Medicaid Program; Coverage for Rehabilitative Services, 45201-45213 [07-3925]

Download as PDF sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules SUMMARY: EPA proposes to approve the State Implementation Plan (SIP) revision submitted by the Commonwealth of Virginia for the purpose of establishing a variance for the International Paper, Franklin Paper Mill facility located in Franklin, Virginia. The variance provides regulatory relief from compliance with state regulations governing new source review for the implementation of the International Paper, Franklin Paper Mill innovation project. In lieu of compliance with these regulatory requirements, the variance requires the facility to comply with site-wide emission caps. In the Final Rules section of this Federal Register, EPA is approving the Commonwealth’s SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this action, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. DATES: Comments must be received in writing by September 12, 2007. ADDRESSES: Submit your comments, identified by Docket ID Number EPA– R03–OAR–2006–0060 by one of the following methods: A. https://www.regulations.gov. Follow the on-line instructions for submitting comments. B. E-mail: campbell.dave@epa.gov. C. Mail: EPA–R03–OAR–2006–0060, David Campbell, Chief, Permits and Technical Assessment Branch, Mailcode 3AP11, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. D. Hand Delivery: At the previouslylisted EPA Region III address. Such deliveries are only accepted during the Docket’s normal hours of operation, and special arrangements should be made for deliveries of boxed information. Instructions: Direct your comments to Docket ID No. EPA–R03–OAR–2006– 0060. EPA’s policy is that all comments received will be included in the public docket without change, and may be made available online at https:// www.regulations.gov, including any personal information provided, unless the comment includes information claimed to be Confidential Business VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through https:// www.regulations.gov or e-mail. The https://www.regulations.gov Web site is an anonymous access system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an e-mail comment directly to EPA without going through https:// www.regulations.gov, your e-mail address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your name and other contact information in the body of your comment and with any disk or CD–ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. Docket: All documents in the electronic docket are listed in the https://www.regulations.gov index. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically in https:// www.regulations.gov or in hard copy during normal business hours at the Air Protection Division, U.S. Environmental Protection Agency, Region III, 1650 Arch Street, Philadelphia, Pennsylvania 19103. Copies of the State submittal are available at the Virginia Department of Environmental Quality, 629 East Main Street, Richmond, Virginia, 23219. FOR FURTHER INFORMATION CONTACT: Sharon McCauley, (215) 814–3376, or by e-mail at mccauley.sharon@epa.gov. SUPPLEMENTARY INFORMATION: For further information, please see the information provided in the direct final action, with the same title, that is located in the Rules and Regulations section of this Federal Register publication. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 45201 of the rule that are not subject of an adverse comment. Dated: July 31, 2007. William T. Wisniewski, Acting Regional Administrator, Region III. [FR Doc. E7–15585 Filed 8–10–07; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 440 and 441 [CMS 2261–P] RIN 0938–A081 Medicaid Program; Coverage for Rehabilitative Services Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. AGENCY: SUMMARY: This proposed rule would amend the definition of Medicaid rehabilitative services in order to provide for important beneficiary protections such as a person-centered written rehabilitation plan and maintenance of case records. The proposed rule would also ensure the fiscal integrity of claimed Medicaid expenditures by clarifying the service definition and providing that Medicaid rehabilitative services must be coordinated with but do not include services furnished by other programs that are focused on social or educational development goals and available as part of other services or programs. These services and programs include, but are not limited to, foster care, child welfare, education, child care, prevocational and vocational services, housing, parole and probation, juvenile justice, public guardianship, and any other nonMedicaid services from Federal, State, or local programs. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on October 12, 2007. ADDRESSES: In commenting, please refer to file code CMS–2261–P. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (no duplicates, please): 1. Electronically. You may submit electronic comments on specific issues in this regulation to https:// www.cms.hhs.gov/eRulemaking. Click on the link ‘‘Submit electronic E:\FR\FM\13AUP1.SGM 13AUP1 sroberts on PROD1PC70 with PROPOSALS 45202 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules comments on CMS regulations with an open comment period.’’ (Attachments should be in Microsoft Word, WordPerfect, or Excel; however, we prefer Microsoft Word.) 2. By regular mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–2261– P, P.O. Box 8018, Baltimore, MD 21244– 8018. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS–2261–P, Mail Stop C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244–1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to one of the following addresses. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786– 3685 in advance to schedule your arrival with one of our staff members. Room 445–G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard, Baltimore, MD 21244–1850. (Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. Submission of comments on paperwork requirements. You may submit comments on this document’s paperwork requirements by mailing your comments to the addresses provided at the end of the ‘‘Collection of Information Requirements’’ section in this document. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Maria Reed, (410) 786–2255 or Shawn Terrell, (410) 786–0672. VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 SUPPLEMENTARY INFORMATION: Submitting Comments: We welcome comments from the public on all issues set forth in this rule to assist us in fully considering issues and developing policies. You can assist us by referencing the file code CMS–2261–P and the specific ‘‘issue identifier’’ that precedes the section on which you choose to comment. Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable (for example, names, addresses, social security numbers, and medical diagnoses) or confidential business information (including proprietary information) that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: https:// www.cms.hhs.gov/eRulemaking. Click on the link ‘‘Electronic Comments on CMS Regulations’’ on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951. I. Background A. Overview Section 1905(a)(13) of the Social Security Act (the Act) includes rehabilitative services as an optional Medicaid State plan benefit. Current Medicaid regulations at 42 CFR 440.130(d) provide a broad definition of rehabilitative services. Rehabilitative services are defined as ‘‘any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his or her practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to his best possible functional level.’’ The broad general language in this regulatory definition has afforded States considerable flexibility under their State plans to meet the needs of their State’s Medicaid population. Over the years the scope of services States have provided under the rehabilitation benefit has expanded from physical rehabilitative services to also include mental health and PO 00000 Frm 00026 Fmt 4702 Sfmt 4702 substance abuse treatment rehabilitative services. For example, services currently provided by States under the rehabilitative benefit include services aimed at improving physical disabilities, including physical, occupational, and speech therapies; mental health services, such as individual and group therapy, psychosocial therapy services; and services for substance-related disorders (for example, substance use disorders and substance induced disorders). These Medicaid services may be delivered through various models of care and in a variety of settings. The broad language of the current statutory and regulatory definition has, however, had some unintended consequences. It has also led to some confusion over whether otherwise applicable statutory or regulatory provider standards would apply under the rehabilitative services benefit. As the number of States providing rehabilitative services has increased, some States have viewed the rehabilitation benefit as a ‘‘catch-all’’ category to cover services included in other Federal, State and local programs. For example, it appears some States have used Medicaid to fund services that are included in the provision of foster care and in the Individuals with Disabilities Education Improvement Act (IDEA). Our audit reviews have recently revealed that Medicaid funds have also been used to pay for behavioral treatment services in ‘‘wilderness camps,’’ juvenile detention, and similar facilities where youth are involuntarily confined. These facilities are under the domain of the juvenile justice or youth systems in the State, rather than Medicaid, and there is no assurance that the claimed services reflect an independent evaluation of individual rehabilitative needs. This proposed regulation is designed to clarify the broad general language of the current regulation to ensure that rehabilitative services are provided in a coordinated manner that is in the best interest of the individuals, are limited to rehabilitative purposes and are furnished by qualified providers. This proposed regulation would rectify the improper reliance on the Medicaid rehabilitation benefit for services furnished by other programs that are focused on social or educational development goals in programs other than Medicaid. This proposed regulation would provide guidance to ensure that services claimed under the optional Medicaid rehabilitative benefit are in fact rehabilitative out-patient services, are furnished by qualified providers, are E:\FR\FM\13AUP1.SGM 13AUP1 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules provided to Medicaid eligible individuals according to a goal-oriented rehabilitation plan, and are not for services that are included in programs with a focus other than that of Medicaid. B. Habilitation Services Section 6411(g) of the Omnibus Budget Reconciliation Act of 1989 (OBRA 89) prohibits us from taking adverse action against States with approved habilitation provisions pending the issuance of a regulation that ‘‘specifies types of day habilitation services that a State may cover under paragraphs (9) (clinic services) or (13) (rehabilitative services) of section 1905(a) of the Act on behalf of persons with mental retardation or with related conditions.’’ We believe that issuance of a final rule based on this proposed rule will satisfy this condition. We intend to work with those States that have habilitation programs under the clinic services or rehabilitative services benefits in their State plans to transition to appropriate Medicaid coverage authorities, such as section 1915(c) waivers or the Home and CommunityBased Services State plan option under section 1915 (i) of the Deficit Reduction Act (DRA) of 2005 (Pub. L. 107–171), enacted on February 8, 2006. II. Provisions of the Proposed Rule [If you choose to comment on issues in this section, please include the caption ‘‘PROVISIONS OF THE PROPOSED REGULATIONS’’ at the beginning of your comments.] sroberts on PROD1PC70 with PROPOSALS A. Definitions In 440.130(d)(1), we propose to define the terms used in this rule, as listed below: • Recommended by a physician or other licensed practitioner of the healing arts. • Other licensed practitioner of the healing arts. • Qualified providers of rehabilitative services. • Under the direction of. • Written rehabilitation plan. • Restorative services. • Medical services. • Remedial services. In § 440.130(d)(1)(iii), we would define ‘‘qualified providers of rehabilitative services’’ to require that individuals providing rehabilitative services meet the provider qualification requirements applicable to the same service when it is furnished under other benefit categories. Further, the provider qualifications must be set forth in the Medicaid State plan. These qualifications may include education, VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 work experience, training, credentialing, supervision and licensing, that are applied uniformly. Provider qualifications must be reasonable given the nature of the service provided and the population being served. We require uniform application of these qualifications to ensure the individual free choice of qualified providers, consistent with section 1902(a)(23) of the Act. Under this proposed definition, if specific provider qualifications are set forth elsewhere in subpart A of part 440, those provider qualifications take precedence when those services are provided under the rehabilitation option. Thus, if a State chooses to provide the various therapies discussed at § 440.110 (physical therapy, occupational therapy, speech, language and hearing services) under § 440.130(d), the requirements of § 440.110 applicable to those services would apply. For example, speech therapy is addressed in regulation at § 440.110(c) with specific provider requirements for speech pathologists and audiologists that must be met. If a State offers speech therapy as a rehabilitative service, the specific provider requirements at § 440.110(c) must be met. It should be noted that the definition of Occupational Therapy in § 440.110 is not correct insofar as the following—Occupational Therapists must be certified through the National Board of Certification for Occupational Therapy, not the American Occupational Therapy Association. We are proposing a definition of the term ‘‘under the direction of’’ because it is a key issue in the provision of therapy services through the rehabilitative services benefit. Therapy services may be furnished by or ‘‘under the direction of’’ a qualified provider under the provisions of § 440.110. We are proposing to clarify that the term means that the therapist providing direction is supervising the individual’s care which, at a minimum, includes seeing the individual initially, prescribing the type of care to be provided, reviewing the need for continued services throughout treatment, assuming professional responsibility for services provided, and ensuring that all services are medically necessary. The term ‘‘under the direction of’’ requires each of these elements; in particular, professional responsibility requires face-to-face contact by the therapist at least at the beginning of treatment and periodically thereafter. Note that this definition applies specifically to providers of physical therapy, occupational therapy, and services for individuals with speech, hearing and language disorders. PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 45203 This language is not meant to exclude appropriate supervision arrangements for other rehabilitative services. B. Scope of Services Consistent with the provision of section 1905(a)(13) of the Act, we have retained the current definition of rehabilitative services in § 440.130(d)(2) as including ‘‘medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a recipient to his best possible functional level.’’ We would, however, clarify that rehabilitative services do not include room and board in an institution, consistent with the longstanding CMS interpretation that section 1905(a) of the Act has specifically identified circumstances in which Medicaid would pay for coverage of room and board in an inpatient setting. This interpretation was upheld in Texas v. U.S. Dep’t Health and Human Servs., 61 F.3d 438 (5th Cir. 1995). C. Written Rehabilitation Plan We propose to add a new requirement, at § 440.130(d)(3), that covered rehabilitative services for each individual must be identified under a written rehabilitation plan. This rehabilitation plan would ensure that the services are designed and coordinated to lead to the goals set forth in statute and regulation (maximum reduction of physical or mental disability and restoration to the best possible functional level). It would ensure transparency of coverage and medical necessity determinations, so that the beneficiary, and family or other responsible individuals, would have a clear understanding of the services that are being made available to the beneficiary. In all situations, the ultimate goal is to reduce the duration and intensity of medical care to the least intrusive level possible which sustains health. The Medicaid goal is to deliver and pay for the clinically-appropriate, Medicaid-covered services that would contribute to the treatment goal. It is our expectation that, for persons with mental illnesses and substance-related disorders, the rehabilitation plan would include recovery goals. The rehabilitation plan would establish a basis for evaluating the effectiveness of the care offered in meeting the stated goals. It would provide for a process to involve the beneficiary, and family or other responsible individuals, in the overall management of rehabilitative care. The rehabilitation plan would also E:\FR\FM\13AUP1.SGM 13AUP1 sroberts on PROD1PC70 with PROPOSALS 45204 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules document that the services have been determined to be rehabilitative services consistent with the regulatory definition, and will have a timeline, based on the individual’s assessed needs and anticipated progress, for reevaluation of the plan, not longer than one year. It is our expectation that the reevaluation of the plan would involve the beneficiary, family, or other responsible individuals and would include a review of whether the goals set forth in the plan are being met and whether each of the services described in the plan has contributed to meeting the stated goals. If it is determined that there has been no measurable reduction of disability and restoration of functional level, any new plan would need to pursue a different rehabilitation strategy including revision of the rehabilitative goals, services and/or methods. It is important to note that this benefit is not a custodial care benefit for individuals with chronic conditions but should result in a change in status. The rehabilitation plan should identify the rehabilitation objectives that would be achieved under the plan in terms of measurable reductions in a diagnosed physical or mental disability and in terms of restored functional abilities. We recognize, however, that rehabilitation goals are often contingent on the individual’s maintenance of a current level of functioning. In these instances, services that provide assistance in maintaining functioning may be considered rehabilitative only when necessary to help an individual achieve a rehabilitation goal as defined in the rehabilitation plan. Services provided primarily in order to maintain a level of functioning in the absence of a rehabilitation goal are not rehabilitation services. It is our further expectation that the rehabilitation plan be reasonable and based on the individual’s diagnosed condition(s) and on the standards of practice for provisions of rehabilitative services to an individual with the individual’s condition(s). The rehabilitation plan is not intended to limit or restrict the State’s ability to require prior authorization for services. The proposed requirements state that the written rehabilitation plan must: • Be based on a comprehensive assessment of an individual’s rehabilitation needs including diagnoses and presence of a functional impairment in daily living; • Be developed by qualified provider(s) working within the State scope of practice acts with input from the individual, individual’s family, the individual’s authorized health care VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 decision maker and/or persons of the individual’s choosing; • Ensure the active participation of the individual, individual’s family, the individual’s authorized health care decision maker and/or persons of the individual’s choosing in the development, review and modification of these goals and services; • Specify the individual’s rehabilitation goals to be achieved, including recovery goals for persons with mental health and/or substance related disorders; • Specify the physical impairment, mental health and/or substance related disorder that is being addressed; • Identify the medical and remedial services intended to reduce the identified physical impairment, mental health and/or substance related disorder; • Identify the methods that would be used to deliver services; • Specify the anticipated outcomes; • Indicate the frequency, amount and duration of the services; • Be signed by the individual responsible for developing the rehabilitation plan; • Indicate the anticipated provider(s) of the service(s) and the extent to which the services may be available from alternate provider(s) of the same service; • Specify a timeline for reevaluation of the plan, based on the individual’s assessed needs and anticipated progress, but not longer than one year; • Document that the individual or representative participated in the development of the plan, signed the plan, and received a copy of the rehabilitation plan; and • Document that the services have been determined to be rehabilitative services consistent with the regulatory definition. We believe that a written rehabilitation plan would ensure that services are provided within the scope of the rehabilitative services and would increase the likelihood that an individual’s disability would be reduced and functional level restored. In order to determine whether a specific service is a covered rehabilitative benefit, it is helpful to scrutinize the purpose of the service as defined in the care plan. For example, an activity that may appear to be a recreational activity may be rehabilitative if it is furnished with a focus on medical or remedial outcomes to address a particular impairment and functional loss. Such an activity, if provided by a Medicaid qualified provider, could address a physical or mental impairment that would help to increase motor skills in PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 an individual who has suffered a stroke, or help to restore social functioning and personal interaction skills for a person with a mental illness. We are proposing to require in § 440.130(d)(3)(iii) that the written rehabilitation plan include the active participation of the individual (or the individual’s authorized health care decision maker) in the development, review, and reevaluation of the rehabilitation goals and services. We recommend the use of a person-centered planning process. Since the rehabilitation plan identifies recoveryoriented goals, the individual must be at the center of the planning process. D. Impairments to be Addressed We propose in § 440.130(d)(4) that rehabilitative services include services provided to an eligible individual to address the individual’s physical needs, mental health needs, and/or substancerelated disorder treatment needs. Because rehabilitative services are an optional service for adults, a State has flexibility to determine whether rehabilitative services would be limited to certain rehabilitative services (for example, only physical rehabilitative services) or will include rehabilitative treatment for mental health or substance-related disorders as well. Provision of rehabilitative services to individuals with mental health or substance-related disorders is consistent with the recommendations of the New Freedom Commission on Mental Health. The Commission challenged States, among others, to expand access to quality mental health care and noted that States are at the very center of mental health system transformation. Thus, while States are not required to provide rehabilitative services for treatment of mental health and substance-related disorders, they are encouraged to do so. The Commission noted in its report that, ‘‘[m]ore individuals would recover from even the most serious mental illnesses and emotional disturbances if they had earlier access in their communities to treatment and supports that are evidence-based and tailored to their needs.’’ Under existing provisions at § 440.230(a), States are required to provide in the State plan a detailed description of the services to be provided. In reviewing a State plan amendment that proposes rehabilitative services, we would consider whether the proposed services are consistent with the requirements in § 440.130(d) and section 1905(a)(13) of the Act. We would also consider whether the proposed scope of rehabilitative services E:\FR\FM\13AUP1.SGM 13AUP1 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules is ‘‘sufficient in amount, duration and scope to reasonably achieve its purpose’’ as required at § 440.230(b). For that analysis, we will review whether any assistive devices, supplies, and equipment necessary to the provision of those services are covered either under the rehabilitative services benefit or elsewhere under the plan. E. Settings In § 440.130(d)(5), consistent with the provisions of section 1905(a)(13) of the Act, we propose that rehabilitative services may be provided in a facility, home, or other setting. For example, rehabilitative services may be furnished in freestanding outpatient clinics and to supplement services otherwise available as an integral part of the services of facilities such as schools, community mental health centers, or substance abuse treatment centers. Other settings may include the office of qualified independent practitioners, mobile crisis vehicles, and appropriate community settings. The State has the authority to determine in which settings a particular service may be provided. While services may be provided in a variety of settings, the rehabilitative services benefit is not an inpatient benefit. Rehabilitative services do not include room and board in an institutional, community or home setting. F. Requirements and Limitations for Rehabilitative Services sroberts on PROD1PC70 with PROPOSALS 1. Requirements for Rehabilitative Services In § 441.45(a), we set forth the assurances required in a State plan amendment that provides for rehabilitative services in this proposed rule. In § 441.45(b) we set forth the expenditures for which Federal financial participation (FFP) would not be available. As with most Medicaid services, rehabilitative services are subject to the requirements of section 1902(a) of the Act. These include statewideness at section 1902(a)(1) of the Act, comparability at section 1902(a)(10)(B), and freedom of choice of qualified providers at section 1902(a)(23) of the Act. Accordingly, at § 441.45(a)(1), we propose to require that States comport with the listed requirements. At § 441.45(a)(2), we propose to require that the State ensure that rehabilitative services claimed for Medicaid payment are only those provided for the maximum reduction of physical or mental disability and restoration of the individual to the best possible functional level. VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 In § 441.45(a)(3) and (a)(4), we propose to require that providers of the rehabilitative services maintain case records that contain a copy of the rehabilitation plan. We also propose to require that the provider document the following for all individuals receiving rehabilitative services: • The name of the individual; • The date of the rehabilitative service or services provided; • The nature, content, and units of rehabilitative services provided; and • The progress made toward functional improvement and attainment of the individual’s goals. We believe this information is necessary to establish an audit trail for rehabilitative services provided, and to establish whether or not the services have achieved the maximum reduction of physical or mental disability, and to restore the individual to his or her best possible functional level. A State that opts to provide rehabilitative services must do so by amending its State plan in accordance with proposed § 441.45(a)(5). The amendment must (1) describe the rehabilitative services proposed to be furnished, (2) specify the provider type and provider qualifications that are reasonably related to each of the rehabilitative services, and (3) specify the methodology under which rehabilitation providers would be paid. 2. Limitations for Rehabilitative Services In § 441.45(b)(1) through (b)(8) we set forth limitations on coverage of rehabilitative services in this proposed rule. We propose in § 441.45(b)(1) that coverage of rehabilitative services would not include services that are furnished through a non-medical program as either a benefit or administrative activity, including programs other than Medicaid, such as foster care, child welfare, education, child care, vocational and prevocational training, housing, parole and probation, juvenile justice, or public guardianship. We also propose in § 441.45(b)(1) that coverage of rehabilitative services would not include services that are intrinsic elements of programs other than Medicaid. It should be noted however, that enrollment in these non-medical programs does not affect eligibility for Title XIX services. Rehabilitation services may be covered by Medicaid if they are not the responsibility of other programs and if all applicable requirements of the Medicaid program are met. Medicaid rehabilitative services must be coordinated with, but do not PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 45205 include, services furnished by other programs that are focused on social or educational development goals and are available as part of other services or programs. Further, Medicaid rehabilitation services must be available for all participants based on an identified medical need and otherwise would have been provided to the individual outside of the foster care, juvenile justice, parole and probation systems and other non-Medicaid systems. Individuals must have free choice of providers and all willing and qualified providers must be permitted to enroll in Medicaid. For instance, therapeutic foster care is a model of care, not a medically necessary service defined under Title XIX of the Act. States have used it as an umbrella to package an array of services, some of which may be medically necessary services, some of which are not. In order for a service to be reimbursable by Medicaid, states must specifically define all of the services that are to be provided, provider qualifications, and payment methodology. It is important to note that provider qualifications for those who furnish care to children in foster care must be the same as provider qualifications for those who furnish the same care to children not in foster care. Examples of therapeutic foster care components that would not be Medicaid coverable services include provider recruitment, foster parent training and other such services that are the responsibility of the foster care system. In § 441.45(b)(2), we propose to exclude FFP for expenditures for habilitation services including those provided to individuals with mental retardation or ‘‘related conditions’’ as defined in the State Medicaid Manual § 4398. Physical impairments and mental health and/or substance related disorder are not considered ‘‘related conditions’’ and are therefore medical conditions for which rehabilitation services may be appropriately provided. As a matter of general usage in the medical community, there is a distinction between the terms ‘‘habilitation’’ and ‘‘rehabilitation.’’ Rehabilitation refers to measures used to restore individuals to their best functional levels. The emphasis in covering rehabilitation services is the restoration of a functional ability. Individuals receiving rehabilitation services must have had the capability to perform an activity in the past rather than to actually have performed the activity. For example, a person may not have needed to drive a car in the past, but may have had the capability to do so prior to having the disability. E:\FR\FM\13AUP1.SGM 13AUP1 sroberts on PROD1PC70 with PROPOSALS 45206 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules Habilitation typically refers to services that are for the purpose of helping persons acquire new functional abilities. Current Medicaid policy explicitly covers habilitation services in two ways: (1) When provided in an intermediate care facility for persons with mental retardation (ICF/MR); or (2) when covered under sections 1915(c), (d), or (i) of the Act as a home and communitybased service. Habilitation services may also be provided under some 1905(a) service authorities such as Physician services defined at 42 CFR 440.50, Therapy services defined at 42 CFR 440.110 (such as, Physical Therapy, Occupational Therapy, and Speech/ Language/Audiology Therapy), and Medical or other remedial care provided by licensed practitioners, defined at 42 CFR 440.60. Habilitative services can also be provided under the 1915(i) State Plan Home and Community Based Services pursuant to the Deficit Reduction Act of 2005. In the late 1980s, the Congress responded to State concerns about disallowances for habilitation services provided under the State’s rehabilitative services benefit by passing section 6411(g) of the OBRA 89. This provision prohibited us from taking adverse actions against States with approved habilitation provisions pending the issuance of a regulation that ‘‘specifies types of day habilitation services that a State may cover under paragraphs (9) [clinic services] or (13) [rehabilitative services] of section 1905(a) of the Act on behalf of persons with mental retardation or with related conditions.’’ Accordingly, this regulation would specify that all such habilitation services would not be covered under sections 1905(a)(9) or 1905(a)(13) of the Act. If this regulation is issued in final form, the protections provided to certain States by section 6411(g) of OBRA 89 for day habilitation services will no longer be in force. We intend to provide for a delayed compliance date so that States will have a transition period of the lesser of 2 years or 1 year after the close of the first regular session of the State legislature that begins after this regulation becomes final before we will take enforcement action. This transition period will permit States an opportunity to transfer coverage of habilitation services from the rehabilitation option into another appropriate Medicaid authority. We are available to States as needed for technical assistance during this transition period. In § 441.45(b)(3), we propose to provide that rehabilitative services would not include recreational and social activities that are not specifically VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 focused on the improvement of physical or mental health impairment and achievement of a specific rehabilitative goal specified in the rehabilitation plan, and provided by a Medicaid qualified provider recognized under State law. We would also specify in this provision that rehabilitative services would not include personal care services; transportation; vocational and prevocational services; or patient education not related to the improvement of physical or mental health impairment and achievement of a specific rehabilitative goal specified in the rehabilitation plan. The first two of these services may be otherwise covered under the State plan. But these services are not primarily focused on rehabilitation, and thus do not meet the definition of medical or remedial services for rehabilitative purposes that would be contained in § 440.130(d)(1). It is possible that some recreational or social activities are reimbursable as rehabilitative services if they are provided for the purpose allowed under the benefit and meet all the requirements governing rehabilitative services. For example, in one instance the activity of throwing a ball to an individual and having her/him throw it back, may be a recreational activity. In another instance, the activity may be part of a program of physical therapy that is provided by, or under the direction of, a qualified therapist for the purpose of restoring motor skills and balance in an individual who has suffered a stroke. Likewise, for an individual suffering from mental illness, what may appear to be a social activity may in fact be addressing the rehabilitation goal of social skills development as identified in the rehabilitation plan. The service would need to be specifically related to an identified rehabilitative goal as documented in the rehabilitation plan with specific time-limited treatment goals and outcomes. The rehabilitative service would further need to be provided by a qualified provider, be documented in the case record, and meet all requirements of this proposed regulation. When personal care services are provided during the course of the provision of a rehabilitative service, they are an incidental activity and separate payment may not be made for the performance of the incidental activity. For example, an individual recovering from the effects of a stroke may receive occupational therapy services from a qualified occupational therapy provider under the rehabilitation option to regain the capacity to feed himself or herself. If PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 during the course of those services the individual’s clothing becomes soiled and the therapist assists the individual with changing his or her clothing, no separate payment may be made for assisting the individual with dressing under the rehabilitation option. However, FFP may be available for optional State plan personal care services under § 440.167 if provided by an enrolled, qualified personal care services provider. Similarly, transportation is not within the scope of the definition of rehabilitative services proposed by this regulation since the transportation service itself does not result in the maximum reduction of a physical or mental disability and restoration of the individual to the best possible functional level. However, transportation is a Medicaid covered service and may be billed separately as a medical assistance service under § 440.170, if provided by an enrolled, qualified provider, or may be provided under the Medicaid program as an administrative activity necessary for the proper and efficient administration of the State’s Medicaid program. Generally, vocational services are those that teach specific skills required by an individual to perform tasks associated with performing a job. Prevocational services address underlying habilitative goals that are associated with performing compensated work. To the extent that the primary purpose of these services is to help individuals acquire a specific job skill, and are not provided for the purpose of reducing disability and restoring a person to a previous functional level, they would not be construed as covered rehabilitative services. For example, teaching an individual to cook a meal to train for a job as a chef would not be covered, whereas, teaching an individual to cook in order to re-establish the use of her or his hands or to restore living skills may be coverable. While it may be possible for Medicaid to cover prevocational services when provided under the section 1915(c) of the Act, home and community based services waiver programs, funding for vocational services rests with other, non-Medicaid Federal and State funding sources. Similarly, the purpose of patient education is one important determinant to whether the activity is a rehabilitative activity covered under § 440.130(d). While taking classes in an academic setting may increase an individual’s integration into the community and enable the individual to learn social skills, the primary purpose of this activity is academic enhancement. E:\FR\FM\13AUP1.SGM 13AUP1 sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules Thus, patient education in an academic setting is not covered under the Medicaid rehabilitation option. On the other hand, some patient education directed towards a specific rehabilitative therapy service may be provided for the purpose of equipping the individual with specific skills that will decrease disability and restore the individual to a previous functioning level. For example, an individual with a mental disorder that manifests with behavioral difficulties may need anger management training to restore his or her ability to interact appropriately with others. These services may be covered under the rehabilitation option if all of the requirements of this regulation are met. In § 441.45(b)(4), we propose to exclude payment for services, including services that are rehabilitative services that are provided to inmates living in the secure custody of law enforcement and residing in a public institution. An individual is considered to be living in secure custody if serving time for a criminal offense in, or confined involuntarily to, State or Federal prisons, local jails, detention facilities, or other penal facilities. A facility is a public institution when it is under the responsibility of a governmental unit or over which a governmental unit exercises administrative control. Rehabilitative services could be reimbursed on behalf of Medicaideligible individuals paroled, on probation, on home release, in foster care, in a group home, or other community placement, that are not part of the public institution system, when the services are identified due to a medical condition targeted under the State’s Plan, are not used in the administration of other non-medical programs. We also propose to exclude payment for services that are provided to residents of an institution for mental disease (IMD), including residents of a community residential treatment facility of over 16 beds, that is primarily engaged in providing diagnosis, treatment, or care of persons with mental illness, and that does not meet the requirements at § 440.160. It appears that in the past, certain States may have provided services under the rehabilitation option to these individuals. Our proposed exclusion of FFP for rehabilitative services provided to these populations is consistent with the statutory requirements in paragraphs (A) and (B) following section 1905(a)(28) of the Act. The statute indicates that ‘‘except as otherwise provided in paragraph (16), such term [medical assistance] does not include— VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 (A) Any such payments with respect to care or services for any individual who is an inmate of a public institution; or (B) any such payments with respect to care or services for any individual who has not attained 65 years and who is a patient in an IMD.’’ Section 1905(a)(16) of the Act defines as ‘‘medical assistance’’ ‘‘* * * inpatient psychiatric hospital services for individuals under age 21 * * *’’. The Secretary has defined the term ‘‘inpatient psychiatric hospital services for individuals under age 21’’ in regulations at § 440.160 to include ‘‘a psychiatric facility which is accredited by the Joint Commission on Accreditation of Healthcare Organizations, the Council on Accreditation of Services for Families and Children, the Commission on Accreditation of Rehabilitation Facilities, or by any other accrediting organization, with comparable standards, that is recognized by the State.’’ Thus, the term ‘‘inpatient psychiatric hospital services for individuals under age 21’’ includes services furnished in accredited children’s psychiatric residential treatment facilities that are not hospitals. The rehabilitative services that are provided by the psychiatric hospital or accredited psychiatric residential treatment facility (PRTF) providing inpatient psychiatric services for individuals under age 21 to its residents would be reimbursed under the benefit for inpatient psychiatric services for individuals under age 21 (often referred to as the ‘‘psych under 21’’ benefit), rather than under the rehabilitative services benefit. In § 441.45(b)(6), we propose to exclude expenditures for room and board from payment under the rehabilitative services option. While rehabilitative services may be furnished in a residential setting that is not an IMD, the benefit provided by section 1905(a)(13) of the Act is primarily intended for community based services. Thus, when rehabilitative services are provided in a residential setting, such as in a residential substance abuse treatment facility of less than 17 beds, delivered by qualified providers, only the costs of the specific rehabilitative services will be covered. In § 441.45(b)(7), we propose to preclude payment for services furnished for the rehabilitation of an individual who is not Medicaid eligible. This provision reinforces basic program requirements found in section 1905(a) of the Act that require medical assistance to be furnished only to eligible individuals. An ‘‘eligible individual’’ is a person who is eligible for Medicaid and requires rehabilitative services as PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 45207 defined in the Medicaid State plan at the time the services are furnished. The provision of rehabilitative services to non-Medicaid eligible individuals cannot be covered if it relates directly to the non-eligible individual’s care and treatment. However, effective rehabilitation of eligible individuals may require some contact with non-eligible individuals. For instance, in developing the rehabilitation plan for a child with a mental illness, it may be appropriate to include the child’s parents, who are not eligible for Medicaid, in the process. In addition, counseling sessions for the treatment of the child might include the parents and other non-eligible family members. In all cases, in order for a service to be a Medicaid coverable service, it must be provided to, or directed exclusively toward, the treatment of the Medicaid eligible individual. Thus, contacts with family members for the purpose of treating the Medicaid eligible individual may be covered by Medicaid. If these other family members or other individuals also are Medicaid eligible and in need of the services covered under the State’s rehabilitation plan, Medicaid could pay for the services furnished to them. In § 441.45(b)(8), we propose that FFP would only be available for claims for services provided to a specific individual that are documented in an individual’s case record. We will work with States to implement this rule in a timely fashion using existing monitoring and compliance authority. III. Collection of Information Requirements Under the Paperwork Reduction Act of 1995, we are required to provide 60day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. E:\FR\FM\13AUP1.SGM 13AUP1 45208 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements: sroberts on PROD1PC70 with PROPOSALS Section 440.130 Diagnostic, Screening, Preventative, and Rehabilitative Services This section outlines the scope of service for rehabilitative services provided by States. The services discussed in this section must be provided under a written rehabilitation plan as defined in § 440.130(d)(1)(v). Specifically, § 440.130(d)(3) states that the written rehabilitation plan must meet the following requirements: (i) Be based on a comprehensive assessment of an individual’s rehabilitation needs including diagnoses and presence of a functional impairment in daily living. (ii) Be developed by a qualified provider(s) working within the State scope of practice act with input from the individual, individual’s family, the individual’s authorized health care decision maker and/or persons of the individual’s choosing. (iii) Ensure the active participation of the individual, individual’s family, the individual’s authorized health care decision maker and/or persons of the individual’s choosing in the development, review, and modification of these goals and services. (iv) Specify the individual’s rehabilitation goals to be achieved including recovery goals for persons with mental illnesses or substance related disorders. (v) Specify the physical impairment, mental health and/or substance related disorder that is being addressed. (vi) Identify the medical and remedial services intended to reduce the identified physical impairment, mental health and/or substance related disorder. (vii) Identify the methods that will be used to deliver services. (viii)Specify the anticipated outcomes. (ix) Indicate the frequency and duration of the services. (x) Be signed by the individual responsible for developing the rehabilitation plan. (xi) Indicate the anticipated provider(s) of the service(s) and the extent to which the services may be available from alternate provider(s) of the same service. (xii) Specify a timeline for reevaluation of the plan, based on the individual’s assessed needs and anticipated progress, but not longer than one year. VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 (xiii) Be reevaluated with the involvement of the beneficiary, family or other responsible individuals. (xiv) Be reevaluated including a review of whether the goals set forth in the plan are being met and whether each of the services described in the plan has contributed to meeting the stated goals. If it is determined that there has been no measurable reduction of disability and restoration of functional level, any new plan would need to pursue a different rehabilitation strategy including revision of the rehabilitative goals, services and/or methods. (xv) Document that the individual or representative participated in the development of the plan, signed the plan, and received a copy of the rehabilitation plan. (xvi) Document that the services have been determined to be rehabilitative services consistent with the regulatory definition. The burden associated with the requirements in this section is the time and effort put forth by the provider to gather the information and develop a specific written rehabilitation plan. While these requirements are subject to the PRA, we believe they meet the exemption requirements for the PRA found at 5 CFR 1320.3(b)(2), and as such, the burden associated with these requirements is exempt. Section 441.45 Rehabilitative Services Section 441.45(a)(3) requires that providers maintain case records that contain a copy of the rehabilitation plan for all individuals. The burden associated with these requirements is the time and effort put forth by the provider to maintain the case records. While these requirements are subject to the PRA, we believe they meet the exemption requirements for the PRA found at 5 CFR 1320.3(b)(2), and as such, the burden associated with these requirements is exempt. If you comment on these information collection and recordkeeping requirements, please mail copies directly to the following: Centers for Medicare & Medicaid Services, Office of Strategic Operations and Regulatory Affairs, Regulations Development Group, Attn: Melissa Musotto [CMS–2261–P], Room C4–26–05, 7500 Security Boulevard, Baltimore, MD 21244– 1850; and Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10235, New Executive Office Building, Washington, DC 20503, Attn: Katherine Astrich, CMS Desk Officer, [CMS–1321–P], PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 katherine_astrich@omb.eop.gov. Fax (202) 395–6974. IV. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a final document, we will respond to the comments in that document. V. Regulatory Impact Analysis A. Overall Impact We have examined the impacts of this rule as required by Executive Order 12866 (September 1993, Regulatory Planning and Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96–354), section 1102(b) of the Social Security Act, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4), and Executive Order 13132. Executive Order 12866 (as amended by Executive Order 13258, which merely reassigns responsibility of duties) directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). This is a major rule because of the size of the anticipated reduction in Federal financial participation that is estimated to have an economically significant effect of more than $100 million in each of the Federal fiscal years 2008 through 2012. The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $6.5 million to $31.5 million in any 1 year. The Secretary certifies that this major rule would not have a direct impact on providers of rehabilitative services that furnish services pursuant to section 1905(a)(13) of the Act. The rule would directly affect states and we do not know nor can we predict the manner in which states would adjust or respond to the provisions of this rule. CMS is unable to determine the E:\FR\FM\13AUP1.SGM 13AUP1 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules sroberts on PROD1PC70 with PROPOSALS percentage of providers of rehabilitative services that are considered small businesses according to the Small Business Administration’s size standards with total revenues of $6.5 million to $31.5 million or less in any 1 year. Individuals and States are not included in the definition of a small entity. In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 603 (proposed documents) of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicaid payment regulations and has fewer than 100 beds. The Secretary certifies that this major rule would not have a direct impact on small rural hospitals. The rule would directly affect states and we do not know nor can we predict the manner in which states would adjust or respond to the provisions of this rule. Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. That threshold level is currently approximately $120 million. Since this rule would not mandate spending in any 1 year of $120 million or more, the requirements of the UMRA are not applicable. Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has Federalism implications. Since this rule would not impose any costs on State or local governments, preempt State law, or otherwise have Federalism implications, the requirements of E.O. 13132 are not applicable. B. Anticipated Effects FFP will be available for rehabilitative services for treatment of physical, mental health, or substance-related disorder rehabilitation treatment if the State elects to provide those services through the approved State plan. Individuals retain the right to select among qualified providers of rehabilitative services. However, because FFP will be excluded for rehabilitative services that are included VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 in other Federal, State and local programs, it is estimated that Federal Medicaid spending on rehabilitative services would be reduced by approximately $180 million in FY 2008 and would be reduced by $2.2 billion between FY 2008 and FY 2012. This reduction in spending is expected to occur because FFP for rehabilitative services would no longer be paid to inappropriate other third parties or other Federal, State, or local programs. The estimated impact on Federal Medicaid spending was calculated starting with an estimate of rehabilitative service spending that may be subject to this rule. This estimate was developed after consulting with several experts, as data for rehabilitative services, particularly as it would apply to this rule, is limited. Given this estimate, the actuaries discounted this amount to account for four factors: (1) The ability of CMS to effectively identify the rehabilitative services spending that would be subject to this proposal; (2) the effectiveness of CMS’s efforts to implement this rule and the potential that some identified rehabilitative services spending may still be permissible under the rule; (3) the change in States’ plans that may regain some of the lost Federal funding; and (4) the length of time for CMS to fully implement the rule and review all States’ plans. The actual impact to the Federal Medicaid program may be different than the estimate to the extent that the estimate of the amount of rehabilitative services spending subject to this rule is different than the actual amount and to the extent that the effectiveness of the rule is greater than or less than assumed. Because a comprehensive review of these rehabilitative services had not been conducted at the time of this estimate and because we do not routinely collect data on spending for rehabilitative services, particularly as it relates to this rule, there is a significantly wide range of possible impacts. Thus, we are unable to determine what fiscal impact the publication of this rule would have on consumers, individual industries, Federal, State, or local government agencies or geographic regions under Executive Order 12866. We invite public comment on the potential impact of the rule. C. Alternatives Considered This proposed rule would amend the definition of rehabilitative services to provide for important individual protections and to clarify that Medicaid rehabilitative services must be coordinated with but do not include PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 45209 services furnished by other programs that are focused on social or educational development goals and available as part of other services or programs. We believe this proposed rule is the best approach to clarifying the covered rehabilitative services, and also because all stakeholders will have the opportunity to comment on the proposed rule. These comments will then be considered before the final document is published. In considering regulatory options, we considered requiring States to license all providers as an alternative to only requiring that providers to be qualified as defined by the State. However we believe that giving States the flexibility to determine how providers are credentialed allows for necessary flexibility to States to consider a wide range of provider types necessary to cover a variety of rehabilitation services. We believe this flexibility will result in decreases in administrative and service costs. We also considered restricting the rule to only include participant protections but not explicitly prohibiting FFP for services that are intrinsic elements of other nonMedicaid programs. Had we not prohibited FFP for services that are intrinsic elements of other programs, States would continue to provide nonMedicaid services to participants, the result would have been a less efficient use of Medicaid funding because increased Medicaid spending would not result in any increase in services to beneficiaries. Instead, increased Medicaid funding would have simply replaced other sources of funding. D. Accounting Statement and Table As required by OMB Circular A–4 (available at https:// www.whitehouse.gov/omb/circulars/ a004/a-4.pdf), in the table below, we have prepared an accounting statement showing the classification of the savings associated with the provisions of this proposed rule. This table provides our best estimate of the savings to the Federal Government as a result of the changes presented in this proposed rule that Federal Medicaid spending on rehabilitative services would be reduced by approximately $180 million in FY 2008 and would be reduced by $2.24 billion between FY 2008 and FY 2012. All savings are classified as transfers from the Federal Government to State Government. These transfers represent a reduction in the federal share of Medicaid spending once the rule goes into effect, as it would limit States from claiming Medicaid reimbursement for E:\FR\FM\13AUP1.SGM 13AUP1 45210 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules rehabilitation services that could be covered through other programs. ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED SAVINGS, FROM FY 2008 TO FY 2012 [In millions] Category Primary estimates Year dollar Units discount rate Period covered Federal Annualized Monetized ($millions/year) ............................................... 443.4 ........................ 441.6 ........................ 448 2008 ........................ 2008 ........................ 2008 7% ........................ 3% ........................ 0% 2008–2012 ........................ 2008–2012 ........................ 2008–2012 From Whom to Whom? ................................................................................... Column 1: Category—Contains the description of the different impacts of the rule; it could include monetized, quantitative but not monetized, or qualitative but not quantitative or monetized impacts; it also may contain unit of measurement (such as, dollars). In this case, the only impact is the Federal annualized monetized impact of the rule. Column 2: Primary Estimate— Contains the quantitative or qualitative impact of the rule for the respective category of impact. Monetized amounts are generally shown in real dollar terms. In this case, the federalized annualized monetized primary estimate represents the equivalent amount that, if paid (saved) each year over the period covered, would result in the same net Federal Government to State Government present value of the stream of costs (savings) estimated over the period covered. Column 3: Year Dollar—Contains the year to which dollars are normalized; that is, the first year that dollars are discounted in the estimate. Column 4: Unit Discount Rate— Contains the discount rate or rates used to estimate the annualized monetized impacts. In this case, three rates are used: 7 percent; 3 percent; 0 percent. Column 5: Period Covered—Contains the years for which the estimate was made. Rows: The rows contain the estimates associated with each specific impact and each discount rate used. ‘‘From Whom to Whom?’’—In the case of a transfer (as opposed to a change in aggregate social welfare as described in the OMB Circular), this section describes the parties involved in the transfer of costs. In this case, costs previously paid for by the Federal Government would be transferred to the State Governments. The table may also contain minimum and maximum estimates and sources cited. In this case, there is only a primary estimate and there are no additional sources for the estimate. Estimated Savings—The following table shows the discounted costs (savings) for each discount rate and for each year over the period covered. ‘‘Total’’ represents the net present value of the impact in the year the rule takes effect. These numbers represent the anticipated annual reduction in Federal Medicaid spending under this rule. ESTIMATED SAVINGS, FROM FY 2008 TO FY 2012 [In millions] Discount rate (percent) 2008 sroberts on PROD1PC70 with PROPOSALS 0 ............................................................... 3 ............................................................... 7 ............................................................... 180 175 168 E. Conclusion For these reasons, we are not preparing analyses for either the RFA or section 1102(b) of the Act because a comprehensive review of these rehabilitative services had not been conducted at the time of this estimate and because we do not routinely collect data on spending for rehabilitative services. Accordingly, there is a significantly wide range of possible impacts due to this rule. As indicated in the Estimated Savings table above, we project an estimated savings of $180 million in FY 2008, $360 million in FY 2009, $520 million in FY 2010, $570 million in FY 2011, and $610 million in FY 2012. This reflects a total estimated savings of $2.240 billion dollars for FY VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 2009 2010 360 339 314 2011 520 476 424 2008 through FY 2012. We invite public comment on the potential impact of this rule. In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget. List of Subjects 42 CFR Part 440 Grant programs—health, Medicaid. 42 CFR Part 441 Family planning, Grant programs— health, Infants and children, Medicaid, Penalties, Prescription drugs, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, the Centers for Medicare & PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 2012 570 506 435 Total 610 526 435 2,288 2,069 1,822 Medicaid Services proposes to amend 42 CFR chapter IV as set forth below: PART 440—SERVICES: GENERAL PROVISIONS 1. The authority citation for part 440 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). 2. Section 440.130 is amended by revising paragraph (d) to read as follows: § 440.130 Diagnostic, screening, preventative, and rehabilitative services. * E:\FR\FM\13AUP1.SGM * * 13AUP1 * * sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules (d) Rehabilitative Services—(1) Definitions. For purposes of this subpart, the following definitions apply: (i) Recommended by a physician or other licensed practitioner of the healing arts means that a physician or other licensed practitioner of the healing arts, based on a comprehensive assessment of the individual, has— (A) Determined that receipt of rehabilitative services would result in reduction of the individual’s physical or mental disability and restoration to the best possible functional level of the individual; and (B) Recommended the rehabilitative services to achieve specific individualized goals. (ii) Other licensed practitioner of the healing arts means any health practitioner or practitioner of the healing arts who is licensed in the State to diagnose and treat individuals with the physical or mental disability or functional limitations at issue, and operating within the scope of practice defined in State law. (iii) Qualified providers of rehabilitative services means individuals who meet any applicable provider qualifications under Federal law that would be applicable to the same service when it is furnished under other Medicaid benefit categories, qualifications under applicable State scope of practice laws, and any additional qualifications set forth in the Medicaid State plan. These qualifications may include minimum age requirements, education, work experience, training, credentialing, supervision and licensing requirements that are applied uniformly. Provider qualifications must be documented in the State plan and be reasonable given the nature of the service provided and the population served. Individuals must have free choice of providers and all willing and qualified providers must be permitted to enroll in Medicaid. (iv) Under the direction of means that for physical therapy, occupational therapy, and services for individuals with speech, hearing and language disorders (see § 440.110, ‘‘Inpatient hospital services, other than services in an institution for mental diseases’’) the Medicaid qualified therapist providing direction is a licensed practitioner of the healing arts qualified under State law to diagnose and treat individuals with the disability or functional limitations at issue, is working within the scope of practice defined in State law and is supervising each individual’s care. The supervision must include, at a minimum, face-to-face contact with the individual initially and periodically as needed, prescribing the services to be VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 provided, and reviewing the need for continued services throughout the course of treatment. The qualified therapist must also assume professional responsibility for the services provided and ensure that the services are medically necessary. Therapists must spend as much time as necessary directly supervising services to ensure beneficiaries are receiving services in a safe and efficient manner in accordance with accepted standards of practice. Moreover, documentation must be kept supporting the supervision of services and ongoing involvement in the treatment. Note that this definition applies specifically to providers of physical therapy, occupational therapy, and services for individuals with speech, hearing and language disorders. This language is not meant to exclude appropriate supervision arrangements for other rehabilitative services. (v) Rehabilitation plan means a written plan that specifies the physical impairment, mental health and/or substance related disorder to be addressed, the individualized rehabilitation goals and the medical and remedial services to achieve those goals. The plan is developed by a qualified provider(s) working within the State scope of practice act, with input from the individual, individual’s family, the individual’s authorized decision maker and/or of the individual’s choosing and also ensures the active participation of the individual, individual’s family, individual’s authorized decision maker and/or of the individual’s choosing in the development, review, and modification of the goals and services. The plan must document that the services have been determined to be rehabilitative services consistent with the regulatory definition. The plan must have a timeline, based on the individual’s assessed needs and anticipated progress, for reevaluation of the plan, not longer than one year. The plan must be reasonable and based on the individual’s condition(s) and on general standards of practice for provision of rehabilitative services to an individual with the individual’s condition(s). (vi) Restorative services means services that are provided to an individual who has had a functional loss and has a specific rehabilitative goal toward regaining that function. The emphasis in covering rehabilitation services is on the ability to perform a function rather than to actually have performed the function in the past. For example, a person may not have needed to take public transportation in the past, but may have had the ability to do so prior to having the disability. PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 45211 Rehabilitation goals are often contingent on the individual’s maintenance of a current level of functioning. In these instances services that provide assistance in maintaining functioning may be considered rehabilitative only when necessary to help an individual achieve a rehabilitation goal defined in the rehabilitation plan. Services provided primarily in order to maintain a level of functioning in the absence of a rehabilitation goal are not within the scope of rehabilitation services. (vii) Medical services means services specified in the rehabilitation plan that are required for the diagnosis, treatment, or care of a physical or mental disorder and are recommended by a physician or other licensed practitioner of the healing arts within the scope of his or her practice under State law. Medical services may include physical therapy, occupational therapy, speech therapy, and mental health and substance-related disorder rehabilitative services. (viii) Remedial services means services that are intended to correct a physical or mental disorder and are necessary to achieve a specific rehabilitative goal specified in the individual’s rehabilitation plan. (2) Scope of services. Except as otherwise provided under this subpart, rehabilitative services include medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a individual to the best possible functional level. Rehabilitative services may include assistive devices, medical equipment and supplies, not otherwise covered under the plan, which are determined necessary to the achievement of the individual’s rehabilitation goals. Rehabilitative services do not include room and board in an institution or community setting. (3) Written rehabilitation plan. The written rehabilitation plan shall be reasonable and based on the individual’s condition(s) and on the standards of practice for provision of rehabilitative services to an individual with the individual’s condition(s). In addition, the written rehabilitation plan must meet the following requirements: (i) Be based on a comprehensive assessment of an individual’s rehabilitation needs including diagnoses and presence of a functional impairment in daily living. (ii) Be developed by a qualified provider(s) working within the State scope of practice act with input from the individual, individual’s family, the individual’s authorized health care E:\FR\FM\13AUP1.SGM 13AUP1 sroberts on PROD1PC70 with PROPOSALS 45212 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules decision maker and/or persons of the individual’s choosing. (iii) Follow guidance obtained through the active participation of the individual, and/or persons of the individual’s choosing (which may include the individual’s family and the individual’s authorized health care decision maker), in the development, review, and modification of plan goals and services. (iv) Specify the individual’s rehabilitation goals to be achieved, including recovery goals for persons with mental health and/or substance related disorders. (v) Specify the physical impairment, mental health and/or substance related disorder that is being addressed. (vi) Identify the medical and remedial services intended to reduce the identified physical impairment, mental health and/or substance related disorder. (vii) Identify the methods that will be used to deliver services. (viii) Specify the anticipated outcomes. (ix) Indicate the frequency, amount and duration of the services. (x) Be signed by the individual responsible for developing the rehabilitation plan. (xi) Indicate the anticipated provider(s) of the service(s) and the extent to which the services may be available from alternate provider(s) of the same service. (xii) Specify a timeline for reevaluation of the plan, based on the individual’s assessed needs and anticipated progress, but not longer than one year. (xiii) Be reevaluated with the involvement of the individual, family or other responsible individuals. (xiv) Be reevaluated including a review of whether the goals set forth in the plan are being met and whether each of the services described in the plan has contributed to meeting the stated goals. If it is determined that there has been no measurable reduction of disability and restoration of functional level, any new plan would need to pursue a different rehabilitation strategy including revision of the rehabilitative goals, services and/or methods. (xv) Document that the individual or representative participated in the development of the plan, signed the plan, and received a copy of the rehabilitation plan. (xvi) Document that the services have been determined to be rehabilitative services consistent with the regulatory definition. (xvii) Include the individual’s relevant history, current medical VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 findings, contraindications and identify the individual’s care coordination needs, if any, as needed to achieve the rehabilitation goals. (4) Impairments to be addressed. For purposes of this section, rehabilitative services include services provided to the Medicaid eligible individual to address the individual’s physical impairments, mental health impairments, and/or substance-related disorder treatment needs. (5) Settings. Rehabilitative services may be provided in a facility, home, or other setting. PART 441—SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC SERVICES 1. The authority citation for part 441 continues to read as follows: Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 1302). Subpart A—General Provisions 2. A new § 441.45 is added to subpart A to read as follows: § 441.45 Rehabilitative services. (a) If a State covers rehabilitative services, as defined in § 440.130(d) of this chapter, the State must meet the following requirements: (1) Ensure that services are provided in accordance with § 431.50, § 431.51, § 440.230, and § 440.240 of this chapter. (2) Ensure that rehabilitative services are limited to services furnished for the maximum reduction of physical or mental disability and restoration of the individual to their best possible functional level. (3) Require that providers maintain case records that contain a copy of the rehabilitation plan for all individuals. (4) For all individuals receiving rehabilitative services, require that providers maintain case records that include the following: (i) A copy of the rehabilitative plan. (ii) The name of the individual. (iii) The date of the rehabilitative services provided. (iv) The nature, content, and units of the rehabilitative services. (v) The progress made toward functional improvement and attainment of the individual’s goals as identified in the rehabilitation plan and case record. (5) Ensure the State plan for rehabilitative services includes the following requirements: (i) Describes the rehabilitative services furnished. (ii) Specifies provider qualifications that are reasonably related to the rehabilitative services proposed to be furnished. PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 (iii) Specifies the methodology under which rehabilitation providers are paid. (b) Rehabilitation does not include, and FFP is not available in expenditures for, services defined in § 440.130(d) of this chapter if the following conditions exist: (1) The services are furnished through a non-medical program as either a benefit or administrative activity, including services that are intrinsic elements of programs other than Medicaid, such as foster care, child welfare, education, child care, vocational and prevocational training, housing, parole and probation, juvenile justice, or public guardianship. Examples of services that are intrinsic elements of other programs and that would not be paid under Medicaid include, but are not limited to, the following: (i) Therapeutic foster care services furnished by foster care providers to children, except for medically necessary rehabilitation services for an eligible child that are clearly distinct from packaged therapeutic foster care services and that are provided by qualified Medicaid providers. (ii) Packaged services furnished by foster care or child care institutions for a foster child except for medically necessary rehabilitation services for an eligible child that are clearly distinct from packaged therapeutic foster care services and that are provided by qualified Medicaid providers. (iii) Adoption services, family preservation, and family reunification services furnished by public or private social services agencies. (iv) Routine supervision and nonmedical support services provided by teacher aides in school settings (sometimes referred to as ‘‘classroom aides’’ and ‘‘recess aides’’). (2) Habilitation services, including services for which FFP was formerly permitted under the Omnibus Budget Reconciliation Act of 1989. Habilitation services include ‘‘services provided to individuals’’ with mental retardation or related conditions. (Most physical impairments, and mental health and/or substance related disorders, are not included in the scope of related conditions, so rehabilitation services may be appropriately provided.) (3) Recreational or social activities that are not focused on rehabilitation and not provided by a Medicaid qualified provider; personal care services; transportation; vocational and prevocational services; or patient education not related to reduction of physical or mental disability and the restoration of an individual to his or her best possible functional level. E:\FR\FM\13AUP1.SGM 13AUP1 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules (4) Services that are provided to inmates living in the secure custody of law enforcement and residing in a public institution. An individual is considered to be living in secure custody if serving time for a criminal offence in, or confined involuntarily to, public institutions such as State or Federal prisons, local jails, detention facilities, or other penal facilities. A facility is a public institution when it is under the responsibility of a governmental unit; or over which a governmental unit exercises administrative control. Rehabilitative services could be reimbursed on behalf of Medicaid-eligible individuals paroled, on probation, on home release, in foster care, in a group home, or other community placement, that are not part of the public institution system, when the services are identified due to a medical condition targeted under the State’s Plan, are not used in the administration of other non-medical programs. (5) Services provided to residents of an institution for mental disease (IMD) who are under the age of 65, including residents of community residential treatment facilities with more than 16 beds that do not meet the requirements at § 440.160 of this chapter. (6) Room and board. (7) Services furnished for the treatment of an individual who is not Medicaid eligible. (8) Services that are not provided to a specific individual as documented in an individual’s case record. (Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program) Dated: March 22, 2007. Leslie V. Norwalk, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: July 12, 2007. Michael O. Leavitt, Secretary. [FR Doc. 07–3925 Filed 8–8–07; 4:00 pm] sroberts on PROD1PC70 with PROPOSALS BILLING CODE 4120–01–P VerDate Aug<31>2005 17:02 Aug 10, 2007 Jkt 211001 DEPARTMENT OF THE INTERIOR National Park Service 43 CFR Part 10 Consultation and Dialogue On Regulations Regarding The Disposition Of Unclaimed Native American Human Remains, Funerary Objects, Sacred Objects, Or Objects Of Cultural Patrimony Excavated Or Discovered On Federal Or Tribal Lands After November 16, 1990, Pursuant To Provisions Of The Native American Graves Protection And Repatriation Act (NAGPRA) National Park Service, Interior. Notice of consultation. AGENCY: ACTION: SUMMARY: This notice of consultation announces three consultation meetings and a facilitated dialogue session (recommended by the Review Committee) that will be held to obtain additional oral and written recommendations on regulations to be drafted regarding the disposition of unclaimed Native American human remains, funerary objects, sacred objects, or objects of cultural patrimony that are excavated or discovered on Federal or tribal lands after November 16, 1990. Previous consultation meetings were held November, 2005, and April, 2007. DATES: The four consultation/dialogue sessions are scheduled for October 14– 16, 2007: 1. Tribal consultation: October 14, 2007, 8:30 a.m. to 10:30 a.m., Chaparral Suites Resort, 5001 North Scottsdale Rd., Scottsdale, AZ 85250. Authorized representatives of Indian tribes and Native Hawaiian organizations and traditional Native American religious leaders are invited to participate in this meeting. Tribal representatives wishing to make a public presentation at this session should submit a request to do so by October 8, 2007, including evidence that you are authorized to speak on behalf of an Indian tribe or Native Hawaiian organization. 2. Museum consultation: October 14, 2007, 10:45 a.m. to 12:45 p.m., Chaparral Suites Resort, 5001 North Scottsdale Rd., Scottsdale, AZ 85250. Authorized representatives of museums and national museum and scientific organizations are invited to participate in this meeting. Representatives wishing to make a public presentation at this session should submit a request to do so by October 8, 2007, including evidence that you are authorized to speak on PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 45213 behalf of a museum or national museum or scientific organization. 3. Museum-Tribal Dialogue: October 14, 2007, 2:30 p.m. to 5:00 p.m., Chaparral Suites Resort, 5001 North Scottsdale Rd., Scottsdale, AZ 85250. This facilitated discussion, recommended by the Review Committee, will provide the authorized representatives of Indian tribes, Native Hawaiian organizations, museums, and national museum and scientific organizations with a forum to identify points of agreement regarding the disposition of unclaimed Native American human remains, funerary objects, sacred objects, or objects of cultural patrimony. The results of the museum-tribal dialogue will be reported to the Review Committee at its October 15–16, 2007, meeting. 4. Review Committee consultation: October 15–16, 2007, 8:30 a.m. to 5:00 p.m., Heard Museum, 2301 North Central Ave., Phoenix, AZ 85004. Time will be scheduled during the Review Committee meeting for members of the public to provide oral and written recommendations. Members of the public wishing to make a public presentation at the Review Committee meeting should submit a request to do so by October 8, 2007. Requests to make presentations or participate at any of the sessions should be faxed to (202) 371–5197 by October 8, 2007. Written comments should be postmarked or faxed to Sherry Hutt as indicated under ADDRESSES no later than December 1, 2007. ADDRESSES: Written comments and requests for public presentations may be mailed to Sherry Hutt, Manager, National NAGPRA Program, National Park Service, 1849 C Street NW, Washington, DC 20240. Comments may also be faxed to Sherry Hutt at (202) 371–5197. Before including your address, phone number, e-mail address, or other personal identifying information in your comment, you should be aware that your entire comment - including your personal identifying information - may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. The consultation/dialogue sessions with Indian tribes, Native Hawaiian organizations, traditional Native American religious leaders, museums and national museum and scientific organizations on October 14, 2007 will be held at Chaparral Suites Resort, 5001 North Scottsdale Rd., Scottsdale, AZ E:\FR\FM\13AUP1.SGM 13AUP1

Agencies

[Federal Register Volume 72, Number 155 (Monday, August 13, 2007)]
[Proposed Rules]
[Pages 45201-45213]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-3925]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 440 and 441

[CMS 2261-P]
RIN 0938-A081


Medicaid Program; Coverage for Rehabilitative Services

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend the definition of Medicaid 
rehabilitative services in order to provide for important beneficiary 
protections such as a person-centered written rehabilitation plan and 
maintenance of case records. The proposed rule would also ensure the 
fiscal integrity of claimed Medicaid expenditures by clarifying the 
service definition and providing that Medicaid rehabilitative services 
must be coordinated with but do not include services furnished by other 
programs that are focused on social or educational development goals 
and available as part of other services or programs. These services and 
programs include, but are not limited to, foster care, child welfare, 
education, child care, prevocational and vocational services, housing, 
parole and probation, juvenile justice, public guardianship, and any 
other non-Medicaid services from Federal, State, or local programs.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on October 12, 2007.

ADDRESSES: In commenting, please refer to file code CMS-2261-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to https://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic

[[Page 45202]]

comments on CMS regulations with an open comment period.'' (Attachments 
should be in Microsoft Word, WordPerfect, or Excel; however, we prefer 
Microsoft Word.)
    2. By regular mail. You may mail written comments (one original and 
two copies) to the following address ONLY: Centers for Medicare & 
Medicaid Services, Department of Health and Human Services, Attention: 
CMS-2261-P, P.O. Box 8018, Baltimore, MD 21244-8018.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-2261-P, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments (one original and two copies) before the 
close of the comment period to one of the following addresses. If you 
intend to deliver your comments to the Baltimore address, please call 
telephone number (410) 786-3685 in advance to schedule your arrival 
with one of our staff members.

Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., 
Washington, DC 20201; or
7500 Security Boulevard, Baltimore, MD 21244-1850.

    (Because access to the interior of the HHH Building is not readily 
available to persons without Federal Government identification, 
commenters are encouraged to leave their comments in the CMS drop slots 
located in the main lobby of the building. A stamp-in clock is 
available for persons wishing to retain a proof of filing by stamping 
in and retaining an extra copy of the comments being filed.)
    Comments mailed to the addresses indicated as appropriate for hand 
or courier delivery may be delayed and received after the comment 
period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by mailing your 
comments to the addresses provided at the end of the ``Collection of 
Information Requirements'' section in this document.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Maria Reed, (410) 786-2255 or Shawn 
Terrell, (410) 786-0672.

SUPPLEMENTARY INFORMATION:
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-2261-P and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable (for example, names, addresses, 
social security numbers, and medical diagnoses) or confidential 
business information (including proprietary information) that is 
included in a comment. We post all comments received before the close 
of the comment period on the following Web site as soon as possible 
after they have been received: https://www.cms.hhs.gov/eRulemaking. 
Click on the link ``Electronic Comments on CMS Regulations'' on that 
Web site to view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

A. Overview

    Section 1905(a)(13) of the Social Security Act (the Act) includes 
rehabilitative services as an optional Medicaid State plan benefit. 
Current Medicaid regulations at 42 CFR 440.130(d) provide a broad 
definition of rehabilitative services. Rehabilitative services are 
defined as ``any medical or remedial services recommended by a 
physician or other licensed practitioner of the healing arts, within 
the scope of his or her practice under State law, for maximum reduction 
of physical or mental disability and restoration of a recipient to his 
best possible functional level.'' The broad general language in this 
regulatory definition has afforded States considerable flexibility 
under their State plans to meet the needs of their State's Medicaid 
population.
    Over the years the scope of services States have provided under the 
rehabilitation benefit has expanded from physical rehabilitative 
services to also include mental health and substance abuse treatment 
rehabilitative services. For example, services currently provided by 
States under the rehabilitative benefit include services aimed at 
improving physical disabilities, including physical, occupational, and 
speech therapies; mental health services, such as individual and group 
therapy, psychosocial therapy services; and services for substance-
related disorders (for example, substance use disorders and substance 
induced disorders). These Medicaid services may be delivered through 
various models of care and in a variety of settings.
    The broad language of the current statutory and regulatory 
definition has, however, had some unintended consequences. It has also 
led to some confusion over whether otherwise applicable statutory or 
regulatory provider standards would apply under the rehabilitative 
services benefit.
    As the number of States providing rehabilitative services has 
increased, some States have viewed the rehabilitation benefit as a 
``catch-all'' category to cover services included in other Federal, 
State and local programs. For example, it appears some States have used 
Medicaid to fund services that are included in the provision of foster 
care and in the Individuals with Disabilities Education Improvement Act 
(IDEA). Our audit reviews have recently revealed that Medicaid funds 
have also been used to pay for behavioral treatment services in 
``wilderness camps,'' juvenile detention, and similar facilities where 
youth are involuntarily confined. These facilities are under the domain 
of the juvenile justice or youth systems in the State, rather than 
Medicaid, and there is no assurance that the claimed services reflect 
an independent evaluation of individual rehabilitative needs.
    This proposed regulation is designed to clarify the broad general 
language of the current regulation to ensure that rehabilitative 
services are provided in a coordinated manner that is in the best 
interest of the individuals, are limited to rehabilitative purposes and 
are furnished by qualified providers. This proposed regulation would 
rectify the improper reliance on the Medicaid rehabilitation benefit 
for services furnished by other programs that are focused on social or 
educational development goals in programs other than Medicaid.
    This proposed regulation would provide guidance to ensure that 
services claimed under the optional Medicaid rehabilitative benefit are 
in fact rehabilitative out-patient services, are furnished by qualified 
providers, are

[[Page 45203]]

provided to Medicaid eligible individuals according to a goal-oriented 
rehabilitation plan, and are not for services that are included in 
programs with a focus other than that of Medicaid.

B. Habilitation Services

    Section 6411(g) of the Omnibus Budget Reconciliation Act of 1989 
(OBRA 89) prohibits us from taking adverse action against States with 
approved habilitation provisions pending the issuance of a regulation 
that ``specifies types of day habilitation services that a State may 
cover under paragraphs (9) (clinic services) or (13) (rehabilitative 
services) of section 1905(a) of the Act on behalf of persons with 
mental retardation or with related conditions.'' We believe that 
issuance of a final rule based on this proposed rule will satisfy this 
condition. We intend to work with those States that have habilitation 
programs under the clinic services or rehabilitative services benefits 
in their State plans to transition to appropriate Medicaid coverage 
authorities, such as section 1915(c) waivers or the Home and Community-
Based Services State plan option under section 1915 (i) of the Deficit 
Reduction Act (DRA) of 2005 (Pub. L. 107-171), enacted on February 8, 
2006.

II. Provisions of the Proposed Rule

    [If you choose to comment on issues in this section, please include 
the caption ``PROVISIONS OF THE PROPOSED REGULATIONS'' at the beginning 
of your comments.]

A. Definitions

    In 440.130(d)(1), we propose to define the terms used in this rule, 
as listed below:
     Recommended by a physician or other licensed practitioner 
of the healing arts.
     Other licensed practitioner of the healing arts.
     Qualified providers of rehabilitative services.
     Under the direction of.
     Written rehabilitation plan.
     Restorative services.
     Medical services.
     Remedial services.
    In Sec.  440.130(d)(1)(iii), we would define ``qualified providers 
of rehabilitative services'' to require that individuals providing 
rehabilitative services meet the provider qualification requirements 
applicable to the same service when it is furnished under other benefit 
categories. Further, the provider qualifications must be set forth in 
the Medicaid State plan. These qualifications may include education, 
work experience, training, credentialing, supervision and licensing, 
that are applied uniformly. Provider qualifications must be reasonable 
given the nature of the service provided and the population being 
served. We require uniform application of these qualifications to 
ensure the individual free choice of qualified providers, consistent 
with section 1902(a)(23) of the Act.
    Under this proposed definition, if specific provider qualifications 
are set forth elsewhere in subpart A of part 440, those provider 
qualifications take precedence when those services are provided under 
the rehabilitation option. Thus, if a State chooses to provide the 
various therapies discussed at Sec.  440.110 (physical therapy, 
occupational therapy, speech, language and hearing services) under 
Sec.  440.130(d), the requirements of Sec.  440.110 applicable to those 
services would apply. For example, speech therapy is addressed in 
regulation at Sec.  440.110(c) with specific provider requirements for 
speech pathologists and audiologists that must be met. If a State 
offers speech therapy as a rehabilitative service, the specific 
provider requirements at Sec.  440.110(c) must be met. It should be 
noted that the definition of Occupational Therapy in Sec.  440.110 is 
not correct insofar as the following--Occupational Therapists must be 
certified through the National Board of Certification for Occupational 
Therapy, not the American Occupational Therapy Association.
    We are proposing a definition of the term ``under the direction 
of'' because it is a key issue in the provision of therapy services 
through the rehabilitative services benefit. Therapy services may be 
furnished by or ``under the direction of'' a qualified provider under 
the provisions of Sec.  440.110. We are proposing to clarify that the 
term means that the therapist providing direction is supervising the 
individual's care which, at a minimum, includes seeing the individual 
initially, prescribing the type of care to be provided, reviewing the 
need for continued services throughout treatment, assuming professional 
responsibility for services provided, and ensuring that all services 
are medically necessary. The term ``under the direction of'' requires 
each of these elements; in particular, professional responsibility 
requires face-to-face contact by the therapist at least at the 
beginning of treatment and periodically thereafter. Note that this 
definition applies specifically to providers of physical therapy, 
occupational therapy, and services for individuals with speech, hearing 
and language disorders. This language is not meant to exclude 
appropriate supervision arrangements for other rehabilitative services.

B. Scope of Services

    Consistent with the provision of section 1905(a)(13) of the Act, we 
have retained the current definition of rehabilitative services in 
Sec.  440.130(d)(2) as including ``medical or remedial services 
recommended by a physician or other licensed practitioner of the 
healing arts, within the scope of his practice under State law, for 
maximum reduction of physical or mental disability and restoration of a 
recipient to his best possible functional level.'' We would, however, 
clarify that rehabilitative services do not include room and board in 
an institution, consistent with the longstanding CMS interpretation 
that section 1905(a) of the Act has specifically identified 
circumstances in which Medicaid would pay for coverage of room and 
board in an inpatient setting. This interpretation was upheld in Texas 
v. U.S. Dep't Health and Human Servs., 61 F.3d 438 (5th Cir. 1995).

C. Written Rehabilitation Plan

    We propose to add a new requirement, at Sec.  440.130(d)(3), that 
covered rehabilitative services for each individual must be identified 
under a written rehabilitation plan. This rehabilitation plan would 
ensure that the services are designed and coordinated to lead to the 
goals set forth in statute and regulation (maximum reduction of 
physical or mental disability and restoration to the best possible 
functional level). It would ensure transparency of coverage and medical 
necessity determinations, so that the beneficiary, and family or other 
responsible individuals, would have a clear understanding of the 
services that are being made available to the beneficiary. In all 
situations, the ultimate goal is to reduce the duration and intensity 
of medical care to the least intrusive level possible which sustains 
health. The Medicaid goal is to deliver and pay for the clinically-
appropriate, Medicaid-covered services that would contribute to the 
treatment goal. It is our expectation that, for persons with mental 
illnesses and substance-related disorders, the rehabilitation plan 
would include recovery goals. The rehabilitation plan would establish a 
basis for evaluating the effectiveness of the care offered in meeting 
the stated goals. It would provide for a process to involve the 
beneficiary, and family or other responsible individuals, in the 
overall management of rehabilitative care. The rehabilitation plan 
would also

[[Page 45204]]

document that the services have been determined to be rehabilitative 
services consistent with the regulatory definition, and will have a 
timeline, based on the individual's assessed needs and anticipated 
progress, for reevaluation of the plan, not longer than one year. It is 
our expectation that the reevaluation of the plan would involve the 
beneficiary, family, or other responsible individuals and would include 
a review of whether the goals set forth in the plan are being met and 
whether each of the services described in the plan has contributed to 
meeting the stated goals. If it is determined that there has been no 
measurable reduction of disability and restoration of functional level, 
any new plan would need to pursue a different rehabilitation strategy 
including revision of the rehabilitative goals, services and/or 
methods. It is important to note that this benefit is not a custodial 
care benefit for individuals with chronic conditions but should result 
in a change in status. The rehabilitation plan should identify the 
rehabilitation objectives that would be achieved under the plan in 
terms of measurable reductions in a diagnosed physical or mental 
disability and in terms of restored functional abilities. We recognize, 
however, that rehabilitation goals are often contingent on the 
individual's maintenance of a current level of functioning. In these 
instances, services that provide assistance in maintaining functioning 
may be considered rehabilitative only when necessary to help an 
individual achieve a rehabilitation goal as defined in the 
rehabilitation plan. Services provided primarily in order to maintain a 
level of functioning in the absence of a rehabilitation goal are not 
rehabilitation services.
    It is our further expectation that the rehabilitation plan be 
reasonable and based on the individual's diagnosed condition(s) and on 
the standards of practice for provisions of rehabilitative services to 
an individual with the individual's condition(s). The rehabilitation 
plan is not intended to limit or restrict the State's ability to 
require prior authorization for services. The proposed requirements 
state that the written rehabilitation plan must:
     Be based on a comprehensive assessment of an individual's 
rehabilitation needs including diagnoses and presence of a functional 
impairment in daily living;
     Be developed by qualified provider(s) working within the 
State scope of practice acts with input from the individual, 
individual's family, the individual's authorized health care decision 
maker and/or persons of the individual's choosing;
     Ensure the active participation of the individual, 
individual's family, the individual's authorized health care decision 
maker and/or persons of the individual's choosing in the development, 
review and modification of these goals and services;
     Specify the individual's rehabilitation goals to be 
achieved, including recovery goals for persons with mental health and/
or substance related disorders;
     Specify the physical impairment, mental health and/or 
substance related disorder that is being addressed;
     Identify the medical and remedial services intended to 
reduce the identified physical impairment, mental health and/or 
substance related disorder;
     Identify the methods that would be used to deliver 
services;
     Specify the anticipated outcomes;
     Indicate the frequency, amount and duration of the 
services;
     Be signed by the individual responsible for developing the 
rehabilitation plan;
     Indicate the anticipated provider(s) of the service(s) and 
the extent to which the services may be available from alternate 
provider(s) of the same service;
     Specify a timeline for reevaluation of the plan, based on 
the individual's assessed needs and anticipated progress, but not 
longer than one year;
     Document that the individual or representative 
participated in the development of the plan, signed the plan, and 
received a copy of the rehabilitation plan; and
     Document that the services have been determined to be 
rehabilitative services consistent with the regulatory definition.
    We believe that a written rehabilitation plan would ensure that 
services are provided within the scope of the rehabilitative services 
and would increase the likelihood that an individual's disability would 
be reduced and functional level restored. In order to determine whether 
a specific service is a covered rehabilitative benefit, it is helpful 
to scrutinize the purpose of the service as defined in the care plan.
    For example, an activity that may appear to be a recreational 
activity may be rehabilitative if it is furnished with a focus on 
medical or remedial outcomes to address a particular impairment and 
functional loss. Such an activity, if provided by a Medicaid qualified 
provider, could address a physical or mental impairment that would help 
to increase motor skills in an individual who has suffered a stroke, or 
help to restore social functioning and personal interaction skills for 
a person with a mental illness.
    We are proposing to require in Sec.  440.130(d)(3)(iii) that the 
written rehabilitation plan include the active participation of the 
individual (or the individual's authorized health care decision maker) 
in the development, review, and reevaluation of the rehabilitation 
goals and services. We recommend the use of a person-centered planning 
process. Since the rehabilitation plan identifies recovery-oriented 
goals, the individual must be at the center of the planning process.

D. Impairments to be Addressed

    We propose in Sec.  440.130(d)(4) that rehabilitative services 
include services provided to an eligible individual to address the 
individual's physical needs, mental health needs, and/or substance-
related disorder treatment needs. Because rehabilitative services are 
an optional service for adults, a State has flexibility to determine 
whether rehabilitative services would be limited to certain 
rehabilitative services (for example, only physical rehabilitative 
services) or will include rehabilitative treatment for mental health or 
substance-related disorders as well.
    Provision of rehabilitative services to individuals with mental 
health or substance-related disorders is consistent with the 
recommendations of the New Freedom Commission on Mental Health. The 
Commission challenged States, among others, to expand access to quality 
mental health care and noted that States are at the very center of 
mental health system transformation. Thus, while States are not 
required to provide rehabilitative services for treatment of mental 
health and substance-related disorders, they are encouraged to do so. 
The Commission noted in its report that, ``[m]ore individuals would 
recover from even the most serious mental illnesses and emotional 
disturbances if they had earlier access in their communities to 
treatment and supports that are evidence-based and tailored to their 
needs.''
    Under existing provisions at Sec.  440.230(a), States are required 
to provide in the State plan a detailed description of the services to 
be provided. In reviewing a State plan amendment that proposes 
rehabilitative services, we would consider whether the proposed 
services are consistent with the requirements in Sec.  440.130(d) and 
section 1905(a)(13) of the Act. We would also consider whether the 
proposed scope of rehabilitative services

[[Page 45205]]

is ``sufficient in amount, duration and scope to reasonably achieve its 
purpose'' as required at Sec.  440.230(b). For that analysis, we will 
review whether any assistive devices, supplies, and equipment necessary 
to the provision of those services are covered either under the 
rehabilitative services benefit or elsewhere under the plan.

E. Settings

    In Sec.  440.130(d)(5), consistent with the provisions of section 
1905(a)(13) of the Act, we propose that rehabilitative services may be 
provided in a facility, home, or other setting. For example, 
rehabilitative services may be furnished in freestanding outpatient 
clinics and to supplement services otherwise available as an integral 
part of the services of facilities such as schools, community mental 
health centers, or substance abuse treatment centers. Other settings 
may include the office of qualified independent practitioners, mobile 
crisis vehicles, and appropriate community settings. The State has the 
authority to determine in which settings a particular service may be 
provided. While services may be provided in a variety of settings, the 
rehabilitative services benefit is not an inpatient benefit. 
Rehabilitative services do not include room and board in an 
institutional, community or home setting.

F. Requirements and Limitations for Rehabilitative Services

1. Requirements for Rehabilitative Services
    In Sec.  441.45(a), we set forth the assurances required in a State 
plan amendment that provides for rehabilitative services in this 
proposed rule. In Sec.  441.45(b) we set forth the expenditures for 
which Federal financial participation (FFP) would not be available.
    As with most Medicaid services, rehabilitative services are subject 
to the requirements of section 1902(a) of the Act. These include 
statewideness at section 1902(a)(1) of the Act, comparability at 
section 1902(a)(10)(B), and freedom of choice of qualified providers at 
section 1902(a)(23) of the Act. Accordingly, at Sec.  441.45(a)(1), we 
propose to require that States comport with the listed requirements.
    At Sec.  441.45(a)(2), we propose to require that the State ensure 
that rehabilitative services claimed for Medicaid payment are only 
those provided for the maximum reduction of physical or mental 
disability and restoration of the individual to the best possible 
functional level.
    In Sec.  441.45(a)(3) and (a)(4), we propose to require that 
providers of the rehabilitative services maintain case records that 
contain a copy of the rehabilitation plan. We also propose to require 
that the provider document the following for all individuals receiving 
rehabilitative services:
     The name of the individual;
     The date of the rehabilitative service or services 
provided;
     The nature, content, and units of rehabilitative services 
provided; and
     The progress made toward functional improvement and 
attainment of the individual's goals.
    We believe this information is necessary to establish an audit 
trail for rehabilitative services provided, and to establish whether or 
not the services have achieved the maximum reduction of physical or 
mental disability, and to restore the individual to his or her best 
possible functional level.
    A State that opts to provide rehabilitative services must do so by 
amending its State plan in accordance with proposed Sec.  441.45(a)(5). 
The amendment must (1) describe the rehabilitative services proposed to 
be furnished, (2) specify the provider type and provider qualifications 
that are reasonably related to each of the rehabilitative services, and 
(3) specify the methodology under which rehabilitation providers would 
be paid.
2. Limitations for Rehabilitative Services
    In Sec.  441.45(b)(1) through (b)(8) we set forth limitations on 
coverage of rehabilitative services in this proposed rule.
    We propose in Sec.  441.45(b)(1) that coverage of rehabilitative 
services would not include services that are furnished through a non-
medical program as either a benefit or administrative activity, 
including programs other than Medicaid, such as foster care, child 
welfare, education, child care, vocational and prevocational training, 
housing, parole and probation, juvenile justice, or public 
guardianship. We also propose in Sec.  441.45(b)(1) that coverage of 
rehabilitative services would not include services that are intrinsic 
elements of programs other than Medicaid.
    It should be noted however, that enrollment in these non-medical 
programs does not affect eligibility for Title XIX services. 
Rehabilitation services may be covered by Medicaid if they are not the 
responsibility of other programs and if all applicable requirements of 
the Medicaid program are met. Medicaid rehabilitative services must be 
coordinated with, but do not include, services furnished by other 
programs that are focused on social or educational development goals 
and are available as part of other services or programs. Further, 
Medicaid rehabilitation services must be available for all participants 
based on an identified medical need and otherwise would have been 
provided to the individual outside of the foster care, juvenile 
justice, parole and probation systems and other non-Medicaid systems. 
Individuals must have free choice of providers and all willing and 
qualified providers must be permitted to enroll in Medicaid.
    For instance, therapeutic foster care is a model of care, not a 
medically necessary service defined under Title XIX of the Act. States 
have used it as an umbrella to package an array of services, some of 
which may be medically necessary services, some of which are not. In 
order for a service to be reimbursable by Medicaid, states must 
specifically define all of the services that are to be provided, 
provider qualifications, and payment methodology. It is important to 
note that provider qualifications for those who furnish care to 
children in foster care must be the same as provider qualifications for 
those who furnish the same care to children not in foster care. 
Examples of therapeutic foster care components that would not be 
Medicaid coverable services include provider recruitment, foster parent 
training and other such services that are the responsibility of the 
foster care system.
    In Sec.  441.45(b)(2), we propose to exclude FFP for expenditures 
for habilitation services including those provided to individuals with 
mental retardation or ``related conditions'' as defined in the State 
Medicaid Manual Sec.  4398. Physical impairments and mental health and/
or substance related disorder are not considered ``related conditions'' 
and are therefore medical conditions for which rehabilitation services 
may be appropriately provided. As a matter of general usage in the 
medical community, there is a distinction between the terms 
``habilitation'' and ``rehabilitation.'' Rehabilitation refers to 
measures used to restore individuals to their best functional levels. 
The emphasis in covering rehabilitation services is the restoration of 
a functional ability. Individuals receiving rehabilitation services 
must have had the capability to perform an activity in the past rather 
than to actually have performed the activity. For example, a person may 
not have needed to drive a car in the past, but may have had the 
capability to do so prior to having the disability.

[[Page 45206]]

Habilitation typically refers to services that are for the purpose of 
helping persons acquire new functional abilities. Current Medicaid 
policy explicitly covers habilitation services in two ways: (1) When 
provided in an intermediate care facility for persons with mental 
retardation (ICF/MR); or (2) when covered under sections 1915(c), (d), 
or (i) of the Act as a home and community-based service. Habilitation 
services may also be provided under some 1905(a) service authorities 
such as Physician services defined at 42 CFR 440.50, Therapy services 
defined at 42 CFR 440.110 (such as, Physical Therapy, Occupational 
Therapy, and Speech/Language/Audiology Therapy), and Medical or other 
remedial care provided by licensed practitioners, defined at 42 CFR 
440.60. Habilitative services can also be provided under the 1915(i) 
State Plan Home and Community Based Services pursuant to the Deficit 
Reduction Act of 2005. In the late 1980s, the Congress responded to 
State concerns about disallowances for habilitation services provided 
under the State's rehabilitative services benefit by passing section 
6411(g) of the OBRA 89. This provision prohibited us from taking 
adverse actions against States with approved habilitation provisions 
pending the issuance of a regulation that ``specifies types of day 
habilitation services that a State may cover under paragraphs (9) 
[clinic services] or (13) [rehabilitative services] of section 1905(a) 
of the Act on behalf of persons with mental retardation or with related 
conditions.'' Accordingly, this regulation would specify that all such 
habilitation services would not be covered under sections 1905(a)(9) or 
1905(a)(13) of the Act. If this regulation is issued in final form, the 
protections provided to certain States by section 6411(g) of OBRA 89 
for day habilitation services will no longer be in force. We intend to 
provide for a delayed compliance date so that States will have a 
transition period of the lesser of 2 years or 1 year after the close of 
the first regular session of the State legislature that begins after 
this regulation becomes final before we will take enforcement action. 
This transition period will permit States an opportunity to transfer 
coverage of habilitation services from the rehabilitation option into 
another appropriate Medicaid authority. We are available to States as 
needed for technical assistance during this transition period.
    In Sec.  441.45(b)(3), we propose to provide that rehabilitative 
services would not include recreational and social activities that are 
not specifically focused on the improvement of physical or mental 
health impairment and achievement of a specific rehabilitative goal 
specified in the rehabilitation plan, and provided by a Medicaid 
qualified provider recognized under State law. We would also specify in 
this provision that rehabilitative services would not include personal 
care services; transportation; vocational and prevocational services; 
or patient education not related to the improvement of physical or 
mental health impairment and achievement of a specific rehabilitative 
goal specified in the rehabilitation plan. The first two of these 
services may be otherwise covered under the State plan. But these 
services are not primarily focused on rehabilitation, and thus do not 
meet the definition of medical or remedial services for rehabilitative 
purposes that would be contained in Sec.  440.130(d)(1).
    It is possible that some recreational or social activities are 
reimbursable as rehabilitative services if they are provided for the 
purpose allowed under the benefit and meet all the requirements 
governing rehabilitative services. For example, in one instance the 
activity of throwing a ball to an individual and having her/him throw 
it back, may be a recreational activity. In another instance, the 
activity may be part of a program of physical therapy that is provided 
by, or under the direction of, a qualified therapist for the purpose of 
restoring motor skills and balance in an individual who has suffered a 
stroke. Likewise, for an individual suffering from mental illness, what 
may appear to be a social activity may in fact be addressing the 
rehabilitation goal of social skills development as identified in the 
rehabilitation plan. The service would need to be specifically related 
to an identified rehabilitative goal as documented in the 
rehabilitation plan with specific time-limited treatment goals and 
outcomes. The rehabilitative service would further need to be provided 
by a qualified provider, be documented in the case record, and meet all 
requirements of this proposed regulation.
    When personal care services are provided during the course of the 
provision of a rehabilitative service, they are an incidental activity 
and separate payment may not be made for the performance of the 
incidental activity. For example, an individual recovering from the 
effects of a stroke may receive occupational therapy services from a 
qualified occupational therapy provider under the rehabilitation option 
to regain the capacity to feed himself or herself. If during the course 
of those services the individual's clothing becomes soiled and the 
therapist assists the individual with changing his or her clothing, no 
separate payment may be made for assisting the individual with dressing 
under the rehabilitation option. However, FFP may be available for 
optional State plan personal care services under Sec.  440.167 if 
provided by an enrolled, qualified personal care services provider.
    Similarly, transportation is not within the scope of the definition 
of rehabilitative services proposed by this regulation since the 
transportation service itself does not result in the maximum reduction 
of a physical or mental disability and restoration of the individual to 
the best possible functional level. However, transportation is a 
Medicaid covered service and may be billed separately as a medical 
assistance service under Sec.  440.170, if provided by an enrolled, 
qualified provider, or may be provided under the Medicaid program as an 
administrative activity necessary for the proper and efficient 
administration of the State's Medicaid program.
    Generally, vocational services are those that teach specific skills 
required by an individual to perform tasks associated with performing a 
job. Prevocational services address underlying habilitative goals that 
are associated with performing compensated work. To the extent that the 
primary purpose of these services is to help individuals acquire a 
specific job skill, and are not provided for the purpose of reducing 
disability and restoring a person to a previous functional level, they 
would not be construed as covered rehabilitative services. For example, 
teaching an individual to cook a meal to train for a job as a chef 
would not be covered, whereas, teaching an individual to cook in order 
to re-establish the use of her or his hands or to restore living skills 
may be coverable. While it may be possible for Medicaid to cover 
prevocational services when provided under the section 1915(c) of the 
Act, home and community based services waiver programs, funding for 
vocational services rests with other, non-Medicaid Federal and State 
funding sources.
    Similarly, the purpose of patient education is one important 
determinant to whether the activity is a rehabilitative activity 
covered under Sec.  440.130(d). While taking classes in an academic 
setting may increase an individual's integration into the community and 
enable the individual to learn social skills, the primary purpose of 
this activity is academic enhancement.

[[Page 45207]]

Thus, patient education in an academic setting is not covered under the 
Medicaid rehabilitation option. On the other hand, some patient 
education directed towards a specific rehabilitative therapy service 
may be provided for the purpose of equipping the individual with 
specific skills that will decrease disability and restore the 
individual to a previous functioning level. For example, an individual 
with a mental disorder that manifests with behavioral difficulties may 
need anger management training to restore his or her ability to 
interact appropriately with others. These services may be covered under 
the rehabilitation option if all of the requirements of this regulation 
are met.
    In Sec.  441.45(b)(4), we propose to exclude payment for services, 
including services that are rehabilitative services that are provided 
to inmates living in the secure custody of law enforcement and residing 
in a public institution. An individual is considered to be living in 
secure custody if serving time for a criminal offense in, or confined 
involuntarily to, State or Federal prisons, local jails, detention 
facilities, or other penal facilities. A facility is a public 
institution when it is under the responsibility of a governmental unit 
or over which a governmental unit exercises administrative control. 
Rehabilitative services could be reimbursed on behalf of Medicaid-
eligible individuals paroled, on probation, on home release, in foster 
care, in a group home, or other community placement, that are not part 
of the public institution system, when the services are identified due 
to a medical condition targeted under the State's Plan, are not used in 
the administration of other non-medical programs.
    We also propose to exclude payment for services that are provided 
to residents of an institution for mental disease (IMD), including 
residents of a community residential treatment facility of over 16 
beds, that is primarily engaged in providing diagnosis, treatment, or 
care of persons with mental illness, and that does not meet the 
requirements at Sec.  440.160. It appears that in the past, certain 
States may have provided services under the rehabilitation option to 
these individuals. Our proposed exclusion of FFP for rehabilitative 
services provided to these populations is consistent with the statutory 
requirements in paragraphs (A) and (B) following section 1905(a)(28) of 
the Act. The statute indicates that ``except as otherwise provided in 
paragraph (16), such term [medical assistance] does not include--(A) 
Any such payments with respect to care or services for any individual 
who is an inmate of a public institution; or (B) any such payments with 
respect to care or services for any individual who has not attained 65 
years and who is a patient in an IMD.'' Section 1905(a)(16) of the Act 
defines as ``medical assistance'' ``* * * inpatient psychiatric 
hospital services for individuals under age 21 * * *''. The Secretary 
has defined the term ``inpatient psychiatric hospital services for 
individuals under age 21'' in regulations at Sec.  440.160 to include 
``a psychiatric facility which is accredited by the Joint Commission on 
Accreditation of Healthcare Organizations, the Council on Accreditation 
of Services for Families and Children, the Commission on Accreditation 
of Rehabilitation Facilities, or by any other accrediting organization, 
with comparable standards, that is recognized by the State.'' Thus, the 
term ``inpatient psychiatric hospital services for individuals under 
age 21'' includes services furnished in accredited children's 
psychiatric residential treatment facilities that are not hospitals. 
The rehabilitative services that are provided by the psychiatric 
hospital or accredited psychiatric residential treatment facility 
(PRTF) providing inpatient psychiatric services for individuals under 
age 21 to its residents would be reimbursed under the benefit for 
inpatient psychiatric services for individuals under age 21 (often 
referred to as the ``psych under 21'' benefit), rather than under the 
rehabilitative services benefit.
    In Sec.  441.45(b)(6), we propose to exclude expenditures for room 
and board from payment under the rehabilitative services option. While 
rehabilitative services may be furnished in a residential setting that 
is not an IMD, the benefit provided by section 1905(a)(13) of the Act 
is primarily intended for community based services. Thus, when 
rehabilitative services are provided in a residential setting, such as 
in a residential substance abuse treatment facility of less than 17 
beds, delivered by qualified providers, only the costs of the specific 
rehabilitative services will be covered.
    In Sec.  441.45(b)(7), we propose to preclude payment for services 
furnished for the rehabilitation of an individual who is not Medicaid 
eligible. This provision reinforces basic program requirements found in 
section 1905(a) of the Act that require medical assistance to be 
furnished only to eligible individuals. An ``eligible individual'' is a 
person who is eligible for Medicaid and requires rehabilitative 
services as defined in the Medicaid State plan at the time the services 
are furnished.
    The provision of rehabilitative services to non-Medicaid eligible 
individuals cannot be covered if it relates directly to the non-
eligible individual's care and treatment. However, effective 
rehabilitation of eligible individuals may require some contact with 
non-eligible individuals. For instance, in developing the 
rehabilitation plan for a child with a mental illness, it may be 
appropriate to include the child's parents, who are not eligible for 
Medicaid, in the process. In addition, counseling sessions for the 
treatment of the child might include the parents and other non-eligible 
family members. In all cases, in order for a service to be a Medicaid 
coverable service, it must be provided to, or directed exclusively 
toward, the treatment of the Medicaid eligible individual.
    Thus, contacts with family members for the purpose of treating the 
Medicaid eligible individual may be covered by Medicaid. If these other 
family members or other individuals also are Medicaid eligible and in 
need of the services covered under the State's rehabilitation plan, 
Medicaid could pay for the services furnished to them.
    In Sec.  441.45(b)(8), we propose that FFP would only be available 
for claims for services provided to a specific individual that are 
documented in an individual's case record.
    We will work with States to implement this rule in a timely fashion 
using existing monitoring and compliance authority.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.

[[Page 45208]]

    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements:

Section 440.130 Diagnostic, Screening, Preventative, and Rehabilitative 
Services

    This section outlines the scope of service for rehabilitative 
services provided by States. The services discussed in this section 
must be provided under a written rehabilitation plan as defined in 
Sec.  440.130(d)(1)(v). Specifically, Sec.  440.130(d)(3) states that 
the written rehabilitation plan must meet the following requirements:
    (i) Be based on a comprehensive assessment of an individual's 
rehabilitation needs including diagnoses and presence of a functional 
impairment in daily living.
    (ii) Be developed by a qualified provider(s) working within the 
State scope of practice act with input from the individual, 
individual's family, the individual's authorized health care decision 
maker and/or persons of the individual's choosing.
    (iii) Ensure the active participation of the individual, 
individual's family, the individual's authorized health care decision 
maker and/or persons of the individual's choosing in the development, 
review, and modification of these goals and services.
    (iv) Specify the individual's rehabilitation goals to be achieved 
including recovery goals for persons with mental illnesses or substance 
related disorders.
    (v) Specify the physical impairment, mental health and/or substance 
related disorder that is being addressed.
    (vi) Identify the medical and remedial services intended to reduce 
the identified physical impairment, mental health and/or substance 
related disorder.
    (vii) Identify the methods that will be used to deliver services.
    (viii)Specify the anticipated outcomes.
    (ix) Indicate the frequency and duration of the services.
    (x) Be signed by the individual responsible for developing the 
rehabilitation plan.
    (xi) Indicate the anticipated provider(s) of the service(s) and the 
extent to which the services may be available from alternate 
provider(s) of the same service.
    (xii) Specify a timeline for reevaluation of the plan, based on the 
individual's assessed needs and anticipated progress, but not longer 
than one year.
    (xiii) Be reevaluated with the involvement of the beneficiary, 
family or other responsible individuals.
    (xiv) Be reevaluated including a review of whether the goals set 
forth in the plan are being met and whether each of the services 
described in the plan has contributed to meeting the stated goals. If 
it is determined that there has been no measurable reduction of 
disability and restoration of functional level, any new plan would need 
to pursue a different rehabilitation strategy including revision of the 
rehabilitative goals, services and/or methods.
    (xv) Document that the individual or representative participated in 
the development of the plan, signed the plan, and received a copy of 
the rehabilitation plan.
    (xvi) Document that the services have been determined to be 
rehabilitative services consistent with the regulatory definition.
    The burden associated with the requirements in this section is the 
time and effort put forth by the provider to gather the information and 
develop a specific written rehabilitation plan. While these 
requirements are subject to the PRA, we believe they meet the exemption 
requirements for the PRA found at 5 CFR 1320.3(b)(2), and as such, the 
burden associated with these requirements is exempt.

Section 441.45 Rehabilitative Services

    Section 441.45(a)(3) requires that providers maintain case records 
that contain a copy of the rehabilitation plan for all individuals.
    The burden associated with these requirements is the time and 
effort put forth by the provider to maintain the case records. While 
these requirements are subject to the PRA, we believe they meet the 
exemption requirements for the PRA found at 5 CFR 1320.3(b)(2), and as 
such, the burden associated with these requirements is exempt.
    If you comment on these information collection and recordkeeping 
requirements, please mail copies directly to the following:

Centers for Medicare & Medicaid Services, Office of Strategic 
Operations and Regulatory Affairs, Regulations Development Group, Attn: 
Melissa Musotto [CMS-2261-P], Room C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850; and
Office of Information and Regulatory Affairs, Office of Management and 
Budget, Room 10235, New Executive Office Building, Washington, DC 
20503, Attn: Katherine Astrich, CMS Desk Officer, [CMS-1321-P], 
katherine_astrich@omb.eop.gov. Fax (202) 395-6974.

IV. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a final document, we will respond to the 
comments in that document.

V. Regulatory Impact Analysis

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) directs agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This is a major rule because of the size of the anticipated reduction 
in Federal financial participation that is estimated to have an 
economically significant effect of more than $100 million in each of 
the Federal fiscal years 2008 through 2012.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
$6.5 million to $31.5 million in any 1 year. The Secretary certifies 
that this major rule would not have a direct impact on providers of 
rehabilitative services that furnish services pursuant to section 
1905(a)(13) of the Act. The rule would directly affect states and we do 
not know nor can we predict the manner in which states would adjust or 
respond to the provisions of this rule. CMS is unable to determine the

[[Page 45209]]

percentage of providers of rehabilitative services that are considered 
small businesses according to the Small Business Administration's size 
standards with total revenues of $6.5 million to $31.5 million or less 
in any 1 year. Individuals and States are not included in the 
definition of a small entity. In addition, section 1102(b) of the Act 
requires us to prepare a regulatory impact analysis if a rule may have 
a significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 603 (proposed documents) of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicaid 
payment regulations and has fewer than 100 beds. The Secretary 
certifies that this major rule would not have a direct impact on small 
rural hospitals. The rule would directly affect states and we do not 
know nor can we predict the manner in which states would adjust or 
respond to the provisions of this rule.
    Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. Since this rule would 
not mandate spending in any 1 year of $120 million or more, the 
requirements of the UMRA are not applicable.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this rule would not impose any costs on State or 
local governments, preempt State law, or otherwise have Federalism 
implications, the requirements of E.O. 13132 are not applicable.

B. Anticipated Effects

    FFP will be available for rehabilitative services for treatment of 
physical, mental health, or substance-related disorder rehabilitation 
treatment if the State elects to provide those services through the 
approved State plan. Individuals retain the right to select among 
qualified providers of rehabilitative services. However, because FFP 
will be excluded for rehabilitative services that are included in other 
Federal, State and local programs, it is estimated that Federal 
Medicaid spending on rehabilitative services would be reduced by 
approximately $180 million in FY 2008 and would be reduced by $2.2 
billion between FY 2008 and FY 2012. This reduction in spending is 
expected to occur because FFP for rehabilitative services would no 
longer be paid to inappropriate other third parties or other Federal, 
State, or local programs.
    The estimated impact on Federal Medicaid spending was calculated 
starting with an estimate of rehabilitative service spending that may 
be subject to this rule. This estimate was developed after consulting 
with several experts, as data for rehabilitative services, particularly 
as it would apply to this rule, is limited. Given this estimate, the 
actuaries discounted this amount to account for four factors: (1) The 
ability of CMS to effectively identify the rehabilitative services 
spending that would be subject to this proposal; (2) the effectiveness 
of CMS's efforts to implement this rule and the potential that some 
identified rehabilitative services spending may still be permissible 
under the rule; (3) the change in States' plans that may regain some of 
the lost Federal funding; and (4) the length of time for CMS to fully 
implement the rule and review all States' plans.
    The actual impact to the Federal Medicaid program may be different 
than the estimate to the extent that the estimate of the amount of 
rehabilitative services spending subject to this rule is different than 
the actual amount and to the extent that the effectiveness of the rule 
is greater than or less than assumed. Because a comprehensive review of 
these rehabilitative services had not been conducted at the time of 
this estimate and because we do not routinely collect data on spending 
for rehabilitative services, particularly as it relates to this rule, 
there is a significantly wide range of possible impacts.
    Thus, we are unable to determine what fiscal impact the publication 
of this rule would have on consumers, individual industries, Federal, 
State, or local government agencies or geographic regions under 
Executive Order 12866. We invite public comment on the potential impact 
of the rule.

C. Alternatives Considered

    This proposed rule would amend the definition of rehabilitative 
services to provide for important individual protections and to clarify 
that Medicaid rehabilitative services must be coordinated with but do 
not include services furnished by other programs that are focused on 
social or educational development goals and available as part of other 
services or programs. We believe this proposed rule is the best 
approach to clarifying the covered rehabilitative services, and also 
because all stakeholders will have the opportunity to comment on the 
proposed rule. These comments will then be considered before the final 
document is published.
    In considering regulatory options, we considered requiring States 
to license all providers as an alternative to only requiring that 
providers to be qualified as defined by the State. However we believe 
that giving States the flexibility to determine how providers are 
credentialed allows for necessary flexibility to States to consider a 
wide range of provider types necessary to cover a variety of 
rehabilitation services. We believe this flexibility will result in 
decreases in administrative and service costs.
    We also considered restricting the rule to only include participant 
protections but not explicitly prohibiting FFP for services that are 
intrinsic elements of other non-Medicaid programs. Had we not 
prohibited FFP for services that are intrinsic elements of other 
programs, States would continue to provide non-Medicaid services to 
participants, the result would have been a less efficient use of 
Medicaid funding because increased Medicaid spending would not result 
in any increase in services to beneficiaries. Instead, increased 
Medicaid funding would have simply replaced other sources of funding.

D. Accounting Statement and Table

    As required by OMB Circular A-4 (available at https://
www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in the table below, we 
have prepared an accounting statement showing the classification of the 
savings associated with the provisions of this proposed rule. This 
table provides our best estimate of the savings to the Federal 
Government as a result of the changes presented in this proposed rule 
that Federal Medicaid spending on rehabilitative services would be 
reduced by approximately $180 million in FY 2008 and would be reduced 
by $2.24 billion between FY 2008 and FY 2012. All savings are 
classified as transfers from the Federal Government to State 
Government. These transfers represent a reduction in the federal share 
of Medicaid spending once the rule goes into effect, as it would limit 
States from claiming Medicaid reimbursement for

[[Page 45210]]

rehabilitation services that could be covered through other programs.

               Accounting Statement: Classification of Estimated Savings, From FY 2008 to FY 2012
                                                  [In millions]
----------------------------------------------------------------------------------------------------------------
                                                      Primary                     Units discount
                    Category                         estimates      Year dollar        rate       Period covered
----------------------------------------------------------------------------------------------------------------
Federal Annualized Monetized ($millions/year)...           443.4            2008              7%       2008-2012
                                                  ..............  ..............  ..............  ..............
                                                           441.6            2008              3%       2008-2012
                                                  ..............  ..............  ..............  ..............
                                                             448            2008              0%       2008-2012
                                                 ---------------------------------------------------------------
From Whom to Whom?..............................              Federal Government to State Government
----------------------------------------------------------------------------------------------------------------

    Column 1: Category--Contains the description of the different 
impacts of the rule; it could include monetized, quantitative but not 
monetized, or qualitative but not quantitative or monetized impacts; it 
also may contain unit of measurement (such as, dollars). In this case, 
the only impact is the Federal annualized monetized impact of the rule.
    Column 2: Primary Estimate--Contains the quantitative or 
qualitative impact of the rule for the respective category of impact. 
Monetized amounts are generally shown in real dollar terms. In this 
case, the federalized annualized monetized primary estimate represents 
the equivalent amount that, if paid (saved) each year over the period 
covered, would result in the same net present value of the stream of 
costs (savings) estimated over the period covered.
    Column 3: Year Dollar--Contains the year to which dollars are 
normalized; that is, the first year that dollars are discounted in the 
estimate.
    Column 4: Unit Discount Rate--Contains the discount rate or rates 
used to estimate the annualized monetized impacts. In this case, three 
rates are used: 7 percent; 3 percent; 0 percent.
    Column 5: Period Covered--Contains the years for which the estimate 
was made.
    Rows: The rows contain the estimates associated with each specific 
impact and each discount rate
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