Medicaid Program; State Flexibility for Medicaid Benefit Packages, 9714-9727 [E8-3206]
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9714
Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
involved in the individual case under
consideration. The burden is on the
employee to demonstrate that the
applicable waiver standard has been
met.
§ 309.20
Compromise.
Peace Corps may attempt to effect
compromise in accordance with the
standards set forth in the FCCS (31 CFR
part 902).
§ 309.21
Suspension of collection.
Suspension of collection action shall
be made in accordance with the
standards set forth in the FCCS (31 CFR
903.1–903.2).
§ 309.22
Termination of collection.
Termination of collection action shall
be made in accordance with the
standards set forth in the FCCS (31 CFR
903.1 and 903.3–903.4).
§ 309.23
Discharge.
Once a debt has been closed out for
accounting purposes and collection has
been terminated, the debt is discharged.
Peace Corps will report discharged debt
as income to the debtor to the Internal
Revenue Service per 26 U.S.C. 6050P
and 26 CFR 1.6050P–1.
§ 309.24
Bankruptcy.
Peace Corps generally terminates
collection activity on debts that have
been discharged in bankruptcy unless
otherwise provided for by bankruptcy
law. The CFO will seek legal advice by
the General Counsel’s office if there is
the belief that any claims or offset may
have survived the discharge of a debtor.
Dated: February 15, 2008.
Tyler S. Posey,
General Counsel.
[FR Doc. E8–3268 Filed 2–21–08; 8:45 am]
BILLING CODE 6015–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 440
[CMS–2232–P]
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RIN 0938–A048
Medicaid Program; State Flexibility for
Medicaid Benefit Packages
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
SUMMARY: This proposed rule would
implement provisions of section 6044 of
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the Deficit Reduction Act of 2005, Pub.
L. 109–171, which amends the Social
Security Act by adding a new section
1937 related to the coverage of medical
assistance under approved State plans.
Under this new section, States have
increased flexibility under an approved
State plan to define the scope of covered
medical assistance by offering coverage
of benchmark or benchmark-equivalent
benefit packages to certain Medicaid
recipients.
To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. March 24, 2008.
ADDRESSES: In commenting, please refer
to file code CMS–2232–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
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–2232–
P, 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–2232–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–
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.
DATES:
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(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:
Donna Schmidt, (410) 786–5532.
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–2232–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 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 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
Under title XIX of the Social Security
Act (the Act), the Secretary is
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authorized to provide funds to assist
States in furnishing medical assistance
to needy individuals whose income and
resources are insufficient to meet the
costs of necessary medical services,
including families with dependent
children and individuals who are aged,
blind, or disabled. To be eligible for
funds under this program, States must
submit a State plan, which must be
approved by the Secretary. Programs
under title XIX are jointly financed by
Federal and State governments. Within
broad Federal guidelines, each State
determines the design of its program,
eligible groups, benefit packages,
payment levels for coverage and
administrative and operating
procedures.
Before the passage of the Deficit
Reduction Act (DRA), States were
required to offer at minimum a standard
benefit package to eligible populations
identified in section 1902(a)(10)(A) of
the Act (with some specific exceptions,
for example, for certain pregnant
women, who could be limited to
pregnancy-related services). Under
section 1902(a)(10)(A) of the Act, this
standard benefit package had to include
certain specific benefits identified in the
definition of ‘‘medical assistance’’ at
section 1905(a) of the Act. These
identified benefits include inpatient and
outpatient hospital services, physician
services, medical and surgical services
furnished by a dentist, rural health
clinic services, federally qualified
health center services, laboratory and Xray services, nursing facility services,
early and periodic screening, diagnostic
and treatment services for individuals
under age 21, family planning services
to individuals of child-bearing age,
nurse-midwife services, certified
pediatric nurse practitioner, and
certified family nurse practitioner
services. Under section 1902(a)(10)(D) of
the Act, the standard benefit package is
also required to include home health
services.
Section 6044 of the Deficit Reduction
Act of 2005 (DRA) (Pub. L. 109–171,
enacted on February 8, 2006), amended
the Act by adding a new section 1937
that allows States to amend their
Medicaid State plans to provide for the
use of benefit packages other than the
standard benefit package, namely
benchmark benefit packages or
benchmark-equivalent packages, for
certain populations. The statute
delineates what benefit packages qualify
as benchmark packages and what would
constitute a benchmark-equivalent
package. The statute also specifies those
exempt populations that may not be
included or mandated in the benchmark
coverages. To be eligible for funds under
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this new provision, States must submit
a State plan amendment, which must be
approved by the Secretary.
This proposed rule would incorporate
and integrate into Centers for Medicare
& Medicaid Services (CMS) regulations
the statutory framework for alternative
benchmark packages.
II. Provisions of the Proposed Rule
[If you choose to comment on issues
in this section, please include the
caption ‘‘PROVISIONS OF THE
PROPOSED RULE’’ at the beginning of
your comments.]
By creating section 1937 of the Act,
we believe the Congress intended to
provide States unprecedented flexibility
within Medicaid State Plans to provide
health benefits coverage. This authority,
created by section 6044 of the DRA,
allows States broad flexibility to
develop innovative health coverage
plans for Medicaid recipients. States
may create more mainstream packages
like those found in the private insurance
market by implementing health benefit
packages mirroring employer sponsored
group health plans.
These flexibilities give States new
opportunities to provide benefit plans to
meet the health care needs of Medicaid
populations while maintaining the
sustainability of the program. For the
first time in the State plan, States may
create innovative Medicaid programs
that further strengthen and support the
overall health care system. States now
have the tools they need to provide
person-centered care to maximize health
outcomes for individuals. These tools
may be used in conjunction with other
title XIX and XXI authorities and other
programs, to strategically align the
Medicaid Program with today’s
healthcare environment to expand
access to affordable mainstream
coverage; to promote personal
responsibility for health and accessing
health care; and to improve quality and
coordination of care.
The enactment of this provision of the
DRA gave States new options to create
programs that are more aligned with the
needs of today’s Medicaid populations
and the health care environment. States
may use this flexibility to capitalize on
the strengths of their existing health
care systems by incorporating and
building upon the private insurance
market. Additionally, we encourage
States to use these flexibilities to shape
innovations in the health care
marketplace. The authority under this
provision creates great opportunities for
States to focus the health care system on
delivering person-centered health care
for all individuals. States will be able to
reconnect families receiving health care
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through Medicaid to the larger
insurance system that serves most
Americans and promote continuity of
coverage. This in turn will strengthen
the private market and assist in creating
better access to health care in the State.
Section 1937 of the Act gives States
greater control over the administration
of their Medicaid programs by moving
innovative programs into State plans.
This in turn, provides States with ease
in leveraging the private market forces
to provide care to Medicaid recipients
in much the same way this care is
provided to those with benefits through
private insurance.
We began issuing guidance about the
new flexibilities available to States
within months of the enactment of the
DRA. For example, on March 31, 2006,
we issued a State Medicaid Director
letter providing guidance on the
implementation of section 6044 of the
DRA. This proposed rule is consistent
with that guidance.
Under section 1937 of the Act, a State
may require that medical assistance to
individuals, within one or more groups
of individuals specified by the State, be
provided through enrollment in a
benchmark or benchmark-equivalent
benefit coverage package. A State has
the option to amend its State plan to
provide benchmark or benchmarkequivalent coverage without regard to
comparability, statewideness, freedom
of choice, the assurance of
transportation to medically necessary
services and other requirements in order
to tailor and provide the coverage to the
individuals. The purpose of this section,
as indicated in the title of section 6044
of the DRA, was to provide States with
increased flexibility. In order to
maximize that flexibility, we are
proposing to interpret the statutory
clause ‘‘notwithstanding any other
provision of this title’’ to relieve States
of the responsibility to assure
transportation to and from providers,
which is the regulatory requirement at
42 CFR 431.53 that is based on sections
1902(a)(4) and 1902)(a)(19) of the Act.
The statute provides benchmark options
available to States that are equivalent to
those found in the private health
insurance market. Generally, private
health insurance plans do not offer nonemergency medical transportation as a
benefit to enrollees. It would be a strong
disincentive for States to offer
benchmark coverage through private
health insurance plans if States had to
supplement benchmark benefit plans
with additional transportation benefits.
We are therefore proposing to exempt
States that elect benchmark coverage
from the transportation assurance
requirement. This provides maximum
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flexibility to states and is consistent
with the stated purpose of section 6044.
Populations Affected. Benchmark or
benchmark-equivalent coverage
packages may only be offered to
individuals whose eligibility is based on
an eligibility category of the Act that
would have been covered under the
State’s plan on or before the enactment
of the DRA on February 8, 2006. We are
interpreting the statutory term
‘‘eligibility category’’ in this rule to
mean an eligibility category listed under
section 1905(a) of the Act, in order to
maximize State flexibility. All recipients
within a covered category would be
eligible to participate in a benchmark
plan at the State’s option, unless
specifically exempted by statute as
discussed below, even when the State
makes modifications to the income and
resource eligibility levels for a group or
groups under such an eligibility
category after February 8, 2006.
A State may require recipients to
obtain benefits by enrolling in
benchmark or benchmark-equivalent
coverage only if they are ‘‘full benefit
eligibles.’’ A full benefit eligible is an
individual who would otherwise be
eligible to receive the standard full
Medicaid benefit package under the
approved Medicaid State plan, but does
not include individuals determined
eligible by the State for medical
assistance under section 1902(a)(10)(C)
of the Act, or by reason of section
1902(f) of the Act, or otherwise eligible
based on a reduction of income based
on costs incurred for medical or other
remedial care (medically needy and
spend-down populations).
The statute also specifies other
individuals who are also exempt from
being required to enroll in benchmark or
benchmark-equivalent benefit coverage.
These individuals include:
• A pregnant woman who is required
to be covered under the State plan
under section 1902(a)(10)(A)(i) of the
Act;
• A recipient qualifying for medical
assistance under the State plan on the
basis of being blind or disabled (or being
treated as being blind or disabled)
without regard to whether the
individual is eligible for Supplemental
Security Income (SSI) benefits under
title XVI on the basis of being blind or
disabled and including an individual
who is eligible for medical assistance on
the basis of section 1902(e)(3) of the Act;
• A recipient entitled to benefits
under any part of Medicare;
• A terminally ill recipient receiving
benefits for hospice care under title XIX;
• A recipient who is an inpatient in
a hospital, nursing facility, intermediate
care facility for the mentally retarded, or
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other medical institution, and is
required, as a condition of receiving
services in such institution under the
State plan, to spend for costs of medical
care all but a minimal amount of the
individual’s income required for
personal needs;
• A recipient who is medically frail
or otherwise an individual with special
medical needs (as described by the
Secretary);
• A recipient qualifying based on
medical condition for medical
assistance for long-term care services
described in section 1917 (c)(1)(C) of the
Act;
• A recipient with respect to whom
aid or assistance is made available
under part B of title IV to children in
foster care or with respect to whom
adoption or foster care assistance is
made available under part E of title IV,
without regard to age;
• A recipient qualifying for medical
assistance on the basis of eligibility to
receive assistance under a State plan
funded under part A of title IV (as in
effect on or after welfare reform effective
date defined in section 1931(i) of the
Act);
• Recipients eligible based on the
diagnosis of breast or cervical cancer by
virtue of the application of sections
1902(a)(10)(ii)(XVIII) and 1902(aa) of the
Act; and
• Recipients who receive limited
services because they are eligible only
under section 1902(a)(10)(A)(ii)(XII) of
the Act because they are TB-infected, or
because they are not qualified aliens (as
defined in section 431 of the Personal
Responsibility and Work Opportunity
Reconciliation Act (PRWORA) of 1996
(Pub. L. 104–193, enacted on August 22,
1996) and receive only the care and
services necessary for the treatment of
an emergency medical condition in
accordance with section 1903(v) of the
Act.
For purposes of the exempted
populations under section 1937 of the
Act, the Secretary is proposing in
§ 440.315(f) to define individuals with
special medical needs to include those
groups defined by Federal regulations at
42 CFR 438.50(d)(1) and §438.50(d)(3)
of the managed care regulations. These
groups are: dual eligibles and certain
children under age 19 who are eligible
for Supplemental Security Income (SSI);
children eligible under section
1902(e)(3) of the Act/Tax Equity and
Fiscal Responsibility Act of 1982
(TEFRA) children; individuals in foster
care or other out of home placement;
individuals receiving foster care or
adoption assistance; or individuals
receiving services through a familycentered, community-based,
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coordinated care system that receives
grant funds under section 501(a)(1)(D) of
title V, as defined by the State in terms
of either program participation or
special health care needs.
There may be instances when an
exempted individual may benefit from
enrolling in a benchmark or benchmarkequivalent benefit package. States are
permitted to offer these individuals a
benchmark or benchmark-equivalent
package, but may not require them to
enroll in one. In any case in which a
State offers an individual the option to
enroll in a benchmark or benchmarkequivalent benefit package, the State
must inform the individual that the
enrollment is voluntary and that he or
she may opt out at any time. In addition,
the State must inform the individual of
the benefits available under the
benchmark or benchmark-equivalent
benefit package, provide a comparison
of how they differ from the benefits
available under the regular Medicaid
program, and must document that the
individual was informed.
Generally, we would expect that the
benchmark or benchmark equivalent
plan would have sufficient enrollment
capacity for eligible individuals.
However, there may be circumstances
when it is beneficial for the State to
limit enrollment or when the
benchmark or benchmark-equivalent
plan would not have the capacity to
enroll all interested and eligible
individuals. In these instances, the State
would maintain selection criteria for
such plans based on factors such as
geography or date of application that are
not related to health status. The State
would provide otherwise available
benefits to individuals under the State
plan, which may include the option of
enrolling in another benchmark or
benchmark-equivalent plan. And, if
applicable, the State would have a
system under which recipients already
enrolled in the benchmark or
benchmark equivalent plan are given
priority to continue enrollment if the
plan does not have the capacity to
accept all those seeking enrollment
under the program.
Benefit Packages. Under section 1937
of the Act, benchmark coverage is either
Federal Employees Health Benefit Plan
Equivalent Health Insurance Coverage;
State Employee Coverage; a Health
Maintenance Organization (HMO) plan
that has the largest insured commercial,
non-Medicaid enrollment in the State;
or Secretary approved coverage.
Secretary approved coverage is any
other health benefits coverage that the
Secretary determines, upon application
by a State, provides appropriate
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coverage for the population proposed to
be provided this coverage.
In determining the coverage available
under a benchmark coverage package,
we do not consider cost sharing to be a
limitation on the coverage (even when
the benchmark plan itself does so).
Thus, for example, if the selected
benchmark plan document indicates
that it provides coverage for only half of
the cost of mental health services, we
view that as a coinsurance requirement
rather than as a limitation on coverage.
Cost sharing and premiums for
recipients may not exceed cost sharing
limits under the State’s plan with
respect to sections 1916 and 1916A of
the Act. The State would assure that all
out of pocket costs for the recipients do
not exceed the applicable limits.
However, benchmark and benchmarkequivalent benefit packages may include
annual coverage limitations on the
numbers and types of particular
services.
In determining whether a proposed
health benefits coverage package should
be Secretary approved because it
provides appropriate health benefits
coverage for the proposed population,
we would require that States submit full
descriptions of the proposed coverage,
including comparisons to one of the
benchmark plans or to the State’s
standard full Medicaid coverage
package under section 1905(a) of the
Act. In addition, the State would submit
any other information that would be
relevant to a determination that the
proposed health benefits coverage
would be appropriate for the proposed
population. The scope of a Secretaryapproved health benefits package will
be limited to benefits within the scope
of the categories available under a
benchmark coverage package or the
standard full Medicaid coverage under
section 1905(a) of the Act.
In determining Secretary approved
coverage, a State may consider a benefit
package for a specific population that
excludes a certain category of service.
For example, a State may utilize a
Secretary approved package that is
benchmarked to the State employees
benefit package which does not include
pregnancy-related services. This would
be appropriate where the targeted
population is a population group that
does not require such category of
service—for instance non-pregnant
adults. If an individual within the
targeted population group enrolled in
the Secretary approved benefit was
initially eligible through a category
targeted for the Secretary approved
coverage, but later qualified for
Medicaid through a group excluded
from mandatory enrollment (e.g., non-
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pregnant female enrolled in the
Secretary approved benefit becomes
pregnant and qualifies under the State
plan under section 1902(a)(10)(A)(i)),
such individual must have the
opportunity to receive state plan
services not available through the
benchmark and must be given the
choice to remain in the Secretary
approved benchmark or revert to
traditional Medicaid. In either event, the
individual must be provided the State
plan services not available through the
benchmark through either wrap around
coverage to the Secretary approved
benefit or by virtue of reverting back to
traditional Medicaid.
A State may elect to offer one or more
benchmark coverage options. The State
may also specify in the State plan
criteria establishing the benchmark
options, if any, available for any specific
group of recipients. For example, the
State plan may identify groups of
recipients who receive benefits through
a Federal Employees Health Benefit
Plan (FEHBP) benchmark coverage plan
and may identify other groups who
receive benefits through a State
Employee Coverage benchmark coverage
plan.
A State may also elect to offer
benchmark-equivalent benefit coverage.
Coverage would be considered
benchmark-equivalent coverage if it has
an aggregate actuarial value equivalent
to a benchmark plan described above,
and it includes the following basic
categories of service: inpatient and
outpatient hospital services; physicians’
surgical and medical services;
laboratory and x-ray services; well-baby
and well-child care, including ageappropriate immunizations; and other
appropriate preventive services.
In addition to the categories of
services set forth above, benchmarkequivalent coverage may include
coverage of additional health benefits in
categories of services included in the
benchmark package or described in
section 1905(a) of the Act. If the
benchmark coverage package used by
the State as a basis for comparison in
establishing the aggregate actuarial
value of the benchmark-equivalent
package includes the following four
categories of services: prescription
drugs; mental health services; vision
services; and hearing services; then the
actuarial value of the coverage for each
of these categories of service in the
benchmark-equivalent coverage package
must be at least 75 percent of the
actuarial value of the coverage for that
category of service in the benchmark
plan used for comparison by the State.
If the benchmark coverage package does
not cover one of the additional four
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categories of services, then the
benchmark-equivalent coverage package
may, but is not required to, include
coverage for that category of service.
As a condition of approval of
benchmark-equivalent coverage, the
State must provide an actuarial report
with an actuarial opinion that the
benchmark-equivalent coverage meets
the actuarial requirements.
Benchmark or benchmark-equivalent
benefit coverage may be offered through
employer sponsored health plans for
individuals with access to private health
insurance. For example, if an individual
has access to employer sponsored
coverage and that coverage is
determined by the State to offer a
benchmark or benchmark-equivalent
benefit package (either alone or with the
addition of wrap-around services
covered separately under Medicaid), a
State may elect to provide premium
payments on behalf of the recipient to
purchase the employer coverage. The
State may also provide premium
payments on behalf of the recipient to
purchase private health insurance
coverage. The premium payments
would be considered medical
assistance, the State could require the
recipient to enroll in the group health
plan, and the resulting coverage would
comprise the Medicaid benefit. In
addition, cost sharing for recipients
should not exceed cost sharing limits
under the State’s plan with respect to
sections 1916 and 1916A of the Act.
The State must make available to
recipients under age 19 who are covered
under the State plan under section
1902(a)(10)(A) of the Act benefits
consisting of Early and Periodic
Screening, Diagnostic, and Treatment
(EPSDT) services which are medically
necessary for that individual as defined
in section 1905(r) of the Act. For those
individuals who are enrolled in
benchmark coverage, the individual
must seek coverage through the
benchmark plan before seeking wraparound benefits from the State. As
always, medical necessity as determined
by the State guides the delivery of
EPSDT services. A State must also
assure that individuals in a benchmark
or benchmark-equivalent plan have
access, through that coverage or
otherwise, to rural health clinic services
and federally qualified health center
(FQHC) services.
Under section 1937(a)(1)(C) of the
Act, States have the option to provide
additional or wrap-around services to
the benchmark or benchmark-equivalent
plans. The wrap-around services do not
need to include all State plan services.
However, the State plan must describe
the populations covered and the
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procedures for assuring those services.
We interpret the term ‘‘additional or
wrap-around services’’ to mean health
benefits that are of the same type as
those covered under the benchmark or
considered to be health benefits under
the Medicaid statute. We propose in
§ 440.360 that additional or wraparound services must be within the
scope of categories of services covered
under the benchmark plan, or described
in section 1905(a) of the Act.
Generally, we would expect that the
benchmark or benchmark equivalent
plan would have sufficient enrollment
capacity for eligible individuals.
However, because benchmark and
benchmark equivalent plans are not
bound by comparability, statewideness,
freedom of choice, the assurance of
transportation to medically necessary
services and other requirements of title
XIX of the Act, there may be a
circumstance, particularly in rural areas,
when a plan is not capable of enrolling
all interested and eligible individuals.
In this instance, the State must have a
process for enrolling the individual in
an alternate option. If applicable, the
State must have a system under which
recipients already enrolled in the
benchmark or benchmark equivalent
plan are given priority to continue
enrollment if the plan does not have the
capacity to accept all those seeking
enrollment under the program.
Program Integrity. We propose to
establish in § 440.370 of this regulation
that States are required to implement
benchmark coverage in a cost effective
and efficient manner. While section
1937 of the Act is premised with a
provision that states notwithstanding
any other provision of this title, we do
not believe that the Congress intended
to permit States to bypass efficiency and
effectiveness rules that were tightened
up in other sections of title XIX.
Therefore, we are clarifying that States
must deliver benchmark benefits in a
manner that is cost effective and
efficient. States may not use this
provision to recycle funds or deliver
services to the detriment of the Federal/
State partnership. Benchmark or
benchmark-equivalent coverage and any
additional benefits must be provided in
accordance with economy and
efficiency principles that would
otherwise be applicable to the services
or delivery system through which the
coverage and benefits are obtained. In
other words, if benchmark coverage is
provided on a fee-for-service basis, the
same upper payment limits would apply
to each service as to these services
under standard full Medicaid coverage.
Similarly, the same procurement
requirements, or other economy or
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efficiency principles would apply to
this coverage as would apply to the
purchase of managed care coverage as
under the managed care rules at part
438 of our regulations.
To achieve economy and efficiency,
States may use a variety of delivery
systems for benchmark and benchmarkequivalent coverage. States may furnish
benefits using one or more of the
following: a fee-for-service delivery
system, a fee-for-service delivery system
operated with a primary care case
management system, a managed care
delivery system, or through premium
assistance.
The State may use a selective
procurement process to restrict the
managed care entity or other provider
from (or through) whom a recipient can
obtain services, except in emergency
situations. The selected provider must
meet the reimbursement, quality and
utilization standards under the State
Plan. If a State chooses to selectively
contract for the provider of the
benchmark or benchmark equivalent
plan services, it can do so without any
waiver authority, but only to the extent
that: (1) The selected provider complies
with the reimbursement, quality, and
utilization standards under the State
plan; (2) the selection process does not
discriminate among classes of providers
on grounds unrelated to their
demonstrated effectiveness and
efficiency in providing the benchmark
benefit package; and (3) all providers are
paid on a timely basis in the same
manner as health care practitioners
must be paid under § 447.45. To the
extent that these conditions are met, the
State does not need to obtain a waiver
under the authority of section 1915(b)(4)
of the Act in order to selectively
contract.
Requirements Not Applicable. In
authorizing implementation of section
1937 of the Act ‘‘notwithstanding any
other provision of this title,’’ we believe
that the Congress intended to permit
States to bypass the comparability,
statewideness, freedom of choice, the
assurance of transportation to medically
necessary services and other
requirements of title XIX of the Act in
order for States to tailor benefit
packages appropriate to specified
groups of Medicaid recipients.
We believe that the Congress intended
for States to have a great amount of
flexibility in crafting programs for those
populations which may be mandated
into a benchmark or benchmarkequivalent plan. We also believe that the
Congress intended for those individuals
to have health coverage which mirrored
that of the coverage millions of
Americans receive through employer
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sponsored plans in the private health
insurance market.
Therefore, we propose in § 440.375,
§ 440.380, § 440.385, and § 440.390 to
provide States this flexibility by
allowing them to amend their State
plans to provide benchmark or
benchmark-equivalent coverage without
regard to comparability, statewideness,
freedom of choice, the assurance of
transportation to medically necessary
services, and/or other requirements in
order to tailor and provide benefits.
Changes to Regulations Text. We
propose to add a new subpart C
beginning with § 440.300.
Subpart C—Benchmark Packages:
General Provisions
Sections 440.300, 440.305, and 440.310
Basis, Scope, and Applicability
At proposed § 440.300 (Basis),
§ 440.305 (Scope), and § 440.310
(Applicability), the regulations would
reflect the new statutory authority for
States to provide medical assistance to
recipients, within one or more groups of
Medicaid eligible recipients specified by
the State, through enrollment in
benchmark coverage or benchmarkequivalent coverage. A State may only
require that individuals obtain benefits
by enrolling in that coverage if they are
a ‘‘full benefit eligible’’ whose eligibility
is based on an eligibility category under
section 1905(a) of the Act that would
have been covered under the State’s
plan on or before February 8, 2006, and
are not within exempted categories
under the statute. The proposed
regulatory definition of full benefit
eligible individuals would include
individuals who would otherwise be
eligible to receive the standard full
Medicaid benefit package under the
approved Medicaid State plan, but
would not include individuals within
the statutory exceptions for individuals,
who are determined eligible by the State
for medical assistance under section
1902(a)(10)(C) of the Act, or by reason
of section 1902(f) of the Act, or
otherwise eligible based on a reduction
of income based on costs incurred for
medical or other remedial care (other
medically needy and spend-down
populations).
Section 440.315
Exempt Individuals
Proposed § 440.315 would reflect
statutory limitations on mandatory
enrollment of specified categories of
individuals. A State may not require
enrollment in a benchmark or
benchmark-equivalent benefit plan by
the following individuals:
• The recipient who is a pregnant
woman who is required to be covered
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under the State plan under section
1902(a)(10)(A)(i) of the Act.
• The recipient who qualifies for
medical assistance under the State plan
on the basis of being blind or disabled
(or being treated as being blind or
disabled) without regard to whether the
individual is eligible for SSI benefits
under title XVI on the basis of being
blind or disabled and including an
individual who is eligible for medical
assistance on the basis of section
1902(e)(3) of the Act.
• The recipient who is entitled to
benefits under any part of Medicare.
• The recipient who is terminally ill
and is receiving benefits for hospice
care under title XIX.
• The recipient who is an inpatient in
a hospital, nursing facility, intermediate
care facility for the mentally retarded, or
other medical institution, and is
required, as a condition of receiving
services in such institution under the
State plan, to spend for costs of medical
care all but a minimal amount of the
individual’s income required for
personal needs.
• The recipient who is medically frail
or otherwise an individual with special
medical needs (as described by the
Secretary in section 440.315(f)). For
purposes of this section, we would
propose that individuals with special
needs includes those groups defined by
Federal regulations at § 438.50(d)(1) and
§ 438.50(d)(3) of the managed care
regulations (that is, dual eligibles and
certain children under age 19 who are
eligible for SSI; eligible under section
1902(e)(3) of the Act, TEFRA children;
in foster care or other out of home
placement; or receiving foster care or
adoption assistance). We are not
proposing a definition for medically
frail populations but we invite public
comments to assist us in defining this
term in the final regulation.
• The recipient who qualifies based
on medical condition for medical
assistance for long-term care services
described in section 1917(c)(1)(C) of the
Act.
• The recipient who receives aid or
assistance under part B of title IV for
children in foster care or an individual
with respect to whom adoption or foster
care assistance is made available under
part E of title IV, without regard to age.
• The recipient who qualifies for
medical assistance on the basis of
eligibility to receive assistance under a
State plan funded under part A of title
IV (as in effect on or after welfare reform
effective date defined in section 1931(i)
of the Act). This provision relates to
those individuals who qualify for
Medicaid solely on the basis of
qualification under the Temporary
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Assistance for Needy Families (TANF)
rules (that is, the State links Medicaid
eligibility to TANF eligibility).
• The recipient is a woman who is
receiving medical assistance by virtue of
the application of sections
1902(a)(10)(ii)(XVIII) and 1902(a) of the
Act. This provision relates to those
individuals who are eligible for
Medicaid based on the breast or cervical
cancer eligibility provisions.
• The recipient qualifies for medical
assistance as a TB-infected individual
on the basis of section
1902(a)(10)(A)(ii)(XII) of the Act.
• The recipient is not a qualified
alien (as defined in section 431 of the
Personal Responsibility and Work
Opportunity Reconciliation Act of 1996)
and receives only care and services
necessary for the treatment of an
emergency medical condition in
accordance with section 1903(v) of the
Act.
Section 440.320 State Plan
Requirements: Optional Enrollment for
Exempt Individuals
At proposed § 440.320, we would
allow States to offer exempt individuals
specified in § 440.315 the option to
enroll into a benchmark or benchmarkequivalent benefit plan. The State plan
must identify in its State plan the
exempt groups for which this coverage
is available. There may be instances in
which an exempted individual may
benefit from enrolling in a benchmark or
benchmark-equivalent benefit package.
States are permitted to elect in the State
plan to offer exempted individuals a
benchmark or benchmark-equivalent
package, but States may not require
them to enroll in one. For example, in
some States the State employee
benchmark coverage may be more
generous than the State Medicaid plan.
Secretary-approved coverage may offer
the opportunity for disabled individuals
to obtain integrated coverage for acute
care and community-based long-term
care services. Additionally, States may
be able to better integrate disease
management programs to provide better
coordinated care which targets the
specific needs of individuals with
special health needs.
Section 440.325 State Plan
Requirements: Coverage and Benefits
At proposed § 440.325, we set forth
the conditions under which a State may
offer enrollment to exempt recipients
specified in § 440.315. When a State
offers exempt recipients the option to
enroll in a benchmark or benchmarkequivalent benefit package, the State
must inform the recipients that
enrollment is voluntary and that the
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9719
individual may opt out of the
benchmark or benchmark-equivalent
benefit package at any time and regain
immediate eligibility for the standard
full Medicaid program under the State
plan. The State must inform the
recipient of the benefits available under
the benchmark or benchmark-equivalent
benefit package and provide a
comparison of how they differ from the
benefits available under the standard
full Medicaid program. The State must
document in the individual’s eligibility
file that the individual was informed in
accordance with this paragraph and
voluntarily chose to enroll in the
benchmark or benchmark-equivalent
benefit package.
At proposed § 440.325, a State would
have the option to choose to specify the
benchmark or benchmark-equivalent
coverage packages offered under the
State’s Medicaid plan. A State may
select one or all of the benchmark plans
described in § 440.330 or establish
benchmark-equivalent plans described
in § 440.335, respectively.
Section 440.330 Benchmark Health
Benefits Coverage
At proposed § 440.330, benchmark
coverage is described as any one of the
following:
• Federal Employees Health Benefit
Plan Equivalent Coverage (FEHBP—
Equivalent Health Insurance Coverage).
A benefit plan equivalent to the
standard Blue Cross/Blue Shield
preferred provider option service benefit
plan that is described in and offered to
Federal employees under 5 U.S.C.
8903(1).
• State employee coverage. A health
benefits plan that is offered and
generally available to State employees
in the State involved.
• Health Maintenance Organization
(HMO) plan. A health insurance plan
that is offered through an HMO (as
defined in section 2791(b)(3) of the
Public Health Service Act) that has the
largest insured commercial, nonMedicaid enrollment in the State.
• Secretary approved coverage. Any
other health benefits coverage that the
Secretary determines, upon application
by a State, provides appropriate
coverage for the population proposed to
be provided that coverage. States
wishing to opt for Secretarial approved
coverage should submit a full
description of the proposed coverage
and include a benefit-by-benefit
comparison of the proposed plan to one
or more of the three benchmark plans
specified above or to the State’s
standard full Medicaid coverage
package under section 1905(a) of the
Act, as well as a full description of the
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population that would be receiving the
coverage. In addition, the State should
submit any other information that
would be relevant to a determination
that the proposed health benefits
coverage would be appropriate for the
proposed population. The scope of a
Secretary-approved health benefits
package will be limited to benefits
within the scope of the categories
available under a benchmark coverage
package or the standard full Medicaid
coverage package under section 1905(a)
of the Act.
A State may select one or more
benchmark coverage plan options. The
State may also specify the benchmark
plan for any specific recipient. For
example, one recipient may be enrolled
in the FEHBP and another may be
enrolled into State Employee Coverage
at the option of the State.
Where the benchmark coverage package
used by the State as a basis for
comparison in establishing the aggregate
actuarial value of the benchmarkequivalent package includes any or all
of the following four categories of
services: prescription drugs; mental
health services; vision services; and
hearing services; then the actuarial
value of the coverage for each of these
categories of service in the benchmarkequivalent coverage package must be at
least 75 percent of the actuarial value of
the coverage for that category of service
in the benchmark plan used for
comparison by the State.
If the benchmark coverage package
does not cover one of the four categories
of services mentioned above, then the
benchmark-equivalent coverage package
may, but is not required to, include
coverage for that category of service.
Section 440.335 BenchmarkEquivalent Health Benefits Coverage
At proposed § 440.335, we would
provide that if a State designs or selects
a benchmark plan other than those
specified in § 440.330, the State must
provide coverage that is equivalent to
benchmark coverage. Coverage that
meets the following requirements will
be considered to be benchmarkequivalent coverage:
• Required Coverage. Benchmarkequivalent coverage includes benefits
for items and services within each of the
following categories of basic services
and must include coverage for the
following categories of basic services:
+ Inpatient and outpatient hospital
services.
+ Physicians’ surgical and medical
services.
+ Laboratory and x-ray services.
+ ‘‘Well-baby’’ and ‘‘well-child’’ care,
including age-appropriate
immunizations.
+ Other appropriate preventive
services, as designated by the Secretary.
• Aggregate actuarial value equivalent
to benchmark coverage. Benchmarkequivalent coverage must have an
aggregate actuarial value, determined in
accordance with proposed § 440.340
that is at least equivalent to coverage
under one of the benchmark packages
outlined in § 440.330.
• Additional coverage. In addition to
the categories of services set forth above,
benchmark-equivalent coverage may
include coverage for any additional
services included in the benchmark
plan or described in section 1905(a) of
the Act.
• Application of actuarial value for
benchmark-equivalent coverage that
includes prescription drugs, mental
health, vision, and hearing services.
Section 440.340 Actuarial Report for
Benchmark-Equivalent Health Benefit
Coverage
In accordance with 1937(a)(3) of the
Act, at proposed § 440.340, we would
require a State as a condition of
approval of benchmark-equivalent
coverage, to provide an actuarial report,
with an actuarial opinion that the
benchmark-equivalent coverage meets
the actuarial requirements of § 440.335.
At proposed § 440.340, we would
require the actuarial report to obtain
approval for benchmark-equivalent
health benefit coverage and to meet all
the provisions of the statute. The
actuarial report must state:
• The actuary issuing the opinion is
a member of the American Academy of
Actuaries (AAA) (and meets Academy
standards for issuing an opinion).
• The actuary used generally
accepted actuarial principles and
methodologies of the AAA, standard
utilization and price factors and a
standardized population representative
of the population involved.
• The same principles and factors
were used in analyzing the value of
different coverage (or categories of
services) without taking into account
differences in coverage based on the
method of delivery or means of cost
control or utilization used.
• The report should also state if the
analysis took into account the State’s
ability to reduce benefits because of the
increase in actuarial value of health
benefits coverage offered under the State
plan that results from the limitations on
cost sharing (with the exception of
premiums) under that coverage.
• The actuary preparing the opinion
must select and specify the standardized
set of utilization and pricing factors as
well as the standardized population.
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• The actuary preparing the opinion
must provide sufficient detail to explain
the basis of the methodologies used to
estimate the actuarial value or, if
requested by CMS, to replicate the
State’s result.
Section 440.345 EPSDT Services
Requirement
At proposed § 440.345, we would
require States to make available EPSDT
services as defined in section 1905(r) of
the Act that are medically necessary for
those individuals under age 19 who are
covered under the State plan. We expect
that most benchmark or benchmark
equivalent plans will offer the majority
of EPSDT services. To the extent that
any medically necessary EPSDT services
are not covered through the benchmark
or benchmark-equivalent plan, States
are required to supplement the
benchmark or benchmark-equivalent
plan in order to ensure access to these
services. Individuals mandated into a
benchmark or benchmark-equivalent
plan and entitled to have access to
EPSDT services cannot opt out of the
benchmark or benchmark equivalent
plan just to receive these services. While
individuals are required to have access
to such medically necessary services
first under the benchmark or
benchmark-equivalent plan, the State
may provide wrap-around or additional
coverage for medically necessary
services not covered under such plan.
Any wrap-around benefits must be
sufficient so that, in combination with
the benchmark or benchmark-equivalent
benefits package, an individual would
have coverage for his or her medically
necessary services consistent with the
requirements under 1905(r) of the Act.
The State plan must include a
description of how wrap-around
benefits or additional services will be
provided to ensure that these recipients
have access to full EPSDT services
under 1905(r) of the Act.
In addition, individuals must first
seek coverage of EPSDT services
through the benchmark or benchmark
equivalent plan before seeking coverage
of such through wrap-around benefits.
Section 440.350 Employer Sponsored
Insurance Health Plans
At proposed § 440.350, the use of
benchmark or benchmark-equivalent
benefit coverage would be at the
discretion of the State and may be used
in conjunction with employer
sponsored health plans as a coverage
option for individuals with access to
private health insurance. Additionally,
the use of benchmark or benchmarkequivalent coverage may be used for
individuals with access to private health
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insurance coverage. For example, if an
individual has access to employer
sponsored coverage and that coverage is
determined by the State to be
benchmark or benchmark-equivalent, a
State may, at its option, provide
premium payments on behalf of the
recipient to purchase the employer
coverage. Additionally, a State could
create a benchmark or benchmarkequivalent plan combining employer
sponsored insurance and wrap-around
benefits to that employer sponsored
insurance benefit package. The
premium payments would be
considered medical assistance and the
State could require the recipient to
enroll in the group health plan.
Section 440.355 Payment of Premiums
At proposed § 440.355, payment of
premiums by the State, net of
beneficiary contributions, to obtain
benchmark or benchmark-equivalent
benefit coverage on behalf of
beneficiaries under this section will be
treated as medical assistance under
1905(a) of the Act.
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Section 440.360 State Plan
Requirement for Providing Additional
Wrap-Around Services
At proposed § 440.360, a State may at
its option provide additional wraparound services to the benchmark or
benchmark-equivalent plans. The wraparound services do not need to include
all State plan services. However, the
State plan must describe the
populations covered and the payment
methodology for assuring those services.
Such additional or wrap-around
services must be within the scope of
categories of services covered under the
benchmark plan, or described in section
1905(a) of the Act.
Section 440.365 Coverage of Rural
Health Clinic and Federally Qualified
Health Center (FQHC) Services
At proposed § 440.365, a State that
provides benchmark or benchmarkequivalent coverage to individuals must
assure that the individual has access,
through that coverage or otherwise, to
rural health clinic services and FQHC
services as defined in subparagraphs (B)
and (C) of section 1905(a)(2) of the Act.
Payment for these services must be
made in accordance with the payment
provisions of section 1902(bb) of the
Act.
Section 440.370 Cost Effectiveness
At proposed § 440.370, benchmark or
benchmark-equivalent coverage and any
additional benefits must be provided in
accordance with Federal upper payment
limits, procurement requirements and
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other economy and efficiency principles
that would otherwise be applicable to
the services or delivery system through
which the coverage and benefits are
obtained.
Section 440.375
Comparability
At proposed § 440.375, a State may at
its option amend its State plan to
provide benchmark or benchmarkequivalent coverage to recipients
without regard to comparability.
Section 440.380
Statewideness
At proposed § 440.380, a State may at
its option amend its State plan to
provide benchmark or benchmarkequivalent coverage to recipients
without regard to statewideness.
Section 440.385
Freedom of Choice
At proposed § 440.385, a State may at
its option amend its State plan to
provide benchmark or benchmarkequivalent coverage to recipients
without regard to freedom of choice.
States may restrict recipients to
obtaining services from (or through)
selectively procured provider plans or
practitioners that meet, accept, and
comply with reimbursement, quality
and utilization standards under the
State Plan, to the extent that the
restrictions imposed meet the following
requirements:
(+) Do not discriminate among classes
of providers on grounds unrelated to
their demonstrated effectiveness and
efficiency in providing the benchmark
benefit package.
(+) Do not apply in emergency
circumstances.
(+) Require that all provider plans are
paid on a timely basis in the same
manner as health care practitioners
must be paid under § 447.45 of the
chapter.
Section 440.390
Transportation
Assurance of
At proposed § 440.390, a State may at
its option amend its State plan to
provide benchmark or benchmarkequivalent coverage to recipients
without regard to the assurance of
transportation to medically necessary
services requirement specified in
section 42 CFR 431.53.
While the following requirements are
subject to the PRA, they are currently
approved under OMB# 0938–0993 with
an expiration date of October 31, 2009.
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Section 440.320 State Plan
Requirements: Optional Enrollment for
Exempt Individuals
Section 440.320(a)requires a State to:
(1) Inform the individuals that the
enrollment is voluntary and that the
individual may opt out of the
benchmark or benchmark-equivalent
coverage at any time and regain
immediate access to standard full
Medicaid coverage under the State plan;
(2) Inform the exempt recipient of the
benefits available under the benchmark
or benchmark-equivalent benefit
package and provide a comparison of
how they differ from the benefits
available under the standard full
Medicaid program; and, (3) Document
in the exempt recipient’s eligibility file
that the recipient was informed in
accordance with this section and
voluntarily chose to enroll in the
benchmark or benchmark-equivalent
benefit package.
Section 440.330 Benchmark Health
Benefits Coverage
Section 440.330(d) requires States
wishing to opt for Secretarial-approved
coverage to submit a full description of
the proposed coverage and include a
benefit-by-benefit comparison of the
proposed plan to one or more of the
three other benchmark plans specified.
Section 440.340 Actuarial Report for
Benchmark-Equivalent Coverage
Section 440.340 requires a State trying
to obtain approval for benchmarkequivalent health benefits coverage
described in 440.335 to submit, as part
of its State Plan Amendment, an
actuarial report. The report must
provide sufficient detail to explain the
basis of the methodologies used to
estimate the actuarial value or, if
requested by CMS, to replicate the
State’s result.
Section 440.345 Requirement to
Provide EPSDT Services
Section 440.345(a)(2) requires a State
to include a description in their State
Plan of how the wrap-around benefits or
additional services will be provided to
ensure that recipients receive full
EPSDT services. The description must
describe the populations covered and
the procedures for assuring those
services.
Section 440.350 Employer-Sponsored
Insurance Health Plans
III. Collection of Information
Requirements
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Section 440.350(b) requires a State to
set forth in the State plan the criteria it
will use to identify individuals who
would be required to enroll in an
available group health plan to receive
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benchmark or benchmark-equivalent
coverage.
Section 440.360 State Plan
Requirement for Providing Additional
Wrap-Around Services
This section requires States opting to
provide additional services to the
benchmark-equivalent plans, to describe
the populations covered and the
payment methodology for these services
in their State plan.
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 subsequent document, we will
respond to the comments in the
preamble to 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).
We issued a State Medicaid Director’s
letter on March 31, 2006 providing
guidance on the new flexibilities
available to States as a result of the
enactment of the Deficit Reduction Act
of 2005. This proposed rule simply
codifies that guidance. States have
already begun implementing this
provision well in advance of this
proposed rule. As a result, while we
anticipate that implementation of this
flexibility would be economically
significant, the significance is based on
the changes authorized by statute and
not based on discretionary policies
contained in the rule itself. The impact
of the rule would be limited to ensuring
uniform policies for States that
implement the flexibility afforded under
section 1937 of the Social Security Act,
as added by the Deficit Reduction Act
of 2005. The aggregate amount of
Federal savings is estimated to be $2.3
billion from FY 2006 through FY 2010.
We have estimated the impact of this
rule by analyzing the potential Federal
savings related to lower per capita
spending that may be achieved if States
choose to enroll beneficiaries in eligible
populations in plans that are less costly
than projected Medicaid costs. To do
this, we developed estimates based on
the following assumptions:
• The number of eligible beneficiaries
and the Federal Medicaid costs of these
beneficiaries are based on 2003
Medicaid Statistical Information System
(MSIS) data;
• Projections of the number of eligible
beneficiaries and their associated
Federal Medicaid costs were made using
assumptions from the President’s
Budget 2007, including enrollment
growth rates and per capita spending
growth rates;
• The relative costs of the new plans
allowed under this rule to current
Medicaid spending were estimated
based on reviews of Medicaid spending
data and the plans described in this
rule. Additionally, we have assumed
that not all States would immediately
use the options made available through
this rule; therefore, we assume that State
use of these plans would continue to
increase through 2011. We assume that
use in 2006 will be about 10% of 2011level of use; 40% in 2007; 60% in 2008;
80% in 2009; and 90% in 2010.’’
These estimates assume that there
will be a negligible impact on State
administration costs. As States already
have experience in dealing with
alternative plan designs, including
through waivers or managed care plans,
we have assumed States are equipped to
implement these plans and will be part
of their normal administrative spending.
These estimates are subject to a
substantial amount of uncertainty and
actual experience may be significantly
different. The range of possible
experience is greater than under most
other rules for the following two
reasons. First, this rule provides the
option for States to use alternative
plans; to the extent that States
participate more or less than assumed
here (both the number of States that
participate and the extensiveness of
States’ use of these plans), Federal
savings may be greater than or less than
estimated. Second, this rule also
provides a wide range of options for
States in designing these plans; to the
extent that States use plans that are
relatively more or less costly than
assumed here, Federal savings may be
less than or greater than estimated.
ESTIMATED ANNUAL FEDERAL SAVINGS DISCOUNTED AT 0%, 3% AND 7%—FROM FY 2006 TO FY 2010
[In millions]
Discount rate
2006
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0% ............................................................................................................................
3% ............................................................................................................................
7% ............................................................................................................................
We anticipate that States would phase
in alternative benefit programs, and
changes would not be fully realized
until 2010. The majority of savings
would be achieved through cost
avoidance of future anticipated costs by
providing appropriate benefits based on
a population’s health care needs,
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2007
$70
68
65
appropriate utilization of services, and
through gains in efficiencies through
contracting. States would be able to take
greater advantage of marketplace
dynamics within their State. We also
anticipate that a number of States will
use this flexibility to create programs
that are more similar to their SCHIP
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$280
264
245
2008
$460
421
375
2009
$660
586
504
2010
$810
699
578
Total
2006–2010
$2,280
2,038
1,767
programs. Because States are no longer
tied to statewideness and comparability
rules for non-disabled, non-aged, and
non-blind populations, they would be
able to offer individuals and families
different types of plans consistent with
their needs and available delivery
systems.
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Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
ESTIMATED ANNUAL STATE SAVINGS DISCOUNTED AT 0%, 3% AND 7%—FROM FY 2006 TO FY 2010
[In millions]
Discount rate
2006
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0% ............................................................................................................................
3% ............................................................................................................................
7% ............................................................................................................................
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 $30.5 million in any
1 year. Individuals and States are not
included in the definition of a small
entity. We have determined, and the
Secretary certifies, that this provision
applies to States only and would not
affect small entities.
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 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 Core-Based Statistical Area and has
fewer than 100 beds. We have
determined, and the Secretary certifies,
that this proposed rule would not have
a significant impact on the operations of
a substantial number of small rural
hospitals.
Section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L.
104–4) also requires that agencies assess
anticipated costs and benefits before
issuing any rule that may result in
expenditures in any 1 year by State,
local, or tribal governments, in the
aggregate, or by the private sector, of
$100 million, updated annually for
inflation. That threshold level is
currently approximately $127 million.
Because this rule does not mandate
State participation in using these
benchmark plans, there is no obligation
for the State to make any change to their
Medicaid program. Therefore, there is
no mandate for the State.
We believe this proposed rule would
not mandate expenditures in that
amount.
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
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$50
49
47
2007
$210
198
183
requirement costs on State and local
governments, preempts State law, or
otherwise has Federalism implications.
This proposed rule would not impose
direct cost on States or local government
or preempt State law. The rule would
provide States the option to implement
alternative Medicaid benefits through a
Medicaid State plan amendment.
B. Anticipated Effects
Before section 6044 of the DRA
became effective on March 31, 2006,
State Medicaid programs generally were
required to offer at minimum the same
standard benefit package to each
recipient, regardless of income,
eligibility category, or geographic
location. Some States offered alternative
benefit packages to certain recipients
under section 1115 demonstration
waivers approved by the Centers for
Medicare & Medicaid Services. This
provision allows for similar program
alternatives under the State plan
without the constraints of a waiver.
Moreover, Medicaid families would gain
continuity in coverage as family
members move together from Medicaid
and the State Children’s Health
Insurance Program (SCHIP) to,
eventually, private coverage. Today,
because of the lack of flexibility in
Medicaid, one child may be receiving
Medicaid, another in SCHIP, and the
parent has access to private coverage.
With benefit flexibility in State
Medicaid programs, families could
enroll under the same plan, with the
same providers and one set of
administrative rules. Administrative
simplification can help families
maintain health insurance coverage and
give them experience with private
insurance coverage that would become
important when their income rises
above Medicaid and SCHIP eligibility
levels and to mitigate the need for
dependence. States with strong
employer-based coverage may
emphasize family coverage premium
assistance. States may form larger pools
by combining Medicaid recipients with
their public employees.
C. Alternatives Considered
This rule proposes requirements for
States to elect alternative Medicaid
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2008
$350
320
286
2009
$500
444
381
2010
$610
526
435
Total
2006–2010
$1,720
1,537
1,332
benefit programs through the adoption
of a Medicaid State plan amendment.
The proposed requirements in this rule
were designed to maximize State
flexibility while assuring that
beneficiaries will get quality care that
meets their needs. Under this rule, we
would permit States to define the
alternative benefit packages only by
reference to the benchmark or
benchmark-equivalent standard (with
the exception of the EPSDT wraparound benefits). We would also permit
States to combine an alternative benefit
package with alternative benefit
delivery methods, such as through
managed care, employer-based coverage,
or selective contracting. An alternative
might have been to require the State to
document any deviation from otherwise
applicable State plan requirements,
much as is required under section 1115
demonstration waivers, 1915(b) waivers,
1915(c) waivers, or any combination
thereof. We have not elected this
alternative because it would be
cumbersome for States, it would not be
consistent with the statutory use of
benchmark and benchmark-equivalent
coverage as reference points for
permissible benefit packages, and it
would not improve the clarity of the
State plan. Another alternative might
have been to limit State flexibility under
this provision to variation in the
amount, duration and scope of benefits
without providing authority for an
integrated approach combining
alternative benefits with alternative
benefit delivery methods. We have not
elected this alternative because an
integrated approach allows greater State
flexibility to tailor both benefits and
delivery methods to the eligible groups
of individuals being served.
D. Accounting Statement
As required by OMB Circular A–4
(available at ), https://
www.whitehouse.gov/omb/circulars/
a004/a-4.pdf), in Table 15 below, we
have prepared an accounting statement
showing the classification of the
expenditures associated with the
provisions of this proposed rule. This
table provides our best estimate of the
decrease in Medicaid payments as a
result of the changes presented in this
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Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
proposed rule. All savings are classified
as transfers to the Federal Government,
as well as to States.
TABLE.—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED SAVINGS, FROM FY 2006 TO FY 2010
[In $ millions]
Category
Transfers
Year Dollar
Annualized Monetized Transfers ...................................................
Units Discount Rate
Period Covered
7%
3%
0%
..............................
2006
From Whom To Whom? ................................................................
....................
¥$430.8
¥$445.0
¥$456.0
2006–2010
2009
2010
Federal Government to Beneficiaries, Providers
Category
Transfers
Year ...............................................................................................
2006
¥$70
Annualized Monetized Transfers ...................................................
From Whom To Whom? ................................................................
2007
2008
¥$280
¥$460
¥$660
¥$810
Federal Government to Beneficiaries, Providers
Category
Transfers
Year Dollar
Annualized Monetized Transfers ...................................................
Units Discount Rate
Period Covered
7%
3%
0%
..............................
2006
From Whom to Whom? .................................................................
....................
¥$324.9
¥$335.7
¥$344.0
2006–2010
2009
2010
State Governments to Beneficiaries, Providers
Category
Transfers
Year ...............................................................................................
2006
¥$50
Annualized Monetized Transfers ...................................................
mstockstill on PROD1PC66 with PROPOSALS
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
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
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¥$210
Frm 00016
¥$350
¥$500
¥$610
State Governments to Beneficiaries, Providers
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, the costs
represent a reduction in Federal
Government spending on behalf of
beneficiaries. 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
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anticipated annual reduction in Federal
Medicaid spending under this rule.
E. Conclusion
We project that the use of benchmark
plans under this rule will save $2.3
billion from 2006–2010. These savings
would arise as States use the plans
described by this rule to manage the
costs of their Medicaid program by
modifying plan benefits for targeted
beneficiaries. The actual savings will
heavily depend on the number of States
that ultimately implement these plans,
the number of beneficiaries States cover
with these plans, and the specific design
and selection of benchmark plans.
For reasons stated above, we are not
preparing analyses for either the RFA or
section 1102(b) of the Act because we
have determined that this rule would
not have a significant economic impact
on a substantial number of small entities
or a significant impact on the operations
of a substantial number of small rural
hospitals.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
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Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
List of Subjects in 42 CFR Part 440
Grant programs—health, Medicaid.
For the reasons set forth in the
preamble, the Centers for Medicare &
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. A new subpart C, consisting of
§ 440.300 through § 440.390, is added to
part 440 to read as follows:
Subpart C—Benchmark Benefit and
Benchmark-Equivalent Coverage
Sec.
440.300 Basis.
440.305 Scope.
440.310 Applicability.
440.315 Exempt individuals.
440.320 State plan requirements: Optional
enrollment for exempt individuals.
440.325 State plan requirements: Coverage
and benefits.
440.330 Benchmark health benefits
coverage.
440.335 Benchmark-equivalent health
benefits coverage.
440.340 Actuarial report for benchmarkequivalent coverage.
440.345 EPSDT services requirement.
440.350 Employer-sponsored insurance
health plans.
440.355 Payment of premiums.
440.360 State plan requirement for
providing additional wrap-around
services.
440.365 Coverage of rural health clinic and
federally qualified health center (FQHC)
services.
440.370 Cost-effectiveness.
440.375 Comparability.
440.380 Statewideness.
440.385 Freedom of choice.
440.390 Assurance of Transportation.
Subpart C—Benchmark Benefit and
Benchmark-Equivalent Coverage
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§ 440.300
Basis.
This subpart implements section 1937
of the Act, which authorizes States to
provide for medical assistance to one or
more groups of Medicaid-eligible
recipients specified by the State under
an approved State plan amendment
through enrollment in coverage that
provides benchmark or benchmarkequivalent health care benefit coverage.
§ 440.305
Scope.
(a) General. This subpart sets out
requirements for States that elect to
provide medical assistance to certain
Medicaid eligible recipients within one
or more groups of individuals specified
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by the State, through enrollment of the
recipients in coverage, identified as
‘‘benchmark’’ or ‘‘benchmarkequivalent.’’
(b) Limitations. A State may only
apply the option in paragraph (a) of this
section for an individual whose
eligibility is based on an eligibility
category under section 1905(a) of the
Act that would have been covered under
the State’s plan on or before February 8,
2006.
(c) A State may not require but may
offer enrollment in benchmark or
benchmark-equivalent coverage to the
Medicaid eligible individuals listed in
§ 440.315. States allowing individuals to
opt in must be in compliance with the
rules specified at § 440.320.
§ 440.310
Applicability.
(a) Enrollment. The State may require
‘‘full benefit eligible’’ recipients not
excluded in § 440.315 to enroll in
benchmark or benchmark-equivalent
coverage.
(b) Full benefit eligible. A recipient is
full benefit eligible if determined by the
State to be eligible to receive the
standard full Medicaid benefit package
under the approved Medicaid State plan
if not for the application of the option
available under this subpart, but does
not include individuals determined
eligible as medically needy individuals,
or eligible because of a reduction of
income based on costs incurred for
medical or other remedial care under
section 1902(f) of the Act or otherwise
based on incurred medical costs.
§ 440.315
Exempt individuals.
For recipients within one (or more) of
the following categories, the State plan
may offer, but may not require under
§ 440.310, the opportunity to obtain
benefits through enrollment in
benchmark or benchmark-equivalent
coverage:
(a) The recipient is a pregnant woman
who is required to be covered under the
State plan under section
1902(a)(10)(A)(i) of the Act.
(b) The recipient qualifies for medical
assistance under the State plan on the
basis of being blind or disabled (or being
treated as being blind or disabled)
without regard to whether the
individual is eligible for Supplemental
Security Income benefits under title XVI
on the basis of being blind or disabled
and including an individual who is
eligible for medical assistance on the
basis of section 1902(e)(3) of the Act.
(c) The recipient is entitled to benefits
under any part of Medicare.
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9725
(d) The recipient is terminally ill and
is receiving benefits for hospice care
under title XIX.
(e) The recipient is an inpatient in a
hospital, nursing facility, intermediate
care facility for the mentally retarded, or
other medical institution, and is
required, as a condition of receiving
services in that institution under the
State plan, to spend for costs of medical
care all but a minimal amount of the
individual’s income required for
personal needs.
(f) The recipient is medically frail or
otherwise an individual with special
medical needs. For these purposes,
individuals with special needs are those
individuals described in § 438.50(d)(1)
and § 438.50(d)(3) of this chapter.
(g) The recipient qualifies based on
medical condition for medical
assistance for long-term care services
described in section 1917(c)(1)(C) of the
Act.
(h) The recipient is an individual with
respect to whom aid or assistance is
made available under part B of title IV
to children in foster care and
individuals with respect to whom
adoption or foster care assistance is
made available under part E of title IV,
without regard to age.
(i) The recipient qualifies for medical
assistance on the basis of eligibility to
receive assistance under a State plan
funded under part A of title IV (as in
effect on or after welfare reform effective
date defined in section 1931(i) of the
Act). This provision relates to those
individuals who qualify for Medicaid
solely on the basis of qualification
under the State’s TANF rules.
(j) The recipient is a woman who is
receiving medical assistance by virtue of
the application of sections
1902(a)(10)(ii)(XVIII) and 1902(a) of the
Act.
(k) The recipient qualifies for medical
assistance on the basis of section
1902(a)(10)(A)(ii)(XII) of the Act.
(l) The recipient is not a qualified
alien (as defined in section 431 of the
Personal Responsibility and Work
Opportunity Reconciliation Act of 1996)
and receives care and services necessary
for the treatment of an emergency
medical condition in accordance with
section 1903(v) of the Act.
§ 440.320 State plan requirements:
Optional enrollment for exempt individuals.
(a) General rule. A State plan that
offers exempt individuals as defined in
§ 440.315 the option to enroll in
benchmark or benchmark-equivalent
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Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
coverage must identify in its State plan
the exempt groups for which this
coverage is available, and must comply
with the following provisions:
(1) In any case in which the State
offers an exempt individual the option
to obtain coverage in a benchmark or
benchmark-equivalent benefit package,
the State must inform the individuals
that the enrollment is voluntary and that
the individual may opt out of the
benchmark or benchmark-equivalent
coverage at any time and regain
immediate access to standard full
Medicaid coverage under the State plan.
(2) The State must inform the exempt
recipient of the benefits available under
the benchmark or benchmark-equivalent
benefit package and provide a
comparison of how they differ from the
benefits available under the standard
full Medicaid program.
(3) The State must document in the
exempt recipient’s eligibility file that
the recipient was informed in
accordance with this section and
voluntarily chose to enroll in the
benchmark or benchmark-equivalent
benefit package.
(b) [Reserved]
§ 440.325 State plan requirements:
Coverage and benefits.
Subject to requirements in § 440.345
and § 440.365, States may elect to
provide any of the following of types of
health benefits coverage:
(a) Benchmark coverage in accordance
with § 440.330.
(b) Benchmark-equivalent coverage in
accordance with § 440.335.
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§ 440.330 Benchmark health benefits
coverage.
Benchmark coverage is health benefits
coverage that is equal to the coverage
under one or more of the following
benefit plans:
(a) Federal Employees Health Benefit
Plan Equivalent Coverage (FEHBP—
Equivalent Health Insurance Coverage).
A benefit plan equivalent to the
standard Blue Cross/Blue Shield
preferred provider option service benefit
plan that is described in and offered to
Federal employees under 5 U.S.C.
8903(1).
(b) State employee coverage. Health
benefits coverage that is offered and
generally available to State employees
in the State.
(c) Health Maintenance Organization
(HMO) plan. A health insurance plan
that is offered through an HMO, (as
defined in section 2791(b)(3) of the
Public Health Service Act) that has the
largest insured commercial, nonMedicaid enrollment in the State.
(d) Secretary approved coverage. Any
other health benefits coverage that the
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Secretary determines, upon application
by a State, provides appropriate
coverage for the population proposed to
be provided such coverage. States
wishing to opt for Secretarial approved
coverage should submit a full
description of the proposed coverage,
(including a benefit-by-benefit
comparison of the proposed plan to one
or more of the three other benchmark
plans specified above or to the State’s
standard full Medicaid coverage
package under section 1905(a) of the
Act), and of the population to which the
coverage would be offered. In addition,
the State should submit any other
information that would be relevant to a
determination that the proposed health
benefits coverage would be appropriate
for the proposed population. The scope
of a Secretary-approved health benefits
package will be limited to benefits
within the scope of the categories
available under a benchmark coverage
package or the standard full Medicaid
coverage package under section 1905(a)
of the Act.
§ 440.335 Benchmark-equivalent health
benefits coverage.
(a) Aggregate actuarial value.
Benchmark-equivalent coverage is
health benefits coverage that has an
aggregate actuarial value, as determined
in § 440.340 that is at least actuarially
equivalent to the coverage under one of
the benchmark benefit packages
described in § 440.330 for the identified
Medicaid population to which it will be
offered.
(b) Required coverage. Benchmarkequivalent health benefits coverage
must include coverage for the following
categories of services:
(1) Inpatient and outpatient hospital
services.
(2) Physicians’ surgical and medical
services.
(3) Laboratory and x-ray services.
(4) Well-baby and well-child care,
including age-appropriate
immunizations.
(5) Other appropriate preventive
services, such as emergency services as
designated by the Secretary.
(c) Additional coverage. (1) In
addition to the categories of services of
this section, benchmark-equivalent
coverage may include coverage for any
additional services in a category
included in the benchmark plan or
described in section 1905(a) of the Act.
(2) If the benchmark coverage package
used by the State for purposes of
comparison in establishing the aggregate
actuarial value of the benchmarkequivalent package includes any of the
following four categories of services:
Prescription drugs; mental health
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services; vision services; and hearing
services; then the actuarial value of the
coverage for each of these categories of
service in the benchmark-equivalent
coverage package must be at least 75
percent of the actuarial value of the
coverage for that category of service in
the benchmark plan used for
comparison by the State.
(3) If the benchmark coverage package
does not cover one of the four categories
of services in paragraph (c)(2) of this
section, then the benchmark-equivalent
coverage package may, but is not
required to, include coverage for that
category of service.
§ 440.340 Actuarial report for benchmarkequivalent coverage.
(a) A State plan amendment that
would provide for benchmarkequivalent health benefits coverage
described in § 440.335, must include an
actuarial report. The actuarial report
must contain an actuarial opinion that
the benchmark equivalent health
benefits coverage meets the actuarial
requirements set forth in § 440.335. The
report must also specify the benchmark
coverage used for comparison.
(b) The actuarial report must state that
it was prepared according to the
following requirements:
(1) By an individual who is a member
of the American Academy of Actuaries
(AAA).
(2) Using generally accepted actuarial
principles and methodologies of the
AAA.
(3) Using a standardized set of
utilization and price factors.
(4) Using a standardized population
that is representative of the population
involved.
(5) Applying the same principles and
factors in comparing the value of
different coverage (or categories of
services).
(6) Without taking into account any
differences in coverage based on the
method of delivery or means of cost
control or utilization used.
(7) Taking into account the ability of
the State to reduce benefits by taking
into account the increase in actuarial
value of health benefits coverage offered
under the State plan that results from
the limitations on cost sharing (with the
exception of premiums) under that
coverage.
(c) The actuary preparing the opinion
must select and specify the standardized
set of factors and the standardized
population to be used in paragraphs
(b)(3) and (b)(4) of this section.
(d) The State must provide sufficient
detail to explain the basis of the
methodologies used to estimate the
actuarial value or, if requested by CMS,
to replicate the State’s result.
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Federal Register / Vol. 73, No. 36 / Friday, February 22, 2008 / Proposed Rules
§ 440.345
EPSDT services requirement.
(a) The State must assure access to
early and periodic screening, diagnostic
and treatment (EPSDT) services through
benchmark or benchmark-equivalent
plan benefits or as wrap-around benefits
to those plans for any child under 19
years of age eligible in a category under
the State plan.
(1) Sufficiency: Any wrap-around
EPSDT benefits must be sufficient so
that, in combination with the
benchmark or benchmark-equivalent
benefits plan, these individuals have
access to the full EPSDT benefit.
(2) State Plan requirement: The State
must include a description of how the
wrap-around benefits will be provided
to ensure that these recipients have
access to the full EPSDT benefit.
(b) Individuals must first seek
coverage of EPSDT services through the
benchmark or benchmark equivalent
plan before seeking coverage of such
through wrap-around benefits.
§ 440.350 Employer-sponsored insurance
health plans.
(a) A State may provide benchmark or
benchmark-equivalent coverage by
obtaining employer sponsored health
plans (either alone or with the addition
of wrap-around services covered
separately under Medicaid) for
individuals with access to private health
insurance.
(b) The State must assure that
employer sponsored plans meet the
requirements of benchmark or
benchmark-equivalent coverage,
including the cost-effectiveness
requirements at § 440.370.
(c) A State may provide benchmark or
benchmark-equivalent coverage through
a combination of employer sponsored
health plans and additional benefit
coverage provided by the State that
wraps around the employer sponsored
health plan which, in the aggregate,
results in benchmark or benchmarkequivalent level of coverage for those
recipients.
§ 440.355
Payment of premiums.
mstockstill on PROD1PC66 with PROPOSALS
Payment of premiums by the State,
net of beneficiary contributions, to
obtain benchmark or benchmarkequivalent benefit coverage on behalf of
beneficiaries under this section will be
treated as medical assistance under
section 1905(a) of the Act.
§ 440.360 State plan requirement for
providing additional wrap-around services.
If the State opts to provide additional
or wrap-around coverage to individuals
enrolled in benchmark or benchmarkequivalent plans, the State plan must
describe the populations covered and
VerDate Aug<31>2005
16:29 Feb 21, 2008
Jkt 214001
9727
the payment methodology for these
services. Additional or wrap-around
services must be in categories that are
within the scope of the benchmark
coverage, or are described in section
1905(a) of the Act.
§ 440.365 Coverage of rural health clinic
and federally qualified health center (FQHC)
services.
(2) Do not apply in emergency
circumstances.
(3) Require that all provider plans are
paid on a timely basis in the same
manner as health care practitioners
must be paid under § 447.45 of the
chapter.
§ 440.390
If a State provides benchmark or
benchmark-equivalent coverage to
individuals, it must assure that the
individual has access, through that
coverage or otherwise, to rural health
clinic services and FQHC services as
defined in subparagraphs (B) and (C) of
section 1905(a)(2) of the Act. Payment
for these services must be made in
accordance with the payment provisions
of section 1902(bb) of the Act.
§ 440.370
Cost-effectiveness.
Benchmark and benchmarkequivalent coverage and any additional
benefits must be provided in accordance
with Federal upper payment limits,
procurement requirements and other
economy and efficiency principles that
would otherwise be applicable to the
services or delivery system through
which the coverage and benefits are
obtained.
§ 440.375
Comparability.
States have the option to amend their
State plan to provide benchmark or
benchmark-equivalent coverage to
recipients without regard to
comparability.
§ 440.380
Statewideness.
States have the option to amend their
State plan to provide benchmark or
benchmark-equivalent coverage to
recipients without regard to
statewideness.
§ 440.385
Frm 00019
Fmt 4702
Sfmt 4702
(Catalog of Federal Domestic Assistance
Program No. 93.778, Medical Assistance
Program)
Dated: October 11, 2007.
Kerry Weems,
Acting Administrator, Centers for Medicare
& Medicaid Services.
Approved: November 1, 2007.
Michael O. Leavitt,
Secretary.
Editorial Note: This document was
received at the Office of the Federal Register
on February 15, 2008.
[FR Doc. E8–3206 Filed 2–21–08; 8:45 am]
BILLING CODE 4120–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 447 and 457
[CMS–2244–P]
RIN 0938–A047
Medicaid Program; Premiums and Cost
Sharing
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
Freedom of choice.
(a) States have the option to amend
their State plan to provide benchmark or
benchmark-equivalent coverage to
recipients without regard to the
requirements for free choice of provider
in § 431.51 of this chapter.
(b) States may restrict recipients to
obtaining services from (or through)
selectively procured provider plans or
practitioners that meet, accept, and
comply with reimbursement, quality
and utilization standards under the
State Plan, to the extent that the
restrictions imposed meet the following
requirements:
(1) Do not discriminate among classes
of providers on grounds unrelated to
their demonstrated effectiveness and
efficiency in providing the benchmark
benefit package.
PO 00000
Assurance of Transportation.
A State may at its option amend its
State plan to provide benchmark or
benchmark-equivalent coverage to
recipients without regard to the
assurance of transportation to medically
necessary services requirement
specified in § 431.53 of this chapter.
SUMMARY: This proposed rule would
implement and interpret the provisions
of sections 6041, 6042, and 6043 of the
Deficit Reduction Act of 2005 (DRA),
and section 405(a)(1) of the Tax Relief
and Health Care Act of 2006 (TRHCA).
These sections amend the Social
Security Act (the Act) by adding a new
section 1916A to provide State
Medicaid agencies with increased
flexibility to impose premium and cost
sharing requirements on certain
Medicaid recipients. This authority is in
addition to the existing authority States
have to impose premiums and cost
sharing under section 1916 of the Act.
The DRA provisions also specifically
address cost sharing for non-preferred
E:\FR\FM\22FEP1.SGM
22FEP1
Agencies
[Federal Register Volume 73, Number 36 (Friday, February 22, 2008)]
[Proposed Rules]
[Pages 9714-9727]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-3206]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 440
[CMS-2232-P]
RIN 0938-A048
Medicaid Program; State Flexibility for Medicaid Benefit Packages
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would implement provisions of section 6044
of the Deficit Reduction Act of 2005, Pub. L. 109-171, which amends the
Social Security Act by adding a new section 1937 related to the
coverage of medical assistance under approved State plans. Under this
new section, States have increased flexibility under an approved State
plan to define the scope of covered medical assistance by offering
coverage of benchmark or benchmark-equivalent benefit packages to
certain Medicaid recipients.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. March 24, 2008.
ADDRESSES: In commenting, please refer to file code CMS-2232-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 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-2232-P, 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-2232-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) 786-7195 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.
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: Donna Schmidt, (410) 786-5532.
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-2232-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 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 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
Under title XIX of the Social Security Act (the Act), the Secretary
is
[[Page 9715]]
authorized to provide funds to assist States in furnishing medical
assistance to needy individuals whose income and resources are
insufficient to meet the costs of necessary medical services, including
families with dependent children and individuals who are aged, blind,
or disabled. To be eligible for funds under this program, States must
submit a State plan, which must be approved by the Secretary. Programs
under title XIX are jointly financed by Federal and State governments.
Within broad Federal guidelines, each State determines the design of
its program, eligible groups, benefit packages, payment levels for
coverage and administrative and operating procedures.
Before the passage of the Deficit Reduction Act (DRA), States were
required to offer at minimum a standard benefit package to eligible
populations identified in section 1902(a)(10)(A) of the Act (with some
specific exceptions, for example, for certain pregnant women, who could
be limited to pregnancy-related services). Under section 1902(a)(10)(A)
of the Act, this standard benefit package had to include certain
specific benefits identified in the definition of ``medical
assistance'' at section 1905(a) of the Act. These identified benefits
include inpatient and outpatient hospital services, physician services,
medical and surgical services furnished by a dentist, rural health
clinic services, federally qualified health center services, laboratory
and X-ray services, nursing facility services, early and periodic
screening, diagnostic and treatment services for individuals under age
21, family planning services to individuals of child-bearing age,
nurse-midwife services, certified pediatric nurse practitioner, and
certified family nurse practitioner services. Under section
1902(a)(10)(D) of the Act, the standard benefit package is also
required to include home health services.
Section 6044 of the Deficit Reduction Act of 2005 (DRA) (Pub. L.
109-171, enacted on February 8, 2006), amended the Act by adding a new
section 1937 that allows States to amend their Medicaid State plans to
provide for the use of benefit packages other than the standard benefit
package, namely benchmark benefit packages or benchmark-equivalent
packages, for certain populations. The statute delineates what benefit
packages qualify as benchmark packages and what would constitute a
benchmark-equivalent package. The statute also specifies those exempt
populations that may not be included or mandated in the benchmark
coverages. To be eligible for funds under this new provision, States
must submit a State plan amendment, which must be approved by the
Secretary.
This proposed rule would incorporate and integrate into Centers for
Medicare & Medicaid Services (CMS) regulations the statutory framework
for alternative benchmark packages.
II. Provisions of the Proposed Rule
[If you choose to comment on issues in this section, please include
the caption ``PROVISIONS OF THE PROPOSED RULE'' at the beginning of
your comments.]
By creating section 1937 of the Act, we believe the Congress
intended to provide States unprecedented flexibility within Medicaid
State Plans to provide health benefits coverage. This authority,
created by section 6044 of the DRA, allows States broad flexibility to
develop innovative health coverage plans for Medicaid recipients.
States may create more mainstream packages like those found in the
private insurance market by implementing health benefit packages
mirroring employer sponsored group health plans.
These flexibilities give States new opportunities to provide
benefit plans to meet the health care needs of Medicaid populations
while maintaining the sustainability of the program. For the first time
in the State plan, States may create innovative Medicaid programs that
further strengthen and support the overall health care system. States
now have the tools they need to provide person-centered care to
maximize health outcomes for individuals. These tools may be used in
conjunction with other title XIX and XXI authorities and other
programs, to strategically align the Medicaid Program with today's
healthcare environment to expand access to affordable mainstream
coverage; to promote personal responsibility for health and accessing
health care; and to improve quality and coordination of care.
The enactment of this provision of the DRA gave States new options
to create programs that are more aligned with the needs of today's
Medicaid populations and the health care environment. States may use
this flexibility to capitalize on the strengths of their existing
health care systems by incorporating and building upon the private
insurance market. Additionally, we encourage States to use these
flexibilities to shape innovations in the health care marketplace. The
authority under this provision creates great opportunities for States
to focus the health care system on delivering person-centered health
care for all individuals. States will be able to reconnect families
receiving health care through Medicaid to the larger insurance system
that serves most Americans and promote continuity of coverage. This in
turn will strengthen the private market and assist in creating better
access to health care in the State.
Section 1937 of the Act gives States greater control over the
administration of their Medicaid programs by moving innovative programs
into State plans. This in turn, provides States with ease in leveraging
the private market forces to provide care to Medicaid recipients in
much the same way this care is provided to those with benefits through
private insurance.
We began issuing guidance about the new flexibilities available to
States within months of the enactment of the DRA. For example, on March
31, 2006, we issued a State Medicaid Director letter providing guidance
on the implementation of section 6044 of the DRA. This proposed rule is
consistent with that guidance.
Under section 1937 of the Act, a State may require that medical
assistance to individuals, within one or more groups of individuals
specified by the State, be provided through enrollment in a benchmark
or benchmark-equivalent benefit coverage package. A State has the
option to amend its State plan to provide benchmark or benchmark-
equivalent coverage without regard to comparability, statewideness,
freedom of choice, the assurance of transportation to medically
necessary services and other requirements in order to tailor and
provide the coverage to the individuals. The purpose of this section,
as indicated in the title of section 6044 of the DRA, was to provide
States with increased flexibility. In order to maximize that
flexibility, we are proposing to interpret the statutory clause
``notwithstanding any other provision of this title'' to relieve States
of the responsibility to assure transportation to and from providers,
which is the regulatory requirement at 42 CFR 431.53 that is based on
sections 1902(a)(4) and 1902)(a)(19) of the Act. The statute provides
benchmark options available to States that are equivalent to those
found in the private health insurance market. Generally, private health
insurance plans do not offer non-emergency medical transportation as a
benefit to enrollees. It would be a strong disincentive for States to
offer benchmark coverage through private health insurance plans if
States had to supplement benchmark benefit plans with additional
transportation benefits. We are therefore proposing to exempt States
that elect benchmark coverage from the transportation assurance
requirement. This provides maximum
[[Page 9716]]
flexibility to states and is consistent with the stated purpose of
section 6044.
Populations Affected. Benchmark or benchmark-equivalent coverage
packages may only be offered to individuals whose eligibility is based
on an eligibility category of the Act that would have been covered
under the State's plan on or before the enactment of the DRA on
February 8, 2006. We are interpreting the statutory term ``eligibility
category'' in this rule to mean an eligibility category listed under
section 1905(a) of the Act, in order to maximize State flexibility. All
recipients within a covered category would be eligible to participate
in a benchmark plan at the State's option, unless specifically exempted
by statute as discussed below, even when the State makes modifications
to the income and resource eligibility levels for a group or groups
under such an eligibility category after February 8, 2006.
A State may require recipients to obtain benefits by enrolling in
benchmark or benchmark-equivalent coverage only if they are ``full
benefit eligibles.'' A full benefit eligible is an individual who would
otherwise be eligible to receive the standard full Medicaid benefit
package under the approved Medicaid State plan, but does not include
individuals determined eligible by the State for medical assistance
under section 1902(a)(10)(C) of the Act, or by reason of section
1902(f) of the Act, or otherwise eligible based on a reduction of
income based on costs incurred for medical or other remedial care
(medically needy and spend-down populations).
The statute also specifies other individuals who are also exempt
from being required to enroll in benchmark or benchmark-equivalent
benefit coverage. These individuals include:
A pregnant woman who is required to be covered under the
State plan under section 1902(a)(10)(A)(i) of the Act;
A recipient qualifying for medical assistance under the
State plan on the basis of being blind or disabled (or being treated as
being blind or disabled) without regard to whether the individual is
eligible for Supplemental Security Income (SSI) benefits under title
XVI on the basis of being blind or disabled and including an individual
who is eligible for medical assistance on the basis of section
1902(e)(3) of the Act;
A recipient entitled to benefits under any part of
Medicare;
A terminally ill recipient receiving benefits for hospice
care under title XIX;
A recipient who is an inpatient in a hospital, nursing
facility, intermediate care facility for the mentally retarded, or
other medical institution, and is required, as a condition of receiving
services in such institution under the State plan, to spend for costs
of medical care all but a minimal amount of the individual's income
required for personal needs;
A recipient who is medically frail or otherwise an
individual with special medical needs (as described by the Secretary);
A recipient qualifying based on medical condition for
medical assistance for long-term care services described in section
1917 (c)(1)(C) of the Act;
A recipient with respect to whom aid or assistance is made
available under part B of title IV to children in foster care or with
respect to whom adoption or foster care assistance is made available
under part E of title IV, without regard to age;
A recipient qualifying for medical assistance on the basis
of eligibility to receive assistance under a State plan funded under
part A of title IV (as in effect on or after welfare reform effective
date defined in section 1931(i) of the Act);
Recipients eligible based on the diagnosis of breast or
cervical cancer by virtue of the application of sections
1902(a)(10)(ii)(XVIII) and 1902(aa) of the Act; and
Recipients who receive limited services because they are
eligible only under section 1902(a)(10)(A)(ii)(XII) of the Act because
they are TB-infected, or because they are not qualified aliens (as
defined in section 431 of the Personal Responsibility and Work
Opportunity Reconciliation Act (PRWORA) of 1996 (Pub. L. 104-193,
enacted on August 22, 1996) and receive only the care and services
necessary for the treatment of an emergency medical condition in
accordance with section 1903(v) of the Act.
For purposes of the exempted populations under section 1937 of the
Act, the Secretary is proposing in Sec. 440.315(f) to define
individuals with special medical needs to include those groups defined
by Federal regulations at 42 CFR 438.50(d)(1) and Sec. 438.50(d)(3) of
the managed care regulations. These groups are: dual eligibles and
certain children under age 19 who are eligible for Supplemental
Security Income (SSI); children eligible under section 1902(e)(3) of
the Act/Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
children; individuals in foster care or other out of home placement;
individuals receiving foster care or adoption assistance; or
individuals receiving services through a family-centered, community-
based, coordinated care system that receives grant funds under section
501(a)(1)(D) of title V, as defined by the State in terms of either
program participation or special health care needs.
There may be instances when an exempted individual may benefit from
enrolling in a benchmark or benchmark-equivalent benefit package.
States are permitted to offer these individuals a benchmark or
benchmark-equivalent package, but may not require them to enroll in
one. In any case in which a State offers an individual the option to
enroll in a benchmark or benchmark-equivalent benefit package, the
State must inform the individual that the enrollment is voluntary and
that he or she may opt out at any time. In addition, the State must
inform the individual of the benefits available under the benchmark or
benchmark-equivalent benefit package, provide a comparison of how they
differ from the benefits available under the regular Medicaid program,
and must document that the individual was informed.
Generally, we would expect that the benchmark or benchmark
equivalent plan would have sufficient enrollment capacity for eligible
individuals. However, there may be circumstances when it is beneficial
for the State to limit enrollment or when the benchmark or benchmark-
equivalent plan would not have the capacity to enroll all interested
and eligible individuals. In these instances, the State would maintain
selection criteria for such plans based on factors such as geography or
date of application that are not related to health status. The State
would provide otherwise available benefits to individuals under the
State plan, which may include the option of enrolling in another
benchmark or benchmark-equivalent plan. And, if applicable, the State
would have a system under which recipients already enrolled in the
benchmark or benchmark equivalent plan are given priority to continue
enrollment if the plan does not have the capacity to accept all those
seeking enrollment under the program.
Benefit Packages. Under section 1937 of the Act, benchmark coverage
is either Federal Employees Health Benefit Plan Equivalent Health
Insurance Coverage; State Employee Coverage; a Health Maintenance
Organization (HMO) plan that has the largest insured commercial, non-
Medicaid enrollment in the State; or Secretary approved coverage.
Secretary approved coverage is any other health benefits coverage that
the Secretary determines, upon application by a State, provides
appropriate
[[Page 9717]]
coverage for the population proposed to be provided this coverage.
In determining the coverage available under a benchmark coverage
package, we do not consider cost sharing to be a limitation on the
coverage (even when the benchmark plan itself does so). Thus, for
example, if the selected benchmark plan document indicates that it
provides coverage for only half of the cost of mental health services,
we view that as a coinsurance requirement rather than as a limitation
on coverage. Cost sharing and premiums for recipients may not exceed
cost sharing limits under the State's plan with respect to sections
1916 and 1916A of the Act. The State would assure that all out of
pocket costs for the recipients do not exceed the applicable limits.
However, benchmark and benchmark-equivalent benefit packages may
include annual coverage limitations on the numbers and types of
particular services.
In determining whether a proposed health benefits coverage package
should be Secretary approved because it provides appropriate health
benefits coverage for the proposed population, we would require that
States submit full descriptions of the proposed coverage, including
comparisons to one of the benchmark plans or to the State's standard
full Medicaid coverage package under section 1905(a) of the Act. In
addition, the State would submit any other information that would be
relevant to a determination that the proposed health benefits coverage
would be appropriate for the proposed population. The scope of a
Secretary-approved health benefits package will be limited to benefits
within the scope of the categories available under a benchmark coverage
package or the standard full Medicaid coverage under section 1905(a) of
the Act.
In determining Secretary approved coverage, a State may consider a
benefit package for a specific population that excludes a certain
category of service. For example, a State may utilize a Secretary
approved package that is benchmarked to the State employees benefit
package which does not include pregnancy-related services. This would
be appropriate where the targeted population is a population group that
does not require such category of service--for instance non-pregnant
adults. If an individual within the targeted population group enrolled
in the Secretary approved benefit was initially eligible through a
category targeted for the Secretary approved coverage, but later
qualified for Medicaid through a group excluded from mandatory
enrollment (e.g., non-pregnant female enrolled in the Secretary
approved benefit becomes pregnant and qualifies under the State plan
under section 1902(a)(10)(A)(i)), such individual must have the
opportunity to receive state plan services not available through the
benchmark and must be given the choice to remain in the Secretary
approved benchmark or revert to traditional Medicaid. In either event,
the individual must be provided the State plan services not available
through the benchmark through either wrap around coverage to the
Secretary approved benefit or by virtue of reverting back to
traditional Medicaid.
A State may elect to offer one or more benchmark coverage options.
The State may also specify in the State plan criteria establishing the
benchmark options, if any, available for any specific group of
recipients. For example, the State plan may identify groups of
recipients who receive benefits through a Federal Employees Health
Benefit Plan (FEHBP) benchmark coverage plan and may identify other
groups who receive benefits through a State Employee Coverage benchmark
coverage plan.
A State may also elect to offer benchmark-equivalent benefit
coverage. Coverage would be considered benchmark-equivalent coverage if
it has an aggregate actuarial value equivalent to a benchmark plan
described above, and it includes the following basic categories of
service: inpatient and outpatient hospital services; physicians'
surgical and medical services; laboratory and x-ray services; well-baby
and well-child care, including age-appropriate immunizations; and other
appropriate preventive services.
In addition to the categories of services set forth above,
benchmark-equivalent coverage may include coverage of additional health
benefits in categories of services included in the benchmark package or
described in section 1905(a) of the Act. If the benchmark coverage
package used by the State as a basis for comparison in establishing the
aggregate actuarial value of the benchmark-equivalent package includes
the following four categories of services: prescription drugs; mental
health services; vision services; and hearing services; then the
actuarial value of the coverage for each of these categories of service
in the benchmark-equivalent coverage package must be at least 75
percent of the actuarial value of the coverage for that category of
service in the benchmark plan used for comparison by the State. If the
benchmark coverage package does not cover one of the additional four
categories of services, then the benchmark-equivalent coverage package
may, but is not required to, include coverage for that category of
service.
As a condition of approval of benchmark-equivalent coverage, the
State must provide an actuarial report with an actuarial opinion that
the benchmark-equivalent coverage meets the actuarial requirements.
Benchmark or benchmark-equivalent benefit coverage may be offered
through employer sponsored health plans for individuals with access to
private health insurance. For example, if an individual has access to
employer sponsored coverage and that coverage is determined by the
State to offer a benchmark or benchmark-equivalent benefit package
(either alone or with the addition of wrap-around services covered
separately under Medicaid), a State may elect to provide premium
payments on behalf of the recipient to purchase the employer coverage.
The State may also provide premium payments on behalf of the recipient
to purchase private health insurance coverage. The premium payments
would be considered medical assistance, the State could require the
recipient to enroll in the group health plan, and the resulting
coverage would comprise the Medicaid benefit. In addition, cost sharing
for recipients should not exceed cost sharing limits under the State's
plan with respect to sections 1916 and 1916A of the Act.
The State must make available to recipients under age 19 who are
covered under the State plan under section 1902(a)(10)(A) of the Act
benefits consisting of Early and Periodic Screening, Diagnostic, and
Treatment (EPSDT) services which are medically necessary for that
individual as defined in section 1905(r) of the Act. For those
individuals who are enrolled in benchmark coverage, the individual must
seek coverage through the benchmark plan before seeking wrap-around
benefits from the State. As always, medical necessity as determined by
the State guides the delivery of EPSDT services. A State must also
assure that individuals in a benchmark or benchmark-equivalent plan
have access, through that coverage or otherwise, to rural health clinic
services and federally qualified health center (FQHC) services.
Under section 1937(a)(1)(C) of the Act, States have the option to
provide additional or wrap-around services to the benchmark or
benchmark-equivalent plans. The wrap-around services do not need to
include all State plan services. However, the State plan must describe
the populations covered and the
[[Page 9718]]
procedures for assuring those services. We interpret the term
``additional or wrap-around services'' to mean health benefits that are
of the same type as those covered under the benchmark or considered to
be health benefits under the Medicaid statute. We propose in Sec.
440.360 that additional or wrap-around services must be within the
scope of categories of services covered under the benchmark plan, or
described in section 1905(a) of the Act.
Generally, we would expect that the benchmark or benchmark
equivalent plan would have sufficient enrollment capacity for eligible
individuals. However, because benchmark and benchmark equivalent plans
are not bound by comparability, statewideness, freedom of choice, the
assurance of transportation to medically necessary services and other
requirements of title XIX of the Act, there may be a circumstance,
particularly in rural areas, when a plan is not capable of enrolling
all interested and eligible individuals. In this instance, the State
must have a process for enrolling the individual in an alternate
option. If applicable, the State must have a system under which
recipients already enrolled in the benchmark or benchmark equivalent
plan are given priority to continue enrollment if the plan does not
have the capacity to accept all those seeking enrollment under the
program.
Program Integrity. We propose to establish in Sec. 440.370 of this
regulation that States are required to implement benchmark coverage in
a cost effective and efficient manner. While section 1937 of the Act is
premised with a provision that states notwithstanding any other
provision of this title, we do not believe that the Congress intended
to permit States to bypass efficiency and effectiveness rules that were
tightened up in other sections of title XIX. Therefore, we are
clarifying that States must deliver benchmark benefits in a manner that
is cost effective and efficient. States may not use this provision to
recycle funds or deliver services to the detriment of the Federal/State
partnership. Benchmark or benchmark-equivalent coverage and any
additional benefits must be provided in accordance with economy and
efficiency principles that would otherwise be applicable to the
services or delivery system through which the coverage and benefits are
obtained. In other words, if benchmark coverage is provided on a fee-
for-service basis, the same upper payment limits would apply to each
service as to these services under standard full Medicaid coverage.
Similarly, the same procurement requirements, or other economy or
efficiency principles would apply to this coverage as would apply to
the purchase of managed care coverage as under the managed care rules
at part 438 of our regulations.
To achieve economy and efficiency, States may use a variety of
delivery systems for benchmark and benchmark-equivalent coverage.
States may furnish benefits using one or more of the following: a fee-
for-service delivery system, a fee-for-service delivery system operated
with a primary care case management system, a managed care delivery
system, or through premium assistance.
The State may use a selective procurement process to restrict the
managed care entity or other provider from (or through) whom a
recipient can obtain services, except in emergency situations. The
selected provider must meet the reimbursement, quality and utilization
standards under the State Plan. If a State chooses to selectively
contract for the provider of the benchmark or benchmark equivalent plan
services, it can do so without any waiver authority, but only to the
extent that: (1) The selected provider complies with the reimbursement,
quality, and utilization standards under the State plan; (2) the
selection process does not discriminate among classes of providers on
grounds unrelated to their demonstrated effectiveness and efficiency in
providing the benchmark benefit package; and (3) all providers are paid
on a timely basis in the same manner as health care practitioners must
be paid under Sec. 447.45. To the extent that these conditions are
met, the State does not need to obtain a waiver under the authority of
section 1915(b)(4) of the Act in order to selectively contract.
Requirements Not Applicable. In authorizing implementation of
section 1937 of the Act ``notwithstanding any other provision of this
title,'' we believe that the Congress intended to permit States to
bypass the comparability, statewideness, freedom of choice, the
assurance of transportation to medically necessary services and other
requirements of title XIX of the Act in order for States to tailor
benefit packages appropriate to specified groups of Medicaid
recipients.
We believe that the Congress intended for States to have a great
amount of flexibility in crafting programs for those populations which
may be mandated into a benchmark or benchmark-equivalent plan. We also
believe that the Congress intended for those individuals to have health
coverage which mirrored that of the coverage millions of Americans
receive through employer sponsored plans in the private health
insurance market.
Therefore, we propose in Sec. 440.375, Sec. 440.380, Sec.
440.385, and Sec. 440.390 to provide States this flexibility by
allowing them to amend their State plans to provide benchmark or
benchmark-equivalent coverage without regard to comparability,
statewideness, freedom of choice, the assurance of transportation to
medically necessary services, and/or other requirements in order to
tailor and provide benefits.
Changes to Regulations Text. We propose to add a new subpart C
beginning with Sec. 440.300.
Subpart C--Benchmark Packages: General Provisions
Sections 440.300, 440.305, and 440.310 Basis, Scope, and Applicability
At proposed Sec. 440.300 (Basis), Sec. 440.305 (Scope), and Sec.
440.310 (Applicability), the regulations would reflect the new
statutory authority for States to provide medical assistance to
recipients, within one or more groups of Medicaid eligible recipients
specified by the State, through enrollment in benchmark coverage or
benchmark-equivalent coverage. A State may only require that
individuals obtain benefits by enrolling in that coverage if they are a
``full benefit eligible'' whose eligibility is based on an eligibility
category under section 1905(a) of the Act that would have been covered
under the State's plan on or before February 8, 2006, and are not
within exempted categories under the statute. The proposed regulatory
definition of full benefit eligible individuals would include
individuals who would otherwise be eligible to receive the standard
full Medicaid benefit package under the approved Medicaid State plan,
but would not include individuals within the statutory exceptions for
individuals, who are determined eligible by the State for medical
assistance under section 1902(a)(10)(C) of the Act, or by reason of
section 1902(f) of the Act, or otherwise eligible based on a reduction
of income based on costs incurred for medical or other remedial care
(other medically needy and spend-down populations).
Section 440.315 Exempt Individuals
Proposed Sec. 440.315 would reflect statutory limitations on
mandatory enrollment of specified categories of individuals. A State
may not require enrollment in a benchmark or benchmark-equivalent
benefit plan by the following individuals:
The recipient who is a pregnant woman who is required to
be covered
[[Page 9719]]
under the State plan under section 1902(a)(10)(A)(i) of the Act.
The recipient who qualifies for medical assistance under
the State plan on the basis of being blind or disabled (or being
treated as being blind or disabled) without regard to whether the
individual is eligible for SSI benefits under title XVI on the basis of
being blind or disabled and including an individual who is eligible for
medical assistance on the basis of section 1902(e)(3) of the Act.
The recipient who is entitled to benefits under any part
of Medicare.
The recipient who is terminally ill and is receiving
benefits for hospice care under title XIX.
The recipient who is an inpatient in a hospital, nursing
facility, intermediate care facility for the mentally retarded, or
other medical institution, and is required, as a condition of receiving
services in such institution under the State plan, to spend for costs
of medical care all but a minimal amount of the individual's income
required for personal needs.
The recipient who is medically frail or otherwise an
individual with special medical needs (as described by the Secretary in
section 440.315(f)). For purposes of this section, we would propose
that individuals with special needs includes those groups defined by
Federal regulations at Sec. 438.50(d)(1) and Sec. 438.50(d)(3) of the
managed care regulations (that is, dual eligibles and certain children
under age 19 who are eligible for SSI; eligible under section
1902(e)(3) of the Act, TEFRA children; in foster care or other out of
home placement; or receiving foster care or adoption assistance). We
are not proposing a definition for medically frail populations but we
invite public comments to assist us in defining this term in the final
regulation.
The recipient who qualifies based on medical condition for
medical assistance for long-term care services described in section
1917(c)(1)(C) of the Act.
The recipient who receives aid or assistance under part B
of title IV for children in foster care or an individual with respect
to whom adoption or foster care assistance is made available under part
E of title IV, without regard to age.
The recipient who qualifies for medical assistance on the
basis of eligibility to receive assistance under a State plan funded
under part A of title IV (as in effect on or after welfare reform
effective date defined in section 1931(i) of the Act). This provision
relates to those individuals who qualify for Medicaid solely on the
basis of qualification under the Temporary Assistance for Needy
Families (TANF) rules (that is, the State links Medicaid eligibility to
TANF eligibility).
The recipient is a woman who is receiving medical
assistance by virtue of the application of sections
1902(a)(10)(ii)(XVIII) and 1902(a) of the Act. This provision relates
to those individuals who are eligible for Medicaid based on the breast
or cervical cancer eligibility provisions.
The recipient qualifies for medical assistance as a TB-
infected individual on the basis of section 1902(a)(10)(A)(ii)(XII) of
the Act.
The recipient is not a qualified alien (as defined in
section 431 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996) and receives only care and services
necessary for the treatment of an emergency medical condition in
accordance with section 1903(v) of the Act.
Section 440.320 State Plan Requirements: Optional Enrollment for Exempt
Individuals
At proposed Sec. 440.320, we would allow States to offer exempt
individuals specified in Sec. 440.315 the option to enroll into a
benchmark or benchmark-equivalent benefit plan. The State plan must
identify in its State plan the exempt groups for which this coverage is
available. There may be instances in which an exempted individual may
benefit from enrolling in a benchmark or benchmark-equivalent benefit
package. States are permitted to elect in the State plan to offer
exempted individuals a benchmark or benchmark-equivalent package, but
States may not require them to enroll in one. For example, in some
States the State employee benchmark coverage may be more generous than
the State Medicaid plan. Secretary-approved coverage may offer the
opportunity for disabled individuals to obtain integrated coverage for
acute care and community-based long-term care services. Additionally,
States may be able to better integrate disease management programs to
provide better coordinated care which targets the specific needs of
individuals with special health needs.
Section 440.325 State Plan Requirements: Coverage and Benefits
At proposed Sec. 440.325, we set forth the conditions under which
a State may offer enrollment to exempt recipients specified in Sec.
440.315. When a State offers exempt recipients the option to enroll in
a benchmark or benchmark-equivalent benefit package, the State must
inform the recipients that enrollment is voluntary and that the
individual may opt out of the benchmark or benchmark-equivalent benefit
package at any time and regain immediate eligibility for the standard
full Medicaid program under the State plan. The State must inform the
recipient of the benefits available under the benchmark or benchmark-
equivalent benefit package and provide a comparison of how they differ
from the benefits available under the standard full Medicaid program.
The State must document in the individual's eligibility file that the
individual was informed in accordance with this paragraph and
voluntarily chose to enroll in the benchmark or benchmark-equivalent
benefit package.
At proposed Sec. 440.325, a State would have the option to choose
to specify the benchmark or benchmark-equivalent coverage packages
offered under the State's Medicaid plan. A State may select one or all
of the benchmark plans described in Sec. 440.330 or establish
benchmark-equivalent plans described in Sec. 440.335, respectively.
Section 440.330 Benchmark Health Benefits Coverage
At proposed Sec. 440.330, benchmark coverage is described as any
one of the following:
Federal Employees Health Benefit Plan Equivalent Coverage
(FEHBP--Equivalent Health Insurance Coverage). A benefit plan
equivalent to the standard Blue Cross/Blue Shield preferred provider
option service benefit plan that is described in and offered to Federal
employees under 5 U.S.C. 8903(1).
State employee coverage. A health benefits plan that is
offered and generally available to State employees in the State
involved.
Health Maintenance Organization (HMO) plan. A health
insurance plan that is offered through an HMO (as defined in section
2791(b)(3) of the Public Health Service Act) that has the largest
insured commercial, non-Medicaid enrollment in the State.
Secretary approved coverage. Any other health benefits
coverage that the Secretary determines, upon application by a State,
provides appropriate coverage for the population proposed to be
provided that coverage. States wishing to opt for Secretarial approved
coverage should submit a full description of the proposed coverage and
include a benefit-by-benefit comparison of the proposed plan to one or
more of the three benchmark plans specified above or to the State's
standard full Medicaid coverage package under section 1905(a) of the
Act, as well as a full description of the
[[Page 9720]]
population that would be receiving the coverage. In addition, the State
should submit any other information that would be relevant to a
determination that the proposed health benefits coverage would be
appropriate for the proposed population. The scope of a Secretary-
approved health benefits package will be limited to benefits within the
scope of the categories available under a benchmark coverage package or
the standard full Medicaid coverage package under section 1905(a) of
the Act.
A State may select one or more benchmark coverage plan options. The
State may also specify the benchmark plan for any specific recipient.
For example, one recipient may be enrolled in the FEHBP and another may
be enrolled into State Employee Coverage at the option of the State.
Section 440.335 Benchmark-Equivalent Health Benefits Coverage
At proposed Sec. 440.335, we would provide that if a State designs
or selects a benchmark plan other than those specified in Sec.
440.330, the State must provide coverage that is equivalent to
benchmark coverage. Coverage that meets the following requirements will
be considered to be benchmark-equivalent coverage:
Required Coverage. Benchmark-equivalent coverage includes
benefits for items and services within each of the following categories
of basic services and must include coverage for the following
categories of basic services:
+ Inpatient and outpatient hospital services.
+ Physicians' surgical and medical services.
+ Laboratory and x-ray services.
+ ``Well-baby'' and ``well-child'' care, including age-appropriate
immunizations.
+ Other appropriate preventive services, as designated by the
Secretary.
Aggregate actuarial value equivalent to benchmark
coverage. Benchmark-equivalent coverage must have an aggregate
actuarial value, determined in accordance with proposed Sec. 440.340
that is at least equivalent to coverage under one of the benchmark
packages outlined in Sec. 440.330.
Additional coverage. In addition to the categories of
services set forth above, benchmark-equivalent coverage may include
coverage for any additional services included in the benchmark plan or
described in section 1905(a) of the Act.
Application of actuarial value for benchmark-equivalent
coverage that includes prescription drugs, mental health, vision, and
hearing services. Where the benchmark coverage package used by the
State as a basis for comparison in establishing the aggregate actuarial
value of the benchmark-equivalent package includes any or all of the
following four categories of services: prescription drugs; mental
health services; vision services; and hearing services; then the
actuarial value of the coverage for each of these categories of service
in the benchmark-equivalent coverage package must be at least 75
percent of the actuarial value of the coverage for that category of
service in the benchmark plan used for comparison by the State.
If the benchmark coverage package does not cover one of the four
categories of services mentioned above, then the benchmark-equivalent
coverage package may, but is not required to, include coverage for that
category of service.
Section 440.340 Actuarial Report for Benchmark-Equivalent Health
Benefit Coverage
In accordance with 1937(a)(3) of the Act, at proposed Sec.
440.340, we would require a State as a condition of approval of
benchmark-equivalent coverage, to provide an actuarial report, with an
actuarial opinion that the benchmark-equivalent coverage meets the
actuarial requirements of Sec. 440.335.
At proposed Sec. 440.340, we would require the actuarial report to
obtain approval for benchmark-equivalent health benefit coverage and to
meet all the provisions of the statute. The actuarial report must
state:
The actuary issuing the opinion is a member of the
American Academy of Actuaries (AAA) (and meets Academy standards for
issuing an opinion).
The actuary used generally accepted actuarial principles
and methodologies of the AAA, standard utilization and price factors
and a standardized population representative of the population
involved.
The same principles and factors were used in analyzing the
value of different coverage (or categories of services) without taking
into account differences in coverage based on the method of delivery or
means of cost control or utilization used.
The report should also state if the analysis took into
account the State's ability to reduce benefits because of the increase
in actuarial value of health benefits coverage offered under the State
plan that results from the limitations on cost sharing (with the
exception of premiums) under that coverage.
The actuary preparing the opinion must select and specify
the standardized set of utilization and pricing factors as well as the
standardized population.
The actuary preparing the opinion must provide sufficient
detail to explain the basis of the methodologies used to estimate the
actuarial value or, if requested by CMS, to replicate the State's
result.
Section 440.345 EPSDT Services Requirement
At proposed Sec. 440.345, we would require States to make
available EPSDT services as defined in section 1905(r) of the Act that
are medically necessary for those individuals under age 19 who are
covered under the State plan. We expect that most benchmark or
benchmark equivalent plans will offer the majority of EPSDT services.
To the extent that any medically necessary EPSDT services are not
covered through the benchmark or benchmark-equivalent plan, States are
required to supplement the benchmark or benchmark-equivalent plan in
order to ensure access to these services. Individuals mandated into a
benchmark or benchmark-equivalent plan and entitled to have access to
EPSDT services cannot opt out of the benchmark or benchmark equivalent
plan just to receive these services. While individuals are required to
have access to such medically necessary services first under the
benchmark or benchmark-equivalent plan, the State may provide wrap-
around or additional coverage for medically necessary services not
covered under such plan. Any wrap-around benefits must be sufficient so
that, in combination with the benchmark or benchmark-equivalent
benefits package, an individual would have coverage for his or her
medically necessary services consistent with the requirements under
1905(r) of the Act. The State plan must include a description of how
wrap-around benefits or additional services will be provided to ensure
that these recipients have access to full EPSDT services under 1905(r)
of the Act.
In addition, individuals must first seek coverage of EPSDT services
through the benchmark or benchmark equivalent plan before seeking
coverage of such through wrap-around benefits.
Section 440.350 Employer Sponsored Insurance Health Plans
At proposed Sec. 440.350, the use of benchmark or benchmark-
equivalent benefit coverage would be at the discretion of the State and
may be used in conjunction with employer sponsored health plans as a
coverage option for individuals with access to private health
insurance. Additionally, the use of benchmark or benchmark-equivalent
coverage may be used for individuals with access to private health
[[Page 9721]]
insurance coverage. For example, if an individual has access to
employer sponsored coverage and that coverage is determined by the
State to be benchmark or benchmark-equivalent, a State may, at its
option, provide premium payments on behalf of the recipient to purchase
the employer coverage. Additionally, a State could create a benchmark
or benchmark-equivalent plan combining employer sponsored insurance and
wrap-around benefits to that employer sponsored insurance benefit
package. The premium payments would be considered medical assistance
and the State could require the recipient to enroll in the group health
plan.
Section 440.355 Payment of Premiums
At proposed Sec. 440.355, payment of premiums by the State, net of
beneficiary contributions, to obtain benchmark or benchmark-equivalent
benefit coverage on behalf of beneficiaries under this section will be
treated as medical assistance under 1905(a) of the Act.
Section 440.360 State Plan Requirement for Providing Additional Wrap-
Around Services
At proposed Sec. 440.360, a State may at its option provide
additional wrap-around services to the benchmark or benchmark-
equivalent plans. The wrap-around services do not need to include all
State plan services. However, the State plan must describe the
populations covered and the payment methodology for assuring those
services. Such additional or wrap-around services must be within the
scope of categories of services covered under the benchmark plan, or
described in section 1905(a) of the Act.
Section 440.365 Coverage of Rural Health Clinic and Federally Qualified
Health Center (FQHC) Services
At proposed Sec. 440.365, a State that provides benchmark or
benchmark-equivalent coverage to individuals must assure that the
individual has access, through that coverage or otherwise, to rural
health clinic services and FQHC services as defined in subparagraphs
(B) and (C) of section 1905(a)(2) of the Act. Payment for these
services must be made in accordance with the payment provisions of
section 1902(bb) of the Act.
Section 440.370 Cost Effectiveness
At proposed Sec. 440.370, benchmark or benchmark-equivalent
coverage and any additional benefits must be provided in accordance
with Federal upper payment limits, procurement requirements and other
economy and efficiency principles that would otherwise be applicable to
the services or delivery system through which the coverage and benefits
are obtained.
Section 440.375 Comparability
At proposed Sec. 440.375, a State may at its option amend its
State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to comparability.
Section 440.380 Statewideness
At proposed Sec. 440.380, a State may at its option amend its
State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to statewideness.
Section 440.385 Freedom of Choice
At proposed Sec. 440.385, a State may at its option amend its
State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to freedom of choice. States may restrict
recipients to obtaining services from (or through) selectively procured
provider plans or practitioners that meet, accept, and comply with
reimbursement, quality and utilization standards under the State Plan,
to the extent that the restrictions imposed meet the following
requirements:
(+) Do not discriminate among classes of providers on grounds
unrelated to their demonstrated effectiveness and efficiency in
providing the benchmark benefit package.
(+) Do not apply in emergency circumstances.
(+) Require that all provider plans are paid on a timely basis in
the same manner as health care practitioners must be paid under Sec.
447.45 of the chapter.
Section 440.390 Assurance of Transportation
At proposed Sec. 440.390, a State may at its option amend its
State plan to provide benchmark or benchmark-equivalent coverage to
recipients without regard to the assurance of transportation to
medically necessary services requirement specified in section 42 CFR
431.53.
III. Collection of Information Requirements
While the following requirements are subject to the PRA, they are
currently approved under OMB 0938-0993 with an expiration date
of October 31, 2009.
Section 440.320 State Plan Requirements: Optional Enrollment for Exempt
Individuals
Section 440.320(a)requires a State to: (1) Inform the individuals
that the enrollment is voluntary and that the individual may opt out of
the benchmark or benchmark-equivalent coverage at any time and regain
immediate access to standard full Medicaid coverage under the State
plan; (2) Inform the exempt recipient of the benefits available under
the benchmark or benchmark-equivalent benefit package and provide a
comparison of how they differ from the benefits available under the
standard full Medicaid program; and, (3) Document in the exempt
recipient's eligibility file that the recipient was informed in
accordance with this section and voluntarily chose to enroll in the
benchmark or benchmark-equivalent benefit package.
Section 440.330 Benchmark Health Benefits Coverage
Section 440.330(d) requires States wishing to opt for Secretarial-
approved coverage to submit a full description of the proposed coverage
and include a benefit-by-benefit comparison of the proposed plan to one
or more of the three other benchmark plans specified.
Section 440.340 Actuarial Report for Benchmark-Equivalent Coverage
Section 440.340 requires a State trying to obtain approval for
benchmark-equivalent health benefits coverage described in 440.335 to
submit, as part of its State Plan Amendment, an actuarial report. The
report must provide sufficient detail to explain the basis of the
methodologies used to estimate the actuarial value or, if requested by
CMS, to replicate the State's result.
Section 440.345 Requirement to Provide EPSDT Services
Section 440.345(a)(2) requires a State to include a description in
their State Plan of how the wrap-around benefits or additional services
will be provided to ensure that recipients receive full EPSDT services.
The description must describe the populations covered and the
procedures for assuring those services.
Section 440.350 Employer-Sponsored Insurance Health Plans
Section 440.350(b) requires a State to set forth in the State plan
the criteria it will use to identify individuals who would be required
to enroll in an available group health plan to receive
[[Page 9722]]
benchmark or benchmark-equivalent coverage.
Section 440.360 State Plan Requirement for Providing Additional Wrap-
Around Services
This section requires States opting to provide additional services
to the benchmark-equivalent plans, to describe the populations covered
and the payment methodology for these services in their State plan.
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 subsequent document, we will respond to the
comments in the preamble to 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).
We issued a State Medicaid Director's letter on March 31, 2006
providing guidance on the new flexibilities available to States as a
result of the enactment of the Deficit Reduction Act of 2005. This
proposed rule simply codifies that guidance. States have already begun
implementing this provision well in advance of this proposed rule. As a
result, while we anticipate that implementation of this flexibility
would be economically significant, the significance is based on the
changes authorized by statute and not based on discretionary policies
contained in the rule itself. The impact of the rule would be limited
to ensuring uniform policies for States that implement the flexibility
afforded under section 1937 of the Social Security Act, as added by the
Deficit Reduction Act of 2005. The aggregate amount of Federal savings
is estimated to be $2.3 billion from FY 2006 through FY 2010.
We have estimated the impact of this rule by analyzing the
potential Federal savings related to lower per capita spending that may
be achieved if States choose to enroll beneficiaries in eligible
populations in plans that are less costly than projected Medicaid
costs. To do this, we developed estimates based on the following
assumptions:
The number of eligible beneficiaries and the Federal
Medicaid costs of these beneficiaries are based on 2003 Medicaid
Statistical Information System (MSIS) data;
Projections of the number of eligible beneficiaries and
their associated Federal Medicaid costs were made using assumptions
from the President's Budget 2007, including enrollment growth rates and
per capita spending growth rates;
The relative costs of the new plans allowed under this
rule to current Medicaid spending were estimated based on reviews of
Medicaid spending data and the plans described in this rule.
Additionally, we have assumed that not all States would immediately use
the options made available through this rule; therefore, we assume that
State use of these plans would continue to increase through 2011. We
assume that use in 2006 will be about 10% of 2011-level of use; 40% in
2007; 60% in 2008; 80% in 2009; and 90% in 2010.''
These estimates assume that there will be a negligible impact on
State administration costs. As States already have experience in
dealing with alternative plan designs, including through waivers or
managed care plans, we have assumed States are equipped to implement
these plans and will be part of their normal administrative spending.
These estimates are subject to a substantial amount of uncertainty
and actual experience may be significantly different. The range of
possible experience is greater than under most other rules for the
following two reasons. First, this rule provides the option for States
to use alternative plans; to the extent that States participate more or
less than assumed here (both the number of States that participate and
the extensiveness of States' use of these plans), Federal savings may
be greater than or less than estimated. Second, this rule also provides
a wide range of options for States in designing these plans; to the
extent that States use plans that are relatively more or less costly
than assumed here, Federal savings may be less than or greater than
estimated.
Estimated Annual Federal Savings Discounted at 0%, 3% and 7%--From FY 2006 to FY 2010
[In millions]
----------------------------------------------------------------------------------------------------------------
Total 2006-
Discount rate 2006 2007 2008 2009 2010 2010
----------------------------------------------------------------------------------------------------------------
0%.................................................... $70 $280 $460 $660 $810 $2,280
3%.................................................... 68 264 421 586 699 2,038
7%.................................................... 65 245 375 504 578 1,767
----------------------------------------------------------------------------------------------------------------
We anticipate that States would phase in alternative benefit
programs, and changes would not be fully realized until 2010. The
majority of savings would be achieved through cost avoidance of future
anticipated costs by providing appropriate benefits based on a
population's health care needs, appropriate utilization of services,
and through gains in efficiencies through contracting. States would be
able to take greater advantage of marketplace dynamics within their
State. We also anticipate that a number of States will use this
flexibility to create programs that are more similar to their SCHIP
programs. Because States are no longer tied to statewideness and
comparability rules for non-disabled, non-aged, and non-blind
populations, they would be able to offer individuals and families
different types of plans consistent with their needs and available
delivery systems.
[[Page 9723]]
Estimated Annual State Savings Discounted at 0%, 3% and 7%--From FY 2006 to FY 2010
[In millions]
----------------------------------------------------------------------------------------------------------------