recognize that future interpretations will be
forthcoming. We intend to ensure that any such interpretations, as well
as performance metrics, are developed with input from the State
agencies. As stated above, for performance measures, we will publish
such measures in a Federal Register notice and provide for a period of
comment.
Comment: One commenter requested that we reinstate the stepped down
reduction in FFP that was outlined in Sec. 433.113 prior to our
proposed rule and eliminate the 25 percent reduction proposed in Sec.
433.119 should there be a decertification action.
Response: We do not believe we have the authority to provide for
the stepped down reductions in FFP as previously outlined in Sec.
433.113. The specific authority to provide such stepped down reductions
that previously existed in section 1903(r) of the Act was repealed by
section 4753 of BBA. However, as explained elsewhere in preamble, we do
have the authority to, on the basis of our review, determine that a
system is no longer leading to more effective, efficient, or economical
operation of the State plan, under section 1903(a)(3) of the Act, and
therefore, to remove the enhanced FFP.
Comment: One commenter asks CMS to reconsider the proposed limit on
the opportunity for enhanced funding at 75 percent for eligibility
determination systems operation to only those systems approved prior to
December 31, 2015. The commenter believed that the new standards and
conditions listed in Sec. 433.112 coupled with the typical timeframes
for design, development, and implementation make it unlikely that the
majority of States will achieve approval by the specified date.
Response: We disagree with the commenter. As stated elsewhere in
this preamble, the Affordable Care Act requires that eligibility
changes be in place by January 1, 2014, and we have already provided an
additional 2 years beyond that date for States to meet the standards
and conditions for enhanced funding for design, development, or
installation.
Comment: One commenter requested that CMS reinstate the criteria
previously listed in Sec. 433.120(b) indicating that any reductions in
FFP would be tied to a reasoned determination that a system is failing
to meet certification requirements in a significant manner.
Response: First, we are clarifying that any deficiencies found as
the result of future reviews would be subject to a period of corrective
action before making a determination that enhanced FFP would be
discontinued. Additionally, while we will be issuing future guidance
regarding the specific performance review measurements, we do agree
that it is likely that enhanced FFP would only be discontinued in
situations where the system is failing to meet the standards and
conditions in a significant manner.
I. Issues Related to the Regulatory Impact Analysis, Including the Cost
Estimates, and Information Collection
Comment: One commenter stated that CMS underestimated States'
eligibility system replacement costs. The commenter pointed out that
the impact analysis assumes that new systems, on average, would cost
$50 million over 3 years for each State and that assumption includes
design, development, and implementation. The commenter indicated that
one State's plan to modernize/replace their Medicaid Eligibility System
cost a total of $200 million over the course of 4 years.
Response: In the Regulatory Impact Analysis of the proposed rule,
we outlined the uncertainty surrounding the assumptions and associated
cost estimates relating to the expenditures for the necessary
technology, innovation, and implementation requirements. This
uncertainty not only included recognizing the difficulty surrounding
the extent of the necessary technology advancements, but how these
changes would affect State systems. We concluded that time, money,
resources, and considerable effort would be necessary for States to
make changes to their current technology. Our estimates also accounted
for the additional uncertainty surrounding the rate of adoption for
States to make necessary changes in the proposed rule. As a result of
the uncertainty in our assumptions surrounding State behavior,
including adoption rates and the associated costs for implementing new
systems within the timeframe assessed, we presented our concluding
aggregate cost estimates within a 25 percent lower and upper range.
This allowed us to reflect a larger cost estimate range, so that both
States throughout the lower to higher bands of expenditures may be
reflected.
In further substantiating the initial estimates, our experience
regarding State costs for eligibility systems is
[[Page 21966]]
based on considerably larger integrated systems involving SNAP and ACF
programs, of which Medicaid typically has a 30 to 45 percent share
based on how States choose to allocate costs. Thus, we recognize that
total system costs may be higher than the $50 million (total computable
Medicaid costs) originally estimated, but the specific Medicaid share
of those costs reflects a portion of the total; that is, on average $50
million (total computable). The focus of our estimates for this rule is
strictly Medicaid costs and not total system costs. Furthermore, we
recognize larger States may have higher costs, while smaller States may
experience lower costs. The $50 million estimate is our best effort to
estimate the midpoint for the Medicaid-only costs, with the estimated
majority of States experiencing costs somewhere within the 25 percent
lower to upper cost range provided in the regulatory impact analysis.
As a result, we are not making revisions to the Regulatory Impact
Analysis or associated cost estimates as a result of this comment.
Comment: One commenter noted that we indicate there are no
additional information collection requirements; however, the commenter
questioned the evolving certification requirements and asked if this
means that additional information collection will be necessary.
Response: We considered that additional data may be necessary in
terms of the performance measurements and compliance with our standards
and conditions. However, we believe this process will be part and
parcel to the APD process; that is, we believe that States will submit
information to us as part of the APDs. We indicated in our proposed
rule that States already submit to us for review and approval APDs for
funding for automated data processing in accordance with Federal
regulations at 45 CFR Part 95, Subpart F. However, we agree with the
commenter that any new APDs for Medicaid systems that perform
eligibility and enrollment functions will need to address the
requirements of this final rule. Consequently, we developed an
expedited APD checklist specific to the purposes of this rule and
submitted to OMB for review and approval the burden associated with the
information collection.
IV. Provisions of the Final Regulations
After consideration of the comments reviewed and further analysis
of specific issues, with a few modifications, we are adopting the
provisions of the November 8, 2010 proposed rule as final.
Specifically, we are finalizing the following provisions:
A. Medicaid Eligibility Determinations
In Sec. 433.112, we have revised the definitions such that
Medicaid eligibility determinations will be considered ``claims'' of
eligibility and Medicaid eligibility determination systems are
potentially eligible for the enhanced 90 and 75 percent FFP under
section 1903(a)(3) of the Act. This final policy will apply only upon
the effective date of this final rule. Additionally, enhanced FFP does
not eliminate the responsibility of States to ensure compliance with
cost allocation principles outlined in OMB Circular A-87.
Further, enhanced FFP at the 90 percent rate for design,
development, installation, or enhancement of eligibility determination
systems will be available for State expenditures only through calendar
year (CY) 2015, even if work on approved APDs continues after 2015.
Enhanced FFP at the 75 percent rate to maintain and operate systems
that previously qualified for 90 percent FFP will be available after
2015 if those systems continue to meet the requirements specified in
this final rule.
Additionally, enhanced funding at 75 percent to maintain and
operate systems meeting the standards and conditions is available prior
to December 31, 2015, (but after the effective date of any final rule),
in recognition of the fact that some States may have already invested
in improvements that will allow systems to qualify without the need for
additional enhanced development, design, installation or enhancement
funding. For any State receiving enhanced FFP at 90 percent or 75
percent prior to December 31, 2015, systems must continue to meet the
requirements, standards and conditions specified in this rule in order
to continue receiving 75 percent enhanced funding after December 31,
2015.
We are limiting the timeframe for which enhanced 90 percent FFP is
available for design, development, installation or enhancement of
automated eligibility systems because we view the changes made by the
Affordable Care Act for the new eligibility rules in Medicaid as
requiring an immediate, substantial commitment to, and investment in,
technologies. In order words, we expect that changes to State systems
will be completed with the start of the new Affordable Care Act
provisions and support the operation of Exchanges on January 1, 2014.
However, we realize that States may need to make additional changes to
State systems to provide for additional functionality in support of
Medicaid eligibility rule modifications. Thus, we are providing for an
additional 2 years of 90 percent enhanced FFP so that States' systems
would have additional time to ensure the peak performance of their
systems.
States would need to incur costs for goods and services furnished
no later than December 31, 2015 to receive 90 percent FFP for the
design, development, installation or enhancement of an eligibility
determination system. This would mean that if an amount has been
obligated by December 31, 2015, but the good or service has not yet
been furnished by that date, then such expenditure would not be
eligible for enhanced FFP. Further, we are limiting the availability of
75 percent enhanced funding for maintenance and operations to those
eligibility determination systems that have complied with the standards
and conditions in this rule by December 31, 2015.
B. Standards and Conditions for Receiving Enhanced Funding
Under sections 1903(a)(3)(A)(i) and 1903(a)(3)(B) of the Act, we
are delineating standards and conditions that must be met by States in
order for their Medicaid technology investments (including traditional
claims processing systems, as well as eligibility systems) to be
eligible for the enhanced match. These authorities provide that the
enhanced FFP of 90 percent is not available unless the Secretary
determines that a system is ``likely to provide more efficient,
economical, and effective administration of the plan'' as described in
section 1903(a)(3)(A)(i) of the Act. Similarly, section 1903(a)(3)(B)
of the Act specifies that enhanced FFP of 75 percent is not available
for maintenance or operations unless the system is ``of the type
described in subparagraph (A)(i)'' and is approved by the Secretary.
We define MITA at Sec. 433.111(c) and we build on the work of MITA
by codifying that enhanced FFP (either at the 90 percent rate for
design, development, installation or enhancement; or at the 75 percent
rate for maintenance and operations) is only available when certain
standards and conditions are met. Specifically, we articulate a set of
standards and conditions that States must commit to in order to receive
enhanced FFP:
Use of a modular, flexible approach to systems
development, including the use of open interfaces and exposed
application programming interfaces; the separation of business rules
from core programming; and the availability of
[[Page 21967]]
business rules in both human and machine readable formats.
Align to and advance increasingly in MITA maturity for
business, architecture, and data.
Ensure alignment with, and incorporation of, industry
standards: the Health Insurance Portability and Accountability Act of
1996 (HIPAA) security, privacy and transaction standards; accessibility
standards established under section 508 of the Rehabilitation Act, or
standards that provide greater accessibility for individuals with
disabilities, and compliance with Federal civil rights laws; standards
adopted by the Secretary under section 1104 of the Affordable Care Act;
and standards and protocols adopted by the Secretary under section 1561
of the Affordable Care Act.
Promote sharing, leverage, and reuse of Medicaid
technologies and systems within and among States.
Support accurate and timely processing of claims
(including claims of eligibility), adjudications, and effective
communications with providers, beneficiaries, and the public.
Produce transaction data, reports, and performance
information that would contribute to program evaluation, continuous
improvement in business operations, and transparency and
accountability.
Ensure seamless coordination and integration with the
Exchange (whether run by the State or Federal government), and allow
interoperability with health information exchanges, public health
agencies, human services programs, and community organizations
providing outreach and enrollment assistance services.
To ensure that States have an opportunity to come into compliance
with these requirements, the States currently receiving enhanced FFP
for MMIS will have a period of transition to come into compliance with
the standards and conditions listed above. Under our schedule, the
following transition periods will apply:
For new MMIS development (new APDs requesting 90 percent
FFP for design, development, installation, and enhancement): No
transition period.
For MMIS development already underway (approved APDs
providing 90 percent enhanced FFP): 14-month transition period
(beginning with the effective date of this final rule) in which to
submit an updated Implementation APD (IAPD) detailing how systems will
be modified to meet the required conditions and standards.
For maintenance and operations of MMIS currently receiving
75 percent FFP: 38-month transition period (beginning with the
effective date of this final rule) in which to submit an IAPD with
plans to upgrade or modify systems to meet the required conditions and
standards.
Eligibility systems (currently receiving 50 percent for
development and maintenance and operations): Because eligibility
systems are not currently receiving enhanced funding, there is no
transition period and no need for a transition period for new requests
for enhanced funding for eligibility systems. Any APDs requesting
enhanced funding for eligibility systems funding following the
effective date of this regulation will have to meet the standards and
conditions above. States with eligibility systems currently under
development (approved APDs providing 50 percent FFP) can update their
APDs to reflect how they will comply with these standards and
conditions in order to begin receiving 90 percent FFP. Similarly,
eligibility systems currently receiving 50 percent FFP for State
expenditures will need to comply with our final standards and
conditions to receive a 75-percent FFP.
Our standards and conditions will be enforced through both front-
end and back-end review processes. Front-end review will entail APD
review and prior approval processes where States apply for enhanced
match before entering into IT investment projects. Back-end reviews
will entail certifications of the systems capabilities, as well as
ongoing performance monitoring.
C. Reviews and Performance Monitoring of MMISs
In this final rule, we are also reinstituting periodic performance
reviews of MMISs (including eligibility determination systems receiving
enhanced funding). Our reviews will focus on performance measures we
set to determine whether States are meeting the standards and
conditions in this final rule. For example, we will measure how a
system meets requirements for providing notices to beneficiaries,
claims and applications intake and acceptance, efficient timely and
accurate processing of claims, applications and renewals, proper
determinations, and experience with appeals, interoperability with
Exchanges, as well as traditional systems standards such as
availability and down time. We expect to see such data automatically
generated by the systems in which we invest, with standards and
conditions established in consultation with States and stakeholders,
and based on industry experience.
Additionally, we will evaluate systems based upon their
interoperability with other Federal and State health programs. Thus, in
operating their systems, States will need to ensure that they consult
documents articulating the Department's strategy on interoperability,
such as the Guidance for Exchange and Medicaid Information Technology
Systems.
Any failures or deficiencies will be the basis for investigation
and opportunity for corrective action before making a determination
that enhanced FFP will be discontinued.
To reflect the passage of the BBA, we have modified Sec. 433.119
through Sec. 433.121 to eliminate any reference to Systems Performance
Reviews (SPRs) but, more importantly, to reflect the requirements for
performance monitoring and review.
D. Partial Systems Improvements or Modernizations
As discussed in response to comment, as well as in the proposed
rule, in referring to ``system'' or ``technology,'' we recognize that
States will likely use a system of systems in support of MMIS
functions. States submitting partial system updates will need to submit
and have an approved roadmap for achieving full compliance with the
standards and conditions in the regulation. We will track progress
against an approved roadmap when determining if system updates meet the
standards and conditions for the enhanced match. For enhancements
intended to satisfy a specific requirement or to address a compliance
issue, for example, ICD-10 or implementation of the National Correct
Coding Initiative, our final policy is that States making enhancements
to address a specific requirement would have to continue to make
improvements and continue to look to industry standards to ensure that
the enhancement is evolving along with such standards.
E. Changes to Federal Regulations at 42 CFR Part 433 Subpart C--
Mechanized Claims Processing and Information Retrieval Systems
We are deleting Sec. 433.113 (referencing the need to have
mechanized claims processing and information retrieval systems by a
certain deadline, or face reduced Federal Medicaid funds as a
consequence) and Sec. 433.130 (referencing waiver provisions for
qualifying States with a certain 1976 population and expenditures). We
have also deleted various cross-references to these provisions.
[[Page 21968]]
We have also made conforming amendments to various provisions in
part 433, subpart C to conform to our final policy that eligibility
determination systems may now be considered part of mechanized claims
processing and information retrieval systems. We have eliminated the
statement in the current Sec. 433.111(b)(3) that ``Eligibility
determination systems are not part of mechanized claims processing and
information retrieval systems or enhancements to those systems.'' In
response to comments we have reinserted language in Sec. 433.111(b)(3)
to include information regarding approved enhancements to mechanized
systems, including claims processing and information retrieval systems.
We have also eliminated the provision at Sec. 433.112(c), which
currently states that ``eligibility determination systems are not part
of mechanized claims processing and information retrieval systems and
are not eligible for 75 percent FFP under this Subpart. These systems
are also not eligible for 90 percent FFP for any APD approved after
November 13, 1989.'' We have replaced this with language making clear
that 90 percent FFP for the design, development, installation, or
enhancement of an eligibility determination system is available only
before December 31, 2015, even if work on an approved APD continues
after 2015. In this final rule, we also are amending the regulation to
make clear that States will need to incur costs for goods and services
furnished no later than December 31, 2015 to receive 90 percent FFP for
the design, development, installation, or enhancement of an eligibility
determination system. We are also codifying in this final rule that FFP
at 75 percent is not available for eligibility determination systems
that do not meet the standards and conditions by December 31, 2015.
States will be required to supply information and demonstrate
consideration of the standards and conditions to CMS for review and
approval and as part of the APD before we will grant approval of
enhanced funding. We will scrutinize all investments and will decline
to approve enhanced funding (resulting in 50 percent FFP) that do not
demonstrate careful consideration and application of these standards
and conditions.
V. Waiver of Delay in Effective Date
Section 553(d) of the Administrative Procedure Act (APA) (5 U.S.C.
553(d)) ordinarily requires a 30-day delay in the effective date of
final rules after the date of their publication. In addition, the
Congressional Review Act at 5 U.S.C. 801, requires a major rule to take
effect no earlier than 60 days after the date the rule is published in
the Federal Register. Both the 30- and 60-day delays in effective date
can be waived, however, if an agency finds for good cause that the
delay is impracticable, unnecessary, or contrary to the public
interest, and the agency incorporates a statement of the findings and
its reasons in the rule issued. 8 U.S.C. 808(2).
We find that it is both unnecessary and contrary to the public
interest to delay the effective date of this final rule. This rule is
altering the definition of a mechanized claims processing and
information retrieval system, such that the definition will now include
automated eligibility determination systems. As a result, enhanced
Federal funding should be available to States that seek to alter their
systems, or that have already altered their systems, in a manner that
meets all of our requirements.
We believe it is in the public interest to immediately ensure the
availability of such enhanced funding, so that States are able to begin
the process of altering their systems as soon as possible. States will
be required to have systems in place that comply with the Affordable
Care Act by the beginning of 2014, and the sooner States are able to
start relying on Federal funding to begin modernizing their systems,
the more likely they will be able to meet these deadlines. In addition,
at least a few States already have systems that would comply with all
of our standards and conditions. Therefore, an immediate effective date
would allow such States to receive funding immediately to support such
modernization efforts. For these reasons, it would be contrary to the
public interest to delay the availability of enhanced funding.
In addition, given that States will have a period of time to come
into compliance with the terms and conditions we have promulgated in
this final rule, it is unnecessary to delay an effective date, as an
immediate effective date will not require any State to immediately
alter its systems. Rather, for eligibility determination systems, the
rule simply conditions enhanced funding on States being in compliance
with the terms and conditions of this final rule--but there is no
immediate requirement that systems change. For current MMISs already
receiving enhanced funding, the rule does impose new terms and
conditions to continue the receipt of such enhanced funding, but a
transition period is built in to allow States time to comply and this
transition period has been extended by 2 months to account for the
immediate effective date in this final rule.
For the above reasons, we find good cause, based on both public
interest, and lack of necessity for a delayed effective date, to waive
both the 30- and 60-day delayed effective dates and to make this rule
effective upon publication.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, 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. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 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.
The changes specified in this final rule impose new reporting,
recordkeeping or disclosure requirements for submission of APDs.
Initially, we indicated that States already submit to us for review and
approval APDs for funding for automated data processing in accordance
with Federal regulations at 45 CFR Part 95, Subpart F. We noted,
however, in section III.I. of this final rule that we received one
comment on the burden associated with this final rule. As a result of
review of this comment and the development of a new expedited ADP
checklist specific to the purposes of this final rule, we are seeking
emergency review and approval from OMB in order for the expedited APD
checklist to be available to States at the time this rule becomes
effective. In addition, we are soliciting public comments on the
information collections and associated burden contained in this final
rule.
An Expedited Eligibility and Enrollment (E&E)--APD checklist (CMS-
10385; OMB number 0938-NEW) has been developed for States that
participate in Early Innovator grants or Establishment grants to
complete and submit to CMS for review and prior approval in order to
receive enhanced
[[Page 21969]]
federal funding for Medicaid Information Technology (IT) system(s)
projects related to eligibility and enrollment functions.
Specifically, this checklist:
(1) Guides States in obtaining prior approval to secure 90 percent
Federal financial participation (FFP) for the design, development,
implementation (DDI), and/or enhancements of a system(s); and 75
percent FFP for maintenance and operations [42 CFR Sec. 433 Subpart
C].
(2) Contains Seven Standards & Conditions that the State's APD must
meet.
(3) Contains Federal requirements for both Planning and
Implementation activities of an APD [45 CFR part 95 subpart F (Revised
October 28, 2010)].
(4) Streamlines the process for States by requiring fewer
documents, as well as potentially shortening the review timeframe for
CMS, and if applicable, other Agencies, of system projects related to
the Affordable Care Act. Although Federal Regulations allow up to 60
days for APD approvals, our goal is to provide an approval within 30
business days upon receipt.
We estimate that there are 56 State Medicaid programs (including
the District of Columbia and 5 territories) and that it will take
approximately 5 hours for each State program to complete the APD
template with the requested information which in aggregate will take
280 total hours to complete one checklist, and 840 total hours to
complete the anticipated average response of 3 per Medicaid program. We
reviewed 2009 National Labor Statistics and speculate that the job role
of Management Analyst (13-1111) with a mean hourly wage estimate rate
of $40.70 would be completing the data for the template. Based on these
estimates, the total cost to complete the APD template would be
$2,279.20 (15 hours x hourly rate of 40.70 = 610.50 x 56 programs =
$34,188.00). We acknowledge that there are uncertainties regarding
these burden estimates.
Estimated Annual Reporting Burden Reporting
[States]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated Average number Average burden
Section number of Frequency of of annual per response Annual burden
respondents responses responses (hours) hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
States that participate in Early 42 CFR Part 433 Subpart C 56 3 168 5 840
Innovator grants or Establishment and 45 CFR Part 95
grants complete expedited checklist. Subpart F.
----------------------------------------------------------------------------------------------------------------
Total.............................. .......................... 56 3 168 5 840
--------------------------------------------------------------------------------------------------------------------------------------------------------
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access our Web
site at http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage or e-mail your request, including your address,
phone number, OMB number, and CMS document identifier, to
[email protected], or call the Reports Clearance Office at 410-786-
1326.
In commenting on the information collections please reference the
document identifier or OMB control number. To be assured consideration,
comments and recommendations must be submitted in one of the following
ways by June 20, 2011:
1. Electronically. You may submit your comments electronically to
http://www.regulations.gov. Follow the instructions for ``Comment or
Submission'' or ``More Search Options'' to find the information
collection document(s) accepting comments.
2. By regular mail. You may mail written comments to the following
address: CMS, Office of Strategic Operations and Regulatory Affairs,
Division of Regulations Development, Attention: Document Identifier/OMB
Control Number, Room C4-26-05, 7500 Security Boulevard, Baltimore,
Maryland 21244-1850.
VII. Regulatory Impact Analysis
A. Statement of Need
This regulation is important, since with the passage of the
Affordable Care Act, we expect that changes to eligibility policies and
business processes will need to be adopted. System transformations will
be needed in most States to apply new rules to adjudicate eligibility
for the program; enroll millions of newly eligible individuals through
multiple channels; renew eligibility for existing enrollees; operate
seamlessly with newly authorized Health Insurance Exchanges
(``Exchanges''); participate in a system to verify information from
applicants electronically; incorporate a streamlined application used
to apply for multiple sources of coverage and financial assistance; and
produce notices and communications to applicants and beneficiaries
concerning the process, outcomes, and their rights to dispute or
appeal.
We wish to ensure that a key outcome of our technology investments
is a much higher degree of interaction and interoperability in order to
maximize value and minimize burden and costs on providers,
beneficiaries, and States. Thus, we are committed to providing 90
percent FFP for design, development, and installation of eligibility
determination systems through CY 2015 or 75 percent FFP for maintenance
and operations of such systems that meet the new regulatory
requirements. We have provided that States must commit to a set of
standards and conditions to receive the enhanced FFP. This enhanced FFP
reduces the financial burden on States to 10 percent of the costs
compared to the 50 percent financial burden currently in place and
ensures that States utilize current technology development and
deployment practices and produce reliable business outputs and
outcomes.
B. Overall Impact
The estimated costs of the Federal-share for Medicaid
administration have been reflected in the FY 2012 President's Budget.
We have examined the impact of this final rule as required by
Executive Order 12866 (September 30, 1993, Regulatory Planning and
Review), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (September
19, 1980; Pub. L. 96-354) (RFA), section 1102(b)
[[Page 21970]]
of the Act, section 202 of the Unfunded Mandates Reform Act of 1995
(March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism
(August 4, 1999), and the Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 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). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. A regulatory impact analysis (RIA) must be prepared for
rules with economically significant effects ($100 million or more in
any 1 year). This final rule is anticipated to have an annual effect on
the economy of $100 million or more, making it an economically
significant rule under the Executive Order 12866 and hence a major rule
under the Congressional Review Act. Accordingly, we have prepared a RIA
that to the best of our ability presents the costs and benefits of this
final rule.
States will continue to receive the traditional 50 percent FFP for
reasonable administrative expenditures for designing, developing,
installing, or enhancing the Medicaid portion of their integrated
eligibility determination systems. Similarly, States will continue to
receive 50 percent FFP for expenditures associated with the maintenance
and operation of such systems.
This final rule, however, addresses the impact related to enhanced
FFP for mechanized claims processing and information retrieval systems,
including those that perform eligibility determination and enrollment
activities, as well as the Medicaid portion of integrated eligibility
determination systems that the Secretary determines are likely to
provide more efficient, economical, and effective administration of the
State plan.
In projecting the impact to the Federal government and State
Medicaid agencies, we considered how the standards and conditions on
MMIS and the availability of enhanced match for State eligibility
systems through CY 2015 will impact State investments over the 10-year
period of 2011 through 2020. As discussed in section VI.C of this final
rule, we considered the expected costs to the Federal government of
providing the enhanced match rate, changes in State investments due to
the application of standards and conditions on MMIS (including
eligibility systems), and possible savings as a result of the use of
more modern, reusable, and efficient technologies.
C. Potential Savings
We considered a number of ways in which application of the
standards and conditions, including increased use of MITA, could result
in savings; however, as no States have yet reached MITA maturity, it is
difficult to predict the savings that may accrue over any certain
timeframe. These areas include the following:
(1) Modular technology solutions: As States, or groups of States,
will begin to develop ``modular'' technology solutions, these solutions
will be used by others through a ``plug and play'' approach, in which
pieces of a new MMIS will not need to be reinvented from scratch every
time, but rather, could be incorporated into the MMIS framework. We
assume that savings associated with reusable technology could be
achieved in both the development and operation of new systems. We
expect that States will dispense with the need to engage in significant
requirements analyses and the need to pay for new modules to be built
when there are successful models around the country that they can draw
down from a ``technology bank'' maintained by the Federal or State
governments.
(2) Increased use of industry standards and open source
technologies: While HIPAA administrative transaction standards have
existed for 5 to 7 years, use of more specific industry standards to
build new systems will allow such systems to exchange information
seamlessly--a major goal of the Affordable Care Act, and one that is
the explicit purpose of the standards work envisioned within section
1561 of the Act. We also believe that more open source technology will
encourage the development of software solutions that address the needs
of a variety of diverse activities--such as eligibility, member
enrollment, and pharmacy analysis of drug claims. Software that is
sufficiently flexible to meet different needs and perform different
functions could result in cost savings, as States are able to use the
systems without making major adaptations to them.
(3) Maintenance and operations: As States take up the changes in
this final rule, the maintenance/operation costs of new systems should
decrease. Less maintenance should be required than that necessary to
reengineer special, highly customized systems every time there is a new
regulatory or legal requirement.
(4) Reengineering business processes, more Web-based solutions,
service-oriented architecture (SOA): Savings are likely to result from
the modular design and operation of systems, combined with use of
standardized business processes, as States are compelled to rethink and
streamline processes as a result of greater reliance on technology.
D. Calculation of MMIS Costs
MMIS costs are estimated at approximately $10.0 billion over the 5-
year budget window and $23.0 billion over the 10-year budget window.
These costs represent only the Federal share.
To calculate the impact of the regulation on MMIS costs, we assumed
that new systems on average will cost $150 million over 3 years for
each State ($50 million total cost per year, or $45 million Federal
costs at 90 percent FFP per year). We have identified that ten States
have sophisticated systems that are very close to meeting the
implemented regulation standards. As a result, we assumed the remaining
41 States will have approved APDs in place to replace or update their
MMIS between FY 2011 and FY 2013 to comply with the new regulation
standards and conditions.
We assumed that the States modernizing earlier in the cycle will
see increased development, design, and installation costs, whereas
States moving later will see increased development, design, and
installation savings as they are able to take advantage of efficiencies
gained by the early adopter States. Specifically, for those States that
update or build new systems in FY 2011 and FY 2012, we assumed a 10
percent annual cost increase to new MMIS systems for design,
development, and installation. For those States that build new systems
in FY 2013 and FY 2014, we assumed a 5 percent annual savings to new
MMIS systems for design, development, and installation. While it is
difficult to predict State behavior, we believe all States will comply
with the standards and conditions in this regulation to receive the 90
percent FFP, and have assumed that for the purpose of these estimates.
For maintenance, we assumed those States that have implemented the
new regulation requirements would see a 20 percent annual savings, and
for operations, we assumed those States that have implemented the new
regulation requirements would see a 5 percent annual savings.
Based on these assumptions, we estimate the net Federal budgetary
[[Page 21971]]
impact on baseline MMIS costs from FY 2011 through 2015 of implementing
the new regulation is approximately $1.1 billion, and the net Federal
budgetary impact from FY 2011 through 2020 is approximately $557
million in savings.
E. Calculation of Eligibility Systems Costs
For eligibility systems, we applied the same methodology we used to
calculate net Federal costs to MMIS under the new regulation.
To meet the requirements of the Affordable Care Act, States would
have to build new systems or modernize existing systems. Most States
will add new functionalities to interface with the Exchanges and
implement new adaptability standards and conditions (such as
incorporation of new mandated eligibility categories). We assume
baseline costs for development, design, and installation at 50 percent
FFP for all States are approximately $815 million from FY 2011 through
2015 and $1.1 billion from FY 2011 through 2020. Eligibility systems
costs for maintenance and operations at 50 percent for all States are
approximately $1.2 billion from FY 2011 through 2015 and $2.7 billion
from FY 2011 through 2020. These costs represent only the Federal
share.
To calculate the impact of the implemented regulation, we assumed
that new systems on average will cost $50 million over 3 years for each
State ($16.7 million total cost per year, or $15 million Federal costs
at 90 percent FFP per year). We assumed that 25 States will replace
their eligibility systems in FY 2011 through CY 2015. We assumed no
States will build new systems past FY 2014 (beyond what is assumed in
the baseline) due to the timing of the start of major coverage
provisions in the Affordable Care Act, the length of time needed to
build new systems (approximately 3 years), and the enhanced match
ending after CY 2015. For maintenance, we assumed States that have
implemented new systems meeting the required standards and conditions
will see a 20 percent annual savings, and for operations, we assumed
those States that have implemented the new systems would see a 5
percent annual savings. These assumptions are consistent with our
approach for savings under MMIS in the regulation.
The net Federal cost impact from FY 2011 through 2015 of
implementing our regulation on eligibility systems is approximately
$2.2 billion, and the net Federal cost from FY 2011 through 2020 is
$2.9 billion. These costs represent only the Federal share.
F. Total Net Cost Impact
Combining the impact of the regulation, the total net Federal cost
impact is approximately $3.3 billion for FY 2011 through 2015 and
approximately $2.3 billion for FY 2011 through 2020. We see lower costs
over the 10-year budget window due to the increased savings to MMIS
over time.
Aligned with these Federal net costs, States will see a
corresponding decrease in their net State share due to the enhanced
Federal match for eligibility systems they will receive through CY 2015
and the benefits accrued to their systems by putting in place the set
of standards and conditions articulated in our regulation. Combining
the impact of the regulation, the total net State budget impact is
approximately $792.5 million in savings for FY 2011 through 2015 and
approximately $1.9 billion in savings from for FY 2011 through 2020.
Similar to the Federal budget impact, we expect to see higher savings
achieved by States over the 10-year budget window due to the increased
savings to MMIS over time.
The projections in this analysis are subject to considerable
uncertainty, as they reflect projected costs based on technology and
innovation. While we believe that advancements in technology will
likely have an impact on States' systems, it is difficult to predict
with certainty how significant the technology advancements may be and
how they would affect State systems. For example, we have worked for
many years developing the MITA maturity model. We believe that States
should adopt the MITA framework as the basis for all MMIS replacements
and major system upgrades related to the MMIS, and while we are
requiring that States move to a MITA framework in order to receive
enhanced funding, to date there are no States that have reached full
MITA maturity. Consequently, having no States at full MITA maturity
indicates that it takes time, money, and considerable effort for States
to make changes to their current technology.
Additional uncertainty exists because we are unsure of the rate of
adoption for States to make the changes in this final rule. The
enhanced FFP is available for approximately 5 years, from CY 2011
through CY 2015, and States could upgrade or replace their systems at
any point within the 5-year period. Further, States may simply choose
to make moderate changes to existing systems, and even with the 90 and
75 percent enhanced FFP, such moderate changes could be less costly
overall for States than replacing their systems.
Additional uncertainty exists about the rate of State adoption
since some States may consider the costs needed to move to a more
advanced system to be too high to undertake such a project. Similarly,
States may decide not to make changes due to implementation of
performance requirements and the performance reviews.
We acknowledge that there are uncertainties regarding our
assumptions, including State behavior, and the associated cost
estimates with respect to States implementing new systems within the
timeframe assessed. However, we have offered our estimates with a 25
percent upper and lower range to capture such uncertainty in actual
implementation outcomes. Due to a number of uncertainties in our
assumptions, we believe a range of estimates better represents the net
cost impact of this regulation. Tables 1 and 2 represent a 25 percent
range for these aggregate net costs to the Federal and State
government, respectively. It is important to point out that we believe
that systems transformation is necessary to meet the vision of the
Affordable Care Act and consequently, these costs are necessary and
will provide for efficient systems that in the end will provide for
more efficient and effective administration of the State plan. The
separate impacts to MMIS and eligibility systems are summarized below.
Table 1--Net Federal Cost Impact of Regulation
[Dollars in millions] *
------------------------------------------------------------------------
FY 2011-2020
------------------------------------------------------------------------
MMIS (excluding eligibility)...................... (417.4)-(695.7)
Eligibility Systems............................... 2,154.6-3,591.0
---------------------
Total......................................... 1,737.2-2,895.3
------------------------------------------------------------------------
* Numbers in parentheses represent savings to the Federal government.
[[Page 21972]]
Table 1.1--Net Federal Cost Impact of Regulation by Fiscal Year
[Dollars in millions] *
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
MMIS (excluding Eligibility)......................... 231.1 469.4 435.6 54.3 (83.0) (322.6) (329.0) (333.1) (337.4) (341.8) (556.6)
Eligibility Systems.................................. 328.9 436.7 634.6 469.3 337.4 127.9 130.5 133.1 135.8 138.5 2,872.8
--------------------------------------------------------------------------------------------------
Total............................................ 560.0 906.1 1,070.2 523.6 254.4 (194.7) (198.5) (200.0) (201.6) (203.3) 2,316.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses represent savings to the Federal government.
Table 2--Net State Cost Impact of Regulation
[Dollars in Millions] *
------------------------------------------------------------------------
FY 2011-2020
------------------------------------------------------------------------
MMIS (excluding eligibility)...................... (170.6)-(284.4)
Eligibility Systems............................... (1,255.4)-(2,092.3)
---------------------
Total......................................... (1,426.0)-(2,376.7)
------------------------------------------------------------------------
* Numbers in parentheses represent savings to State governments.
Table 2.1--Net State Cost Impact of Regulation by Fiscal Year
[Dollars in millions] *
--------------------------------------------------------------------------------------------------------------------------------------------------------
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
MMIS (excluding eligibility)............. 25.7 52.2 48.4 1.3 (24.1) (61.6) (65.2) (66.6) (68.0) (69.5) (227.5)
Eligibility Systems...................... (285.6) (276.7) (258.0) (139.9) 64.3 (149.5) (152.5) (155.5) (158.6) (161.8) (1,673.8)
--------------------------------------------------------------------------------------------------------------
Total................................ (259.9) (224.6) (209.6) (138.6) 40.2 (211.1) (217.7) (222.1) (226.6) (231.3) (1,901.3)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses represent savings to State governments.
G. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA) requires agencies to prepare a
Regulatory Flexibility Analysis to describe and analyze the impact of
final rule on small entities unless the Secretary can certify that the
regulation will not have a significant impact on a substantial number
of small entities. In the healthcare sector, Small Business
Administration size standards define a small entity as one with between
$7 million and $34 million in annual revenues. For the purposes of the
RFA, essentially all non-profit organizations are considered small
entities, regardless of size. Individuals and States are not included
in the definition of a small entity.
Since this rule will affect States, which are not considered small
entities, the Secretary has determined that this final rule will not
have a significant economic impact on a substantial number of small
entities. Therefore, we have not prepared a regulatory flexibility
analysis.
Additionally, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operation of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define small rural hospital
as a hospital that is located outside of a Metropolitan Statistical
Area and has fewer than 100 beds. We are not preparing an analysis for
section 1102(b) of the Act because we have determined that this rule
will not have a significant impact on the operations of a substantial
amount of small rural hospitals. There is no negative impact on the
program or on small businesses.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditures in any one year of
$100 million in 1995 dollars (updated annually for inflation), by
State, local, or tribal governments, in the aggregate, or by the
private sector. In 2011, that threshold is approximately $136 million.
This final rule does not mandate expenditures by the State governments,
local governments, tribal governments, in the aggregate, or the private
sector, of $136 million. This rule provides that States can receive
enhanced FFP if States ensure that the mechanized claims processing and
information retrieval systems (MMIS) including, for a limited time,
those that perform eligibility determination and enrollment activities,
as well as the Medicaid portion of integrated eligibility determination
systems, meet with certain conditions including migrating to the MITA
framework and meet certain performance requirements. This is a
voluntary activity; that is, States can continue to receive the
traditional 50 percent FFP match rate for reasonable administrative
expenditures for the design, development, or enhancement and
maintenance and operations to the Medicaid portion of integrated
eligibility determination systems to make eligibility determinations
for Title XIX of the Act. This final rule imposes no substantial
mandates on States. The State role in determining Medicaid eligibility
is dependent upon the population type; specifically, some populations
such as the elderly, blind, and disabled are typically determined by
the Medicaid State agency whereas other population types may have their
Medicaid eligibility determined by cash-assistance programs. Mechanized
claims processing and information retrieval systems, including those
that perform eligibility determination and enrollment activities and
the Medicaid portion of integrated eligibility determination systems,
at a minimum, will need to be updated. However, providing 90 percent
FFP for design, development, and
[[Page 21973]]
installation or 75 percent FFP for maintenance and operations of such
systems reduces the financial burden on States to 10 percent of the
costs compared to the 50 percent financial burden currently in place.
Specifically, while this entails certain procedural responsibilities,
these activities do not involve substantial State expense; providing 90
percent and 75 percent FFP reduces the total State outlay.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. We wish to note again that this is a voluntary activity
and as such this regulation does not mandate any direct costs on State
or local governments. Consequently, the requirements of Executive Order
13132 are not applicable.
H. Alternatives Considered
We considered that an alternative to our final rule could be that
we not provide enhanced match for a limited time for State systems
builds and not provide Federal standards and conditions. In fact,
States could continue to receive the traditional 50 percent FFP for
reasonable administrative expenditures for designing, developing,
installing, or enhancing Medicaid eligibility determination systems.
Similarly, States could continue to receive 50 percent FFP for
expenditures associated with the maintenance and operation of such
systems.
However, States must continue to meet the requirements of Federal
legislation. Since the Affordable Care Act significantly alters
Medicaid eligibility and requires coordination with the Exchanges, it
is imperative that States have the resources and systems to be able to
meet this challenge.
Therefore, we believe that if States were left to develop
eligibility systems without Federal standards and conditions and
without the benefit of enhanced match, States systems may not comport
with our ultimate goal; that is, that design, development,
implementation, and operation of IT and systems projects are in support
of the Affordable Care Act.
I. Accounting Statement
As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 3, we have
prepared an accounting statement showing the classification of the
expenditures associated with the provisions of this rule. This table
provides our best estimate of the net costs decrease in Medicaid
payments as a result of the changes presented in this rule.
Table 3--Accounting Statement: Classification of Estimated Net Costs, From FY 2011 to FY 2020
[In $millions]
----------------------------------------------------------------------------------------------------------------
Transfers
--------------------------------------------------------------------------
Category Year dollar Units discount rate
--------------------------------------------------------- Period covered
2010 7% 3%
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers....... Primary Estimate....... $311.31 $266.55 FYs 2011-2020
Low Estimate........... 233.48 199.91 FYs 2011-2020
High Estimate.......... 389.14 333.19 FYs 2011-2020
----------------------------------------------------------------------------------------------------------------
From................................. Federal Government to State Governments ................
----------------------------------------------------------------------------------------------------------------
Annualized Monetized Transfers....... Primary Estimate....... -$189.87 -$189.82 FYs 2011-2020
Low Estimate........... -142.40 -142.36 FYs 2011-2020
High Estimate.......... -237.34 -237.28 FYs 2011-2020
----------------------------------------------------------------------------------------------------------------
From................................. State Governments to System Vendors, Integrators ................
----------------------------------------------------------------------------------------------------------------
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 433
Administrative practice and procedure, Child support Claims, Grant
programs--health, Medicaid, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 433--STATE FISCAL ADMINISTRATION
0
1. The authority citation for part 433 continues to read as follows:
Authority: Section 1102 of the Social Security Act, (42 U.S.C.
1302).
Subpart C--Mechanized Claims Processing and Information Retrieval
Systems
0
2. Section 433.110 is amended by revising paragraph (a)(2) to read as
follows:
Sec. 433.110 Basis, purpose, and applicability.
(a) * * *
(2) Section 1903(r) of the Act, which imposes certain standards and
conditions on mechanized claims processing and information retrieval
systems (including eligibility determination systems) in order for
these systems to be eligible for Federal funding under section 1903(a)
of the Act.
* * * * *
0
3. Section 433.111 is amended by--
0
A. Revising paragraph (b)(3).
0
B. Adding paragraph (c).
The revision and addition read as follows:
Sec. 433.111 Definitions.
* * * * *
(b) * * *
(3) Approved enhancements to the system.
(c) ``Medicaid Information Technology Architecture (MITA)'' is
defined at Sec. 495.302 of this chapter.
0
4. Section 433.112 is amending by-
0
A. Revising paragraphs (a), (b)(2), and (c).
0
B. Amending paragraph (b)(7) by removing the reference ``45 CFR
74.171'' and adding in its place, the reference ``45 CFR 74.27(a)''.
0
C. Adding paragraphs (b)(10) through (b)(16).
[[Page 21974]]
The revisions and additions read as follows:
Sec. 433.112 FFP for design, development, installation or enhancement
of mechanized claims processing and information retrieval systems.
(a) Subject to paragraph (c) of this section, FFP is available at
the 90 percent rate in State expenditures for the design, development,
installation, or enhancement of a mechanized claims processing and
information retrieval system only if the APD is approved by CMS prior
to the State's expenditure of funds for these purposes.
(b) * * *
(2) The system meets the system requirements, standards and
conditions, and performance standards in Part 11 of the State Medicaid
Manual, as periodically amended.
* * * * *
(10) Use a modular, flexible approach to systems development,
including the use of open interfaces and exposed application
programming interfaces; the separation of business rules from core
programming, available in both human and machine readable formats.
(11) Align to, and advance increasingly, in MITA maturity for
business, architecture, and data.
(12) Ensure alignment with, and incorporation of, industry
standards: The HIPAA privacy, security and transaction standards;
accessibility standards established under section 508 of the
Rehabilitation Act, or standards that provide greater accessibility for
individuals with disabilities, and compliance with Federal civil rights
laws; standards adopted by the Secretary under section 1104 of the
Affordable Care Act; and standards and protocols adopted by the
Secretary under section 1561 of the Affordable Care Act.
(13) Promote sharing, leverage, and reuse of Medicaid technologies
and systems within and among States.
(14) Support accurate and timely processing and adjudications/
eligibility determinations and effective communications with providers,
beneficiaries, and the public.
(15) Produce transaction data, reports, and performance information
that would contribute to program evaluation, continuous improvement in
business operations, and transparency and accountability.
(16) Ensure seamless coordination and integration with the
Exchange, and allow interoperability with health information exchanges,
public health agencies, human services programs, and community
organizations providing outreach and enrollment assistance services.
(c) FFP is available at 90 percent of a State's expenditures for
the design, development, installation, or enhancement of an eligibility
determination system that meets the requirements of this subpart and
only for costs incurred for goods and services provided on or after
April 19, 2011 and on or before December 31, 2015.
Sec. 433.113 [Removed]
0
5. Section 433.113 is removed.
0
6. Section 433.114 is amended by--
0
A. Amending paragraph (a) by removing the reference ``(h)'' and by
adding in its place the reference ``(i)''.
0
B. Revising paragraph (b).
The revision reads as follows:
Sec. 433.114 Procedures for obtaining initial approval; notice of
decision.
* * * * *
(b) If CMS disapproves the system, the notice will include all of
the following information:
(1) The findings of fact upon which the determination was made.
(2) The procedures for appeal of the determination in the context
of a reconsideration of the resulting disallowance to the Departmental
Appeals Board.
0
7. Section 433.116 is amended by --
0
A. Amending paragraph (a) by removing the phrase ``Subject to 42 CFR
433.113(c),'' and by adding in its place ``Subject to paragraph (j) of
this section,''.
0
B. Amending paragraph (b) by removing the reference ``(h)'' and by
adding in its place the reference ``(i)''.
0
C. Adding new paragraphs (i) and (j).
The additions read as follows:
Sec. 433.116 FFP for operation of mechanized claims processing and
information retrieval systems.
* * * * *
(i) The standards and conditions of Sec. 433.112(b)(10) through
(b)(16) of this subpart must be met.
(j) Beginning and no earlier than, April 19, 2011, FFP is available
at 75 percent of a State's expenditures for the operation of an
eligibility determination system that meets the requirements of this
subpart. FFP at 75 percent is not available for eligibility
determination systems that do not meet the standards and conditions by
December 31, 2015.
Sec. 433.117 [Amended]
0
8. Section 433.117 is amended by--
0
A. Amending paragraph (a) by removing the phrase ``all conditions'' and
adding in its place the phrase ``all standards and conditions''.
0
B. Amending paragraph (c)(2) by removing the reference ``(h)'' and
adding in its place the reference ``(j)''.
0
9. Section 433.119 is amended by revising paragraphs (a) and (c) to
read as follows:
Sec. 433.119 Conditions for reapproval; notice of decision.
(a) CMS periodically reviews each system operation initially
approved under Sec. 433.114 of this subpart and reapproves it for FFP
at 75 percent of expenditures if the following standards and conditions
are met:
(1) The system meets the requirements of Sec. 433.112(b)(1), (3),
(4), (7) through (16) of this subpart.
(2) The system meets the conditions of Sec. 433.116 (d) through
(j).
(3) The system meets the standards, conditions, and performance
standards for reapproval and the system requirements in part 11 of the
State Medicaid Manual as periodically amended.
(4) A State system must meet all of the requirements of this
subpart within the appropriate period CMS determines should apply as
required by Sec. 433.123(b) of this subpart.
* * * * *
(c) After performing the review under paragraph (a) of this
section, CMS will issue to the Medicaid agency a written notice
informing the agency whether the system is reapproved or disapproved.
If the system is disapproved, the notice will include the following
information:
(1) CMS's decision to reduce FFP for system operations from 75
percent to 50 percent of expenditures, beginning with the first day of
the first calendar quarter after CMS issues the written notice to the
State.
(2) The findings of fact upon which the determination was made.
(3) A statement that State claims in excess of the reduced FFP rate
will be disallowed and that any such disallowance will be appealable to
the Departmental Appeals Board.
0
10. Section 433.120 is amended by revising paragraph (b) to read as
follows:
Sec. 433.120 Procedures for reduction of FFP after reapproval review.
* * * * *
(b) CMS will reduce FFP in expenditures for system operations from
75 percent to 50 percent.
0
11. Section 433.121 is amended by revising paragraph (a) to read as
follows:
Sec. 433.121 Reconsideration of the decision to reduce FFP after
reapproval review.
(a) The State Medicaid agency may appeal (to the Departmental
Appeals Board under 45 CFR Part 16) a
[[Page 21975]]
disallowance concerning a reduction in FFP claimed for system
operations caused by a disapproval of the State's system.
* * * * *
Sec. 433.130 [Removed]
0
12. Section 433.130 is removed.
0
13. Section 433.131 is amended by adding a new paragraph (c) to read as
follows:
Sec. 433.131 Waiver for noncompliance with conditions of approval and
reapproval.
* * * * *
(c) Waiver of deadline. In no case will CMS waive the December 31,
2015 deadlines referenced in Sec. 433.112(c) and Sec. 433.116(j).
Authority: Catalog of Federal Domestic Assistance Program No.
93.778, Medical Assistance Program.
Dated: March 16, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: April 12, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2011-9340 Filed 4-14-11; 11:15 am]
BILLING CODE 4120-01-P