[Title 42 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2009 Edition]
[From the U.S. Government Printing Office]
[[Page 1]]
42
Parts 430 to 481
Revised as of October 1, 2009
Public Health
________________________
Containing a codification of documents of general
applicability and future effect
As of October 1, 2009
With Ancillaries
Published by
Office of the Federal Register
National Archives and Records
Administration
A Special Edition of the Federal Register
[[Page ii]]
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As of October 1, 2009
Title 42, Part 430 to End
Revised as of October 1, 2008
Is Replaced by
Title 40, Parts 430 to 481
and
Title 42, Part 482 to End
[[Page v]]
Table of Contents
Page
Explanation................................................. vii
Title 42:
Chapter IV--Centers for Medicare & Medicaid
Services, Department of Health and Human Services
(Continued) 3
Finding Aids:
Table of CFR Titles and Chapters........................ 539
Alphabetical List of Agencies Appearing in the CFR...... 559
Table of OMB Control Numbers............................ 569
List of CFR Sections Affected........................... 571
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 42 CFR 430.0 refers
to title 42, part 430,
section 0.
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[[Page vii]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
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Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
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[[Page viii]]
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[[Page ix]]
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Raymond A. Mosley,
Director,
Office of the Federal Register.
October 1, 2009.
[[Page xi]]
THIS TITLE
Title 42--Public Health is composed of five volumes. The parts in
these volumes are arranged in the following order: Parts 1-399, parts
400-413, parts 414-429, parts 430 to 481, and part 482 to end. The first
volume (parts 1-399) contains current regulations issued under chapter
I--Public Health Service (HHS). The second, third, and fourth volumes
(parts 400-413, parts 414-429, and parts 430 to 481) include regulations
issued under chapter IV--Centers for Medicare & Medicaid Services (HHS)
and the fifth volume (part 482 to end) contains the remaining
regulations in chapter IV and the regulations issued under chapter V by
the Office of Inspector General-Health Care (HHS). The contents of these
volumes represent all current regulations codified under this title of
the CFR as of October 1, 2009.
The OMB control numbers for the Centers for Medicare & Medicaid
Services appear in Sec. 400.310 of chapter IV. For the convenience of
the user, subpart C consisting of Sec. Sec. 400.300-400.310 is
reprinted in the Finding Aids section of the third, fourth and fifth
volumes.
For this volume, Jonn V. Lilyea was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Michael L. White, assisted by Ann Worley.
[[Page 1]]
TITLE 42--PUBLIC HEALTH
(Parts 430 to 481)
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Part
chapter iv--Centers for Medicare & Medicaid Services,
Department of Health and Human Services (Continued)....... 430
[[Page 3]]
CHAPTER IV--CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF
HEALTH AND HUMAN SERVICES (CONTINUED)
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Editorial Note: Nomenclature changes to chapter IV appear at 66 FR
39452, July 31, 2001; 67 FR 36540, May 24, 2002; and 69 FR 18803, Apr.
9, 2004.
SUBCHAPTER C--MEDICAL ASSISTANCE PROGRAMS
Part Page
430 Grants to States for Medical Assistance
Programs................................ 5
431 State organization and general
administration.......................... 19
432 State personnel administration.............. 67
433 State fiscal administration................. 72
434 Contracts................................... 109
435 Eligibility in the States, District of
Columbia, the Northern Mariana Islands,
and American Samoa...................... 111
436 Eligibility in Guam, Puerto Rico, and the
Virgin Islands.......................... 177
438 Managed care................................ 211
440 Services: General provisions................ 250
441 Services: Requirements and limits applicable
to specific services.................... 275
442 Standards for payment to nursing facilities
and intermediate care facilities for the
mentally retarded....................... 319
447 Payments for services....................... 325
455 Program integrity: Medicaid................. 369
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456 Utilization control......................... 380
SUBCHAPTER D--STATE CHILDREN'S HEALTH INSURANCE PROGRAMS (SCHIPS)
457 Allotments and grants to States............. 417
SUBCHAPTER E--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)
460 Programs of all-inclusive care for the
elderly (PACE).......................... 469
SUBCHAPTER F--QUALITY IMPROVEMENT ORGANIZATIONS
475 Quality improvement organizations........... 503
476 Utilization and quality control review...... 506
478 Reconsiderations and appeals................ 518
480 Acquisition, protection, and disclosure of
quality improvement organization
information............................. 524
481
[RESERVED]
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SUBCHAPTER C_MEDICAL ASSISTANCE PROGRAMS
PART 430_GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS--Table of Contents
Subpart A_Introduction; General Provisions
Sec.
430.0 Program description.
430.1 Scope of subchapter C.
430.2 Other applicable Federal regulations.
430.3 Appeals under Medicaid.
430.5 Definitions.
Subpart B_State Plans
430.10 The State plan.
430.12 Submittal of State plans and plan amendments.
430.14 Review of State plan material.
430.15 Basis and authority for action on State plan material.
430.16 Timing and notice of action on State plan material.
430.18 Administrative review of action on State plan material.
430.20 Effective dates of State plans and plan amendments.
430.25 Waivers of State plan requirements.
Subpart C_Grants; Reviews and Audits; Withholding for Failure To Comply;
Deferral and Disallowance of Claims; Reduction of Federal Medicaid
Payments
430.30 Grants procedures.
430.32 Program reviews.
430.33 Audits.
430.35 Withholding of payment for failure to comply with Federal
requirements.
430.38 Judicial review.
430.40 Deferral of claims for FFP.
430.42 Disallowance of claims for FFP.
430.45 Reduction of Federal Medicaid payments.
430.48 Repayment of Federal funds by installments.
Subpart D_Hearings on Conformity of State Medicaid Plans and Practice to
Federal Requirements
430.60 Scope.
430.62 Records to be public.
430.63 Filing and service of papers.
430.64 Suspension of rules.
430.66 Designation of presiding officer for hearing.
430.70 Notice of hearing or opportunity for hearing.
430.72 Time and place of hearing.
430.74 Issues at hearing.
430.76 Parties to the hearing.
430.80 Authority of the presiding officer.
430.83 Rights of parties.
430.86 Discovery.
430.88 Evidence.
430.90 Exclusion from hearing for misconduct.
430.92 Unsponsored written material.
430.94 Official transcript.
430.96 Record for decision.
430.100 Posthearing briefs.
430.102 Decisions following hearing.
430.104 Decisions that affect FFP.
Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302).
Source: 53 FR 36571, Sept. 21, 1988, unless otherwise noted.
Subpart A_Introduction; General Provisions
Sec. 430.0 Program description.
Title XIX of the Social Security Act, enacted in 1965, authorizes
Federal grants to States for medical assistance to low-income persons
who are age 65 or over, blind, disabled, or members of families with
dependent children or qualified pregnant women or children. The program
is jointly financed by the Federal and State governments and
administered by States. Within broad Federal rules, each State decides
eligible groups, types and range of services, payment levels for
services, and administrative and operating procedures. Payments for
services are made directly by the State to the individuals or entities
that furnish the services.
Sec. 430.1 Scope of subchapter C.
The regulations in subchapter C set forth State plan requirements,
standards, procedures, and conditions for obtaining Federal financial
participation (FFP). Each part (or subpart of section) in the subchapter
describes the specific statutory basis for the regulation. However,
where the basis is the Secretary's general authority to issue
regulations for any program under the Act (section 1102 of the Act), or
his general authority to prescribe State plan requirements needed for
proper and efficient administration of the
[[Page 6]]
plan (section 1902(a)(4)), those statutory provisions are simply cited
without further description.
Sec. 430.2 Other applicable Federal regulations.
Other regulations applicable to State Medicaid programs include the
following:
(a) 5 CFR part 900, subpart F, Administration of the Standards for a
Merit System of Personnel Administration.
(b) The following HHS Regulations in 45 CFR subtitle A:
Part 16--Procedures of the Departmental Appeals Board.
Part 74--Administration of Grants.
Part 80--Nondiscrimination Under Programs Receiving Federal Assistance
Through the Department of Health and Human Services: Effectuation of
Title VI of the Civil Rights Act of 1964.
Part 81--Practice and Procedure for Hearings Under 45 CFR part 80.
Part 84--Nondiscrimination on the Basis of Handicap in Programs and
Activities Receiving or Benefiting From Federal Financial Assistance.
Part 95--General Administration--grant programs (public assistance and
medical assistance).
[53 FR 36571, Sept. 21, 1988, as amended at 56 FR 8845, Mar. 1, 1991]
Sec. 430.3 Appeals under Medicaid.
Three distinct types of disputes may arise under Medicaid.
(a) Compliance with Federal requirements. Disputes that pertain to
whether a State's plan or proposed plan amendments, or its practice
under the plan meet or continue to meet Federal requirements are subject
to the hearing provisions of subpart D of this part.
(b) FFP in Medicaid expenditures. Disputes that pertain to
disallowances of FFP in Medicaid expenditures (mandatory grants) are
heard by the Departmental Appeals Board (the Board) in accordance with
procedures set forth in 45 CFR part 16.
(c) Discretionary grants disputes. Disputes pertaining to
discretionary grants, such as grants for special demonstration projects
under sections 1110 and 1115 of the Act, which may be awarded to a
Medicaid agency, are also heard by the Board. 45 CFR part 16, appendix
A, lists all the types of disputes that the Board hears.
[53 FR 36571, Sept. 21, 1988, as amended at 56 FR 8845, Mar. 1, 1991]
Sec. 430.5 Definitions.
As used in this subchapter, unless the context indicates otherwise--
Contractor means any entity that contracts with the State agency,
under the State plan, in return for a payment, to process claims, to
provide or pay for medical services, or to enhance the State agency's
capability for effective administration of the program.
Representative has the meaning given the term by each State
consistent with its laws, regulations, and policies.
[67 FR 41094, June 14, 2002]
Subpart B_State Plans
Sec. 430.10 The State plan.
The State plan is a comprehensive written statement submitted by the
agency describing the nature and scope of its Medicaid program and
giving assurance that it will be administered in conformity with the
specific requirements of title XIX, the regulations in this Chapter IV,
and other applicable official issuances of the Department. The State
plan contains all information necessary for CMS to determine whether the
plan can be approved to serve as a basis for Federal financial
participation (FFP) in the State program.
Sec. 430.12 Submittal of State plans and plan amendments.
(a) Format. A State plan for Medicaid consists of preprinted
material that covers the basic requirements, and individualized content
that reflects the characteristics of the particular State's program.
(b) Governor's review--(1) Basic rules. Except as provided in
paragraph (b)(2) of this section--
(i) The Medicaid agency must submit the State plan and State plan
amendments to the State Governor or his designee for review and comment
before submitting them to the CMS regional office.
(ii) The plan must provide that the Governor will be given a
specific period
[[Page 7]]
of time to review State plan amendments, long-range program planning
projections, and other periodic reports on the Medicaid program,
excluding periodic statistical, budget and fiscal reports.
(iii) Any comments from the Governor must be submitted to CMS with
the plan or plan amendment.
(2) Exceptions. (i) Submission is not required if the Governor's
designee is the head of the Medicaid agency.
(ii) Governor's review is not required for preprinted plan
amendments that are developed by CMS if they provide absolutely no
options for the State.
(c) Plan amendments. (1) The plan must provide that it will be
amended whenever necessary to reflect--
(i) Changes in Federal law, regulations, policy interpretations, or
court decisions; or
(ii) Material changes in State law, organization, or policy, or in
the State's operation of the Medicaid program. For changes related to
advance directive requirements, amendments must be submitted as soon as
possible, but no later than 60 days from the effective date of the
change to State law concerning advance directives.
(2) Prompt submittal of amendments is necessary--
(i) So that CMS can determine whether the plan continues to meet the
requirements for approval; and
(ii) To ensure the availability of FFP in accordance with Sec.
430.20.
[53 FR 36571, Sept. 21, 1988, as amended at 60 FR 33293, June 27, 1995]
Sec. 430.14 Review of State plan material.
CMS regional staff reviews State plans and plan amendments,
discusses any issues with the Medicaid agency, and consults with central
office staff on questions regarding application of Federal policy.
Sec. 430.15 Basis and authority for action on State plan material.
(a) Basis for action. (1) Determinations as to whether State plans
(including plan amendments and administrative practice under the plans)
originally meet or continue to meet the requirements for approval are
based on relevant Federal statutes and regulations.
(2) Guidelines are furnished to assist in the interpretation of the
regulations.
(b) Approval authority. The Regional Administrator exercises
delegated authority to approve the State plan and plan amendments on the
basis of policy statements and precedents previously approved by the
Administrator.
(c) Disapproval authority. (1) The Administrator retains authority
for determining that proposed plan material is not approvable or that
previously approved material no longer meets the requirements for
approval.
(2) The Administrator does not make a final determination of
disapproval without first consulting the Secretary.
Sec. 430.16 Timing and notice of action on State plan material.
(a) Timing. (1) A State plan or plan amendment will be considered
approved unless CMS, within 90 days after receipt of the plan or plan
amendment in the regional office, sends the State--
(i) Written notice of disapproval; or
(ii) Written notice of any additional information it needs in order
to make a final determination.
(2) If CMS requests additional information, the 90-day period for
CMS action on the plan or plan amendment begins on the day it receives
that information.
(b) Notice of final determination. (1) The Regional Administrator or
the Administrator notifies the Medicaid agency of the approval of a
State plan or plan amendment.
(2) Only the Administrator gives notice of disapproval of a State
plan or plan amendment.
Sec. 430.18 Administrative review of action on State plan material.
(a) Request for reconsideration. Any State dissatisfied with the
Administrator's action on plan material under Sec. 430.15 may, within
60 days after receipt of the notice provided under Sec. 430.16(b),
request that the Administrator reconsider the issue of whether the plan
or plan amendment conforms to the requirements for approval.
(b) Notice and timing of hearing. (1) Within 30 days after receipt
of the request, the Administrator notifies the
[[Page 8]]
State of the time and place of the hearing.
(2) The hearing takes place not less than 30 days nor more than 60
days after the date of the notice, unless the State and the
Administrator agree in writing on an earlier or later date.
(c) Hearing procedures. The hearing procedures are set forth in
subpart D of this part.
(d) Decision. A decision affirming, modifying, or reversing the
Administrator's original determination is made in accordance with Sec.
430.102.
(e) Effect of hearing decision. (1) Denial of Federal funds, if
required by the Administrator's original determination, will not be
delayed pending a hearing decision.
(2) However, if the Administrator determines that his or her
original decision was incorrect, CMS pays the State a lump sum equal to
any funds incorrectly denied.
Sec. 430.20 Effective dates of State plans and plan amendments.
For purposes of FFP, the following rules apply:
(a) New plans. The effective date of a new plan--
(1) May not be earlier than the first day of the quarter in which an
approvable plan is submitted to the regional office; and
(2) With respect to expenditures for medical assistance, may not be
earlier than the first day on which the plan is in operation on a
statewide basis.
(b) Plan amendment. (1) For a plan amendment that provides
additional services to individuals eligible under the approved plan,
increases the payment amounts for services already included in the plan,
or makes additional groups eligible for services provided under the
approved plan, the effective date is determined in accordance with
paragraph (a) of this section.
(2) For a plan amendment that changes the State's payment method and
standards, the rules of Sec. 447.256 of this chapter apply.
(3) For other plan amendments, the effective date may be a date
requested by the State if CMS approves it.
[53 FR 36571, Sept. 21, 1988, as amended at 56 FR 8845, Mar. 1, 1991]
Sec. 430.25 Waivers of State plan requirements.
(a) Scope of section. This section describes the purpose and effect
of waivers, identifies the requirements that may be waived and the other
regulations that apply to waivers, and sets forth the procedures that
CMS follows in reviewing and taking action on waiver requests.
(b) Purpose of waivers. Waivers are intended to provide the
flexibility needed to enable States to try new or different approaches
to the efficient and cost-effective delivery of health care services, or
to adapt their programs to the special needs of particular areas or
groups of recipients. Waivers allow exceptions to State plan
requirements and permit a State to implement innovative programs or
activities on a time-limited basis, and subject to specific safeguards
for the protection of recipients and the program. Detailed rules for
waivers are set forth in subpart B of part 431, subpart A of part 440,
and subpart G of part 441 of this chapter.
(c) Effect of waivers. (1) Waivers under section 1915(b) allow a
State to take the following actions:
(i) Implement a primary care case-management system or a specialty
physician system.
(ii) Designate a locality to act as central broker in assisting
Medicaid recipients to choose among competing health care plans.
(iii) Share with recipients (through provision of additional
services) cost-savings made possible through the recipients' use of more
cost-effective medical care.
(iv) Limit recipients' choice of providers (except in emergency
situations and with respect to family planning services) to providers
that fully meet reimbursement, quality, and utilization standards, which
are established under the State plan and are consistent with access,
quality, and efficient and economical furnishing of care.
(2) A waiver under section 1915(c) of the Act allows a State to
include as ``medical assistance'' under its plan home and community
based services furnished to recipients who would otherwise need
inpatient care that is furnished in a hospital, SNF, ICF, or ICF/
[[Page 9]]
MR, and is reimbursable under the State plan.
(3) A waiver under section 1916 (a)(3) or (b)(3) of the Act allows a
State to impose a deduction, cost-sharing or similar charge of up to
twice the ``nominal charge'' established under the plan for outpatient
services, if--
(i) The outpatient services are received in a hospital emergency
room but are not emergency services; and
(ii) The State has shown that Medicaid recipients have actually
available and accessible to them alternative services of nonemergency
outpatient services.
(d) Requirements that are waived. In order to permit the activities
described in paragraph (c) of this section, one or more of the title XIX
requirements must be waived, in whole or in part.
(1) Under section 1915(b) of the Act, and subject to certain
limitations, any of the State plan requirements of section 1902 of the
Act may be waived to achieve one of the purposes specified in that
section.
(2) Under section 1915(c) of the Act, the following requirements may
be waived:
(i) Statewideness--section 1902(a)(1).
(ii) Comparability of services--section 1902(a)(10)(B).
(iii) Income and resource rules--section 1902(a)(10)(C)(i)(III).
(3) Under section 1916 of the Act, paragraphs (a)(3) and (b)(3)
require that any cost-sharing imposed on recipients be nominal in
amount, and provide an exception for nonemergency services furnished in
a hospital emergency room if the conditions of paragraph (c)(3) of this
section are met.
(e) Submittal of waiver request. The State Governor, the head of the
Medicaid agency, or an authorized designee may submit the waiver
request.
(f) Review of waiver requests. (1) This paragraph applies to initial
waiver requests and to requests for renewal or amendment of a previously
approved waiver.
(2) CMS regional and central office staff review waiver requests and
submit a recommendation to the Administrator, who--
(i) Has the authority to approve or deny waiver requests; and
(ii) Does not deny a request without first consulting the Secretary.
(3) A waiver request is considered approved unless, within 90 days
after the request is received by CMS, the Administrator denies the
request, or the Administrator or the Regional Administrator sends the
State a written request for additional information necessary to reach a
final decision. If additional information is requested, a new 90-day
period begins on the day the response to the additional information
request is received by the addressee.
(g) Basis for approval--(1) Waivers under section 1915 (b) and (c).
The Administrator approves waiver requests if the State's proposed
program or activity meets the requirements of the Act and the
regulations at Sec. 431.55 or subpart G of part 441 of this chapter.
(2) Waivers under section 1916. The Administrator approves a waiver
under section 1916 of the Act if the State shows, to CMS's satisfaction,
that the Medicaid recipients have available and accessible to them
sources, other than a hospital emergency room, where they can obtain
necessary nonemergency outpatient services.
(h) Effective date and duration of waivers--(1) Effective date.
Waivers receive a prospective effective date determined, with State
input, by the Administrator. The effective date is specified in the
letter of approval to the State.
(2) Duration of waivers--(i) Home and community-based services under
section 1915(c). The initial waiver is for a period of three years and
may be renewed thereafter for periods of five years.
(ii) Waivers under sections 1915(b) and 1916. The initial waiver is
for a period of two years and may be renewed for additional periods of
up to two years as determined by the Administrator.
(3) Renewal of waivers. (i) A renewal request must be submitted at
least 90 days (but not more than 120 days) before a currently approved
waiver expires, to provide adequate time for CMS review.
(ii) If a renewal request for a section 1915(c) waiver proposes a
change in services provided, eligible population, service area, or
statutory sections
[[Page 10]]
waived, the Administrator may consider it a new waiver, and approve it
for a period of three years.
[56 FR 8846, Mar. 1, 1991]
Subpart C_Grants; Reviews and Audits; Withholding for Failure To Comply;
Deferral and Disallowance of Claims; Reduction of Federal Medicaid
Payments
Sec. 430.30 Grants procedures.
(a) General provisions. (1) Once CMS has approved a State plan, it
makes quarterly grant awards to the State to cover the Federal share of
expenditures for services, training, and administration.
(2) The amount of the quarterly grant is determined on the basis of
information submitted by the State agency (in quarterly estimate and
quarterly expenditure reports) and other pertinent documents.
(b) Quarterly estimates. The Medicaid agency must submit Form CMS-25
(Medicaid Program Budget Report; Quarterly Distribution of Funding
Requirements) to the central office (with a copy to the regional office)
45 days before the beginning of each quarter.
(c) Expenditure reports. (1) The State must submit Form CMS-64
(Quarterly Medicaid Statement of Expenditures for the Medical Assistance
Program) to the central office (with a copy to the regional office) not
later than 30 days after the end of each quarter.
(2) This report is the State's accounting of actual recorded
expenditures. The disposition of Federal funds may not be reported on
the basis of estimates.
(d) Grant award--(1) Computation by CMS. Regional office staff
analyzes the State's estimates and sends a recommendation to the central
office. Central office staff considers the State's estimates, the
regional office recommendations and any other relevant information,
including any adjustments to be made under paragraph (d)(2) of this
section, and computes the grant.
(2) Content of award. The grant award computation form shows the
estimate of expenditures for the ensuring quarter, and the amounts by
which that estimate is increased or decreased because of an
underestimate or overestimate for prior quarters, or for any of the
following reasons:
(i) Penalty reductions imposed by law.
(ii) Accounting adjustments.
(iii) Deferrals or disallowances.
(iv) Interest assessments.
(v) Mandated adjustments such as those required by section 1914 of
the Act.
(3) Effect of award. The grant award authorizes the State to draw
Federal funds as needed to pay the Federal share of disbursements.
(4) Drawing procedure. The draw is through a commercial bank and the
Federal Reserve system against a continuing letter of credit certified
to the Secretary of the Treasury in favor of the State payee. (The
letter of credit payment system was established in accordance with
Treasury Department regulations--Circular No. 1075.)
(e) General administrative requirements. With the following
exceptions, the provisions of 45 CFR part 74, which establish uniform
administrative requirements and cost principles, apply to all grants
made to States under this subpart:
45 CFR part 74
Subpart G--Matching and Cost Sharing
Subpart I--Financial Report Requirements
Sec. 430.32 Program reviews.
(a) Review of State and local administration. In order to determine
whether the State is complying with the Federal requirements and the
provisions of its plan, CMS reviews State and local administration
through analysis of the State's policies and procedures, on-site review
of selected aspects of agency operation, and examination of samples of
individual case records.
(b) Quality control program. The State itself is required to carry
out a continuing quality control program as set forth in part 431,
subpart P, of this chapter.
(c) Action on review findings. If Federal or State reviews reveal
serious problems with respect to compliance with any Federal
requirement, the State must correct its practice accordingly.
[[Page 11]]
Sec. 430.33 Audits.
(a) Purpose. The Department's Office of Inspector General (OIG)
periodically audits State operations in order to determine whether--
(1) The program is being operated in a cost-efficient manner; and
(2) Funds are being properly expended for the purposes for which
they were appropriated under Federal and State law and regulations.
(b) Reports. (1) The OIG releases audit reports simultaneously to
State officials and the Department's program officials.
(2) The reports set forth OIG opinion and recommendations regarding
the practices it reviewed, and the allowability of the costs it audited.
(3) Cognizant officials of the Department make final determinations
on all audit findings.
(c) Action on audit exceptions--(1) Concurrence or clearance. The
State agency has the opportunity of concurring in the exceptions or
submitting additional facts that support clearance of the exceptions.
(2) Appeal. Any exceptions that are not disposed of under paragraph
(c)(1) of this section are included in a disallowance letter that
constitutes the Department's final decision unless the State requests
reconsideration by the Appeals Board. (Specific rules are set forth in
Sec. 430.42.)
(3) Adjustment. If the decision by the Board requires an adjustment
of FFP, either upward or downward, a subsequent grant award promptly
reflects the amount of increase or decrease.
[53 FR 36571, Sept. 21, 1988, as amended at 56 FR 8846, Mar. 1, 1991]
Sec. 430.35 Withholding of payment for failure to comply with Federal requirements.
(a) Basis for withholding. CMS withholds payments to the State, in
whole or in part, only if, after giving the agency reasonable notice and
opportunity for a hearing in accordance with subpart D of this part, the
Administrator finds--
(1) That the plan no longer complies with the provisions of section
1902 of the Act; or
(2) That in the administration of the plan there is failure to
comply substantially with any of those provisions.
(Hearings under subpart D are generally not called until a reasonable
effort has been made to resolve the issues through conferences and
discussions. These may be continued even if a date and place have been
set for the hearing.)
(b) Noncompliance of the plan. A question of noncompliance of a
State plan may arise from an unapprovable change in the approved State
plan or the failure of the State to change its approved plan to conform
to a new Federal requirement for approval of State plans.
(c) Noncompliance in practice. A question of noncompliance in
practice may arise from the State's failure to actually comply with a
Federal requirement, regardless of whether the plan itself complies with
that requirement.
(d) Notice and implementation of withholding. If the Administrator
makes a finding of noncompliance under paragraph (a) of this section,
the following rules apply:
(1) The Administrator notifies the State:
(i) That no further payments will be made to the State (or that
payments will be made only for those portions or aspects of the program
that are not affected by the noncompliance); and
(ii) That the total or partial withholding will continue until the
Administrator is satisfied that the State's plan and practice are, and
will continue to be, in compliance with Federal requirements.
(2) CMS withholds payments, in whole or in part, until the
Administrator is satisfied regarding the State's compliance.
Sec. 430.38 Judicial review.
(a) Right to judicial review. Any State dissatisfied with the
Administrator's final determination on approvability of plan material
(Sec. 430.18) or compliance with Federal requirements (Sec. 430.35)
has a right to judicial review.
(b) Petition for review. (1) The State must file a petition for
review with the U.S. Court of Appeals for the circuit in which the State
is located, within 60
[[Page 12]]
days after it is notified of the determination.
(2) The clerk of the court will file a copy of the petition with the
Administrator and the Administrator will file in the court the record of
the proceedings on which the determination was based.
(c) Court action. (1) The court is bound by the Administrator's
findings of fact if they are supported by substantial evidence.
(2) The court has jurisdiction to affirm the Administrator's
decision, to set it aside in whole or in part, or, for good cause, to
remand the case for additional evidence.
(d) Response to remand. (1) If the court remands the case, the
Administrator may make new or modified findings of fact and may modify
his or her previous determination.
(2) The Administrator will certify to the court the transcript and
record of the further proceedings.
(e) Review by the Supreme Court. The judgment of the appeals court
is subject to review by the U.S. Supreme Court upon certiorari or
certification, as provided in 28 U.S.C. 1254.
Sec. 430.40 Deferral of claims for FFP.
(a) Requirements for deferral. Payment of a claim or any portion of
a claim for FFP is deferred only if--
(1) The Regional Administrator or the Administrator questions its
allowability and needs additional information in order to resolve the
question; and
(2) CMS takes action to defer the claim (by excluding the claimed
amount from the grant award) within 60 days after the receipt of a
Quarterly Statement of Expenditures (prepared in accordance with CMS
instructions) that includes that claim.
(b) Notice of deferral and State's responsibility. (1) Within 15
days of the action described in paragraph (a)(2) of this section, the
Regional Administrator sends the State a written notice of deferral
that--
(i) Identifies the type and amount of the deferred claim and
specifies the reason for deferral; and
(ii) Requests the State to make available all the documents and
materials the regional office then believes are necessary to determine
the allowability of the claim.
(2) It is the responsibility of the State to establish the
allowability of a deferred claim.
(c) Handling of documents and materials. (1) Within 60 days (or
within 120 days if the State requests an extension) after receipt of the
notice of deferral, the State must make available to the regional
office, in readily reviewable form, all requested documents and
materials except any that it identifies as not being available.
(2) Regional office staff usually initiates review within 30 days
after receipt of the documents and materials.
(3) If the Regional Administrator finds that the materials are not
in readily reviewable form or that additional information is needed, he
or she promptly notifies the State that it has 15 days to submit the
readily reviewable or additional materials.
(4) If the State does not provide the necessary materials within 15
days, the Regional Administrator disallows the claim.
(5) The Regional Administrator has 90 days, after all documentation
is available in readily reviewable form, to determine the allowability
of the claim.
(6) If the Regional Administrator cannot complete review of the
material within 90 days, CMS pays the claim, subject to a later
determination of allowability.
(d) Effect of decision to pay a deferred claim. Payment of a
deferred claim under paragraph (c)(6) of this section does not preclude
a subsequent disallowance based on the results of an audit or financial
review. (If there is a subsequent disallowance, the State may request
reconsideration as provided in paragraph (e)(2) of this section.)
(e) Notice and effect of decision on allowability. (1) The Regional
Administrator or the Administrator gives the State written notice of his
or her decision to pay or disallow a deferred claim.
(2) If the decision is to disallow, the notice informs the State of
its right to reconsideration in accordance with 45 CFR part 16.
[[Page 13]]
Sec. 430.42 Disallowance of claims for FFP.
(a) Notice of disallowance and of right to reconsideration. When the
Regional Administrator or the Administrator determines that a claim or
portion of claim is not allowable, he or she promptly sends the State a
disallowance letter that includes the following, as appropriate:
(1) The date or dates on which the State's claim for FFP was made.
(2) The time period during which the expenditures in question were
made or claimed to have been made.
(3) The date and amount of any payment or notice of deferral.
(4) A statement of the amount of FFP claimed, allowed, and
disallowed and the manner in which these amounts were computed.
(5) Findings of fact on which the disallowance determination is
based or a reference to other documents previously furnished to the
State or included with the notice (such as a report of a financial
review or audit) which contain the findings of fact on which the
disallowance determination is based.
(6) Pertinent citations to the law, regulations, guides and
instructions supporting the action taken.
(7) A request that the State make appropriate adjustment in a
subsequent expenditure report.
(8) Notice of the State's right to request reconsideration of the
disallowance and the time allowed to make the request.
(9) A statement indicating that the disallowance letter is the
Department's final decision unless the State requests reconsideration
under paragraph (b)(2) of this section.
(b) Reconsideration of FFP disallowance. (1) The Departmental
Appeals Board reviews disallowances of FFP under title XIX.
(2) A State that wishes to request reconsideration must submit the
request to the Chair, Departmental Appeals Board, within 30 days after
receipt of the disallowance letter, and include--
(i) A copy of the disallowance letter;
(ii) A statement of the amount in dispute; and
(iii) A brief statement of why the disallowance is wrong.
(c) Reconsideration procedures. The reconsideration procedures are
those set forth in 45 CFR part 16 for Medicaid and for many other
programs administered by the Department.
(d) Implementation of decisions. If the reconsideration decision
requires an adjustment of FFP, either upward or downward, a subsequent
grant award promptly reflects the amount of increase or decrease.
[53 FR 36571, Sept. 21, 1988, as amended at 56 FR 8846, Mar. 1, 1991]
Sec. 430.45 Reduction of Federal Medicaid payments.
(a) Methods of reduction. CMS may reduce Medicaid payments to a
State as required under the Act by reducing--
(1) The Federal Medical Assistance Percentage;
(2) The amount of State expenditures subject to FFP;
(3) The rates of FFP; or
(4) The amount otherwise payable to the State.
(b) Right to reconsideration. A state that receives written final
notice of a reduction under paragraph (a) of this section has a right to
reconsideration. The provisions of Sec. 430.42 (b) and (c) apply.
(c) Other applicable rules. Other rules regarding reduction of
Medicaid payments are set forth in parts 433 and 447 of this chapter.
Sec. 430.48 Repayment of Federal funds by installments.
(a) Basic conditions. When Federal payments have been made for
claims that are later found to be unallowable, the State may repay the
Federal Funds by installments if the following conditions are met:
(1) The amount to be repaid exceeds 2\1/2\ percent of the estimated
or actual annual State share for the Medicaid program; and
(2) The State has given the Regional Administrator written notice,
before total repayment was due, of its intent to repay by installments.
(b) Annual State share determination. CMS determines whether the
amount to be repaid exceeds 2\1/2\ percent of the annual State share as
follows:
(1) If the Medicaid program is ongoing, CMS uses the annual
estimated
[[Page 14]]
State share of Medicaid expenditures. This is the sum of the estimated
State shares for four consecutive quarters, beginning with the quarter
in which the first installment is to be paid, as shown on the State's
latest CMS-25 form.
(2) If the Medicaid program has been terminated by Federal law or by
the State, CMS uses the actual State share. The actual State share is
that shown on the State's Statement of Expenditures reports for the last
four quarters before the program was terminated.
(c) Repayment amounts, schedules, and procedures--(1) Repayment
amount. The repayment amount may not include any amount previously
approved for installment repayment.
(2) Repayment schedule. The number of quarters allowed for repayment
is determined on the basis of the ratio of the repayment amount to the
annual State share of Medicaid expenditures. The higher the ratio of the
total repayment amount is to the annual State share, the greater the
number of quarters allowed, as follows:
------------------------------------------------------------------------
Number of
Total repayment amount as percentage of State share of quarters
annual expenditures for Medicaid to make
repayment
------------------------------------------------------------------------
2.5 pct. or less............................................ 1
Greater than 2.5, but not greater than 5.................... 2
Greater than 5, but not greater than 7.5.................... 3
Greater than 7.5, but not greater than 10................... 4
Greater than 10, but not greater than 15.................... 5
Greater than 15, but not greater than 20.................... 6
Greater than 20, but not greater than 25.................... 7
Greater than 25, but not greater than 30.................... 8
Greater than 30, but not greater than 47.5.................. 9
Greater than 47.5, but not greater than 65.................. 10
Greater than 65, but not greater than 82.5.................. 11
Greater than 82.5, but not greater than 100................. 12
------------------------------------------------------------------------
(3) Quarterly repayment amounts. The quarterly repayment amounts for
each of the quarters in the repayment schedule may not be less than the
following percentages of the estimated State share of the annual
expenditures for Medicaid:
------------------------------------------------------------------------
Repayment
installment
may not be
For each of the following quarters less than
these
percentages
------------------------------------------------------------------------
1 to 4..................................................... 2.5
5 to 8..................................................... 5.0
9 to 12.................................................... 17.5
------------------------------------------------------------------------
(4) Extended schedule. The repayment schedule may be extended beyond
12 quarterly installments if the total repayment amount exceeds 100% of
the estimated State share of annual expenditures. In these
circumstances, paragraph (c)(2) of this section is followed for
repayment of the amount equal to 100 percent of the annual State share.
The remaining amount of the repayment is in quarterly amounts equal to
not less than 17.5 percent of the estimated State share of annual
expenditures.
(5) Repayment process. Repayment is accomplished through adjustment
in the quarterly grants over the period covered by the repayment
schedule.
If the State chooses to repay amounts representing higher percentages
during the early quarters, any corresponding reduction in required
minimum percentages is applied first to the last scheduled payment, then
to the next to the last payment, and so forth as neccessary.
(6) Offsetting of retroactive claims. The amount of a retroactive
claim to be paid a State will be offset against any amounts to be, or
already being, repaid by the State in installments. Under this
provision, the State may choose to:
(i) Suspend payments until the retroactive claim due the State has,
in fact, been offset; or
(ii) Continue payments until the reduced amount of its debt
(remaining after the offset), has been paid in full.
This second option would result in a shorter payment period.
A retroactive claim for the purpose of this regulation is a claim
applicable to any period ending 12 months or more before the beginning
of the quarter in which CMS would pay that claim.
Subpart D_Hearings on Conformity of State Medicaid Plans and Practice to
Federal Requirements
Sec. 430.60 Scope.
(a) This subpart sets forth the rules for hearings to States that
appeal a decision to disapprove State plan material (under Sec. 430.18)
or to withhold Federal funds (under Sec. 430.35), because the
[[Page 15]]
State plan or State practice in the Medicaid program is not in
compliance with Federal requirements.
(b) Nothing in this subpart is intended to preclude or limit
negotiations between CMS and the State, whether before, during, or after
the hearing to resolve the issues that are, or otherwise would be,
considered at the hearing. Such negotiations and resolution of issues
are not part of the hearing, and are not governed by the rules in this
subpart except as expressly provided.
Sec. 430.62 Records to be public.
All pleadings, correspondence, exhibits, transcripts of testimony,
exceptions, briefs, decisions, and other documents filed in the docket
in any proceeding may be inspected and copied in the office of the CMS
Docket Clerk. Inquiries may be made to the Docket Clerk, Hearing Staff,
Bureau of Eligibility, Reimbursment and Coverage, 300 East High Rise,
6325 Security Boulevard, Baltimore, Maryland, 21207. Telephone: (301)
594-8261.
Sec. 430.63 Filing and service of papers.
(a) Filing. All papers in the proceedings are filed with the CMS
Docket Clerk, in an original and two copies. Originals only of exhibits
and transcripts of testimony need be filed.
(b) Service. All papers in the proceedings are served on all parties
by personal delivery or by mail. Service on the party's designated
attorney is considered service upon the party.
Sec. 430.64 Suspension of rules.
Upon notice to all parties, the Administrator or the presiding
officer may modify or waive any rule in this subpart upon determination
that no party will be unduly prejudiced and the ends of justice will
thereby be served.
Sec. 430.66 Designation of presiding officer for hearing.
(a) The presiding officer at a hearing is the Administrator or his
designee.
(b) The designation of the presiding officer is in writing. A copy
of the designation is served on all parties.
Sec. 430.70 Notice of hearing or opportunity for hearing.
The Administrator mails the State a notice of hearing or opportunity
for hearing that--
(a) Specifies the time and place for the hearing;
(b) Specifies the issues that will be considered;
(c) Identifies the presiding officer; and
(d) Is published in the Federal Register.
Sec. 430.72 Time and place of hearing.
(a) Time. The hearing is scheduled not less than 30 nor more than 60
days after the date of notice to the State. The scheduled date may be
changed by written agreement between CMS and the State.
(b) Place. The hearing is conducted in the city in which the CMS
regional office is located or in another place fixed by the presiding
officer in light of the circumstances of the case, with due regard for
the convenience and necessity of the parties or their representatives.
Sec. 430.74 Issues at hearing.
The list of issues specified in the notice of hearing may be
augmented or reduced as provided in this section.
(a) Additional issues. (1) Before a hearing under Sec. 430.35, the
Administrator may send written notice to the State listing additional
issues to be considered at the hearing. That notice is published in the
Federal Register.
(2) If the notice of additional issues is furnished to the State
less than 20 days before the scheduled hearing date, postponement is
granted if requested by the State or any other party. The new date may
be 20 days after the date of the notice, or a later date agreed to by
the presiding officer.
(b) New or modified issues. If, as a result of negotiations between
CMS and the State, the submittal of plan amendment, a change in the
State program, or other actions by the State, any issue is resolved in
whole or in part, but new or modified issues are presented, as specified
by the presiding officer, the hearing proceeds on the new or modified
issues.
[[Page 16]]
(c) Issues removed from consideration--(1) Basis for removal. If at
any time before, during, or after the hearing, the presiding officer
finds that the State has come into compliance with Federal requirements
on any issue or part of an issue, he or she removes the appropriate
issue or part of an issue from consideration. If all issues are removed,
the hearing is terminated.
(2) Notice to parties. Before removing any issue or part of an issue
from consideration, the presiding officer provides all parties other
than CMS and the State with--
(i) A statement of the intent to remove and the reasons for removal;
and
(ii) A copy of the proposed State plan provision on which CMS and
the State have agreed.
(3) Opportunity for written comment. The notified parties have 15
days to submit, for consideration by the presiding officer, and for the
record, their views as to, or any information bearing upon, the merits
of the proposed plan provision and the merits of the reasons for
removing the issue from consideration.
(d) Remaining issues. The issues considered at the hearing are
limited to those issues of which the State is notified as provided in
Sec. 430.70 and paragraph (a) of this section, and new or modified
issues described in paragraph (b) of this section. They do not include
issues or parts of issues removed in accordance with paragraph (c) of
this section.
Sec. 430.76 Parties to the hearing.
(a) CMS and the State. CMS and the State are parties to the hearing.
(b) Other individuals--(1) Basis for participation. Other
individuals or groups may be recognized as parties if the issues to be
considered at the hearing have caused them injury and their interest is
within the zone of interests to be protected by the governing Federal
statute.
(2) Petition for participation. Any individual or group wishing to
participate as a party must, within 15 days after notice of hearing is
published in the Federal Register, file with the CMS Docket Clerk, a
petition that concisely states--
(i) Petitioner's interest in the proceeding;
(ii) Who will appear for petitioner;
(iii) The issues on which petitioner wishes to participate; and
(iv) Whether petitioner intends to present witnesses.
The petitioner must also serve a copy of the petition on each party of
record at that time.
(3) Comments on petition. Any party may, within 5 days of receipt of
the copy of the petition, file comments on it.
(4) Action on petition. (i) The presiding officer promptly
determines whether each petitioner has the requisite interest in the
proceedings and approves or denies participation accordingly.
(ii) If petitions are made by more than one individual or group with
common interests, the presiding officer may--
(A) Request all those petitioners to designate a single
representative; or
(B) Recognize one or more of those petitioners to represent all of
them.
(iii) The presiding officer gives each petitioner written notice of
the decision and, if the decision is to deny, briefly states the grounds
for denial.
(c) Amicus curiae (friend of the court)--(1) Petition for
participation. Any person or organization that wishes to participate as
amicus curiae must, before the hearing begins, file with the CMS Docket
Clerk, a petition that concisely states--
(i) The petitioners' interest in the hearing;
(ii) Who will represent the petitioner; and
(iii) The issues on which the petitioner intends to present
argument.
(2) Action on amicus curiae petition. The presiding officer may
grant the petition if he or she finds that the petitioner has a
legitimate interest in the proceedings, that such participation will not
unduly delay the outcome and may contribute materially to the proper
disposition of the issues.
(3) Nature of amicus participation. An amicus curiae is not a party
to the hearing but may participate by--
(i) Submitting a written statement of position to the presiding
officer before the beginning of the hearing;
[[Page 17]]
(ii) Presenting a brief oral statement at the hearing, at the point
in the proceedings specified by the presiding officer; and
(iii) Submitting a brief or written statement when the parties
submit briefs.
The amicus curiae must serve copies of any briefs or written statements
on all parties.
Sec. 430.80 Authority of the presiding officer.
(a) The presiding officer has the duty to conduct a fair hearing, to
avoid delay, maintain order, and make a record of the proceedings. He or
she has the authority necessary to accomplish those ends, including but
not limited to authority to take the following actions:
(1) Change the date, time, and place of the hearing after due notice
to the parties. This includes authority to postpone or adjourn the
hearing in whole or in part. In a hearing on disapproval of a State
plan, or State plan amendments, changes in the date of the hearing are
subject to the time limits imposed by section 1116(a)(2) of the Act.
(2) Hold conferences to settle or simplify the issues, or to
consider other matters that may aid in the expeditious disposition of
the issues.
(3) Regulate participation of parties and amici curiae and require
parties and amici curiae to state their position with respect to the
various issues in the proceeding.
(4) Administer oaths and affirmations.
(5) Rule on motions and other procedural items, including issuance
of protective orders or other relief to a party against whom discovery
is sought.
(6) Regulate the course of the hearing and conduct of counsel.
(7) Examine witnesses.
(8) Receive, rule on, exclude or limit evidence or discovery.
(9) Fix the time for filing motions, petitions, briefs, or other
items.
(10) If the presiding officer is the Administrator, make a final
decision.
(11) If the presiding officer is a designee of the Administrator,
certify the entire record including recommended findings and proposed
decision to the Administrator.
(12) Take any action authorized by the rules in this subpart or in
conformance with the provisions of 5 U.S.C. 551 through 559.
(b) The presiding officer does not have authority to compel by
subpoena the production of witnesses, papers, or other evidence.
(c) If the presiding officer is a designee of the Administrator, his
or her authority pertains to the issues of compliance by a State with
Federal requirements, and does not extend to the question of whether, in
case of any noncompliance, Federal payments will be denied in respect to
the entire State plan or only for certain categories under, or parts of,
the State plan affected by the noncompliance.
Sec. 430.83 Rights of parties.
All parties may:
(a) Appear by counsel or other authorized representative, in all
hearing proceedings.
(b) Participate in any prehearing conference held by the presiding
officer.
(c) Agree to stipulations as to facts which will be made a part of
the record.
(d) Make opening statements at the hearing.
(e) Present relevant evidence on the issues at the hearing.
(f) Present witnesses who then must be available for cross-
examination by all other parties.
(g) Present oral arguments at the hearing.
(h) Submit written briefs, proposed findings of fact, and proposed
conclusions of law, after the hearing.
Sec. 430.86 Discovery.
CMS and any party named in the notice issued under Sec. 430.70 has
the right to conduct discovery (including depositions) against opposing
parties. Rules 26-37 of the Federal Rules of Civil Procedures apply to
such proceedings; there will be no fixed rule on priority of discovery.
Upon written motion, the presiding officer promptly rules upon any
objection to discovery action initiated under this section. The
presiding officer also has the power to grant a
[[Page 18]]
protective order or relief to any party against whom discovery is sought
and to restrict or control discovery so as to prevent undue delay in the
conduct of the hearing. Upon the failure of any party to make discovery,
the presiding officer may issue any order and impose any sanction (other
than contempt orders) authorized by Rule 37 of the Federal Rules of
Civil Procedure.
Sec. 430.88 Evidence.
(a) Evidentiary purpose. The hearing is directed to receiving
factual evidence and expert opinion testimony related to the issues
involved in the proceeding. Argument is not received in evidence. It
must be presented in statements, memoranda, or briefs, as determined by
the presiding officer. Brief opening statements, concerning the party's
position and what he or she intends to prove, may be made at hearings.
(b) Testimony. Testimony is given orally under oath or affirmation
by witnesses at the hearing. Witnesses are available at the hearing for
cross-examination by all parties.
(c) Stipulations and exhibits. Two or more parties may agree to
stipulations of fact. Those stipulations, and any exhibit proposed by
any party, are exchanged before the hearing if the presiding officer so
requires.
(d) Rules of evidence. (1) Technical rules of evidence do not apply
to hearings conducted under this subpart. However, rules or principles
designed to ensure production of the most credible evidence available
and to subject testimony to test by cross-examination are applied by the
presiding officer when reasonably necessary.
(2) A witness may be cross-examined on any matter material to the
proceeding without regard to the scope of his or her direct examination.
(3) The presiding officer may exclude irrelevant, immaterial, or
unduly repetitious evidence.
(4) All documents and other evidence offered or taken for the record
are open to examination by the parties and an opportunity is given to
refute facts and arguments advanced on either side of the issues.
Sec. 430.90 Exclusion from hearing for misconduct.
The presiding officer may immediately exclude from the hearing any
person who--
(a) Uses disrespectful, disorderly, or contumacious language or
engages in contemptuous behavior;
(b) Refuses to comply with directions; or
(c) Uses dilatory tactics.
Sec. 430.92 Unsponsored written material.
Letters expressing views or urging action and other unsponsored
written material regarding matters in issue in a hearing are placed in
the correspondence section of the docket of the proceeding. These data
are not considered part of the evidence or record in the hearing.
Sec. 430.94 Official transcript.
(a) Filing. The official transcripts of testimony, together with any
stipulations, briefs, or memoranda of law, are filed with CMS.
(b) Availability of transcripts. CMS designates an official reporter
for each hearing. Transcripts of testimony in hearings may be obtained
from the official reporter by the parties and the public at rates not in
excess of the maximum rates fixed by the contract between CMS and the
reporter.
(c) Correction of transcript. Upon notice to all parties, the
presiding officer may authorize corrections that affect substantive
matters in the transcript.
Sec. 430.96 Record for decision.
The transcript of testimony, exhibits, and all papers and requests
filed in the proceedings, except the correspondence section of the
docket, including rulings and any recommended or initial decision
constitute the exclusive record for decision.
Sec. 430.100 Posthearing briefs.
The presiding officer fixes the time for filing posthearing briefs,
which may contain proposed findings of fact and conclusions of law. The
presiding officer may also permit reply briefs.
[[Page 19]]
Sec. 430.102 Decisions following hearing.
(a) Administrator presides. If the presiding officer is the
Administrator, he or she issues the hearing decision within 60 days
after expiration of the period for submission of posthearing briefs.
(b) Administrator's designee presides. If the presiding officer is
other than the Administrator, the procedure is as follows:
(1) Upon expiration of the period allowed for submission of
posthearing briefs, the presiding officer certifies the entire record,
including his or her recommended findings and proposed decision, to the
Administrator. The Administrator serves a copy of the recommended
findings and proposed decision upon all parties and amici, if any.
(2) Any party may, within 20 days, file with the Administrator
exceptions to the recommended findings and proposed decision and a
supporting brief or statement.
(3) The Administrator reviews the recommended decision and, within
60 days of its issuance, issues his or her own decision.
(c) Effect of Administrator's decision. The decision of the
Administrator under this section is the final decision of the Secretary
and constitutes ``final agency action'' within the meaning of 5 U.S.C.
704 and a ``final determination'' within the meaning of section
1116(a)(3) of the Act and Sec. 430.38. The Administrator's decision is
promptly served on all parties and amici.
Sec. 430.104 Decisions that affect FFP.
(a) Scope of decisions. If the Administrator concludes that
withholding of FFP is necessary because a State is out of compliance
with Federal requirements, in accordance with Sec. 430.35, the decision
also specifies--
(1) Whether no further payments will be made to the State or whether
payments will be limited to parts of the program not affected by the
noncompliance; and
(2) The effective date of the decision to withhold.
(b) Consultation. The Administrator may ask the parties for
recommendations or briefs or may hold conferences of the parties on the
question of further payments to the State.
(c) Effective date of decision. The effective date of a decision to
withhold Federal funds will not be earlier than the date of the
Administrator's decision and will not be later than the first day of the
next calendar quarter. The provisions of this section may not be waived
under Sec. 430.64.
PART 431_STATE ORGANIZATION AND GENERAL ADMINISTRATION--Table of Contents
Sec.
431.1 Purpose.
Subpart A_Single State Agency
431.10 Single State agency.
431.11 Organization for administration.
431.12 Medical care advisory committee.
431.15 Methods of administration.
431.16 Reports.
431.17 Maintenance of records.
431.18 Availability of agency program manuals.
431.20 Advance directives.
Subpart B_General Administrative Requirements
431.40 Basis and scope.
431.50 Statewide operation.
431.51 Free choice of providers.
431.52 Payments for services furnished out of State.
431.53 Assurance of transportation.
431.54 Exceptions to certain State plan requirements.
431.55 Waiver of other Medicaid requirements.
431.56 Special waiver provisions applicable to American Samoa and the
Northern Mariana Islands.
431.57 Waiver of cost-sharing requirements.
Subpart C_Administrative Requirements: Provider Relations
431.105 Consultation to medical facilities.
431.107 Required provider agreement.
431.108 Effective date of provider agreements.
431.110 Participation by Indian Health Service facilities.
431.115 Disclosure of survey information and provider or contractor
evaluation.
431.120 State requirements with respect to nursing facilities.
Subpart D_Appeals Process for NFs and ICFs/MR
431.151 Scope and applicability.
431.152 State plan requirements.
431.153 Evidentiary hearing.
[[Page 20]]
431.154 Informal reconsideration for ICFs/MR.
Subpart E_Fair Hearings for Applicants and Recipients
General Provisions
431.200 Basis and purpose.
431.201 Definitions.
431.202 State plan requirements.
431.205 Provision of hearing system.
431.206 Informing applicants and recipients.
Notice
431.210 Content of notice.
431.211 Advance notice.
431.213 Exceptions from advance notice.
431.214 Notice in cases of probable fraud.
Right to Hearing
431.220 When a hearing is required.
431.221 Request for hearing.
431.222 Group hearings.
431.223 Denial or dismissal of request for a hearing.
Procedures
431.230 Maintaining services.
431.231 Reinstatement of services.
431.232 Adverse decision of local evidentiary hearing.
431.233 State agency hearing after adverse decision of local evidentiary
hearing.
431.240 Conducting the hearing.
431.241 Matters to be considered at the hearing.
431.242 Procedural rights of the applicant or recipient.
431.243 Parties in cases involving an eligibility determination.
431.244 Hearing decisions.
431.245 Notifying the applicant or recipient of a State agency decision.
431.246 Corrective action.
Federal Financial Participation
431.250 Federal financial participation.
Subpart F_Safeguarding Information on Applicants and Recipients
431.300 Basis and purpose.
431.301 State plan requirements.
431.302 Purposes directly related to State plan administration.
431.303 State authority for safeguarding information.
431.304 Publicizing safeguarding requirements.
431.305 Types of information to be safeguarded.
431.306 Release of information.
431.307 Distribution of information materials.
Subparts G-L [Reserved]
Subpart M_Relations With Other Agencies
431.610 Relations with standard-setting and survey agencies.
431.615 Relations with State health and vocational rehabilitation
agencies and title V grantees.
431.620 Agreement with State mental health authority or mental
institutions.
431.621 State requirements with respect to nursing facilities.
431.625 Coordination of Medicaid with Medicare part B.
431.630 Coordination of Medicaid with QIOs.
431.635 Coordination of Medicaid with Special Supplemental Food Program
for Women, Infants, and Children (WIC).
431.636 Coordination of Medicaid with the State Children's Health
Insurance Program (SCHIP).
Subpart N_State Programs for Licensing Nursing Home Administrators
431.700 Basis and purpose.
431.701 Definitions.
431.702 State plan requirement.
431.703 Licensing requirement.
431.704 Nursing homes designated by other terms.
431.705 Licensing authority.
431.706 Composition of licensing board.
431.707 Standards.
431.708 Procedures for applying standards.
431.709 Issuance and revocation of license.
431.710 Provisional licenses.
431.711 Compliance with standards.
431.712 Failure to comply with standards.
431.713 Continuing study and investigation.
431.714 Waivers.
431.715 Federal financial participation.
Subpart O [Reserved]
Subpart P_Quality Control
General Provisions
431.800 Scope of subpart.
431.802 Basis.
431.804 Definitions.
431.806 State plan requirements.
431.808 Protection of recipient rights.
Medicaid Eligibility Quality Control (MEQC) Program
431.810 Basic elements of the Medicaid eligibility quality control
(MEQC) program.
431.812 Review procedures.
431.814 Sampling plan and procedures.
431.816 Case review completion deadlines and submittal of reports.
431.818 Access to records: MEQC program.
431.820 Corrective action under the MEQC program.
431.822 Resolution of differences in State and Federal case eligibility
or payment findings.
[[Page 21]]
Medicaid Quality Control (MQC) Claims Processing Assessment System
431.830 Basic elements of the Medicaid quality control (MQC) claims
processing assessment system.
431.832 Reporting requirements for claims processing assessment systems.
431.834 Access to records: Claims processing assessment systems.
431.836 Corrective action under the MQC claims processing assessment
systems.
Federal Financial Participation
431.861-431.864 [Reserved]
431.865 Disallowance of Federal financial participation for erroneous
State payments (for annual assessment periods ending after
July 1, 1990).
Subpart Q_Requirements for Estimating Improper Payments in Medicaid and
SCHIP
431.950 Purpose.
431.954 Basis and scope.
431.958 Definitions and use of terms.
431.970 Information submission requirements.
431.974 Basic elements of Medicaid and SCHIP eligibility reviews.
431.978 Eligibility sampling plan and procedures.
431.980 Eligibility review procedures.
431.988 Eligibility case review completion deadlines and submittal of
reports.
431.992 Corrective action plan.
431.998 Difference resolution process.
431.1002 Recoveries.
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C. 1302).
Source: 43 FR 45188, Sept. 29, 1978, unless otherwise noted.
Sec. 431.1 Purpose.
This part establishes State plan requirements for the designation,
organization, and general administrative activities of a State agency
responsible for operating the State Medicaid program, directly or
through supervision of local administering agencies.
Subpart A_Single State Agency
Sec. 431.10 Single State agency.
(a) Basis and purpose. This section implements section 1902(a)(5) of
the Act, which provides for designation of a single State agency for the
Medicaid program.
(b) Designation and certification. A State plan must--
(1) Specify a single State agency established or designated to
administer or supervise the administration of the plan; and
(2) Include a certification by the State Attorney General, citing
the legal authority for the single State agency to--
(i) Administer or supervise the administration of the plan; and
(ii) Make rules and regulations that it follows in administering the
plan or that are binding upon local agencies that administer the plan.
(c) Determination of eligibility. (1) The plan must specify whether
the agency that determines eligibility for families and for individuals
under 21 is--
(i) The Medicaid agency; or
(ii) The single State agency for the financial assistance program
under title IV-A (in the 50 States or the District of Columbia), or
under title I or XVI (AABD), in Guam, Puerto Rico, or the Virgin
Islands.
(2) The plan must specify whether the agency that determines
eligibility for the aged, blind, or disabled is--
(i) The Medicaid agency;
(ii) The single State agency for the financial assistance program
under title IV-A (in the 50 States or the District of Columbia) or under
title I or XVI (AABD), in Guam, Puerto Rico, or the Virgin Islands; or
(iii) The Federal agency administering the supplemental security
income program under title XVI (SSI). In this case, the plan must also
specify whether the Medicaid agency or the title IV-A agency determines
eligibility for any groups whose eligibility is not determined by the
Federal agency.
(d) Agreement with Federal or State agencies. The plan must provide
for written agreements between the Medicaid agency and the Federal or
other State agencies that determine eligibility for Medicaid, stating
the relationships and respective responsibilities of the agencies.
(e) Authority of the single State agency. In order for an agency to
qualify as the Medicaid agency--
(1) The agency must not delegate, to other than its own officials,
authority to--
[[Page 22]]
(i) Exercise administrative discretion in the administration or
supervision of the plan, or
(ii) Issue policies, rules, and regulations on program matters.
(2) The authority of the agency must not be impaired if any of its
rules, regulations, or decisions are subject to review, clearance, or
similar action by other offices or agencies of the State.
(3) If other State or local agencies or offices perform services for
the Medicaid agency, they must not have the authority to change or
disapprove any administrative decision of that agency, or otherwise
substitute their judgment for that of the Medicaid agency with respect
to the application of policies, rules, and regulations issued by the
Medicaid agency.
[44 FR 17930, Mar. 23, 1979]
Sec. 431.11 Organization for administration.
(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes the general organization and staffing requirements
for the Medicaid agency and the State plan.
(b) Medical assistance unit. A State plan must provide for a medical
assistance unit within the Medicaid agency, staffed with a program
director and other appropriate personnel who participate in the
development, analysis, and evaluation of the Medicaid program.
(c) Description of organization. (1) The plan must include--
(i) A description of the organization and functions of the Medicaid
agency and an organization chart;
(ii) A description of the organization and functions of the medical
assistance unit and an organization chart; and
(iii) A description of the kinds and number of professional medical
personnel and supporting staff used in the administration of the plan
and their responsibilities.
(d) Eligibility determined by other agencies. If eligibility is
determined by State agencies other than the Medicaid agency or by local
agencies under the supervision of other State agencies, the plan must
include a description of the staff designated by those other agencies
and the functions they perform in carrying out their responsibility.
[44 FR 17931, Mar. 23, 1979]
Sec. 431.12 Medical care advisory committee.
(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes State plan requirements for establishment of a
committee to advise the Medicaid agency about health and medical care
services.
(b) State plan requirement. A State plan must provide for a medical
care advisory committee meeting the requirements of this section to
advise the Medicaid agency director about health and medical care
services.
(c) Appointment of members. The agency director, or a higher State
authority, must appoint members to the advisory committee on a rotating
and continuous basis.
(d) Committee membership. The committee must include--
(1) Board-certified physicians and other representatives of the
health professions who are familiar with the medical needs of low-income
population groups and with the resources available and required for
their care;
(2) Members of consumers' groups, including Medicaid recipients, and
consumer organizations such as labor unions, cooperatives, consumer-
sponsored prepaid group practice plans, and others; and
(3) The director of the public welfare department or the public
health department, whichever does not head the Medicaid agency.
(e) Committee participation. The committee must have opportunity for
participation in policy development and program administration,
including furthering the participation of recipient members in the
agency program.
(f) Committee staff assistance and financial help. The agency must
provide the committee with--
(1) Staff assistance from the agency and independent technical
assistance as needed to enable it to make effective recommendations; and
(2) Financial arrangements, if necessary, to make possible the
participation of recipient members.
[[Page 23]]
(g) Federal financial participation. FFP is available at 50 percent
in expenditures for the committee's activities.
Sec. 431.15 Methods of administration.
A State plan must provide for methods of administration that are
found by the Secretary to be necessary for the proper and efficient
operation of the plan.
(Sec. 1902(a)(4) of the Act)
[44 FR 17931, Mar. 23, 1979]
Sec. 431.16 Reports.
A State plan must provide that the Medicaid agency will--
(a) Submit all reports required by the Secretary;
(b) Follow the Secretary's instructions with regard to the form and
content of those reports; and
(c) Comply with any provisions that the Secretary finds necessary to
verify and assure the correctness of the reports.
[44 FR 17931, Mar. 23, 1979]
Sec. 431.17 Maintenance of records.
(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes the kinds of records a Medicaid agency must
maintain, the retention period, and the conditions under which microfilm
copies may be substituted for original records.
(b) Content of records. A State plan must provide that the Medicaid
agency will maintain or supervise the maintenance of the records
necessary for the proper and efficient operation of the plan. The
records must include--
(1) Individual records on each applicant and recipient that contain
information on--
(i) Date of application;
(ii) Date of and basis for disposition;
(iii) Facts essential to determination of initial and continuing
eligibility;
(iv) Provision of medical assistance;
(v) Basis for discontinuing assistance;
(vi) The disposition of income and eligibility verification
information received under Sec. Sec. 435.940 through 435.960 of this
subchapter; and
(2) Statistical, fiscal, and other records necessary for reporting
and accountability as required by the Secretary.
(c) Retention of records. The plan must provide that the records
required under paragraph (b) of this section will be retained for the
periods required by the Secretary.
(d) Conditions for optional use of microfilm copies. The agency may
substitute certified microfilm copies for the originals of
substantiating documents required for Federal audit and review, if the
conditions in paragraphs (d)(1) through (4) of this section are met.
(1) The agency must make a study of its record storage and must show
that the use of microfilm is efficient and economical.
(2) The microfilm system must not hinder the agency's supervision
and control of the Medicaid program.
(3) The microfilm system must--
(i) Enable the State to audit the propriety of expenditures for
which FFP is claimed; and
(ii) Enable the HHS Audit Agency and CMS to properly discharge their
respective responsibilities for reviewing the manner in which the
Medicaid program is being administered.
(4) The agency must obtain approval from the CMS regional office
indicating--
(i) The system meets the conditions of paragraphs (d)(2) and (3) of
this section; and
(ii) The microfilming procedures are reliable and are supported by
an adequate retrieval system.
[44 FR 17931, Mar. 23, 1979, as amended at 51 FR 7210, Feb. 28, 1986]
Sec. 431.18 Availability of agency program manuals.
(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes State plan requirements for facilitating access to
Medicaid rules and policies by individuals outside the State Medicaid
agency.
(b) State plan requirements. A State plan must provide that the
Medicaid agency meets the requirements of paragraphs (c) through (g) of
this section.
(c) Availability in agency offices. (1) The agency must maintain, in
all its offices, copies of its current rules and
[[Page 24]]
policies that affect the public, including those that govern
eligibility, provision of medical assistance, covered services, and
recipient rights and responsibilities.
(2) These documents must be available upon request for review,
study, and reproduction by individuals during regular working hours of
the agency.
(d) Availability through other entities. The agency must provide
copies of its current rules and policies to--
(1) Public and university libraries;
(2) The local or district offices of the Bureau of Indian Affairs;
(3) Welfare and legal services offices; and
(4) Other entities that--
(i) Request the material in order to make it accessible to the
public;
(ii) Are centrally located and accessible to a substantial number of
the recipient population they serve; and
(iii) Agree to accept responsibility for filing all amendments or
changes forwarded by the agency.
(e) Availability in relation to fair hearings. The agency must make
available to an applicant or recipient, or his representative, a copy of
the specific policy materials necessary--
(1) To determine whether to request a fair hearing; or
(2) To prepare for a fair hearing.
(f) Availability for other purposes. The agency must establish rules
for making program policy materials available to individuals who request
them for other purposes.
(g) Charges for reproduction. The agency must make copies of its
program policy materials available without charge or at a charge related
to the cost of reproduction.
[44 FR 17931, Mar. 23, 1979]
Sec. 431.20 Advance directives.
(a) Basis and purpose. This section, based on section 1902(a) (57)
and (58) of the Act, prescribes State plan requirements for the
development and distribution of a written description of State law
concerning advance directives.
(b) A State Plan must provide that the State, acting through a State
agency, association, or other private nonprofit entity, develop a
written description of the State law (whether statutory or as recognized
by the courts of the State) concerning advance directives, as defined in
Sec. 489.100 of this chapter, to be distributed by Medicaid providers
and health maintenance organizations (as specified in section
1903(m)(1)(A) of the Act) in accordance with the requirements under part
489, subpart I of this chapter. Revisions to the written descriptions as
a result of changes in State law must be incorporated in such
descriptions and distributed as soon as possible, but no later than 60
days from the effective date of the change in State law, to Medicaid
providers and health maintenance organizations.
[57 FR 8202, Mar. 6, 1992, as amended at 60 FR 33293, June 27, 1995]
Subpart B_General Administrative Requirements
Source: 56 FR 8847, Mar. 1, 1991, unless otherwise noted.
Sec. 431.40 Basis and scope.
(a) This subpart sets forth State plan requirements and exceptions
that pertain to the following administrative requirements and provisions
of the Act:
(1) Statewideness--section 1902(a)(1);
(2) Proper and efficient administration--section 1902(a)(4);
(3) Comparability of services--section 1902(a)(10) (B)-(E);
(4) Payment for services furnished outside the State--section
1902(a)(16);
(5) Free choice of providers--section 1902(a)(23);
(6) Special waiver provisions applicable to American Samoa and the
Northern Mariana Islands--section 1902(j); and
(7) Exceptions to, and waiver of, State plan requirements--sections
1915 (a)-(c) and 1916 (a)(3) and (b)(3).
(b) Other applicable regulations include the following:
(1) Section 430.25 Waivers of State plan requirements.
(2) Section 440.250 Limits on comparability of services.
Sec. 431.50 Statewide operation.
(a) Statutory basis. Section 1902(a)(1) of the Act requires a State
plan to be
[[Page 25]]
in effect throughout the State, and section 1915 permits certain
exceptions.
(b) State plan requirements. A State plan must provide that the
following requirements are met:
(1) The plan will be in operation statewide through a system of
local offices, under equitable standards for assistance and
administration that are mandatory throughout the State.
(2) If administered by political subdivisions of the State, the plan
will be mandatory on those subdivisions.
(3) The agency will ensure that the plan is continuously in
operation in all local offices or agencies through--
(i) Methods for informing staff of State policies, standards,
procedures, and instructions;
(ii) Systematic planned examination and evaluation of operations in
local offices by regularly assigned State staff who make regular visits;
and
(iii) Reports, controls, or other methods.
(c) Exceptions. (1) ``Statewide operation'' does not mean, for
example, that every source of service must furnish the service State-
wide. The requirement does not preclude the agency from contracting with
a comprehensive health care organization (such as an HMO or a rural
health clinic) that serves a specific area of the State, to furnish
services to Medicaid recipients who live in that area and chose to
receive services from that HMO or rural health clinic. Recipients who
live in other parts of the State may receive their services from other
sources.
(2) Other allowable exceptions and waivers are set forth in
Sec. Sec. 431.54 and 431.55.
[56 FR 8847, Mar. 1, 1991; 56 FR 23022, May 20, 1991]
Sec. 431.51 Free choice of providers.
(a) Statutory basis. This section is based on sections 1902(a)(23),
1902(e)(2), and 1915(a) and (b) and 1932(a)(3) of the Act.
(1) Section 1902(a)(23) of the Act provides that recipients may
obtain services from any qualified Medicaid provider that undertakes to
provide the services to them.
(2) Section 1915(a) of the Act provides that a State shall not be
found out of compliance with section 1902(a)(23) solely because it
imposes certain specified allowable restrictions on freedom of choice.
(3) Section 1915(b) of the Act authorizes waiver of the section
1902(a)(23) freedom of choice of providers requirement in certain
specified circumstances, but not with respect to providers of family
planning services.
(4) Section 1902(a)(23) of the Act provides that a recipient
enrolled in a primary care case management system or Medicaid managed
care organization (MCO) may not be denied freedom of choice of qualified
providers of family planning services.
(5) Section 1902(e)(2) of the Act provides that an enrollee who,
while completing a minimum enrollment period, is deemed eligible only
for services furnished by or through the MCO or PCCM, may, as an
exception to the deemed limitation, seek family planning services from
any qualified provider.
(6) Section 1932(a) of the Act permits a State to restrict the
freedom of choice required by section 1902(a)(23), under specified
circumstances, for all services except family planning services.
(b) State plan requirements. A State plan, except the plan for
Puerto Rico, the Virgin Islands, or Guam, must provide as follows:
(1) Except as provided under paragraph (c) of this section and part
438 of this chapter, a recipient may obtain Medicaid services from any
institution, agency, pharmacy, person, or organization that is--
(i) Qualified to furnish the services; and
(ii) Willing to furnish them to that particular recipient.
This includes an organization that furnishes, or arranges for the
furnishing of, Medicaid services on a prepayment basis.
(2) A recipient enrolled in a primary care case-management system, a
Medicaid MCO, or other similar entity will not be restricted in freedom
of choice of providers of family planning services.
(c) Exceptions. Paragraph (b) of this section does not prohibit the
agency from--
[[Page 26]]
(1) Establishing the fees it will pay providers for Medicaid
services;
(2) Setting reasonable standards relating to the qualifications of
providers; or
(3) Subject to paragraph (b)(2) of this section, restricting
recipients' free choice of providers in accordance with one or more of
the exceptions set forth in Sec. 431.54, or under a waiver as provided
in Sec. 431.55; or
(4) Limiting the providers who are available to furnish targeted
case management services defined in Sec. 440.169 of this chapter to
target groups that consist solely of individuals with developmental
disabilities or with chronic mental illness. This limitation may only be
permitted so that the providers of case management services for eligible
individuals with developmental disabilities or with chronic mental
illness are capable of ensuring that those individuals receive needed
services.
(d) Certification requirement--(1) Content of certification. If a
State implements a project under one of the exceptions allowed under
Sec. 431.54 (d), (e) or (f), it must certify to CMS that the statutory
safeguards and requirements for an exception under section 1915(a) of
the Act are met.
(2) Timing of certification. (i) For an exception under Sec.
431.54(d), the State may not institute the project until after it has
submitted the certification and CMS has made the findings required under
the Act, and so notified the State.
(ii) For exceptions under Sec. 431.54 (e) or (f), the State must
submit the certificate by the end of the quarter in which it implements
the project.
[56 FR 8847, Mar. 1, 1991, as amended at 67 FR 41094, June 14, 2002; 72
FR 68091, Dec. 4, 2007]
Sec. 431.52 Payments for services furnished out of State.
(a) Statutory basis. Section 1902(a)(16) of the Act authorizes the
Secretary to prescribe State plan requirements for furnishing Medicaid
to State residents who are absent from the State.
(b) Payment for services. A State plan must provide that the State
will pay for services furnished in another State to the same extent that
it would pay for services furnished within its boundaries if the
services are furnished to a recipient who is a resident of the State,
and any of the following conditions is met:
(1) Medical services are needed because of a medical emergency;
(2) Medical services are needed and the recipient's health would be
endangered if he were required to travel to his State of residence;
(3) The State determines, on the basis of medical advice, that the
needed medical services, or necessary supplementary resources, are more
readily available in the other State;
(4) It is general practice for recipients in a particular locality
to use medical resources in another State.
(c) Cooperation among States. The plan must provide that the State
will establish procedures to facilitate the furnishing of medical
services to individuals who are present in the State and are eligible
for Medicaid under another State's plan.
Sec. 431.53 Assurance of transportation.
A State plan must--
(a) Specify that the Medicaid agency will ensure necessary
transportation for recipients to and from providers; and
(b) Describe the methods that the agency will use to meet this
requirement.
[74 FR 31195, June 30, 2009]
Sec. 431.54 Exceptions to certain State plan requirements.
(a) Statutory basis--(1) Section 1915(a) of the Act provides that a
State shall not be deemed to be out of compliance with the requirements
of sections 1902(a)(1), (10), or (23) of the Act solely because it has
elected any of the exceptions set forth in paragraphs (b) and (d)
through (f) of this section.
(2) Section 1915(g) of the Act provides that a State may provide, as
medical assistance, targeted case management services under the plan
without regard to the requirements of sections 1902(a)(1) and
1902(a)(10)(B) of the Act.
(b) Additional services under a prepayment system. If the Medicaid
agency contracts on a prepayment basis with an organization that
provides services additional to those offered under the State plan, the
agency may restrict the provision of the additional services to
[[Page 27]]
recipients who live in the area served by the organization and wish to
obtain services from it.
(c) [Reserved]
(d) Special procedures for purchase of medical devices and
laboratory and X-ray tests. The Medicaid agency may establish special
procedures for the purchase of medical devices or laboratory and X-ray
tests (as defined in Sec. 440.30 of this chapter) through a competitive
bidding process or otherwise, if the State assures, in the certification
required under Sec. 431.51(d), and CMS finds, as follows:
(1) Adequate services or devices are available to recipients under
the special procedures.
(2) Laboratory services are furnished through laboratories that meet
the following requirements:
(i) They are independent laboratories, or inpatient or outpatient
hospital laboratories that provide services for individuals who are not
hospital patients, or physician laboratories that process at least 100
specimens for other physicians during any calendar year.
(ii) They meet the requirements of subpart M of part 405 or part 482
of this chapter.
(iii) Laboratories that require an interstate license under 42 CFR
part 74 are licensed by CMS or receive an exemption from the licensing
requirement by the College of American Pathologists. (Hospital and
physician laboratories may participate in competitive bidding only with
regard to services to non-hospital patients and other physicians'
patients, respectively.)
(3) Any laboratory from which a State purchases services under this
section has no more than 75 percent of its charges based on services to
Medicare beneficiaries and Medicaid recipients.
(e) Lock-in of recipients who over-utilize Medicaid services. If a
Medicaid agency finds that a recipient has utilized Medicaid services at
a frequency or amount that is not medically necessary, as determined in
accordance with utilization guidelines established by the State, the
agency may restrict that recipient for a reasonable period of time to
obtain Medicaid services from designated providers only. The agency may
impose these restrictions only if the following conditions are met:
(1) The agency gives the recipient notice and opportunity for a
hearing (in accordance with procedures established by the agency) before
imposing the restrictions.
(2) The agency ensures that the recipient has reasonable access
(taking into account geographic location and reasonable travel time) to
Medicaid services of adequate quality.
(3) The restrictions do not apply to emergency services furnished to
the recipient.
(f) Lock-out of providers. If a Medicaid agency finds that a
Medicaid provider has abused the Medicaid program, the agency may
restrict the provider, through suspension or otherwise, from
participating in the program for a reasonable period of time.
Before imposing any restriction, the agency must meet the following
conditions:
(1) Give the provider notice and opportunity for a hearing, in
accordance with procedures established by the agency.
(2) Find that in a significant number or proportion of cases, the
provider has:
(i) Furnished Medicaid services at a frequency or amount not
medically necessary, as determined in accordance with utilization
guidelines established by the agency; or
(ii) Furnished Medicaid services of a quality that does not meet
professionally recognized standards of health care.
(3) Notify CMS and the general public of the restriction and its
duration.
(4) Ensure that the restrictions do not result in denying recipients
reasonable access (taking into account geographic location: and
reasonable travel time) to Medicaid services of adequate quality,
including emergency services.
(g) Targeted case management services. The requirements of Sec.
431.50(b) relating to the statewide operation of a State plan and Sec.
440.240 of this chapter related to comparability of services do not
apply with respect to targeted case management services defined in Sec.
440.169 of this chapter.
[56 FR 8847, Mar. 1, 1991, as amended at 72 FR 68091, Dec. 4, 2007]
[[Page 28]]
Sec. 431.55 Waiver of other Medicaid requirements.
(a) Statutory basis. Section 1915(b) of the Act authorizes the
Secretary to waive most requirements of section 1902 of the Act to the
extent he or she finds proposed improvements or specified practices in
the provision of services under Medicaid to be cost effective,
efficient, and consistent with the objectives of the Medicaid program.
Sections 1915 (f) and (h) prescribe how such waivers are to be approved,
continued, monitored, and terminated. Section 1902(p)(2) of the Act
conditions FFP in payments to an entity under a section 1915(b)(1)
waiver on the State's provision for exclusion of certain entities from
participation.
(b) General requirements. (1) General requirements for submittal of
waiver requests, and the procedures that CMS follows for review and
action on those requests are set forth in Sec. 430.25 of this chapter.
(2) In applying for a waiver to implement an approvable project
under paragraph (c), (d), (e), or (f) of this section, a Medicaid agency
must document in the waiver request and maintain data regarding:
(i) The cost-effectiveness of the project;
(ii) The effect of the project on the accessibility and quality of
services;
(iii) The anticipated impact of the project on the State's Medicaid
program and;
(iv) Assurances that the restrictions on free choice of providers do
not apply to family planning services.
(3) No waiver under this section may be granted for a period longer
than 2 years, unless the agency requests a continuation of the waiver.
(4) CMS monitors the implementation of waivers granted under this
section to ensure that requirements for such waivers are being met.
(i) If monitoring demonstrates that the agency is not in compliance
with the requirements for a waiver under this section, CMS gives the
agency notice and opportunity for a hearing.
(ii) If, after a hearing, CMS finds an agency to be out of
compliance with the requirements of a waiver, CMS terminates the waiver
and gives the agency a specified date by which it must demonstrate that
it meets the applicable requirements of section 1902 of the Act.
(5) The requirements of section 1902(s) of the Act, with regard to
adjustments in payments for inpatient hospital services furnished to
infants who have not attained age 1 and to children who have not
attained age 6 and who receive these services in disproportionate share
hospitals, may not be waived under a section 1915(b) waiver.
(c) Case-management system. (1) Waivers of appropriate requirements
of section 1902 of the Act may be authorized for a State to implement a
primary care case-management system or specialty physician services
system.
(i) Under a primary care case-management system the agency assures
that a specific person or persons or agency will be responsible for
locating, coordinating, and monitoring all primary care or primary care
and other medical care and rehabilitative services on behalf of a
recipient. The person or agency must comply with the requirements set
forth in part 438 of this chapter for primary care case management
contracts and systems.
(ii) A specialty physician services system allows States to restrict
recipients of specialty services to designated providers of such
services, even in the absence of a primary care case-management system.
(2) A waiver under this paragraph (c) may not be approved unless the
State's request assures that the restrictions--
(i) Do not apply in emergency situations; and
(ii) Do not substantially impair access to medically necessary
services of adequate quality.
(d) Locality as central broker. Waivers of appropriate requirements
of section 1902 of the Act may be authorized for a State to allow a
locality to act as a central broker to assist recipients in selecting
among competing health care plans. States must ensure that access to
medically necessary services of adequate quality is not substantially
impaired.
(1) A locality is any defined jurisdiction, e.g., district, town,
city, borough, county, parish, or State.
[[Page 29]]
(2) A locality may use any agency or agent, public or private,
profit or nonprofit, to act on its behalf in carrying out its central
broker function.
(e) Sharing of cost savings. (1) Waivers of appropriate requirements
of section 1902 of the Act may be authorized for a State to share with
recipients the cost savings resulting from the recipients' use of more
cost-effective medical care.
(2) Sharing is through the provision of additional services,
including--
(i) Services furnished by a plan selected by the recipient; and
(ii) Services expressly offered by the State as an inducement for
recipients to participate in a primary care case-management system, a
competing health care plan or other system that furnishes health care
services in a more cost-effective manner.
(f) Restriction of freedom of choice--(1) Waiver of appropriate
requirements of section 1902 of the Act may be authorized for States to
restrict recipients to obtaining services from (or through) qualified
providers or practitioners that meet, accept, and comply with the State
reimbursement, quality and utilization standards specified in the
State's waiver request.
(2) An agency may qualify for a waiver under this paragraph (f) only
if its applicable State standards are consistent with access, quality
and efficient and economic provision of covered care and services and
the restrictions it imposes--
(i) Do not apply to recipients residing at a long-term care facility
when a restriction is imposed unless the State arranges for reasonable
and adequate recipient transfer.
(ii) Do not discriminate among classes of providers on grounds
unrelated to their demonstrated effectiveness and efficiency in
providing those services; and
(iii) Do not apply in emergency circumstances.
(3) Demonstrated effectiveness and efficiency refers to reducing
costs or slowing the rate of cost increase and maximizing outputs or
outcomes per unit of cost.
(4) The agency must make payments to providers furnishing services
under a freedom of choice waiver under this paragraph (f) in accordance
with the timely claims payment standards specified in Sec. 447.45 of
this chapter for health care practitioners participating in the Medicaid
program.
(g) [Reserved]
(h) Waivers approved under section 1915(b)(1) of the Act--(1) Basic
rules. (i) An agency must submit, as part of it's waiver request,
assurance that the entities described in paragraph (h)(2) of this
section will be excluded from participation under an approved waiver.
(ii) FFP is available in payments to an entity that furnishes
services under a section 1915(b)(1) waiver only if the agency excludes
from participation any entity described in paragraph (h)(2) of this
section.
(2) Entities that must be excluded. The agency must exclude an
entity that meets any of the following conditions:
(i) Could be excluded under section 1128(b)(8) of the Act as being
controlled by a sanctioned individual.
(ii) Has a substantial contractual relationship (direct or indirect)
with an individual convicted of certain crimes, as described in section
1128(b)(8)(B) of the Act.
(iii) Employs or contracts directly or indirectly with one of the
following:
(A) Any individual or entity that, under section 1128 or section
1128A of the Act, is precluded from furnishing health care, utilization
review, medical social services, or administrative services.
(B) Any entity described in paragraph (h)(2)(i) of this section.
(3) Definitions. As used in this section, substantial contractual
relationship means any contractual relationship that provides for one or
more of the following services:
(i) The administration, management, or provision of medical
services.
(ii) The establishment of policies, or the provision of operational
support, for the administration, management, or provision of medical
services.
[56 FR 8847, Mar. 1, 1991, as amended at 59 FR 4599, Feb. 1, 1994; 59 FR
36084, July 15, 1994; 67 FR 41094, June 14, 2002]
[[Page 30]]
Sec. 431.56 Special waiver provisions applicable to American Samoa and the Northern Mariana Islands.
(a) Statutory basis. Section 1902(j) of the Act provides for waiver
of all but three of the title XIX requirements, in the case of American
Samoa and the Northern Mariana Islands.
(b) Waiver provisions. American Samoa or the Northern Mariana
Islands may request, and CMS may approve, a waiver of any of the title
XIX requirements except the following:
(1) The Federal medical assistance percentage specified in section
1903 of the Act and Sec. 433.10(b) of this chapter.
(2) The limit imposed by section 1108(c) of the Act on the amount of
Federal funds payable to American Samoa or the Northern Mariana Islands
for care and services that meet the section 1905(a) definition for
Medicaid assistance.
(3) The requirement that payment be made only with respect to
expenditure made by American Samoa or the Northern Mariana Islands for
care and services that meet the section 1905(a) definition of medical
assistance.
Sec. 431.57 Waiver of cost-sharing requirements.
(a) Sections 1916(a)(3) and 1916(b)(3) of the Act specify the
circumstances under which the Secretary is authorized to waive the
requirement that cost-sharing amounts be nominal.
(b) For nonemergency services furnished in a hospital emergency
room, the Secretary may by waiver permit a State to impose a copayment
of up to double the ``nominal'' copayment amounts determined under Sec.
447.54(a)(3) of this subchapter.
(c) Nonemergency services are services that do not meet the
definition of emergency services at Sec. 447.53(b)(4) of this
subchapter.
(d) In order for a waiver to be approved under this section, the
State must establish to the satisfaction of CMS that alternative sources
of nonemergency, outpatient services are available and accessible to
recipients.
(e) Although, in accordance with Sec. 431.55(b)(3) of this part, a
waiver will generally be granted for a 2-year duration, CMS will
reevaluate waivers approved under this section if the State increases
the nominal copayment amounts in effect when the waiver was approved.
(f) A waiver approved under this section cannot apply to services
furnished before the waiver was granted.
[59 FR 4600, Feb. 1, 1994]
Subpart C_Administrative Requirements: Provider Relations
Sec. 431.105 Consultation to medical facilities.
(a) Basis and purpose. This section implements section 1902(a)(24)
of the Act, which requires that the State plan provide for consultative
services by State agencies to certain institutions furnishing Medicaid
services.
(b) State plan requirements. A State plan must provide that health
agencies and other appropriate State agencies furnish consultative
services to hospitals, nursing homes, home health agencies, clinics, and
laboratories in order to assist these facilities to--
(1) Qualify for payments under the maternal and child health and
crippled children's program (title V of the Act), Medicaid or Medicare;
(2) Establish and maintain fiscal records necessary for the proper
and efficient administration of the Act; and
(3) Provide information needed to determine payments due under the
Act for services furnished to recipients.
(c) State plan option: Consultation to other facilities. The plan
may provide that health agencies and other appropriate State agencies
furnish consultation to other types of facilities if those facilities
are specified in the plan and provide medical care to individuals
receiving services under the programs specified in paragraph (b) of this
section.
Sec. 431.107 Required provider agreement.
(a) Basis and purpose. This section sets forth State plan
requirements, based on sections 1902(a)(4), 1902(a)(27), 1902(a)(57),
and 1902(a)(58) of the Act, that relate to the keeping of records and
the furnishing of information by all providers of services (including
individual practitioners and groups of practitioners).
[[Page 31]]
(b) Agreements. A State plan must provide for an agreement between
the Medicaid agency and each provider or organization furnishing
services under the plan in which the provider or organization agrees to:
(1) Keep any records necessary to disclose the extent of services
the provider furnishes to recipients;
(2) On request, furnish to the Medicaid agency, the Secretary, or
the State Medicaid fraud control unit (if such a unit has been approved
by the Secretary under Sec. 455.300 of this chapter), any information
maintained under paragraph (b)(1) of this section and any information
regarding payments claimed by the provider for furnishing services under
the plan;
(3) Comply with the disclosure requirements specified in part 455,
subpart B of this chapter; and
(4) Comply with the advance directives requirements for hospitals,
nursing facilities, providers of home health care and personal care
services, hospices, and HMOs specified in part 489, subpart I, and Sec.
417.436(d) of this chapter.
[44 FR 41644, July 17, 1979, as amended at 57 FR 8202, Mar. 6, 1992]
Sec. 431.108 Effective date of provider agreements.
(a) Applicability--(1) General rule. Except as provided in paragraph
(a)(2) of this section, this section applies to Medicaid provider
agreements with entities that, as a basis for participation in
Medicaid--
(i) Are subject to survey and certification by CMS or the State
survey agency; or
(ii) Are deemed to meet Federal requirements on the basis of
accreditation by an accrediting organization whose program has CMS
approval at the time of accreditation survey and accreditation decision.
(2) Exception. A Medicaid provider agreement with a laboratory is
effective only while the laboratory has in effect a valid CLIA
certificate issued under part 493 of this chapter, and only for the
specialty and subspecialty tests it is authorized to perform.
(b) All requirements are met on the date of survey. The agreement is
effective on the date the onsite survey (including the Life Safety Code
survey if applicable) is completed, if on that date the provider meets--
(1) All applicable Federal requirements as set forth in this
chapter; and
(2) Any other requirements imposed by the State for participation in
the Medicaid program. (If the provider has a time-limited agreement, the
new agreement is effective on the day following expiration of the
current agreement.)
(c) All requirements are not met on the date of survey. If on the
date the survey is completed the provider fails to meet any of the
requirements specified in paragraph (b) of this section, the following
rules apply:
(1) An NF provider agreement is effective on the date on which--
(i) The NF is found to be in substantial compliance as defined in
Sec. 488.301 of this chapter; and
(ii) CMS or the State survey agency receives from the NF, if
applicable, an approvable waiver request.
(2) For an agreement with any other provider, the effective date is
the earlier of the following:
(i) The date on which the provider meets all requirements.
(ii) The date on which a provider is found to meet all conditions of
participation but has lower level deficiencies, and CMS or the State
survey agency receives from the provider an acceptable plan of
correction for the lower level deficiencies, or an approvable waiver
request, or both. (The date of receipt is the effective date of the
agreement, regardless of when CMS approves the plan of correction or
waiver request, or both.)
(d) Accredited provider requests participation in the Medicaid
program--(1) General rule. If a provider is currently accredited by a
national accrediting organization whose program had CMS approval at the
time of accreditation survey and accreditation decision, and on the
basis of accreditation, CMS has deemed the provider to meet Federal
requirements, the effective date depends on whether the provider is
subject to requirements in addition to those included in the accrediting
organization's approved program.
[[Page 32]]
(i) Provider subject to additional requirements. For a provider that
is subject to additional requirements, Federal or State, or both, the
effective date is the date on which the provider meets all requirements,
including the additional requirements.
(ii) Provider not subject to additional requirements. For a provider
that is not subject to additional requirements, the effective date is
the date of the provider's initial request for participation if on that
date the provider met all Federal requirements.
(2) Special rule: Retroactive effective date. If the provider meets
the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of
this section, the effective date may be retroactive for up to one year,
to encompass dates on which the provider furnished, to a Medicaid
recipient, covered services for which it has not been paid.
[62 FR 43935, Aug. 18, 1997]
Sec. 431.110 Participation by Indian Health Service facilities.
(a) Basis. This section is based on section 1902(a)(4) of the Act,
proper and efficient administration; 1902(a)(23), free choice of
provider; and 1911, reimbursement of Indian Health Service facilities.
(b) State plan requirements. A State plan must provide that an
Indian Health Service facility meeting State requirements for Medicaid
participation must be accepted as a Medicaid provider on the same basis
as any other qualified provider. However, when State licensure is
normally required, the facility need not obtain a license but must meet
all applicable standards for licensure. In determining whether a
facility meets these standards, a Medicaid agency or State licensing
authority may not take into account an absence of licensure of any staff
member of the facility.
Sec. 431.115 Disclosure of survey information and provider or contractor evaluation.
(a) Basis and purpose. This section implements--
(1) Section 1902(a)(36) of the Act, which requires a State plan to
provide that the State survey agency will make publicly available the
findings from surveys of health care facilities, laboratories, agencies,
clinics, or organizations; and
(2) Section 1106(d) of the Act, which places certain restrictions on
the Medicaid agency's disclosure of contractor and provider evaluations.
(b) Definition of State survey agency. The State survey agency
referred to in this section means the agency specified under section
1902(a)(9) of the Act as responsible for establishing and maintaining
health standards for private or public institutions in which Medicaid
recipients may receive services.
(c) State plan requirements. A State plan must provide that the
requirements of this section and Sec. 488.325 of this chapter are met.
(d) Disclosure procedure. The Medicaid agency must have a procedure
for disclosing pertinent findings obtained from surveys made by the
State survey agency to determine if a health care facility, laboratory,
agency, clinic or health care organization meets the requirements for
participation in the Medicaid program.
(e) Documents subject to disclosure. Documents subject to disclosure
include--
(1) Survey reports, except for Joint Commission on the Accreditation
of Hospitals reports prohibited from disclosure under Sec.
422.426(b)(2) of this chapter;
(2) Official notifications of findings based on survey reports:
(3) Pertinent parts of written documents furnished by the health
care provider to the survey agency that relate to the reports and
findings; and
(4) Ownership and contract information as specified in Sec. 455.104
of this subchapter.
(f) Availability for inspection and copy of statements listing
deficiencies. The disclosure procedure must provide that the State
survey agency will--
(1) Make statements of deficiencies based on the survey reports
available for inspection and copying in both the public assistance
office and the Social Security Administration district office serving
the area where the provider is located; and
(2) Submit to the Regional Medicaid Director, through the Medicaid
agency,
[[Page 33]]
a plan for making those findings available in other public assistance
offices in standard metropolitian statistical areas where this
information would be helpful to persons likely to use the health care
provider's services.
(g) When documents must be made available. The disclosure procedure
must provide that the State survey agency will--
(1) Retain in the survey agency office and make available upon
request survey reports and current and accurate ownership information;
and
(2) Make available survey reports, findings, and deficiency
statements immediately upon determining that a health care provider is
eligible to begin or continue participation in the Medicaid program, or
within 90 days after completion of the survey, whichever occurs first.
(h) Evaluation reports on providers and contractors. (1) If the
Secretary sends the following reports to the Medicaid agency, the agency
must meet the requirements of paragraphs (h) (2) and (3) of this section
in releasing them:
(i) Individual contractor performance reviews and other formal
performance evaluations of carriers, intermediaries, and State agencies,
including the reports of followup reviews;
(ii) Comparative performance evaluations of those contractors,
including comparisons of either overall performance or of any particular
aspect of contractor operations; and
(iii) Program validation survey reports and other formal performance
evaluations of providers, including the reports of followup reviews.
(2) The agency must not make the reports public until--
(i) The contractor or provider has had a reasonable opportunity, not
to exceed 30 days, to comment on them; and
(ii) Those comments have been incorporated in the report.
(3) The agency must ensure that the reports contain no
identification of individual patients, individual health care
practitioners or other individuals.
[43 FR 45188, Sept. 29, 1978, as amended at 44 FR 41644, July 17, 1979;
59 FR 56232, Nov. 10, 1994]
Sec. 431.120 State requirements with respect to nursing facilities.
(a) State plan requirements. A State plan must--
(1) Provide that the requirements of subpart D of part 483 of this
chapter are met; and
(2) Specify the procedures and rules that the State follows in
carrying out the specified requirements, including review and approval
of State-operated programs.
(3) To an NF or ICF/MR that is dissatisfied with a determination as
to the effective date of its provider agreement.
(b) Basis and scope of requirements. The requirements set forth in
part 483 of this chapter pertain to the following aspects of nursing
facility services and are required by the indicated sections of the Act.
(1) Nurse aide training and competency programs, and evaluation of
nurse aide competency (1919(e)(1) of the Act).
(2) Nurse aide registry (1919(e)(2) of the Act).
[56 FR 48918, Sept. 26, 1991, as amended at 62 FR 43935, Aug. 18, 1997]
Subpart D_Appeals Process for NFs and ICFs/MR
Source: 44 FR 9753, Feb. 15, 1979, unless otherwise noted.
Sec. 431.151 Scope and applicability.
(a) General rules. This subpart sets forth the appeals procedures
that a State must make available as follows:
(1) To a nursing facility (NF) that is dissatisfied with a State's
finding of noncompliance that has resulted in one of the following
adverse actions:
(i) Denial or termination of its provider agreement.
(ii) Imposition of a civil money penalty or other alternative
remedy.
(2) To an intermediate care facility for the mentally retarded (ICF/
MR) that is dissatisfied with a State's finding of noncompliance that
has resulted in the denial, termination, or nonrenewal of its provider
agreement.
(3) To an NF or ICF/MR that is dissatisfied with a determination as
to
[[Page 34]]
the effective date of its provider agreement.
(b) Special rules. This subpart also sets forth the special rules
that apply in particular circumstances, the limitations on the grounds
for appeal, and the scope of review during a hearing.
[61 FR 32348, June 24, 1996, as amended at 62 FR 43935, Aug. 18, 1997]
Sec. 431.152 State plan requirements.
The State plan must provide for appeals procedures that, as a
minimum, satisfy the requirements of Sec. Sec. 431.153 and 431.154.
[59 FR 56232, Nov. 10, 1994, as amended at 61 FR 32348, June 24, 1996]
Sec. 431.153 Evidentiary hearing.
(a) Right to hearing. Except as provided in paragraph (b) of this
section, and subject to the provisions of paragraphs (c) through (j) of
this section, the State must give the facility a full evidentiary
hearing for any of the actions specified in Sec. 431.151.
(b) Limit on grounds for appeal. The following are not subject to
appeal:
(1) The choice of sanction or remedy.
(2) The State monitoring remedy.
(3) [Reserved]
(4) The level of noncompliance found by a State except when a
favorable final administrative review decision would affect the range of
civil money penalty amounts the State could collect.
(5) A State survey agency's decision as to when to conduct an
initial survey of a prospective provider.
(c) Notice of deficiencies and impending remedies. The State must
give the facility a written notice that includes:
(1) The basis for the decision; and
(2) A statement of the deficiencies on which the decision was based.
(d) Request for hearing. The facility or its legal representative or
other authorized official must file written request for hearing within
60 days of receipt of the notice of adverse action.
(e) Special rules: Denial, termination or nonrenewal of provider
agreement--(1) Appeal by an ICF/MR. If an ICF/MR requests a hearing on
denial, termination, or nonrenewal of its provider agreement--
(i) The evidentiary hearing must be completed either before, or
within 120 days after, the effective date of the adverse action; and
(ii) If the hearing is made available only after the effective date
of the action, the State must, before that date, offer the ICF/MR an
informal reconsideration that meets the requirements of Sec. 431.154.
(2) Appeal by an NF. If an NF requests a hearing on the denial or
termination of its provider agreement, the request does not delay the
adverse action and the hearing need not be completed before the
effective date of the action.
(f) Special rules: Imposition of remedies. If a State imposes a
civil money penalty or other remedies on an NF, the following rules
apply:
(1) Basic rule. Except as provided in paragraph (f)(2) of this
section (and notwithstanding any provision of State law), the State must
impose all remedies timely on the NF, even if the NF requests a hearing.
(2) Exception. The State may not collect a civil money penalty until
after the 60-day period for request of hearing has elapsed or, if the NF
requests a hearing, until issuance of a final administrative decision
that supports imposition of the penalty.
(g) Special rules: Dually participating facilities. If an NF is also
participating or seeking to participate in Medicare as an SNF, and the
basis for the State's denial or termination of participation in Medicaid
is also a basis for denial or termination of participation in Medicare,
the State must advise the facility that--
(1) The appeals procedures specified for Medicare facilities in part
498 of this chapter apply; and
(2) A final decision entered under the Medicare appeals procedures
is binding for both programs.
(h) Special rules: Adverse action by CMS. If CMS finds that an NF is
not in substantial compliance and either terminates the NF's Medicaid
provider agreement or imposes alternative remedies on the NF (because
CMS's findings and proposed remedies prevail over those of the State in
accordance with Sec. 488.452 of this chapter), the NF is entitled only
to the appeals procedures
[[Page 35]]
set forth in part 498 of this chapter, instead of the procedures
specified in this subpart.
(i) Required elements of hearing. The hearing must include at least
the following:
(1) Opportunity for the facility--
(i) To appear before an impartial decision-maker to refute the
finding of noncompliance on which the adverse action was based;
(ii) To be represented by counsel or other representative; and
(iii) To be heard directly or through its representative, to call
witnesses, and to present documentary evidence.
(2) A written decision by the impartial decision-maker, setting
forth the reasons for the decision and the evidence on which the
decision is based.
(j) Limits on scope of review: Civil money penalty cases. In civil
money penalty cases--
(1) The State's finding as to a NF's level of noncompliance must be
upheld unless it is clearly erroneous; and
(2) The scope of review is as set forth in Sec. 488.438(e) of this
chapter.
[61 FR 32348, June 24, 1996, as amended at 62 FR 43935, Aug. 18, 1997;
64 FR 39937, July 23, 1999]
Sec. 431.154 Informal reconsideration for ICFs/MR.
The informal reconsideration must, at a minimum, include--
(a) Written notice to the facility of the denial, termination or
nonrenewal and the findings upon which it was based;
(b) A reasonable opportunity for the facility to refute those
findings in writing, and
(c) A written affirmation or reversal of the denial, termination, or
nonrenewal.
[44 FR 9753, Feb. 15, 1979, as amended at 59 FR 56233, Nov. 10, 1994; 61
FR 32349, June 24, 1996]
Subpart E_Fair Hearings for Applicants and Recipients
Source: 44 FR 17932, Mar. 29, 1979, unless otherwise noted.
General Provisions
Sec. 431.200 Basis and scope.
This subpart--
(a) Implements section 1902(a)(3) of the Act, which requires that a
State plan provide an opportunity for a fair hearing to any person whose
claim for assistance is denied or not acted upon promptly;
(b) Prescribes procedures for an opportunity for a hearing if the
State agency or PAHP takes action, as stated in this subpart, to
suspend, terminate, or reduce services, or an MCO or PIHP takes action
under subpart F of part 438 of this chapter; and
(c) Implements sections 1919(f)(3) and 1919(e)(7)(F) of the Act by
providing an appeals process for any person who--
(1) Is subject to a proposed transfer or discharge from a nursing
facility; or
(2) Is adversely affected by the pre-admission screening or the
annual resident review that are required by section 1919(e)(7) of the
Act.
[67 FR 41094, June 14, 2002]
Sec. 431.201 Definitions.
For purposes of this subpart:
Action means a termination, suspension, or reduction of Medicaid
eligibility or covered services. It also means determinations by skilled
nursing facilities and nursing facilities to transfer or discharge
residents and adverse determinations made by a State with regard to the
preadmission screening and annual resident review requirements of
section 1919(e)(7) of the Act.
Adverse determination means a determination made in accordance with
sections 1919(b)(3)(F) or 1919(e)(7)(B) of the Act that the individual
does not require the level of services provided by a nursing facility or
that the individual does or does not require specialized services.
Date of action means the intended date on which a termination,
suspension, reduction, transfer or discharge becomes effective. It also
means the date of the determination made by a State with regard to the
preadmission screening and annual resident review requirements of
section 1919(e)(7) of the Act.
[[Page 36]]
De novo hearing means a hearing that starts over from the beginning.
Evidentiary hearing means a hearing conducted so that evidence may
be presented.
Notice means a written statement that meets the requirements of
Sec. 431.210.
Request for a hearing means a clear expression by the applicant or
recipient, or his authorized representative, that he wants the
opportunity to present his case to a reviewing authority.
Service authorization request means a managed care enrollee's
request for the provision of a service.
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56505, Nov. 30, 1992;
67 FR 41095, June 14, 2002]
Sec. 431.202 State plan requirements.
A State plan must provide that the requirements of Sec. Sec.
431.205 through 431.246 of this subpart are met.
Sec. 431.205 Provision of hearing system.
(a) The Medicaid agency must be responsible for maintaining a
hearing system that meets the requirements of this subpart.
(b) The State's hearing system must provide for--
(1) A hearing before the agency; or
(2) An evidentiary hearing at the local level, with a right of
appeal to a State agency hearing.
(c) The agency may offer local hearings in some political
subdivisions and not in others.
(d) The hearing system must meet the due process standards set forth
in Goldberg v. Kelly, 397 U.S. 254 (1970), and any additional standards
specified in this subpart.
Sec. 431.206 Informing applicants and recipients.
(a) The agency must issue and publicize its hearing procedures.
(b) The agency must, at the time specified in paragraph (c) of this
section, inform every applicant or recipient in writing--
(1) Of his right to a hearing;
(2) Of the method by which he may obtain a hearing; and
(3) That he may represent himself or use legal counsel, a relative,
a friend, or other spokesman.
(c) The agency must provide the information required in paragraph
(b) of this section--(1) At the time that the individual applies for
Medicaid;
(2) At the time of any action affecting his or her claim;
(3) At the time a skilled nursing facility or a nursing facility
notifies a resident in accordance with Sec. 483.12 of this chapter that
he or she is to be transferred or discharged; and
(4) At the time an individual receives an adverse determination by
the State with regard to the preadmission screening and annual resident
review requirements of section 1919(e)(7) of the Act.
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56505, Nov. 30, 1992;
58 FR 25784, Apr. 28, 1993]
Notice
Sec. 431.210 Content of notice.
A notice required under Sec. 431.206 (c)(2), (c)(3), or (c)(4) of
this subpart must contain--
(a) A statement of what action the State, skilled nursing facility,
or nursing facility intends to take;
(b) The reasons for the intended action;
(c) The specific regulations that support, or the change in Federal
or State law that requires, the action;
(d) An explanation of--
(1) The individual's right to request an evidentiary hearing if one
is available, or a State agency hearing; or
(2) In cases of an action based on a change in law, the
circumstances under which a hearing will be granted; and
(e) An explanation of the circumstances under which Medicaid is
continued if a hearing is requested.
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56505, Nov. 30, 1992]
Sec. 431.211 Advance notice.
The State or local agency must mail a notice at least 10 days before
the date of action, except as permitted under Sec. Sec. 431.213 and
431.214 of this subpart.
[[Page 37]]
Sec. 431.213 Exceptions from advance notice.
The agency may mail a notice not later than the date of action if--
(a) The agency has factual information confirming the death of a
recipient;
(b) The agency receives a clear written statement signed by a
recipient that--
(1) He no longer wishes services; or
(2) Gives information that requires termination or reduction of
services and indicates that he understands that this must be the result
of supplying that information;
(c) The recipient has been admitted to an institution where he is
ineligible under the plan for further services;
(d) The recipient's whereabouts are unknown and the post office
returns agency mail directed to him indicating no forwarding address
(See Sec. 431.231 (d) of this subpart for procedure if the recipient's
whereabouts become known);
(e) The agency establishes the fact that the recipient has been
accepted for Medicaid services by another local jurisdiction, State,
territory, or commonwealth;
(f) A change in the level of medical care is prescribed by the
recipient's physician;
(g) The notice involves an adverse determination made with regard to
the preadmission screening requirements of section 1919(e)(7) of the
Act; or
(h) The date of action will occur in less than 10 days, in
accordance with Sec. 483.12(a)(5)(ii), which provides exceptions to the
30 days notice requirements of Sec. 483.12(a)(5)(i).
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56505, Nov. 30, 1992;
58 FR 25784, Apr. 28, 1993]
Sec. 431.214 Notice in cases of probable fraud.
The agency may shorten the period of advance notice to 5 days before
the date of action if--
(a) The agency has facts indicating that action should be taken
because of probable fraud by the recipient; and
(b) The facts have been verified, if possible, through secondary
sources.
Right to Hearing
Sec. 431.220 When a hearing is required.
(a) The State agency must grant an opportunity for a hearing to the
following:
(1) Any applicant who requests it because his claim for services is
denied or is not acted upon with reasonable promptness.
(2) Any recipient who requests it because he or she believes the
agency has taken an action erroneously.
(3) Any resident who requests it because he or she believes a
skilled nursing facility or nursing facility has erroneously determined
that he or she must be transferred or discharged.
(4) Any individual who requests it because he or she believes the
State has made an erroneous determination with regard to the
preadmission and annual resident review requirements of section
1919(e)(7) of the Act.
(5) Any MCO or PIHP enrollee who is entitled to a hearing under
subpart F of part 438 of this chapter.
(6) Any PAHP enrollee who has an action as stated in this subpart.
(7) Any enrollee who is entitled to a hearing under subpart B of
part 438 of this chapter.
(b) The agency need not grant a hearing if the sole issue is a
Federal or State law requiring an automatic change adversely affecting
some or all recipients.
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56505, Nov. 30, 1992;
67 FR 41095, June 14, 2002; 67 FR 65505, Oct. 25, 2002]
Sec. 431.221 Request for hearing.
(a) The agency may require that a request for a hearing be in
writing.
(b) The agency may not limit or interfere with the applicant's or
recipient's freedom to make a request for a hearing.
(c) The agency may assist the applicant or recipient in submitting
and processing his request.
(d) The agency must allow the applicant or recipient a reasonable
time, not to exceed 90 days from the date that notice of action is
mailed, to request a hearings.
Sec. 431.222 Group hearings.
The agency--
[[Page 38]]
(a) May respond to a series of individual requests for hearing by
conducting a single group hearing;
(b) May consolidate hearings only in cases in which the sole issue
involved is one of Federal or State law or policy;
(c) Must follow the policies of this subpart and its own policies
governing hearings in all group hearings; and
(d) Must permit each person to present his own case or be
represented by his authorized representative.
Sec. 431.223 Denial or dismissal of request for a hearing.
The agency may deny or dismiss a request for a hearing if--
(a) The applicant or recipient withdraws the request in writing; or
(b) The applicant or recipient fails to appear at a scheduled
hearing without good cause.
Procedures
Sec. 431.230 Maintaining services.
(a) If the agency mails the 10-day or 5-day notice as required under
Sec. 431.211 or Sec. 431.214 of this subpart, and the recipient
requests a hearing before the date of action, the agency may not
terminate or reduce services until a decision is rendered after the
hearing unless--
(1) It is determined at the hearing that the sole issue is one of
Federal or State law or policy; and
(2) The agency promptly informs the recipient in writing that
services are to be terminated or reduced pending the hearing decision.
(b) If the agency's action is sustained by the hearing decision, the
agency may institute recovery procedures against the applicant or
recipient to recoup the cost of any services furnished the recipient, to
the extent they were furnished solely by reason of this section.
[44 FR 17932, Mar. 29, 1979, as amended at 45 FR 24882, Apr. 11, 1980]
Sec. 431.231 Reinstatement of services.
(a) The agency may reinstate services if a recipient requests a
hearing not more than 10 days after the date of action.
(b) The reinstated services must continue until a hearing decision
unless, at the hearing, it is determined that the sole issue is one of
Federal or State law or policy.
(c) The agency must reinstate and continue services until a decision
is rendered after a hearing if--
(1) Action is taken without the advance notice required under Sec.
431.211 or Sec. 431.214 of this subpart;
(2) The recipient requests a hearing within 10 days of the mailing
of the notice of action; and
(3) The agency determines that the action resulted from other than
the application of Federal or State law or policy.
(d) If a recipient's whereabouts are unknown, as indicated by the
return of unforwardable agency mail directed to him, any discontinued
services must be reinstated if his whereabouts become known during the
time he is eligible for services.
Sec. 431.232 Adverse decision of local evidentiary hearing.
If the decision of a local evidentiary hearing is adverse to the
applicant or recipient, the agency must--
(a) Inform the applicant or recipient of the decision;
(b) Inform the applicant or recipient that he has the right to
appeal the decision to the State agency, in writing, within 15 days of
the mailing of the notice of the adverse decision;
(c) Inform the applicant or recipient of his right to request that
his appeal be a de novo hearing; and
(d) Discontinue services after the adverse decision.
Sec. 431.233 State agency hearing after adverse decision of local evidentiary hearing.
(a) Unless the applicant or recipient specifically requests a de
novo hearing, the State agency hearing may consist of a review by the
agency hearing officer of the record of the local evidentiary hearing to
determine whether the decision of the local hearing officer was
supported by substantial evidence in the record.
(b) A person who participates in the local decision being appealed
may not participate in the State agency hearing decision.
[[Page 39]]
Sec. 431.240 Conducting the hearing.
(a) All hearings must be conducted--
(1) At a reasonable time, date, and place;
(2) Only after adequate written notice of the hearing; and
(3) By one or more impartial officials or other individuals who have
not been directly involved in the initial determination of the action in
question.
(b) If the hearing involves medical issues such as those concerning
a diagnosis, an examining physician's report, or a medical review team's
decision, and if the hearing officer considers it necessary to have a
medical assessment other than that of the individual involved in making
the original decision, such a medical assessment must be obtained at
agency expense and made part of the record.
Sec. 431.241 Matters to be considered at the hearing.
The hearing must cover--
(a) Agency action or failure to act with reasonable promptness on a
claim for services, including both initial and subsequent decisions
regarding eligibility;
(b) Agency decisions regarding changes in the type or amount of
services;
(c) A decision by a skilled nursing facility or nursing facility to
transfer or discharge a resident; and
(d) A State determination with regard to the preadmission screening
and annual resident review requirements of section 1919(e)(7) of the
Act.
[57 FR 56505, Nov. 30, 1992]
Sec. 431.242 Procedural rights of the applicant or recipient.
The applicant or recipient, or his representative, must be given an
opportunity to--
(a) Examine at a reasonable time before the date of the hearing and
during the hearing:
(1) The content of the applicant's or recipient's case file; and
(2) All documents and records to be used by the State or local
agency or the skilled nursing facility or nursing facility at the
hearing;
(b) Bring witnesses;
(c) Establish all pertinent facts and circumstances;
(d) Present an argument without undue interference; and
(e) Question or refute any testimony or evidence, including
opportunity to confront and cross-examine adverse witnesses.
[44 FR 17932, Mar. 29, 1979, as amended at 57 FR 56506, Nov. 30, 1992]
Sec. 431.243 Parties in cases involving an eligibility determination.
If the hearing involves an issue of eligibility and the Medicaid
agency is not responsible for eligibility determinations, the agency
that is responsible for determining eligibility must participate in the
hearing.
Sec. 431.244 Hearing decisions.
(a) Hearing recommendations or decisions must be based exclusively
on evidence introduced at the hearing.
(b) The record must consist only of--
(1) The transcript or recording of testimony and exhibits, or an
official report containing the substance of what happened at the
hearing;
(2) All papers and requests filed in the proceeding; and
(3) The recommendation or decision of the hearing officer.
(c) The applicant or recipient must have access to the record at a
convenient place and time.
(d) In any evidentiary hearing, the decision must be a written one
that--
(1) Summarizes the facts; and
(2) Identifies the regulations supporting the decision.
(e) In a de novo hearing, the decision must--
(1) Specify the reasons for the decision; and
(2) Identify the supporting evidence and regulations.
(f) The agency must take final administrative action as follows:
(1) Ordinarily, within 90 days from the earlier of the following:
(i) The date the enrollee filed an MCO or PIHP appeal, not including
the number of days the enrollee took to subsequently file for a State
fair hearing; or
(ii) If permitted by the State, the date the enrollee filed for
direct access to a State fair hearing.
[[Page 40]]
(2) As expeditiously as the enrollee's health condition requires,
but no later than 3 working days after the agency receives, from the MCO
or PIHP, the case file and information for any appeal of a denial of a
service that, as indicated by the MCO or PIHP--
(i) Meets the criteria for expedited resolution as set forth in
Sec. 438.410(a) of this chapter, but was not resolved within the
timeframe for expedited resolution; or
(ii) Was resolved within the timeframe for expedited resolution, but
reached a decision wholly or partially adverse to the enrollee.
(3) If the State agency permits direct access to a State fair
hearing, as expeditiously as the enrollee's health condition requires,
but no later than 3 working days after the agency receives, directly
from an MCO or PIHP enrollee, a fair hearing request on a decision to
deny a service that it determines meets the criteria for expedited
resolution, as set forth in Sec. 438.410(a) of this chapter.
(g) The public must have access to all agency hearing decisions,
subject to the requirements of subpart F of this part for safeguarding
of information.
[44 FR 17932, Mar. 29, 1979, as amended at 67 FR 41095, June 14, 2002]
Sec. 431.245 Notifying the applicant or recipient of a State agency decision.
The agency must notify the applicant or recipient in writing of--
(a) The decision; and
(b) His right to request a State agency hearing or seek judicial
review, to the extent that either is available to him.
Sec. 431.246 Corrective action.
The agency must promptly make corrective payments, retroactive to
the date an incorrect action was taken, and, if appropriate, provide for
admission or readmission of an individual to a facility if--
(a) The hearing decision is favorable to the applicant or recipient;
or
(b) The agency decides in the applicant's or recipient's favor
before the hearing.
[57 FR 56506, Nov. 30, 1992]
Federal Financial Participation
Sec. 431.250 Federal financial participation.
FFP is available in expenditures for--
(a) Payments for services continued pending a hearing decision;
(b) Payments made--
(1) To carry out hearing decisions; and
(2) For services provided within the scope of the Federal Medicaid
program and made under a court order.
(c) Payments made to take corrective action prior to a hearing;
(d) Payments made to extend the benefit of a hearing decision or
court order to individuals in the same situation as those directly
affected by the decision or order;
(e) Retroactive payments under paragraphs (b), (c), and (d) of this
section in accordance with applicable Federal policies on corrective
payments; and
(f) Administrative costs incurred by the agency for--
(1) Transportation for the applicant or recipient, his
representative, and witnesses to and from the hearing;
(2) Meeting other expenses of the applicant or recipient in
connection with the hearing;
(3) Carrying out the hearing procedures, including expenses of
obtaining the additional medical assessment specified in Sec. 431.240
of this subpart; and
(4) Hearing procedures for Medicaid and non-Medicaid individuals
appealing transfers, discharges and determinations of preadmission
screening and annual resident reviews under part 483, subparts C and E
of this chapter.
[44 FR 17932, Mar. 29, 1979, as amended at 45 FR 24882, Apr. 11, 1980;
57 FR 56506, Nov. 30, 1992]
Subpart F_Safeguarding Information on Applicants and Recipients
Source: 44 FR 17934, Mar. 29, 1979, unless otherwise noted.
Sec. 431.300 Basis and purpose.
(a) Section 1902(a)(7) of the Act requires that a State plan must
provide
[[Page 41]]
safeguards that restrict the use or disclosure of information concerning
applicants and recipients to purposes directly connected with the
administration of the plan. This subpart specifies State plan
requirements, the types of information to be safeguarded, the conditions
for release of safeguarded information, and restrictions on the
distribution of other information.
(b) Section 1137 of the Act, which requires agencies to exchange
information in order to verify the income and eligibility of applicants
and recipients (see Sec. 435.940ff), requires State agencies to have
adequate safeguards to assure that--
(1) Information exchanged by the State agencies is made available
only to the extent necessary to assist in the valid administrative needs
of the program receiving the information, and information received under
section 6103(l) of the Internal Revenue Code of 1954 is exchanged only
with agencies authorized to receive that information under that section
of the Code; and
(2) The information is adequately stored and processed so that it is
protected against unauthorized disclosure for other purposes.
[51 FR 7210, Feb. 28, 1986]
Sec. 431.301 State plan requirements.
A State plan must provide, under a State statute that imposes legal
sanctions, safeguards meeting the requirements of this subpart that
restrict the use or disclosure of information concerning applicants and
recipients to purposes directly connected with the administration of the
plan.
Sec. 431.302 Purposes directly related to State plan administration.
Purposes directly related to plan administration include--
(a) Establishing eligibility;
(b) Determining the amount of medical assistance;
(c) Providing services for recipients; and
(d) Conducting or assisting an investigation, prosecution, or civil
or criminal proceeding related to the administration of the plan.
Sec. 431.303 State authority for safeguarding information.
The Medicaid agency must have authority to implement and enforce the
provisions specified in this subpart for safeguarding information about
applicants and recipients.
Sec. 431.304 Publicizing safeguarding requirements.
(a) The agency must publicize provisions governing the confidential
nature of information about applicants and recipients, including the
legal sanctions imposed for improper disclosure and use.
(b) The agency must provide copies of these provisions to applicants
and recipients and to other persons and agencies to whom information is
disclosed.
Sec. 431.305 Types of information to be safeguarded.
(a) The agency must have criteria that govern the types of
information about applicants and recipients that are safeguarded.
(b) This information must include at least--
(1) Names and addresses;
(2) Medical services provided;
(3) Social and economic conditions or circumstances;
(4) Agency evaluation of personal information;
(5) Medical data, including diagnosis and past history of disease or
disability; and
(6) Any information received for verifying income eligibility and
amount of medical assistance payments (see Sec. 435.940ff). Income
information received from SSA or the Internal Revenue Service must be
safeguarded according to the requirements of the agency that furnished
the data.
(7) Any information received in connection with the identification
of legally liable third party resources under Sec. 433.138 of this
chapter.
[44 FR 17934, Mar. 29, 1979, as amended at 51 FR 7210, Feb. 28, 1986; 52
FR 5975, Feb. 27, 1987]
Sec. 431.306 Release of information.
(a) The agency must have criteria specifying the conditions for
release and use of information about applicants and recipients.
[[Page 42]]
(b) Access to information concerning applicants or recipients must
be restricted to persons or agency representatives who are subject to
standards of confidentiality that are comparable to those of the agency.
(c) The agency must not publish names of applicants or recipients.
(d) The agency must obtain permission from a family or individual,
whenever possible, before responding to a request for information from
an outside source, unless the information is to be used to verify
income, eligibility and the amount of medical assistance payment under
section 1137 of this Act and Sec. Sec. 435.940 through 435.965 of this
chapter.
If, because of an emergency situation, time does not permit obtaining
consent before release, the agency must notify the family or individual
immediately after supplying the information.
(e) The agency's policies must apply to all requests for information
from outside sources, including governmental bodies, the courts, or law
enforcement officials.
(f) If a court issues a subpoena for a case record or for any agency
representative to testify concerning an applicant or recipient, the
agency must inform the court of the applicable statutory provisions,
policies, and regulations restricting disclosure of information.
(g) Before requesting information from, or releasing information to,
other agencies to verify income, eligibility and the amount of
assistance under Sec. Sec. 435.940 through 435.965 of this chapter, the
agency must execute data exchange agreements with those agencies, as
specified in Sec. 435.945(f).
(h) Before requesting information from, or releasing information to,
other agencies to identify legally liable third party resources under
Sec. 433.138(d) of this chapter, the agency must execute data exchanges
agreements, as specified in Sec. 433.138(h)(2) of this chapter.
[44 FR 17934, Mar. 29, 1979, as amended at 51 FR 7210, Feb. 28, 1986; 52
FR 5975, Feb. 27, 1987]
Sec. 431.307 Distribution of information materials.
(a) All materials distributed to applicants, recipients, or medical
providers must--
(1) Directly relate to the administration of the Medicaid program;
(2) Have no political implications except to the extent required to
implement the National Voter Registration Act of 1993 (NVRA) Pub. L.
103-931; for States that are exempt from the requirements of NVRA, voter
registration may be a voluntary activity so long as the provisions of
section 7(a)(5) of NVRA are observed;
(3) Contain the names only of individuals directly connected with
the administration of the plan; and
(4) Identify those individuals only in their official capacity with
the State or local agency.
(b) The agency must not distribute materials such as ``holiday''
greetings, general public announcements, partisan voting information and
alien registration notices.
(c) The agency may distribute materials directly related to the
health and welfare of applicants and recipients, such as announcements
of free medical examinations, availability of surplus food, and consumer
protection information.
(d) Under NVRA, the agency must distribute voter information and
registration materials as specified in NVRA.
[44 FR 17934, Mar. 29, 1979, as amended at 61 FR 58143, Nov. 13, 1996]
Subparts G-L [Reserved]
Subpart M_Relations With Other Agencies
Sec. 431.610 Relations with standard-setting and survey agencies.
(a) Basis and purpose. This section implements--
(1) Section 1902(a)(9) of the Act, concerning the designation of
State authorities to be responsible for establishing and maintaining
health and other standards for institutions participating in Medicaid;
and
[[Page 43]]
(2) Section 1902(a)(33) of the Act, concerning the designation of
the State licensing agency to be responsible for determining whether
institutions and agencies meet requirements for participation in the
State's Medicaid program.
(3) Section 1919(g)(1)(A) of the Act, concerning responsibilities of
the State for certifying the compliance of non-State operated NFs with
requirements of participation in the State's Medicaid program.
(b) Designated agency responsible for health standards. A State plan
must designate, as the State authority responsible for establishing and
maintaining health standards for private or public institutions that
provide services to Medicaid recipients, the same State agency that is
used by the Secretary to determine qualifications of institutions and
suppliers of services to participate in Medicare (see 42 CFR 405.1902).
The requirement for establishing and maintaining standards does not
apply with respect to religious nonmedical institutions as defined in
Sec. 440.170(b) of this chapter.
(c) Designated agency responsible for standards other than health
standards. The plan must designate the Medicaid agency or other
appropriate State authority or authorities to be responsible for
establishing and maintaining standards, other than those relating to
health, for private or public institutions that provide services to
Medicaid recipients.
(d) Description and retention of standards. (1) The plan must
describe the standards established under paragraphs (b) and (c) of this
section.
(2) The plan must provide that the Medicaid agency keeps these
standards on file and makes them available to the Administrator upon
request.
(e) Designation of survey agency. The plan must provide that--
(1) The agency designated in paragraph (b) of this section, or
another State agency responsible for licensing health institutions in
the State, determines for the Medicaid agency whether institutions and
agencies meet the requirements for participation in the Medicaid
program; and
(2) The agency staff making the determination under paragraph (e)(1)
of this section is the same staff responsible for making similar
determinations for institutions or agencies participating under
Medicare; and
(3) The agency designated in paragraph (e)(1) of this section makes
recommendations regarding the effective dates of provider agreements, as
determined under Sec. 431.108.
(f) Written agreement required. The plan must provide for a written
agreement (or formal written intra-agency arrangement) between the
Medicaid agency and the survey agency designated under paragraph (e) of
this section, covering the activities of the survey agency in carrying
out its responsibilities. The agreement must specify that--
(1) Federal requirements and the forms, methods and procedures that
the Administrator designates will be used to determine provider
eligibility and certification under Medicaid;
(2) Inspectors surveying the premises of a provider will--
(i) Complete inspection reports;
(ii) Note on completed reports whether or not each requirement for
which an inspection is made is satisfied; and
(iii) Document deficiencies in reports;
(3) The survey agency will keep on file all information and reports
used in determining whether participating facilities meet Federal
requirements; and
(4) The survey agency will make the information and reports required
under paragraph (f)(3) of this section readily accessible to HHS and the
Medicaid agency as necessary--
(i) For meeting other requirements under the plan; and
(ii) For purposes consistent with the Medicaid agency's effective
administration of the program.
(g) Responsibilities of survey agency. The plan must provide that,
in certifying NFs and ICFs/MR, the survey agency designated under
paragraph (e) of this section will--
(1) Review and evaluate medical and independent professional review
team reports obtained under part 456 of this subchapter as they relate
to health and safety requirements;
[[Page 44]]
(2) Have qualified personnel perform on-site inspections
periodically as appropriate based on the timeframes in the correction
plan and--
(i) At least once during each certification period or more
frequently if there is a compliance question; and
(ii) For non-State operated NFs, within the timeframes specified in
Sec. 488.308 of this chapter.
(3) Have qualified personnel perform on-site inspections--
(i) At least once during each certification period or more
frequently if there is a compliance question; and
(ii) For intermediate care facilities with deficiencies as described
in Sec. Sec. 442.112 and 442.113 of this subchapter, within 6 months
after initial correction plan approval and every 6 months thereafter as
required under those sections.
(h) FFP for survey responsibilities. (1) FFP is available in
expenditures that the survey agency makes to carry out its survey and
certification responsibilities under the agreement specified in
paragraph (f) of this section.
(2) FFP is not available in any expenditures that the survey agency
makes that are attributable to the State's overall responsibilities
under State law and regulations for establishing and maintaining
standards.
[43 FR 45188, Sept. 29, 1978, as amended at 45 FR 24883, Apr. 11, 1980;
53 FR 20494, June 3, 1988; 57 FR 43923, Sept. 23, 1992; 59 FR 56233,
Nov. 10, 1994; 62 FR 43936, Aug. 18, 1997; 64 FR 67052, Nov. 30, 1999]
Sec. 431.615 Relations with State health and vocational rehabilitation agencies and title V grantees.
(a) Basis and purpose. This section implements section 1902(a)(11)
and (22)(C) of the Act, by setting forth State plan requirements for
arrangements and agreements between the Medicaid agency and--
(1) State health agencies;
(2) State vocational rehabilitation agencies; and
(3) Grantees under title V of the Act, Maternal and Child Health and
Crippled Children's Services.
(b) Definitions. For purposes of this section--
``Title V grantee'' means the agency, institution, or organization
receiving Federal payments for part or all of the cost of any service
program or project authorized by title V of the Act, including--
(1) Maternal and child health services;
(2) Crippled children's services;
(3) Maternal and infant care projects;
(4) Children and youth projects; and
(5) Projects for the dental health of children.
(c) State plan requirements. A state plan must--
(1) Describe cooperative arrangements with the State agencies that
administer, or supervise the administration of, health services and
vocational rehabilitation services designed to make maximum use of these
services;
(2) Provide for arrangements with title V grantees, under which the
Medicaid agency will utilize the grantee to furnish services that are
included in the State plan;
(3) Provide that all arrangements under this section meet the
requirements of paragraph (d) of this section; and
(4) Provide, if requested by the title V grantee in accordance with
the arrangements made under this section, that the Medicaid agency
reimburse the grantee or the provider for the cost of services furnished
recipients by or through the grantee.
(d) Content of arrangements. The arrangements referred to in
paragraph (c) must specify, as appropriate--
(1) The mutual objectives and responsibilities or each party to the
arrangement;
(2) The services each party offers and in what circumstances;
(3) The cooperative and collaborative relationships at the State
level;
(4) The kinds of services to be provided by local agencies; and
(5) Methods for--
(i) Early identification of individuals under 21 in need of medical
or remedial services;
(ii) Reciprocal referrals;
(iii) Coordinating plans for health services provided or arranged
for recipients;
(iv) Payment or reimbursement;
(v) Exchange of reports of services furnished to recipients;
[[Page 45]]
(vi) Periodic review and joint planning for changes in the
agreements;
(vii) Continuous liaison between the parties, including designation
of State and local liaison staff; and
(viii) Joint evaluation of policies that affect the cooperative work
of the parties.
(e) Federal financial participation. FFP is available in
expenditures for Medicaid services provided to recipients through an
arrangement under this section.
Sec. 431.620 Agreement with State mental health authority or mental institutions.
(a) Basis and purpose. This section implements section
1902(a)(20)(A) of the Act, for States offering Medicaid services in
institutions for mental diseases for recipients aged 65 or older, by
specifying the terms of the agreement those States must have with other
State authorities and institutions. (See part 441, subpart C of this
chapter for regulations implementing section 1902(a)(20) (B) and (C).)
(b) Definition. For purposes of this section, an ``institution for
mental diseases'' means an institution primarily engaged in providing
diagnosis, treatment, or care of persons with mental diseases. This
includes medical attention, nursing care, and related services.
(c) State plan requirement. A State plan that includes Medicaid for
persons aged 65 or older in institutions for mental diseases must
provide that the Medicaid agency has in effect a written agreement
with--
(1) The State authority or authorities concerned with mental
diseases; and
(2) Any institution for mental diseases that is not under the
jurisdiction of those State authorities, and that provides services
under Medicaid to recipients aged 65 or older.
(d) Provisions required in an agreement. The agreement must specify
the respective responsibilities of the agency and the authority or
institution, including arrangements for--
(1) Joint planning between the parties to the agreement;
(2) Development of alternative methods of care;
(3) Immediate readmission to an institution when needed by a
recipient who is in alternative care;
(4) Access by the agency to the institution, the recipient, and the
recipient's records when necessary to carry out the agency's
responsibilities;
(5) Recording, reporting, and exchanging medical and social
information about recipients; and
(6) Other procedures needed to carry out the agreement.
[44 FR 17935, Mar. 23, 1979]
Sec. 431.621 State requirements with respect to nursing facilities.
(a) Basis and purpose. This section implements sections
1919(b)(3)(F) and 1919(e)(7) of the Act by specifying the terms of the
agreement the State must have with the State mental health and mental
retardation authorities concerning the operation of the State's
preadmission screening and annual resident review (PASARR) program.
(b) State plan requirement. The State plan must provide that the
Medicaid agency has in effect a written agreement with the State mental
health and mental retardation authorities that meets the requirements
specified in paragraph (c) of this section.
(c) Provisions required in an agreement. The agreement must specify
the respective responsibilities of the agency and the State mental
health and mental retardation authorities, including arrangements for--
(1) Joint planning between the parties to the agreement;
(2) Access by the agency to the State mental health and mental
retardation authorities' records when necessary to carry out the
agency's responsibilities;
(3) Recording, reporting, and exchanging medical and social
information about individuals subject to PASARR;
(4) Ensuring that preadmission screenings and annual resident
reviews are performed timely in accordance with Sec. Sec. 483.112(c)
and 483.114(c) of this part;
(5) Ensuring that, if the State mental health and mental retardation
authorities delegate their respective responsibilities, these
delegations comply with Sec. 483.106(e) of this part;
(6) Ensuring that PASARR determinations made by the State mental
[[Page 46]]
health and mental retardation authorities are not countermanded by the
State Medicaid agency, except through the appeals process, but that the
State mental health and mental retardation authorities do not use
criteria which are inconsistent with those adopted by the State Medicaid
agency under its approved State plan;
(7) Designating the independent person or entity who performs the
PASARR evaluations for individuals with MI; and
(8) Ensuring that all requirements of Sec. Sec. 483.100 through
483.136 are met.
[57 FR 56506, Nov. 30, 1992; 58 FR 25784, Apr. 28, 1993]
Sec. 431.625 Coordination of Medicaid with Medicare part B.
(a) Basis and purpose. (1) Section 1843(a) of the Act requires the
Secretary to have entered into an agreement with any State that
requested that agreement before January 1, 1970, or during calendar year
1981, under which the State could enroll certain Medicare-eligible
recipients under Medicare Part B and agree to pay their premiums.
(2) Section 1902(a)(10) of the Act (in clause (II) following
subparagraph (D)), allows the State to pay the premium, deductibles,
cost sharing, and other charges for recipients enrolled under Medicare
Part B without obligating itself to provide the range of Part B benefits
to other recipients; and
(3) Section 1903 (a)(1) and (b) of the Act authorizes FFP for State
payment of Medicare Part B premiums for certain recipients.
(4) This section--
(i) Specifies the exception, relating to Part B coverage, from the
requirement to provide comparable services to all recipients; and
(ii) Prescribes FFP rules concerning State payment for Medicare
premiums and for services that could have been covered under Medicare.
(5) Section 1902(a)(15) of the Act requires that if a State chooses
to pay only a portion of deductibles, cost sharing or other charges for
recipients enrolled under Medicare Part B, the portion that is to be
paid by a Medicaid recipient must be reasonably related to the
recipient's income and resources.
(b) Exception from obligation to provide comparable services; State
plan requirement. (1) The State's payment of premiums, deductibles, cost
sharing, or similar charges under Part B does not obligate it to provide
the full range of Part B services to recipients not covered by Medicare.
(2) The State plan must specify this exception if it applies.
(c) Effect of payment of premiums on State liability for cost
sharing. (1) State payment of Part B premiums on behalf of a Medicaid
recipient does not obligate it to pay on the recipient's behalf the Part
B deductible and coinsurance amounts for those Medicare Part B services
not covered in the Medicaid State plan.
(2) If a State pays on a recipient's behalf any portion of the
deductible or cost sharing amounts under Medicare Part B, the portion
paid by a State must be reasonably related to the recipient's income and
resources.
(d) Federal financial participation: Medicare Part B premiums--(1)
Basic rule. Except as provided in paragraph (d)(2) of this section, FFP
is not available in State expenditures for Medicare Part B premiums for
Medicaid recipients unless the recipients receive money payments under
title I, IV-A, X, XIV, XVI (AABD or SSI) of the Act, or State
supplements as permitted under section 1616(a) of the Act, or as
required by section 212 of Pub. L. 93-66.
(2) Exception. FFP is available in expenditures for Medicare Part B
premiums for the following groups:
(i) AFDC families required to be covered under Sec. Sec. 435.112
and 436.116 of this subchapter, those eligible for continued Medicaid
coverage despite increased income from employment;
(ii) Recipients required to be covered under Sec. Sec. 435.114,
435.134, and 436.112 of this subchapter, those eligible for continued
Medicaid coverage despite increased income from monthly insurance
benefits under title II of the Act;
(iii) Recipients required to be covered under Sec. 435.135 of this
subchapter, those eligible for continued Medicaid coverage despite
increased income from cost-of-living increases under title II of the
Act;
(iv) Recipients of foster care maintenance payments or adoption
assistance
[[Page 47]]
payments who, under Part E of title IV of the Act are considered as
receiving AFDC;
(v) Individuals required to be covered under Sec. 435.120 of this
chapter, that is, blind or disabled individuals who, under section
1619(b) of the Act, are considered to be receiving SSI;
(vi) Individuals who, in accordance with Sec. Sec. 435.115 and
436.114 of this chapter are, for purposes of Medicaid eligibility,
considered to be receiving AFDC. These are participants in a work
supplementation program, or individuals denied AFDC because the payment
would be less than $10;
(vii) Certain recipients of Veterans Administration pensions during
the limited time they are, under section 310(b) of Pub. L. 96-272,
considered as receiving SSI, mandatory State supplements, or AFDC;
(viii) Disabled children living at home to whom the State provides
Medicaid under section 1902(e)(3) of the Act;
(ix) Individuals who become ineligible for AFDC because of the
collection or increased collection of child or spousal support, but, in
accordance with section 406(h) of the Act, remain eligible for Medicaid
for four more months; and
(x) Individuals who become ineligible for AFDC because they are no
longer eligible for the disregard of earnings of $30 or of $30 plus one-
third of the remainder, but, in accordance with section 402(a)(37) of
the Act, are considered as receiving AFDC for a period of 9 to 15
months.
(3) No FFP is available in State Medicaid expenditures that could
have been paid for under Medicare Part B but were not because the person
was not enrolled in Part B. This limit applies to all recipients
eligible for enrollment under Part B, whether individually or through an
agreement under section 1843(a) of the Act. However, FFP is available in
expenditures required by Sec. Sec. 435.914 and 436.901 of this
subchapter for retroactive coverage of recipients.
[43 FR 45188, Sept. 29, 1978, as amended at 44 FR 17935, Mar. 23, 1979;
52 FR 47933, Dec. 17, 1987; 53 FR 657, Jan. 11, 1988]
Sec. 431.630 Coordination of Medicaid with QIOs.
(a) The State plan may provide for the review of Medicaid services
through a contract with a QIO designated under Part 462 of this chapter.
Medicaid requirements for medical and utilization review are deemed to
be met for those services or providers subject to review under the
contract.
(b) The State plan must provide that the contract with the QIO--
(1) Meets the requirements of Sec. 434.6(a) of this part;
(2) Includes a monitoring and evaluation plan by which the State
ensures satisfactory performance by the QIO;
(3) Identifies the services and providers subject to QIO review;
(4) Ensures that the review activities performed by the QIO are not
inconsistent with QIO review activities of Medicare services and
includes a description of whether and to what extent QIO determinations
will be considered conclusive for Medicaid payment purposes.
[50 FR 15327, Apr. 17, 1985]
Sec. 431.635 Coordination of Medicaid with Special Supplemental Food Program for Women, Infants, and Children (WIC).
(a) Basis. This section implements sections 1902(a)(11)(C) and
1902(a) (53) of the Act, which provide for coordination of Medicaid with
the Special Supplemental Food Program for Women, Infants, and Children
(WIC) under section 17 of the Child Nutrition Act of 1966.
(b) Definitions. As used in this section, the terms breastfeeding
women, postpartum women, and pregnant women mean women as defined in
section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)).
(c) State plan requirements. A State Plan must provide for--
(1) Coordinating operation of the Medicaid program with the State's
operation of the Special Supplemental Food Program for Women, Infants,
and Children;
(2) Providing timely written notice of the availability of WIC
benefits to all individuals in the State who are determined to be
eligible (including presumptively eligible) for Medicaid and who are:
[[Page 48]]
(i) Pregnant women;
(ii) Postpartum women;
(iii) Breastfeeding women; and
(iv) Children under the age of 5.
(3) Referring individuals described under paragraphs (c)(2) (i)
through (iv) of this section to the local agency responsible for
administering the WIC program.
(d) Notification requirements. (1) The agency must give the written
notice required under paragraph (c) of this section as soon as the
agency identifies the individual (e.g., at the time of an eligibility
determination for Medicaid) or immediately thereafter (e.g., at the time
of notice of eligibility).
(2) The agency, no less frequently than annually, must also provide
written notice of the availability of WIC benefits, including the
location and telephone number of the local WIC agency or instructions
for obtaining further information about the WIC program, to all Medicaid
recipients (including those found to be presumptively eligible) who are
under age 5 or who are women who might be pregnant, postpartum, or
breastfeeding as described in paragraphs (c)(2) (i) through (iv) of this
section.
(3) The agency must effectively inform those individuals who are
blind or deaf or who cannot read or understand the English language.
[57 FR 28103, June 24, 1992]
Sec. 431.636 Coordination of Medicaid with the State Children's Health Insurance Program (SCHIP).
(a) Statutory basis. This section implements--
(1) Section 2102(b)(3)(B) of the Act, which provides that children
who apply for coverage under a separate child health plan under title
XXI, but are found to be eligible for medical assistance under the State
Medicaid plan, must be enrolled in the State Medicaid plan; and
(2) Section 2102(c)(2) of the Act, which requires coordination
between a State child health program and other public health insurance
programs.
(b) Obligations of State Medicaid Agency. The State Medicaid agency
must adopt procedures to facilitate the Medicaid application process
for, and the enrollment of children for whom the Medicaid application
and enrollment process has been initiated in accordance with Sec.
457.350(f) of this chapter. The procedures must ensure that--
(1) The applicant is not required to provide information or
documentation that has been provided to the State agency responsible for
determining eligibility under a separate child health program under
title XXI and forwarded by such agency to the Medicaid agency on behalf
of the child in accordance with Sec. 457.350(f) of this chapter;
(2) Eligibility is determined in a timely manner in accordance with
Sec. 435.911 of this chapter;
(3) The Medicaid agency promptly notifies the State agency
responsible for determining eligibility under a separate child health
program when a child who was screened as potentially eligible for
Medicaid is determined ineligible or eligible for Medicaid; and
(4) The Medicaid agency adopts a process that facilitates enrollment
in a State child health program when a child is determined ineligible
for Medicaid at initial application or redetermination.
[66 FR 2666, Jan. 11, 2001]
Subpart N_State Programs for Licensing Nursing Home Administrators
Sec. 431.700 Basis and purpose.
This subpart implements sections 1903(a)(29) and 1908 of the Act
which require that the State plan include a State program for licensing
nursing home administrators.
Sec. 431.701 Definitions.
Unless otherwise indicated, the following definitions apply for
purposes of this subpart:
Agency means the State agency responsible for licensing individual
practitioners under the State's healing arts licensing act.
Board means an appointed State board established to carry out a
State program for licensing administrators of nursing homes, in a State
that does not have a healing arts licensing act or an agency as defined
in this section.
Licensed means certified by a State agency or board as meeting all
of the
[[Page 49]]
requirements for a licensed nursing home administrator specified in this
subpart.
Nursing home means any institution, facility, or distinct part of a
hospital that is licensed or formally recognized as meeting nursing home
standards established under State law, or that is determined under Sec.
431.704 to be included under the requirements of this subpart. The term
does not include--
(a) A religious nonmedical institution as defined in Sec.
440.170(b) of this chapter; or
(b) A distinct part of a hospital, if the hospital meets the
definition in Sec. 440.10 or Sec. 440.140 of this subchapter, and the
distinct part is not licensed separately or formally approved as a
nursing home by the State even though it is designated or certified as a
skilled nursing facility.
Nursing home administrator means any person who is in charge of the
general administration of a nursing home whether or not the person--
(a) Has an ownership interest in the home; or
(b) Shares his functions and duties with one or more other persons.
[43 FR 45188, Sept. 29, 1978, as amended at 64 FR 67052, Nov. 30, 1999]
Sec. 431.702 State plan requirement.
A State plan must provide that the State has a program for licensing
administrators of nursing homes that meets the requirements of
Sec. Sec. 431.703 through 431.713 of this subpart.
Sec. 431.703 Licensing requirement.
The State licensing program must provide that only nursing homes
supervised by an administrator licensed in accordance with the
requirements of this subpart may operate in the State.
Sec. 431.704 Nursing homes designated by other terms.
If a State licensing law does not use the term ``nursing home,'' the
CMS Administrator will determine the term or terms equivalent to
``nursing home'' for purposes of applying the requirements of this
subpart. To obtain this determination, the Medicaid agency must submit
to the Regional Medicaid Director copies of current State laws that
define institutional health care facilities for licensing purposes.
Sec. 431.705 Licensing authority.
(a) The State licensing program must provide for licensing of
nursing home administrators by--
(1) The agency designated under the healing arts act of the State;
or
(2) A State licensing board.
(b) The State agency or board must perform the functions and duties
specified in Sec. Sec. 431.707 through 431.713 and the board must meet
the membership requirements specified in Sec. 431.706 of this subpart.
Sec. 431.706 Composition of licensing board.
(a) The board must be composed of persons representing professions
and institutions concerned with the care and treatment of chronically
ill or infirm elderly patients. However--
(1) A majority of the board members may not be representative of a
single profession or category of institution; and
(2) Members not representative of institutions may not have a direct
financial interest in any nursing home.
(b) For purposes of this section, nursing home administrators are
considered representatives of institutions.
Sec. 431.707 Standards.
(a) The agency or board must develop, impose, and enforce standards
that must be met by individuals in order to be licensed as a nursing
home administrator.
(b) The standards must be designed to insure that nursing home
administrators are--
(1) Of good character;
(2) Otherwise suitable; and
(3) Qualified to serve because of training or experience in
institutional administration.
Sec. 431.708 Procedures for applying standards.
The agency or board must develop and apply appropriate procedures
and techniques, including examinations and investigations, for
determining if a person meets the licensing standards.
[[Page 50]]
Sec. 431.709 Issuance and revocation of license.
Except as provided in Sec. 431.714 of this subpart, the agency or
board must--
(a) Issue licenses to persons who meet the agency's or board's
standards; and
(b) Revoke or suspend a license if the agency or board determines
that the person holding the license substantially fails to meet the
standards.
Sec. 431.710 Provisional licenses.
To fill a position of nursing home administrator that unexpectedly
becomes vacant, the agency or board may issue one provisional license,
for a single period not to exceed 6 months. The license may be issued to
a person who does not meet all of the licensing requirements established
under Sec. 431.707 but who--
(a) Is of good character and otherwise suitable; and
(b) Meets any other standards established for provisional licensure
by the agency or board.
Sec. 431.711 Compliance with standards.
The agency or board must establish and carry out procedures to
insure that licensed administrators comply with the standards in this
subpart when they serve as nursing home administrators.
Sec. 431.712 Failure to comply with standards.
The agency or board must investigate and act on all complaints it
receives of violations of standards.
Sec. 431.713 Continuing study and investigation.
The agency or board must conduct a continuing study of nursing homes
and administrators within the State to improve--
(a) Licensing standards; and
(b) The procedures and methods for enforcing the standards.
Sec. 431.714 Waivers.
The agency or board may waive any standards developed under Sec.
431.707 of this subpart for any person who has served in the capacity of
a nursing home administrator during all of the 3 calendar years
immediately preceding the calendar year in which the State first meets
the requirements in this subpart.
Sec. 431.715 Federal financial participation.
No FFP is available in expenditures by the licensing board for
establishing and maintaining standards for the licensing of nursing home
administrators.
Subpart O [Reserved]
Subpart P_Quality Control
General Provisions
Source: Sections 431.800 through 431.808 appear at 55 FR 22166, May
31, 1990, unless otherwise noted.
Sec. 431.800 Scope of subpart.
This subpart--
(a) Establishes State plan requirements for a Medicaid eligibility
quality control (MEQC) program designed to reduce erroneous expenditures
by monitoring eligibility determinations and a claims processing
assessment system that monitors claims processing operations.
(b) Establishes rules and procedures for disallowing Federal
financial participation (FFP) in erroneous Medicaid payments due to
eligibility and recipient liability errors as detected through the MEQC
program.
Sec. 431.802 Basis.
This subpart implements the following sections of the Act, which
establish requirements for State plans and for payment of Federal
financial participation (FFP) to States:
1902(a)(4) Administrative methods for proper and efficient operation
of the State plan.
1903(u) Limitation of FFP for erroneous medical assistance
expenditures.
Sec. 431.804 Definitions.
As used in this subpart--
Active case means an individual or family determined to be currently
authorized as eligible for Medicaid by the agency.
Administrative period means the period of time recognized by the
MEQC program for State agencies to reflect
[[Page 51]]
changes in case circumstances, i.e., a change in a common program area,
during which no case error based on the circumstance change would be
cited. This period consists of the review month and the month prior to
the review month.
Claims processing error means FFP has been claimed for a Medicaid
payment that was made--
(1) For a service not authorized under the State plan;
(2) To a provider not certified for participation in the Medicaid
program;
(3) For a service already paid for by Medicaid; or
(4) In an amount above the allowable reimbursement level for that
service.
Eligibility error means that Medicaid coverage has been authorized
or payment has been made for a recipient or family under review who--
(1) Was ineligible when authorized or when he received services; or
(2) Was eligible for Medicaid but was ineligible for certain
services he received; or
(3) Had not met recipient liability requirements when authorized
eligible for Medicaid; that is, he had not incurred medical expenses
equal to the amount of his excess income over the State's financial
eligibility level or he had incurred medical expenses that exceeded the
amount of excess income over the State's financial eligibility level, or
was making an incorrect amount of payment toward the cost of services.
Negative case action means an action that was taken to deny or
otherwise dispose of a Medicaid application without a determination of
eligibility (for instance, because the application was withdrawn or
abandoned) or an action to deny, suspend, or terminate an individual or
family.
State agency means either the State Medicaid agency or a State
agency that is responsible for determining eligibility for Medicaid.
Sec. 431.806 State plan requirements.
(a) MEQC program. A State plan must provide for operating a Medicaid
eligibility quality control program that meets the requirements of
Sec. Sec. 431.810 through 431.822 of this subpart.
(b) Claims processing assessment system. Except in a State that has
an approved Medicaid Management Information System (MMIS) under subpart
C of part 433 of this subchapter, a State plan must provide for
operating a Medicaid quality control claims processing assessment system
that meets the requirements of Sec. Sec. 431.830 through 431.836 of
this subpart.
Sec. 431.808 Protection of recipient rights.
Any individual performing activities under the MEQC program or the
claims processing assessment system specified in this subpart must do so
in a manner that is consistent with the provisions of Sec. Sec. 435.902
and 436.901 of this subchapter concerning the rights of recipients.
Medicaid Eligibility Quality Control (MEQC) Program
Source: Sections 431.810 through 431.822 appear at 55 FR 22167, May
31, 1990, unless otherwise noted.
Sec. 431.810 Basic elements of the Medicaid eligibility quality control (MEQC) program.
(a) General requirements. The agency must operate the MEQC program
in accordance with this section and Sec. Sec. 431.812 through 431.822
and other instructions established by CMS.
(b) Review requirements. The agency must conduct MEQC reviews in
accordance with the requirements specified in Sec. 431.812 and other
instructions established by CMS.
(c) Sampling requirements. The agency must conduct MEQC sampling in
accordance with the requirements specified in Sec. 431.814 and other
instructions established by CMS.
Sec. 431.812 Review procedures.
(a) Active case reviews. (1) Except as provided in paragraph (a)(2)
of this section, the agency must review all active cases selected from
the State agency's lists of cases authorized eligible for the review
month, to determine if the cases were eligible for services during all
or part of the month under review, and, if appropriate, whether the
proper amount of recipient liability was computed.
[[Page 52]]
(2) The agency is not required to conduct reviews of the following
cases:
(i) Supplemental Security Income (SSI) recipient cases in States
with contracts under section 1634 of the Act for determining Medicaid
eligibility;
(ii) Foster care and adoption assistance cases under title IV-E of
the Act found eligible for Medicaid; and
(iii) Cases under programs that are 100 percent federally funded.
(b) Negative case reviews. Except as provided in paragraph (c) of
this section, or unless a State is utilizing an approved sampling plan
to conduct negative case action reviews under Sec. 431.978(a) and Sec.
431.980(b), the agency must review those negative cases selected from
the State agency's list of cases that are denied, suspended, or
terminated in the review month to determine if the reason for the
denial, suspension, or termination was correct and if requirements for
timely notice of negative action were met. A State's negative case
sample size is determined on the basis of the number of negative case
actions in the universe.
(c) Alternate systems of negative case reviews--(1) Basic provision.
A State may be exempt from the negative case review requirements
specified in paragraphs (b) and (e)(2) of this section and in Sec.
431.814(d) upon CMS's approval of a plan for the use of a superior
system.
(2) Submittal of plan for alternate system. An agency must submit
its plan for the use of a superior system to CMS for approval at least
60 days before the beginning of the review period in which it is to be
implemented. If a plan is unchanged from a previous period, the agency
is not required to resubmit it.
The agency must receive approval for a plan before it can be
implemented.
(3) Requirement for alternate system. To be approved, the State's
plan must--
(i) Clearly define the purpose of the system and demonstrate how the
system is superior to the current negative case review requirements.
(ii) Contain a methodology for identifying significant problem areas
that could result in erroneous denials, suspensions, and terminations of
applicants and recipients. Problem areas selected for review must
contain at least as many applicants and recipients as were included in
the negative case sample size previously required for the State.
(iii) Provide a detailed methodology describing how the extent of
the problem area will be measured through sampling and review
procedures, the findings expected from the review, and planned
corrective actions to resolve the problem.
(iv) Include documentation supporting the use of the system
methodology. Documentation must include the timeframes under which the
system will be operated.
(v) Provide a superior means of monitoring denials, terminations,
and suspensions than that required under paragraph (b) of this section.
(vi) Provide a statistically valid error rate that can be projected
to the universe that is being studied.
(d) Reviews for erroneous payments. The agency must review all
claims for services furnished during the review month and paid within 4
months of the review month to all members of each active case related in
the sample to identify erroneous payments resulting from--
(1) Ineligibility for Medicaid;
(2) Ineligibility for certain Medicaid services; and
(3) Recipient understated or overstated liability.
(e) Reviews for verification of eligibility status. The agency must
collect and verify all information necessary to determine the
eligibility status of each individual included in an active case
selected in the sample as of the review month and whether Medicaid
payments were for services which the individual was eligible to receive.
The agency must apply the administrative period described in Sec.
431.804 when considering the case circumstances and the case
correctness. In order to verify eligibility information, the agency
must--
(1) Examine and analyze each case record for all cases under review
to establish what information is available for use in determining
eligibility in the review month;
(2) Conduct field investigations including in-person recipient
interviews for each case in the active case sample, and conduct in-
person interviews only
[[Page 53]]
when the correctness of the agency action cannot be determined by review
of the case record with recipients for cases in the negative case action
sample (unless this is otherwise addressed in a superior system provided
for in paragraph (c)(1) of this section);
(3) Verify all appropriate elements of eligibility for active cases
through at least one primary source of evidence or two secondary sources
of evidence as defined by CMS by documentation or by collateral contacts
as required, or both, and fully record the information on the
appropriate forms;
(4) Determine the basis on which eligibility was established and the
eligibility status of the active case and each case member;
(5) Collect copies of State paid claims or recipient profiles for
services delivered during the review month and, if indicated, any months
prior to the review month in the agency's selected spenddown period, for
all members of the active case under review;
(6) Associate dollar values with eligibility status for each active
case under review; and
(7) Complete the payment, case, and review information for all
individuals in the active case under review on the appropriate forms.
[55 FR 22167, May 31, 1990, as amended at 72 FR 50513, Aug. 31, 2007]
Sec. 431.814 Sampling plan and procedures.
(a) Plan approval. The agency must submit a basic MEQC sampling plan
(or revisions to a current plan) that meets the requirements of this
section to the appropriate CMS regional office for approval at least 60
days before the beginning of the review period in which it is to be
implemented. If a plan is unchanged from a previous period, the agency
is not required to resubmit the entire plan. Universe estimates and
sampling intervals are required 2 weeks before the first monthly sample
selection for each review period. The agency must receive approval for a
plan before it can be implemented.
(b) Plan requirements. The agency must have an approved sampling
plan in effect for the full 6-month sampling period that includes the
following:
(1) The population to be sampled;
(2) The list(s) from which the sample is selected and the following
characteristics of the list(s):
(i) Sources;
(ii) All types of cases in the selection lists;
(iii) Accuracy and completeness of sample lists in reference to the
population(s) of interest;
(iv) Whether or not the selection list was constructed by combining
more than one list;
(v) The form of the selection list (whether the list or part of the
list is automated);
(vi) Frequency and length of delays in updating the selection lists
or their sources;
(vii) Number of items on the lists and proportion of listed-in-error
items:
(viii) Methods of deleting unwanted items from the selection lists;
and
(ix) Structure of the selection lists.
(3) The sample size, including the minimum number of reviews to be
completed and the expected number of cases to be selected. Minimum
sample sizes are based on the State's relative level of Medicaid annual
expenditures for services for active cases, and on the total number of
negative case actions in the universe for negative cases. When the
sample is substratified, there can be no fewer than 75 cases in each
substratum, except as provided in paragraph (c) of this section or as
provided in an exception documented in an approved sampling plan which
contains a statement accepting the precision and reliability of the
reduced sample.
(4) The sample selection procedure. Systematic random sampling is
recommended. Alternative procedures must provide a representative
sample, conform to principles of probability sampling, and yield
estimates with the same or better precision than achieved in systematic
random sampling.
(5) Procedures used to identify amounts paid for services received
in the review month.
(6) Specification as to whether the agency chooses to--
(i) Use billed amounts to offset recipient liability toward cost of
care (No indication will be interpreted to mean that the agency will use
paid claims); and
[[Page 54]]
(ii) Use denied claims to offset recipient liability toward cost of
care in the payment review. (No indication will be interpreted to mean
denied claims will not be used.)
(7) Indication of whether the agency opts to drop or complete cases
selected more than once in a sample period. (No indication will be
interpreted to mean that the agency will complete cases selected more
than once.)
(c) Eligibility universe--active cases. The MEQC universe for active
cases must be divided into two strata, the Aid to Families with
Dependent Children (AFDC) stratum and the Medical Assistance Only (MAO)
stratum.
(1) All States must use the AFDC quality control sample for the AFDC
stratum.
(2) States must include in the MAO stratum all cases certified as
eligible for Medicaid that are not in the AFDC stratum, excluding
individuals specified in paragraph (c)(4) of this section.
(3) States that do not have an agreement with the Social Security
Administration under section 1634 of the Act and do not have more
restrictive eligibility criteria under section 1902(f) of the Act but
require a separate Medicaid application for recipients of SSI and
determine Medicaid eligibility using SSI criteria must divide the MAO
stratum into two substrata: MAO cases and SSI cash cases for the first
review period beginning after July 1, 1990 and for review periods
thereafter. The SSI substratum sample size must be 75 cases or one-half
of the total MAO sample, whichever is smaller. The non-SSI MAO
substratum sample will be the remainder of the MAO stratum cases.
States may be exempt from this requirement when implementing an approved
sampling option that does not accommodate this stratification method.
(4) States must exclude from the MEQC universe SSI beneficiaries
whose eligibility determinations were made exclusively by the Social
Security Administration under an agreement under section 1634 of the
Act, individuals in foster care or receiving adoption assistance whose
eligibility is determined under title IV-E of the Act, and individuals
receiving Medicaid under programs that are 100 percent federally funded.
(d) Eligibility universe--negative cases. Unless the agency has an
approved superior system under Sec. 431.812(c) that provides otherwise,
the universe for negative Medicaid eligibility cases must consist of all
denied applications, suspensions, and terminations occurring during the
review month except transfers between counties without any break in
eligibility, cases in which eligibility is exclusively determined by SSA
under a section 1634 contract, cases determined eligible for foster care
and adoption assistance under title IV-E of the Act, and cases under
programs that are 100 percent federally funded.
(e) Sampling procedures. The agency must document all sampling
procedures used by the State agency, including 98 percent accuracy of
program identifier codes used in the sampling frame to separate listed-
in-error cases from those in the population of interest, must make them
available for review by CMS, and must be able to demonstrate the
integrity of its sampling procedures in accordance with this section.
(f) Sampling periods. The agency must use 6-month sampling periods,
from April through September and from October through March.
(g) Statistical samples. The agency must select statistically valid
samples of both active and negative case actions.
(h) Sample selection lists. The agency must submit to CMS monthly a
list of cases selected in the sample to be reviewed, after the State's
sample selection and before commencing MEQC reviews on the cases in the
sample.
(i) Universe estimates and sampling intervals. The agency must
submit detailed universe estimates and sampling intervals to CMS for
approval at least 2 weeks before the first sample selection of the
review period if the estimates differ from the previous period. The
sampling intervals must be used continuously throughout the sampling
period unless otherwise specified in an approved sampling plan. Final
universe counts based on the actual sampling
[[Page 55]]
universe must be determined and reported to CMS for each stratum/
substratum designated in the sampling plan.
The agency also must submit universe counts for cases eligible for
foster care and adoption assistance under title IV-E of the Act, and,
for States with an agreement under section 1634 of the Act, for cases
found eligible by the Social Security Administration.
(j) Sample size and methodology options. The agency may select a
sample size in accordance with the minimum established under paragraph
(b)(3) of this section or use one of the methodologies specified in
paragraph (j)(1) or (2) of this section.
(1) Increase in size. The agency may, at its option, increase its
sample size for a sampling period above the federally prescribed minimum
sample size provided for under paragraph (b)(3) of this section, and
receive FFP for any increased administrative costs the agency incurs by
exercising this option.
(2) Retrospective sampling. The agency may, at its option, implement
retrospective sampling in which cases are stratified by dollar value of
claims paid. If the agency selects retrospective sampling, it must--
(i) Draw an initial case sample size each month that is no less than
5 times the required sample size. The sample will be selected from the
universe of cases that were certified eligible in the fourth month prior
to the month of case selection;
(ii) Identify claims paid for services furnished to all individuals
during the review month (and, if indicated, any months prior to the
review month in the agency's selected spenddown period) for these cases;
(iii) Stratify the cases by dollar value of the claims into three
strata; and
(iv) Select a second statistically valid sample within each group
subject to the sample size requirements specified in paragraph (b)(3) or
(j)(1) of this section.
Sec. 431.816 Case review completion deadlines and submittal of reports.
(a) The agency must complete case reviews and submit reports of
findings to CMS as specified in paragraph (b) of this section in the
form and at the time specified by CMS.
(b) In addition to the reporting requirements specified in Sec.
431.814 relating to sampling, the agency must complete case reviews and
submit reports of findings to CMS in accordance with paragraphs (b)(1)
through (6) of this section for review periods beginning after July 1,
1990. The agency must not combine or otherwise integrate case findings
from the MAO and AFDC strata to meet the case percentage deadlines as
specified in paragraphs (b)(1) through (6) of this section.
(1) Active case eligibility reviews--MAO stratum. (i) The agency
must complete case eligibility reviews and report the findings
electronically through the system prescribed by CMS for 90 percent of
all active MAO cases within 105 days of the end of the review month for
which those cases were reviewed, within 125 days for 95 percent of all
active MAO cases, and within 150 days for 100 percent of all MAO active
cases.
(ii) The agency must submit a report on cases selected for the
review month.
(2) Active case eligibility reviews--AFDC stratum. (i) The agency
must complete case eligibility reviews for AFDC ineligible and overpaid
error cases caused by ineligible individuals and report the findings
electronically through the system prescribed by CMS within 105 days of
the end of the review month for which those cases were reviewed for 90
percent of the total reviews; within 125 days of the end of the review
month for which those cases were reviewed for 95 percent of the total
reviews; and within 150 days of the end of the review month for which
those cases were reviewed for 100 percent of the total reviews.
(ii) The agency must report findings electronically through the
system prescribed by CMS for 100 percent of the State agency-reported
eligible individuals within 30 days after the final timeframe required
by the AFDC program as specified in program regulations at 45 CFR
205.40(b)(2)(ii).
(3) Negative case eligibility reviews. The agency must submit a
monthly
[[Page 56]]
progress report on negative case reviews completed during the month
unless the agency has an approved superior system in effect. The agency
must submit a report on its findings by June 30 of each year for the
previous April-September sampling period and by December 31, for the
October-March sampling period.
(4) Payment reviews. (i) The agency must submit payment review
findings electronically through the system prescribed by CMS.
(ii) The agency must complete payment review findings for 100
percent of the active case reviews in its sample and report the findings
within 60 days after the first day of the month in which the claims
collection process begins. The agency must wait 5 months after the end
of each review month before associating the amount of claims paid for
each case for services furnished during the review month unless
retrospective sampling is elected.
(iii) The agency must make any necessary corrections to claims
payments during the month the claim is paid and the following month. CMS
will take necessary action to reject any State adjustment adversely
affecting the error rate, for example, by not paying claims on error
cases.
(5) Summary of reviews and findings. The agency must submit summary
reports of the findings for all active cases in the 6-month sample by
July 31 of each year for the previous April-September sampling period
and by January 31 for the October-March sampling period. These summary
reports must include findings changed in the Federal re-review process.
(6) Other data and reports. The agency must report other requested
data and reports in a manner prescribed by CMS.
Sec. 431.818 Access to records: MEQC program.
(a) The agency, upon written request, must mail to the HHS staff all
records, including complete local agency eligibility case files or
legible copies and all other documents pertaining to its MEQC reviews to
which the State has access, including information available under part
435, subpart I, of this chapter.
(b) The agency must mail requested records within 10 working days of
receipt of a request, unless the State has an alternate method of
submitting these records that is approved by CMS or has received, on an
as-needed basis, approval from CMS to extend this timeframe by 3
additional working days to allow for exceptional circumstances.
Sec. 431.820 Corrective action under the MEQC program.
The agency must--
(a) Take action to correct any active or negative case action errors
found in the sample cases;
(b) Take administrative action to prevent or reduce the incidence of
those errors; and
(c) By September 15 each year, submit to CMS a report on its error
rate analysis and a corrective action plan based on that analysis. The
agency must submit revisions to the plan within 60 days of
identification of additional error-prone areas, other significant
changes in the error rate (that is, changes that the State experiences
that increase or decrease its error rate and necessitate immediate
corrective action or discontinuance of corrective actions that
effectively control the cause of the error rate change), or changes in
planned corrective action.
Sec. 431.822 Resolution of differences in State and Federal case eligibility or payment findings.
(a) When a difference exists between State and Federal case
eligibility or payment findings, the Regional Office will notify the
agency by a difference letter.
(b) The agency must return the difference letter to the Regional
Office within 28 calendar days of the date of the letter indicating
either agreement with the Federal finding or reasons for disagreement
and if the agency desires a conference to resolve the difference. This
period may be shortened if the Regional Office finds that it is
necessary to do so in order to meet a case completion deadline, and the
State still has a reasonable period of time in which to respond to the
letter. If the agency fails to submit the difference letter indicating
its agreement or disagreement
[[Page 57]]
with the Federal findings within the 28 calendar days (or the shorter
period designated as described above), the Federal findings will be
sustained.
(c) If the Regional Office disagrees with the agency's response, a
difference conference will be scheduled within 20 days of the request of
the agency. If a difference cannot be resolved, the State may request a
direct presentation of its position to the Regional Administrator. The
Regional Administrator has final authority for resolving the difference.
Medicaid Quality Control (MQC) Claims Processing Assessment System
Source: Sections 431.830 through 431.836 appear at 55 FR 22170, May
31, 1990, unless otherwise noted.
Sec. 431.830 Basic elements of the Medicaid quality control (MQC) claims processing assessment system.
An agency must--
(a) Operate the MQC claims processing assessment system in
accordance with the policies, sampling methodology, review procedures,
reporting forms, requirements, and other instructions established by
CMS.
(b) Identify deficiencies in the claims processing operations.
(c) Measure cost of deficiencies;
(d) Provide data to determine appropriate corrective action;
(e) Provide an assessment of the State's claims processing or that
of its fiscal agent;
(f) Provide for a claim-by-claim review where justifiable by data;
and
(g) Produce an audit trail that can be reviewed by CMS or an outside
auditor.
Sec. 431.832 Reporting requirements for claims processing assessment systems.
(a) The agency must submit reports and data specified in paragraph
(b) of this section to CMS, in the form and at the time specified by
CMS.
(b) Except when CMS authorizes less stringent reporting, States must
submit:
(1) A monthly report on claims processing reviews sampled and or
claims processing reviews completed during the month;
(2) A summary report on findings for all reviews in the 6-month
sample to be submitted by the end of the 3rd month following the
scheduled completion of reviews for that 6 month period; and
(3) Other data and reports as required by CMS.
Sec. 431.834 Access to records: Claims processing assessment systems.
The agency, upon written request, must provide HHS staff with access
to all records pertaining to its MQC claims processing assessment system
reviews to which the State has access, including information available
under part 435, subpart J, of this chapter.
Sec. 431.836 Corrective action under the MQC claims processing assessment system.
The agency must--
(a) Take action to correct those errors identified through the
claims processing assessment system review and, if cost effective, to
recover those funds erroneously spent;
(b) Take administrative action to prevent and reduce the incidence
of those errors; and
(c) By August 31 of each year, submit to CMS a report of its error
analysis and a corrective action plan on the reviews conducted since the
cut-off-date of the previous corrective action plan.
Federal Financial Participation
Sec. Sec. 431.861-431.864 [Reserved]
Sec. 431.865 Disallowance of Federal financial participation for erroneous State payments (for annual assessment periods ending after July 1, 1990).
(a) Purpose and applicability--
(1) Purpose. This section establishes rules and procedures for
disallowing Federal financial participation (FFP) in erroneous medical
assistance payments due to eligibility and beneficiary liability errors,
as detected through the Medicaid eligibility quality control (MEQC)
program required under Sec. 431.806 in effect on and after July 1,
1990.
(2) Applicability. This section applies to all States except Puerto
Rico, Guam, the Virgin Islands, the Northern
[[Page 58]]
Mariana Islands, and American Samoa beginning July 1, 1990.
(b) Definitions. For purposes of this section--
Administrator means the Administrator, Centers for Medicare &
Medicaid Services or his or her designee.
Annual assessment period means the 12-month period October 1 through
September 30 and includes two 6-month sample periods (October-March and
April-September).
Beneficiary liability means--
(1) The amount of excess income that must be offset with incurred
medical expenses to gain eligibility; or
(2) The amount of payment a recipient must make toward the cost of
services.
Erroneous payments means the Medicaid payment that was made for an
individual or family under review who--
(1) Was ineligible for the review month or, if full month coverage
is not provided, at the time services were received;
(2) Was ineligible to receive a service provided during the review
month; or
(3) Had not properly met enrollee liability requirements prior to
receiving Medicaid services.
(4) The term does not include payments made for care and services
covered under the State plan and furnished to children during a
presumptive eligibility period as described in Sec. 435.1102 of this
chapter.
National mean error rate means the payment weighted average of the
eligibility payment error rates for all States.
National standard means a 3-percent eligibility payment error rate.
State payment error rate means the ratio of erroneous payments for
medical assistance to total expenditures for medical assistance (less
payments to Supplemental Security Income beneficiaries in section 1634
contract States and payments for children eligible for foster care and
adoption assistance under title IV-E of the Act) for cases under review
under the MEQC system for each assessment period.
Technical error means an error in an eligibility condition that, if
corrected, would not result in a difference in the amount of medical
assistance paid. These errors include work incentive program
requirements, assignment of social security numbers, the requirement for
a separate Medicaid application, monthly reporting requirements,
assignment of rights to third party benefits, and failure to apply for
benefits for which the family or individual is not eligible. Errors
other than those listed in this definition, identified by CMS in
subsequent instructions, or approved by CMS are not technical errors.
(c) Setting of State's payment error rate. (1) Each State must, for
each annual assessment period, have a payment error rate no greater than
3 percent or be subject to a disallowance of FFP.
(2) A payment error rate for each State is determined by CMS for
each annual assessment period by computing the statistical estimate of
the ratio of erroneous payments for medical assistance made on behalf of
individuals or cases in the sample for services received during the
review month to total expenditures for medical assistance for that State
made on behalf of individuals or cases in the sample for services
received during the review month. This ratio incorporates the findings
of a federally re-reviewed subsample of the State's review findings and
is projected to the universe of total medical assistance payments for
calculating the amount of disallowance under paragraph (d)6) of this
section.
(3) The State's payment error rate does not include payments made on
behalf of individuals whose eligibility determinations were made
exclusively by the Social Security Administration under an agreement
under section 1634 of the Act or children found eligible for foster care
and adoption assistance under title IV-E of the Act.
(4) The amount of erroneous payments is determined as follows:
(i) For ineligible cases resulting from excess resources, the amount
of error is the lesser of--
(A) The amount of the payment made on behalf of the family or
individual for the review month; or
(B) The difference between the actual amount of countable resources
of the family or individual for the review month and the State's
applicable resources standard.
[[Page 59]]
(ii) For ineligible cases resulting from other than excess
resources, the amount of error is the total amount of medical assistance
payments made for the individual or family under review for the review
month.
(iii) For erroneous payments resulting from failure to properly meet
beneficiary liability, the amount of error is the lesser of--
(A) The amount of payments made on behalf of the family or
individual for the review month; or
(B) The difference between the correct amount of beneficiary
liability and the amount of beneficiary liability met by the individual
or family for the review month.
(iv) The amount of payments made for services provided during the
review month for which the individual or family was not eligible.
(5) In determining the amount of erroneous payments, errors caused
by technical errors are not included.
(6) If a State fails to cooperate in completing a valid MEQC sample
or individual reviews in a timely and appropriate fashion as required,
CMS will establish the State's payment error rate based on either--
(i) A special sample or audit;
(ii) The Federal subsample; or
(iii) Other arrangements as the Administrator may prescribe.
(7) When it is necessary for CMS to exercise the authority in
paragraph (c)(6) of this section, the amount that would otherwise be
payable to the State under title XIX of the Act is reduced by the full
costs incurred by CMS in making these determinations. CMS may make these
determinations either directly or under contractual or other
arrangements.
(d) Computation of anticipated error rate. (1) Before the beginning
of each quarter, CMS will project the anticipated medical assistance
payment error rate for each State for that quarter. The anticipated
error rate is the lower of the weighted average error rate of the two
most recent 6-month review periods or the error rate of the most recent
6-month review period. In either case, cases in the review periods must
have been completed by the State and CMS. If a State fails to provide
CMS with information needed to project anticipated excess erroneous
expenditures, CMS will assign the State an error rate as prescribed in
paragraph (c)(6) of this section.
(2) If the State believes that the anticipated error rate
established in accordance with paragraph (d)(1) of this section is based
on erroneous data, the State may submit evidence that demonstrates the
data were erroneous. If the State satisfactorily demonstrates that CMS's
data were erroneous, the State's anticipated error rate will be adjusted
accordingly. Submittal of evidence is subject to the following
conditions:
(i) The State must inform CMS of its intent to submit evidence at
least 70 days prior to the beginning of the quarter.
(ii) The State may request copies of data that CMS used to compute
its anticipated error rate within 7 days of receiving notification of
its projected error rate.
(iii) The State has up to 40 days before the quarter begins to
present the evidence.
(iv) The evidence is restricted to documentation of suspected CMS
data entry errors, processing errors, and resolutions of Federal
subsample difference cases subsequent to calculation of the error rate
projection as contained in the original notice to the State.
(v) The State may not submit other evidence, such as that consisting
of revisions to State errors as a result of changes to the original
State review findings submitted to CMS.
(vi) The State may not submit evidence challenging the error rate
computational methodology.
(3) Based on the anticipated error rate established in paragraph
(d)(1) or (d)(2) of this section, CMS reduces its estimate of the
State's requirements for FFP for medical assistance for the quarter by
the percentage by which the anticipated payment error rate exceeds the
3-percent national standard. This reduction is applied against CMS's
total estimate of FFP for medical assistance expenditures (less payments
to Supplemental Security Income beneficiaries in 1634 contract States
and payments to children found eligible for foster care and adoption
assistance
[[Page 60]]
under title IV-E of the Act) prior to any other required reductions. The
reduction is noted on the State's grant award for the quarter and does
not constitute a disallowance, and, therefore, is not appealable.
(4) After the end of each quarter, an adjustment to the reduction
will be made based on the State's actual expenditures.
(5) After the actual payment error rate has been established for
each annual assessment period, CMS will compute the actual amount of the
disallowance and adjust the FFP payable to each State based on the
difference between the amounts previously withheld for each of the
quarters during the appropriate assessment period and the amount that
should have been withheld based on the State's actual final error rate.
If CMS determines that the amount withheld for the period exceeds the
amount of the actual disallowance, the excess amount withheld will be
returned to the States through the normal grant awards process within 30
days of the date the actual disallowance is calculated.
(6) CMS will compute the amount to be withheld or disallowed as
follows:
(i) Subtract the 3-percent national standard from the State's
anticipated or actual payment error rate percentage.
(ii) If the difference is greater than zero, the Federal medical
assistance funds for the period, excluding payments for those
individuals whose eligibility for Medicaid was determined exclusively by
the Social Security Administration under a section 1634 agreement and
children found eligible for foster care and adoption assistance under
title IV-E of the Act, are multiplied by that percentage. This product
is the amount of the disallowance or withholding.
(7) A State's payment error rate for an annual assessment period is
the weighted average of the payment error rates in the two 6-month
review periods comprising the annual assessment period.
(8) The weights are established as the percent of the total annual
payments, excluding payments for those individuals whose eligibility for
Medicaid was determined exclusively by the Social Security
Administration under a section 1634 agreement and children found
eligible for foster care and adoption assistance under title IV-E of the
Act, that occur in each of the 6-month periods.
(e) Notice to States and showing of good faith. (1) When the actual
payment error rate data are finalized for each annual assessment period
ending after July 1, 1990, CMS will establish each State's error rate
and the amount of any disallowance. States that have error rates above
the national standard will be notified by letter of their error rates
and the amount of the disallowance.
(i) The State has 65 days from the date of receipt of this
notification to show that this disallowance should not be made because
it failed to meet the national standard despite a good faith effort to
do so.
(ii) If CMS is satisfied that the State did not meet the national
standard despite a good faith effort, CMS may reduce the funds being
disallowed in whole or in part as it finds appropriate under the
circumstances shown by the State.
(iii) A finding that a State did not meet the national standard
despite a good faith effort will be limited to extraordinary
circumstances.
(iv) The burden of establishing that a good faith effort was made
rests entirely with the State.
(2) Some examples of circumstances under which CMS may find that a
State did not meet the national standard despite a good faith effort
are--
(i) Disasters such as fire, flood, or civil disorders that--
(A) Require the diversion of significant personnel normally assigned
to Medicaid eligibility administration; or
(B) Destroyed or delayed access to significant records needed to
make or maintain accurate eligibility determinations;
(ii) Strikes of State staff or other government or private personnel
necessary to the determination of eligibility or processing of case
changes;
(iii) Sudden and unanticipated workload changes that result from
changes in Federal law and regulation, or rapid,
[[Page 61]]
unpredictable caseload growth in excess of, for example, 15 percent for
a 6-month period;
(iv) State actions resulting from incorrect written policy
interpretations to the State by a Federal official reasonably assumed to
be in a position to provide that interpretation; and
(v) The State has taken the action it believed was needed to meet
the national standard, but the national standard was not met. CMS will
consider request for a waiver under this criterion only if a State has
achieved an error rate for the sample period that (after reducing the
error rate by taking into account the cases determined by CMS to be in
error as a result of conditions listed in paragraphs (e)(2) (i) through
(iv) of this section) is less than its error rate for the preceding
sample year and does not exceed the national mean error rate for the
sample period under review (unless that national mean error rate is at
or below the 3-percent national standard). If the agency has met this
error reduction requirement or had error rates of 3 percent or below for
the prior two review periods, and its error rate for the review period
under consideration is less than one-third above the national standard,
CMS will evaluate a request for a good faith waiver based on the
following factors:
(A) The State has fully met the performance standards in the
operation of a quality control system in accordance with Federal
regulations and CMS guidelines (e.g., adherence to Federal case
completion timeliness requirements and verification standards).
(B) The State has achieved substantial performance in the
formulation of error reduction initiatives based on the following
processes:
(1) Performance of an accurate and thorough statistical and program
analysis for error reduction which utilized quality control and other
data:
(2) The translation of such analysis into specific and appropriate
error reduction practices for major error elements; and
(3) The use of monitoring systems to verify that the error reduction
initiatives were implemented at the local office level.
(C) The State has achieved substantial performance in the operation
of the following systems supported by evidence of the timely utilization
of their outputs in the determination of case eligibility:
(1) The operation of the Income and Eligibility Verification System
in accordance with the requirements of parts 431 and 435 of this
chapter, and
(2) The operation of systems that interface with Social Security
data and, where State laws do not restrict agency access, records from
agencies responsible for motor vehicles, vital statistics, and State or
local income and property taxes (where these taxes exist).
(D) The State has achieved substantial performance in the use of the
following accountability mechanisms to ensure that agency staff adhere
to error reduction initiatives. The following are minimum requirements:
(1) Accuracy of eligibility and liability determinations and timely
processing of case actions are used as quantitative measures of employee
performance and reflected in performance standards and appraisal forms:
(2) Selective second-party case reviews are conducted. The second-
party review results are periodically reported to higher level
management, as well as supervisors and workers and are used in
performance standards and appraisal forms; and
(3) Regular operational reviews of local offices are performed by
the State to evaluate the offices' effectiveness in meeting error
reduction goals with periodic monitoring to ensure that review
recommendations have been implemented.
(vi) A State that meets the performance standards specified in
paragraphs (e)(2)(v) (A) through (D) of this section will be considered
for a full or partial waiver of its disallowance amount. The State must
submit only specific documentation that verifies that the necessary
actions were accomplished. For example, a State could submit worker
performance standards reflecting timeliness and case accuracy as
quantitative measures of performance.
(3) The failure of a State to act upon necessary legislative changes
or to obtain budget authorization for needed
[[Page 62]]
resources is not a basis for finding that a State failed to meet the
national standard despite a good faith effort.
(f) Disallowance subject to appeal. (1) If a State does not agree
with a disallowance imposed under paragraph (e) of this section, it may
appeal to the Departmental Appeals Board within 30 days from the date of
the final disallowance notice from CMS. The regular procedures for an
appeal of a disallowance will apply, including review by the Appeals
Board under 45 CFR part 16.
(2) This appeal provision, as it applies to MEQC disallowances, is
not applicable to the Administrator's decision on a State's waiver
request provided for under paragraph (e) of this section.
[55 FR 22171, May 31, 1990, as amended at 61 FR 38398, July 24, 1996; 66
FR 2666, Jan. 11, 2001]
Subpart Q_Requirements for Estimating Improper Payments in Medicaid and
SCHIP
Source: 71 FR 51081, Aug. 28, 2006, unless otherwise noted.
Sec. 431.950 Purpose.
This subpart requires States and providers to submit information
necessary to enable the Secretary to produce national improper payment
estimates for Medicaid and the State Children's Health Insurance Program
(SCHIP).
Sec. 431.954 Basis and scope.
(a) Basis. The statutory bases for this subpart are sections 1102,
1902(a)(6), and 2107(b)(1) of the Act, which contain the Secretary's
general rulemaking authority and obligate States to provide information,
as the Secretary may require, to monitor program performance. In
addition, this rule supports the Improper Payments Information Act of
2002 (Pub. L. 107-300), which requires Federal agencies to review and
identify annually those programs and activities that may be susceptible
to significant erroneous payments, estimate the amount of improper
payments, report such estimates to the Congress, and submit a report on
actions the agency is taking to reduce erroneous payments. Section
1902(a)(27)(B) of the Act requires States to require providers to agree
to furnish the State Medicaid agencies and the Secretary with
information regarding payments claimed by Medicaid providers for
furnishing Medicaid services.
(b) Scope. (1) This subpart requires States under the statutory
provisions cited in paragraph (a) of this section to submit information
as set forth in Sec. 431.970 for, among other purposes, estimating
improper payments in the fee-for-service (FFS) and managed care
components of the Medicaid and SCHIP programs and to determine whether
eligibility was correctly determined. This subpart also requires
providers to submit to the Secretary any medical records and other
information necessary to disclose the extent of services provided to
individuals receiving assistance, and to furnish information regarding
any payments claimed by the provider for furnishing such services, as
requested by the Secretary.
(2) All information must be furnished in accordance with section
1902(a)(7)(A) of the Act, regarding confidentiality.
(3) This subpart does not apply with respect to Puerto Rico, Guam,
the Virgin Islands, the Northern Mariana Islands or American Samoa.
Sec. 431.958 Definitions and use of terms.
Active case means a case containing information on a beneficiary who
is enrolled in the Medicaid or SCHIP program in the month that
eligibility is reviewed.
Active fraud investigation means a beneficiary's name has been
referred to the State Fraud and Abuse Control or similar investigation
unit and the unit is currently actively pursuing an investigation to
determine whether the beneficiary committed fraud.
Adjudication date means either the date on which money was obligated
to pay a claim or the date the decision was made to deny a claim.
Agency means, for purposes of the PERM eligibility reviews and this
regulation, the agency that performs the Medicaid and SCHIP eligibility
determinations under PERM and excludes the State agency as defined in
the regulation.
Application means an application form for Medicaid or SCHIP benefits
[[Page 63]]
deemed complete by the State, with respect to which such State approved
or denied eligibility.
Beneficiary means an applicant for, or recipient of, Medicaid or
SCHIP program benefits.
Case means an individual beneficiary.
Case error rate means an error rate that reflects the number of
cases in error in the eligibility sample for the active cases plus the
number of cases in error in the eligibility sample for the negative
cases expressed as a percentage of the total number of cases examined in
the sample.
Case record means either a hardcopy or electronic file that contains
information on a beneficiary regarding program eligibility.
Eligibility means meeting the State's categorical and financial
criteria for receipt of benefits under the Medicaid or SCHIP programs.
Improper payment means any payment that should not have been made or
that was made in an incorrect amount (including overpayments and
underpayments) under statutory, contractual, administrative, or other
legally applicable requirements; and includes any payment to an
ineligible recipient, any duplicate payment, any payment for services
not received, any payment incorrectly denied, and any payment that does
not account for credits or applicable discounts.
Last action means the most recent date on which the State agency
took action to grant, deny, or terminate program benefits based on the
State agency's eligibility determination; and is the point in time for
the PERM eligibility reviews unless the last action occurred outside of
12 months prior to the sample month.
Medicaid means the joint Federal and State program, authorized and
funded under Title XIX of the Act, that provides medical care to people
with low incomes and limited resources.
Negative case means a case containing information on a beneficiary
who applied for benefits and was denied or whose program benefits were
terminated, based on the State agency's eligibility determination or on
a completed redetermination.
Payment means any payment to a provider, insurer, or managed care
organization for a Medicaid or SCHIP beneficiary for which there is
Medicaid or SCHIP Federal financial participation. It may also mean a
direct payment to a Medicaid or SCHIP beneficiary in limited
circumstances permitted by CMS regulation or policy.
Payment error rate means an annual estimate of improper payments
made under Medicaid and SCHIP equal to the sum of the overpayments and
underpayments in the sample, that is, the absolute value of such
payments, expressed as a percentage of total payments made in the
sample.
Payment review means the process by which payments for services are
associated with cases reviewed for eligibility. Payments are collected
for services received in the review month or in the sample month,
depending on the case reviewed.
PERM means the Payment Error Rate Measurement process to measure
improper payment in Medicaid and SCHIP.
Provider means any qualified provider recognized under Medicaid and
SCHIP statute and regulations.
Review cycle means the complete timeframe to complete the improper
payments measurement including the fiscal year being measured; generally
this timeframe begins in October of the fiscal year reviewed and ends in
August of the following fiscal year.
Review month means the month in which eligibility is reviewed and is
usually when the State took its last action to grant or redetermine
eligibility. If the State's last action was taken beyond 12 months prior
to the sample month, the review month shall be the sample month.
Review year means the Federal fiscal year being analyzed for errors
by Federal contractors or the State.
Sample month means the month the State selects a case from the
sample for an eligibility review.
State agency means the State agency that is responsible for
determining program eligibility for Medicaid and SCHIP, as applicable,
based on applications and redeterminations.
State Children's Health Insurance Program (SCHIP) means the program
authorized and funded under Title XXI of the Act.
[[Page 64]]
States means the 50 States and the District of Columbia.
Undetermined means a beneficiary case subject to a Medicaid or SCHIP
eligibility determination under this regulation about which a definitive
determination of eligibility could not be made.
Sec. 431.970 Information submission requirements.
(a) States must submit information to the Secretary for, among other
purposes, estimating improper payments in Medicaid and SCHIP, that
include but are not limited to--
(1) All adjudicated fee-for-service (FFS) and managed care claims
information, on a quarterly basis, from the review year;
(2) Upon request from CMS, provider contact information that has
been verified by the State as current;
(3) All medical and other related policies in effect and any
quarterly policy updates;
(4) Current managed care contracts, rate information, and any
quarterly updates applicable to the review year for SCHIP and, as
requested, for Medicaid;
(5) Data processing systems manuals;
(6) Repricing information for claims that are determined during the
review to have been improperly paid;
(7) Information on claims that were selected as part of the sample,
but changed in substance after selection, for example, successful
provider appeals;
(8) Adjustments made within 60 days of the adjudication dates for
the original claims or line items with sufficient information to
indicate the nature of the adjustments and to match the adjustments to
the original claims or line items;
(9) For the eligibility improper payment measurement, information as
set forth in Sec. 431.978 through Sec. 431.988;
(10) A corrective action plan for purposes of reducing erroneous
payments in FFS, managed care, and eligibility; and
(11) Other information that the Secretary determines is necessary
for, among other purposes, estimating improper payments and determining
error rates in Medicaid and SCHIP.
(b) Providers must submit information to the Secretary for, among
other purposes, estimating improper payments in Medicaid and SCHIP,
which include but are not limited to, Medicaid and SCHIP beneficiary
medical records.
[71 FR 51081, Aug. 28, 2006, as amended at 72 FR 50513, Aug. 31, 2007]
Sec. 431.974 Basic elements of Medicaid and SCHIP eligibility reviews.
(a) General requirements. (1) States selected in any given year for
Medicaid and SCHIP improper payments measurement under the Improper
Payments Information Act of 2002 must conduct reviews of a statistically
valid random sample of beneficiary cases for such programs to determine
if improper payments were made based on errors in the State agency's
eligibility determinations.
(2) The agency and personnel responsible for the development,
direction, implementation, and evaluation of the eligibility reviews and
associated activities, including calculation of the error rates under
this section, must be functionally and physically separate from the
State agencies and personnel that are responsible for Medicaid and SCHIP
policy and operations, including eligibility determinations.
(3) Any individual performing activities under this section must do
so in a manner that is consistent with the provisions of Sec. 435.901,
concerning the rights of recipients.
(b) Sampling requirements. The State must have in effect a CMS-
approved sampling plan for the review year in accordance with the
requirements specified in Sec. 431.978.
(c) Review requirements. The State must conduct eligibility reviews
in accordance with the requirements specified in Sec. 431.980.
Sec. 431.978 Eligibility sampling plan and procedures.
(a) Plan approval. For the review year beginning October 1, 2006,
the agency must submit a Medicaid and a SCHIP sampling plan for both
active and negative cases to CMS for approval by November 15, 2006. For
review years beginning October 1, 2007 and beyond, the agency must
submit a Medicaid or
[[Page 65]]
SCHIP sampling plan (or revisions to a current plan) for both active and
negative cases to CMS for approval by the August 1 before the review
year and must receive approval of the plan before implementation. The
agency must notify CMS that it will be using the same plan from the
previous review year if the plan is unchanged.
(b) Maintain current plan. States must keep the plan current, for
example, by making adjustments to the plan when necessary due to
fluctuations in the universe. The State must review and determine that
the approved plan is unchanged from the previous review year and submit
a revised plan for CMS approval if changes have occurred.
(c) Sample size. Total sample size must be estimated to achieve
within a 3 percent precision level at 95 percent confidence interval for
the eligibility component of the program.
(d) Sample selection. The sample must be stratified in accordance
with Sec. 431.978(d)(3). Cases must be selected each month throughout
the fiscal year under review. Each month throughout the year and before
commencing the eligibility reviews, States must submit to CMS a monthly
sample selection list that identifies the cases selected in that month.
(1) Eligibility universe-active cases--(i) Medicaid. The Medicaid
active universe consists of all active Medicaid cases funded through
Title XIX for the sample month. Cases for which the Social Security
Administration, under a section 1634 agreement with a State, determines
Medicaid eligibility for Supplemental Security Income recipients are
excluded from the universe. All foster care and adoption assistance
cases under Title IV-E of the Act are excluded from the universe in all
States. Cases under active fraud investigations shall be excluded from
the universe. If the State cannot identify cases under active fraud
investigations for exclusion from the universe previous to the sample
selection, the State shall drop these cases from review if they are
selected in the sample and are later determined to be under active fraud
investigation at the time of selection.
(ii) SCHIP. The SCHIP active universe consists of all active SCHIP
and Medicaid expansion cases that are funded through Title XXI for the
sample month. Cases under active fraud investigations shall be excluded
from the SCHIP active universe. If the State cannot identify cases under
active fraud investigations for exclusion from the universe previous to
sample selection, the State shall drop these cases from review if they
are selected in the sample and are later determined to be under active
fraud investigation at the time of selection.
(2) Eligibility universe--negative cases. The Medicaid and SCHIP
negative universe consists of all negative cases for the sample month.
The negative case universe is not stratified.
(3) Stratifying the universe. Each month, the State stratifies the
Medicaid and SCHIP active case universe into three strata:
(i) Program applications completed by the beneficiaries in which the
State took action in the sample month to approve such beneficiaries for
Medicaid or SCHIP based on the eligibility determination.
(ii) Redeterminations of eligibility in which the State took action
in the sample month to approve the beneficiaries for Medicaid or SCHIP
based on information obtained through the completed redetermination.
(iii) All other cases.
(4) Sample selection. Each month, an equal number of cases are
selected from each stratum for review, unless otherwise provided for in
the plan approved by CMS.
[71 FR 51081, Aug. 28, 2006, as amended at 72 FR 50513, Aug. 31, 2007]
Sec. 431.980 Eligibility review procedures.
(a) Active case reviews. The agency must verify eligibility for all
selected active cases for Medicaid and SCHIP for the review month for
compliance with the State's eligibility criteria.
(b) Negative case reviews. The agency must review all selected
negative cases for Medicaid and SCHIP for the review month to determine
whether the cases were properly denied or terminated.
(c) Payment review. The agency must identify all Medicaid and SCHIP
payments made for services furnished, either in the first 30 days of
eligibility or in the review month for applications
[[Page 66]]
under Sec. 431.978(d)(3)(i) and redeterminations under Sec.
431.978(d)(3)(ii) in accordance to State policy or from the sample month
for all other cases under Sec. 431.978(d)(3)(iii), to identify
erroneous payments resulting from ineligibility for services or for the
program.
(d) Eligibility determination. The agency must verify program
eligibility for all active cases in the sample based on acceptable
documentation contained in the case file or obtained independently
through the review process.
(1) Active cases--Medicaid. The agency must--
(i) Review the cases specified at Sec. 431.978(d)(3)(i) and Sec.
431.978(d)(3)(ii) in accordance with the State's categorical and
financial eligibility criteria as of the review month and identify with
a specific beneficiary payments made on behalf of such beneficiary for
services received in the first 30 days of eligibility or in the review
month;
(ii) For cases specified in Sec. 431.978(d)(3)(iii), if the last
action was 12 months prior to the sample month, review in accordance
with the State's categorical and financial eligibility criteria as of
the last action and identify with a specific beneficiary payments made
on behalf of such beneficiary for services received in the sample month.
If the last action occurred more than 12 months prior to the sample
month, review in accordance with the State's categorical and financial
eligibility criteria as of the sample month and identify payments made
on behalf of the specific beneficiary for services received in the
sample month;
(iii) Examine the evidence in the case file that supports
categorical and financial eligibility for the category of coverage in
which the case is assigned, and independently verify information that is
missing, older than 12 months, likely to change, based on self
declaration, or otherwise as needed, to verify eligibility; and
(iv) For managed care cases, also verify residency and eligibility
for and actual enrollment in the managed care plan during the month
under review.
(v) If the case is ineligible under paragraphs (d)(1)(i) through
(d)(1)(iv) of this section, review the case to determine whether the
case is eligible under any coverage category within the program.
(vi) As a result of paragraphs (d)(1)(i) through (d)(1)(v) of this
section--
(A) Cite the case as eligible or ineligible based on the review
findings and identify with the particular beneficiary the payments made
on behalf of the particular beneficiary for services received in the
first 30 days of eligibility, the review month or sample month, as
appropriate; or
(B) Cite the case as undetermined if after due diligence an
eligibility determination could not be made and identify with the
particular beneficiary the payments made on behalf of the particular
beneficiary for services received in the first 30 days of eligibility,
the review month or sample month, as appropriate.
(2) Active cases--SCHIP. In addition to the procedures for active
cases as set forth in paragraphs (d)(1)(i) through (d)(1)(v) of this
section, once the agency establishes SCHIP eligibility, the agency must
verify that the case is not eligible for Medicaid by determining that
the child has income above the Medicaid levels in accordance with the
requirements in Sec. 457.350 of this chapter. Upon verification, the
agency must--
(i) Cite the case as eligible or ineligible based on the review
findings and identify with the particular beneficiary the payments made
on behalf of the particular beneficiary for services received in the
review month or sample month, as appropriate; or
(ii) Cite the case as undetermined if after due diligence an
eligibility determination could not be made and identify with the
particular beneficiary the payments made on behalf of the particular
beneficiary for services received in the review month or sample month,
as appropriate.
(e) Negative cases--Medicaid and SCHIP. The agency must--
(1) Identify the reason the State agency determined ineligibility;
(2) Examine the evidence in the case file to determine whether the
State agency's denial or termination was correct or whether there is any
reason the case should have been denied or terminated; and
[[Page 67]]
(i) Record the State agency's finding as correct if the case record
review substantiates that the individual was not eligible; or
(ii) Record the case as an error if there is no valid reason for the
denial or termination.
Sec. 431.988 Eligibility case review completion deadlines and submittal of reports.
(a) States must complete and report to CMS the findings, including
the error causes if known, for all active case reviews listed on the
monthly sample selection lists, including cases dropped from review due
to active fraud investigations and cases for which eligibility could not
be determined. States must submit a summary report of the active case
eligibility and payment review findings to CMS by July 1 following the
review year.
(b) The agency must report by July 1 following the review year,
information as follows:
(1) Case and payment error rates for active cases.
(2) Case error rates for negative cases.
(3) The number and amounts of undetermined cases in the sample and
the total amount of payments from all undetermined cases.
(4) The number of cases dropped from review due to active fraud
investigations.
Sec. 431.992 Corrective action plan.
The State agency must submit to CMS a corrective action plan to
reduce improper payments in its Medicaid and SCHIP programs based on its
analysis of the error causes in the FFS, managed care, and eligibility
components.
Sec. 431.998 Difference resolution process.
(a) The State may file, in writing, a request with the Federal
contractor to resolve differences in the Federal contractor's findings
based on medical or data processing reviews on FFS and managed care
claims in Medicaid and SCHIP. The State must have a factual basis for
filing the difference and must provide the Federal contractor with valid
evidence directly related to the error finding to support the State's
position that the claim was properly paid.
(b) For a claim in which the State and the Federal contractor cannot
resolve the difference in findings, the State may appeal to CMS for
final resolution.
(1) The difference in findings must be in the amount of $100 or
greater; and
(2) The agency must provide CMS with the facts and valid
documentation to support its determination that the claim was correctly
paid, as well as the Federal contractor's justification for upholding
its initial error finding.
(3) CMS will make the final decision on the claim. There will be no
further judicial or administrative review of CMS' decision.
(c) All differences, including those pending in CMS for final
decision that are not resolved in time to be included in the error rate
calculation, will be considered as errors for meeting the reporting
requirements of the IPIA. Upon State request, CMS will calculate a
subsequent State-specific error rate that reflects any reversed
disposition of the unresolved claims.
Sec. 431.1002 Recoveries.
(a) Medicaid. States must return to CMS the Federal share of
overpayments based on medical and processing errors in accordance with
section 1903(d)(2) of the Act and related regulations at part 433,
subpart F of this chapter. Payments based on erroneous Medicaid
eligibility determinations are addressed under section 1903(u) of the
Act and related regulations at part 431, subpart P of this chapter.
(b) SCHIP. Quarterly Federal payments to the States under Title XXI
of the Act must be reduced in accordance with section 2105(e) of the Act
and related regulations at part 457, subpart B of this chapter.
PART 432_STATE PERSONNEL ADMINISTRATION--Table of Contents
Subpart A_General Provisions
Sec.
432.1 Basis and purpose.
432.2 Definitions.
432.10 Standards of personnel administration.
[[Page 68]]
Subpart B_Training Programs; Subprofessional and Volunteer Programs
432.30 Training programs: General requirements.
432.31 Training and use of subprofessional staff.
432.32 Training and use of volunteers.
Subpart C_Staffing and Training Expenditures
432.45 Applicability of provisions in subpart.
432.50 FFP: Staffing and training costs.
432.55 Reporting training and administrative costs.
Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302).
Source: 43 FR 45199, Sept. 29, 1978, unless otherwise noted.
Subpart A_General Provisions
Sec. 432.1 Basis and purpose.
This part prescribes regulations to implement section 1902(a)(4) of
the Act, which relates to a merit system of State personnel
administration and training and use of subprofessional staff and
volunteers in State Medicaid programs, and section 1903(a), rates of FFP
for Medicaid staffing and training costs. It also prescribes
regulations, based on the general administrative authority in section
1902(a)(4), for State training programs for all staff.
Sec. 432.2 Definitions.
As used in this part--
Community service aides means subprofessional staff, employed in a
variety of positions, whose duties are an integral part of the agency's
responsibility for planning, administration, and for delivery of health
services.
Directly supporting staff means secretarial, stenographic, and
copying personnel and file and records clerks who provide clerical
services that directly support the responsibilities of skilled
professional medical personnel, who are directly supervised by the
skilled professional medical personnel, and who are in an employer-
employee relationship with the Medicaid agency.
Fringe benefits means the employer's share of premiums for workmen's
compensation, employees' retirement, unemployment compensation, health
insurance, and similar expenses.
Full-time training means training that requires employees to be
relieved of all responsibility for performance of current agency work to
participate in a training program.
Part-time training means training that allows employees to continue
full-time in their agency jobs or requires only partial reduction of
work activities to participate in the training activity.
Skilled professional medical personnel means physicians, dentists,
nurses, and other specialized personnel who have professional education
and training in the field of medical care or appropriate medical
practice and who are in an employer-employee relationship with the
Medicaid agency. It does not include other nonmedical health
professionals such as public administrators, medical analysts,
lobbyists, senior managers or administrators of public assistance
programs or the Medicaid program.
Staff of other public agencies means skilled professional medical
personnel and directly supporting staff who are employed in State or
local agencies other than the Medicaid agency who perform duties that
directly relate to the administration of the Medicaid program.
Subprofessional staff means persons performing tasks that demand
little or no formal education; a high school diploma; or less than 4
years of college.
Supporting staff means secretarial, stenographic, clerical, and
other subprofessional staff whose activities are directly necessary to
the carrying out of the functions which are the responsibility of
skilled professional medical personnel, as defined in this section.
Training program means a program of educational activities based on
the agency's training needs and aimed at insuring that agency staff
acquire the knowledge and skills necessary to perform their jobs.
Volunteer means a person who contributes personal service to the
community through the agency's program but is not a replacement or
substitute for paid staff.
[43 FR 45199, Sept. 29, 1978, as amended at 50 FR 46663, Nov. 12, 1985;
50 FR 49389, Dec. 2, 1985]
[[Page 69]]
Sec. 432.10 Standards of personnel administration.
(a) State plan requirement. A State plan must provide that the
requirements of paragraphs (c) through (h) of this section are met.
(b) Terms. In this section, ``standards'' refer to those specified
in paragraph (c) of this section.
(c) Methods of personnel administration. Methods of personnel
administration must be established and maintained, in the Medicaid
agency and in local agencies administering the propgram, in conformity
with:
(1) [Reserved]
(2) 5 CFR part 900, subpart F, Administration of the Standards for
Merit System of Personnel Administration.
(d) Compliance of local jurisdictions. The Medicaid agency must have
in effect methods to assure compliance with the standards by local
jurisdictions included in the plan.
(e) Review and adequacy of State laws, regulations, and policies.
The agency must--
(1) Assure that the U.S. Civil Service Commission has determined the
adequacy of current State laws, regulations, and policy statements that
effect methods of personnel administration in conformity with the
standards, and
(2) Submit any changes in them to the Commission for review.
(f) Statements of acceptance by local agencies. If the Medicaid
agency changes from a State-administered to a State-supervised, locally
administered program, it must obtain statements of acceptance of the
standards from the local agencies.
(g) Affirmative action plan. The Medicaid agency must have in effect
an affirmative action plan for equal employment opportunity, that
includes specific action steps and timetables to assure that
opportunity, and meets all other requirements of 45 CFR 70.4. \1\
---------------------------------------------------------------------------
\1\ Editorial Note: The regulations formerly contained in 45 CFR
70.4 were revised and reissued by the Office of Personnel Management at
5 CFR Part 900, (Subpart F).
---------------------------------------------------------------------------
(h) Submittal of requested materials. The Medicaid agency must
submit to HHS, upon request, copies of the affirmative action plan and
of the State and local materials that assure compliance with the
standards.
[43 FR 45199, Sept. 29, 1978, as amended at 45 FR 24883, Apr. 11, 1980]
Subpart B_Training Programs; Subprofessional and Volunteer Programs
Sec. 432.30 Training programs: General requirements.
(a) A State plan must provide for a program of training for Medicaid
agency personnel. (See also Sec. Sec. 432.31 and 432.32 for training
programs for subprofessional staff and for volunteers.)
(b) The program must--
(1) Include initial inservice training for newly appointed staff,
and continuing training opportunities to improve the operation of the
program;
(2) Be related to job duties performed or to be performed by the
persons trained; and
(3) Be consistent with the program objectives of the agency.
Sec. 432.31 Training and use of subprofessional staff.
(a) State plan requirement. A State plan must provide for the
training and effective use of subprofessional staff as community service
aides, in accordance with the requirements of this section.
(b) Recruitment and selection. The Medicaid agency must have methods
of recruitment and selection that afford opportunity for full-time or
part-time employment of persons of low income, including:
(1) Young, middle-aged, and older persons;
(2) Physically and mentally disabled; and
(3) Recipients.
(c) Merit system. Subprofessional positions must be subject to merit
system requirements except where special exemption is approved on the
basis of a State alternative plan for employment of disadvantaged
persons.
(d) Staffing plan. The agency staffing plan must include the kinds
of jobs that subprofessional staff can perform.
(e) Career service. The agency must have a career service program
that allows persons:
[[Page 70]]
(1) To enter employment at the subprofessional level; and
(2) To progress to positions of increasing responsibility and
reward:
(i) In accordance with their abilities; and
(ii) Through work experience and pre-service and in-service
training.
(f) Training, supervision and supportive services. The agency must
have an organized training program, supervision, and supportive services
for subprofessional staff.
(g) Progressive expansion. The agency must provide for annual
increase in the number of subprofessional staff until:
(1) An appropriate ratio of subprofessional and professional staff
has been achieved; and
(2) There is maximum use of subprofessional staff as community aides
in the operation of the program.
Sec. 432.32 Training and use of volunteers.
(a) State plan requirement. A State plan must provide for the
training and use of non-paid or partially paid volunteers in accordance
with the requirements of this section.
(b) Functions of volunteers. The Medicaid agency must make use of
volunteers in:
(1) Providing services to applicants and recipients; and
(2) Assisting any advisory committees established by the agency.
As used in this paragraph, ``partially paid volunteers'' means
volunteers who are reimbursed only for actual expenses incurred in
giving service, without regard to the value of the service or the time
required to provide it.
(c) Staffing. The agency must designate a position whose incumbent
is responsible for:
(1) The development, organization, and administration of the
volunteer program; and
(2) Coordination of the program with related functions.
(d) Recruitment, selection, training, and supervision. The agency
must have:
(1) Methods of recruitment and selection that assure participation
of volunteers of all income levels, in planning capacities and service
provision; and
(2) A program of organized training and supervision of volunteers.
(e) Reimbursement of expenses. The agency must--
(1) Reimburse volunteers for actual expenses incurred in providing
services; and
(2) Assure that no volunteer is deprived of the opportunity to serve
because of the expenses involved.
(f) Progressive expansion. The agency must provide for annual
increase in the number of volunteers used until the volunteer program is
adequate for the achievement of the agency's service goals.
Subpart C_Staffing and Training Expenditures
Sec. 432.45 Applicability of provisions in subpart.
The rates of FFP specified in this subpart C do not apply to State
personnel who conduct survey activities and certify facilities for
participation in Medicaid, as provided for under section 1902(a)(33)(B)
of the Act.
[50 FR 46663, Nov. 12, 1985; 50 FR 49389, Dec. 2, 1985]
Sec. 432.50 FFP: Staffing and training costs.
(a) Availability of FFP. FFP is available in expenditures for salary
or other compensation, fringe benefits, travel, per diem, and training,
at rates determined on the basis of the individual's position, as
specified in paragraph (b) of this section.
(b) Rates of FFP. (1) For skilled professional medical personnel and
directly supporting staff of the Medicaid agency or of other public
agencies (as defined in Sec. 432.2), the rate is 75 percent.
(2) For personnel engaged directly in the operation of mechanized
claims processing and information retrieval systems, the rate is 75
percent.
(3) For personnel engaged in the design, development, or
installation of mechanized claims processing and information retrieval
systems, the rate is 50 percent for training and 90 percent for all
other costs specified in paragraph (a) of this section.
(4) [Reserved]
(5) For personnel administering family planning services and
supplies, the rate is 90 percent.
[[Page 71]]
(6) For all other staff of the Medicaid agency or other public
agencies providing services to the Medicaid agency, and for training and
other expenses of volunteers, the rate is 50 percent.
(c) Application of rates. (1) FFP is prorated for staff time that is
split among functions reimbursed at different rates.
(2) Rates of FFP in excess of 50 percent apply only to those
portions of the individual's working time that are spent carrying out
duties in the specified areas for which the higher rate is authorized.
(3) The allocation of personnel and staff costs must be based on
either the actual percentages of time spent carrying out duties in the
specified areas, or another methodology approved by CMS.
(d) Other limitations for FFP rate for skilled professional medical
personnel and directly supporting staff--(1) Medicaid agency personnel
and staff. The rate of 75 percent FFP is available for skilled
professional medical personnel and directly supporting staff of the
Medicaid agency if the following criteria, as applicable, are met:
(i) The expenditures are for activities that are directly related to
the administration of the Medicaid program, and as such do not include
expenditures for medical assistance;
(ii) The skilled professional medical personnel have professional
education and training in the field of medical care or appropriate
medical practice. ``Professional education and training'' means the
completion of a 2-year or longer program leading to an academic degree
or certificate in a medically related profession. This is demonstrated
by possession of a medical license, certificate, or other document
issued by a recognized National or State medical licensure or certifying
organization or a degree in a medical field issued by a college or
university certified by a professional medical organization. Experience
in the administration, direction, or implementation of the Medicaid
program is not considered the equivalent of professional training in a
field of medical care.
(iii) The skilled professional medical personnel are in positions
that have duties and responsibilities that require those professional
medical knowledge and skills.
(iv) A State-documented employer-employee relationship exists
between the Medicaid agency and the skilled professional medical
personnel and directly supporting staff; and
(v) The directly supporting staff are secretarial, stenographic, and
copying personnel and file and records clerks who provide clerical
services that are directly necessary for the completion of the
professional medical responsibilities and functions of the skilled
professional medical staff. The skilled professional medical staff must
directly supervise the supporting staff and the performance of the
supporting staff's work.
(2) Staff of other public agencies. The rate of 75 percent FFP is
available for staff of other public agencies if the requirements
specified in paragraph (d)(1) of this section are met and the public
agency has a written agreement with the Medicaid agency to verify that
these requirements are met.
(e) Limitations on FFP rates for staff in mechanized claims
processing and information retrieval systems. The special matching rates
for persons working on mechanized claims processing and information
retrieval systems (paragraphs (b)(2) and (3) of this section) are
applicable only if the design, development and installation, or the
operation, have been approved by the Administrator in accordance with
part 433, subchapter C, of this chapter.
[43 FR 45199, Sept. 29, 1978, as amended at 46 FR 48566, Oct. 1, 1981;
50 FR 46663, Nov. 12, 1985]
Sec. 432.55 Reporting training and administrative costs.
(a) Scope. This section identifies activities and costs to be
reported as training or administrative costs on quarterly estimate and
expenditure reports to CMS.
(b) Activities and costs to be reported on training expenditures.
(1) For fulltime training (with no assigned agency duties): Salaries,
fringe benefits, dependency allowances, travel, tuition, books, and
educational supplies.
(2) For part-time training: Travel, per diem, tuition, books and
educational supplies.
[[Page 72]]
(3) For State and local Medicaid agency staff development personnel
(including supporting staff) assigned fulltime training functions:
Salaries, fringe benefits, travel, and per diem. Costs for staff
spending less than full time on training for the Medicaid program must
be allocated between training and administration in accordance with
Sec. 433.34 of this subchapter.
(4) For experts engaged to develop or conduct special programs:
Salary, fringe benefits, travel, and per diem.
(5) For agency training activities directly related to the program:
Use of space, postage, teaching supplies, and purchase or development of
teaching materials and equipment, for example, books and audiovisual
aids.
(6) For field instruction in Medicaid: Instructors' salaries and
fringe benefits, rental of space, travel, clerical assistance, teaching
materials and equipment such as books and audiovisual aids.
(c) Activities and costs not to be reported as training
expenditures. The following activities are to be reported as
administrative costs:
(1) Salaries of supervisors (day-to-day supervision of staff is not
a training activity); and
(2) Cost of employing students on a temporary basis, for instance,
during summer vacation.
[43 FR 45199, Sept. 29, 1978, as amended at 44 FR 17935, Mar. 23, 1979]
PART 433_STATE FISCAL ADMINISTRATION--Table of Contents
Sec.
433.1 Purpose.
Subpart A_Federal Matching and General Administration Provisions
433.8 [Reserved]
433.10 Rates of FFP for program services.
433.11 Enhanced FMAP rate for children.
433.15 Rates of FFP for administration.
433.32 Fiscal policies and accountability.
433.34 Cost allocation.
433.35 Equipment--Federal financial participation.
433.36 Liens and recoveries.
433.37 Reporting provider payments to Internal Revenue Service.
433.38 Interest charge on disallowed claims for FFP.
433.40 Treatment of uncashed or cancelled (voided) Medicaid checks.
Subpart B_General Administrative Requirements State Financial
Participation
433.50 Basis, scope, and applicability.
433.51 Funds from units of government as the State share of financial
participation.
433.52 General definitions.
433.53 State plan requirements.
433.54 Bona fide donations.
433.55 Health care-related taxes defined.
433.56 Classes of health care services and providers defined.
433.57 General rules regarding revenues from provider-related donations
and health care-related taxes.
433.58-433.60 [Reserved]
433.66 Permissible provider-related donations.
433.67 Limitations on level of FFP for permissible provider-related
donations.
433.68 Permissible health care-related taxes.
433.70 Limitation on level of FFP for revenues from health care-related
taxes.
433.72 Waiver provisions applicable to health care-related taxes.
433.74 Reporting requirements.
Subpart C_Mechanized Claims Processing and Information Retrieval Systems
433.110 Basis, purpose, and applicability.
433.111 Definitions.
433.112 FFP for design, development, installation or enhancement of
mechanized claims processing and information retrieval
systems.
433.113 Reduction of FFP for failure to operate a system and obtain
initial approval.
433.114 Procedures for obtaining initial approval; notice of decision.
433.116 FFP for operation of mechanized claims processing and
information retrieval systems.
433.117 Initial approval of replacement systems.
433.119 Conditions for reapproval; notice of decision.
433.120 Procedures for reduction of FFP after reapproval review.
433.121 Reconsideration of the decision to reduce FFP after reapproval
review.
433.122 Reapproval of a disapproved system.
433.123 Notification of changes in system requirements, performance
standards or other conditions for approval or reapproval.
433.127 Termination of FFP for failure to provide access to claims
processing and information retrieval systems.
433.130 Waiver of conditions of initial operation and approval.
433.131 Waiver for noncompliance with conditions of approval and
reapproval.
[[Page 73]]
Subpart D_Third Party Liability
433.135 Basis and purpose.
433.136 Definitions.
433.137 State plan requirements.
433.138 Identifying liable third parties.
433.139 Payment of claims.
433.140 FFP and repayment of Federal share.
Assignment of Rights to Benefits
433.145 Assignment of rights to benefits--State plan requirements.
433.146 Rights assigned; assignment method.
433.147 Cooperation in establishing paternity and in obtaining medical
support and payments and in identifying and providing
information to assist in pursuing third parties who may be
liable to pay.
433.148 Denial or termination of eligibility.
Cooperative Agreements and Incentive Payments
433.151 Cooperative agreements and incentive payments--State plan
requirements.
433.152 Requirements for cooperative agreements for third party
collections.
433.153 Incentive payments to States and political subdivisions.
433.154 Distribution of collections.
Subpart E [Reserved]
Subpart F_Refunding of Federal Share of Medicaid Overpayment to
Providers
433.300 Basis.
433.302 Scope of subpart.
433.304 Definitions.
433.310 Applicability of requirements.
433.312 Basic requirements for refunds.
433.316 When discovery of overpayment occurs and its significance.
433.318 Overpayments involving providers who are bankrupt or out of
business.
433.320 Procedures for refunds to CMS.
433.322 Maintenance of records.
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C. 1302).
Source: 43 FR 45201, Sept. 29, 1978, unless otherwise noted.
Sec. 433.1 Purpose.
This part specifies the rates of FFP for services and
administration, and prescribes requirements, prohibitions, and FFP
conditions relating to State fiscal activities.
Subpart A_Federal Matching and General Administration Provisions
Sec. 433.8 [Reserved]
Sec. 433.10 Rates of FFP for program services.
(a) Basis. Sections 1903(a)(1), 1903(g), and 1905(b) provide for
payments to States, on the basis of a Federal medical assistance
percentage, for part of their expenditures for services under an
approved State plan.
(b) Federal medical assistance percentage (FMAP)--Computations. The
FMAP is determined by the formula described in section 1905(b) of the
Act. Under the formula, if a State's per capita income is equal to the
national average per capita income, the Federal share is 55 percent. If
a State's per capita income exceeds the national average, the Federal
share is lower, with a statutory minimum of 50 percent. If a State's per
capita income is lower than the national average, the Federal share is
increased, with a statutory maximum of 83 percent. The formula used in
determining the State and Federal share is as follows:
State Share = [(State per capita income) \2\/(National per capita
income) \2\] x 45 percent
Federal share=100 percent minus the State share (with a minimum of 50
percent and a maximum of 83 percent)
The formula provides for squaring both the State and national average
per capita incomes; this procedure magnifies any difference between the
State's income and the national average. Consequently, Federal matching
to lower income States is increased, and Federal matching to higher
income States is decreased, within the statutory 50-83 percent limits.
The FMAP for Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa is set by statute at 50 percent and is
subject to dollar limitations specified in section 1108 of the Act.
(c) Special provisions. (1) Under section 1903(a)(5) of the Act, the
Federal share of State expenditures for family planning services is 90
percent.
(2) Under section 1905(b), the Federal share of State expenditures
for services
[[Page 74]]
provided through Indian Health Service facilities is 100 percent.
(3) Under section 1903(g), the FMAP is reduced if the State does not
have an effective program to control use of institutional services.
(4) Under section 1905(b) of the Social Security Act, the Federal
share of State expenditures described in Sec. 433.11(a) for services
provided to children, is the enhanced FMAP rate determined in accordance
with Sec. 457.622(b) of this chapter, subject to the conditions
explained in Sec. 433.11(b).
(5)(i) Under section 1933(d) of the Act, the Federal share of State
expenditures for Medicare Part B premiums described in section
1905(p)(3)(A)(ii) of the Act on behalf of Qualifying Individuals
described in section 1902(a)(10)(E)(iv) of the Act, is 100 percent, to
the extent that the assistance does not exceed the State's allocation
under paragraph (c)(5)(ii) of this section. To the extent that the
assistance exceeds that allocation, the Federal share is 0 percent.
(ii) Under section 1933(c)(2) of the Act and subject to paragraph
(c)(5)(iii) of this section, the allocation to each State is equal to
the total allocation specified in section 1933(g) of the Act multiplied
by the Secretary's estimate of the ratio of the total number of
individuals described in section 1902(a)(10)(E)(iv) of the Act in the
State to the total number of individuals described in section
1902(a)(10)(E)(iv) of the Act for all eligible States. In estimating
that ratio, the Secretary will use data from the U.S. Census Bureau.
(iii) If, based on projected expenditures for a fiscal year, or for
a shorter period for which funding is available under section 1933 of
the Act, the Secretary determines that the expenditures described in
paragraph (c)(5)(i) of this section for one or more States are projected
to exceed the allocation made to the State, the Secretary may adjust
each State's fiscal year allocation, as follows:
(A) The Secretary will compare each State's projected total
expenditures for the expenses described in paragraph (c)(5)(i) of this
section to the State's initial allocation determined under paragraph
(c)(5)(ii) of this section, to determine the extent of each State's
projected surplus or deficit.
(B) The surplus of each State with a projected surplus, as
determined in accordance with paragraph (c)(5)(iii)(A) of this section
will be added together to arrive at the Total Projected Surplus.
(C) The deficit of each State with a projected deficit, as
determined in accordance with paragraph (c)(5)(iii)(A) of this section
will be added together to arrive at the Total Projected Deficit.
(D) Each State with a projected deficit will receive an additional
allocation equal to the amount of its projected deficit, or a prorated
amount of such deficit, if the Total Projected Deficit is greater than
the Total Projected Surplus. Except as described in paragraph
(c)(5)(iii)(E) of this section, the amount to be reallocated from each
State with a projected surplus will be equal to A x B, where A equals
the Total Projected Deficit and B equals the amount of the State's
projected surplus as a percentage of the Total Projected Surplus.
(E) If the Total Projected Deficit determined under paragraph
(c)(5)(iii)(C) of this section is greater than the Total Projected
Surplus determined under paragraph (c)(5)(iii)(B) of this section, each
State with a projected deficit will receive an additional allocation
amount equal to the amount of the Total Projected Surplus multiplied by
the amount of the projected deficit for such State as a percentage of
the Total Projected Deficit. The amount to be reallocated from each
State with a projected surplus will be equal to the amount of the
projected surplus.
(iv) CMS will notify States of any changes in allotments resulting
from any reallocations.
(v) The provisions in paragraph (c)(5) of this section will be in
effect through the end of the period for which funding authority is
available under section 1933 of the Act.
(Sections 1902(a)(10), 1933 of the Social Security Act (42 U.S.C.
1396a), and Pub. L. 105-33)
[43 FR 45201, Sept. 29, 1978, as amended at 46 FR 48559, Oct. 1, 1981;
51 FR 41350, Nov. 14, 1986; 54 FR 21066, May 16, 1989; 66 FR 2666, Jan.
11, 2001; 70 FR 50220, Aug. 26, 2005; 71 FR 25092, Apr. 28, 2006; 73 FR
70893, Nov. 24, 2008]
[[Page 75]]
Sec. 433.11 Enhanced FMAP rate for children.
(a) Subject to the conditions in paragraph (b) of this section, the
enhanced FMAP determined in accordance with Sec. 457.622 of this
chapter will be used to determine the Federal share of State
expenditures, except any expenditures pursuant to section 1923 of the
Act for payments to disproportionate share hospitals for--
(1) Services provided to optional targeted low-income children
described in Sec. 435.4 or Sec. 436.3 of this chapter; and
(2) Services provided to children born before October 1, 1983, with
or without group health coverage or other health insurance coverage, who
would be described in section 1902(l)(1)(D) of the Act (poverty-level-
related children's groups) if--
(i) They had been born on or after that date; and
(ii) They would not qualify for medical assistance under the State
plan in effect on March 31, 1997.
(b) Enhanced FMAP is not available if--
(1) A State adopts income and resource standards and methodologies
for purposes of determining a child's eligibility under the Medicaid
State plan that are more restrictive than those applied under policies
of the State plan (as described in the definition of optional targeted
low-income children at Sec. 435.4 of this chapter) in effect on June 1,
1997; or
(2) No funds are available in the State's title XXI allotment, as
determined under part 457, subpart F of this chapter for the quarter
enhanced FMAP is claimed; or
(3) The State fails to maintain a valid method of identifying
services provided on behalf of children listed in paragraph (a) of this
section.
[66 FR 2666, Jan. 11, 2001]
Sec. 433.15 Rates of FFP for administration.
(a) Basis. Section 1903(a) (2) through (5) and (7) of the Act
provide for payments to States, on the basis of specified percentages,
for part of their expenditures for administration of an approved State
plan.
(b) Activities and rates. (1) [Reserved]
(2) Administration of family planning services: 90 percent. (Section
1903 (a)(5); 42 CFR 432.50(b)(5).)
(3) Design, development, or installation of mechanized claims
processing and information retrieval systems: 90 percent. (Section
1903(a)(3)(A)(i); 42 CFR part 433, subpart C, and Sec. 432.50 (b)(3).)
(4) Operation of mechanized claims processing and information
retrieval systems: 75 percent. (Section 1903(a) (3)(B); 42 CFR part 433,
subpart C and Sec. 432.50(b)(2).)
(5) Compensation and training of skilled professional medical
personnel and staff directly supporting those personnel if the criteria
specified in Sec. 432.50 (c) and (d) are met: 75 percent. (Section
1903(a)(2); 42 CFR 432.50(b)(1).)
(6)(i) Funds expended for the performance of medical and utilization
review by a QIO under a contract entered into under section 1902(d) of
the Act: 75 percent (section 1903(a)(3)(C) of the Act).
(ii) If a State contracts for medical and utilization review with
any individual or organization not designated under Part B of Title XI
of the Act, funds expended for such review will be reimbursed as
provided in paragraph (b)(7) of this section.
(7) All other activities the Secretary finds necessary for proper
and efficient administration of the State plan: 50 percent. (Section
1903(a)(7).) (See also Sec. 455.300 of this subchapter for FFP at 90
percent for State Medicaid fraud control units under section
1903(a)(6).)
(8) Nurse aide training and competency evaluation programs and
competency evaluation programs described in 1919(e)(1) of the Act: for
calendar quarters beginning on or after July 1, 1988 and before July 1,
1990: The lesser of 90% or the Federal medical assistance percentage
plus 25 percentage points; for calendar quarters beginning on or after
October 1, 1990: 50%. (Section 1903(a)(2)(B) of the Act.)
(9) Preadmission screening and annual resident review (PASARR)
activities conducted by the State: 75 percent. (Sections 1903(a)(2)(C)
and 1919(e)(7); 42 CFR part 483, subparts C and E.)
(10) Funds expended for the performance of external quality review
or the related activities described in Sec. 438.358
[[Page 76]]
of this chapter when they are performed by an external quality review
organization as defined in Sec. 438.320 of this chapter: 75 percent.
[43 FR 45201, Sept. 29, 1978, as amended at 46 FR 48566, Oct. 1, 1981;
46 FR 54744, Nov. 4, 1981; 50 FR 15327, Apr. 17, 1985; 50 FR 46664, Nov.
12, 1985; 56 FR 48918, Sept. 26, 1991; 57 FR 56506, Nov. 30, 1992; 68 FR
3635, Jan. 24, 2003]
Sec. 433.32 Fiscal policies and accountability.
A State plan must provide that the Medicaid agency and, where
applicable, local agencies administering the plan will--
(a) Maintain an accounting system and supporting fiscal records to
assure that claims for Federal funds are in accord with applicable
Federal requirements;
(b) Retain records for 3 years from date of submission of a final
expenditure report;
(c) Retain records beyond the 3-year period if audit findings have
not been resolved; and
(d) Retain records for nonexpendable property acquired under a
Federal grant for 3 years from the date of final disposition of that
property.
[44 FR 17935, Mar. 23, 1979]
Sec. 433.34 Cost allocation.
A State plan under Title XIX of the Social Security Act must provide
that the single or appropriate Agency will have an approved cost
allocation plan on file with the Department in accordance with the
requirements contained in subpart E of 45 CFR part 95. Subpart E also
sets forth the effect on FFP if the requirements contained in that
subpart are not met.
[47 FR 17490, Apr. 23, 1982]
Sec. 433.35 Equipment--Federal financial participation.
Claims for Federal financial participation in the cost of equipment
under the Medicaid Program are determined in accordance with subpart G
of 45 CFR part 95. Requirements concerning the management and
disposition of equipment under the Medicaid Program are also prescribed
in subpart G of 45 CFR part 95.
[47 FR 41564, Sept. 21, 1982]
Sec. 433.36 Liens and recoveries.
(a) Basis and purpose. This section implements sections 1902(a)(18)
and 1917(a) and (b) of the Act, which describe the conditions under
which an agency may impose a lien against a recipient's property, and
when an agency may make an adjustment or recover funds in satisfaction
of the claim against the individual's estate or real property.
(b) Definition of property. For purposes of this section,
``property'' includes the homestead and all other personal and real
property in which the recipient has a legal interest.
(c) State plan requirement. If a State chooses to impose a lien
against an individual's real property (or as provided in paragraph
(g)(1) of this section, personal property), the State plan must provide
that the provisions of paragraphs (d) through (i) of this section are
met.
(d) Procedures. The State plan must specify the process by which the
State will determine that an institutionalized individual cannot
reasonably be expected to be discharged from the medical institution and
return home as provided in paragraph (g)(2)(ii) of this section. The
description of the process must include the type of notice to be given
the individual, the process by which the individual will be given the
opportunity for a hearing, the hearing procedures, and by whom and on
what basis the determination that the individual cannot reasonably be
expected to be discharged from the institution will be made. The notice
to the individual must explain what is meant by the term lien, and that
imposing a lien does not mean that the individual will lose ownership of
the home.
(e) Definitions. The State plan must define the following terms used
in this section:
(1) Individual's home.
(2) Equity interest in home.
(3) Residing in the home for at least 1 (or 2) year(s).
(4) On a continuing basis.
(5) Discharge from the medical institution and return home.
(6) Lawfully residing.
(f) Exception. The State plan must specify the criteria by which a
son or daughter can establish to the agency's
[[Page 77]]
satisfaction that he or she has been providing care which permitted the
individual to reside at home rather than in an institution, as provided
in paragraph (h)(2)(iii)(B) of this section.
(g) Lien provisions--(1) Incorrect payments. The agency may place a
lien against an individual's property, both personal and real, before
his or her death because of Medicaid claims paid or to be paid on behalf
of that individual following a court judgement which determined that
benefits were incorrectly paid for that individual.
(2) Correct payments. Except as provided in paragraph (g)(3) of this
section, the agency may place a lien against the real property of an
individual at any age before his or her death because of Medicaid claims
paid or to be paid for that individual when--
(i) An individual is an inpatient of a medical institution and must,
as a condition of receiving services in the institution under the State
plan, apply his or her income to the cost of care as provided in
Sec. Sec. 435.725, 435.832 and 436.832; and
(ii) The agency determines that he or she cannot reasonably be
expected to be discharged and return home. The agency must notify the
individual of its intention to make that determination and provide an
opportunity for a hearing in accordance with State established
procedures before the determination is made. The notice to an individual
must include an explanation of liens and the effect on an individual's
ownership of property.
(3) Restrictions on placing liens. The agency may not place a lien
on an individual's home under paragraph (g)(2) of this section if any of
the following individuals is lawfully residing in the home:
(i) The spouse;
(ii) The individual's child who is under age 21 or blind or disabled
as defined in the State plan; or
(iii) The individual's sibling (who has an equity interest in the
home, and who was residing in the individual's home for at least one
year immediately before the date the individual was admitted to the
medical institution).
(4) Termination of lien. Any lien imposed on an individual's real
property under paragraph (g)(2) of this section will dissolve when that
individual is discharged from the medical institution and returns home.
(h) Adjustments and recoveries. (1) The agency may make an
adjustment or recover funds for Medicaid claims correctly paid for an
individual as follows:
(i) From the estate of any individual who was 65 years of age or
older when he or she received Medicaid; and
(ii) From the estate or upon sale of the property subject to a lien
when the individual is institutionalized as described in paragraph
(g)(2) of this section.
(2) The agency may make an adjustment or recovery under paragraph
(h)(1) of this section only:
(i) After the death of the individual's surviving spouse; and
(ii) When the individual has no surviving child under age 21 or
blind or disabled as defined in the State plan; and
(iii) In the case of liens placed on an individual's home under
paragraph (g)(2) of this section, when there is no--
(A) Sibling of the individual residing in the home, who has resided
there for at least one year immediately before the date of the
individual's admission to the institution, and has resided there on a
continuous basis since that time; or
(B) Son or daughter of the individual residing in the home, who has
resided there for at least two years immediately before the date of the
individual's admission to the institution, has resided there on a
continuous basis since that time, and can establish to the agency's
satisfaction that he or she has been providing care which permitted the
individual to reside at home rather than in an institution.
(i) Prohibition of reduction of money payments. No money payment
under another program may be reduced as a means of recovering Medicaid
claims incorrectly paid.
[43 FR 45201, Sept. 29, 1978, as amended at 47 FR 43647, Oct. 1, 1982;
47 FR 49847, Nov. 3, 1982]
[[Page 78]]
Sec. 433.37 Reporting provider payments to Internal Revenue Service.
(a) Basis and purpose. This section, based on section 1902(a)(4) of
the Act, prescribes requirements concerning--
(1) Identification of providers; and
(2) Compliance with the information reporting requirements of the
Internal Revenue Code.
(b) Identification of providers. A State plan must provide for the
identification of providers by--
(1) Social security number if--
(i) The provider is in solo practice; or
(ii) The provider is not in solo practice but billing is by the
individual practitioner; or
(2) Employer identification number for all other providers.
(c) Compliance with section 6041 of the Internal Revenue Code. The
plan must provide that the Medicaid agency complies with the information
reporting requirements of section 6041 of the Internal Revenue Code (26
U.S.C. 6041). Section 6041 requires the filing of annual information
returns showing amounts paid to providers, who are identified by name,
address, and social security number or employer identification number.
Sec. 433.38 Interest charge on disallowed claims for FFP.
(a) Basis and scope. This section is based on section 1903(d)(5) of
the Act, which requires that the Secretary charge a State interest on
the Federal share of claims that have been disallowed but have been
retained by the State during the administrative appeals process under
section 1116(d) of the Act and the Secretary later recovers after the
administrative appeals process has been completed. This section does not
apply to--
(1) Claims that have been deferred by the Secretary and disallowed
within the time limits of Sec. 430.40 of this chapter. Deferral of
claims for FFP; or
(2) Claims for expenditures that have never been paid on a grant
award; or
(3) Disallowances of any claims for services furnished before
October 1, 1980, regardless of the date of the claim submitted to CMS.
(b) General principles. (1) CMS will charge a State interest on FFP
when--
(i) CMS has notified the Medicaid agency under 45 CFR 74.304 that a
State claim for FFP is not allowable;
(ii) The agency has appealed the disallowance to the Grant Appeals
Board under 45 CFR Part 16 and has chosen to retain the FFP during the
administrative appeals process in accordance with paragraph (c)(2) of
this section; and
(iii)(A) The Board has made a final determination upholding part or
all of the disallowance; (B) the agency has withdrawn its appeal on all
or part of the disallowance; or (C) the agency has reversed its decision
to retain the funds without withdrawing its appeal and the Board upholds
all or part of the disallowance.
(2) If the courts overturn, in whole or in part, a Board decision
that has sustained a disallowance, CMS will return the principal and the
interest collected on the funds that were disallowed, upon the
completion of all judicial appeals.
(3) Unless an agency decides to withdraw its appeal on part of the
disallowance and therefore returns only that part of the funds on which
it has withdrawn its appeal, any decision to retain or return disallowed
funds must apply to the entire amount in dispute.
(4) If the agency elects to have CMS recover the disputed amount, it
may not reverse that election.
(c) State procedures. (1) If the Medicaid agency has appealed a
disallowance to the Board and wishes to retain the disallowed funds
until the Board issues a final determination, the agency must notify the
CMS Regional Administrator in writing of its decision to do so.
(2) The agency must mail its notice to the CMS Regional
Administrator within 30 days of the date of receipt of the notice of the
disallowance, as established by the certified mail receipt accompanying
the notices.
(3) If the agency withdraws either its decision to retain the FFP or
its appeal on all or part of the FFP or both, the agency must notify CMS
in writing.
(4) If the agency does not notify the CMS Regional Administrator
within the time limit set forth in paragraph (c)(2) of this section. CMS
will recover the amount of the disallowed funds
[[Page 79]]
from the next possible Medicaid grant award to the State.
(d) Amount of interest charged. (1) If the agency retains funds that
later become subject to an interest charge under paragraph (b) of this
section, CMS will offset from the next Medicaid grant award to the State
the amount of the funds subject to the interest charge, plus interest on
that amount.
(2) The interest charge is at the rate CMS determines to be the
average of the bond equivalent of the weekly 90-day Treasury bill
auction rates during the period for which interest will be charged.
(e) Duration of interest. (1) The interest charge on the amount of
disallowed FFP retained by the agency will begin on the date of the
disallowance notice and end--
(i) On the date of the final determination by the Board;
(ii) On the date CMS receives written notice from the State that it
is withdrawing its appeal on all of the disallowed funds; or
(iii) If the agency withdraws its appeal on part of the funds, on
(A) the date CMS receives written notice from the agency that it is
withdrawing its appeal on a specified part of the disallowed funds for
the part on which the agency withdraws its appeal; and (B) the date of
the final determination by the Board on the part for which the agency
pursues its appeal; or
(iv) The date CMS receives written notice from the agency that it no
longer chooses to retain the funds.
(2) CMS will not charge interest on FFP retained by an agency for
more than 12 months for disallowances of FFP made between October 1,
1980 and August 13, 1981.
[48 FR 29485, June 27, 1983]
Sec. 433.40 Treatment of uncashed or cancelled (voided) Medicaid checks.
(a) Purpose. This section provides the rules to ensure that States
refund the Federal portion of uncashed or cancelled (voided) checks
under title XIX.
(b) Definitions. As used in this section--
Cancelled (voided) check means a Medicaid check issued by a State or
fiscal agent which prior to its being cashed is cancelled (voided) by
the State or fiscal agent, thus preventing disbursement of funds.
Check means a check or warrant that a State or local agency uses to
make a payment.
Fiscal agent means an entity that processes or pays vendor claims
for the Medicaid State agency.
Uncashed check means a Medicaid check issued by a State or fiscal
agent which has not been cashed by the payee.
Warrant means an order by which the State agency or local agency
without the authority to issue checks recognizes a claim. Presentation
of a warrant by the payee to a State officer with authority to issue
checks will result in release of funds due.
(c) Refund of Federal financial participation (FFP) for uncashed
checks--(1) General provisions. If a check remains uncashed beyond a
period of 180 days from the date it was issued; i.e., the date of the
check, it will no longer be regarded as an allowable program
expenditure. If the State has claimed and received FFP for the amount of
the uncashed check, it must refund the amount of FFP received.
(2) Report of refund. At the end of each calendar quarter, the State
must identify those checks which remain uncashed beyond a period of 180
days after issuance. The State agency must refund all FFP that it
received for uncashed checks by adjusting the Quarterly Statement of
Expenditures for that quarter. If an uncashed check is cashed after the
refund is made, the State may file a claim. The claim will be considered
to be an adjustment to the costs for the quarter in which the check was
originally claimed. This claim will be paid if otherwise allowed by the
Act and the regulations issued pursuant to the Act.
(3) If the State does not refund the appropriate amount as specified
in paragraph (c)(2) of this section, the amount will be disallowed.
(d) Refund of FFP for cancelled (voided) checks--(1) General
provision. If the State has claimed and received FFP for the amount of a
cancelled (voided) check, it must refund the amount of FFP received.
[[Page 80]]
(2) Report of refund. At the end of each calendar quarter, the State
agency must identify those checks which were cancelled (voided). The
State must refund all FFP that it received for cancelled (voided) checks
by adjusting the Quarterly Statement of Expenditures for that quarter.
(3) If the State does not refund the appropriate amount as specified
in paragraph (d)(2) of this section, the amount will be disallowed.
[51 FR 36227, Oct. 9, 1986]
Subpart B_General Administrative Requirements State Financial
Participation
Source: 57 FR 55138, Nov. 24, 1992, unless otherwise noted.
Sec. 433.50 Basis, scope, and applicability.
(a) Basis. This subpart interprets and implements--(1) Section
1902(a)(2) and section 1903(w)(7)(G) of the Act, which require States to
share in the cost of medical assistance expenditures and permit State
and local units of government to participate in the financing of the
non-Federal portion of medical assistance expenditures.
(i) A unit of government is a State, a city, a county, a special
purpose district, or other governmental unit in the State that: has
taxing authority, has direct access to tax revenues, is a State
university teaching hospital with direct appropriations from the State
treasury, or is an Indian tribe as defined in Section 4 of the Indian
Self-Determination and Education Assistance Act, as amended [25 U.S.C.
450b].
(ii) A health care provider may be considered a unit of government
only when it is operated by a unit of government as demonstrated by a
showing of the following:
(A) The health care provider has generally applicable taxing
authority; or
(B) The health care provider has direct access to generally
applicable tax revenues. This means the health care provider is able to
directly access funding as an integral part of a unit of government with
taxing authority which is legally obligated to fund the health care
provider's expenses, liabilities, and deficits, so that a contractual
arrangement with the State or local government is not the primary or
sole basis for the health care provider to receive tax revenues;
(C) The health care provider receives appropriated funding as a
State university teaching hospital providing supervised teaching
experiences to graduate medical school interns and residents enrolled in
a State university in the State; or
(D) The health care provider is an Indian Tribe or Tribal
organization (as those terms are defined in Section 4 of the Indian
Self-Determination and Education Assistance Act (ISDEAA); 25 U.S.C.
450b) and meets the following criteria:
(1) If the entity is a Tribal organization, it is--
(a) Carrying out health programs of the IHS, including health
services which are eligible for reimbursement by Medicaid, under a
contract or compact entered into between the Tribal organization and the
Indian Health Service pursuant to the Indian Self-Determination and
Education Assistance Act, Public Law 93-638, as amended, and
(b) Either the recognized governing body of an Indian tribe, or an
entity which is formed solely by, wholly owned or comprised of, and
exclusively controlled by Indian tribes.
(2) Section 1903(a) of the Act, which requires the Secretary to pay
each State an amount equal to the Federal medical assistance percentage
of the total amount expended as medical assistance under the State's
plan.
(3) Section 1903(w) of the Act, which specifies the treatment of
revenues from provider-related donations and health care-related taxes
in determining a State's medical assistance expenditures for which
Federal financial participation (FFP) is available under the Medicaid
program.
(b) Scope. This subpart--
(1) Specifies State plan requirements for State financial
participation in expenditures for medical assistance.
(2) Defines provider-related donations and health care-related taxes
that may be received without a reduction in FFP.
(3) Specifies rules for revenues received from provider-related
donations
[[Page 81]]
and health care-related taxes during a transition period.
(4) Establishes limitations on FFP when States receive funds from
provider-related donations and revenues generated by health care-related
taxes.
(c) Applicability. The provisions of this subpart apply to the 50
States and the District of Columbia, but not to any State whose entire
Medicaid program is operated under a waiver granted under section 1115
of the Act.
[57 FR 55138, Nov. 24, 1992; 58 FR 6095, Jan. 26, 1993; 72 FR 29832, May
29, 2007; 72 FR 29832, May 29, 2007]
Sec. 433.51 Funds from units of government as the State share of financial participation.
(a) Funds from units of government may be considered as the State's
share in claiming FFP if they meet the conditions specified in
paragraphs (b) and (c) of this section.
(b) The funds from units of government are appropriated directly to
the State or local Medicaid agency, or are transferred from other units
of government (including Indian tribes) to the State or local agency and
are under its administrative control, or are certified by the
contributing unit of government as representing expenditures eligible
for FFP under this section. Certified public expenditures must be
expenditures within the meaning of 45 CFR 95.13 that are supported by
auditable documentation in a form approved by the Secretary that, at a
minimum--
(1) Identifies the relevant category of expenditures under the State
plan;
(2) Explains whether the contributing unit of government is within
the scope of the exception to limitations on provider-related taxes and
donations;
(3) Demonstrates the actual expenditures incurred by the
contributing unit of government in providing services to eligible
individuals receiving medical assistance or in administration of the
State plan; and
(4) Is subject to periodic State audit and review.
(c) The funds from units of government are not Federal funds, or are
Federal funds authorized by Federal law to be used to match other
Federal funds.
[72 FR 29833, May 29, 2007]
Sec. 433.52 General definitions.
As used in this subpart--
Entity related to a health care provider means--
(1) An organization, association, corporation, or partnership formed
by or on behalf of a health care provider;
(2) An individual with an ownership or control interest in the
provider, as defined in section 1124(a)(3) of the Act;
(3) An employee, spouse, parent, child, or sibling of the provider,
or of a person with an ownership or control interest in the provider, as
defined in section 1124(a)(3) of the Act; or
(4) A supplier of health care items or services or a supplier to
providers of health care items or services.
Health care provider means the individual or entity that receives
any payment or payments for health care items or services provided.
Provider-related donation means a donation or other voluntary
payment (in cash or in kind) made directly or indirectly to a State or
unit of local government by or on behalf of a health care provider, an
entity related to such a health care provider, or an entity providing
goods or services to the State for administration of the State's
Medicaid plan.
(1) Donations made by a health care provider to an organization,
which in turn donates money to the State, may be considered to be a
donation made indirectly to the State by a health care provider.
(2) When an organization receives less than 25 percent of its
revenues from providers and/or provider-related entities, its donations
will not generally be presumed to be provider-related donations. Under
these circumstances, a provider-related donation to an organization will
not be considered a donation made indirectly to the State. However, if
the donations from providers to an organization are subsequently
determined to be indirect donations to the State or unit of local
government for administration of the State's Medicaid program, then such
donations will be considered to be health care related.
(3) When the organization receives more than 25 percent of its
revenue from donations from providers or provider-related entities, the
organization
[[Page 82]]
always will be considered as acting on behalf of health care providers
if it makes a donation to the State. The amount of the organization's
donation to the State, in a State fiscal year, that will be considered
health care related, will be based on the percentage of donations the
organization received from the providers during that period.
Sec. 433.53 State plan requirements.
A State plan must provide that--
(a) State (as distinguished from local) funds will be used both for
medical assistance and administration;
(b) State funds will be used to pay at least 40 percent of the non-
Federal share of total expenditures under the plan; and
(c) State and Federal funds will be apportioned among the political
subdivisions of the State on a basis that assures that--
(1) Individuals in similar circumstances will be treated similarly
throughout the State; and
(2) If there is local financial participation, lack of funds from
local sources will not result in lowering the amount, duration, scope,
or quality of services or level of administration under the plan in any
part of the State.
[57 FR 55138, Nov. 24, 1992; 58 FR 6095, Jan. 26, 1993]
Sec. 433.54 Bona fide donations.
(a) A bona fide donation means a provider-related donation, as
defined in Sec. 433.52, made to the State or unit of local government,
that has no direct or indirect relationship, as described in paragraph
(b) of this section, to Medicaid payments made to--
(1) The health care provider;
(2) Any related entity providing health care items and services; or
(3) Other providers furnishing the same class of items or services
as the provider or entity.
(b) Provider-related donations will be determined to have no direct
or indirect relationship to Medicaid payments if those donations are not
returned to the individual provider, the provider class, or related
entity under a hold harmless provision or practice, as described in
paragraph (c) of this section.
(c) A hold harmless practice exists if any of the following applies:
(1) The State (or other unit of government) provides for a direct or
indirect non-Medicaid payment to those providers or others making, or
responsible for, the donation, and the payment amount is positively
correlated to the donation. A positive correlation includes any positive
relationship between these variables, even if not consistent over time.
(2) All or any portion of the Medicaid payment to the donor,
provider class, or related entity, varies based only on the amount of
the donation, including where Medicaid payment is conditional on receipt
of the donation.
(3) The State (or other unit of government) receiving the donation
provides for any direct or indirect payment, offset, or waiver such that
the provision of that payment, offset, or waiver directly or indirectly
guarantees to return any portion of the donation to the provider (or
other parties responsible for the donation).
(d) CMS will presume provider-related donations to be bona fide if
the voluntary payments, including, but not limited to, gifts,
contributions, presentations or awards, made by or on behalf of
individual health care providers to the State, county, or any other unit
of local government does not exceed--
(1) $5,000 per year in the case of an individual provider donation;
or
(2) $50,000 per year in the case of a donation from any health care
organizational entity.
(e) To the extent that a donation presumed to be bona fide contains
a hold harmless provision, as described in paragraph (c) of this
section, it will not be considered a bona fide donation. When provider-
related donations are not bona fide, CMS will deduct this amount from
the State's medical assistance expenditures before calculating FFP. This
offset will apply to all years the State received such donations and any
subsequent fiscal year in which a similar donation is received.
[57 FR 55138, Nov. 24, 1992, as amended at 73 FR 9698, Feb. 22, 2008]
Sec. 433.55 Health care-related taxes defined.
(a) A health care-related tax is a licensing fee, assessment, or
other mandatory payment that is related to--
[[Page 83]]
(1) Health care items or services;
(2) The provision of, or the authority to provide, the health care
items or services; or
(3) The payment for the health care items or services.
(b) A tax will be considered to be related to health care items or
services under paragraph (a)(1) of this section if at least 85 percent
of the burden of the tax revenue falls on health care providers.
(c) A tax is considered to be health care related if the tax is not
limited to health care items or services, but the treatment of
individuals or entities providing or paying for those health care items
or services is different than the tax treatment provided to other
individuals or entities.
(d) A health care-related tax does not include payment of a criminal
or civil fine or penalty, unless the fine or penalty was imposed instead
of a tax.
(e) Health care insurance premiums and health maintenance
organization premiums paid by an individual or group to ensure coverage
or enrollment are not considered to be payments for health care items
and services for purposes of determining whether a health care-related
tax exists.
Sec. 433.56 Classes of health care services and providers defined.
(a) For purposes of this subpart, each of the following will be
considered as a separate class of health care items or services:
(1) Inpatient hospital services;
(2) Outpatient hospital services;
(3) Nursing facility services (other than services of intermediate
care facilities for the mentally retarded);
(4) Intermediate care facility services for the mentally retarded,
and similar services furnished by community-based residences for the
mentally retarded, under a waiver under section 1915(c) of the Act, in a
State in which, as of December 24, 1992, at least 85 percent of such
facilities were classified as ICF/MRs prior to the grant of the waiver;
(5) Physician services;
(6) Home health care services;
(7) Outpatient prescription drugs;
(8) Services of managed care organizations (including health
maintenance organizations, preferred provider organizations);
(9) Ambulatory surgical center services, as described for purposes
of the Medicare program in section 1832(a)(2)(F)(i) of the Social
Security Act. These services are defined to include facility services
only and do not include surgical procedures;
(10) Dental services;
(11) Podiatric services;
(12) Chiropractic services;
(13) Optometric/optician services;
(14) Psychological services;
(15) Therapist services, defined to include physical therapy, speech
therapy, occupational therapy, respiratory therapy, audiological
services, and rehabilitative specialist services;
(16) Nursing services, defined to include all nursing services,
including services of nurse midwives, nurse practitioners, and private
duty nurses;
(17) Laboratory and x-ray services, defined as services provided in
a licensed, free-standing laboratory or x-ray facility. This definition
does not include laboratory or x-ray services provided in a physician's
office, hospital inpatient department, or hospital outpatient
department;
(18) Emergency ambulance services; and
(19) Other health care items or services not listed above on which
the State has enacted a licensing or certification fee, subject to the
following:
(i) The fee must be broad based and uniform or the State must
receive a waiver of these requirements;
(ii) The payer of the fee cannot be held harmless; and
(iii) The aggregate amount of the fee cannot exceed the State's
estimated cost of operating the licensing or certification program.
(b) Taxes that pertain to each class must apply to all items and
services within the class, regardless of whether the items and services
are furnished by or through a Medicaid-certified or licensed provider.
[57 FR 55138, Nov. 24, 1992, as amended at 58 FR 43180, Aug. 13, 1993;
73 FR 9698, Feb. 22, 2008]
[[Page 84]]
Sec. 433.57 General rules regarding revenues from provider-related donations and health care-related taxes.
Effective January 1, 1992, CMS will deduct from a State's
expenditures for medical assistance, before calculating FFP, funds from
provider-related donations and revenues generated by health care-related
taxes received by a State or unit of local government, in accordance
with the requirements, conditions, and limitations of this subpart, if
the donations and taxes are not--
(a) Permissible provider-related donations, as specified in Sec.
433.66(b); or
(b) Health care-related taxes, as specified in Sec. 433.68(b).
[57 FR 55138, Nov. 24, 1992, as amended at 73 FR 9698, Feb. 22, 2008]
Sec. Sec. 433.58-433.60 [Reserved]
Sec. 433.66 Permissible provider-related donations.
(a) General rule. (1) Except as specified in paragraph (a)(2) of
this section, a State may receive revenues from provider-related
donations without a reduction in FFP, only in accordance with the
requirements of this section.
(2) The provisions of this section relating to provider-related
donations for outstationed eligibility workers are effective on October
1, 1992.
(b) Permissible donations. Subject to the limitations specified in
Sec. 433.67, a State may receive, without a reduction in FFP, provider-
related donations that meet at least one of the following requirements:
(1) The donations must be bona fide donations, as defined in Sec.
433.54; or
(2) The donations are made by a hospital, clinic, or similar entity
(such as a Federally-qualified health center) for the direct costs of
State or local agency personnel who are stationed at the facility to
determine the eligibility (including eligibility redeterminations) of
individuals for Medicaid or to provide outreach services to eligible (or
potentially eligible) Medicaid individuals. Direct costs of outstationed
eligibility workers refers to the costs of training, salaries and fringe
benefits associated with each outstationed worker and similar allocated
costs of State or local agency support staff, and a prorated cost of
outreach activities applicable to the outstationed workers at these
sites. The prorated costs of outreach activities will be calculated
taking the percent of State outstationed eligibility workers at a
facility to total outstationed eligibility workers in the State, and
multiplying the percent by the total cost of outreach activities in the
State. Costs for such items as State agency overhead and provider office
space are not allowable for this purpose.
[57 FR 55138, Nov. 24, 1992, as amended at 58 FR 43180, Aug. 13, 1993;
73 FR 9698, Feb. 22, 2008]
Sec. 433.67 Limitations on level of FFP for permissible provider-related donations.
(a)(1) Limitations on bona fide donations. There are no limitations
on the amount of bona fide provider-related donations that a State may
receive without a reduction in FFP, as long as the bona fide donations
meet the requirements of Sec. 433.66(b)(1).
(2) Limitations on donations for outstationed eligibility workers.
Effective October 1, 1992, the maximum amount of provider-related
donations for outstationed eligibility workers, as described in Sec.
433.66(b)(2), that a State may receive without a reduction in FFP may
not exceed 10 percent of a State's medical assistance administrative
costs (both the Federal and State share), excluding the costs of family
planning activities. The 10 percent limit for provider-related donations
for outstationed eligibility workers is not included in the limit in
effect through September 30, 1995, for health care-related taxes as
described in Sec. 433.70.
(b) Calculation of FFP. CMS will deduct from a State's quarterly
medical assistance expenditures, before calculating FFP, any provider-
related donations received in that quarter that do not meet the
requirements of Sec. 433.66(b)(1) and provider donations for
outstationed eligibility workers in excess of the limits specified under
paragraph (a)(2) of this section.
[57 FR 55138, Nov. 24, 1992, as amended at 58 FR 43180, Aug. 13, 1993;
73 FR 9698, Feb. 22, 2008]
[[Page 85]]
Sec. 433.68 Permissible health care-related taxes.
(a) General rule. A State may receive health care-related taxes,
without a reduction in FFP, only in accordance with the requirements of
this section.
(b) Permissible health care-related taxes. Subject to the
limitations specified in Sec. 433.70, a State may receive, without a
reduction in FFP, health care-related taxes if all of the following are
met:
(1) The taxes are broad based, as specified in paragraph (c) of this
section;
(2) The taxes are uniformly imposed throughout a jurisdiction, as
specified in paragraph (d) of this section; and
(3) The tax program does not violate the hold harmless provisions
specified in paragraph (f) of this section.
(c) Broad based health care-related taxes. (1) A health care-related
tax will be considered to be broad based if the tax is imposed on at
least all health care items or services in the class or providers of
such items or services furnished by all non-Federal, non-public
providers in the State, and is imposed uniformly, as specified in
paragraph (d) of this section.
(2) If a health care-related tax is imposed by a unit of local
government, the tax must extend to all items or services or providers
(or to all providers in a class) in the area over which the unit of
government has jurisdiction.
(3) A State may request a waiver from CMS of the requirement that a
tax program be broad based, in accordance with the procedures specified
in Sec. 433.72. Waivers from the uniform and broad-based requirements
will automatically be granted in cases of variations in licensing and
certification fees for providers if the amount of such fees is not more
than $1,000 annually per provider and the total amount raised by the
State from the fees is used in the administration of the licensing or
certification program.
(d) Uniformly imposed health care-related taxes. A health care-
related tax will be considered to be imposed uniformly even if it
excludes Medicaid or Medicare payments (in whole or in part), or both;
or, in the case of a health care-related tax based on revenues or
receipts with respect to a class of items or services (or providers of
items or services), if it excludes either Medicaid or Medicare revenues
with respect to a class of items or services, or both. The exclusion of
Medicaid revenues must be applied uniformly to all providers being
taxed.
(1) A health care-related tax will be considered to be imposed
uniformly if it meets any one of the following criteria:
(i) If the tax is a licensing fee or similar tax imposed on a class
of health care services (or providers of those health care items or
services), the tax is the same amount for every provider furnishing
those items or services within the class.
(ii) If the tax is a licensing fee or similar tax imposed on a class
of health care items or services (or providers of those items or
services) on the basis of the number of beds (licensed or otherwise) of
the provider, the amount of the tax is the same for each bed of each
provider of those items or services in the class.
(iii) If the tax is imposed on provider revenue or receipts with
respect to a class of items or services (or providers of those health
care items or services), the tax is imposed at a uniform rate for all
services (or providers of those items or services) in the class on all
the gross revenues or receipts, or on net operating revenues relating to
the provision of all items or services in the State, unit, or
jurisdiction. Net operating revenue means gross charges of facilities
less any deducted amounts for bad debts, charity care, and payer
discounts.
(iv) The tax is imposed on items or services on a basis other than
those specified in paragraphs (d)(1) (i) through (iii) of this section,
e.g., an admission tax, and the State establishes to the satisfaction of
the Secretary that the amount of the tax is the same for each provider
of such items or services in the class.
(2) A tax imposed with respect to a class of health care items or
services will not be considered to be imposed uniformly if it meets
either one of the following two criteria:
(i) The tax provides for credits, exclusions, or deductions which
have as
[[Page 86]]
its purpose, or results in, the return to providers of all, or a
portion, of the tax paid, and it results, directly or indirectly, in a
tax program in which--
(A) The net impact of the tax and payments is not generally
redistributive, as specified in paragraph (e) of this section; and
(B) The amount of the tax is directly correlated to payments under
the Medicaid program.
(ii) The tax holds taxpayers harmless for the cost of the tax, as
described in paragraph (f) of this section.
(3) If a tax does not meet the criteria specified in paragraphs
(d)(1)(i) through (iv) of this section, but the State establishes that
the tax is imposed uniformly in accordance with the procedures for a
waiver specified in Sec. 433.72, the tax will be treated as a uniform
tax.
(e) Generally redistributive. A tax will be considered to be
generally redistributive if it meets the requirements of this paragraph.
If the State desires waiver of only the broad-based tax requirement, it
must demonstrate compliance with paragraph (e)(1) of this section. If
the State desires waiver of the uniform tax requirement, whether or not
the tax is broad-based, it must demonstrate compliance with paragraph
(e)(2) of this section.
(1) Waiver of broad-based requirement only. This test is applied on
a per class basis to a tax that is imposed on all revenues but excludes
certain providers. For example, a tax that is imposed on all revenues
(including Medicare and Medicaid) but excludes teaching hospitals would
have to meet this test. This test cannot be used when a State excludes
any or all Medicaid revenue from its tax in addition to the exclusion of
providers, since the test compares the proportion of Medicaid revenue
being taxed under the proposed tax with the proportion of Medicaid
revenue being taxed under a broad-based tax.
(i) A State seeking waiver of the broad-based tax requirement only
must demonstrate that its proposed tax plan meets the requirement that
its plan is generally redistributive by:
(A) Calculating the proportion of the tax revenue applicable to
Medicaid if the tax were broad based and applied to all providers or
activities within the class (called P1);
(B) Calculating the proportion of the tax revenue applicable to
Medicaid under the tax program for which the State seeks a waiver
(called P2); and
(C) Calculating the value of P1/P2.
(ii) If the State demonstrates to the Secretary's satisfaction that
the value of P1/P2 is at least 1, CMS will automatically approve the
waiver request.
(iii) If a tax is enacted and in effect prior to August 13, 1993,
and the State demonstrates to the Secretary's satisfaction that the
value of P1/P2 is at least 0.90, CMS will review the waiver request.
Such a waiver will be approved only if the following two criteria are
met:
(A) The value of P1/P2 is at least 0.90; and
(B) The tax excludes or provides credits or deductions only to one
or more of the following providers of items and services within the
class to be taxed:
(1) Providers that furnish no services within the class in the
State;
(2) Providers that do not charge for services within the class;
(3) Rural hospitals (defined as any hospital located outside of an
urban area as defined in Sec. 412.62(f)(1)(ii) of this chapter);
(4) Sole community hospitals as defined in Sec. 412.92(a) of this
chapter;
(5) Physicians practicing primarily in medically underserved areas
as defined in section 1302(7) of the Public Health Service Act;
(6) Financially distressed hospitals if:
(i) A financially distressed hospital is defined by the State law;
(ii) The State law specifies reasonable standards for determining
financially distressed hospitals, and these standards are applied
uniformly to all hospitals in the State; and
(iii) No more than 10 percent of nonpublic hospitals in the State
are exempt from the tax;
(7) Psychiatric hospitals; or
(8) Hospitals owned and operated by HMOs.
(iv) If a tax is enacted and in effect after August 13, 1993, and
the State demonstrates to the Secretary's satisfaction that the value of
P1/P2 is at least 0.95, CMS will review the waiver request. Such a
waiver request will be
[[Page 87]]
approved only if the following two criteria are met:
(A) The value of P1/P2 is at least 0.95; and
(B) The tax complies with the provisions of Sec.
433.68(e)(1)(iii)(B).
(2) Waiver of uniform tax requirement. This test is applied on a per
class basis to all taxes that are not uniform. This includes those taxes
that are neither broad based (as specified in Sec. 433.68(c)) nor
uniform (as specified in Sec. 433.68(d)).
(i) A State seeking waiver of the uniform tax requirement (whether
or not the tax is broad based) must demonstrate that its proposed tax
plan meets the requirement that its plan is generally redistributive by:
(A) Calculating, using ordinary least squares, the slope (designated
as (B) (that is. the value of the x coefficient) of two linear
regressions, in which the dependent variable is each provider's
percentage share of the total tax paid by all taxpayers during a 12-
month period, and the independent variable is the taxpayer's ``Medicaid
Statistic''. The term ``Medicaid Statistic'' means the number of the
provider's taxable units applicable to the Medicaid program during a 12-
month period. If, for example, the State imposed a tax based on provider
charges, the amount of a provider's Medicaid charges paid during a 12-
month period would be its ``Medicaid Statistic''. If the tax were based
on provider inpatient days, the number of the provider's Medicaid days
during a 12-month period would be its ``Medicaid Statistic''. For the
purpose of this test, it is not relevant that a tax program exempts
Medicaid from the tax.
(B) Calculating the slope (designated as B1) of the linear
regression, as described in paragraph (e)(2)(i) of this section, for the
State's tax program, if it were broad based and uniform.
(C) Calculating the slope (designated as B2) of the linear
regression, as described in paragraph (e)(2)(i) of this section, for the
State's tax program, as proposed.
(ii) If the State demonstrates to the Secretary's satisfaction that
the value of B1/B2 is at least 1, CMS will automatically approve the
waiver request.
(iii) If the State demonstrates to the Secretary's satisfaction that
the value of B1/B2 is at least 0.95, CMS will review the waiver request.
Such a waiver will be approved only if the following two criteria are
met:
(A) The value of B1/B2 is at least 0.95; and
(B) The tax excludes or provides credits or deductions only to one
or more of the following providers of items and services within the
class to be taxes:
(1) Providers that furnish no services within the class in the
State;
(2) Providers that do not charge for services within the class;
(3) Rural hospitals (defined as any hospital located outside of an
urban area as defined in Sec. 412.62(f)(1)(ii) of this chapter;
(4) Sole community hospitals as defined in Sec. 412.92(a) of this
chapter;
(5) Physicians practicing primarily in medically underserved areas
as defined in section 1302(7) of the Public Health Service Act;
(6) Financially distressed hospitals if:
(i) A financially distressed hospital is defined by the State law;
(ii) The State law specifies reasonable standards for determining
financially distressed hospitals, and these standards are applied
uniformly to all hospitals in the State; and
(iii) No more than 10 percent of nonpublic hospitals in the State
are exempt from the tax;
(7) Psychiatric hospitals; or
(8) Providers or payers with tax rates that vary based exclusively
on regions, but only if the regional variations are coterminous with
preexisting political (and not special purpose) boundaries. Taxes within
each regional boundary must meet the broad-based and uniformity
requirements as specified in paragraphs (c) and (d) of this section.
(iv) A B1/B2 value of 0.70 will be applied to taxes that vary based
exclusively on regional variations, and enacted and in effect prior to
November 24, 1992, to permit such variations.
(f) Hold harmless. A taxpayer will be considered to be held harmless
under a tax program if any of the following conditions applies:
(1) The State (or other unit of government) imposing the tax
provides for a direct or indirect non-Medicaid payment to those
providers or others paying the tax and the payment amount is
[[Page 88]]
positively correlated to either the tax amount or to the difference
between the Medicaid payment and the tax amount. A positive correlation
includes any positive relationship between these variables, even if not
consistent over time.
(2) All or any portion of the Medicaid payment to the taxpayer
varies based only on the tax amount, including where Medicaid payment is
conditional on receipt of the tax amount.
(3) The State (or other unit of government) imposing the tax
provides for any direct or indirect payment, offset, or waiver such that
the provision of that payment, offset, or waiver directly or indirectly
guarantees to hold taxpayers harmless for all or any portion of the tax
amount.
(i)(A) An indirect guarantee will be determined to exist under a two
prong ``guarantee'' test. If the health care-related tax or taxes on
each health care class are applied at a rate that produces revenues less
than or equal to 6 percent of the revenues received by the taxpayer, the
tax or taxes are permissible under this test. The phrase ``revenues
received by the taxpayer'' refers to the net patient revenue
attributable to the assessed permissible class of health care items or
services. However, for the period of January 1, 2008 through September
30, 2011, the applicable percentage of net patient service revenue is
5.5 percent. Compliance in State fiscal year 2008 will be evaluated from
January 1, 2008 through the last day of State fiscal year 2008.
Beginning with State fiscal year 2009 the 5.5 percent tax collection
will be measured on an annual State fiscal year basis.
(B) When the tax or taxes produce revenues in excess of the
applicable percentage of the revenue received by the taxpayer, CMS will
consider an indirect hold harmless provision to exist if 75 percent or
more of the taxpayers in the class receive 75 percent or more of their
total tax costs back in enhanced Medicaid payments or other State
payments. The second prong of the indirect hold harmless test is applied
in the aggregate to all health care taxes applied to each class. If this
standard is violated, the amount of tax revenue to be offset from
medical assistance expenditures is the total amount of the taxpayers'
revenues received by the State.
(ii) [Reserved]
[57 FR 55138, Nov. 24, 1992, as amended at 58 FR 43181, Aug. 13, 1993;
62 FR 53572, Oct. 15, 1997; 73 FR 9698, Feb. 22, 2008]
Sec. 433.70 Limitation on level of FFP for revenues from health care-related taxes.
(a) Limitations. Beginning October 1, 1995, there is no limitation
on the amount of health care-related taxes that a State may receive
without a reduction in FFP, as long as the health care-related taxes
meet the requirements specified in Sec. 433.68.
(b) Calculation of FFP. CMS will deduct from a State's medical
assistance expenditures, before calculating FFP, revenues from health
care-related taxes that do not meet the requirements of Sec. 433.68 and
any health care-related taxes in excess of the limits specified in
paragraph (a)(1) of this section.
[57 FR 55138, Nov. 24, 1992, as amended at 73 FR 9699, Feb. 22, 2008]
Sec. 433.72 Waiver provisions applicable to health care-related taxes.
(a) Bases for requesting waiver. (1) A State may submit to CMS a
request for a waiver if a health care-related tax does not meet any or
all of the following:
(i) The tax does not meet the broad based criteria specified in
Sec. 433.68c); and/or
(ii) The tax is not imposed uniformly but meets the criteria
specified in Sec. 433.68(d)(2) or (d)(3).
(2) When a tax that meets the criteria specified in paragraph (a)(1)
of this section is imposed on more than one class of health care items
or services, a separate waiver must be obtained for each class of health
care items and services subject to the tax.
(b) Waiver conditions. In order for CMS to approve a waiver request
that would permit a State to receive tax revenue (within specified
limitations) without a reduction in FFP, the State must demonstrate, to
CMS's satisfaction, that its tax program meets all of the following
requirements:
(1) The net impact of the tax and any payments made to the provider
by the
[[Page 89]]
State under the Medicaid program is generally redistributive, as
described in Sec. 433.68(e);
(2) The amount of the tax is not directly correlated to Medicaid
payments; and
(3) The tax program does not fall within the hold harmless
provisions specified in Sec. 433.68(f).
(c) Effective date. A waiver will be effective:
(1) The date of enactment of the tax for programs in existence prior
to August 13, 1993 or;
(2) For tax programs commencing on or after August 13, 1993, on the
first day in the quarter in which the waiver is received by CMS.
[57 FR 55138, Nov. 24, 1992, as amended at 58 FR 43182, Aug. 13, 1993]
Sec. 433.74 Reporting requirements.
(a) Beginning with the first quarter of Federal fiscal year 1993,
each State must submit to CMS quarterly summary information on the
source and use of all provider-related donations (including all bona
fide and presumed-to-be bona fide donations) received by the State or
unit of local government, and health care-related taxes collected. Each
State must also provide any additional information requested by the
Secretary related to any other donations made by, or any taxes imposed
on, health care providers. States' reports must present a complete,
accurate, and full disclosure of all of their donation and tax programs
and expenditures.
(b) Each State must provide the summary information specified in
paragraph (a) of this section on a quarterly basis in accordance with
procedures established by CMS.
(c) Each State must maintain, in readily reviewable form, supporting
documentation that provides a detailed description and legal basis for
each donation and tax program being reported, as well as the source and
use of all donations received and taxes collected. This information must
be made available to Federal reviewers upon request.
(d) If a State fails to comply with the reporting requirements
contained in this section, future grant awards will be reduced by the
amount of FFP CMS estimates is attributable to the sums raised by tax
and donation programs as to which the State has not reported properly,
until such time as the State complies with the reporting requirements.
Deferrals and/or disallowances of equivalent amounts may also be imposed
with respect to quarters for which the State has failed to report
properly. Unless otherwise prohibited by law, FFP for those expenditures
will be released when the State complies with all reporting
requirements.
Subpart C_Mechanized Claims Processing and Information Retrieval Systems
Sec. 433.110 Basis, purpose, and applicability.
(a) This subpart implements the following sections of the Act:
(1) Section 1903(a)(3) of the Act, which provides for FFP in State
expenditures for the design, development, or installation of mechanized
claims processing and information retrieval systems and for the
operation of certain systems. Additional HHS regulations and CMS
procedures for implementing these regulations are in 45 CFR part 74, 45
CFR part 95, subpart F, and part 11, State Medicaid Manual; and
(2) Section 1903(r) of the Act, which--(i) Requires reductions in
FFP otherwise due a State under section 1903(a) if a State fails to meet
certain deadlines for operating a mechanized claims processing and
information retrieval system or if the system fails to meet certain
conditions of approval or conditions of reapproval;
(ii) Requires a Federal performance review at least every three
years of the mechanized claims processing and information retrieval
systems; and
(iii) Allows waivers of conditions of approval, conditions of
reapproval, and FFP reductions under certain circumstances.
(b) The requirements under section 1903(r) of the Act do not apply
to Puerto Rico, Guam, the Virgin Islands, American Samoa and the
Northern Mariana Islands.
[50 FR 30846, July 30, 1985, as amended at 54 FR 41973, Oct. 13, 1989]
[[Page 90]]
Sec. 433.111 Definitions.
For purposes of this section:
(a) The following terms are defined at 45 CFR part 95, subpart F
Sec. 95.605:
``Advance Planning Document''; ``Design'' or ``System Design'';
``Development''; ``Enhancement''; ``Hardware''; ``Installation'';
``Operation''; and, ``Software''.
(b) ``Mechanized claims processing and information retrieval
system'' or ``system'' means the system of software and hardware used to
process Medicaid claims from providers of medical care and services for
the medical care and services furnished to recipients under the medical
assistance program and to retrieve and produce service utilization and
management information required by the Medicaid single State agency and
Federal Government for program administration and audit purposes. The
system consists of
(1) Required subsystems specified in the State Medicaid Manual;
(2) Required changes to the required system or subsystem that are
published in accordance with Sec. 433.123 of this subpart and specified
in the State Medicaid Manual; and
(3) Approved enhancements to the system. Eligibility determination
systems are not part of mechanized claims processing and information
retrieval systems or enhancements to those systems.
[51 FR 45330, Dec. 18, 1986, as amended at 54 FR 41973, Oct. 13, 1989]
Sec. 433.112 FFP for design, development, installation or enhancement of mechanized claims processing and information retrieval systems.
(a) FFP is available at the 90 percent rate in State expenditures
for the design, development, installation, or enhancement of a
mechanized claims processing and information retrieval system only if
the APD is approved by CMS prior to the State's expenditure of funds for
these purposes.
(b) CMS will approve the system described in the APD if the
following conditions are met:
(1) CMS determines the system is likely to provide more efficient,
economical, and effective administration of the State plan.
(2) The system meets the system requirements and performance
standards in Part 11 of the State Medicaid Manual, as periodically
amended.
(3) The system is compatible with the claims processing and
information retrieval systems used in the administration of Medicare for
prompt eligibility verification and for processing claims for persons
eligible for both programs.
(4) The system supports the data requirements of quality improvement
organizations established under Part B of title XI of the Act.
(5) The State owns any software that is designed, developed,
installed or improved with 90 percent FFP.
(6) The Department has a royalty free, non-exclusive, and
irrevocable license to reproduce, publish, or otherwise use and
authorize others to use, for Federal Government purposes, software,
modifications to software, and documentation that is designed,
developed, installed or enhanced with 90 percent FFP.
(7) The costs of the system are determined in accordance with 45 CFR
74.171.
(8) The Medicaid agency agrees in writing to use the system for the
period of time specified in the advance planning document approved by
CMS or for any shorter period of time that CMS determines justifies the
Federal funds invested.
(9) The agency agrees in writing that the information in the system
will be safeguarded in accordance with subpart F, part 431 of this
subchapter.
(c) Eligibility determination systems are not part of mechanized
claims processing and information retrieval systems and are not eligible
for 75 percent FFP under this subpart. These systems are also not
eligible for 90 percent FFP for any APD approved after November 13,
1989.
[43 FR 45201, Sept. 29, 1978, as amended at 44 FR 17937, Mar. 23, 1979;
45 FR 14213, Mar. 5, 1980; 50 FR 30846, July 30, 1985; 51 FR 45330, Dec.
18, 1986; 54 FR 41973, Oct. 13, 1989; 55 FR 1820, Jan. 19, 1990; 55 FR
4375, Feb. 7, 1990]
Sec. 433.113 Reduction of FFP for failure to operate a system and obtain initial approval.
(a) Except as waived under Sec. 433.130 or 433.131, FFP will be
reduced as specified
[[Page 91]]
in paragraph (b) of this section unless the Medicaid agency has in
continuous operation a mechanized claims processing and information
retrieval system that meets the following conditions:
(1) The APD for the system was approved by CMS;
(2) The system is operational by September 30, 1985; and
(3) The system is initially approved by the last day of the fourth
quarter that begins after the date the system became operational as
determined by CMS.
(b) CMS will reduce FFP in expenditures for compensation and
training of skilled professional medical personnel and support staff
under section 1903(a)(2) of the Act, and for general administration
under section 1903(a)(7) of the Act, by the following increments applied
separately to those two categories of expenditures:
(1) Five percentage points for the first two quarters beginning
after a deadline in paragraph (a) of this section;
(2) An additional five percentage points during each additional two-
quarter period, through the quarter in which the State achieves
compliance with the conditions for initial operation or initial approval
of an operating system. FFP reductions will not exceed 25 percentage
points for each type of reduction.
(c) The amount of FFP (determined under section 1903(a)(3)(B)) that
would be available retroactively for operating a system that later
receives initial approval will be reduced by CMS by the same percentage
points for the identical periods of time described in subparagraph
(b)(1) of this section, until the system is initially approved. No
reduction will be made after the first quarter during which the system
is initially approved.
[50 FR 30847, July 30, 1985, as amended at 54 FR 41973, Oct. 13, 1989]
Sec. 433.114 Procedures for obtaining initial approval; notice of decision.
(a) To obtain initial approval, the Medicaid agency must inform CMS
in writing that the system meets the conditions specified in Sec.
433.116(c) through (h).
(b) If CMS disapproves the system, or determines that the system met
requirements for initial approval on a date later than the date required
under Sec. 433.113(a)(3), the notice will include--
(1) The findings of fact upon which the determination was made; and
(2) The procedures for appeal of the determination in the context of
a reconsideration of the resulting disallowance, to the Departmental
Appeals Board.
[50 FR 30847, July 30, 1985, as amended at 54 FR 41973, Oct. 13, 1989]
Sec. 433.116 FFP for operation of mechanized claims processing and information retrieval systems.
(a) Subject to 42 CFR 433.113(c), FFP is available at 75 percent of
expenditures for operation of a mechanized claims processing and
information retrieval system approved by CMS, from the first day of the
calendar quarter after the date the system met the conditions of initial
approval, as established by CMS (including a retroactive adjustment of
FFP if necessary to provide the 75 percent rate beginning on the first
day of that calendar quarter). Subject to 45 CFR 95.611(a), the State
shall obtain prior written approval from CMS when it plans to acquire
ADP equipment or services, when it anticipates the total acquisition
costs will exceed thresholds, and meets other conditions of the subpart.
(b) CMS will approve the system operation if the conditions
specified in paragraphs (c) through (h) of this section are met.
(c) The conditions of Sec. 433.112(b) (1) through (4) and (7)
through (9), as periodically modified under Sec. 433.112(b)(2), must be
met.
(d) The system must have been operating continuously during the
period for which FFP is claimed.
(e) The system must provide individual notices, within 45 days of
the payment of claims, to all or a sample group of the persons who
received services under the plan.
(f) The notice required by paragraph (e) of this section--
(1) Must specify--
(i) The service furnished;
(ii) The name of the provider furnishing the service;
[[Page 92]]
(iii) The date on which the service was furnished; and
(iv) The amount of the payment made under the plan for the service;
and
(2) Must not specify confidential services (as defined by the State)
and must not be sent if the only service furnished was confidential.
(g) The system must provide both patient and provider profiles for
program management and utilization review purposes.
(h) If the State has a Medicaid fraud control unit certified under
section 1903(q) of the Act and Sec. 455.300 of this chapter, the
Medicaid agency must have procedures to assure that information on
probable fraud or abuse that is obtained from, or developed by, the
system is made available to that unit. (See Sec. 455.21 of this chapter
for State plan requirements.)
[45 FR 14213, Mar. 5, 1980. Redesignated and amended at 50 FR 30847,
July 30, 1985; 55 FR 4375, Feb. 7, 1990]
Sec. 433.117 Initial approval of replacement systems.
(a) A replacement system must meet all conditions of initial
approval of a mechanized claims processing and information retrieval
system.
(b) The agency must submit a APD that includes--
(1) The date the replacement system will be in operation; and
(2) A plan for orderly transition from the system being replaced to
the replacement system.
(c) FFP is available at--
(1) 90 percent in expenditures for design, development, and
installation in accordance with the provisions of Sec. 433.112; and
(2) 75 percent in expenditures for operation of an approved
replacement system in accordance with the provisions of Sec. 433.116(b)
through (h), from the date that the system met the conditions of initial
approval, as established by CMS.
(d) FFP is available at 75 percent in expenditures for the operation
of an approved system that is being replaced (or at a reduced rate
determined under Sec. 433.120 of this subpart for a system that has
been disapproved) until the replacement system is in operation and
approved.
[50 FR 30847, July 30, 1985]
Sec. 433.119 Conditions for reapproval; notice of decision.
(a) CMS will review at least once every three years each system
operation initially approved under Sec. 433.114 and reapprove it for
FFP at 75 percent of expenditures if the following conditions are met:
(1) The system meets the conditions of Sec. 433.112(b) (1), (3),
(4), and (7) through (9).
(2) The system meets the conditions of Sec. 433.116 (d) through
(h).
(3) The system meets the performance standards for reapproval and
the system requirements in part 11 of the State Medicaid Manual as
periodically amended.
(4) Automated eligibility determination systems approved or
operating on or before November 13, 1989, will not qualify for FFP at 75
percent of expenditures after November 13, 1989.
(b) CMS may review an entire system operation or focus its review on
parts of the operation. However, at a minimum, CMS will review
standards, system requirements and other conditions of reapproval that
have demonstrated weakness in a previous review or reviews.
(c) CMS will issue to each Medicaid agency, by the end of the first
quarter after the review period, a written notice informing the agency
whether its system is reapproved or disapproved. If the system is
disapproved, the notice will also include--
(1) CMS's decision to reduce FFP for system operations, and the
percentage to which it is reduced, beginning with the next calender
quarter;
(2) The findings of fact upon which the determination was made; and
(3) A statement that State claims in excess of the reduced FFP rate
will be disallowed and that any such disallowance will be appealable to
the Departmental Appeals Board.
[54 FR 41973, Oct. 13, 1989; 55 FR 1820, Jan. 19, 1990]
[[Page 93]]
Sec. 433.120 Procedures for reduction of FFP after reapproval review.
(a) If CMS determines after the reapproval review that the system no
longer meets the conditions of reapproval in Sec. 433.119, CMS will
reduce FFP for system operations for at least four quarters. However, no
system will be subject to reduction of FFP for at least the first four
quarters after the quarter in which the system is initially approved as
eligible for 75 percent FFP.
(b) CMS will reduce FFP in expenditures for system operations from
75 percent to no more than 70 percent and no less than 50 percent;
however, CMS will not reduce FFP by more than 10 percentage points in
any four-quarter period. The percentage to which the FFP is reduced will
depend primarily on the following criteria:
(1) The number of conditions judged unsatisfactory;
(2) The extent to which conditions were not met;
(3) The significance of the unsatisfactory conditions in overall
mechanized claims processing and information retrieval system
operations; and
(4) The actual and potential program impact attributable to the
unsatisfactory conditions.
[50 FR 30848, July 30, 1985, as amended at 54 FR 41974, Oct. 13, 1989]
Sec. 433.121 Reconsideration of the decision to reduce FFP after reapproval review.
(a) The agency may appeal to the Departmental Appeals Board under 45
CFR part 16, a disallowance concerning a reduction in FFP claimed for
system operation caused by a disapproval of the State's system. If the
Board finds such a disallowance to be appropriate, the discretionary
determination to reduce FFP by a particular percentage amount (instead
of by a lesser percentage) is not subject to review by the Board unless
the percentage reduction exceeds the range authorized by section
1903(r)(4)(B) of the Act.
(b) The decisions concerning whether to restore any FFP
retroactively and the actual number of quarters for which FFP will be
restored under Sec. 433.122 of this subpart are not subject to
administrative appeal to the Departmental Appeals Board under 45 CFR
part 16.
(c) An agency's request for a reconsideration before the Board under
paragraph (a) of this section does not delay implementation of the
reduction in FFP. However, any reduction is subject to retroactive
adjustment if required by the Board's determination on reconsideration.
[50 FR 30848, July 30, 1985, as amended at 54 FR 41974, Oct. 13, 1989;
55 FR 1820, Jan. 19, 1990]
Sec. 433.122 Reapproval of a disapproved system.
When FFP has been reduced under Sec. 433.120(a), and CMS determines
upon subsequent review that the system meets all current performance
standards, system requirements and other conditions of reapproval, the
following provisions apply:
(a) CMS will resume FFP in expenditures for system operations at the
75 percent level beginning with the quarter following the review
determination that the system again meets conditions of reapproval.
(b) CMS may retroactively waive a reduction of FFP in expenditures
for system operations if CMS determines that the waiver could improve
the administration of the State Medicaid plan. However, CMS cannot waive
this reduction for any quarter before the fourth quarter immediately
preceding the quarter in which CMS issues the determination (as part of
the review process) stating that the system is reapproved.
[54 FR 41974, Oct. 13, 1989]
Sec. 433.123 Notification of changes in system requirements, performance standards or other conditions for approval or reapproval.
(a) Whenever CMS modifies system requirements or other conditions
for approval under Sec. 433.112 or Sec. 433.116, CMS will--
(1) Publish a notice in the Federal Register making available the
proposed changes for public comment;
(2) Respond in a subsequent Federal Register notice to comments
received; and
[[Page 94]]
(3) Issue the new or modified requirements or conditions in the
State Medicaid Manual.
(b) For changes in system requirements or other conditions for
approval, CMS will allow an appropriate period for Medicaid agencies to
meet the requirement determining this period on the basis of the
requirement's complexity and other relevant factors.
(c) Whenever CMS modifies performance standards and other conditions
for reapproval under Sec. 433.119, CMS will notify Medicaid agencies at
least one calendar quarter before the review period to which the new or
modified standards or conditions apply.
[57 FR 38782, Aug. 27, 1992]
Sec. 433.127 Termination of FFP for failure to provide access to claims processing and information retrieval systems.
CMS will terminate FFP at any time if the Medicaid agency fails to
provide State and Federal representatives with full access to the
system, including on-site inspection. CMS may request such access at any
time to determine whether the conditions in this subpart are being met.
[43 FR 45201, Sept. 29, 1978. Redesignated and amended at 50 FR 30847
and 30848, July 30, 1985]
Sec. 433.130 Waiver of conditions of initial operation and approval.
(a) CMS will waive requirements for initial operation and approval
of systems under Sec. 433.113 for a State meeting the requirements of
paragraph (b) of this section and that had a 1976 population of less
than one million and made total Federal and State Medicaid expenditures
of less than $100 million in fiscal year 1976. Population figures are
those reported by the Bureau of the Census. Expenditures for fiscal year
1976 are those reported by the State for that year.
(b) To be eligible for this waiver, the agency must submit its
reasons to CMS in writing and demonstrate to CMS's satisfaction that a
system will not significantly improve the efficiency of the
administration of the State plan.
(c) If CMS denies the waiver request, the notice of denial will
include--
(1) The findings of fact upon which the denial was made; and
(2) The procedures for appeal of the denial.
(d) If CMS determines, after granting a waiver, that a system would
significantly improve the administration of the State Medicaid program,
CMS may withdraw the waiver and require that a State obtain initial
approval of a system within two years of the date of waiver withdrawal.
[50 FR 30848, July 30, 1985, as amended at 54 FR 41974, Oct. 13, 1989]
Sec. 433.131 Waiver for noncompliance with conditions of approval and reapproval.
If a State is unable to comply with the conditions of approval or of
reapproval and the noncompliance will cause a percentum reduction in
FFP, CMS will waive the FFP reduction in the following circumstances:
(a) Good cause. If CMS determines that good cause existed, CMS will
waive the FFP reduction attributable to those items for which the good
cause existed. A waiver of FFP consequences of the failure to meet the
conditions of approval or reapproval based upon good cause will not
extend beyond two consecutive quarters.
(b) Circumstances beyond the control of a State. The State must
satisfactorily explain the circumstances that are beyond its control.
When CMS grants the waiver, CMS will also defer all other system
deadlines for the same length of time that the waiver applies.
[50 FR 30848, July 30, 1985, as amended at 54 FR 41974, Oct. 13, 1989]
Subpart D_Third Party Liability
Source: 45 FR 8984, Feb. 11, 1980, unless otherwise noted.
Sec. 433.135 Basis and purpose.
This subpart implements sections 1902(a)(25), 1902(a)(45),
1903(d)(2), 1903(o), 1903(p), and 1912 of the Act by setting forth State
plan requirements concerning--
(a) The legal liability of third parties to pay for services
provided under the plan;
[[Page 95]]
(b) Assignment to the State of an individual's rights to third party
payments; and
(c) Cooperative agreements between the Medicaid agency and other
entities for obtaining third party payments.
[50 FR 46664, Nov. 12, 1985]
Sec. 433.136 Definitions.
For purposes of this subpart--
Private insurer means:
(1) Any commercial insurance company offering health or casualty
insurance to individuals or groups (including both experience-rated
insurance contracts and indemnity contracts);
(2) Any profit or nonprofit prepaid plan offering either medical
services or full or partial payment for services included in the State
plan; and
(3) Any organization administering health or casualty insurance
plans for professional associations, unions, fraternal groups, employer-
employee benefit plans, and any similar organization offering these
payments or services, including self-insured and self-funded plans.
Third party means any individual, entity or program that is or may
be liable to pay all or part of the expenditures for medical assistance
furnished under a State plan.
Title IV-D agency means the organizational unit in the State that
has the responsibility for administering or supervising the
administration of a State plan for child support enforcement under title
IV-D of the Act.
[49 FR 8984, Feb. 11, 1980, as amended at 50 FR 46664, Nov. 12, 1985; 50
FR 49389, Dec. 2, 1985]
Sec. 433.137 State plan requirements.
(a) A State plan must provide that the requirements of Sec. Sec.
433.138 and 433.139 are met for identifying third parties liable for
payment of services under the plan and for payment of claims involving
third parties.
(b) A State plan must provide that--
(1) The requirements of Sec. Sec. 433.145 through 433.148 are met
for assignment of rights to benefits, cooperation with the agency in
obtaining medical support or payments, and cooperation in identifying
and providing information to assist the State in pursuing any liable
third parties; and
(2) The requirements of Sec. Sec. 433.151 through 433.154 are met
for cooperative agreements and incentive payments for third party
collections.
(c) The requirements of paragraph (b)(1) of this section relating to
assignment of rights to benefits and cooperation in obtaining medical
support or payments and paragraph (b)(2) of this section are effective
for medical assistance furnished on or after October 1, 1984. The
requirements of paragraph (b)(1) of this section relating to cooperation
in identifying and providing information to assist the State in pursuing
liable third parties are effective for medical assistance furnished on
or after July 1, 1986.
[50 FR 46665, Nov. 12, 1985, as amended at 55 FR 48606, Nov. 21, 1990;
55 FR 52130, Dec. 19, 1990; 60 FR 35502, July 10, 1995]