[Federal Register Volume 78, Number 63 (Tuesday, April 2, 2013)]
[Rules and Regulations]
[Pages 19918-19947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-07599]
[[Page 19917]]
Vol. 78
Tuesday,
No. 63
April 2, 2013
Part IV
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
42 CFR Part 433
Medicaid Program; Increased Federal Medical Assistance Percentage
Changes Under the Affordable Care Act of 2010; Rule
Federal Register / Vol. 78 , No. 63 / Tuesday, April 2, 2013 / Rules
and Regulations
[[Page 19918]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 433
[CMS-2327-FC]
RIN 0938-AR38
Medicaid Program; Increased Federal Medical Assistance Percentage
Changes Under the Affordable Care Act of 2010
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with request for comments.
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SUMMARY: This final rule implements the provisions of the Patient
Protection and Affordable Care Act of 2010 and the Health Care and
Education Reconciliation Act of 2010 (collectively referred to as the
Affordable Care Act) relating to the availability of increased Federal
Medical Assistance Percentage (FMAP) rates for certain adult
populations under states' Medicaid programs. This final rule implements
and interprets the increased FMAP rates that will be applicable
beginning January 1, 2014 and sets forth conditions for states to claim
these increased FMAP rates.
DATES: Effective Date: These regulations are effective June 3, 2013.
Comment Date: To be assured of consideration, comments on Sec.
433.10(c)(8), Sec. 433.206(c)(4), Sec. 433.206(d), Sec. 433.206(e),
Sec. 433.206(f), and Sec. 433.206(g) must be received at one of the
addresses provided below, no later than 5 p.m. on June 3, 2013.
ADDRESSES: In commenting, please refer to file code CMS-2327-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-2327-FC, P.O. Box 8016, Baltimore, MD
21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-2327-FC, Mail Stop C4-26-05, 7500
Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Room 445-G, Hubert H. Humphrey Building, 200
Independence Avenue SW., Washington, DC 20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Richard Strauss, (410) 786-2019.
SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
We are providing additional opportunity for comment on the
threshold methodology. In order to operationalize the methodology, the
final rule contains significantly more detail about various aspects of
the threshold methodology than originally included in the August 17,
2011 proposed rule. For example, the proposed rule included basic
language regarding the treatment of disability status, resource (or
asset) criteria, enrollment caps in states with section 1115
demonstrations, and spend-down eligibility provisions and we solicited
public comments on how to account for these factors in assigning the
appropriate FMAP. This increased detail in this final rule resulted in
large part from our consideration of comments received from the public,
including requests for additional clarity with respect to some of these
matters. While we believe that this additional detail will assist
states in implementing the threshold methodology, we recognize the
complexity surrounding these issues. We are seeking additional comment
on these provisions so that we can determine whether additional
clarification would assist states to implement these aspects of the
threshold methodology more effectively.
Although this final rule is effective 60 days from publication, the
increased FMAPs authorized by the Affordable Care Act and codified here
do not become effective until January 1, 2014. We are proceeding with
the issuance of a final rule in light of the time constraints for
states to implement system changes to implement the FMAP claiming
methodology described in this rule. To the extent that any revisions to
the final rule are warranted by new public comment, we will make
necessary revisions well before the effective date.
In summary, while we are issuing these rules as final, we are
providing the opportunity for further comment on parts of this rule to
ensure transparency and allow for further clarifications that might be
necessary. We are thus issuing certain provisions as final but are
soliciting comments. These provisions
[[Page 19919]]
are specifically listed in the ``Comment Date'' section of this final
rule.
Table of Contents
I. Executive Summary
II. Background
III. Summary of Proposed Provisions and Analysis of and Responses to
Public Comments
IV. Provisions of the Final Rule
V. Collection of Information Requirements
VI. Summary of Regulatory Impact Analysis
VII. Federalism
I. Executive Summary
This final rule implements sections 2001(a)(3)(B) and 10201(c) of
the Patient Protection and Affordable Care Act (Pub. L. 111-148,
enacted on March 23, 2010), as amended by the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30,
2010), and together referred to as the Affordable Care Act of 2010
(Affordable Care Act).
Specifically, this final rule implements the provisions of the
Affordable Care Act related to the availability of increased FMAP rates
under the Medicaid program with respect to the new adult eligibility
group. The rule also describes a temporary general increase in FMAP
rates for certain expansion states that meet required statutory
criteria.
Although this rule is being issued in final, we remain interested
in considering comments from the public on the following provisions:
Sec. 433.10(c)(8)--Expansion State FMAP
Sec. 433.206(c)(4)--Components of Threshold Methodology; Treatment of
Disability
Sec. 433.206(d)--Optional Resource Criteria Proxy Adjustment
Sec. 433.206(e)--Enrollment Caps Adjustment
Sec. 433.206(f)--Application of Spend-down Income Eligibility Criteria
Sec. 433.206(g)--Special Circumstances
II. Background
In the August 17, 2011 Federal Register (76 FR 51148), we published
a proposed rule entitled ``Medicaid Program; Eligibility Changes under
the Affordable Care Act of 2010'' (Medicaid Eligibility proposed rule).
After considering public comments, we finalized many provisions of the
proposed rule in the March 23, 2012 Federal Register (77 FR 17144).
That final rule, in conjunction with other proposed and final rules
published by the Department of Health and Human Services implemented
provisions of the Affordable Care Act that expand access to health
coverage through improvements in Medicaid and the Children's Health
Insurance Program (CHIP) and the establishment of the new Affordable
Insurance Exchanges (also called Health Insurance Marketplaces). In
addition, those rules simplified and streamlined the enrollment and
renewal processes for Medicaid and CHIP and created alignment and
coordination across insurance affordability programs.
This final rule addresses certain provisions that were included in
the August 17, 2011 Medicaid Eligibility proposed rule but not included
in the March 23, 2012 final rule. These provisions include
implementation of statutory increases in the FMAP rates for state
medical assistance expenditures relating to certain individuals
described in the new adult eligibility group (new adult group) set
forth at section 1902(a)(10)(A)(i)(VIII) of the Social Security Act
(the Act), as amended by the Affordable Care Act, and a temporary
general increase in FMAP rates in certain states that meet the
definition of ``expansion states.''
In particular, amendments made by section 2001(a)(3) of the
Affordable Care Act added section 1905(y) to the Act effective January
1, 2014 to provide for an increased FMAP rate for expenditures for
medical assistance for individuals who are defined as ``newly
eligible.'' The statutory definition of newly eligible individuals at
section 1905(y)(2) of the Act requires that such individuals be: (1)
described in the new adult eligibility group at section
1902(a)(10)(A)(i)(VIII) of the Act and not under age 19 or such higher
age as the state may have elected; (2) not eligible for full benefits,
benchmark coverage described in subparagraphs (A), (B) or (C) of
section 1937(b)(1) or benchmark-equivalent coverage under section
1937(b)(2) under the provisions of the state plan or under a waiver of
the plan as of December 1, 2009; or (3) eligible but not enrolled (or
on a waiting list) for such benefits or coverage under a waiver under
the plan that has capped or limited enrollment that is full. Therefore,
not all individuals enrolled in the eligibility group described in
section 1902(a)(10)(A)(i)(VIII) of the Act (and in our corresponding
regulation at Sec. 435.119) will be ``newly eligible'' for FMAP
purposes. Note that the newly eligible FMAP is available only for the
50 states and the District of Columbia; the United States territories
are not included in the scope of the newly eligible FMAP under section
1905(y)(1) of the Act, which provides that the increased FMAP is at 100
percent for calendar years (CYs 2014, 2015, and 2016) and gradually
declines to 90 percent by 2020, where it remains permanently.
Furthermore, amendments made by section 10201(b) of the Affordable
Care Act added section 1905(z) to the Act effective January 1, 2014 to
provide for an increased FMAP for expenditures for childless
nonpregnant individuals in the new adult eligibility group in a defined
``expansion state.'' The expansion state FMAP is initially lower than
the newly eligible FMAP; however it increases to be the same as the
newly eligible FMAP effective January 1, 2019. Section 1905(z) also
provides for certain expansion states to receive a 2.2 percentage point
increase in FMAP rates for the medical assistance expenditures of all
individuals who are not considered newly eligible (under the definition
at section 1905(y) as summarized above) during the period January 1,
2014 through December 31, 2015. The August 17, 2011 proposed rule
included provisions to implement these increased FMAP rates, and set
forth options for states to quantify expenditures that would qualify
for the increased FMAP rate.
The August 17, 2011 proposed rule included three possible
methodologies for states to use in documenting claims for the increased
FMAP for medical assistance expenditures for newly eligible
individuals. The purpose of these proposed methodologies was to ensure
that states would not need to operate dual eligibility determination
systems, one to determine Modified Adjusted Gross Income (MAGI)-based
financial eligibility, and the other to determine the appropriate FMAP
based on the pre-2014 eligibility rules. Each of these three methods
was intended to capture the expenditures that would be claimed in
accordance with the requirements of the statute. We also solicited
comment on whether other methods would accomplish these goals.
In this issuance, we discuss our consideration of public comments
on the FMAP calculation issues included in the August 17, 2011 proposed
rule, and set forth final rules to define the increased FMAP rates and
set out the threshold methodology which states will be required to use
to document claims for the increased FMAP rates. As described in more
detail below, the threshold methodology begins with a simplified method
for determining the individuals who are and are not newly eligible,
comparing their MAGI-based income (as calculated for purposes of
eligibility determination) to the effective income thresholds for
relevant eligibility categories in effect in December 2009, converted
to a MAGI-based equivalent. It then describes, and in some cases,
offers states options, regarding the treatment of other factors
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that may be relevant for purposes of claiming the appropriate FMAP. To
complete the transition to the MAGI-based methodology, CMS is also
working with states to develop MAGI-based income eligibility standards
for the applicable eligibility groups that are not less than the
effective income levels that were used to determine Medicaid and CHIP
income eligibility as of the enactment of the Affordable Care Act, and
as of December 1, 2009 for Medicaid for FMAP determination purposes for
the new adult eligibility group. The conversion of income eligibility
standards to equivalent MAGI-based income eligibility standards should
take into account income disregards that factor into the effective
income eligibility standard.
III. Summary of Proposed Provisions and Analysis of and Responses to
Public Comments
The following summarizes the FMAP-related provisions that were
discussed in more detail in the Medicaid Eligibility proposed rule (76
FR 51172 through 51178):
Newly Eligible Increased FMAP Sec. 433.10(c)(6).
Indicated the increased FMAP rates applicable for states' medical
assistance expenditures in their Medicaid program for individuals in
the new adult group who meet the definition of ``newly eligible''
individual for the period beginning January 1, 2014.
Temporary Increase to FMAP Sec. 433.10(c)(7). Indicated
the conditions applicable for a state to be eligible for a 2.2
percentage point increase in its FMAP rates for the medical assistance
expenditures of individuals who are not newly eligible during the
period January 1, 2014 through December 31, 2015.
Increased Expansion State FMAP Sec. 433.10(c)(8).
Indicated the conditions, requirements, rate calculation formula, and
the applicable ``expansion state'' definition for states to be eligible
for an increase in their FMAP rates for certain childless adults in the
new adult group who do not meet the definition of newly eligible
individual for the period beginning January 1, 2014.
Definition of Newly Eligible Individual Sec. 433.204.
Indicated the definition of newly eligible individual for purposes of
the availability of the newly eligible FMAP referenced in Sec.
433.10(c)(6) for the medical assistance expenditures of such
individuals.
Methodology Sec. 433.206. Described three possible
approaches in Sec. 433.208, Sec. 433.210, or Sec. 433.212 for states
to use for purposes of claiming federal funding for the expenditures
for individuals in the new adult eligibility group at the appropriate
FMAPs. The rule proposed that a state could choose one of the three
indicated alternative methods and indicated that in the final rule we
might modify, narrow, or combine these approaches based on comments
received and the results of a feasibility study.
Threshold Methodology Sec. 433.208. Described the
``threshold methodology'' under which there would be a determination of
``newly eligible'' and not ``newly eligible'' on an individual specific
basis through the application of simplified eligibility criteria,
including income eligibility standards for each eligibility group in
effect in each state's December 1, 2009 Medicaid program, and as
appropriate, proxies for disability and resources, if applicable to
such eligibility groups.
Statistically Valid Sampling Methodology Sec. 433.210.
Described an alternative methodology under which states would use
sampling to extrapolate the amount of expenditures to be claimed at the
applicable FMAPs for newly and not newly eligible individuals in the
new adult group.
CMS Established FMAP Proportion Sec. 433.212. Described
an alternative methodology under which states would develop appropriate
applicable proportions based on reliable data sources; this would
provide a basis for determining the amount of expenditures for the
adult group to be claimed at the applicable FMAPs for newly and not
newly eligible individuals.
Responses to General Comments
We received 813 comments from state Medicaid and CHIP agencies,
policy and advocacy organizations, health care providers and
associations, Tribes, Tribal organizations, and individual citizens
regarding the August 17, 2011 eligibility proposed rule, including 87
comments on the FMAP provisions. In addition, to support the goal of
transparency, we conducted a number of webinar and other consultation
sessions with states and interested parties in which we presented the
FMAP provisions of the proposed rule and participants were afforded an
opportunity to ask questions and make comments. At these consultation
sessions, the public was reminded to submit written comments before the
close of the public comment period that was announced in the August
2011 Medicaid Eligibility proposed rule. In addition, we worked more
intensively with 10 pilot states to discuss and test different elements
of the proposed regulation, with a particular emphasis on income
conversion and application of appropriate FMAP claiming methodologies.
Because of the technical aspects of the FMAP provisions related to the
new adult group, in addition to evaluating the comments received on the
proposed rule, we performed additional research on this topic to better
understand which approaches would maximize the accuracy of the
increased FMAP and further the simplification goals of the Affordable
Care Act. We have revised the proposed regulation to respond to public
comments and reflect our final policies.
We received a number of comments concerning the proposed FMAP
methodologies for newly eligible individuals and for the expansion
state provisions. The majority of comments on the three methodologies
described in the proposed rule supported the ``threshold methodology,''
described in section IV of this final rule, and did not support certain
aspects of the other proposed methodologies. Consistent with these
comments, as discussed below, this final rule adopts the threshold
methodology as the methodology to be used to document claims for the
increased FMAPs. Summaries of the public comments that are within the
scope of the proposals and our responses to those comments follow; more
detailed summaries of the key changes in the final regulation are also
included in section IV of this final rule, ``Provisions of the Final
Rule.'' Some of the comments received were outside the scope of the
FMAP provisions contained in the Medicaid Eligibility proposed rule
and, therefore, are not addressed in this final rule. In some
instances, commenters raised policy or operational issues that will be
addressed through regulatory and subregulatory guidance subsequent to
this final rule.
A. Comments on General Issues
Some commenters addressed items of a general nature in their
comments, as described below. Numerous commenters requested
clarification about whether expenditures for certain categories of
individuals will be matched at the increased newly eligible or
expansion state FMAP. We reiterate in the preamble and in the
provisions of this final rule that under the statute the increased
newly eligible and expansion state FMAPs are only available to
individuals enrolled in the new adult group described at Sec. 435.119.
Therefore, for example, former foster care children enrolled in the new
group described in proposed regulation at Sec. 435.150 (78 FR 4687)
are not eligible for the newly eligible FMAP because they will not be
enrolled under Sec. 435.119. As our proposed regulation explains (78
FR
[[Page 19921]]
4604), we proposed that eligibility under the adult group at Sec.
435.119 will not take precedence over coverage under the mandatory
group of former foster care children. This position was in accordance
with subclause (XVII) in the matter following subparagraph (G) of
section 1902(a)(10) of the Act, as added by section 10201(a)(2) of the
Affordable Care Act, which states that individuals eligible for both
the former foster care group and the adult group should be enrolled in
the former foster care group. Similarly, in general individuals who
receive Supplemental Security Income benefits based on a determination
of a disability would not be enrolled under Sec. 435.119 and would not
receive the newly eligible FMAP. Finally, individuals who could have
been eligible for an optional Medicaid eligibility category of coverage
as of December 1, 2009 may in some cases become eligible for the new
adult group at Sec. 435.119, effective January 1, 2014, but they will
not be newly eligible (as defined in Sec. 433.204(a)(1)). This is
because they were previously eligible for full state plan benefits as
of December 1, 2009. These and other scenarios are discussed in more
detail below.
Comment: Many commenters endorsed the goal that CMS articulated in
the August 17, 2011 proposed rule to avoid creating a shadow
eligibility system that states would have to implement to determine who
was and who was not newly eligible. Commenters opposed any methodology
or system that would require applicants to provide information that is
not necessary to determine their eligibility under the new Affordable
Care Act eligibility criteria.
Response: As described in more detail below, the threshold
methodology which we are adopting in the final rule is designed to
provide for a simplified methodology for determining the appropriate
FMAP that does not require states to maintain two sets of eligibility
rules or to solicit information from applicants that is not necessary
to determine eligibility.
Comment: One commenter noted that the proposed definition of
``newly eligible'' at Sec. 433.204 only refers to individuals eligible
under the new adult group, even though the Affordable Care Act expanded
Medicaid eligibility from 100 percent of the Federal Poverty Level
(FPL) to 133 percent of the FPL for children aged 6-18, making some
children newly eligible for Medicaid in 2014. As such, the commenter
suggested that the increased newly eligible FMAP also should be
available to children who may not have been covered by Medicaid before
January 1, 2014 (including children previously eligible under CHIP).
Another commenter requested clarification with respect to the
applicable FMAP for children between 100 and 133 percent FPL who were
not eligible for Medicaid prior to 2014.
Response: The commenter is correct that the Affordable Care Act
increased the minimum eligibility income standard for children in
Medicaid, although in all states these children were already eligible
for Medicaid or CHIP. The Affordable Care Act did not provide for the
same increased FMAP for the expanded population of children since the
newly eligible FMAP is available only for individuals enrolled in the
new adult group (as codified at Sec. 435.119), which does not include
individuals eligible under mandatory coverage groups previously listed
in the statute, including groups for children. For children, the
Affordable Care Act revised section 1902(l)(2)(C) of the Act to extend
Medicaid coverage of children aged 6-18 from 100 to 133 percent of the
FPL, making them eligible for coverage under section
1902(a)(10)(A)(i)(VII) of the Act, a mandatory coverage group. However,
states may be able to claim the enhanced FMAP available through CHIP
under Title XXI of the Act for expenditures relating to children. The
state will be able to claim the CHIP enhanced match, consistent with
Sec. 433.11, for children who would not have been covered under
Medicaid before July 1, 1997 (including children covered by a separate
CHIP before 2014 who will move to Medicaid) to the extent that the
state has available CHIP allotment funding.
Comment: One commenter requested clarification as to whether the
newly eligible FMAP would be available for childless adults who were
eligible for Medicaid prior to 2014 based upon disability but in 2014
choose to apply for Medicaid under the new adult group.
Response: In general, individuals with disabilities who are
eligible for Medicaid under a mandatory eligibility category based on
receipt of Supplemental Security Income (SSI), are not within the
definition of the new adult group, and should not be enrolled in that
group. Some states may have covered individuals with disabilities under
an optional Medicaid category as of December 1, 2009 but may choose to
eliminate such categories after January 1, 2014. In these cases,
individuals with disabilities who were enrolled in the optional
eligibility group would retain Medicaid eligibility under the new adult
group (assuming they met the eligibility standards for the new adult
group), but expenditures for their coverage would not be subject to the
newly eligible FMAP. Individuals who would have been eligible for full
benefits, benchmark benefits, or benchmark equivalent benefits under
Title XIX of the Act as of December 1, 2009 are not newly eligible
under the definition in 1905(y)(2)(A) of the Act, which is codified in
Sec. 433.204(a)(1) (as revised in this final rule). CMS will be
providing technical assistance to states to identify relevant
disability groups for FMAP claiming purposes, based on states' optional
disability categories in effect in 2009.
Comment: Several commenters raised issues related to American
Indian and Alaska Native (AI/AN) populations enrolled in Medicaid.
First, the commenters requested that the regulation explicitly state
that all existing AI/AN specific protections continue to apply (such as
for cost sharing). Second, the commenters suggested that the regulation
explicitly indicate that services provided through an IHS facility are
claimed at 100 percent FMAP, whether or not they are provided as part
of an expansion.
Response: The final eligibility rule published on March 23, 2012 as
well as a proposed rule published on January 22, 2013 both address
beneficiary protections for AI/AN populations and, as they do not
relate to FMAP specifically, are outside the scope of this regulation.
We understand that the commenters are concerned about the continued
availability of the 100 percent FMAP for services provided through an
IHS facility for individuals eligible under the new adult eligibility
group. We are currently reviewing this issue and intend to issue
guidance on this at a later date.
B. Rates of FFP for Program Services (Sec. 433.10)
The August 17, 2011 proposed rule would have amended part 433 to
add new provisions at Sec. 433.10(c) to indicate the increases to the
FMAPs available to states under the Affordable Care Act. We received
numerous comments on these provisions and are revising the final rule
to account for many of the comments.
1. Newly Eligible FMAP (Sec. 433.10(c)(6))
In Sec. 433.10(c)(6), we proposed to add a new paragraph to
indicate the increased FMAP rates available to states beginning January
1, 2014 for the medical assistance expenditures of individuals
determined eligible under the new adult group who are considered
[[Page 19922]]
to be newly eligible as defined in section 1905(y)(2)(A) of the Act.
Comment: Several commenters noted, in their comments on Sec.
433.10(c)(6), that the definition of ``newly eligible'' in proposed
Sec. 433.204 did not accurately reflect the language of the Act,
omitting key elements of the statutory definition. They urged revisions
to resolve ambiguity with respect to the application of the newly
eligible FMAP described in Sec. 433.10(c)(6).
Response: We agree with the commenters, as is described below under
comments regarding Sec. 433.204, and have made changes to the
regulation text accordingly to ensure that the increased FMAP described
at Sec. 433.10(c)(6) can be applied properly. Please see the
discussion below on the revised Sec. 433.204.
Comment: One commenter noted a typographical error in Sec.
433.10(c)(6)(ii), observing that a reference to Sec. 422.206 should be
to Sec. 433.206 (choice of methodology).
Response: We acknowledge the typographical error. Because this
final rule is not finalizing all proposed sections of new subpart E of
Sec. 433, Sec. 433.206 now describes the threshold methodology and it
remains the correct cross-reference.
2. Expansion State FMAP (Sec. 433.10(c)(7) and Sec. 433.10(c)(8))
CMS proposed new regulatory text to indicate the availability of
additional FMAP rates for states that expanded eligibility prior to
enactment of the Affordable Care Act. CMS did not receive any comments
about the temporary increased FMAP reflected in proposed Sec.
433.10(c)(7), which describes a 2.2 percentage point increase available
only to a state that meets very specific criteria established in
section 1905(z)(1) of the Act. CMS received numerous comments regarding
the definition and methodology to apply the expansion state FMAP set
forth in Sec. 433.10(c)(8), which seeks to codify section 1905(z)(2)
of the Act. The expansion state FMAP is available for expansion states
for the expenditures of certain nonpregnant childless adults who are
determined eligible under the adult group, and who are not considered
to be newly eligible, as defined in section 1905(y)(2)(A) of the Act.
For this purpose, in this final rule, we define a nonpregnant,
childless adult as an individual who is not determined eligible for
Medicaid on the basis of pregnancy and who does not meet the definition
of a parent caretaker relative in Sec. 435.4.
Comment: Several commenters, in noting the aforementioned omissions
of statutory language in the proposed newly eligible definition
(described in more detail in the discussion of Sec. 433.204, below),
also suggest that the proposed definition of ``expansion state'' in
Sec. 433.10(c)(8)(iii) be revised to include a reference to enrollment
caps and/or freezes.
Response: We are revising the proposed definition at Sec.
433.204(a)(1) to reflect the statutory language regarding both the
scope of benefits and enrollment caps and/or freezes. However, we do
not agree with the commenters that the definition of expansion states
needs to be revised to include similar language regarding enrollment
caps. Such language is not included in the statutory definition of
expansion states and we do not think it is necessary to revise the
proposed definition. We have moved that definition, proposed in Sec.
433.10(c)(8)(iii), to Sec. 433.204(b) in this final rule, so that all
definitions are grouped together for ease of reference.
Comment: Several comments urged CMS to strike the phrase ``who are
nonpregnant childless adults for whom the state may require enrollment
in benchmark coverage under section 1937 of the Act'' from proposed
regulation text at Sec. 433.10(c)(8)(i) and (iv). Several commenters
noted that language in proposed Sec. 433.10(c)(8)(iv) could be
interpreted to permit the expansion state FMAP only in states that
provide section 1937 benchmark benefits, and not for non-benchmark
medical assistance expenditures. The commenters asserted that this
interpretation would improperly limit the availability of the expansion
state FMAP to a narrow subset of individuals not deemed newly eligible.
They suggest striking the language to align with congressional intent
to provide the expansion state FMAP to all individuals in the new adult
group (Sec. 435.119) who are not determined to be newly eligible.
Response: To clarify the availability of the expansion state FMAP,
we have restructured Sec. 433.10(c)(8) of the final rule to explicitly
reflect section 1905(z) of the Act, including the provisions related to
benchmark coverage. With respect to the concern expressed by the
commenters, section 1902(k)(1) of the Act provides that benchmark
coverage, for individuals in the adult group who would otherwise be
considered exempt from the limits on such coverage, is not defined by
the requirements of section 1937 of the Act. States will provide state
plan benefits or they can allow such individuals to voluntarily enroll
in benchmark coverage, consistent with our rules. As a result, the
provision in section 1905(z) of the Act relating to individuals for
whom the state may require enrollment in benchmark coverage does not
limit the availability of the expansion FMAP for the expenditures for
such individuals.
C. Definitions (Sec. 433.204)
In the August 17, 2011 proposed rule, CMS proposed only one new
FMAP-related definition, that of ``newly eligible.'' We proposed to
define ``newly eligible'' to mean an ``individual eligible for Medicaid
in accordance with the requirements of the new adult group and who
would not have been eligible for Medicaid under the state's eligibility
standards and methodologies for the Medicaid state plan, waiver or
demonstration programs in effect in the state as of December 1, 2009.''
Numerous commenters suggested revisions to our proposed definition to
more accurately reflect the statutory definition and to avoid
improperly denying certain states the increased FMAP. In this final
rule, we are revising the proposed definition and providing other
related definitions in final Sec. 433.204 as described below.
Comment: Numerous commenters noted correctly that the proposed
``newly eligible'' definition omitted statutory language included in
section 1905(y)(2)(A) of the Act. Commenters recommended that the
proposed regulatory definition of newly eligible at Sec. 433.204 be
revised to correct these omissions and follow the statutory definition
found at 1905(y)(2)(A); in particular, they recommended two changes:
(1) specify that a newly eligible individual could not have been
eligible for full benefits, benchmark, or benchmark-equivalent coverage
as of December 1, 2009; and (2) specify that if the state had a cap or
limitation on enrollment through a section 1115 demonstration, those
who could have been eligible but were not enrolled in coverage as a
result of the cap should be considered as newly eligible.
Response: The final rule has been revised to include the statutory
language that was omitted in the proposed rule. The definition of newly
eligible at Sec. 433.204(a)(1) now includes a reference to eligibility
for full benefits, benchmark benefits, or benchmark equivalent
benefits, as well as a reference to an individual who may have been
``eligible but not enrolled (or is on a waiting list) for such benefits
or coverage through a waiver under the plan that has a capped or
limited enrollment that is full.'' Additional information about
applying the threshold methodology in states that had capped or limited
enrollment is included in Sec. 433.206(e), as revised. In addition,
Sec. 433.204(a)(2) now includes a
[[Page 19923]]
definition of ``full benefits'' (consistent with section 1905(y)(2)(B)
of the Act) and clarifies that individuals who were eligible to receive
``full benefits'' (or benchmark or benchmark equivalent benefits) are
not considered to be ``newly eligible.'' Thus, in the event that a
state covered an optional Medicaid eligibility category as of December
1, 2009 but eliminates that category after January 1, 2014, individuals
previously eligible for the optional category will be eligible for the
new adult group described in Sec. 435.119 of this chapter but will not
be eligible to receive the newly eligible FMAP because they would
previously have been eligible for full state plan benefits. These
changes should ensure that the increased newly eligible FMAP is
available as set forth in the Affordable Care Act.
Comment: One commenter suggested adding the phrase ``under the
provisions of Sec. 435.119'' to the definition of newly eligible
proposed in Sec. 433.204. The commenter suggested that this revision
would clarify the reference in our proposed definition to the new adult
group, as defined in Sec. 435.119 in the March 23, 2012 final rule.
Another commenter suggested that the definition should be revised to
explicitly reference the age requirements of the new adult group.
Response: We have revised Sec. 433.204(a)(1) to more accurately
link the definition of newly eligible to the new adult group created by
section 1902(a)(10)(A)(i)(VIII) of the Act and defined in Sec.
435.119. Including this cross-reference also addresses the suggestion
that we include age ranges in the definition of ``newly eligible''
since Sec. 435.119 explicitly defines the new adult group as including
individuals age 19 or older and under age 65.
Comment: One commenter suggested that CMS should clarify that
individuals whose coverage is funded under a Title XXI demonstration
project will be considered ``newly eligible'' for Medicaid in 2014. The
commenter stated that the fact that a state's CHIP program operates
through a Medicaid state plan or demonstration program does not convert
CHIP to Medicaid and that, therefore, adults whose coverage is so
funded must be considered newly eligible.
Response: Under section 1905(y)(2) of the Act, in general, if
through the application of a state's Title XIX Medicaid state plan or
demonstration as in effect on December 1, 2009 an individual would be
considered eligible under Medicaid, the individual will not be
considered to be a newly eligible individual. However, the commenter
refers to a situation in which through a state plan or demonstration
under Title XXI, certain adults were made eligible and funded under
Title XXI as of December 1, 2009. If through the application of such
demonstration(s) an individual would not be considered eligible under
Title XIX as of December 1, 2009, such individual would be considered
to be a newly eligible individual. CMS will work with states for which
this may be an issue to address unique circumstances and application of
the requirements of the state plans and demonstrations.
Comment: One commenter requested clarification about whether
parents and caretaker relatives with income at or below 133 percent of
the FPL who are eligible under the mandatory eligibility category for
parents and other caretaker relatives at Sec. 435.110 can qualify for
the newly eligible FMAP if it is determined that they would not have
been eligible as of December 1, 2009.
Response: The newly eligible FMAP described in Sec. 433.10(c)(6)
is only available for expenditures of individuals enrolled in the new
adult group described in Sec. 435.119 who meet the definition of newly
eligible codified in Sec. 433.204(a)(1). Under the related statute at
section 1902(a)(10)(A)(i)(VIII) of the Act, and the regulation at Sec.
435.119, individuals such as parents and caretaker relatives who are
eligible under Sec. 435.110 are precluded from eligibility under the
new adult group.
If effective January 1, 2014 the state lowers the eligibility
income standards used to determine eligibility for the parent and
caretaker relative group below the levels in effect on December 1, 2009
for that group, resulting in certain individuals who would have been
eligible for the group as of December 1, 2009, having income greater
than the revised standard, such individuals may become eligible under
the new adult group and some could potentially be newly eligible. For
example, if the state's eligibility category for parent/caretaker
relatives had a resource test in December 2009, and such individuals
would have failed that test, the state could factor such individuals
into its claim for newly eligible FMAP in accordance with Sec.
433.206(d).
In addition, if the state had raised its income standard for its
mandatory eligibility category for parents and other caretaker
relatives after December 2009, the individuals now covered in the new
adult group whose incomes are above the December 2009 standards would
be newly eligible.
D. FMAP Methodology (Sec. 433.206 through Sec. 433.212)
The August 17, 2011 proposed rule (76 FR 51148) provided for three
possible methodologies that could potentially be available to states to
claim expenditures at the appropriate FMAP for individuals determined
eligible in the new adult group. As proposed, Sec. 433.206 set out
principles for these methodologies; enumerated the methodologies
described in more detail in proposed Sec. 433.208, Sec. 433.210, and
Sec. 433.212; proposed to permit states to select any of these
methodologies; and set out a process for states to make their initial
and subsequent selections of methodology. The proposed rule indicated
the possibility that these three approaches could be modified,
narrowed, or combined based on comments received and the results of a
feasibility study, including site visits to, and discussions with, 10
pilot states. We requested comment on the methodologies themselves,
whether other options should be considered, and whether states should
be able to choose from such alternatives or different methods, or
whether a single method should be used by all states. We received
numerous comments on these issues. After assessment of the comments
received, we are continuing to apply the following principles as
expressed in the proposed rule:
Any methodology must provide as accurate and valid
application of the applicable FMAPs to actual expenditures as possible
in the determination of the appropriate amounts of federal payments for
such expenditures. The methodology must not include a systemic bias in
favor of either the states or the federal government.
Any allowable methodology should minimize administrative
burdens and costs to states, the federal government, individuals, and
the health care system.
Any methodology must be developed and applied
transparently by both the federal government and states.
Any methodology must take into consideration the
practical, programmatic and operational goals of the Medicaid program.
To ensure that the states claim expenditures at the
correct FMAP, any methodologies should include sufficient data to
identify, associate and reconcile expenditures with the related
eligibility group to which the FMAPs apply. The increased newly
eligible and expansion state FMAPs are only available for individuals
enrolled under Sec. 435.119 of this chapter.
[[Page 19924]]
On the basis of the comments received and the analysis of the
feasibility of each of the alternatives, including input from pilot
states and analyses of pilot states' information, we believe that the
threshold methodology best addresses these principles and is the method
identified in this final rule as the one that shall be used by states
for purposes of claiming expenditures at the appropriate FMAP for
individuals determined eligible in the new adult group.
As described briefly above and in more detail in section IV of this
rule, in general, under the threshold methodology, states will compare
income levels of individuals eligible for the new adult group to
equivalent December 2009 standards to determine if that individual
could have qualified for Medicaid under the State's December 2009
income standards. More specifically, the threshold methodology proposed
using MAGI-converted income thresholds (as described in CMS' December
28, 2012 letter to State Medicaid Directors and Health Officials (SHO
12-003, available at: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf)) across categorical eligibility
groups, taking into account the December 2009 eligibility standards
under state plans, waivers or demonstrations and applicable disregards
and adjustments, to approximate, in the aggregate, the December 2009
standards for each such group. After individuals are determined
eligible for the new adult group described in Sec. 435.119 of this
chapter, their current income will be compared to these eligibility
group or demonstration MAGI-converted standards to determine if such
individual could have been income eligible, as of December 1, 2009, for
an eligibility group for which they would have otherwise been eligible
(for example, mandatory coverage for parents and caretaker relatives,
or an optional eligibility category).
Since we are finalizing only one methodology, some of the
provisions of the proposed Sec. 433.206 are inapplicable. Below is a
summary of the public comments that we received with respect to
proposed Sec. 433.206 through Sec. 433.212. The discussion begins
with the general comments about the choice of methodology, focusing on
the threshold methodology since that is the methodology being finalized
and is relevant to our responses to other comments discussed throughout
this section.
1. General Comments on Choice of Methodology (Sec. 433.206)
Comment: Some commenters supported the flexibility offered by the
three proposed approaches in the proposed Sec. 433.208, Sec. 433.210,
and Sec. 433.212, and, noting that Medicaid programs vary from state
to state, urged CMS not to implement only one approach. Other
commenters suggested that states should have the flexibility to propose
an alternative methodology and that each state should be allowed to
establish its best and least biased methodology for application of the
appropriate FMAP rates, in collaboration with CMS. Other commenters
instead urged CMS to finalize one approach so that a single, consistent
approach will be used to determine which adult enrollees qualify as
newly eligible. Commenters noted that applying a single methodology
would also help ensure that audits and other program integrity
activities could assess whether payments were determined accurately.
Response: We have determined that it is more administratively
feasible and consistent with the guiding principles to adopt a uniform
methodology for applying the applicable FMAP. Although some commenters
supported flexibility in concept, the overall position favored in the
comments and other analyses and input from states supported the use of
the threshold methodology. An essential characteristic of the threshold
methodology is that, in general, it allows states to determine the
appropriate FMAP on an individual-specific basis. In that regard, the
threshold methodology most directly addresses the explicit statutory
definition of newly eligible individual and allows for the most
accurate application of FMAP as it relies on actual data related to the
individual. For example, the FMAP for expenditures for an individual
determined during the eligibility process to be a parent or caretaker
relative will be assessed relative to the MAGI-converted income level
in effect in 2009 for parents and caretaker relatives. We note
flexibilities given to states in establishing the threshold under both
the MAGI conversion process under Sec. 435.603 and the options given
to states in this final rule. As we discuss below, we have modified our
proposed threshold methodology to include certain population-based
adjustments to reflect factors such as resource limits or enrollment
caps in effect on December 1, 2009.
Comment: Numerous commenters wrote to support the threshold
methodology. One commenter stated that the threshold methodology could
be the most accurate and efficient of the options provided in the
proposed rule. The commenter noted that for states that can create
clear upper thresholds and proxies for non-income related criteria, the
newly eligible adult population could be categorized for the proper
FMAP under this methodology.
Response: Based on comments, consultation with states, and other
analyses, we agree that the threshold methodology, modified to clarify
adjustments to increase accuracy, is the most accurate and efficient
method and least burdensome for states to implement. Therefore, we are
finalizing the threshold methodology in a revised Sec. 433.206. That
methodology begins with a simplified method for determining the
individuals who are and are not newly eligible based on MAGI-based
income (as already determined for purposes of establishing eligibility
under Sec. 435.119) and then offers states options for how they will
address other factors. In this final rule, as part of the threshold
methodology we include alternatives for states to address criteria that
are not directly related to income but that may have an impact on the
validity of the threshold results, such as criteria related to
resources and section 1115 demonstration enrollment caps that will
permit a simplified application of the methodology. We will work with
states to facilitate their proper application of the methodology.
Comment: One commenter suggested that, when finalizing a
methodology to determine FMAP, CMS consider the potential for each of
the alternatives to impose additional burdens on beneficiaries,
Medicaid health plans, and states in determining whether these or other
alternatives should be included in the final rule.
Response: Our choice to finalize the threshold methodology reflects
our assessment, consistent with the comments received, that it is the
least burdensome of the proposed options for both states and
beneficiaries, for the reasons described throughout this section and in
section IV of this rule, which provides more details about the
provisions of the final rule.
Comment: One commenter criticized all of the proposed
methodologies, noting that the proposed regulations contemplate an
apparent estimation of the population and associated expenditures in
perpetuity. The commenter suggested that at some point both CMS and
states need to move away from using estimates in the FMAP
methodologies. The commenter suggested that CMS convene a group of
[[Page 19925]]
state stakeholders to develop best practices on this issue.
Response: The threshold methodology is not based on estimates but
is instead based on individualized comparisons to December 1, 2009
eligibility standards. Therefore, it best addresses the goals of
accuracy and simplicity. We are adopting the threshold methodology in
this final rule because it provides a simplified yet largely
individualized way to apply the appropriate FMAP to expenditures for
those enrolled in the new adult group. While the final threshold
methodology includes population-based adjustments that are not the
result of individualized determinations, those adjustments are to
increase the accuracy of the result.
Comment: One commenter raised concerns about one of the principles
that CMS articulated as the basis for any methodology to be used to
assign FMAP. The commenter finds the fifth principle, ``sufficient data
to identify, associate and reconcile expenditures with the related
eligibility group to which the FMAPs apply,'' to be potentially
problematic. Instead of retrospective reconciliation of expenditures,
the commenter urged that states will need to be held harmless in any
reconciliation if subsequently determined FMAP discrepancies are within
a reasonable range.
Response: We understand the commenter's concern about financial
stability and predictability and we have determined that the threshold
methodology will provide states with the most certainty in part because
it will generally not require retroactive reconciliations. Moreover, we
believe the threshold methodology will best serve the interests of
beneficiaries by avoiding dual eligibility rules and the unnecessary
questions and procedures that dual rules would entail.
Comment: One commenter expressed concern that states will attempt
to shift costs to the federal government by reducing or eliminating
optional Medicaid groups. The commenter stated that the three proposed
methodologies would not prevent such cost-shifting because there are
too many subjective aspects of pre-Affordable Care Act eligibility
determinations (including disability determinations) to expect that the
proposed methods would result in unbiased identification of the newly
eligible. Instead, the commenter suggested that HHS should define a
population-based method that compares pre-Affordable Care Act Medicaid
take-up rates with post-Affordable Care Act Medicaid take-up rates
(excluding the Affordable Care Act adult group).
Response: A key goal of the Affordable Care Act is to simplify
eligibility for Medicaid and collapsing various Medicaid coverage
categories helps achieve that goal. As described above, the newly
eligible FMAP is only available for expenditures for individuals who
would not have been eligible for full benefits, benchmark benefits, or
benchmark-equivalent benefits (as further described in Sec.
433.204(a)) in either a mandatory or optional Medicaid eligibility
category as of December 1, 2009 (or were unable to enroll in such
coverage through a demonstration that had capped or limited enrollment
that was full). Therefore, we do not share the commenter's concern that
this method promotes cost-shifting. As described in more detail in
section IV of this final rule, we believe that the threshold
methodology will appropriately identify individuals and expenditures
that are and are not subject to the newly eligible FMAP.
Comment: As an alternative to the approaches described in the
proposed regulation, one commenter asked whether states could use a
single ``blended FMAP'' rate across the entire population, similar to
the method proposed under Sec. 433.212. Noting the implementation
obstacles associated with the three proposed methodologies, the
commenter suggested mitigating the associated burdens by permitting a
blended FMAP combined with annual floors on any downward adjustments to
state rates, and 15 months advance notice of annual changes to the
model.
Response: We considered the blended FMAP, and related
methodologies, but concluded that the threshold methodology is
preferable for the reasons described throughout this preamble.
Comment: One commenter suggested that CMS should allow states to
determine their own methodologies and procedures for tracking FMAP for
the new adult population, noting that some states already have the
capacity to do so.
Response: We believe it is important, and in the interest of
efficient administration of the Medicaid program, to promote
consistency in FMAP determinations. Therefore, we are finalizing an
approach that will minimize the administrative burden on states while
also ensuring accuracy and consistency across the country, and permit
CMS oversight and review. We note flexibilities given to states in
establishing the threshold under both the MAGI conversion process under
Sec. 435.603 and the options given to states in this final rule as
described below for resources and enrollment caps, for example. As we
explain in our December 28, 2012 letter to State Medicaid Directors and
Health Officials (SHO 12-003, available at: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf)
regarding MAGI conversion, states will have flexibility with respect to
the methodology they choose to adopt for income conversions.
Comment: A number of identical comments were submitted to urge CMS
to adopt, for all states, a hybrid methodology based on the threshold
and proportion methods. These commenters suggested that in the initial
years of the availability of the increased newly eligible FMAP (CYs
2014-2016), the threshold methodology be used to determine which
individuals are newly or not newly eligible. For 2017 and years
thereafter, they suggested that the federal government would coordinate
a proportion method using data from previous years related to each
state's unique experience. The first 3 years' experience would
represent and provide ``benchmark'' data for the future and would give
states time to develop the administrative structure necessary for
implementation. The commenters also suggested that HHS should establish
approval criteria including estimated accuracy of the method and limits
burdens on enrollees.
Response: To provide for a consistent approach nationally, we are
adopting the proposed threshold methodology under which states have
certain options that help ensure that it reflects and claims
expenditures at the appropriate FMAP. Using the elections available
under these options, states will have the ability to amend their
threshold methodology to further refine the methodology. As described
under the provisions of the regulation, states will need to submit
state plan amendments to make such elections.
2. Threshold Methodology (Sec. 433.208, redesignated Sec. 433.206)
Proposed Sec. 433.208, which is being redesignated as Sec.
433.206 in this final rule, described the first of three proposed
approaches to identify newly eligible individuals for purposes of
applying the correct enhanced FMAP rate. We sought comment on the
methodology as proposed and on the use of proxies of eligibility
criteria in place prior to CY 2014 that are not related to income, such
as disability status and resource value.
[[Page 19926]]
a. Comments Related to Dual Eligibility Systems, Burdens on States and
Applicants, and Streamlined Eligibility Procedures
In the proposed rule, CMS articulated several principles that would
drive our selection of a methodology (or methodologies) to accurately
reflect the appropriate FMAP. One principle was to minimize the
administrative burdens and costs to states, the federal government,
individuals, and the health care system. We also noted that requiring
states to run two distinct eligibility systems--one for purposes of
eligibility using new MAGI methodologies and one that would exactly
retain all of the eligibility requirements of states' Medicaid programs
as in effect on December 1, 2009 for purposes of determining which
individuals are newly and not newly eligible--would pose challenges and
create unnecessary burdens, inefficiencies, and administrative costs to
applicants, states, and the federal government. Because retaining and
applying two different sets of eligibility rules is burdensome and
costly to states and the federal government, a barrier to enrollment
for eligible individuals and families, and would likely lead to
inaccurate determinations, we identified possible alternative
approaches for determining the appropriate FMAP rate. We proposed not
to permit FFP for the costs of maintaining dual eligibility systems for
the adult group and instead proposed methodologies to enable states to
determine FMAP without needing to run dual eligibility systems. We
remain committed to that principle in this final rule, which
establishes the threshold methodology as a simplified approach to apply
the eligibility criteria effective on December 1, 2009.
Comment: Numerous commenters wrote in support of the principle
articulated in the proposed rule that eschewed requiring states to
evaluate every applicant under both the pre-and post-Affordable Care
Act eligibility criteria for purposes of both identifying individuals
as newly eligible and assigning FMAP accordingly. Some commenters,
however, expressed concern that the threshold methodology, as proposed
in Sec. 433.208, would require dual eligibility screening for every
applicant. They therefore recommended that states not be required to
evaluate every applicant under both the old and new eligibility rules,
nor be permitted to require every applicant to submit information not
required to determine the eligibility of the applicant under the new
adult category solely for the purpose of determining the appropriate
FMAP for that individual. Commenters expressed concern that questions
or requests for an individual to provide information related to FMAP
that are not needed for the basic eligibility determination would be a
burden for the applicant and the case worker and, as such could
potentially be a disincentive for the individual in applying for
Medicaid. To the extent that CMS permits such actions, however,
commenters recommend that CMS require states first to make every effort
to gather all supplemental information through electronic data matching
or other processes that require no additional input from the applicant.
This would require applicants to provide as little information as
possible.
Response: We appreciate the support for the principle that dual
eligibility systems are neither fair nor efficient. This rule finalizes
the threshold methodology to enable states to apply a methodology for
purposes of the FMAP application that does not require the application
of December 2009 eligibility rules. Rather, the threshold methodology
provides for a method for applying the FMAP provisions based on the
characteristics associated with each individual that will be determined
during the newly designed eligibility process, such as whether an
individual is a parent or caretaker relative or a childless adult, and
the associated relevant eligibility group. The threshold methodology
can be applied by employing the new MAGI-based income rules, rather
than the old December 2009 income rules, and comparing MAGI-based
income to the converted MAGI eligibility standards. Finally, note that
the final rule includes, at Sec. 433.206(b)(1), language (originally
proposed at Sec. 433.206(d)) that specifies that the threshold
methodology must not impact the timing or approval of an individual's
eligibility for Medicaid.
Comment: Numerous commenters urged CMS not to require applicants to
submit additional information, beyond what would be required for
eligibility determinations, solely for the purpose of FMAP
determinations. Commenters noted that this point applied regardless of
which method is adopted; one commenter noted that any proposed
methodology that asks additional questions of applicants works against
the expressed goal of simplification and is not preferable. Other
commenters wrote that any additional questions regarding FMAP should
not unduly burden applicants. Some commenters urged CMS to require
states to inform applicants that failing to answer any such additional
questions will not impact eligibility. Other commenters suggested that
the threshold methodology regulation text should be revised to
explicitly require states first to gather all necessary supplemental
information through electronic data matching (as required by Sec.
435.949), or other processes that require no additional information
from the applicant. Other commenters recommended adding explicit
language to the regulation directing states that they may not ``include
a request for information from an individual unless such request is
essential to determining that individual's current eligibility.'' Other
commenters suggested that the proposed regulation be revised to require
CMS to establish standards for additional application questions and
approve any additional questions asked during the application process
for the purpose of the newly eligible determination.
Response: We remain committed to creating the least burdensome
system--for applicants and states--to determine the appropriate FMAP.
The threshold methodology generally will not require any supplemental
information from applicants, beyond the information that will already
be collected for purposes of the eligibility determination. For
example, certain information, such as that related to income and
categorical eligibility status, may be needed for both eligibility and
FMAP determinations both to properly determine eligibility for the new
adult group and to assign the applicable FMAP once the individual is
determined eligible for the group. As noted above, in the final rule we
retained language at Sec. 433.206(b)(1) that was originally included
at proposed Sec. 433.206(d), which specifies that the threshold
methodology must not impact the timing or approval of an individual's
eligibility for Medicaid. We do not think any additional revisions are
necessary to Sec. 433.206 because these principles are already
reflected in the March 23, 2012 eligibility rule.
As described below, this rule provides states with the option to
develop one-time sampling data to help determine the proportion of
individuals enrolled under the new adult group who would qualify as
newly eligible because they would have been found ineligible for
Medicaid in 2009 due to excess resources. To the extent that states
take advantage of a time-limited opportunity (described below) to
gather sampling data to develop an accurate resource proxy, those
questions will not be permissible as part of the application, cannot
affect the application, and cannot delay determinations of eligibility.
Effective January 1, 2014,
[[Page 19927]]
when resources are no longer a relevant eligibility criterion for many
categories of eligibility, only a post-eligibility sample (which would
be for a period ending no later than December 31, 2014 with respect to
states' new adult eligibility groups that are effective on January 1,
2014) would be permissible. States taking this option must notify
beneficiaries that a nonresponse would not impact their continuing
eligibility.
Comment: Related to concerns that the methodology for claiming FMAP
not unduly burden applicants, several commenters suggested that CMS
revise the FMAP methodology regulation text to capture the intent that
applicants would not be asked to provide additional information for
purposes of assigning FMAP. Commenters recommended that the regulations
describing the selected FMAP methodology cross-reference those at Sec.
435.907(c), which set out the standards for a streamlined eligibility
application. Several commenters suggested strengthening proposed Sec.
433.206(d) by reinforcing the requirements to not unduly burden
applicants with a cross-reference to Sec. 435.907 (and to rely on data
matching as required by Sec. 435.949).
Response: The final March 23, 2012 eligibility rule contained
various provisions regarding a single streamlined application and data
matching. We affirm those provisions and the principles they embody.
b. Comments Related to Application of and Refinements to the Threshold
Methodology
Comment: Several commenters wrote to support the proposal in Sec.
433.208(c)(2) that determinations under this Part remain in effect for
the entire 12-month eligibility period.
Response: Both the proposed rule and the final rule now at Sec.
433.206(c)(7) indicate that for an individual who is eligible under the
new adult group, the individual's status as newly or not newly eligible
continues to apply until a new determination of MAGI-based income has
been made in accordance with Sec. 435.916; in general, this could
occur at the next scheduled periodic redetermination, or it could occur
at other times related to the availability of other information, for
example, as discussed in the provisions related to disability status.
Additionally, Sec. 433.206(c)(7) also indicates that changes to an
individual's eligibility group would require changes in the status for
FMAP purposes. This approach will generally avoid any need to reassign
FMAP should an individual's income change within the year.
Comment: Several commenters suggested that the regulation should be
explicit in using MAGI-equivalent standards under the threshold
methodology. They note that the preamble to the proposed rule suggests
this as an option but that the proposed regulatory language does not.
They further note that the MAGI-equivalent standards will appropriately
take into account disregards and deductions that states use in
determining Medicaid eligibility currently, and could therefore be used
to implement the threshold methodology.
Response: We agree with the commenters that the converted MAGI-
based thresholds will serve as the basis for the threshold methodology.
Individuals in the new adult group with MAGI income that is above the
relevant converted MAGI-based threshold standard that is determined to
apply as of December 1, 2009 would be considered as newly eligible. We
do not think it is necessary to further clarify the regulation text now
included at Sec. 433.206.
Comment: One commenter notes that the threshold methodology
requires that many income standards would have to be applied to each
eligibility category that was in effect on December 1, 2009 for
purposes of determining the availability of the newly eligible FMAP
rate. Therefore, the commenter asks whether the upper income standard
is a blended rate or will the state be required to maintain many
classes of newly eligible categories.
Response: The commenter is observing that the threshold methodology
will require states to compare the income of individuals found eligible
for the new adult group to the converted MAGI income levels for
relevant eligibility groups for which the individual could have been
eligible as of December 1, 2009. CMS has worked and continues to work
extensively with states to establish converted MAGI income thresholds.
We published a letter to State Medicaid Directors and Health Officials
on December 28, 2012 (SHO 12-003, available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf) to
provide guidance about the conversion of net income standards to MAGI
equivalent income standards. As described in this regulation, in
addition to income conversion required for eligibility for certain
eligibility groups, these converted standards will be used as a
reference point for the income eligibility levels that were applicable
for eligibility groups in effect as of December 1, 2009 explicitly for
the purposes of the FMAP determination. The converted standards will be
applied, by eligibility group, to make FMAP determinations.
Comment: One commenter wrote to request clarification as to whether
eligibility under the threshold methodology is based on the current
income and household size composition, regardless of changes since
December 1, 2009.
Response: Under the statute, for purposes of determining the
availability of the appropriate FMAP for the expenditures of newly and
not newly eligible individuals, the issue is whether the individual who
is found to be eligible for the new adult group would have been
eligible for full benefits, benchmark benefits, or benchmark equivalent
benefits under the state's eligibility standards as of December 1,
2009. Therefore, under the threshold methodology the individual's
current (that is, post-December 31, 2013) MAGI-based income would be
compared to the state's applicable converted December 1, 2009 MAGI-
based eligibility standards. An individual's income and household
composition from December 2009 is not relevant for FMAP determinations.
Comment: In setting income thresholds for 2009, one commenter urged
CMS to adjust the 2009 levels to adjust for cost of living increases,
inflation, and other factors.
Response: We are currently working with states to convert December
1, 2009 income standards to the applicable MAGI-based income standards
and these converted income standards will be used to determine whether
individuals in the adult group qualify as newly eligible. Under the
threshold methodology those MAGI-based income standards, as applicable
for the relevant eligibility groups in effect in 2009 when expressed as
a percentage of the FPL, will be adjusted annually as the FPL adjusts
annually for inflation. Income eligibility standards in effect on
December 1, 2009 that were expressed as fixed dollar amounts will
continue to be expressed in fixed dollar amounts after being converted.
Comment: One commenter suggested that the final regulation should
strike the proposed paragraph Sec. 433.208(b)(2)(i), which permits
states to claim the enhanced federal matching funds based on ``self-
declaration'' from an applicant.
Response: As proposed, Sec. 433.208(b) included a number of
criteria to establish thresholds. As a result of public comments and
our additional research to better understand which approaches will
ensure an accurate
[[Page 19928]]
method for assigning the FMAP and further the simplification goals of
the Affordable Care Act, we significantly revised the original Sec.
433.208(b)(2), now redesignated as Sec. 433.206(b), ``General
Principles,'' to revise several of the criteria included in the
proposed rule. The final rule affirms that FMAP determinations will
rely on information derived from the regular eligibility determination
process, consistent with regulations finalized in our March 2012 final
rule; in that regard, we struck the language regarding the reliance on
self-declaration data in this regulation.
c. Application of Disability Criteria
In the proposed rule (76 FR 51148, 51175), we indicated we were
considering using either a disability proxy methodology or using only
actual disability determinations under the threshold methodology to
determine if an individual may have been eligible under the state's
December 1, 2009 standards based on disability. The disability status
of an individual may be relevant in two ways. First, a disabled
individual may be eligible under section 1902(a)(10)(A)(i)(II) of the
Act for Medicaid based on receipt of supplemental security income (SSI)
or such more stringent standards that a state may have under the
election at section 1902(f) of the Act (the ``209(b)'' option), in
which case the individual would not be eligible under the new adult
group and should be excluded from the universe to which the threshold
methodology applies. Second, a disabled individual may have been
eligible in an optional eligibility category in effect under a state's
December 1, 2009 Medicaid program at higher income levels than adults
without disabilities, which would mean that they would not be
considered newly eligible.
We received numerous comments in response to our request for
feedback on this issue. In general, commenters encouraged CMS to avoid
asking applicants additional questions and urged CMS to clarify
expectations in the regulation. Based on comments received, we are not
finalizing a disability proxy. Rather, only an actual disability
determination will be used for purposes of determining whether an
individual enrolled in the new adult group will be newly eligible. This
approach is described in more detail in section IV and is reflected in
Sec. 433.206(c)(4).
Comment: One commenter suggested that the initial question for
disability should be whether an individual has actually been determined
to be disabled. The commenter asserted that the other proxies suggested
in the proposed rule will disadvantage the state by counting as
``disabled'' individuals who never would have qualified for Medicaid
but for the new adult eligibility group. Another commenter affirmed the
reasonableness of using actual disability determinations to ascertain
the appropriate FMAP. Numerous commenters suggested that the
regulations should indicate that no additional information should be
required from individuals with respect to disability status for
purposes of an FMAP determination. Rather, they suggested that the
state could draw from existing data. Other commenters specifically
asked whether individuals would be permitted to opt not to answer such
questions.
Response: We are finalizing this rule to specify that for purposes
of applying the appropriate FMAP under the threshold methodology, as
well as for determining whether an individual could be considered
eligible under another eligibility category for which disability is a
criteria, only an actual disability determination will be used to
establish whether an individual is disabled. For individuals actually
determined disabled, the state would need to apply the status for such
individuals for any December 1, 2009 eligibility category for which
such status is applicable for purposes of determining if the individual
is newly eligible; under the threshold methodology, the state would
also need to apply the income test specific for such disability related
eligibility categories. If the individual's income exceeds such
December 1, 2009 income eligibility level for the applicable
eligibility category, the individual would be considered newly eligible
with respect to such eligibility category. The revised approach is
described in more detail in section IV of this rule and in regulation
text at Sec. 433.206(c)(4).
d. Population Adjustments to the Threshold Methodology; Application of
Resource Criteria and Section 1115 Demonstration Enrollment Caps
In general, the threshold methodology is designed to properly
assign the applicable FMAP to the expenditures of individuals eligible
in the new adult group under Sec. 435.119. The threshold methodology
provides for states to use the applicable state plan or demonstration
eligibility income standard converted to a MAGI-equivalent for each
eligibility group as in effect in the state on December 1, 2009 to
determine whether an individual is considered to be newly eligible for
purposes of assigning a federal matching rate. Although the threshold
methodology is individualized, we are finalizing this rule to include
certain population-based adjustments, or proxies, to account for
resource standards and, as applicable, enrollment caps or limits.
In the proposed eligibility rule, we proposed several ways in which
the threshold methodology could account for a resource (or asset) test
that was applied to the applicants' coverage category as of December
2009, since resources will no longer be part of the eligibility
determination for populations whose income will be determined using
MAGI rules. We solicited comments on these various alternatives, as
well as on the feasibility of using the Asset Verification System (AVS)
as a tool to obtain resource information, as necessary. We received a
variety of comments on these varied approaches.
Comment: Several commenters noted that, when comparing individuals'
eligibility against the December 2009 criteria, only income eligibility
and not resource information should be considered. One commenter stated
that resources should not be considered since verification would be
confusing and burdensome to applicants, particularly since a
significant proportion of low-income individuals do not have resources
in excess of 2009 Medicaid resource standards. Thus, they stated that
the threshold method should not include a resource test. Another
commenter stated that the final regulation should clearly state that
individuals who were ineligible on the basis of resources under rules
in effect as of December 1, 2009 are considered to be newly eligible.
Response: As described in more detail in section IV of this rule
and Sec. 433.206(d), we are giving states a choice whether or not to
consider resources; for states that elect to consider resources, this
rule directs the use of a proxy methodology that minimizes the need to
seek information about resources from applicants. Further, to the
extent that information is requested the response (or lack of a
response) is not a basis for denying eligibility.
Comment: Another commenter suggested that since resources may make
an individual ineligible (based on December 2009 rules), the threshold
method must include a question regarding resources; otherwise the
threshold methodology will not provide accurate results.
Response: As explained above, the existence of a resource test in
2009 may have made individuals ineligible for coverage, even if they
met Medicaid
[[Page 19929]]
income criteria, so these individuals should be characterized as newly
eligible in 2014. To determine whether such newly eligible individuals
qualify for the newly eligible FMAP, states may apply the resource
methodology as described in Sec. 433.206(d) and in more detail below.
However, a state may forego the application of a resource proxy test as
part of the threshold methodology as some states have advised CMS that
very small numbers of individuals were determined ineligible due to
resources. States that choose to consider their December 2009 resource
tests may apply the resource proxy methodology described in Sec.
433.206(d) and in more detail below.
Comment: We received numerous comments in response to our request
for feedback about using the Asset Verification System (AVS). Multiple
commenters suggested using the AVS for electronic resource verification
and one commenter suggested that the regulation be revised to
explicitly require use of the AVS. Other commenters suggested that the
threshold methodology regulation should be revised to indicate that
resources will be determined using the AVS. One commenter noted that
using the AVS for electronic verification would help permit a resource
test while maintaining the Affordable Care Act goal of a simplified
streamlined process.
Response: We agree that the AVS can be a good tool to verify
resources but we are not requiring its use for individuals enrolled in
the new adult group under Sec. 435.119. The approach we outline in
this rule provides states with greater flexibility and is consistent
with MAGI-based income determinations that will be in effect starting
January 1, 2014. States may continue to use AVS for non-MAGI
populations.
Comment: One commenter requested clarification about how to account
for the current resource tests in Medicaid eligibility determinations.
The commenter noted that states will need to adjust the threshold
methodology to reflect relative resource values and recommended
freezing resource levels at the 2009 threshold.
Response: Subject to the requirements of Sec. 433.206(d) of this
final rule with comment period, to the extent a state elects to
incorporate a resource proxy methodology under its applied threshold
methodology, the resource criteria should reflect the states' December
1, 2009 resource eligibility levels. Referencing resource levels at the
2009 value will most accurately reflect eligibility as of December 1,
2009, which is the relevant criterion for determining whether or not an
applicant shall be considered newly eligible.
e. Application of Spend-down Income Eligibility Criteria
The August 17, 2011 proposed rule stated that CMS does not believe
that, for FMAP determination purposes, states need to consider whether
an individual enrolled in the new adult group would have been eligible
under a spend-down for a medically needy category under section
1902(a)(10)(C) of the Act in considering whether someone would have
been eligible under standards in effect in December 1, 2009. We
explained that this is because we believe there is an inherent
uncertainty in determining whether and when a spend-down would have
been met. An individual who is eligible for the new adult group and
whose income is above the December 1, 2009 medically needy income
standard would be considered newly eligible. If an individual would
have qualified by meeting the medically needy income standard without a
spend-down, the state could not claim newly eligible FMAP for that
individual. We requested comment on this analysis and received numerous
responses, which we have used to add more detail to the final threshold
methodology regulation at Sec. 433.206(f).
Comment: Multiple commenters raised issues with respect to how the
threshold methodology will account for medically needy determinations.
Some noted that the final rule should explicitly indicate that if
spend-down criteria are not met, the individual should be considered
newly eligible. Commenters noted that this principle should also extend
to ``209(b)'' states, which are states in which the Medicaid
eligibility criteria for the elderly and people with disabilities are
more restrictive than the federal SSI program standards. We take these
comments to mean that if an individual's income is above the medically
needy income level, he or she would be assumed not to be eligible under
the December 2009 standards and therefore newly eligible for purposes
of FMAP, even if it might have been possible for that person to spend-
down and qualify in a medically needy eligibility category.
Response: In section IV below, and Sec. 433.206(f), we address how
the threshold methodology will account for the treatment of individuals
in 209(b) states. Individuals eligible for SSI are enrolled in the
eligibility group specified in Sec. 435.120, and, as such, are not
eligible for the newly eligible FMAP, which is only available to
individuals enrolled in the new adult group at Sec. 435.119.
f. Timeframes and Parameters for Notice to CMS
In light of the proposed rules that identified potential alternate
FMAP claiming methodologies, Sec. 433.206(b) of the August 2011
proposed rule proposed that a state provide notice to CMS of which
methodology it plans to use at least two calendar years prior to the
first day of the calendar year in which the state would have used the
particular method. For 2014, we proposed that states would give notice
to CMS no later than one year prior to the beginning of the CY, which
is January 1, 2013.
Comment: Numerous commenters expressed concern about the amount of
notice that CMS proposed states must give CMS with respect to choice of
methodology or with respect to changes in methodology. They requested
additional time to notify CMS of the selected methodology and noted
that the proposed timeframe is insufficient to make an informed
decision.
Response: As indicated in responses to previous comments and in
section IV of this rule, the threshold methodology is the selected
permissible methodology and, as such, there is no longer the need for
states to provide notice to CMS as to their choice of methodology. We
provide, at Sec. 433.206(h), that states must revise their state plans
under the provisions of subpart B of part 430. States will submit, as
an attachment to their state plan, a threshold methodology plan that
outlines how the threshold methodology will be applied. CMS will review
and approve this plan pursuant to the timeframes that otherwise govern
review of state plan amendments.
Comment: Several commenters noted that the regulations should
define a timeline for states to submit and CMS to approve the threshold
methodology prior to implementation. One commenter wrote to support
proposed Sec. 433.208(b), which proposed that each state submit a
proposed methodology to CMS and receive CMS approval for that
methodology prior to its implementation.
Response: As discussed previously and as indicated in revised Sec.
433.206(h), states must amend their state plans under the provisions of
subpart B of part 430 to reflect the threshold methodology the state
implements in accordance with the provisions of this part 433. The
threshold methodology, which will be reviewed and approved by CMS, will
be included as an attachment to the state plan and will include details
about the manner in which the state will apply
[[Page 19930]]
the methodology to FMAP determinations.
g. Comments Regarding Need for Technical Assistance for States
Comment: Several commenters suggested that CMS should provide
technical assistance to states as they implement approaches to properly
identify the FMAP associated with individuals in the new adult group.
One commenter suggested that CMS should assist states upon request with
determining individuals newly eligible for Medicaid as of 2014,
particularly with respect to treatment of previously excluded income in
determining Medicaid eligibility. Another commenter believes that
states need specific guidance from CMS to operationalize the approach
used to determine the appropriate FMAP. Another commenter requested
more examples to illustrate how the three alternate methods would work
and requested additional guidance about the appropriate sample size
necessary to test each methodology.
Response: We will be working to provide states with technical
assistance as they implement the final methodology and are already
providing technical assistance in the context of the conversion process
which is a component of the methodology. One of the concerns raised by
commenters about the treatment, under MAGI rules, of income previously
excluded in determining Medicaid eligibility, has been addressed by a
legislative change included in section 401 of Public Law 112-56, which
revised the MAGI rules to include as income an amount equal to the
portion of the taxpayer's social security benefits (as defined in
section 86(d) of the Internal Revenue Code) that is not included in
gross income under section 86 for the taxable year.
h. Comments Regarding Transparency
Comment: Multiple commenters suggested that states should use an
open and transparent process to determine the methodology they will use
to claim the appropriate FMAP. Another commenter noted that given the
significant budgetary and beneficiary implications of any methodology,
negotiations between states and CMS on the proposed methodological
approach should be public (including any documents submitted by the
state and any question posed by CMS in response). In addition, the
process should allow for input from beneficiaries and consumer
advocates to ensure that the proposals do not unduly burden applicants.
Response: CMS is adopting the threshold methodology in this final
regulation, in part to support the goals of transparency and
simplicity. The methodology does offer states certain options and
states that take them must clearly and transparently describe to CMS
how they will implement the threshold methodology. The proposed rule,
at Sec. 433.208(b) indicated that to implement the threshold
methodology, states must submit a methodology and receive CMS approval
of such methodology prior to its application to new FMAP
determinations. As described in more detail in section IV of this final
rule, we have revised that provision, now included at Sec. 433.206(h),
to instead require states to submit a state plan amendment reflecting
the manner in which they will implement the threshold methodology. This
will achieve the goals of transparency that commenters supported.
i. Other General Methodology Comments
Comment: One commenter suggests that CMS should require states to
take into account whether public entities other than the state, such as
counties, provide the non-federal share of Medicaid payments when
developing an FMAP methodology. The commenter further suggested that
CMS could require the state to demonstrate that its methodology results
in a distribution of funds among the public entities providing the non-
federal share that reflect the actual enrollment of newly eligible
adults.
Response: States have significant flexibility to finance their
Medicaid programs consistent with existing federal laws and
regulations. This final rule does nothing to change the regulatory
requirements set forth in subpart B of part 433, including Sec.
433.53, which permits entities other than the state to contribute up to
60 percent of the non-federal share of total expenditures under the
plan and requires state and federal funds to be apportioned among
political subdivisions of the state on a basis that ensures that
individuals in similar circumstances will be treated similarly and that
a lack of local financial participation will not result in lowering the
amount, duration, scope, or quality of services available to
beneficiaries. Nor does this rule address the provisions of section
1905(cc) of the Act, added by section 10201(c)(6) of the Affordable
Care Act, which offer some protection to political subdivisions from
increased requirements to contribute the non-federal share. We further
note that due to the significantly increased FMAP rates available for
the newly eligible adults, there will be no non-federal share for the
medical assistance expenditures for such adults in calendar years 2014-
2016 and a small non-federal share (no more than 10 percent of costs)
thereafter.
Comment: Commenters recommended that CMS require that any claiming
methodology include the total cost of providing care to patients,
including supplemental payments such as disproportionate share hospital
(DSH) or upper payment limit payments (UPL). The commenter notes that
the proposed rule described the statistically valid sampling
methodology as excluding Medicaid supplemental payments from medical
expenditures paid to providers when providers are paid under a managed
care capitated payment arrangement. The commenter believes that all
payments should be in the claiming methodologies including costs
associated with patients for whom supplemental payments such as DSH or
UPL are made to reflect providers' total cost of care.
Response: The threshold methodology as contained in this final rule
with comment period is not intended to revise the definition of or
requirements for determining the amounts of the expenditures that may
be claimed by a state as medical assistance provided to individuals. In
that regard, Medicaid DSH payments are considered payments that are
required under section 1923 of the Act and are payments made to
hospitals to take into account the situation of hospitals which serve a
disproportionate number of low income patients. Accordingly, DSH
payments are not considered to be medical assistance expenditures for
an eligible individual such as those in the new adult group. Therefore,
the new increased FMAPs would not be available for any DSH payments.
Supplemental payments made by a state under its Medicaid state plan
that are based on the upper payment limit (UPL) are always identifiable
with specific services furnished to individuals not enrolled in managed
care. Accordingly, a state could claim the new increased FMAPs for such
supplemental payments when identified with a service furnished to a
newly eligible individual (or a qualified nonpregnant childless adult
in expansion states). We note that a state may need to work with CMS to
develop such a UPL demonstration.
3. Statistically Valid Sampling Methodology (Sec. 433.210)
As originally proposed in Sec. 433.210, one methodology to assign
FMAP would
[[Page 19931]]
have used a sampling methodology across individuals in the adult group
and related Medicaid expenditures to make a statistically valid
extrapolation of who is newly eligible and their related expenditures.
Comment: Numerous commenters criticized the sampling methodology as
unworkable. Among the objections provided by states, advocates, and
other Medicaid stakeholders is the concern that sampling would create a
scenario under which a state would operate a shadow eligibility system,
requiring actual eligibility determinations under 2009 rules and would
thus be counter to HHS' principle of avoiding two separate eligibility
systems.
Other commenters noted that the sampling methodology would be
administratively burdensome to develop and would place additional
burdens on enrollees, including requests for information not required
for eligibility. Other commenters noted that the proposed regulation
appropriately required verification of the sampling results, but it is
not clear how results can be verified without states retaining December
1, 2009 standards. Commenters also noted that if enrollees refused to
undergo a full eligibility determination for purposes of FMAP, states
would face additional administrative burdens in creating the
statistically valid sample. Furthermore, other commenters noted that,
at least for states that had not previously expanded Medicaid using
section 1115 demonstrations, the statistically valid sampling
methodology would not be applicable during the initial years of the
Medicaid expansion (2014 through 2019) because states would not have
applicable data for sampling purposes. Another commenter noted that the
level of accuracy of the sampling method would depend on whether or not
``newly eligibles'' are more or less expensive than other adults.
One commenter noted that the sampling methodology would require a
highly complex system to create a readily reviewable audit trail
between the individual claim transaction and corresponding disposition
on the CMS-64. Another commenter also noted that use of data sources
like the Medical Expenditure Panel Survey (MEPS) or Medicaid
Statistical Information Statistics (MSIS) will take some time to
establish as reliable data elements.
Response: CMS agrees with commenters' concerns about administrative
feasibility and accuracy, and therefore, we are not finalizing the
proposed sampling methodology.
Comment: Commenters note that because the sampling results would
apply retroactively, this methodology creates the potential for
sizeable retroactively adjusted federal payments, which would make it
difficult for states to budget. One commenter expressed concern about
such retroactive adjustments to correct federal funds and noted that
the proposed rule did not include any language that would hold states
harmless from retroactive adjustments. The state also noted that the
proposed rule could be revised to design an approach to create an
incentive for states to correct the federal claiming if to their
advantage to claim additional federal funds. Other commenters noted the
statistically valid sampling methodology would hinder state budget
planning and that it is not feasible to retroactively adjust the FMAP
rates and adjust prior period CMS-64 claims.
Response: We understand the commenters' concerns about retroactive
adjustments and this concern contributed to our decision not to
finalize the sampling methodology.
Comment: One commenter supports the use of statistical sampling to
ensure that the expanded Medicaid population is accounted for in the
sampling methodology. Absent this basic statistical tool, the commenter
is concerned that states may underestimate the significant numbers of
Latinos who are expected to participate in the Affordable Care Act's
various insurance affordability programs.
Response: We share the commenter's interest in promoting and
accurately tracking participation in the Medicaid program. The purpose
of the proposed methodologies is to properly designate the FMAP, and we
believe that the threshold methodology does this most efficiently.
Comment: One commenter endorsed the sampling methodology as the
best option available at this time, despite concerns about the burden
for applicants/beneficiaries and the financial risk to states due to
potentially inaccurate sampling. Nonetheless, the commenter concluded
that the sampling method could be the least burdensome to states.
Response: We agree with the commenter's concerns and reach a
different conclusion after weighing the considerations. Therefore, we
are finalizing the threshold methodology instead of the sampling
methodology.
4. CMS-Established FMAP Proportion Methodology (Sec. 433.212)
As originally proposed in Sec. 433.212, the proportion methodology
would have used an extrapolation from available data sources to
determine the proportion of individuals covered under the new adult
group who would not have been eligible under the eligibility category
in effect under the state plan or applicable waiver as of December 1,
2009, validating and adjusting the estimate, based on sampling or some
other mechanism going forward.
Comment: Several commenters opposed the use of the proportion
methodology, noting that reliable data sources have limited experience
with newly eligible populations and new rules under the Affordable Care
Act, making it difficult to accurately estimate the proportion of
individuals covered under the new adult group who would have been
eligible under eligibility categories that would have been in effect as
of December 1, 2009. Furthermore, the commenter noted that many newly
eligible individuals will have insurance coverage for the first time
and their actual utilization will be varied. Another commenter noted
concerns about the proportion methodology in light of uncertainty
regarding the fundamental restructuring of the Medicaid program
resulting from the Affordable Care Act. Therefore, the commenter noted
that it would be difficult for any model to accurately predict
allocation of expenses on a state-by-state basis. This uncertainty
would lead to the need for large annual adjustments of state-specific
rates, particularly once the proportion methodology is tested in 2016.
A commenter questioned the reliability of the estimates of proportions
of enrollees who would be newly eligible, especially because this
methodology would not provide an opportunity for retroactive
adjustments.
Response: We agree with the commenters and for these reasons we are
not including the proportion methodology in the final rule.
Comment: Many commenters noted that the proportion methodology
could provide a consistent and administratively simple approach to
determine the newly eligible FMAP, especially if statistical modeling
cannot provide a reliable basis for FMAP determinations. Commenters
specifically encouraged CMS to consider the Congressional Budget
Office, the Urban Institute, and the Agency for Healthcare Research and
Quality as credible sources of information on effective modeling
techniques. Several other commenters supported the proportion
methodology as the most appropriate since it appears to best fit the
requirements of a streamlined process and is least likely to
[[Page 19932]]
place an undue and unnecessary burden on applicants, states, and CMS.
Some commenters further qualified their support for the proportion
methodology by noting some data concerns. They noted that while they
support the use of Medical Expenditure Panel Survey (MEPS), MSIS and
Current Population Survey (CPS) data as the foundation for the
implementation of the proportion method, they had concerns, especially
for smaller states, with MEPS and CPS data. One commenter warned about
survey margins of error and noted that the MEPS does not provide
individual estimates for the 50 states, thus requiring additional
imputation of the survey.
Response: We appreciate the commenters' thoughtful concerns about
methodology and data related to the proportion methodology. Because we
are not adopting the proportion methodology for the reasons stated in
our prior response, we have not pursued these recommendations.
IV. Provisions of the Final Rule
This final rule incorporates certain provisions set forth in the
Medicaid Eligibility proposed rule and reflects revisions made based on
comments received on the proposed rule. The following describes the
provisions of this final rule:
A. Availability of FMAP Rates for the Adult Group (Sec. 433.10(c)).
1. Newly Eligible FMAP (Sec. 433.10(c)(6))
The provisions of Sec. 433.10(c)(6) describe the availability and
amounts of the increased FMAP for newly eligible adults, as defined in
Sec. 433.204(a)(i), who are enrolled in the new adult group described
in Sec. 435.119 of this chapter. In response to comments and questions
from the public about whether states that meet the definition of
expansion states (which this rule redesignates from Sec.
433.10(c)(8)(iii) in the proposed rule and codifies at Sec.
433.204(b)) may receive the newly eligible FMAP, we revised Sec.
433.10(c)(6)(i) to clarify that the increased FMAP for newly eligible
individuals can be applied in states that meet the definition of
expansion state. As discussed in the proposed rule (76 FR 51147, 51173
(August 17, 2011)), if a population covered by a state that qualifies
as an expansion state meets the criteria for the newly eligible
matching rate, the state will receive the newly eligible matching rate
for expenditures for that population. The expansion state match is
designed to help states that expanded coverage to adults prior to
enactment of the Affordable Care Act to the extent that a particular
expansion population does not qualify as newly eligible.
2. Temporary FMAP Increase (Sec. 433.10(c)(7)).
In accordance with section 1905(z)(1)(A) of the Act, Sec.
433.10(c)(7) describes the availability of a temporary 2.2 percentage
point increase in the regular FMAP for a state that meets three
conditions specified in the regulation:
The state meets the definition of expansion state in Sec.
433.204(b);
The state does not qualify for any payments for the
medical assistance expenditures of newly eligible individuals under the
newly eligible FMAP in Sec. 433.10(c)(6); and
The state has not been approved to divert a portion of its
disproportionate share hospital allotment under a demonstration in
effect on July 1, 2009.
Although in this final rule we are not making any substantive
revisions to Sec. 433.10(c)(7) as was contained in the proposed rule,
the following provides clarification regarding this provision. If a
state meets the three indicated conditions, then the regular FMAP in
Sec. 433.10(b) is increased as follows:
Medical assistance expenditures for individuals who are
not eligible under the new adult group. The regular FMAP in Sec.
433.10(b), which is available for the medical assistance expenditures
of individuals eligible under any eligibility group other than the new
adult group, would be increased by 2.2 percentage points.
Medical assistance expenditures of individuals who are
eligible under the new adult group, but who do not meet the definition
of newly eligible individual in Sec. 433.204(a)(1). For these
individuals:
++ Increase in Expansion State FMAP. The regular FMAP component of
the expansion state FMAP formula is increased by 2.2 percentage points
for the medical assistance expenditures of individuals in the new adult
group who are not newly eligible and for whom the expansion state FMAP
is available.
++ Increase in Regular FMAP. The 2.2 percentage point increase in
the regular FMAP would also be available for the medical assistance
expenditures of individuals in the new adult group who are not newly
eligible and for whom the expansion state FMAP is not available, for
example pregnant women or parents.
Expansion State FMAP (Sec. 433.10(c)(8)). Section
433.10(c)(8) in general refers to the availability of the expansion
state FMAP for certain individuals who are not newly eligible. This
FMAP is only available for expenditures in states that meet the
definition of an expansion state in Sec. 433.204(b)(1).
In response to comments and for purposes of clarification, proposed
Sec. 433.10(c)(8)(iv) was deleted as redundant. As discussed above,
Sec. 433.10(c)(6)(i) as revised clarifies that the newly eligible FMAP
is available for newly eligible individuals in an expansion state.
However, Sec. 433.10(c)(8)(iv), as contained in the proposed rule,
also referred to the availability of the newly eligible FMAP for
certain individuals in an expansion state. We believe the reference in
the revised Sec. 433.10(c)(6)(i) makes clear that the newly eligible
FMAP is available for newly eligible individuals in expansion states.
B. Scope of Regulation (Sec. 433.202).
Section 433.202, which sets out the scope of the FMAP provisions
for the new adult eligibility category in Sec. 435.119, is revised to
indicate explicitly in regulation the increased or regular FMAP rates
that are potentially available, as applicable, for the medical
assistance expenditures associated with individuals in the new adult
eligibility group: the regular FMAP, the increased newly eligible FMAP,
or the increased expansion state FMAP, as indicated in Sec. 433.10(b)
and (c).
C. Definitions (Sec. 433.204).
1. Newly Eligible Individual (Sec. 433.204(a)(1)).
Section 433.204 is revised to include the definition of newly
eligible individual in the renumbered Sec. 433.204(a)(1), which now
indicates that the determination of an individual as newly eligible is
in accordance with the requirements of Sec. 433.206, the revised and
renumbered threshold methodology.
The definition of newly eligible individual in Sec.
433.204(a)(1) is clarified to follow the statutory definition in
section 1905(y)(2)(A) of the Act and, in particular, to refer to
individuals who would not have been eligible for full benefits,
benchmark coverage, or benchmark equivalent coverage as of December 1,
2009. Section 433.204(a)(1) as revised refers to the regulations in
Sec. 440.330 and Sec. 440.335, referring to benchmark and benchmark
equivalent coverage, respectively. These changes were necessary to more
accurately reflect the statutory language of the Affordable Care Act,
which was not included in the proposed rule. Individuals enrolled in
Sec. 435.119 who could have previously received full
[[Page 19933]]
Medicaid state plan benefits (either under an optional coverage
category under the Medicaid state plan or a waiver of the plan),
benchmark benefits, or benchmark equivalent benefits will not satisfy
the definition of newly eligible in Sec. 433.204(a)(1) and their
medical assistance expenditures will not be matched at the newly
eligible FMAP provided in Sec. 433.10(c)(6)(i). Medical assistance
expenditures for other populations in these states, however, may be
matched at either of the increased FMAP rates described in Sec.
433.10(c)(7) or (8).
As described in Sec. 433.204(a)(3), states with section 1115
demonstrations that provided benefits to adult populations that are
more limited than standard state plan benefits will need to analyze the
benefit package that was offered so that CMS can determine the
appropriate FMAP to apply to specific populations who were enrolled in
Medicaid as of December 1, 2009. As CMS explained in FAQ guidance
issued in February 2013 at http://www.medicaid.gov/State-Resource-Center/Frequently-Asked-Questions/Downloads/ACA-FAQ-BHP.pdf and in
letters to states following this guidance, CMS will work with each
state to ensure that the correct FMAP is applied to medical assistance
expenditures for individuals enrolled under Sec. 435.119. We are
requesting that states that expanded eligibility through section 1115
demonstrations provide CMS with an analysis of the eligibility levels
and scope of benefits available under demonstrations as of December 1,
2009 to enable CMS to confirm the applicable FMAP. CMS has provided
states with guidance about the manner in which benefits should be
analyzed to substantiate claims for the increased newly eligible FMAP;
states are expected to utilize a consistent methodology and provide CMS
with sufficient data to substantiate the states' analyses. In addition,
states' benchmark equivalence analyses must be certified by a qualified
actuary and must include information on the data, assumptions, and
methodology used to calculate actuarial values. CMS will use the
benefit analysis provided by states to determine the appropriate FMAP.
States that do not qualify for the newly eligible FMAP but appear to
meet the criteria to be an expansion state should provide CMS with
information about coverage in effect as of the date of enactment of the
Affordable Care Act, if they wish to claim the expansion state FMAP for
qualified populations.
The definition of newly eligible at Sec. 433.204(a)(1)
has also been clarified to include the provision in statute that
describes as newly eligible those individuals in the new adult group
who, as of December 1, 2009, would have been eligible but not enrolled
(or could have been on a waiting list) for benefits or coverage through
a waiver under the plan that has a capped or limited enrollment that is
full.
2. Full Benefits (Sec. 433.204(a)(2)).
Section 433.204 is revised to add a new Sec. 433.204(a)(2) to
include the statutory definition of ``full benefits'' from section
1905(y)(2)(B) of the Act, which describes ``full benefits'' to mean
those benefits required to be provided to mandatory adult populations
under the state plan, or such benefits that are not less in amount,
duration, or scope than the benefits offered to the mandatory
populations, or benefits that are determined by the Secretary to be
substantially equivalent to the medical assistance available for the
mandatory populations. Adult populations covered by a state under a
section 1115 demonstration under which any associated waivers of state
plan requirements did not provide for any reduction of the benefits
relative to those offered to the mandatory populations under the state
plan are presumed to have received full benefits under the
demonstration; that is, full benefits are presumed unless approved
terms and conditions of the demonstration explicitly provided for a
lesser benefit package.
3. Expansion State (Sec. 433.204(b)).
A new Sec. 433.204(b)(1) is added to include the definition of
``expansion state,'' moving the definition from the proposed Sec.
433.10(c)(8)(iii). We also clarified in a new Sec. 433.204(b)(2), for
purposes of applying the expansion state FMAP in Sec. 433.10(c)(8)
that a ``nonpregnant childless adult'' is an individual who is not
eligible based on pregnancy and who does not meet the definition of a
caretaker relative in Sec. 435.4.
D. Choice of Methodology (Sec. 433.206 in proposed rule)
In the proposed rule Sec. 433.206 referred to the ``Choice of
Methodology.'' This regulatory provision is deleted in this final rule
and the remaining sections are renumbered accordingly.
E. Threshold Methodology (Sec. 433.206, was Sec. 433.208 in proposed
rule)
Previously numbered as Sec. 433.208 ``Threshold Methodology'' in
the proposed rule, this final rule redesignates this section of the
regulation as Sec. 433.206. Under the threshold methodology, for
individuals enrolled under Sec. 435.119, the applicability of the
newly eligible FMAP is determined, in part, by comparing individuals'
MAGI-based income to converted MAGI-based income eligibility levels for
each appropriate eligibility group as in effect on December 1, 2009
(this conversion process was described in a State Health Official
letter 12-003, dated December 28, 2012).
The following highlights, by section, revisions to provisions of
the proposed rule and, as appropriate, provides further description of
revised provisions. The following provisions are being issued as final
with an opportunity for comment: Sec. 433.206(c)(4), Sec. 433.206(d),
Sec. 433.206(e), Sec. 433.206(f), and Sec. 433.206(g).
1. Overview (Sec. 433.206(a)).
This paragraph specifies that the threshold methodology must be
used by states to document claims for the newly eligible FMAP specified
in Sec. 433.10(b) and (c). The threshold methodology encompasses an
individualized analysis of whether individuals determined eligible
under Sec. 435.119 are newly or not newly eligible individuals for
purposes of determining the appropriate federal share of medical
assistance expenditures. We note that for certain aspects of the
threshold methodology, such as the treatment of resources and
enrollment caps, states have options in applying the methodology, which
may be based on either population or total medical assistance
expenditures. Such options are addressed in the related regulation
sections.
In general, this rule clarifies that the threshold methodology is
designed to assign the applicable FMAP to the medical assistance
expenditures only for individuals determined eligible under Sec.
435.119. The methodology begins with a simplified method for
determining the individuals who are and are not newly eligible based on
MAGI-based income (as already determined for purposes of establishing
eligibility under Sec. 435.119) and disability status, and then offers
states options for how they will adjust the results to take into
account other factors that may be relevant to assess the appropriate
FMAP; in particular, resources, and enrollment caps and limits to the
extent that a cap or limit was in effect in a state for an applicable
eligibility group in December 2009. These factors will not be accounted
for in MAGI-converted income standards but have bearing on determining
whether claims for individuals enrolled under Sec. 435.119 can be
matched at the
[[Page 19934]]
newly eligible FMAP. Therefore, although the threshold methodology is
individual based, to ensure a simplified procedure, we are finalizing a
rule to include some population-based adjustments, or proxies, to
account for certain eligibility factors that may have been in place in
a state in December 2009. As noted, the final rule includes options for
how states might calculate or apply these adjustments and proxies.
2. General Principles (Sec. 433.206(b)).
This section of the threshold methodology regulation indicates
general principles underlying the establishment and application of the
threshold methodology. In accordance with these principles, the
threshold methodology: must not affect the timing of any individual's
eligibility determination; must not be biased; must provide for a valid
and accurate accounting of medical assistance expenditures and claims
for federal funding for Medicaid claims; and operate efficiently,
without further review, once an individual has been determined not to
be newly eligible based on the December 1, 2009 standards for any
eligibility category.
3. Components for Threshold Methodology (Sec. 433.206(c)).
To clarify the threshold methodology, the final Sec. 433.206(c)
now indicates the basic components of the methodology. This section
references the use of individuals' MAGI-based income determinations as
established under the 2014 eligibility requirements; the threshold
methodology does not require determining individuals' income under the
income rules in effect as of December 1, 2009:
The threshold methodology applies for individuals
determined eligible and enrolled under Sec. 435.119; the regulation
clarifies that the threshold methodology is not applicable for
individuals who have been determined eligible and enrolled under any
other mandatory or optional Medicaid eligibility category.
Under the threshold methodology, the individuals' MAGI-
based income (as determined under the rules in effect as of January 1,
2014) is compared to converted MAGI-based income eligibility levels for
each appropriate eligibility group as in effect on December 1, 2009.
Appropriate eligibility groups include, for example, parent/caretaker
relative groups, section 1115 demonstration expansion populations, and
optional disabled groups. CMS is currently working with states to
convert those standards. If an individual in the new adult group would
only have qualified for a December 1, 2009 eligibility group which did
not offer full benefits, benchmark coverage, or benchmark equivalent
coverage, they will be considered newly eligible for FMAP determination
purposes regardless of income;
Finally, states must ensure that for purposes of the
availability and applicability of the applicable FMAPs for individuals,
the determination of such individuals' status as newly or not newly
eligible continues until a new determination of MAGI-based income has
been made, in accordance with Sec. 435.916, or until the individual
has been otherwise determined not to be covered under the adult group
set forth at Sec. 435.119 of this chapter. Section 433.206(c)(4)
describes, for example, the treatment of individuals for whom a
determination of disability alters the applicable FMAP.
Under this process, an individual enrolled in the new adult group
with income at or below the converted MAGI-based income eligibility
standard for a relevant December 1, 2009 eligibility group related to
that individual's characteristics and who would have been eligible to
receive full benefits, benchmark benefits, or benchmark-equivalent
benefits as of December 1, 2009 would be considered as not newly
eligible and the FMAP applicable to such individuals would apply; this
would be the regular FMAP or the expansion FMAP for applicable
individuals, in expansion states. An individual in the new adult group
whose income is greater than the converted income eligibility standard
for December 1, 2009 for the relevant eligibility group related to that
individual's characteristics would be considered as newly eligible and
the newly eligible FMAP applicable to such individuals may apply.
Disability Status. A new Sec. 433.206(c)(4) is included in the
components of the threshold methodology section of the regulation to
clarify the role an individual's disability status plays in determining
the availability of increased FMAP for the expenditures of the new
adult eligibility group under the definition of newly eligible. This
final rule with comment period clarifies that to the extent disability
status is applicable to the determination of newly eligible, an
individual will not be considered to be disabled during the period of a
pending disability determination, and would be considered disabled for
purposes of determining FMAP availability only effective with the
actual determination of disability.
The disability status of an individual may be relevant with respect
to establishing whether the individual would have been eligible under
an eligibility category that was in effect on December 1, 2009 for
which disability is a criteria. In that case, if the individual could
be determined eligible based on disability and the financial criteria
applicable for such December 1, 2009 eligibility category, the
individual would not be considered to be newly eligible for purposes of
applying the appropriate FMAP for the expenditures associated with such
individual. For this reason, to establish the applicable FMAP, it is
necessary to establish whether the individual met the appropriate
definition of disability applicable for a state.
For purposes of establishing disability status with respect to
determining whether an individual meets the definition of newly
eligible, in the proposed rule we indicated we were considering using
either a disability proxy methodology or using actual disability
determinations under the threshold methodology. In recognition of the
disability determination process currently used by states and the
Social Security Administration, we have concluded that for purposes of
applying the appropriate FMAP under the threshold methodology, only an
actual disability determination can be used to establish whether an
individual should be considered to be disabled as relates to meeting
the definition of newly eligible. That is, absent an actual
determination of disability made in accordance with the disability
definition applicable for the state under Title XIX of the Act, an
individual enrolled in the new adult group should be considered not
disabled for any FMAP determination purpose, regardless of any
indication of disability provided by the individual. Therefore, in
general, with respect to any eligibility categories in effect on
December 1, 2009 for which a disability determination was required,
individuals eligible for the new adult group who do not have an actual
determination of disability would be considered newly eligible.
Individuals who are disabled have an incentive to seek a disability
determination to receive financial support based on disability;
therefore, an actual disability determination under the established
disability determination process may be initiated by and for such
individuals. In circumstances in which a disability determination
process is initiated, the individual will be considered not to be
disabled for FMAP determination purposes while the disability
determination is pending.
[[Page 19935]]
This means that the newly eligible FMAP will apply until the date on
which the individual is actually determined to be disabled. On the date
of the disability determination, the individual may shift, if eligible,
to an eligibility category other than the new adult group, in which
case the determination of newly or not newly eligible would no longer
be relevant; or, if still enrolled in the new adult eligibility group,
the individual might then be considered as not newly eligible
(depending on the individual's income level), and, if no longer newly
eligible, the state must adjust FMAP claiming from the date the
disability determination is made. The determination relative to newly
eligible status will depend on both the disability status and the
individual's income: if the individual's income exceeds the converted
MAGI threshold for any December 1, 2009 category of coverage related to
disability status, expenditures for the individual would continue to be
matched at the newly eligible FMAP.
In determining which expenditures can be claimed under the newly
eligible matching rate relative to expenses for an individual who
eventually is determined disabled, the application of the FMAP
methodology is not intended to revise existing claiming rules. In
particular, the FMAP applicable for provider claims paid by a state is
generally determined based on when the state made the payment to the
service provider; the application of the appropriate FMAP is not
generally based on the date the service is provided. Therefore, the
FMAP applicable for payments made by a state subsequent to the date of
the disability determination would reflect any change in the
individual's status as newly eligible and/or the individual's actual
eligibility status; for example, if receiving a disability
determination results in the individual becoming eligible under an
eligibility category other than the new adult group, any FMAPs
associated with the new adult group would not be applicable to claims
paid after the change in status.
We developed this approach to support our general principle of
providing states with certainty and avoiding retroactive recoupment of
dollars from states. Numerous commenters also reinforced the concept
that any selected methodology should minimize the need for retroactive
financial adjustments to avoid subjecting states to financial
uncertainty; this approach is consistent with those comments. While
current practice requires states to adjust claiming back to the date of
onset of the disability determination, we think creation of the new
adult group gives us an alternative because individuals have a way to
receive services during the period of the pending disability
determination.
Finally, although we recognize that under normal circumstances the
disability process may take a significant period of time to be
completed, we do not wish to incentivize states to prolong this
process--to the extent they play a role in conjunction with the Social
Security Administration in determining disability--by providing the
increased newly eligible FMAP during the period when the disability
determination is pending. Therefore, to ensure timely determinations of
disability status, we will closely monitor state implementation of the
threshold methodology and develop safeguards, such as performance
standards related to timeliness of disability determinations and work
with states to ensure that such performance standards are satisfied. We
will work with the Social Security Administration to continue to
consider ways to expedite such determinations.
4. Application of Resource Criteria (Sec. 433.206(d)).
In this final rule, a new Sec. 433.206(d) is added to indicate how
resource criteria may be applied for purposes of determining the
availability of an increased FMAP for the expenditures of newly
eligible individuals (as described in Sec. 433.204(a)(1)).
For the new adult group under Sec. 435.119, which is effective
beginning January 1, 2014, there is no resource test (sometimes called
an ``asset test'') applied in determining individuals' eligibility.
However, some individuals in the new adult group might have had income
below the applicable income standards in effect in December 2009 but
would not have been eligible due to resources. Under the threshold
methodology, for FMAP purposes a state can account for the effect of
resource standards in effect in December 2009.
To promote simplification and flexibility, in this final rule CMS
is providing states the option of not applying a resource proxy. A
number of states have indicated that resources did not keep many
individuals from qualifying for Medicaid, and imposing a resource proxy
for purposes of determining the applicable FMAP might be
administratively burdensome and yet not yield a very different result
than if no resource proxy were used. Therefore, Sec. 433.206(d)(1)
allows states to choose whether to apply a resource proxy methodology
under the threshold methodology. For a state that elects not to impose
a resource proxy methodology, the increased FMAP under Sec.
433.10(c)(6)(i) would not apply to the medical assistance expenditures
of individuals determined eligible under the adult group whose incomes
are at or below the applicable income levels for the eligibility
categories in effect on December 1, 2009.
For states that elect to apply a resource proxy methodology, as
described in greater detail below, this rule also provides for two
options for states to address the application of resource criteria
which were applied to applicable eligibility groups under a state's
Medicaid program as in effect on December 1, 2009:
A state could elect to collect and use existing state data
prior to January 1, 2014 related to denials of eligibility explicitly
due to excess resources; or
A state could elect to obtain similar data through
sampling of beneficiaries in eligibility categories relevant to the
adult group (for periods prior to January 1, 2014), or eligible and
enrolled in the new adult group (for periods on or after January 1,
2014).
A state may elect to apply a resource proxy methodology under the
threshold methodology with respect to a particular eligibility category
that had a resource test in effect on December 1, 2009, or the state
could apply the resource proxy methodology to all relevant eligibility
categories that had a resource test in effect on December 1, 2009.
Consistent with previously issued regulations, the development of a
resource proxy methodology must not delay or interfere with the
eligibility determination for an individual nor rely on information
from applicants or beneficiaries if such information is available
electronically. Particularly for states that undertake a resource proxy
sample on or after January 1, 2014, when new MAGI methodologies are in
effect and resources are no longer a criteria for eligibility
determinations, states may not require individuals to provide
information that is not necessary for the determination of eligibility,
such as resource information for purposes of determining FMAP. However,
states are not precluded from asking for such information, if it is not
available electronically through an accessible data base or through
electronic means, for example, after an applicant has completed an
application. Such requests may not be part of the formal application
process, and states must provide applicants or beneficiaries with clear
notice that the information solicited is not required for purposes of
[[Page 19936]]
eligibility determination and will not affect such determination.
Section 433.206(d)(2) describes the standards for the resource
proxy methodology. In particular, the resource proxy methodology must
be based on state-level data, which would be used to identify the
percentage of denials of Medicaid eligibility over a period of time due
to excess resources. The state data must either be existing data from
and for periods before January 1, 2014 related to denials of
eligibility explicitly due to excess resources, or data obtained
through a statistically valid sample of beneficiaries in eligibility
categories relevant to the new adult group (for periods prior to
January 1, 2014) or eligible and enrolled in the new adult group (for
periods on or after January 1, 2014).
Whether the state data is based on actual resource criteria
determinations prior to January 1, 2014 or based on statistically valid
post-eligibility sampling (whether prior to or on or after January 1,
2014), the data that will be used for the resource criteria proxy must
represent sampling results for a period of sufficient length to be
statistically valid. States who use data based on actual resource
criteria determinations prior to January 1, 2014 must ensure the data
validly reflects eligibility denials explicitly due to excess
resources. Eligibility denials that were not explicitly related to
excess resources, such as denials based on failure to return paperwork
or other administrative issues, shall not be included as they would
inappropriately inflate the number of people for whom the resource
requirement was a bar to eligibility.
States that have not changed their resource eligibility criteria
since December 1, 2009, that have valid state data, as described above,
available from and for a statistically valid period prior to January 1,
2014 or that can collect such state data before January 1, 2014 (when
resource tests will no longer be permissible), may rely on that data
for the resource proxy. Alternatively, for states that do not have such
data or cannot collect it before January 1, 2014, this rule permits
states to develop a resource proxy based on data derived through a
post-eligibility review of the resource information for a one-time
sample of beneficiaries. Such sample would be with respect to
applicable resources as assessed against standards for eligibility
groups in effect on December 1, 2009, collected through a statistically
valid sample obtained during the one year period that begins on the
first day of the quarter in which eligibility for individuals under the
new adult group is initially effective for the state (for example, by
December 31, 2014, for states that adopt the new adult group effective
January 1, 2014), and ends on the last day of the one year period. For
example, denial data for a determined statistically valid period
January to March 2014 could be used for claims beginning with January
1, 2014, subject to CMS approval of an amendment to the state plan
submitted during the first calendar quarter of 2014, retroactive to the
beginning of such quarter in which the SPA was submitted.
Because we believe that it is important to have consistent
processes, we would provide for a one-time opportunity to elect to
implement a resource proxy methodology. States may elect to implement a
resource proxy methodology through submission of a state plan amendment
no later than one year from the first day of the quarter in which
eligibility for individuals under the new adult group under Sec.
435.119 is initially effective for the state. For example, for states
choosing to adopt the new adult group effective January 1, 2014, this
would be by December 31, 2014. State claims for federal funding in
accordance with the resource proxy could be allowable no earlier than
the beginning of the quarter in which the state plan was submitted,
subject to CMS approval. The state plan amendment would describe the
data upon which the resource proxy is based. CMS will review such
amendments to ensure all requirements both methodological and related
to data are met.
Under the resource proxy, states would apply the proportion of
denials with respect to the expenditures of individuals in the new
adult group who would otherwise be considered not to be newly eligible
based only on their income being at or below the applicable converted
MAGI standard; this would allow such expenditures to be claimed at the
increased newly eligible FMAP. To illustrate this approach, if based on
the state data there was a 5 percent denial rate due to excess
resources for an applicable eligibility group or groups in effect on
December 1, 2009 for which resource criteria was applicable, then 5
percent of the new adult eligibility group expenditures related to such
applicable group or groups, which would otherwise have been claimed at
the FMAP for individuals who were not newly eligible, would be claimed
at the newly eligible FMAP rate. That is, the amounts of such
expenditures would be considered to be newly eligible expenditures. CMS
will work with the states to ensure that the resource proxy methodology
is appropriately determined and applied.
5. Enrollment Cap Adjustment (Sec. 433.206(e)).
Under section 1905(y)(2)(A) of the Act, the definition of a newly
eligible individual includes individuals who would be eligible for full
benefits, benchmark coverage, or benchmark equivalent coverage provided
through a demonstration under the authority of section 1115 of the Act
(1115 demonstration) as in effect on December 1, 2009 but would not
have been enrolled (or would have been placed on a waiting list) based
on the application of an enrollment cap or limit determined in
accordance with such demonstration. As discussed above, the definition
of newly eligible individual in Sec. 433.204(a)(1) is clarified in
this final rule to include a reference to this enrollment cap
provision. For purposes of applying an enrollment cap, limit, or
waiting list provision under the threshold methodology, individuals who
would have been on a waiting list are considered as not enrolled under
the demonstration. Proposed Sec. 433.208(a)(2) of the August 17, 2011
proposed rule required the threshold methodology to incorporate any
enrollment caps under section 1115 demonstrations programs that were in
place in the state on December 1, 2009. In this final rule, Sec.
433.206(e) is added to more fully describe the treatment of enrollment
caps under the threshold methodology.
Section 433.206(e) indicates the underlying principles for applying
an enrollment cap provision under the threshold methodology and
describes how these principles are used for calculating the amount of
federal funding to be claimed by states that had an enrollment cap or
limit in effect on December 1, 2009, subject to the definition of newly
eligible individual in Sec. 433.204(a)(1). The main objective of the
enrollment cap provision, added here to reflect the previously
described revision to the definition of ``newly eligible'' contained in
Sec. 433.204(a)(1), is to establish the appropriate amount of federal
funding available for the medical assistance expenditures that would be
claimed at the FMAP applicable for individuals enrolled in the new
adult group who are newly eligible individuals due to enrollment caps,
and the amount of such expenditures that would be claimed at the FMAP
applicable for individuals who are not newly eligible. Recognizing that
enrollment limits or caps were designed differently in different
section 1115 demonstrations, Sec. 433.206(e) includes flexibility for
states to reflect enrollment
[[Page 19937]]
caps in a manner consistent with the demonstration terms and conditions
and with the policies in place in the state as of December 1, 2009.
In accordance with the goal of administrative simplicity, and as
described below, for purposes of determining the applicable FMAP and
appropriate level of federal funding for the medical assistance
expenditures of the new adult group, under the threshold methodology
the treatment of enrollment caps is based on the following three
elements associated with the eligibility categories of individuals for
which an enrollment cap/limit provision was applicable on December 1,
2009:
Beginning in quarters ending after January 1, 2014, the
total unduplicated number of individuals eligible and enrolled under
the adult eligibility group for the applicable claiming period, that
is, the period for which expenditures are being made.
Beginning in quarters ending after January 1, 2014, the
total state medical assistance expenditures for the new adult group for
the applicable claiming period.
The enrollment cap or limit in effect on December 1, 2009.
For purposes of the third element above, this final rule indicates
that the enrollment cap/limit would be the level of such enrollment
cap/limit as authorized under the approved demonstration in effect on
December 1, 2009; or, if the state had affirmatively set the cap at a
lower level consistent with flexibility provided by the demonstration
terms and conditions, the state may elect to apply the lower cap as in
effect in the state on December 1, 2009. To the extent that states
imposed enrollment limits in accordance with the approved terms and
conditions, this regulation seeks to assure that the newly eligible
FMAP will be available to states for enrollment above such defined
limits, as verified by CMS. Whether the state uses the enrollment cap
specifically authorized in the demonstration or a lower, verifiable cap
as in effect in the state that was consistent with the demonstration
special terms and conditions, under the methodology described here, the
amount of expenditures multiplied by the proportion of the 2009
enrollment cap to the total number of currently enrolled people in the
group would be claimed at the regular FMAP (or, if applicable, at the
expansion state FMAP); and the amount of expenditures multiplied by 100
percent minus the proportion (expressed as a percentage) would be
claimed at the newly eligible FMAP.
In Sec. 433.206(e)(2), under the threshold methodology, states may
simplify application of enrollment caps/limits by electing to combine
such enrollment caps as were in effect on December 1, 2009, unless such
treatment would preclude claiming of federal funding at the applicable
FMAP rates required under Sec. 433.10(b) or (c). Combining enrollment
caps would be precluded in certain circumstances when separate
treatment of enrollment caps is necessary to distinguish claims for
which different FMAP rates apply. For example, in an expansion state
the applicable FMAP for childless adults who are not newly eligible is
the expansion state FMAP, and the applicable FMAP for parents who are
not newly eligible is the regular FMAP. This difference in the FMAP
rates for individual who are not newly eligible in an expansion state
necessitates separately capturing the number of parents and childless
adults to whom the expansion state FMAP would apply. In all cases, all
states can elect to apply the enrollment caps separately, even when
combining such caps/limits is not precluded.
Whether the treatment is to combine or separate the applicable
enrollment caps, for states that had enrollment caps in effect on
December 1, 2009, using the three elements listed above, federal
funding will be determined based on the proportion of the enrollment
cap to the total number of individuals in the applicable demonstration
coverage group who are eligible under the adult eligibility group. In
particular, the total expenditures multiplied by the proportion would
be claimed at the FMAP for individuals who are not newly eligible
individuals; and the total expenditures multiplied by the difference
between 100 percent and the proportion would be claimed at the
increased newly eligible FMAP.
Example 1
------------------------------------------------------------------------
-------------------------------------------------------------------------
On December 1, 2009 the State had in effect a demonstration applicable
only for childless adults for individuals with incomes up to 133
percent of FPL; the approved enrollment cap (C) for such childless
adults in effect on December 1, 2009 under the demonstration was 1,000.
The State is not an expansion state. The regular FMAP (F) for the State
is 60.00 percent.
------------------------------------------------------------------------
For the quarter ending after January 1, 2014, there are $10 million in
total expenditures for the new adult group consisting of 4,000
childless adults with incomes up to 133 percent of FPL. Since the state
is not an expansion State, the 60.00 percent regular FMAP would be
applied for the amount of the total expenditures of individuals who are
not newly eligible. The enrollment cap (C) for this group as applicable
on December 1, 2009 is 1,000. Since all of the individuals have income
up to 133 percent of FPL, they would otherwise be considered as not
newly eligible. However, in accordance with the FMAP methodology for
enrollment caps, the following describes how these expenditures would
be claimed:
P = C/T = 1,000/4,000 = 25%
E = $10 million total expenditures
F = 60.00%
(100% -P) = 75%
------------------------------------------------------------------------
Not Newly Eligible Claims for Childless Adults (at 60.00% regular FMAP):
= P x E x F = 25% x $10 million x 60.00% = $1.5 million.
Newly Eligible Claims for Childless Adults (at 100% newly eligible
FMAP):
= (100% -P) x E x Newly Eligible FMAP
= 75% x $10 million x 100.00% = $7.5 million
------------------------------------------------------------------------
SUMMARY: The total federal dollars for the new adult group comprised of
childless adults in this example is $9.0 million, calculated as $1.5
million (not newly eligible) + $7.5 million (newly eligible).
------------------------------------------------------------------------
Section 433.206(e)(4)specifies that each state for which the
enrollment cap/limit provision applies will be required to indicate the
treatment of such provisions in the state plan amendment submission
required by new Sec. 433.206(h), described below.
[[Page 19938]]
6. Application of Spend-down Income Eligibility Criteria (Sec.
433.206(f)).
States' Medicaid programs as in effect on December 1, 2009 may have
included eligibility categories for which deduction of incurred medical
expenses from income (referred to as spend-down) under the provisions
of sections 1902(a)(10)(C) and/or 1902(f) of the Act was applied in
determining individuals' Medicaid eligibility. Under the provisions of
section 1902(a)(10(C) of the Act, and in regulations at part 435,
subparts D and I, states had and continue to have the option of
establishing a ``medically needy'' program under which the income of an
individual above the spend-down income eligibility standard (referred
to as the medically needy income level) could become eligible for
Medicaid by applying incurred medical expenses to reduce the excess
income to the medically needy income level. States could choose the
categories of individuals who would be covered by the medically needy
program. Under the authority of section 1902(f) of the Act, and in
regulations at Sec. 435.121, a similar eligibility spend-down process
is also applied under which certain states (referred to as ``209(b)
states''), in determining the Medicaid eligibility of aged, blind and
disabled individuals, may apply certain more restrictive requirements
than are applied under the Supplemental Security Income program to
provide mandatory categorically needy coverage to such individuals. In
certain circumstances, 209(b) states must use a spend-down process to
determine eligibility of such affected individuals whose income is in
excess of the applicable 209(b) mandatory categorically needy income
level. 209(b) states may also elect to have a medically needy program
in addition to covering the mandatory categorically needy aged, blind,
and disabled individuals.
In general, the medically needy spend-down process and the 209(b)
state spend-down process are the same with respect to the application
of incurred medical expenses to reduce the excess income of individuals
to the respective income eligibility levels. In that regard, as
indicated in the August 17, 2011 proposed rule, for purposes of the
determination of the applicable FMAP for individuals in the new adult
group, individuals whose income is greater than the applicable
respective medically needy or 209(b) spend-down levels as in effect on
December 1, 2009 would be considered to be newly eligible individuals.
Essentially, a state will only consider the income level of individuals
in the new adult group, and not their potential spend-down amounts, in
determining if they are newly eligible or not. However, based on
comments received on the proposed rule on this issue, there continues
to be confusion about the application of the spend-down provision in
determining the appropriate FMAP for the adult group. Accordingly, to
clarify the application of the spend-down provision under the threshold
methodology, a new Sec. 433.206(f) is being added in this final rule.
Section 433.206(f)(1) generally describes the spend-down process as
applied in determining eligibility. Section 433.206(f)(2) and (3)
describe the determination under the threshold methodology of an
individual as not newly eligible or newly eligible, respectively, under
the definition indicated in Sec. 433.204 and the availability of the
appropriate FMAP under Sec. 433.10(b) or (c) for the medical
assistance expenditures of such individual for which a spend-down
eligibility category of a state effective on December 1, 2009 is
applicable. As indicated in Sec. 433.206(f)(2), if an individual's
income before any deductions for incurred medical expenses are made is
less than or equal to the applicable spend-down income level in the
state, whether a medically needy or 209(b) spend-down level, the
individual would be considered as not newly eligible and the medical
assistance expenditures related to such individual would be claimed at
the FMAP applicable to not newly eligible individuals in the state. As
indicated in Sec. 433.206(f)(3), if an individual's income before any
deductions for incurred medical expenses is greater than the applicable
spend-down income level in the state, whether a medically needy or
209(b) spend-down level, the individual would be considered as newly
eligible, and the medical assistance expenditures related to such
individual would be claimed at the newly eligible FMAP.
7. Special Circumstances (Sec. 433.206(g)).
As states implement the threshold methodology, we recognize and
anticipate that special circumstances may necessitate the potential
need to consider additional adjustments to provide a basis for states
to properly claim federal funding for the expenditures of individuals
enrolled in the new adult group at the appropriate FMAP. The final rule
provides a basis at new Sec. 433.206(g) for addressing such
circumstances and to assure efficient transitions to the new
eligibility and FMAP provisions. Subject to CMS approval, this
provision will apply such as in the case of the operation of a waiver
authorized under section 1902(e)(14)(A) of the Act or, to the extent
that a section 1115 demonstration in effect as of December 1, 2009
applied non-financial eligibility criteria for demonstration
eligibility that are otherwise not accounted for in the general rule.
To the extent that such criteria are difficult to verify or unknowable
in 2014 and beyond, this approach is intended to provide a basis for
states to claim federal funding for the expenditures of individuals
enrolled in the adult group at the appropriate FMAP. CMS will work with
states to develop an appropriate proxy methodology, process, and the
appropriate documentation for submission to and approval by CMS.
8. Threshold Methodology State Plan Requirements (Sec. 433.206(h)).
The proposed rule generally indicated that states would submit a
threshold methodology plan to CMS for approval. In this final rule,
states are directed to submit a threshold methodology state plan
amendment to their Medicaid state plan for approval by CMS. The
threshold methodology plan, which will be included as an attachment to
the state plan, would indicate that the state will implement such
methodology in accordance with the provisions of this section and
include details about the methodology. The threshold methodology
attachment to the state plan will include any options or alternatives
the state elects with respect to:
Treatment of resources, in accordance with (Sec.
433.206(d));
Treatment of enrollment caps or waiting lists, in
accordance with (Sec. 433.206(e));
Any applicable special circumstances, as approved by CMS
((Sec. 433.206(g)); and
Treatment of other aspects of the threshold methodology as
approved by the CMS.
The process for submission and the format of the threshold
methodology plan will be provided through guidance issued by CMS.
F. Statistically Valid Sampling Methodology (Sec. 433.210))
In the proposed rule, Sec. 433.210 referred to the statistically
valid sampling methodology. This regulatory provision is deleted in
this final rule.
G. CMS Established FMAP Proportion (Sec. 433.212)
In the proposed rule, Sec. 433.212 referred to the CMS established
FMAP proportion. This regulatory provision is deleted in this final
rule.
[[Page 19939]]
V. Collection of Information Requirements
In the Medicaid Eligibility proposed rule (RIN 0938-AQ62, 76 FR
51148), we solicited public comments for 60 days on the rule's
information collection requirements but none were received. As
described in this final rule, we are clarifying and finalizing the
provisions of the threshold methodology for states to use in the
claiming of federal funding at the appropriate FMAP rates for
expenditures related to the new adult eligibility group. In that
regard, and as previously explained, states will need to submit state
plan amendments to reflect their implementation of the threshold
methodology. States will also need to submit expenditure and other
information in their submissions of their quarterly Medicaid
expenditure reports. Any information collection requirements for states
related to the state plan amendment or expenditure report submission
will be described separately.
This final rule implements provisions of the Affordable Care Act
that relate to the availability of increased FMAP rates under states'
Medicaid programs. This final rule codifies the increased FMAP rates
and the related conditions and requirements that will be applicable
beginning January 1, 2014, for the expenditures of certain individuals
determined eligible under the new adult eligibility group. In
particular, with respect to the new adult eligibility group, increased
FMAP rates will be available for state Medicaid expenditures associated
with medical assistance for two groups of adults: certain individuals
who are ``newly eligible'' and certain individuals who are in defined
``expansion states'' and are not ``newly eligible.'' This final rule
selected one of the three methodologies described in the proposed rule
and finalizes it as the methodology that states will use to determine
the appropriate FMAP in claiming federal funding for the expenditures
related to individuals determined eligible in the new adult group. In
general, the threshold methodology offers a simplified approach that
compares individuals' MAGI-based income, as already established through
the basic eligibility process, to the income levels as were in effect
under states' Medicaid programs on December 1, 2009. To further ease
and simplify administration, the threshold methodology also provides
for potential population-based adjustments in the federal claims to
account for resources and enrollment caps that may have applied in the
states' December 1, 2009, Medicaid programs. As specified in Sec.
433.206(h), states must amend their state plans to reflect the
threshold methodology the states will implement.
Although there are short-term burdens associated with
implementation of these provisions, over time the Medicaid program will
be made substantially easier for states to administer by simplifying
the determinations of the applicable FMAP. The policies finalized in
this final rule are intended to reduce or eliminate the burden on
states seeking to determine the appropriate FMAP for claims as well as
on individuals applying for Medicaid. The regulation makes clear that
any additional information potentially requested from individuals for
FMAP purposes cannot delay or otherwise affect the eligibility
determination; nor can any individual be required to provide such
information needed solely for FMAP purposes.
We recognize that there are information collection requirements
related to the implementation of this regulation, particularly with
respect to the state plan amendments required by Sec. 433.206(h). CMS
will seek OMB approval of those amendments at a later time under OCN
0938-1148. In addition, CMS will be making changes to its quarterly
financial reporting form (CMS-64) to facilitate claiming under this
final rule. CMS will seek public comment and OMB approval of those
changes at a later time under OCN 0938-0067.
VI. Regulatory Impact Analysis
A. Introduction
We have examined the impact of this final rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act,
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22,
1995; Pub. L. 104-4), 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 major rules
with economically significant effects ($100 million or more in any 1
year). This final rule does not reach the economic threshold and thus
is not considered a major rule. In accordance with the provisions of
Executive Order 12866, this regulation was reviewed by the Office of
Management and Budget.
This final rule concerns the technical aspects of applying the
appropriate FMAP to the expenditures of individuals in the new adult
group (described at Sec. 435.119) who are either newly eligible or, if
not, meet the criteria for the increased expansion state FMAP. This
final rule simply provides guidelines and a process by which states can
claim the appropriate FMAP in a streamlined manner. The economic
impacts of the Medicaid expansion are entirely attributable to the
Affordable Care Act; the economic impact of this rule concerns the
additional costs of the methodology described in Sec. 433.206, but not
the costs of the expansion or the IT costs of the systems, which are
contained in other implementation rules. As such, the costs of this
rule are not economically significant, particularly when considered
relative to the alternatives CMS considered in developing this rule;
the process described here is less costly and more equitable than the
alternatives described below.
This final rule sets out a simplified methodology and process for
determining the applicable FMAP, which will lessen the burden on states
implementing the provisions described in the Affordable Care Act. In
the absence of the threshold methodology being finalized by this
regulation, states would have to conduct an individualized
determination based on the eligibility rules in effect in 2009, or
would be subject to uncertainty (and potentially ongoing and costly
disputes) in their efforts to claim the increased FMAP. Instead, under
this final rule, the threshold methodology simply requires a basic
comparison of an individual's current income against converted MAGI
income thresholds for applicable categories of eligibility, subject to
a limited number of adjustments that states may elect to increase the
accuracy of the methodology. Therefore, the approach being finalized in
this rule provides relief from the burden that would otherwise accrue
to states seeking to determine the applicable FMAP. Indeed, the key
objective of this final rule, as described in the preamble to the
proposed rule and as reaffirmed
[[Page 19940]]
here, is to alleviate the need to conduct complicated and unnecessary
eligibility determinations simply for the purpose of applying the
appropriate FMAP. The costs of implementing other aspects of the
Affordable Care Act have been accounted for elsewhere and the impacts
described here reflect the incremental costs of applying a process to
claim the increased FMAPs available to individuals enrolled in the new
adult group. We do not find this final rule to be economically
significant because states are already undertaking related activity
pursuant to the March 23, 2012 final eligibility rule and the December
28, 2012 letter to State and Health Officials (SHO 12-003,
available at http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf), regarding the conversion of net income standards to MAGI
equivalent income standards. These converted income standards will
provide the basis for applying the threshold methodology described in
this rule; states will then use standard Medicaid claiming procedures
(using the CMS-64 and MBES systems as modified by CMS) to claim the
applicable FMAP.
B. Statement of Need
This final rule will implement provisions of the Affordable Care
Act related to Medicaid, specifically provisions about the increased
FMAPs and related provisions. It provides states with a simplified,
less burdensome approach by which to identify the appropriate FMAP and
alleviates the need for states to maintain a shadow eligibility system
based on eligibility rules in effect in 2009. Instead, the regulation
sets out a fair and accurate methodology by which to assess whether
individuals seeking coverage in 2014 and beyond could have qualified
for coverage under the state's eligibility standards as of December 1,
2009. Applying this methodology, individuals for whom it is determined
could not have been eligible for specified coverage as of December 1,
2009 will be deemed newly eligible and the higher FMAP will apply.
C. Anticipated Effects
1. Effects on State Medicaid Programs
The final rule sets out standards for claiming the increased FMAPs
created by the Affordable Care Act. Following the process and
methodology outlined in this final rule will provide states that elect
to expand coverage to the new adult group access to the increased
FMAPs, resulting in a significant economic benefit to states. The
threshold methodology approach will require minimal incremental
increases in states' spending relative to the alternatives we
considered in finalizing this rule, as described below.
Although state Medicaid programs will have to invest in
administrative costs to implement the threshold methodology described
in this rule, they will ultimately receive significant federal matching
payments for the costs of new Medicaid beneficiaries. As described
elsewhere in this section, the threshold methodology will minimize the
costs to state Medicaid agencies relative to the costs that they would
otherwise bear in claiming the increased Affordable Care Act FMAPs. For
example, this rule provides a transparent and uniform process for
states to use, eliminating the uncertainty they would experience with
respect to federal funds claiming in the absence of this guidance. Most
significantly, the threshold methodology provides an efficient and
streamlined alternative to avoid indefinitely applying 2009 eligibility
standards to every applicant (in addition to current standards) simply
for the purposes of determining the applicable FMAP. Numerous state and
other commenters wrote to express particular concern about the burden
that any methodology might impose on states and on applicants if
additional information is requested for FMAP purposes.
D. Alternatives Considered
We considered various alternative methodologies to determine the
applicable FMAP in developing the proposed rule and in finalizing the
provisions of this regulation, ultimately revising our approach from
the proposed rule to finalize the threshold methodology. First, with
regard to the increased FMAP rates available for state medical
assistance expenditures relating to ``newly eligible'' individuals, in
developing the proposed rule we considered requiring all states to
complete a second, full eligibility determination on all Medicaid
eligibles using the state's December 2009 eligibility standards to
determine the appropriate FMAP rate based upon whether or not each
individual was newly eligible. We determined that such a requirement
would be overly burdensome to states and to beneficiaries and would
likely lead to errors and unnecessary costs. We do not believe such an
approach would result in an economic and efficient outcome in
administering the program; rather, it would be significantly more
burdensome than the approach we are adopting. In addition, such a
requirement would directly contradict the principles of the Affordable
Care Act to streamline and simplify eligibility and enrollment into
health care programs. We did not propose this approach in the proposed
rule and are not revisiting that decision in this final rule to avoid
imposing unnecessary and unwarranted burdens on states or
beneficiaries.
Second, we considered as an alternative approach the statistically
valid sampling methodology (originally proposed in Sec. 433.210). This
alternative approach would use a sampling methodology across
individuals in the adult group and related Medicaid expenditures to
derive a statistically valid extrapolation of who is newly eligible and
their related expenditures. We received numerous comments about the
potential burdens associated with this methodology and concluded that
it could require states to make actual eligibility determinations under
2009 rules and therefore maintain precisely the type of shadow
eligibility system that the rule seeks to avoid. We also shared
commenters' concerns that this alternative could place additional
burdens on enrollees, including requests for information not required
for eligibility. Such a result would not only be burdensome to
beneficiaries but also inconsistent with standards established in the
March 23, 2012 final rule that prevent states from asking applicants
additional questions, when they apply for Medicaid, that are not
related to the eligibility determination. Furthermore, we concluded
that addressing concerns about burden on applicants could compromise
the accuracy of the statistical sampling methodology.
We also determined that the statistically valid sampling
methodology would not produce accurate results in states that had not
expanded coverage through section 1115 demonstrations prior to 2014
because those states would not have applicable data for sampling
purposes. Finally, we agreed with commenters' concerns that, because
the sampling results would apply retroactively, this methodology would
create the potential for sizeable retroactively adjusted federal
payments, which would make it difficult for states to budget accurately
and would introduce financial uncertainty for states. Given all of
these concerns, we determined that the statistically valid sampling
methodology would be more burdensome, less administratively feasible,
and less accurate than the approach we elected, the threshold
methodology.
A third alternative methodology considered was the CMS-established
[[Page 19941]]
FMAP proportion methodology (originally described in Sec. 433.212).
This alternative approach would have used an extrapolation from
available data sources to determine the proportion of individuals
covered under the new adult group who would not have been eligible
under the eligibility category in effect under the state plan or
applicable waiver as of December 1, 2009, validating and adjusting the
estimate, based on sampling or some other mechanism going forward.
Public comments and our ongoing analysis cast doubt on the accuracy of
this methodology, in part because available data sources have limited
experience with newly eligible populations and new rules under the
Affordable Care Act, making it difficult to accurately estimate the
proportion of individuals covered under the new adult group who would
have been eligible under the eligibility category that would have been
in effect as of December 1, 2009. Some commenters particularly noted
data accuracy concerns for smaller states. Finally, other commenters
pointed out that the proportion methodology could require large annual
adjustments of state-specific rates, introducing uncertainty and
potentially fiscal burden to states. Although some commenters supported
this alternative methodology, we concluded that equity, accuracy, and
administrative simplicity mitigated against its selection and that the
threshold methodology would be a less burdensome alternative.
Finally, numerous commenters provided comments with respect to the
provision (included in the proposed rule at Sec. 433.206) regarding
the choice of FMAP methodologies. Some commenters urged us to select
one methodology for nationwide use while other commenters urged
flexibility. In response to the various comments, particularly those
noting concerns with the accuracy, equity, burden, and lack of
certainty related to the statistically valid sampling methodology and
the proportion methodology, we are finalizing one methodology, the
threshold methodology. Our view is that the threshold methodology
(originally proposed in Sec. 433.208 and being finalized in Sec.
433.206), particularly as modified in this final rule, is the least
burdensome, most transparent, and most accurate approach relative to
the other alternatives. We have worked and continue to work extensively
with states to develop the converted MAGI income thresholds that will
be the basis of this methodology. As noted above, we published a letter
to State and Health Officials on December 28, 2012 (SHO 12-
003, available at: http://www.medicaid.gov/Federal-Policy-Guidance/downloads/SHO12003.pdf) to provide guidance about the conversion of net
income standards to MAGI equivalent income standards. The threshold
methodology builds on this work and, relative to the other alternatives
that we considered, will be less burdensome to implement.
In finalizing the threshold methodology, we accounted for various
comments about specific elements of the threshold methodology,
including how the methodology should account for past denials based on
resources and how the methodology should treat individuals eligible for
Medicaid based on disability status and/or spend-down rules. We revised
this final rule to provide states with various options to account for
these adjustments to the threshold methodology to enable accurate FMAP
claiming. With respect to resources, for example, states may--but are
not required to--undertake additional data analysis to develop a
resource proxy to help determine additional expenditures eligible for
the increased newly eligible FMAP. Rather than require all states
adopting the new adult group to develop and apply a resource proxy,
only states wishing to claim additional FMAP for populations that might
not appear to be newly eligible in the absence of the consideration of
resources will pursue the additional (but time-limited and minimal)
administrative costs of doing so. We believe this approach strikes an
appropriate balance that avoids increasing the burden on all states.
E. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2013, that
threshold is approximately $141 million. However, it is important to
understand that the UMRA does not address the total cost of a rule.
Rather, it focuses on certain categories of cost, mainly costs
resulting from (A) imposing enforceable duties on state, local, or
Tribal governments, or on the private sector, or (B) increasing the
stringency of conditions in, or decreasing the funding of, state,
local, or Tribal governments under entitlement programs.
Because of the favorable Affordable Care Act increased FMAPs and
the availability of 90 percent federal match for systems improvements
to facilitate upgrades to accommodate the Affordable Care Act
eligibility changes, we believe that states can take actions that will
have limited effects on state costs. The extensive consultation with
states we describe below was aimed at the requirements of both UMRA and
Executive Order 13132 on Federalism.
1. State and Local Governments
As noted previously, the Affordable Care Act creates a new
mandatory eligibility group to cover adults with incomes below 133
percent of the FPL. The recent Supreme Court decision gives states the
option not to cover this eligibility group but, for states that elect
to provide such coverage, Title XIX now provides substantial new
federal support to nearly offset the costs of covering that population.
States will have to undertake some work to properly apply the threshold
methodology, including developing procedures to properly identify and
claim the appropriate FMAP for newly eligible and/or certain non-newly
eligible populations in expansion states, but this work builds on
existing work they are already undertaking as part of the conversion of
income standards to MAGI-based standards. Furthermore, claiming
expenditures will be done in accordance with current claiming
requirements.
The Affordable Care Act changes the Medicaid and CHIP programs to
improve coordination between programs and reduce the administrative
burden on states by simplifying and streamlining systems. Following
publication of the August 17, 2011 proposed eligibility rule, we
received input from states about the FMAP provisions in that rule. In
addition to analyzing the feasibility of each of the proposed
alternatives, we solicited input from a group of states working
intensively to prepare to implement the new Medicaid adult group,
including the transition to MAGI, and analyzed the data from these
states.
We have received input from states on how the various Affordable
Care Act provisions codified in this final rule will affect them. We
have participated in a number of conference calls and in person
meetings with state officials since the law was enacted. These
discussions have enabled the states to share their thinking and
questions about how the Medicaid changes in the legislation would be
implemented. The conference calls and meetings also furnished
opportunities for State Medicaid Directors to comment informally on
implementation issues and plans (although to be considered comments on
the Medicaid Eligibility proposed rule, written comments using
[[Page 19942]]
the process described in the Medicaid Eligibility proposed rule were
required). Based on the input we received, we believe that the
threshold methodology best addresses state concerns about burden and
simplification for those states that elect to adopt the new adult
coverage group.
2. Private Sector and Tribal Governments
We do not believe this final rule will impose any unfunded mandates
on the private sector. As we explain in more detail in the Regulatory
Flexibility Act analysis, the provisions of the Affordable Care Act
implemented by this final rule deal with FMAP rates for individuals in
the new adult group, and as such are directed toward state governments
rather than toward the private sector. Since the final rule will impose
no mandates on the private sector, we conclude that the cost of any
possible unfunded mandates would not meet the threshold amounts
discussed previously that would otherwise require an unfunded mandate
analysis for the private sector. We also conclude that an unfunded
mandate analysis is not needed for Tribal governments since the final
rules will not impose mandates on Tribal governments.
F. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze options for regulatory relief
of small entities if a final rule will have a significant economic
impact on a substantial number of small entities. We are not preparing
an RFA because the Secretary has determined that this final rule would
not have a significant economic impact on a substantial number of small
entities. Few of the entities that meet the definition of a small
entity as that term is used in the RFA (for example, small businesses,
nonprofit organization, and small governmental jurisdictions with a
population of less than 50,000) will be impacted directly by this final
rule. Individuals and states are not included in the definition of a
small entity. There are some states in which counties or cities share
in the costs of Medicaid. To the extent that states require counties to
share in these costs, some small jurisdictions could be affected by the
requirements of this final rule, especially beginning in 2017 when the
newly eligible FMAP is no longer 100 percent. However, nothing in this
rule will constrain states from making changes to alleviate any adverse
effects on small jurisdictions.
Because this final rule is focused on the appropriate FMAP to
reimburse the expenditures of individuals enrolled in Medicaid, it does
not contain provisions that would have a significant direct impact on
hospitals, and other health care providers that are designated as small
entities under the RFA. However, the provisions in this final rule,
like the provisions in the final March 23, 2012 eligibility rule, may
have a substantial, positive indirect effect on hospitals and other
health care providers due to the substantial increase in the prevalence
of health coverage among, and Medicaid reimbursement for, populations
who are currently unable to pay for needed health care, leading to
lower rates of uncompensated care at hospitals.
Section 1102(b) of the Act requires us to prepare a regulatory
impact analysis if a final rule may have a significant economic impact
on the operations of a substantial number of small rural hospitals.
This analysis must conform to the provisions of section 604. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because the Secretary has
determined that this final rule will not have a direct economic impact
on the operations of a substantial number of small rural hospitals. As
indicated in the preceding discussion, there may be indirect positive
effects from reductions in uncompensated care.
G. Conclusion
In conclusion, we are not preparing analysis for either the RFA or
section 1102(b) of the Act, because we have determined that this final
rule will not have a direct significant economic impact on states,
small entities, or small rural hospitals. Relative to the alternatives
considered, we determined the threshold methodology to be less
burdensome to states and beneficiaries, more equitable, and more
transparent than other approaches considered. The threshold methodology
provides a uniform, streamlined process for states that adopt to extend
Medicaid to the new adult group to claim the higher FMAPs provided by
the Affordable Care Act. Finalizing this methodology thereby eliminates
the comparatively more burdensome approaches of either uncertainty
about federal claiming standards or requiring states to indefinitely
determine new applicants' eligibility using new standards as well as
the eligibility rules in effect in 2009 simply for the purposes of
assigning the FMAP. The incremental costs of implementing the threshold
methodology process are therefore relatively small compared to the
alternatives considered. This analysis, together with the remainder
final rule, provides a final Regulatory Impact Analysis.
VIII. Federalism
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a final rule that imposes
substantial direct effects on states, preempts state law, or otherwise
has Federalism implications. We have reviewed this rule under the
threshold criteria of Executive Order 13132, Federalism, and have
determined it will not have substantial direct effects on the rights,
rules, and responsibilities of states, local or tribal governments.
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 amend 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).
0
2. Section 433.10 is amended by--
0
A. In paragraph (a), removing the phrase ``and 1905(b),'' and adding in
its place the phrase ``1905(b), 1905(y), and 1905(z)''.
0
B. Adding new paragraphs (c)(6), (c)(7), and (c)(8).
The additions read as follows:
Sec. 433.10 Rates of FFP for program services.
* * * * *
(c) * * *
(6)(i) Newly eligible FMAP. Beginning January 1, 2014, under
section 1905(y) of the Act, the FMAP for a State that is one of the 50
States or the District of Columbia, including a State that meets the
definition of expansion State in Sec. 433.204(b), for amounts expended
by such State for medical assistance for newly eligible individuals, as
defined in Sec. 433.204(a)(1), will be an increased FMAP equal to:
(A) 100 percent, for calendar quarters in calendar years (CYs) 2014
through 2016;
(B) 95 percent, for calendar quarters in CY 2017;
(C) 94 percent, for calendar quarters in CY 2018;
[[Page 19943]]
(D) 93 percent, for calendar quarters in CY 2019;
(E) 90 percent, for calendar quarters in CY 2020 and all subsequent
calendar years.
(ii) The FMAP specified in paragraph (c)(6)(i) of this section will
apply to amounts expended by a State for medical assistance for newly
eligible individuals in accordance with the requirements of the
methodology applied by the State under Sec. 433.206.
(7)(i) Temporary FMAP increase. During the period January 1, 2014,
through December 31, 2015, under section 1905(z)(1) of the Act for a
State described in paragraph (c)(7)(ii) of this section, the FMAP
determined under paragraph (b) of this section will be increased by 2.2
percentage points.
(ii) A State qualifies for the targeted increase in the FMAP under
paragraph (c)(7)(i) of this section, if the State:
(A) Is an expansion State, as described in Sec. 433.204(b) of this
section;
(B) Does not qualify for any payments on the basis of the increased
FMAP under paragraph (c)(6) of this section, as determined by the
Secretary; and
(C) Has not been approved by the Secretary to divert a portion of
the disproportionate share hospital allotment for the State under
section 1923(f) of the Act to the costs of providing medical assistance
or other health benefits coverage under a demonstration that is in
effect on July 1, 2009.
(iii) The increased FMAP under paragraph (c)(7)(i) of this section
is available for amounts expended by the State for medical assistance
for individuals that are not newly eligible as defined in Sec.
433.204(a)(1).
(8) Expansion State FMAP. Beginning January 1, 2014, under section
1905(z)(2) of the Act, the FMAP for an expansion State defined in Sec.
433.204(b), for amounts expended by such State for medical assistance
for individuals described in Sec. 435.119 of this chapter who are not
newly eligible as defined in Sec. 433.204(a)(1), and who are
nonpregnant childless adults with respect to whom the State may require
enrollment in benchmark coverage under section 1937 of the Act, will be
determined in accordance with the expansion State FMAP formula in
paragraph (c)(8)(i).
(i) Expansion State FMAP.
[GRAPHIC] [TIFF OMITTED] TR02AP13.029
(ii) Transition percentage. For purposes of paragraph (c)(8)(i) of
this section, the transition percentage is equal to:
(A) 50 percent, for calendar quarters in CY 2014;
(B) 60 percent, for calendar quarters in CY 2015;
(C) 70 percent, for calendar quarters in CY 2016;
(D) 80 percent, for calendar quarters in CY 2017;
(E) 90 percent, for calendar quarters in CY 2018; and
(F) 100 percent, for calendar quarters in CY 2019 and all
subsequent calendar years.
0
3. Subpart E is added to part 433 to read as follows:
Subpart E--Methodologies for Determining Federal Share of Medicaid
Expenditures for Adult Eligibility Group
Sec.
433.202 Scope.
433.204 Definitions.
433.206 Threshold methodology.
Subpart E--Methodologies for Determining Federal Share of Medicaid
Expenditures for Adult Eligibility Group
Sec. 433.202 Scope.
This subpart sets forth the requirements and procedures that are
applicable to support State claims for the increased FMAP specified at
Sec. 433.10(c)(6) for the medical assistance expenditures for
individuals determined eligible as specified in Sec. 435.119 of this
chapter who meet the definition of newly eligible individual specified
in Sec. 433.204(a)(1). These procedures will also identify individuals
determined eligible as specified in Sec. 435.119 of this chapter for
whom the State may claim the regular FMAP rate specified at Sec.
433.10(b) or the increased FMAP rate specified at Sec. 433.10(c)(7) or
(8), as applicable.
Sec. 433.204 Definitions.
(a)(1) Newly eligible individual means an individual determined
eligible for Medicaid in accordance with the requirements of the adult
group described in Sec. 435.119 of this chapter, and who, as
determined by the State in accordance with the requirements of Sec.
433.206, would not have been eligible for Medicaid under the State's
eligibility standards and methodologies for the Medicaid State plan,
waiver or demonstration programs in effect in the State as of December
1, 2009, for full benefits or for benchmark coverage described in Sec.
440.330(a), (b), or (c) of this chapter or benchmark equivalent
coverage described in Sec. 440.335 of this chapter that has an
aggregate actuarial value that is at least actuarially equivalent to
benchmark coverage described in Sec. 440.330(a), (b), or (c) of this
chapter, or would have been eligible but not enrolled (or placed on a
waiting list) for such benefits or coverage through a waiver under the
plan that had a capped or limited enrollment that was full.
(2) Full benefits means, for purposes of paragraph (a)(1) of this
section, with respect to an adult individual, medical assistance for
all services covered under the State plan under Title XIX of the Act
that is not less in amount, duration, or scope, or is determined by the
Secretary to be substantially equivalent, to the medical assistance
available for an individual described in section 1902(a)(10)(A)(i) of
the Act.
[[Page 19944]]
(3) For purposes of establishing under paragraphs (a)(1) and (2) of
this section whether an individual would not have been eligible for
full benefits, benchmark coverage, or benchmark equivalent coverage
under a waiver or demonstration program in effect on December 1, 2009,
the State must provide CMS with its analysis, in accordance with
guidance issued by CMS, about whether the benefits available under such
waiver or demonstration constituted full benefits, benchmark coverage,
or benchmark equivalent coverage. CMS will review such analysis and
confirm the applicable FMAP. Individuals for whom such benefits or
coverage would have been available under such waiver or demonstration
are not newly eligible individuals.
(b)(1) Expansion State means a State that, as of March 23, 2010,
offered health benefits coverage statewide to parents and nonpregnant,
childless adults whose income is at least 100 percent of the Federal
Poverty Level. A State that offers health benefits coverage to only
parents or only nonpregnant childless adults described in the preceding
sentence will not be considered to be an expansion State. Such health
benefits coverage must:
(i) Have included inpatient hospital services;
(ii) Not have been dependent on access to employer coverage,
employer contribution, or employment; and
(iii) Not have been limited to premium assistance, hospital-only
benefits, a high deductible health plan, or benefits under a
demonstration program authorized under section 1938 of the Act.
(2) For purposes of paragraph (b)(1) of this section and for Sec.
433.10(c)(8), a nonpregnant childless adult means an individual who is
not eligible based on pregnancy and does not meet the definition of a
caretaker relative in Sec. 435.4 of this chapter.
Sec. 433.206 Threshold methodology.
(a) Overview. Effective January 1, 2014, States must apply the
threshold methodology described in this paragraph for purposes of
determining the appropriate claiming for the Federal share of
expenditures at the applicable FMAP rates described in Sec. 433.10(b)
and (c) for medical assistance provided with respect to individuals who
have been determined eligible for the Medicaid program under Sec.
435.119 of this chapter. Subject to the provisions of this paragraph,
States must apply the CMS-approved State specific threshold methodology
to determine and distinguish such individuals as newly or not newly
eligible individuals in accordance with the definition in Sec.
433.204(a)(1), and in accordance with States' Medicaid eligibility
criteria as in effect on December 1, 2009 and to attribute their
associated medical expenditures with the appropriate FMAP. The
threshold methodology must not be applied by States for the purpose of
determining the applicable FMAP for individuals under any other
eligibility category other than Sec. 435.119 of this chapter.
(b) General principles. The threshold methodology should:
(1) Not impact the timing or approval of an individual's
eligibility for Medicaid.
(2) Not be biased in such a manner as to inappropriately establish
the numbers of, or medical assistance expenditures for, individuals
determined to be newly or not newly eligible.
(3) Provide a valid and accurate accounting of individuals who
would have been eligible in accordance with the December 1, 2009
eligibility standards and applicable eligibility categories for the
benefits described in Sec. 433.204(a)(1), and subject to paragraphs
(d), (e), and (g) of this section, by incorporating simplified
assessments of resources, enrollment cap requirements in place at that
time, and other special circumstances as approved by CMS, respectively.
(4) Operate efficiently, without further review once an individual
has been determined not to be newly eligible based on the December 1,
2009 standards for any eligibility category.
(c) Components of the threshold methodology. Subject to the
submission of a threshold methodology State plan amendment as specified
in paragraph (h) of this section, the provisions of the threshold
methodology consist of two components, the individual income-based
determination and population-based non-income adjustments to reflect
resource criteria, enrollment caps in effect on December 1, 2009, and
other factors in accordance with paragraph (g) of this section.
(1) Scope. The threshold methodology shall apply with respect to
the population, and the associated expenditures for such population,
which has been determined eligible for Medicaid under section
1902(a)(10)(A)(i)(VIII) of the Act and in accordance with Sec. 435.119
of this chapter. This population and associated expenditures must not
include individuals who have been determined eligible for Medicaid
under any other mandatory or optional eligibility category.
(2) Benefit criteria for newly eligible. An individual eligible for
and enrolled under Sec. 435.119 of this chapter is considered newly
eligible if, with respect to the applicable eligibility category in
effect on December 1, 2009, the benefits did not meet the criteria
described in the newly eligible definition at Sec. 433.204(a)(1).
(3) Individual income-based determination. The individual income-
based determination shall be a comparison of the individual's MAGI-
based income to the income standard in effect on December 1, 2009, as
converted to an equivalent MAGI-based income standard for each
applicable eligibility category as in effect on that date, as follows.
(i) The amount of an individual's income under the threshold
methodology is the MAGI-based income determined in accordance with
Sec. 435.603 of this chapter.
(ii) For each individual, the equivalent MAGI-based income
eligibility standard is the applicable income eligibility standard for
the applicable category of eligibility as in effect on December 1, 2009
that is converted to an equivalent MAGI-based income standard. For
example, as applicable, a separate MAGI-based income standard will be
applied for individuals determined to be disabled who would have been
eligible under an optional eligibility category in effect on December
1, 2009 that was based on disability. For these purposes, the
applicable equivalent MAGI-based standard is the standard as submitted
by the State and approved by CMS in accordance with CMS guidance.
(iii) With respect to income eligibility criteria, if the
individual's MAGI-based income is at or below the applicable converted
MAGI-based income standard for the relevant eligibility category or
group, then the individual is included in the population that is not
newly eligible;
(iv) With respect to income eligibility criteria, if the
individual's MAGI-based income is greater than the applicable converted
MAGI-based income standard for the relevant eligibility category or
group, then the individual is included in the population that is newly
eligible;
(v) Treatment of spend-down programs. Treatment of medically needy
or spend-down programs under the threshold methodology is described in
paragraph (f) of this section.
(vi) For purposes of comparing the individual's MAGI-based income
to the applicable converted MAGI-based income standard in effect on
December 1, 2009, an individual will not be considered disabled absent
an actual
[[Page 19945]]
disability determination for the individual that is in accordance with
the disability definition applicable for the State under Title XIX of
the Act.
(4) Treatment of disability. For purposes of applying the
appropriate FMAP under Sec. 433.10(b) or (c) for the medical
assistance expenditures of an individual in applying the definition of
newly eligible under Sec. 433.204(a)(1), for eligibility categories or
groups as in effect on December 1, 2009 for which disability was an
eligibility criteria:
(i) During the period of a disability determination. During the
period for which a disability determination is pending, including
during the period of any appeal process, and absent an actual
disability determination for the individual that is in accordance with
the disability definition applicable for the State under Title XIX of
the Act, the individual is not considered to be disabled.
(ii) Following a disability determination. With respect to an
individual for which a disability determination was pending, following
the actual determination of disability, the individual will be
considered disabled effective with the date of the disability
determination, or, if later, the disability onset date, as determined.
(5) Population-based adjustments to the populations of newly
eligible and not newly eligible.
(i) The State may elect a resource criteria proxy adjustment
described in paragraph (d) of this section.
(ii) States that had a waiver or demonstration program with an
enrollment cap in effect as of December 1, 2009 must apply an
adjustment based on enrollment caps, subject to the definition of newly
eligible individual in Sec. 433.204(a)(1) and paragraph (e) of this
section.
(iii) States that have special circumstances may need to submit
associated proxy methodologies to CMS for approval by CMS as described
in paragraph (g) of this section.
(6) Application of FMAP rates to adult group expenditures. Subject
to population adjustments under paragraphs (d), (e), or (g) of this
section, federal funding for a State's expenditures for medical
assistance provided to individuals determined eligible under Sec.
435.119 of this chapter, including individuals determined eligible
under that eligibility group during the evaluation for another
eligibility category, must be claimed using the applicable FMAP as
follows:
(i) The newly eligible FMAP under Sec. 433.10(c)(6) is applicable
for the medical assistance expenditures for individuals determined to
be newly eligible, as defined in Sec. 433.204(a)(1).
(ii) The applicable FMAP under Sec. 433.10(b) or Sec.
433.10(c)(7) or (8) is applicable for the medical assistance
expenditures for individuals determined not to be newly eligible.
(7) Status as newly or not newly eligible. Under the threshold
methodology States must provide that once individuals are determined
under the threshold methodology to be either newly or not newly
eligible individuals in accordance with the applicable December 1, 2009
eligibility criteria, the State would apply that determination until a
new determination of MAGI-based income has been made in accordance with
Sec. 435.916 of this chapter, or the individual has been otherwise
determined not to be covered under the adult group set forth at Sec.
435.119 of this chapter.
(d) Optional resource criteria proxy adjustment. (1) General. Under
an election under this paragraph (d), the State may use a resource
proxy methodology for purposes of adjusting the claims for the
expenditures of the population enrolled under Sec. 435.119 of this
chapter to account for individuals who would not have been eligible for
Medicaid because of the application of resource criteria as in effect
for such population as of December 1, 2009, and therefore would meet
the newly eligible individual definition at Sec. 433.204(a)(1). Under
this paragraph (d), a State may elect to apply a resource proxy
methodology with respect to the resource criteria as in effect on
December 1, 2009 and applied to the expenditures for a specific
eligibility category or categories of individuals as in effect on
December 1, 2009, or applied to the expenditures of the entire
population enrolled under Sec. 435.119 of this chapter. As provided in
paragraph (d)(4) of this section, the State must indicate any resource
proxy election in the threshold methodology State plan amendment
submitted under paragraph (h) of this section. The use of a resource
proxy methodology must not delay or interfere with the eligibility
determination for an individual.
(2) A State's resource proxy methodology must:
(i) Describe each eligibility group or groups for which an
individual eligible under Sec. 435.119 would have been eligible on
December 1, 2009, subject to resource criteria, and a methodology to
apply those resource criteria as an adjustment to the total
expenditures to adjust determinations of the newly eligible population
under paragraph (c) of this section.
(ii) Be auditable.
(iii) Be based on statistically valid data, which is either:
(A) Existing State data from and for periods before January 1, 2014
on the resources of individuals who had applied and received a
determination with respect to Medicaid eligibility, including resource
eligibility under the State's applicable December 1, 2009 eligibility
criteria. The existing State data must be specifically related to
resource eligibility determinations, indicate the number and types of
individuals for whom resource determinations were made, and establish
the denial rates specifically identified as due to excess resources; or
(B) Post-eligibility State data on the resources of individuals
described in paragraph (d)(2)(iii)(B)(1) and (2) of this section, based
on and obtained through a post-eligibility statistically valid sample
of such individuals with respect to the applicable Medicaid eligibility
categories and resource eligibility criteria under the State's
applicable December 1, 2009 eligibility criteria:
(1) State data from and for periods before January 1, 2014 must be
for individuals in eligibility categories relevant to Sec. 435.119 of
this chapter who apply and receive a determination with respect to
Medicaid eligibility, including both approvals and denials, to
establish denial rates specifically due to excess resources and
identify numbers and types of individuals.
(2) State data from and for periods on or after January 1, 2014
must only be for individuals determined eligible and enrolled under
Sec. 435.119 of this chapter, must compare individuals' resources to
the applicable December 1, 2009 resource criteria to establish denial
rates specifically due to excess resources, and identify numbers and
types of individuals.
(iv) Describe the State data on individuals' resources used and the
application of such data. Whether such State data is based on data
described in paragraph (d)(2)(iii)(A) or (B) of this section, such
State data must represent sampling results for a period of sufficient
length to be statistically valid.
(v) Provide that the resource proxy methodology will account for
the treatment of resources in a statistically valid manner when there
is a lack of sufficient information to make a resource determination
for a particular individual in a sampled population.
(vi) Describe the application of the resource proxy methodology in
establishing the amount and submission of claims for Federal funding by
the State for the medical assistance expenditures of the applicable
eligibility group(s). Such claims submitted under
[[Page 19946]]
the resource proxy methodology must reflect the appropriate FMAP for
the medical assistance expenditures of the affected eligibility
group(s).
(vii) As appropriate, describe and demonstrate the statistical
validity of the resource proxy methodology and the use of data under
such methodology.
(3) Effective date for application of resource proxy. The resource
proxy shall not be effective prior to the beginning of the quarter in
which such resource proxy is submitted to CMS under the threshold
methodology State plan in paragraph (h) of this section.
(4) One time election for resource proxy. The election,
application, and description of a resource proxy methodology under this
paragraph for individuals determined eligible under Sec. 435.119 must
be included in a one-time submission of a State plan amendment
submitted under paragraph (h) of this section no later than one year
from the first day of the quarter in which eligibility for individuals
under Sec. 435.119 of this chapter is initially effective for the
State.
(e) Enrollment caps adjustment. (1) Scope. Certain States may have
applied enrollment caps, limits, or waiting lists in their Medicaid
programs as in effect on December 1, 2009. Under the definition of
newly eligible individual in Sec. 433.204(a)(1), such States must
consider as newly eligible those individuals eligible under Sec.
435.119 of this chapter who would otherwise be eligible for full
benefits, benchmark coverage, or benchmark equivalent coverage provided
through a demonstration under the State plan effective December 1,
2009, but would not have been enrolled (or would have been on a waiting
list) based on the application of an enrollment cap or limit determined
in accordance with the approved demonstration as in effect on that
date. Such States must only apply such enrollment cap, limit or waiting
list provisions with respect to eligibility category or categories for
which such provisions were applicable (for example, nonpregnant
childless adults or parents/caretaker relatives) and in effect under
the State's Medicaid program on December 1, 2009. For this purpose,
individuals who would have been on a waiting list are considered as not
enrolled under the demonstration.
(2) A State for which multiple enrollment caps or limits were in
effect under its December 1, 2009 Medicaid program may elect to combine
such enrollment caps or limits, unless such treatment would preclude
claiming of Federal funding at the applicable FMAP rate required under
Sec. 433.10(b) or (c) (for example, to distinguish claims for
childless adults and parents in an expansion State) for the medical
assistance expenditures of individuals determined eligible and enrolled
under Sec. 435.119 of this chapter; a State with enrollment cap or
limit provisions that would preclude combining enrollment caps or limit
provisions must use separate caps; or, the State, at its option, may
elect to use separate caps.
(3) For purposes of claiming Federal funding, with respect to each
claiming period for which the State claims Federal funding for an
eligibility category for which an enrollment cap or limit is applicable
and in effect on December 1, 2009, the State must account for:
(i) The total unduplicated number of individuals eligible and
enrolled under Sec. 435.119 of this chapter for the applicable
claiming period.
(ii) The total State medical assistance expenditures for
individuals eligible and enrolled under Sec. 435.119 of this chapter
for the applicable claiming period.
(iii) The enrollment cap or limit in effect on December 1, 2009 for
the eligibility category, determined in accordance with the approved
demonstration as in effect on December 1, 2009.
(A) For States that elect under paragraph (e)(2) of this section to
combine the enrollment caps, the enrollment cap is the sum of the
enrollment caps for each eligibility group which is being combined.
(B) For States that elect to treat the enrollment caps separately
under paragraph (e)(2) of this section, each enrollment cap will be
accounted for separately.
(C) The level of the enrollment cap will be as authorized under the
demonstration in effect on December 1, 2009; or, if the State had
affirmatively set the cap at a lower level consistent with flexibility
provided by the demonstration terms and conditions, the State may elect
to apply the lower cap as in effect in the State on December 1, 2009.
If a State elects to use such an alternate State-specified enrollment
cap, the State will provide CMS with evidence, in its State plan
amendment submitted to CMS under paragraph (h) of this section, that it
had affirmatively implemented such a cap. Whether the State uses the
authorized cap or a lower, verifiable cap as in effect in the State
consistent with the demonstration special terms and conditions, the
amount of expenditures up to the proportion of the 2009 enrollment cap
to the total number of currently enrolled people in the group would not
be claimed at the newly eligible FMAP.
(4) States for which an enrollment cap, limit, or waiting list was
applicable under their Medicaid programs as in effect on December 1,
2009, must describe the treatment of such provision or provisions in
the submission to CMS for approval by CMS in accordance with the State
plan requirements outlined in Sec. 433.206(h).
(f) Application of spend-down income eligibility criteria. (1)
General. Certain States' Medicaid programs as in effect on December 1,
2009 may have included eligibility categories for which deduction of
incurred medical expenses from income (referred to as spend-down) under
the provisions of sections 1902(a)(10)(C) or 1902(f) of the Act was
applied in determining individuals' Medicaid eligibility. Paragraphs
(f)(2) and (3) of this section apply, for purposes of determining
whether an individual enrolled under Sec. 435.119 of this chapter
meets the definition of newly eligible under Sec. 433.204(a)(1), and
for purposes of applying the appropriate FMAP under Sec. 433.10(b) or
(c) for the medical assistance expenditures of the individual for which
a spend-down eligibility category of a State effective on December 1,
2009 is applicable.
(2) Not newly eligible individual. For purposes of a State's spend-
down provision, an individual enrolled under Sec. 435.119 of this
chapter whose income before the deduction of incurred medical expenses
is less than or equal to the applicable December 1, 2009 State spend-
down eligibility income level that would have resulted in full benefits
is considered not newly eligible. The FMAP applicable for the medical
assistance expenditures of such an individual is the appropriate FMAP
under Sec. 433.10(b) and (c) as applicable for an individual who is
not newly eligible.
(3) Newly eligible individual. For purposes of a State's spend-down
provision, an individual enrolled under Sec. 435.119 of this chapter
whose income before the deduction of incurred medical expenses is
greater than the applicable State spend-down eligibility income level
is considered newly eligible. The FMAP applicable for the medical
assistance expenditures of such an individual is the appropriate FMAP
under Sec. 433.10(b) and (c) as applicable for an individual who is
newly eligible.
(g) Special circumstances. States may submit additional proxy
methodologies to CMS for approval by CMS in accordance with the State
plan requirements outlined in Sec. 433.206(h).
(h) Threshold methodology State plan requirements. To claim
expenditures at the increased FMAPs described in
[[Page 19947]]
Sec. 433.210(c)(6) of (c)(8), the State must amend its State plan
under the provisions of subpart B of part 430 to reflect the threshold
methodology the State implements in accordance with the provisions of
this section. The threshold methodology will be included as an
attachment to the State plan and, explicitly and by reference, must:
(1) Specify that the threshold methodology the State implements is
in accordance with this section;
(2) Specify that the threshold methodology the State implements
accounts for the individuals determined eligible under the adult group
in Sec. 435.119 of this chapter as a newly eligible individual or not
newly eligible individual; and, on that basis, the State implements
appropriate tracking for purpose of claiming Federal Medicaid funding
for the associated medical assistance expenditures.
(3) Reference the converted MAGI-based December 1, 2009 income
eligibility standards and the associated eligibility groups, describe
how the State will apply such standards and methodologies, and include
other relevant criteria in the assignment of FMAP.
(4) Indicate any required provisions, or options and alternatives
the State elects, with respect to:
(i) Treatment of resources, in accordance with paragraph (d) of
this section;
(ii) Treatment of enrollment caps or waiting lists, in accordance
with paragraph (e) of this section; and
(iii) Special circumstances as approved by CMS in accordance with
paragraph (g) of this section.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: March 20, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
Approved: March 26, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-07599 Filed 3-29-13; 11:15 am]
BILLING CODE 4120-01-P