Medicaid Program; Optional State Plan Case Management Services, 68077-68093 [07-5903]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 72, Number 232 (Tuesday, December 4, 2007)]
[Rules and Regulations]
[Pages 68077-68093]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-5903]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 431, 440, and 441

[CMS-2237-IFC]
RIN 0938-AO50


Medicaid Program; Optional State Plan Case Management Services

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

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment period revises current 
Medicaid regulations to incorporate changes made by section 6052 of the 
Deficit Reduction Act of 2005. In addition, it incorporates provisions 
of the Consolidated Omnibus Budget Reconciliation Act of 1985, the 
Omnibus Budget Reconciliation Act of 1986, the Tax Reform Act of 1986, 
the Omnibus Budget Reconciliation Act of 1987, and the Technical and 
Miscellaneous Revenue Act of 1988, concerning case management and 
targeted case management services. This interim final rule with comment 
period will provide for optional coverage of case management services 
or targeted case management services furnished according to section 
1905(a)(19) and section 1915(g) of the Social Security Act. This 
interim final rule with comment period clarifies the situations in 
which Medicaid will pay for case management activities and also 
clarifies when payment will not be consistent with proper and efficient 
operation of the Medicaid program, and is not available.

DATES: Effective Date: The effective date of this rule is March 3, 
2008.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on February 4, 2008.

ADDRESSES: In commenting, please refer to file code CMS-2237-IFC. 
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 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-2237-IFC, P.O. Box 8016, Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments (one 
original and two copies) to the following address ONLY: Centers for 
Medicare & Medicaid Services, Department of Health and Human Services, 
Attention: CMS-2237-IFC, 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) 786-7195 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.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Jean Close, (410) 786-5831.

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-2237-IFC and the specific ``issue 
identifier'' that precedes the section on which you choose to comment.

[[Page 68078]]

    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: 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 also will 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

    [If you choose to comment on issues in this section, please include 
the caption ``Background'' at the beginning of your comments.]
    Case management is commonly understood to be an activity that 
assists individuals in gaining access to necessary care and services 
appropriate to their needs. Many individuals, because of their age, 
condition, illness, living arrangement, or other factors, may benefit 
from receiving direct assistance in gaining access to services. In the 
context of this regulation, it is the individual's access to care and 
services that is the subject of this management--not the individual. 
Because case management has been subject to so many different 
interpretations over the years, many Medicaid agencies now refer to 
case management as ``care management,'' ``service coordination,'' 
``care coordination'' or some other term related to planning and 
coordinating access to health care and other services on behalf of an 
individual. Because section 1915 of the Social Security Act (the Act) 
uses the term ``case management,'' we will use this term throughout 
this document.
    In 1981, the Congress amended the Act to authorize Medicaid 
coverage of case management services under two provisions. Under 
section 1915(b) of the Act, States were authorized to develop primary 
care case management systems in order to direct individuals to 
appropriate Medicaid services. Under section 1915(c) of the Act, States 
were authorized to furnish case management as a distinct service under 
home and community-based services waivers. Case management is widely 
used under both authorities because of its value in ensuring that 
individuals receiving Medicaid benefits are assisted in making 
necessary decisions about the care they need and in locating service 
providers.
    The regulations set forth in this interim final regulation 
implement in 42 CFR parts 431, 440, and 441 the case management 
services provisions authorized by sections 1905(a)(19) of the Act and 
1915(g) of the Act. The definition of case management in the Deficit 
Reduction Act was effective on January 1, 2006. The provisions of this 
rule are effective 90 days after the date of publication of this rule.

II. Legislative History

A. Changes Made by the Consolidated Omnibus Budget Reconciliation Act 
of 1985

    Section 9508 of the Consolidated Omnibus Budget Reconciliation Act 
of 1985 (COBRA) (Pub. L. 99-272), enacted on April 7, 1986, amended the 
Act concerning the provision of targeted case management services. 
Specifically, section 9508 of COBRA added a new section 1915(g) to the 
Act that--
     Provided that a State may elect to furnish case 
management, targeted to specified groups, as a service covered under 
the State plan;
     Defined case management services as services that will 
assist individuals, eligible under the State plan, in gaining access to 
needed medical, social, educational, and other services;
     Provided an exception to the statewideness requirement of 
section 1902(a)(1) of the Act by allowing a State to limit its 
provision of case management services to individuals who reside in 
particular geographic areas or political subdivisions within the State;
     Provided an exception to the comparability requirement of 
section 1902(a)(10)(B) of the Act by allowing a State to furnish case 
management services to any specific group (targeted case management); 
and
     Required that there be no restriction on free choice of 
providers of case management services that would violate section 
1902(a)(23) of the Act.

B. Changes Made by the Omnibus Budget Reconciliation Act of 1986

    Section 9411(b) of the Omnibus Budget Reconciliation Act of 1986 
Pub. L. 99-509, enacted on October 21, 1986, amended section 1915(g) of 
the Act by clarifying that a State may limit the provision of case 
management services to individuals with acquired immune deficiency 
syndrome (AIDS), AIDS-related conditions, or with either. Section 
1915(g) of the Act also was amended to clarify that a State may limit 
case management services to individuals with chronic mental illness.

C. Changes Made by the Tax Reform Act of 1986

    Section 1895(c)(3) of the Tax Reform Act of 1986 (Pub. L. 99-514), 
enacted on October 22, 1986, amended the statute to permit States to 
furnish non-targeted case management services under a State Medicaid 
plan. This law amended section 1905(a) of the Act by adding a new 
paragraph (19) that included case management services, as defined in 
section 1915(g)(2) of the Act, in the list of optional services a State 
may include in its Medicaid plan (the existing paragraph (19) was 
redesignated as paragraph (20)).

D. Changes Made by the Omnibus Budget Reconciliation Act of 1987

    Section 4118(i) of the Omnibus Budget Reconciliation Act of 1987 
(OBRA '87) Pub. L. 100-203, enacted on December 22, 1987, amended 
section 1915(g)(1) of the Act to allow States to limit the providers of 
case management services available for individuals with developmental 
disabilities or chronic mental illness to ensure that the case managers 
for those individuals are capable of ensuring that those individuals 
receive needed services.

E. Changes Made by the Technical and Miscellaneous Revenue Act of 1988

    Section 8435 of the Technical and Miscellaneous Revenue Act of 1988 
(Pub. L. 100-647), enacted on November 10, 1988, prohibited the 
Secretary from denying approval of a State plan amendment to provide 
case management services on the basis that a State is required to 
provide those services under State law or on the basis that the State 
had paid or is paying for those services from other non-Federal revenue 
sources before or after April 7, 1986. This provision also specified 
that the Secretary was not required to make payment under Medicaid for 
case management services that are furnished without charge to the users 
of such services.

F. Changes Made by the Deficit Reduction Act of 2005

    Section 6052 of the Deficit Reduction Act (DRA) of 2005 (Pub. L. 
109-171), enacted on February 8, 2006, addresses Reforms of Case 
Management and Targeted Case Management under Medicaid. This section 
redefined the

[[Page 68079]]

term ``case management services'' to mean services that will ``assist 
individuals eligible under the State plan in gaining access to needed 
medical, social, educational, and other services'' and to include the 
following components:
     Assessment of an eligible individual to determine service 
needs, including activities that focus on needs identification, to 
determine the need for any medical, educational, social, or other 
services. These activities are defined to include the following:

--Taking client history.
--Identifying the needs of the individual, and completing related 
documentation.
--Gathering information from other sources, such as family members, 
medical providers, social workers, and educators, if necessary, to form 
a complete assessment of the eligible individual.

     Development of a specific care plan based on the 
information collected through the assessment described above. The care 
plan specifies the goals of providing case management to the eligible 
individual and actions to address the medical, social, educational, and 
other services needed by the eligible individual, including activities 
such as ensuring the active participation of the eligible individual 
and working with the individual (or the individual's authorized health 
care decision maker) and others to develop such goals and identify a 
course of action to respond to the assessed needs of the eligible 
individual.
     Referral and related activities to help an individual 
obtain needed services, including activities that help link the 
eligible individual with medical, social, educational providers, or 
other programs and services that are capable of providing needed 
services, such as making referrals to providers for needed services and 
scheduling appointments for the individual.
     Monitoring and follow-up activities, including activities 
and contacts that are necessary to ensure that the care plan is 
effectively implemented and adequately addresses the needs of the 
eligible individual. Monitoring and follow-up activities may be with 
the individual, family members, providers, or other entities. These 
activities may be conducted as frequently as necessary to help 
determine such matters as:

--Whether services are being furnished in accordance with the 
individual's care plan.
--Whether the services in the care plan are adequate to meet the needs 
of the individual.
--Whether there are changes in the needs or status of the individual.

If there are changes in the needs or status of the individual, 
monitoring and follow-up activities include making necessary 
adjustments in the care plan and service arrangements with providers.
    Section 6052 of the DRA also clarifies that the term ``case 
management'' does not include the ``direct delivery of an underlying 
medical, educational, social, or other service to which an eligible 
individual has been referred'' by adding clause section 
1915(g)(2)(A)(iii) of the Act. In addition, with respect to foster 
care, the statute gives examples of some types of activities that are 
not covered. With respect to the direct delivery of foster care 
services, the following activities are not considered to qualify as 
components of Medicaid case management services:
     Research gathering and completion of documentation 
required by the foster care program;
     Assessing adoption placements;
     Recruiting or interviewing potential foster care parents;
     Serving legal papers;
     Home investigations;
     Providing transportation;
     Administering foster care subsidies; or
     Making placement arrangements.
    The DRA also added a new section 1915(g)(2)(B) to the Act, defining 
the term ``targeted case management services'' as case management 
services that are furnished without regard to the requirements of 
section 1902(a)(1) of the Act, regarding statewide availability of 
services, and section 1902(a)(10)(B) of the Act, regarding 
comparability of services. Although the ability to provide these 
services without regard to section 1902(a)(1) of the Act and section 
1902(a)(10)(B) of the Act is not new, this paragraph clarifies that the 
State can ``target'' case management services to specific classes of 
individuals, or to individuals who reside in specified areas of the 
State (or both).
    Section 6052 of the DRA also added a new section 1915(g)(3) to the 
Act, to clarify that when a case manager contacts individuals who are 
not eligible for Medicaid, or who are Medicaid eligible but not 
included in the eligible target population in the State, that contact 
may qualify as Medicaid case management services. The contact is 
considered an allowable case management activity when the purpose of 
the contact is directly related to the management of the eligible 
individual's care. It is not considered an allowable case management 
activity if those contacts relate directly to the identification and 
management of the non-eligible or non-targeted individual's needs and 
care.
    Section 6052 of the DRA added a new section 1915(g)(4) to the Act 
to discuss the circumstances under which Federal financial 
participation (FFP) is available for case management or targeted case 
management services. With a few exceptions described in the following 
paragraph, in accordance with section 1902(a)(25) of the Act, FFP only 
is available for the cost of case management or targeted case 
management services if there are no other third parties liable to pay 
for those services, including as reimbursement under a medical, social, 
educational, or other program. When the costs of any part of case 
management or targeted case management services are reimbursable under 
another federally funded program, a State is directed to allocate the 
costs between the other program(s) and Medicaid in accordance with OMB 
Circular (No. A-87) (or any related or successor guidance or 
regulations regarding allocation of costs among Federally funded 
programs) under an approved cost allocation program.
    It should be noted that per section 1903(c) of the Act, nothing in 
this rule would prohibit or restrict payment for medical assistance for 
covered Medicaid services furnished to a child with a disability 
because such services are included in the child's Individualized 
Education Program (IEP) or Individual Family Service Plan (IFSP). 
Likewise, payment for those services that are included in the IEP or 
IFSP would not be available when those services are not covered 
Medicaid services.
    Section 6052 of the DRA also clarified, in a new section 1915(g)(5) 
of the Act, that nothing in section 1915(g) of the Act shall be 
construed as affecting the application of rules with respect to third 
party liability under programs or activities carried out under title 
XXVI of the Public Health Service Act (the HIV Health Care Services 
Program) or the Indian Health Service.
    This rule implements in Federal regulations the statutory 
provisions permitting coverage of case management and targeted case 
management as optional services under a State Medicaid plan, in 
accordance with sections 1905(a)(19) and 1915(g) of the Act, as amended 
by the DRA, and all other relevant statutory provisions.

III. Provisions of the Interim Final Rule

    [If you choose to comment on issues in this section, please 
indicate the caption ``Provisions of the Interim Final

[[Page 68080]]

Rule'' at the beginning of your comments.]
    To incorporate the policies and implement the statutory provisions 
described above, we are making the following revisions to 42 CFR 
chapter IV, subchapter C, Medical Assistance Programs.

A. Freedom of Choice Exception To Permit Limitation of Case Management 
Providers for Certain Target Groups--Sec.  431.51(c)

    While the freedom of choice requirement is beneficial to the 
Medicaid population as a whole, in OBRA '87, the Congress recognized 
that this requirement might not adequately protect the interests of 
persons with a developmental disability or chronic mental illness. In 
several States (or political subdivision), a particular agency may be 
designated under State law or regulation to serve as the exclusive 
source of case management services with respect to these populations. 
Therefore, section 4118(i) of OBRA '87 amended section 1915(g)(1) of 
the Act to provide States with some latitude to restrict the 
availability of case management providers to these targeted groups to 
assure that case management providers are capable of ensuring that 
Medicaid eligible individuals will receive needed services.
    Consistent with section 1915(g) of the Act, as amended by section 
4118(i) of OBRA '87, when a target group consists solely of individuals 
with developmental disabilities or chronic mental illness, including a 
subgroup of those individuals (for example, children with mental 
illness), States may limit provider participation to specific persons 
or entities by setting forth qualifying criteria that assure the 
ability of the case managers to connect individuals with needed 
services. We note, however, that a State's decision to restrict case 
managers for these populations does not impinge on targeted 
individuals' rights to choose freely among those individuals or 
entities that the State has found qualified and eligible to provide 
targeted case management services. Absent a waiver to the contrary, 
those individuals also maintain their right to choose qualified 
providers of all other Medicaid services they receive.
    We are amending Sec.  431.51 by revising paragraphs (c)(2) and 
(c)(3) and adding a new paragraph (c)(4) to afford States the option of 
limiting providers of case management services available to furnish 
services defined in Sec.  440.169 for targeted groups that consist 
solely of individuals with developmental disabilities or chronic mental 
illness. This implements the statutory provisions at section 1915(g)(1) 
of the Act.

B. Statewideness and Comparability Exception to Permitting Targeting--
Sec.  431.54

    While a State can provide case management services under its State 
plan to all Medicaid eligible individuals, it is not required to do so. 
Under section 1915(g)(1) of the Act, a State is not bound by the 
``statewideness'' requirement of section 1902(a)(1) of the Act. (The 
``statewideness'' requirement of section 1902(a)(1) of the Act 
provides, in part, that the provisions of a State plan be in effect in 
all political subdivisions of the State.) Thus, States may limit the 
provision of case management services to any defined location of the 
State (that is, city, county, community, etc.).
    Section 1915(g)(1) of the Act also permits States to target case 
management services to individuals with particular diseases or 
conditions, without regard to the ``comparability'' provision in 
section 1902(a)(10)(B) of the Act. (The ``comparability'' provision 
generally requires States to make Medicaid services available in the 
same amount, duration, and scope to all individuals within the 
categorically needy group or covered medically needy group. The 
comparability provision also requires that the Medicaid services 
available to any individual in a categorically needy group are not less 
in amount, duration, and scope than those Medicaid services available 
to an individual in a medically needy group.) Thus, a State may limit 
case management services to any specific identifiable group, such as 
individuals with human immunodeficiency virus (HIV), acquired immune 
deficiency syndrome (AIDS), AIDS-related conditions, or chronic mental 
illness. A State's flexibility to target case management services to a 
specific group sets these services apart from most other services 
available under the Medicaid program.
    In identifying the groups eligible to receive targeted case 
management services, States are not required to distinguish eligible 
individuals by traditional Medicaid concepts of eligibility groups 
(that is, mandatory categorically needy, optional categorically needy, 
medically needy), although this avenue continues to be available to 
States, should they choose it. Instead, States may target case 
management services by age, type or degree of disability, illness or 
condition, or any other identifiable characteristic or combination of 
characteristics. There is no limit on the number of groups to whom case 
management services may be targeted.
    We note that the exception to the comparability requirement applies 
only to the provision of targeted case management services under 
section 1915(g) of the Act. The comparability requirements of section 
1902(a)(10)(B) of the Act continue to apply to all other Medicaid 
services for which an individual may be eligible, unless these services 
are subject to comparability exceptions in their own right. In other 
words, receipt of case management services does not in any way alter an 
individual's eligibility to receive other services under the State 
plan.
    In Sec.  431.54, we are revising paragraph (a) and adding a new 
paragraph (g) that includes targeted case management services as an 
exception to the comparability requirements in Sec.  440.250 and to the 
statewide operation requirement in Sec.  431.50(b). This implements the 
targeting provisions at section 1915(g)(1) of the Act.

C. Definition of Case Management Services--Sec.  440.169

    Consistent with the provisions of section 1915(g)(2) of the Act, as 
added by the DRA, we will define case management services in Sec.  
440.169(a) generally as services that assist individuals eligible under 
the plan in gaining access to needed medical, social, educational, and 
other services. The intent of case management is to assist the 
individual in gaining access to needed services, consistent with the 
requirements of the law and these regulations. ``Other services'' to 
which an individual eligible under the plan may gain access may include 
services such as housing and transportation.
    In Sec.  440.169(b), we define targeted case management services as 
case management services furnished to particular defined target groups 
or in any defined locations without regard to requirements related to 
statewide provision of services or comparability.
    The integrated medical direction and management of services 
furnished to inpatients in a medical institution already includes case 
management activities. Therefore, including separate coverage for 
institutionalized individuals will in general, result in duplicative 
coverage and payment. Individuals with complex and chronic medical 
needs and individuals transitioning to a community setting after a 
significant period of time in a hospital, nursing facility, or 
intermediate care facility for individuals with mental retardation, 
however,

[[Page 68081]]

require case management that is beyond the scope of work of 
institutional discharge planners. These case management services 
facilitate the process of transitioning individuals from institutional 
care to community services. For example, individuals may require 
assistance locating community services. Thus, services we define as 
case management services for transitioning individuals from medical 
institutions to the community will be included as a separately covered 
case management service.
    In Sec.  440.169(c), we define case management services for the 
transitioning of individuals from institutions to the community. 
Individuals (except individuals ages 22 to 64 who reside in an 
institution for mental diseases (IMD) or individuals who are inmates of 
public institutions) may be considered to be transitioning to the 
community during the last 60 consecutive days (or a shorter period 
specified by the State) of a covered, long-term, institutional stay 
that is 180 consecutive days or longer in duration. For a covered, 
short-term, institutional stay of less than 180 consecutive days, 
individuals may be considered to be transitioning to the community 
during the last 14 days before discharge. We use these time 
requirements to distinguish case management services that are not 
within the scope of discharge planning activities from case management 
required for transitioning individuals with complex, chronic, medical 
needs to the community. As specified in Sec.  441.18(a)(8)(vii)(D) and 
(E), FFP would not be payable until the date that an individual leaves 
the institution, is enrolled with the community case management 
provider, and receiving medically necessary services in a community 
setting.
    In sum, we are defining the case management benefit to include only 
services to individuals who are residing in a community setting or 
transitioning to a community setting following an institutional stay.
    Our proposed exclusion of FFP for case management services or 
targeted case management services provided to individuals under age 65 
who reside in an IMD or to individuals involuntarily living in the 
secure custody of law enforcement, judicial, or penal systems is 
consistent with the statutory requirements in paragraphs (A) and (B) 
following paragraph 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. 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. 
Case management 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, and are not 
used in the administration of other non-medical programs.
    At paragraph (B), following paragraph section 1905(a)(28) of the 
Act, the statute indicates that medical assistance does not include 
``any such payments with respect to care or services for any individual 
who has not attained 65 years of age and who is a patient in an 
institution for mental diseases.'' Paragraph (16) includes in the 
definition of ``medical assistance'' ``* * * inpatient psychiatric 
hospital services for individuals under age 21 * * *''. Section 1905(h) 
of the Act defines ``inpatient psychiatric hospital services'' to 
include inpatient services in inpatient settings other than psychiatric 
hospitals, as specified by the Secretary in regulations. The Secretary 
has specified in regulations at Sec.  440.160 that such settings 
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 hospital services for individuals 
under age 21'' includes services furnished in accredited psychiatric 
residential treatment facilities, currently known as ``PRTFs,'' 
providing inpatient psychiatric services for individuals under age 21 
that are not hospitals.
    However, the statutory wording of the exception to the IMD 
exclusion makes it clear that medical assistance includes payment only 
for inpatient hospital services furnished to residents under age 21 in 
an inpatient psychiatric hospital or, by regulation, to residents under 
age 21 in an accredited PRTF. FFP does not extend to other services 
furnished to individuals under age 21 residing in these settings. 
However, we are clarifying in this rule that FFP is available for 
community case management services to transition an individual 
receiving inpatient psychological services for individuals under age 21 
(authorized under section 1905(a)(16) of the Act), after discharge from 
a medical institution to the community. FFP would not be payable until 
the date that an individual leaves the institution, is enrolled with 
the community case management provider, and receiving medically 
necessary services in a community setting.
    At Sec.  440.169(d), we specify that case management includes the 
following elements specified in section 1915(g)(2)(A)(ii) of the Act:
    1. Assessment and periodic reassessment of an eligible individual 
to determine service needs, including activities that focus on needs 
identification, to determine the need for any medical, educational, 
social, or other services. Such assessment activities include:
     Taking client history.
     Identifying the needs of the individual and completing 
related documentation.
     Gathering information from other sources such as family 
members, medical providers, social workers, and educators, if 
necessary, to form a complete assessment of the eligible individual.
    Because the statute defines case management services as those 
services that will assist individuals eligible under the plan in 
gaining access to needed medical, social, educational, and other 
services, we believe that an assessment of an individual's needs should 
be comprehensive and address all needs of the individual. Thus, we are 
requiring in Sec.  440.169(d)(1) that the assessment be comprehensive 
in order to address all areas of need, the individual's strengths and 
preferences, and consider the individual's physical and social 
environment. Performance of a comprehensive assessment can minimize the 
need for an individual to be covered under multiple case management 
plans and have multiple case managers, and can reduce the likelihood of 
service duplication and inefficiencies.
    Assessment includes periodic reassessment to determine whether an 
individual's needs and/or preferences have changed. At this time, we 
will not put forth Federal standards for the frequency of reassessment, 
but recommend that face-to-face reassessments be conducted at least

[[Page 68082]]

annually or more frequently if changes occur in an individual's 
condition.
    2. Development and periodic revision of a specific care plan based 
on the information collected through an assessment or reassessment, 
that specifies the goals and actions to address the medical, social, 
educational, and other services needed by the eligible individual, 
including activities such as ensuring the active participation of the 
eligible individual and working with the individual (or the 
individual's authorized health care decision maker) and others to 
develop those goals and identify a course of action to respond to the 
assessed needs of the eligible individual.
    Because the assessment of an individual's needs must be 
comprehensive, the care plan also must be comprehensive to address 
these needs. However, while the assessment and care plan must be 
comprehensive and address all of the individual's needs, an individual 
may decline to receive services in the care plan to address these 
needs. Section 1902(a)(23) of the Act requires that recipients have 
free choice of qualified providers. This means that the individual 
cannot be required to receive services from a particular provider--or 
from any provider--if the individual chooses. If an individual declines 
services listed in the care plan, this must be documented in the 
individual's case records.
     Referral and related activities (such as scheduling 
appointments for the individual) to help an individual obtain needed 
services, including activities that help link eligible individuals with 
medical, social, educational providers, or other programs and services 
that are capable of providing needed services to address identified 
needs and achieve goals specified in the care plan.
     Referral and related activities do not include providing 
transportation to the service to which the individual is referred, 
escorting the individual to the service, or providing child care so 
that an individual may access the service. The case management referral 
activity is completed once the referral and linkage has been made. It 
does not include the direct services, program, or activity to which the 
individual is linked.
     Monitoring and follow-up activities, including activities 
and contacts that are necessary to ensure that the care plan is 
effectively implemented and adequately addresses the needs of the 
eligible individual. Monitoring and follow-up activities may be with 
the individual, family members, providers, or other entities or 
individuals. These activities may be conducted as frequently as 
necessary to help determine whether:

--The services are being furnished in accordance with the individual's 
care plan.
--The services in the care plan are adequate to meet the needs of the 
individual.
--There are changes in the needs or status of the individual. If there 
are changes in the needs or status of the individual, monitoring and 
follow-up activities include making necessary adjustments in the care 
plan and service arrangements with providers.

    Monitoring may involve either face-to-face or telephone contact. We 
are requiring that monitoring occur at a frequency established by the 
State, but no less frequently than annually.
    In the course of providing case management services, case managers 
can use a person-centered approach. A person-centered approach is a 
process used to develop, implement, and manage a care plan that 
attempts to fulfill the objectives and personal preferences of the 
individual or the legal representative of that individual. The process 
focuses on the person rather than the system; directly involves the 
person (or the legal representative of that individual) in the plan 
development, all aspects of implementation and management; and is 
tailored to meet individualized needs. Varying levels of person-
centered planning, including choice not to participate, may be selected 
by the individual (or by the individual's legal representative). The 
individual or legal representative can participate throughout all 
components of case management and direct who may participate in the 
care plan development process along with the case manager and the 
individual or the individual's legal representative.
    Case management services must be provided by a single Medicaid case 
management provider. This provision is consistent with the requirement 
that the case management includes a comprehensive assessment and care 
plan. Thus, when an individual could be served under more than one 
targeted case management plan amendment because he falls within the 
scope of more than one target group (for example when the individual 
has both mental retardation and a mental illness and the State has 
target groups for both conditions), a decision must be made concerning 
the appropriate target group so that the individual will have one case 
management provider. That provider will be responsible for ensuring 
that the comprehensive assessment and care plan address the 
individual's needs stemming from mental retardation and from the mental 
illness. In doing so, the case management provider must coordinate with 
service providers in both systems of care to ensure that the 
individual's needs are met. 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 on the requirement 
for one case manager to provide comprehensive services to individuals. 
We will be available to States as needed for technical assistance 
during this transition period.
    We note that section 1915(g)(2) of the Act specifically defines 
case management services in terms of services furnished to individuals 
who are eligible under the State plan. 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 
eligible for case management services (including targeted case 
management services) as defined in the Medicaid State plan, at the time 
the services are furnished. Case management as medical assistance under 
the State plan cannot be used to assist an individual, who has not yet 
been determined eligible for Medicaid, to apply for or obtain this 
eligibility. (Those activities may be an administrative expense of the 
State's operation of its Medicaid program, rather than a medical 
assistance service.)
    While the provision of case management services to non-Medicaid 
eligible individuals cannot be covered, we are including a regulatory 
provision at Sec.  440.169(e) to make clear that the effective case 
management of eligible individuals may require some contact with non-
eligible individuals. For instance, in completing the assessment for a 
Medicaid eligible child for whom targeted case management is available, 
it may be appropriate for a case manager to interview the child's 
parents and/or other family members who are not eligible for Medicaid, 
or who are not, themselves, part of a target population specified in 
the State plan. Contacts with family members that are for the purpose 
of helping the Medicaid-eligible individual access services can be 
covered by Medicaid. It also may be appropriate to have non-eligible 
family members involved in all components of case management because 
they may be able to help identify needs and supports to assist the 
eligible individual in

[[Page 68083]]

obtaining services, provide case managers with useful feedback, and 
alert case managers to changes in the individual's needs.
    A case manager's contacts with individuals who are not eligible for 
Medicaid, or who are not included in the group who receives targeted 
case management services, can be considered allowable activities, 
eligible for FFP, when the purpose of the contact is directly related 
to the management of the eligible individual's care. However, these 
activities will not be considered allowable if they relate directly to 
the identification and management of the non-eligible, or non-targeted 
individual's needs and care. Contacts that relate to the case 
management of non-eligible individuals, that is, assessment of their 
needs, referring them to service providers, and monitoring their 
progress, cannot be covered by Medicaid due to the fact they are not 
Medicaid eligible or not covered under the case management target 
population. If these other family members or other individuals also are 
Medicaid eligible and covered under a target group included in the 
State plan, Medicaid could pay for case management services furnished 
to them. In addition, these individuals could receive other medically 
necessary services for which they may qualify.

D. Comparability Exception To Permit Targeting--Sec.  440.250

    We will revise Sec.  440.250 by adding a new paragraph (r) to 
provide for an exception to the comparability requirements under Sec.  
440.240 for targeted case management services.

E. Technical Change to Statement of Statutory Basis--Sec.  441.10

    In part 441, subpart A, we will revise Sec.  441.10 to add a new 
paragraph (m), which provides a statutory basis for the provision of 
case management and targeted case management services.

F. Limitations on Case Management Services--Sec.  441.18

    At Sec.  441.18(a)(1), we are specifying that, with the exception 
discussed above at Sec.  431.51, individuals must have the free choice 
of any qualified provider. Section 9508 of COBRA amended section 
1915(g) of the Act to require that there be no restriction on a 
recipient's free choice of providers, in violation of section 
1902(a)(23) of the Act. Based on COBRA's legislative history, we 
believe the Congress intended that individuals receiving case 
management services under section 1915(g) of the Act not be locked into 
designated providers, whether for case management services, or for 
other services. (See H. Rept. No. 453, 99th Cong., 1st Sess. 546 
(1985).) Therefore, except as described in Sec.  441.18(b), individuals 
eligible to receive case management (or targeted case management) 
services must be free to choose their case management provider from 
among those that have qualified to participate in Medicaid and are 
willing to provide the services.
    States must establish qualifications for providers of case 
management services in the State plan. These qualifications relate to 
minimum age requirements, education, work experience, training, and 
other requirements, such as licensure or certification, which the State 
may establish. The Act does not set any minimum educational or 
professional qualifications for the provision of case management 
services. Therefore, States have flexibility to establish 
qualifications that are reasonably related to the demands of the 
Medicaid case management services to be furnished and the population 
being served. For example, it is reasonable to expect that the 
qualifications for case managers serving children who are ventilator-
dependent to be different than those qualifications for case managers 
serving persons with intellectual disabilities. While the case manager 
must possess the knowledge and skills to conduct a comprehensive 
assessment and to assist the individual or the individual's legal 
representative with the development of a comprehensive care plan, this 
does not mean that the case manager must have experience with the 
program requirements of every medical, social, educational, or other 
program to which an individual may be referred; it means that the case 
manager must be familiar with the general needs of the population being 
served and must be able to connect and coordinate with medical, social, 
educational, and other programs that serve the population. If the case 
manager also provides other services under the plan, the State must 
ensure that a conflict of interest does not exist that will result in 
the case manager making self-referrals.
    We are also including at Sec.  441.18(a)(2) and Sec.  441.18(a)(3) 
provisions to ensure that the provision of case management is neither 
coerced nor a method to restrict access to care or free choice of 
qualified providers. The receipt of case management services must be at 
the option of individuals included in a specific target group. This 
requirement is also consistent with section 1902(a)(19) of the Act. A 
recipient cannot be compelled to receive case management services for 
which he or she might be eligible. Requiring an individual to receive 
case management services against his or her will would not be in the 
best interest of the individual and, thus, will violate sections 
1902(a)(19) and 1902(a)(23) of the Act. A State also cannot condition 
receipt of case management services on the receipt of other services 
since this also serves as a restriction on the individual's access to 
case management services.
    Section 1915(g)(1) of the Act prohibits the use of case management 
services in any fashion that will restrict an individual's access to 
other care and services furnished under the State plan, which will 
violate section 1902(a)(23) of the Act. The purpose of case management 
services authorized by section 1915(g) of the Act is to help an 
individual gain access to services, not hinder this access. Permitting 
case managers to function as gatekeepers under this optional State plan 
service will allow case managers to restrict access to services--that 
is, to the extent to which authorization may be denied, access also may 
be denied. Because this concept is contrary to the statutory definition 
of case management services, providers of case management services 
(including targeted case management services) furnished under this 
section are prohibited from serving as gatekeepers under Medicaid. 
(States may use a section 1915(b) waiver or primary care case 
management (PCCM) services under section 1905(a)(25) for this purpose.) 
Similarly, a State cannot require that an individual receive case 
management services as a prerequisite for receiving other Medicaid 
services.
    In Sec.  441.18(a)(4), we require that the State's plan provide 
that case management services will not duplicate payments made to 
public agencies or private entities under the State plan and other 
program authorities. In authorizing States to offer case management 
services, the Congress recognized that there was some potential for 
duplicate payments. This recognition led to an explicit statement in 
the legislative history of COBRA that prohibited the duplication of 
payments. (See H. Rept. No. 453, 99th Cong., 1st Sess. 546 (1985).) The 
Congress clarified its prohibition on the duplication of funding in 
section 8435 of the Technical and Miscellaneous Revenue Act of 1988. 
This provision prohibits the Secretary from denying approval of a case 
management State plan amendment on the basis that the State is required 
to provide those services under State law, or on the basis that the 
State had paid for those services from other non-Federal funds. In 
other words, the duplication of payment prohibition does

[[Page 68084]]

not preclude States from using Medicaid to pay for case management 
services that previously had been funded solely with State and/or local 
dollars. The amendment also specifies, however, that the Secretary is 
not required to make payment under Medicaid for case management 
services that are furnished without charge to users of the services.
    When an individual could be served under more than one targeted 
case management plan amendment because he falls within the scope of 
more than one target group, a decision must be made concerning the 
appropriate target group so that the individual will have one case 
manager responsible for his services and duplicate payment for the same 
purpose will not be made.
    While FFP would not be available for case management services that 
duplicates payments made under other program authorities, section 
1903(c) of the Act provides an exception for medical assistance for 
covered Medicaid services, including case management services, 
furnished to a child with a disability because such services are 
included in an individualized education program or individualized 
family service plan.
    In section 441.18(a)(5), we would require case management services 
to be provided on a one-to-one basis to eligible individuals by one 
case manager. We are including this requirement to implement the 
provisions of section 1915(g)(2)(A)(ii) that sets forth a unified care 
planning process for case management to respond to the needs of 
eligible individuals based on a comprehensive assessment. The statute 
describes a step-by-step process, each component built upon the 
previous one, to ensure that the care plan is effectively implemented 
and adequately addresses all of the assessed needs of the eligible 
individual. Having one case manager is necessary to ensure 
accountability and coordination in assisting individuals in gaining 
access to services to address all components of assessed need. 
Fragmenting the service would reduce the quality of case management; 
the point of case management is to address the complexities of 
coordinated service delivery for individuals with medical needs. The 
case manager should be the focus for coordinating and overseeing the 
effectiveness of all providers and programs in responding to the 
assessed need.
    We are including Sec.  441.18(a)(6) to prohibit providers of case 
management services from exercising the State Medicaid agency's 
authority to authorize or deny the provision of other services under 
the plan. Although a State Medicaid agency may place great weight on 
the informed recommendation of a case manager, it must not rely solely 
on case management recommendations in making decisions about the 
medical necessity of other Medicaid services that the individual may 
receive. The decision to authorize the provision of a service must 
remain with the State Medicaid agency as required by Sec.  431.10(e). 
Costs related to these activities, such as prior authorization or 
determination of medical necessity, which are necessary for the proper 
and efficient administration of the Medicaid State plan, must be 
claimed as a direct administrative expense by the Medicaid agency and 
may not be included in the development of a case management rate.
    If a State plan provides for case management services (including 
targeted case management services), the State must require providers to 
maintain case records that document the information required by Sec.  
441.18(a)(7). These case records must document, for each individual 
receiving case management, the name of the individual; the dates of 
case management services; the name of the provider agency (if relevant) 
and person chosen by the individual to provide the case management 
services; the nature, content, units of case management services 
received and whether the goals specified in the care plan have been 
achieved; whether the individual has declined services in the care 
plan; timelines for providing services and reassessment; and the need 
for, and occurrences of, coordination with case managers of other 
programs.
    States that opt to furnish case management services must do so by 
amending their State plans in accordance with Sec.  441.18(a)(8) and 
Sec.  441.18(a)(9). FFP is not available for case management as a 
medical assistance service under sections 1905(a)(19) and 1915(g) of 
the Act in the absence of an approved amendment to the State's Medicaid 
plan. A State's amendment to its State plan must contain all 
information necessary for CMS to determine whether the plan can be 
approved to serve as a basis for FFP. Each amendment must--

     Specify whether case management will be targeted, and if 
so, define the targeted group (and/or subgroup);
     Identify the geographic area to be served;
     Describe the services to be furnished including types of 
monitoring;
     Specify the frequency of assessments and monitoring and 
provide a justification for the frequencies (given that targeted groups 
may vary in their need for case management services);
     Specify the qualifications of the service providers;
     Specify the methodology under which case management 
providers will be paid and rates are calculated;
     Specifies if case management services are being provided 
to Medicaid-eligible individuals who are in institutions to facilitate 
transitioning to the community. In this case, the amendment must 
specify if case management services are being provided to individuals 
with long-term stays of 180 consecutive days or longer or to 
individuals with short-term stays of less than 180 consecutive days. 
Furthermore, when States choose to provide case management services to 
individuals in institutions to facilitate transitioning to the 
community, the State plan must specify the time period or other 
conditions under which case management may be provided in this manner. 
The time period that case management is provided in an institution must 
not exceed an individual's length of stay. In addition, the State plan 
must specify the case management activities and include an assurance 
that these activities are coordinated with and do not duplicate 
institutional discharge planning; include an assurance that the amount, 
duration, and scope of the case management activities would be 
documented in an individual's plan of care which includes case 
management activities prior to and post-discharge, to facilitate a 
successful transition to community living; specify that case management 
is only provided by and reimbursed to community case management 
providers; specify that FFP is only available to community providers 
and will not be claimed on behalf of an individual until the individual 
is discharged from the institution and enrolled in community services; 
and describe the system and process the State will use to monitor 
providers' compliance with these provisions.
     In addition, if the State plan provides for targeted case 
management, the State must submit a State plan amendment for each 
target group that will receive case management services. A separate 
amendment also must be submitted for each subgroup within a group if 
any of these elements differ for that subgroup.
    While a State has some flexibility to establish the methodology and 
rates it will use to reimburse providers of case management or targeted 
case

[[Page 68085]]

management services, a State cannot employ a methodology or rate that 
results in payment for a bundle of services. Per diem rates, weekly 
rates, and monthly rates represent a bundled payment methodology that 
is not consistent with section 1902(a)(30)(A) of the Act, which 
requires that States have methods and procedures to assure that 
payments are consistent with efficiency, economy, and quality of care. 
A bundled payment methodology exists when a State pays a single rate 
for more than one service furnished to an eligible individual during a 
fixed period of time. The payment is the same regardless of the number 
of services furnished or the specific costs, or otherwise available 
rates. Since these bundled (daily, weekly, or monthly) rates are not 
reflective of the actual types or numbers of services provided or the 
actual costs of providing the services, they are not accurate or 
reasonable payments and may result in higher payments than would be 
made on a fee-for-service basis for each individual service. A bundled 
rate is inconsistent with economy, since the rate is not designed to 
accurately reflect true costs or reasonable fee-for-service rates, and 
with efficiency, since it requires substantially more Federal oversight 
resources to establish the accuracy and reasonableness of State 
expenditures. We therefore expect that case management and targeted 
case management services reimbursed on a fee-for-service basis, as 
opposed to a capitated basis, will be reimbursed based on units of 
time. Because of the nature of case management, which can include 
contacts of brief duration, we believe that the most efficient and 
economical unit of service is a unit of 15 minutes or less. 
Accordingly, we are requiring in Sec.  441.18(a)(8)(vi) that the unit 
of service for case management and targeted case management services be 
15 minutes or less.
    In Sec.  441.18(b) we require that, if a State limits qualified 
providers of case management services for target groups with 
developmental disability or chronic mental illness, in accordance with 
Sec.  431.51(a)(4), the plan must identify the limitations being 
imposed on the providers and specify how these limitations enable 
providers to ensure that individuals within the target groups receive 
needed services.
    At Sec.  441.18(c)(1), we specify that the case management benefit 
does not include, and FFP is not available for, activities that are an 
integral component of another covered Medicaid service. To include 
those activities as a separate benefit will result in duplicate 
coverage and payment. This activity would not be consistent with proper 
and efficient operation of the program. For example, when an individual 
receives services from a physician and the physician refers the 
individual to a home health agency for services, that referral is 
integral to the physician's service and FFP will not be available for 
that activity as a case management service.
    Individuals participating in a managed care plan receive case 
management services as an integral part of the managed care services. 
This case management is for the purpose of managing the medical 
services provided by or through the plan and does not extend to helping 
an individual gain access to social, educational, and other services 
the individual may need. Thus, an individual receiving services through 
a managed care plan may also receive case management or targeted case 
management services when the individual is eligible for those services. 
For example, an individual with AIDS served by a managed care plan may 
also be served under a case management plan targeted to persons with 
AIDS/HIV. However, FFP is not available for case management of medical 
services that are also managed by the individual's managed care plan. 
In this situation, it is expected that the Medicaid case manager would 
coordinate with the managed care plan as appropriate. At Sec.  
441.18(c)(2) through Sec.  441.18(c)(5), we set forth limitations 
authorized by the DRA on the case management benefit. The regulation 
text at Sec.  441.18(c) includes the statutory principle set forth at 
section 1915(g)(2)(A)(iii) of the Act providing that the case 
management benefit does not include services that involve the direct 
delivery of underlying medical, educational, social, or other services 
to which an eligible individual has been referred.
    The statutory definition of case management established by the DRA 
draws a distinction between services that assist an individual in 
accessing needed services and the actual services to which access is 
gained. Case management services include only those activities that 
help an individual gain access to needed medical, social, educational, 
and other services. Case managers can assist individuals in gaining 
access to needed services, regardless of the funding source of the 
service to which the individual is referred. By including more than 
medical care, States can implement a holistic approach to the delivery 
of services by using case management to identify all of an individual's 
care needs and coordinate access to services that address these needs.
    Case management does not include the actual direct services the 
individual obtains. For this reason, if a case manager provides a 
direct service, such as counseling, during the course of a case 
management visit, the direct service cannot be reimbursed as part of 
the case management service. This service may be covered under another 
Medicaid service category, such as rehabilitation services, if the 
service is covered under the State's Medicaid program, the case 
management provider also is a qualified provider of that service, and 
the individual chooses to receive the service from the case manager. 
The performance of diagnostic tests also is a direct service. While 
diagnostic tests may provide information that inform the assessment and 
care development process, they do not constitute an assessment activity 
under section 1915(g)(2) of the Act that is covered under the case 
management benefit. These services, however, may be covered under 
another medical assistance category if provided in the State plan. 
Similarly, referral and related activities do not include the provision 
of transportation or escort services, nor do they include the provision 
of day care services so that an eligible individual with children can 
access needed services. These are direct services rather than coverable 
case management activities.
    The nature of the case management benefit to ``assist eligible 
individuals to gain access to needed services'' and the similarity of 
its 1985 definition to the purpose of other programs also has led many 
to confuse the Medicaid benefit with the actual administration of non-
Medicaid programs. This is particularly true when a large number or 
percentage of the participants in these non-Medicaid programs also are 
eligible for Medicaid (and thus, potentially included in a target group 
eligible to receive targeted case management services). Concerns in 
this area have been raised through audits, the review of State plan 
amendments and by the Government Accountability Office (Report GAO-05-
748, entitled ``States Use of Contingency Fee Consultants to Maximize 
Federal Reimbursements Highlights Need for Improved Federal 
Oversight,'' June 2005). The following are examples of targeted case 
management State plans that were inconsistent with Federal policy, 
resulting in excessive Federal Medicaid outlays. These examples 
illustrate the need for the specific definitions and guidance contained