Medicaid Program; Premiums and Cost Sharing, 71828-71855 [E8-27717]

Agencies

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

[Federal Register Volume 73, Number 228 (Tuesday, November 25, 2008)]
[Rules and Regulations]
[Pages 71828-71855]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-27717]



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Part IV





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Parts 447 and 457



Medicaid Program; Premiums and Cost Sharing; Final Rule

Federal Register / Vol. 73, No. 228 / Tuesday, November 25, 2008 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 447 and 457

[CMS-2244-F]
RIN 0938-A047


Medicaid Program; Premiums and Cost Sharing

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

ACTION: Final rule.

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SUMMARY: This final rule implements and interprets 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). The DRA was amended by the TRHCA which revised sections 
6041, 6042, and 6043 of the DRA including limitations on cost sharing 
for individuals with family incomes at or below 100 percent of the 
federal poverty line. These sections amended 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 flexibility 
supplements 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 drugs and non-
emergency care furnished in a hospital emergency department.

DATES: Effective Date: These regulations are effective 60 days after 
the date of publication in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Donna Schmidt, (410) 786-5532.

SUPPLEMENTARY INFORMATION: 

I. Background

A. General

    For more than a decade, States have been asking for the tools to 
modernize their Medicaid programs. With the enactment of the Deficit 
Reduction Act of 2005 (DRA) (Pub. L. 109-171, enacted on February 8, 
2006), States now have new options to create programs that are aligned 
with today's Medicaid populations and the health care environment. The 
alternative cost sharing discussed in this issuance is one part of that 
modernization; other parts include benefit flexibility through 
benchmark plans, and the health opportunity accounts (HOA) 
demonstration projects. Together, these innovations provide the 
opportunities for States to modernize Medicaid by expanding coverage, 
making the overall cost of the program and health care more affordable, 
and providing a bridge to private insurance coverage. States will be 
able to reconnect families to the larger insurance system that serves 
most Americans and promote continuity of coverage. The sweeping DRA 
provisions on Medicaid include six chapters and 39 sections. Through a 
combination of new options for States and new requirements related to 
program integrity, the DRA will help to ensure the sustainability of 
the Medicaid program over time.

B. Statutory Authority

    Sections 6041, 6042, and 6043 of the DRA established a new section 
1916A of the Social Security Act (the Act), which was amended by 
section 405(a)(1) of the Tax Relief and Health Care Act of 2006 (TRHCA) 
(Pub. L. No. 109-432, enacted on December 20, 2006). Section 1916A of 
the Act sets forth options for alternative premiums and cost sharing, 
including options for higher cost sharing for non-preferred 
prescription drugs and for non-emergency use of a hospital emergency 
room.
    Section 6041 of the DRA established new subsections 1916A(a) and 
(b) of the Act, which allow States to amend their State plans to impose 
alternative premiums and cost sharing on certain groups of individuals, 
for items and services other than drugs (which are subject to a 
separate provision discussed below), and to enforce payment of the 
premiums and cost sharing. Subsections 1916A(a) and (b) of the Act set 
forth limitations on alternative premiums and cost-sharing that vary 
based on family income, and exclude some specific services from 
alternative cost sharing. Section 6041 of the DRA also created a new 
section 1916(h) of the Act, which requires the Secretary to increase 
the ``nominal'' cost sharing amounts under section 1916 of the Act for 
each year (beginning with 2006) by the annual percentage increase in 
the medical care component of the consumer price index for all urban 
consumers (CPI-U) as rounded up in an appropriate manner. Section 
405(a)(1) of the TRHCA modified subsections 1916A(a) and (b) of the 
Act.
    Section 6042 of the DRA created section 1916A(c) of the Act, which 
provides States with additional options for establishing cost sharing 
requirements for drugs to encourage the use of preferred drugs. Section 
405(a)(1) of the TRHCA also modified section 1916A(c) of the Act. Under 
section 1916A(c) of the Act, States may amend their State plans to 
require increased cost sharing by certain groups of individuals for 
non-preferred drugs and to waive or reduce the otherwise applicable 
cost sharing for preferred drugs. States may also permit pharmacy 
providers to require the receipt of a cost sharing payment from an 
individual before filling a prescription.
    Section 6043 of the DRA created section 1916A(e) of the Act, which 
permits States to amend their State plans to allow hospitals, after an 
appropriate medical screening examination under section 1867 (EMTALA) 
of the Act, to impose higher cost sharing upon certain groups of 
individuals for non-emergency care or services furnished in a hospital 
emergency department. Section 405(a)(1) of the TRHCA modified section 
1916A(e) of the Act. Under this option, if the hospital determines that 
an individual does not have an emergency medical condition, before 
providing the non-emergency services and imposing cost sharing, it must 
inform the individual that an available and accessible alternate non-
emergency services provider can provide the services without the 
imposition of the same cost sharing and that the hospital can 
coordinate a referral to that provider. After notice is given, the 
hospital may require payment of the cost sharing before providing the 
non-emergency services to the individual.

II. Provisions of the Proposed Rule and Analysis of and Response to 
Public Comments

    We published a proposed rule in the Federal Register on February 
22, 2008 (73 FR 9727) that proposed to implement sections 6041, 6042, 
and 6043 of the DRA. In response to the proposed rule, we received 
approximately 50 timely items of correspondence. Many of the commenters 
represented State and local advocacy groups, national associations that 
represent various aspects of beneficiary groups, physician and provider 
groups, medical associations and hospitals, and State Medicaid agency 
senior officials. The remaining comments were from individuals and 
human services agencies.

A. Public Comment Process

    On February 22, 2008, the date we published the Premiums and Cost 
Sharing proposed rule, we also published a proposed rule entitled, 
``State Flexibility for Medicaid Benefit Packages'' (73 FR 9714 through 
9727) that proposed to implement provisions of the DRA. The comment 
period for

[[Page 71829]]

both proposed rules closed on the same day and commenters submitted 
comments on both the State Flexibility for Medicaid Benefit Packages 
proposed rule, and Premiums and Cost Sharing (73 FR 9727 through 9740) 
proposed rule. To the extent that the comments relate to Premiums and 
Cost Sharing, we believe that the concerns expressed by commenters are 
addressed in the comments and responses presented below. We note that 
we will address comments related to the State Flexibility for Medicaid 
Benefit Packages proposed rule (73 FR 9714 through 9727) in a 
subsequent final rule.
    In this section, we briefly describe our proposed regulatory 
changes, followed by a discussion of the comments we received on each 
proposal. Comments related to the paperwork and other burdens are 
addressed in the Collection of Information Requirements section in this 
preamble.

B. Medicaid Regulations

1. Maximum Allowable and Nominal Charges (Sec.  447.54)
    We proposed to revise Sec.  447.54 to update the existing 
``nominal'' Medicaid cost sharing amounts, specifically the nominal 
deductible amount described at Sec.  447.54(a)(1) and the nominal 
copayment amounts described at Sec.  447.54(a)(3). We also proposed to 
add a new Sec.  447.54(a)(4) to establish a maximum copayment amount 
for services provided by a managed care organization (MCO).
    Section 6041(b)(2) of the DRA requires the Secretary to increase 
the nominal cost sharing amounts under section 1916 of the Act for each 
year (beginning with 2006) by the annual percentage increase in the 
medical care component of the consumer price index for all urban 
consumers (U.S. city average) as rounded up in an appropriate manner. 
In accordance with the statute, we proposed to increase the nominal 
amounts effective as of October 1 of each year, the beginning of the 
Federal fiscal year (FY), by the percentage increase in the medical 
care component of the Consumer Price Index for All Urban Consumers 
(CPI-U) for the period of September to September ending in the 
preceding calendar year. We use this period to update other amounts, 
such as the Medicaid spousal impoverishment standards, by inflation. 
The first adjustment would be for FY 2007, and would be based on the 
CPI-U increases during the period September 2004 to September 2005. The 
medical care component of the CPI-U increased by 3.9 percent between 
September 2004 and September 2005; therefore, we proposed to update the 
nominal amounts by that factor. We also proposed to round to the next 
higher 10-cent increment because it would simplify calculation and 
collection of the amounts involved. Based on this methodology, we 
proposed a maximum deductible for $2.10 per month per family for each 
period of Medicaid eligibility. In addition, we proposed the following 
copayment schedule for FY 2007:

------------------------------------------------------------------------
                                                               Maximum
               State payment for the service                  copayment
------------------------------------------------------------------------
$10 or less................................................         $.60
$10.01 to $25..............................................         1.10
$25.01 to $50..............................................         2.10
$50.01 or more.............................................         3.20
------------------------------------------------------------------------

    We proposed that these amounts would be updated each October 1 by 
the percentage increase in the medical care component of the CPI-U for 
the period of September to September ending in the preceding year, 
rounded to the next higher 10-cent increment.
    In addition, we proposed at 447.54(a)(4) to specify a maximum 
copayment amount for services provided by an MCO. When we published the 
final Medicaid managed care rules on June 14, 2002 (67 FR 40989), we 
also required at Sec.  447.60, that contracts with MCOs limit cost 
sharing charges an MCO may impose on Medicaid enrollees to the amounts 
that could be imposed if fee-for-service payment rates were applicable.
    Specific comments to this section and our responses to those 
comments are as follows:
    Comment: One commenter stated that the matrix of cost sharing 
requirements and exemptions established under the proposed rule is 
complex and the commenter requested a chart for clarification.
    Response: We agree with the commenter that the cost sharing matrix 
established under the proposed rule is complex. We believe it is 
sufficiently clear to establish a Federal framework defining the State 
flexibility available. Actual cost sharing will be specified in State 
plans and may vary based on circumstances. We expect States to clearly 
communicate applicable cost sharing responsibilities to affected 
beneficiaries in simple and understandable terms, consistent with the 
requirement in 42 CFR 435.905. We included in the proposed rule 
information for FY 2007: A chart of updated maximum levels for cost 
sharing, the maximum deductible level, and a chart of maximum allowable 
charges. The amounts for Federal FY 2008 increase by the percentage 
increase in the MCPI-U from September 2005 to September 2006 of 4.2 
percent, and, as we discuss below, we are including the FY 2008 updated 
levels in this final rule. Since we are currently in Federal FY 2009, 
we are also including the FY 2009 updated levels. The amount for 
Federal FY 2009 increased by the percentage increase in the MCPI-U from 
September 2006-2007 is 4.6 percent.
    Additionally, we set forth in other regulatory provisions the 
limitations that apply to alternative cost sharing under section 1916A 
of the Act that apply based on income level. We discuss these 
limitations in Sec.  447.70 of this final rule--General Cost Sharing 
Protections.
    Comment: Several commenters stated that the proposed rule did not 
give effect to the statutory provisions for lower cost sharing (10 
percent of the cost of the service) for those with family incomes above 
100 percent of the Federal poverty but below 150 percent of the FPL 
than for those with family incomes over 150 percent (20 percent of the 
cost of the service) in fee-for-service plans by varying the maximum 
copayment by income and setting lower managed care maximum copayments 
for those with lower incomes. Commenters believe this would be more 
consistent with Congressional intent.
    Response: The statute provides for variance of copayments by income 
level only when alternative copayments are imposed. The provision at 
Sec.  447.54 in this final rule defines nominal levels under section 
1916 of the Act. In section 1916A of the Act, the income related 
limitations apply to alternative cost sharing in addition to the 
definition of nominal levels, and are set forth in the regulations that 
directly apply to alternative cost sharing at Sec. Sec.  447.62 through 
447.82.
    Comment: Several commenters stated that clarification is needed on 
whether the ``per visit'' qualification on the MCO maximum co-payment 
restricts charging of co-payments by the MCO.
    Response: We have not defined what constitutes a ``visit'' in a 
managed care context because we wish to maintain State flexibility. 
However, we agree that it would be problematic if an MCO was generating 
excess ``visits'' for the purpose of extracting extra co-payments. We 
believe that States should not permit MCOs to impose more than one co-
payment for any service or services that could be furnished by a 
provider during one office visit, even if it actually delivered in 
multiple office visits.
    Comment: Some commenters stated that CMS should annually publish a 
notice in the Federal Register of the maximum cost sharing amounts by

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March 31 for the upcoming Federal FY. Other commenters stated that 
there is no statutory basis for imposing this cost sharing.
    Response: We will publish annually the updated amounts, increased 
based on the medical care component of the consumer price index for 
urban consumers. We cannot commit to publication on or by March 31, 
since publication will be dependent on the availability of data. We may 
publish before or after that time, but will seek to give sufficient 
advance notice to facilitate timely adjustment of State cost sharing 
levels. Since the update methodology is detailed in the published rule 
and does not involve discretionary elements, the implementation of 
updated maximum levels should not depend upon CMS publication of 
specific figures. Nevertheless, we intend to publish updates either in 
the Federal Register or in some other form that ensures general 
availability. We do not wish to limit publication options in light of 
the increasing shift toward electronic media.
    To respond to the commenters concerning the statutory basis for 
imposing this cost sharing, as stated earlier, this final rule 
implements sections 6041 through 6043 of the DRA of 2005, which amended 
the Social Security Act to add section 1916A. The authority to set 
nominal levels for cost sharing is contained in sections 1916(a)(3) and 
(b)(3) of the Social Security Act, and the authority to update those 
amounts annually is section 6041(b)(2) of the DRA, which added section 
1916A(h) to the Social Security Act. We established the MCO nominal 
cost sharing levels based on these same authorities. The MCO nominal 
cost sharing levels are consistent with the longstanding levels for fee 
for service nominal cost sharing, and clarify how nominal levels are 
applied in a managed care context. The MCO nominal cost sharing levels 
are updated annually in the same manner as are fee-for-service nominal 
cost sharing levels.
    Comment: Several commenters believe that the proposed methodology 
to update the nominal cost sharing amounts would round up the amounts 
at a faster rate than Congress intended. Specifically, several 
individuals asserted that, under the proposed methodology, each year's 
new maximum co-payment amount would be calculated by applying the 
annual inflation adjustment to the previous year's cost sharing limit 
after it was rounded up. The new maximum would be higher than warranted 
if the inflation adjustment had been applied without the rounding 
increase. As a result, this would increase the nominal cost sharing 
limits at a rate faster than Congress intended.
    Response: We agree that to calculate each subsequent year's new 
maximum co-payment amount by applying the annual inflation adjustment 
to the previous year's cost sharing limit after it was rounded up would 
increase the nominal cost sharing limits at a rate faster than Congress 
intended. To round up the nominal Medicaid and SCHIP amounts based on 
the ``rounded'' values would provide that the nominal amounts would 
grow larger over time, thus, making the nominal Medicaid and SCHIP co-
payments charged by States increasingly onerous for the poorest 
beneficiaries.
    We clarify that it was always our intent that, for the purpose of 
increasing the nominal cost sharing for a future FY, we would increase 
the unrounded values underlying the previous FY's nominal amounts by 
the percentage increase in the MCPI-U for the 12-month period ending in 
September of the preceding calendar year.
    Comment: Commenters stated that the impact is exacerbated by the 
decision to also round up by a 10-cent increment rather than a 5-cent 
increment. The commenters noted that the DRA does not specify a 
rounding methodology, and pointed out that a 5-cent increment is used 
in the Medicare Part D program. They also questioned whether a 5-cent 
increment would be harder to collect and calculate, and asserted that 
consistency with Medicare would be simpler for both providers and for 
beneficiaries enrolled in both programs.
    Response: We agree with the commenters, and in this final rule, we 
provide that in calculating maximum nominal amounts for Medicaid and 
SCHIP, we will update the amounts by the annual percentage increase in 
the MCPI-U and round up to the next 5-cent increment. As discussed 
above, we will calculate the update each year without considering any 
rounding adjustment made in the previous year. The revised chart for FY 
2007 would therefore read as follows:

------------------------------------------------------------------------
                                                               Maximum
               State payment for the service                  copayment
------------------------------------------------------------------------
$10 or less................................................       $ 0.55
$10.01 to $25..............................................         1.05
$25.01 to $50..............................................         2.10
$50.01 or more.............................................         3.15
------------------------------------------------------------------------

    The amounts for Federal FY 2008 reflect an increase in the FY 2007 
levels set forth above based on the percentage increase in the MCPI-U 
from September 2005 to September 2006 of 4.2 percent, rounded up to the 
next highest 5-cent increment. The chart for Federal FY 2008 reads as 
follows:

------------------------------------------------------------------------
                                                               Maximum
               State payment for the service                  copayment
------------------------------------------------------------------------
$10 or less................................................       $ 0.55
$10.01 to $25..............................................         1.10
$25.01 to $50..............................................         2.20
$50.01 or more.............................................         3.25
------------------------------------------------------------------------

     In this final rule at 42 CFR 447.54 we are including the chart for 
FY 2009, since it will provide more immediate useful information for 
States.
    Comment: One commenter questioned if the requirement to increase 
the nominal cost sharing amounts annually also requires the State to 
adjust its amounts annually.
    Response: There is no requirement under Medicaid that States impose 
the maximum level of cost sharing. If the maximum nominal cost sharing 
levels increase as a result of updating, a State may nevertheless 
maintain a lower cost sharing level.
    Comment: Several individuals were concerned about the proposed 
$5.20 per visit maximum cost-sharing for Medicaid services provided by 
a MCO, stating that it could significantly increase the burden on 
Medicaid beneficiaries because it would permit imposition of the 
maximum cost sharing level regardless of the cost of the services 
provided. These commenters stated that beneficiaries with family 
incomes below the poverty line should not be subject to the new $5.20 
co-payment.
    Response: In proposing a maximum managed care co-payment under the 
Medicaid program, we looked to the SCHIP program for guidance. Under 
SCHIP rules at Sec.  457.555, promulgated in 2001, we established a 
maximum per visit copayment level for managed care services at the 
highest level for fee-for-service cost sharing under SCHIP, instead of 
applying the same copayment limitations applicable to services received 
on a fee-for-service basis. Based on that precedent, we proposed a 
similar structure in Medicaid to effectively replace limitations on 
managed care cost sharing that were tied to the same limitations as 
fee-for-service copayments. Instead of reflecting the proposed maximum 
Medicaid fee-for-service co-payment level of $3.20 (consistent with 
Sec.  447.54(a)(3)(i)), we proposed a maximum level per visit at the 
maximum SCHIP fee-for-service level at $5.20.
    Our reasoning in both SCHIP and Medicaid is related to the 
different way services are delivered under managed

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care. We believe that managed care services are typically less 
fragmented than services furnished on a fee-for-service basis, and, for 
virtually all services for which managed care entities charge cost 
sharing (for example, physician visits), the cost sharing would be at 
the maximum level. We also considered reducing the burden on managed 
care entities of justifying each individual cost sharing charge based 
on a comparison to fee-for-service levels when, in many States, there 
is no comparable fee-for-service program.
    After consideration of public comments, we have determined to alter 
our approach. In this final rule, the maximum MCO per visit rate would 
apply only when there is no comparable fee-for-service delivery system. 
When there is a comparable fee-for-service delivery system, managed 
care copayments must follow the same limitations applicable to fee-for-
service. Because it is important to align Medicaid and SCHIP, so that 
States can provide benefits seamlessly under either program to 
individuals referenced in the title XXI State child health plan, we 
include an exception applicable only to such individuals. For these 
individuals, the maximum MCO copayment level will be the same level 
permitted under the SCHIP program. The higher nominal levels permitted 
for individuals referenced in the title XXI State child health plan is 
consistent with the fact that such individuals would not be Medicaid-
eligible except for the SCHIP-related expansion of Medicaid.
    Therefore, this final rule provides for a managed care maximum 
copayment based on the applicable Medicaid fee-for-service maximum rate 
or, where there is no fee-for-service delivery system, at a per-visit 
maximum based on the highest fee-for-service level of $3.15 in FY 2007, 
$3.25 in FY 2008, and $3.40 in FY 2009. In addition, in this final 
rule, we provide for a specific exception to permit alignment with 
SCHIP levels for individuals in a Medicaid expansion referenced in the 
approved State child health plan, so that the maximum copayment level 
would be the maximum under the SCHIP program, which for FY 2007 is 
$5.20, for FY 2008 is $5.45, and for FY 2009 is $5.70.
    States that impose alternate cost sharing under 1916A of the Act, 
as implemented by this rule, are still required to comply with the 
other requirements under 1916A of the Act, such as the limits on cost 
sharing for populations under 100 percent of the FPL, and the aggregate 
maximum and the individual service limits.
2. Alternative Premiums and Cost Sharing: Basis, Purpose and Scope 
(Sec.  447.62)
    Section 1916A of the Act allows States to impose alternative 
premiums and cost sharing that are not subject to the limitations on 
premiums and cost sharing under section 1916 of the Act. Section 1916A 
of the Act does not affect the Secretary's existing waiver authority 
with regard to premiums and cost sharing. Section 447.62 of the 
regulations as stated in this final rule briefly describes this 
statutory provision which is the basis for Sec. Sec.  447.64 through 
447.82.
    Section 447.62 also makes clear, as specified in section 
1916A(b)(6) of the Act, that these regulations do not limit the 
Secretary's waiver authority, or affect existing waivers, concerning 
premiums or cost sharing.
    Section 405(a)(1) of the TRHCA amended section 1916A of the Act by 
explicitly providing certain exemptions from certain alternative cost 
sharing provisions for the population with family incomes at or below 
100 percent of the FPL. The statute also includes protections for 
individuals with family incomes between 100 and 150 percent of the FPL 
and individuals with family incomes above 150 percent of the FPL. CMS 
proposed to implement the protections outlined in the TRHCA including 
the imposition of nominal cost sharing for individuals with family 
income at or below 100 percent of the FPL.
    Specific comments on this section and our responses to those 
comments are as follows:
    Comment: Several commenters supported the proposed regulation. They 
believe that permitting cost sharing under an approved State plan 
provides States with increased flexibility, provides for States to 
better meet the health care needs of Medicaid enrollees, and provides 
States with the ability to contain the growth in the program. The 
commenters believe that the flexibilities approved in the DRA may lead 
to cost efficiencies over time; however, they also stated these 
flexibilities cannot, nor were they intended to, address broader 
economic downturns.
    Response: We agree with the commenters that alternative premiums 
and cost sharing can lead to cost-efficiencies and that these 
provisions can be used to sustain State Medicaid programs. If States 
submit State plan amendments to implement the flexibility outlined in 
the DRA to impose alternative premiums and cost sharing, we anticipate 
that Federal and State savings will be generated. The projected savings 
can be found in the Regulatory Impact Analysis section of this final 
rule and include savings through 2011. These savings are based on only 
those States that currently charge co-payments and/or premiums. If 
additional States choose to implement these flexibilities, these 
savings could be even more. Although CMS is not in a position to 
address future economic downturns, we do believe that savings can be 
generated beyond 2011 and that savings can be generated for more States 
if additional States choose to implement these provisions. We encourage 
States to consider these flexibilities and the potential savings that 
can be generated to help with a State's economic concerns.
    Comment: Other commenters believe these provisions will have 
negative consequences for beneficiaries and will cause individuals to 
delay or forgo needed care. These commenters requested that the 
regulation be withdrawn.
    Response: While it is possible that some individuals may choose to 
delay or forgo care rather than pay their cost sharing obligations, the 
Medicaid statute has been amended to permit State flexibility to impose 
cost sharing as outlined in this regulation. Because the rule 
implements these statutory provisions, withdrawal of the rule is not an 
option consistent with administration of the statutory Medicaid 
program. Moreover, we disagree with the commenter's suggestion that the 
impact of the rule will be wholly negative. States requested maximum 
flexibility in designing their Medicaid programs in order to expand and 
maintain health care coverage to our nation's most vulnerable 
populations and to maintain growth and control costs of Medicaid and 
SCHIP programs over the long term. This flexibility will help protect 
the program from cutbacks in a time of tight State budgets, and permit 
program expansion. Any adverse impact is mitigated by the fact that 
Congress has protected numerous Medicaid eligibility groups and 
services from the imposition of alternative premiums and cost sharing.
    Comment: One commenter believes that States should carefully 
evaluate their health care resources in order to identify and remedy 
problems with access to alternative care options for Medicaid 
recipients before imposing co-payments for non-emergency care furnished 
by emergency rooms. The commenter believes that CMS should undertake a 
national initiative to identify creative solutions to the lack of 
accessible routine medical services for

[[Page 71832]]

the poor. CMS should make a commitment by revising the rules of the DRA 
to protect the lives of some of our most vulnerable citizens.
    The commenter states that CMS should carefully monitor and evaluate 
the impact of the new Medicaid policies being rolled out so that the 
impact on cost and services can be analyzed and used for future policy-
making.
    Response: We believe that States are in the best position to 
evaluate their health care resources in order to identify and remedy 
problems with access to alternative care options for Medicaid 
recipients before imposing co-payments for non-emergency care furnished 
by emergency rooms.
    As for future policy-making and conducting a national initiative to 
identify creative solutions to the lack of accessible routine medical 
services for the poor, Section 6043 of the DRA of 2005 provides for $50 
million in grant funding to States to provide for the establishment of 
alternative non-emergency service providers or networks of such 
providers to address primary care access. CMS recently awarded the 
grant funding to 20 States to help in addressing this issue. State 
programs include providing education to beneficiaries on the benefits 
of a medical home, establishment of additional Federally qualified 
health centers in the State to provide for additional primary care 
access for beneficiaries, and extending the hours of operation of 
currently established Federally qualified health centers to include 
evenings and weekends when Medicaid beneficiaries are more prone to 
presenting in the emergency room with a non-emergent condition.
    We are always interested in working with States on initiatives to 
improve the delivery of services under the Medicaid program and better 
provide health care services to our nation's low-income populations. We 
have approved a number of demonstration projects under the authority of 
section 1115 of the Social Security Act for this purpose. In addition, 
we have worked with States to improve access to care through 
flexibility in payment methods.
    Comment: One commenter believes that a thorough analysis of the 
actual impact of cost sharing on Medicaid recipients and State revenues 
should be conducted before adoption of this rule.
    Response: This rule incorporates options for States that are 
contained in statutory provisions currently in effect. There is no 
basis to unduly delay issuance of this rule which could provide 
guidance on implementing these statutory provisions. Moreover, while we 
can make some estimates as to the impact, those estimates are 
speculative. We are 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 on Federalism, and the Congressional Review 
Act (5 U.S.C. 804(2)) to conduct a regulatory analysis of the impact of 
any regulatory revision to the Medicare, Medicaid, and/or SCHIP 
programs before adoption of any rule. We direct the commenter to the 
Regulatory Impact Analysis included in this rule. Specifically, we 
estimate that this rule is ``economically significant.'' The Regulatory 
Impact Analysis presents the estimated costs and benefits of the 
rulemaking. In the Regulatory Impact Analysis, CMS estimates the 
anticipated effects of this rule.
    Comment: Several commenters stated that the specifics of the 
statutory language have provided fairly narrow opportunities for 
implementing many of the new provisions. That is, many high cost 
populations are excluded from the flexible provisions, and the greatest 
flexibility is often targeted to higher income populations, which do 
not make up the bulk of Medicaid consumers in most States.
    Response: We agree. This rule provides some operational guidance in 
implementing the statutory provisions, but those provisions established 
a relatively comprehensive framework for State flexibility in premiums 
and cost sharing.
    Comment: One commenter indicated the belief that cost sharing, 
while one of several avenues provided to modernize Medicaid, can be 
used by the States in conjunction with other alternatives, such as 
flexibility in benefit packages, to be more cost effective. The 
commenter also recommended that this rule be revised to ensure that 
State election of alternative cost sharing would be cost-effective by 
itself.
    Response: We wish to clarify that Medicaid modernization options, 
such as alternative premiums and cost sharing, can be used separately, 
and do not have to be used jointly with benefit flexibility. States are 
in the best position to determine whether alternative cost sharing 
would be cost effective and whether it is appropriate to provide for 
alternative cost sharing in modernizing their Medicaid and SCHIP 
programs.
    Comment: Several commenters stated that imposing premiums and cost 
sharing on Medicaid services acts as a deterrent to individuals 
receiving care, including children. The commenters stated that imposing 
premiums and cost sharing could lead to higher costs overall, poorer 
health outcomes for beneficiaries, barriers to access and care, shifts 
in costs to providers, and higher rates of uninsured.
    In addition, commenters stated that individuals with low incomes 
will be faced with unreasonable financial burdens and are likely to 
forgo needed treatment. Several commenters stated that our most 
vulnerable populations, those with chronic medical needs and those 
below the poverty line, will be required to choose to provide for their 
basic needs like food and shelter rather than obtain necessary medical 
health care because of the rigor created by following a private health 
insurance model of premiums and co-pays.
    Commenters also stated that people with very low incomes will be 
required to pay more for their care. The commenters are concerned that 
individuals will be unable to pay premiums to enroll in Medicaid 
coverage, or that providers will deny necessary care to those who 
cannot afford to pay cost sharing. The commenters stated that this 
situation will invariably lead to increases in emergency room visits 
and hospitals, and should not be allowed within a program created to 
serve our country's neediest residents. The commenters also stated that 
any cost savings are outweighed because people who go without needed 
care will eventually present in the emergency room with complicated, 
costly conditions that could have been prevented with earlier medical 
attention.
    Several commenters also stated that any new premiums and cost 
sharing imposed on Medicaid recipients would result in negative 
consequences for the recipients who are the poorest individuals and 
families in this country, the providers of Medicaid services, and the 
Medicaid program. Cost sharing results in insurance coverage for fewer 
needy individuals and families. Further, the failure by Medicaid 
recipients to access care and prescription drugs in the community due 
to their inability to afford deductibles and co-payments could result 
in serious health problems and the need for costlier services (for 
example, hospitalization). The commenters further stated that, in turn, 
this could result in eventual higher expenditures by Medicaid and, for 
dually eligible individuals, by Medicare.
    Some commenters stated that other costs, which are more difficult 
to quantify, for example, school absences for children and missed work 
for parents when children are sick as well

[[Page 71833]]

as the adverse consequences of delayed treatment are also likely.
    Response: We acknowledge the commenters' concerns that the 
imposition of premiums and cost sharing can lead to individuals 
delaying or forgoing care and to higher costs in the long-term if 
individuals delay care and therefore, become sicker and costlier to 
treat. We assume that Congress considered these concerns when it passed 
the statutory provisions for alternative premiums and cost sharing at 
State option. Indeed, the statute seems to indicate these 
considerations when it provides protections for certain populations and 
income groups.
    The statutory framework appears to reflect the principle that 
States are in the best position to weigh the commenters' concerns and 
determine the appropriate levels and scope of alternative cost sharing. 
States have the statutory authority and option to impose lower cost 
sharing than the maximum levels permitted, or to exempt additional 
classes of individuals or additional items or services from cost 
sharing.
    In section V of this final rule, we recognized, among other 
possibilities, that increased cost sharing could result in declines in 
utilization as some enrollees subject to new cost sharing requirements 
choose to decrease their use of services.
    Comment: Several commenters stated that the cost sharing proposed 
rule would have a negative impact on community-based services. These 
individuals receiving community-based services require a multitude of 
services, including frequent physician visits, laboratory testing on a 
regular basis, medical equipment and supplies, and numerous 
prescription drugs in addition to their home health services. Although 
cost sharing for services would be limited to 5 percent of total family 
income, these individuals are disproportionately affected by the cost 
sharing and have other costs associated with their illness that are not 
reflected in Medicaid covered services. For example, many are 
prescribed special diets that carry with them higher food costs. 
Another example is the additional expenses they must incur for 
transportation to medical appointments. Elderly and severely disabled 
individuals with bowel and bladder problems require incontinence 
products that are not covered by Medicare or many Medicaid programs.
    Response: As indicated in the last response, the statutory 
framework appears to reflect the principle that States are in the best 
position to weigh the commenters' concerns and determine the 
appropriate levels and scope of alternative cost sharing. For 
community-based services, States have the option to impose lower cost 
sharing than the maximum levels permitted, or to exempt additional 
classes of individuals or additional items or services from alternative 
premiums or cost sharing.
    Comment: Some commenters stated that dual eligible consumers should 
be exempt from premium and cost sharing requirements. Without excluding 
dual eligible consumers from the premium protected lists, the 
commenters indicated that barriers to care would be established.
    Response: Dual eligible individuals (individuals eligible for both 
Medicare and Medicaid) are not a group specifically exempted by statute 
from alternative cost sharing. If States determine that this group 
should be exempted or protected from alternative premiums or cost 
sharing, States have the authority and the option to impose lower cost 
sharing than the maximum levels permitted, or to exempt the class of 
individuals from alternative premiums or cost sharing.
    Comment: Many commenters stated that each of these areas of the 
proposed rule has the potential to become the behavioral healthcare 
Medicaid Trojan horse: It appears harmless but it will reverse hard-
fought progress won over years of struggle that brought about 
equitable, decent care for Medicaid recipients experiencing mental 
illness or who have a developmental disability. They fear that these 
rules will have costlier results--and not the desired economizing--
while also negatively impacting peoples' lives, their well-being and 
care, and our society.
    Response: These concerns should be raised with States for 
consideration in designing their programs. If States determine that a 
group should be exempted or protected from alternative premiums or 
services exempted from cost sharing requirements, States have the 
option to impose lower cost sharing than the maximum levels permitted, 
or to exempt a class of individuals from alternative premiums or cost 
sharing.
    Comment: One commenter stated that health centers such as Federally 
Qualified Health Centers (FQHCs) or other health care centers (that is, 
title X family planning clinics) are statutorily required to care for 
patients who visit the health center regardless of their ability to 
pay. In addition, the commenter stated that any decrease in Medicaid 
coverage only results in increasing health centers' already growing 
population of uninsured. The commenter indicated that cost sharing 
should not apply to FQHC services or other health care centers (that 
is, title X family planning clinics) and should not affect health 
center reimbursements or their ability to provide quality care to their 
patients.
    Response: We note that this is a concern that should be raised with 
States. The Federal statute does not provide for any specific treatment 
of these health centers or their patients.
    Comment: One commenter stated that the proposed rule read together 
with other CMS rules (for example, the citizenship documentation 
requirement and the State Health Officials of August 17, 2007) create 
major barriers to access to health care. In addition, the commenter 
stated that the proposed rule has a devastating impact on the low 
income population who cannot afford cost sharing.
    Response: The citizenship and documentation requirements are part 
of the DRA but are not part of this rule. The August 17 State Health 
Officials letter is also not part of this rule.
    Comment: Many commenters stated that providing for new or increased 
cost sharing was a bad policy. They referred to the Congressional 
Budget Office analysis indicating that some 13 million people--a third 
of them children who could face new or increased cost sharing over the 
first 10 years the provision is in effect--and that 80 percent of the 
savings expected to result from the new cost sharing would be due to 
decreased use of services and/or because individuals are unable to pay 
the new premiums. In that analysis, some who were expected to lose 
coverage are children.
    Several commenters refer to recent experience with section 1115 
Medicaid waivers and the finding that premiums and cost sharing can 
create barriers to obtaining or maintaining coverage, increase the 
number of uninsured, reduce use of essential services, and increase 
financial strains on families who already devote a significant share of 
their incomes to out of pocket medical expenses. Some commenters cited 
studies that show that health insurance participation steadily declines 
when premiums are imposed, particularly at low levels of income and 
providers often faced additional administrative burdens related to 
attempts to collect co-payments and a reduction in payment levels if 
they were unable to do so.
    Response: We assume that Congress considered these concerns when it 
passed the statutory provisions for alternative premiums and cost 
sharing at State option. The materials cited by

[[Page 71834]]

the commenters were available to Congress at the time. Indeed, the 
statute appears to reflect such consideration when it provides specific 
protections for certain populations and income groups.
    The statutory framework appears to reflect the principle that 
States are in the best position to weigh the commenters' concerns and 
determine the appropriate levels and scope of alternative cost sharing. 
States have the discretion under the statute and the option to impose 
lower cost sharing than the maximum levels permitted, or to exempt 
additional classes of individuals and/or additional items or services 
from cost sharing.
    Comment: Several commenters stated that the accelerated pace of 
this short comment period, given the broad implications, would lead to 
a short-sighted, onerous rule that has dangerous health impacts for the 
poor. The commenters stated that this proposed rule was published in 
the Federal Register on February 22, 2008 and the deadline for 
submission of comments was March 24, 2008. The commenter indicated that 
other rulemaking has taken a longer period and that given the impact of 
the discussion in this rule, a longer comment period is warranted.
    Response: We disagree with the commenters suggesting that 30 days 
is too short of a time period to respond to the regulation. Neither 
section 553(c) of the Administrative Procedures Act nor the Social 
Security Act specify a time period for submission of comments. (While 
section 1871(b) of the Act requires a 60-day comment period for 
Medicare proposed rules, there is no specified time period for Medicaid 
rules.) Thus, for Medicaid rules, we allow 30 days or 60 days based on 
the complexity and size of the rule, or the need to publish the final 
rule quickly. Since the statute was fairly prescriptive and the 
proposed rule contains little policy interpretation, we have chosen a 
30-day comment period in the interest of quickly getting guidance to 
States on the DRA flexibilities contained herein. Moreover, none of the 
commenters identified any specific inability to effectively comment on 
the proposed rule in the 30-day time period.
    Comment: Several comments were provided by organizations that have 
an interest in how the premiums and cost sharing impact American 
Indians and Alaskan Natives (AI/ANs). They believe they are like other 
low-income groups; cost sharing requirements serve as a substantial 
barrier to AI/AN enrollment in the Medicaid program. Because of the 
Federal government's trust responsibility to provide health care to AI/
ANs, cost sharing requirements have specific tribal implications that 
have not been addressed in this rule.
    Several commenters believe that the imposition by States of cost 
sharing requirements on Medicaid beneficiaries would have serious 
adverse consequences on Indian Health Service and tribally operated 
health programs in at least three ways: (1) An AI/AN beneficiary who is 
eligible to enroll in Medicaid may be dissuaded from doing so where a 
cost is imposed on him or her for such enrollment; (2) the Indian 
Health Service or tribal operated health program who services an AI/AN 
patient would lose Medicaid reimbursement for that patient; and (3) 
even if the eligible AI/AN does enroll in Medicaid, the Indian Health 
Service or tribally operated health program would have to use scarce 
IHS-appropriated funds to pay the cost share amount.
    Response: We recognize that AI/ANs may have special concerns 
because of their eligibility for services through the Indian Health 
Service (IHS) or tribal health programs without charge. In addition, 
IHS and tribal providers may have special concerns. Nevertheless, the 
statute does not provide for special treatment of this group and these 
concerns should be raised to States for consideration in designing 
their programs. We encourage States to consider these issues fully when 
they design their programs.
    Comment: Several commenters believe that AI/ANs should be exempt 
from premiums and cost sharing requirements entirely.
    Response: We are not aware of any provision in the Medicaid statute 
that authorizes CMS to adopt a position providing for special treatment 
of AI/AN individuals. In contrast, section 2103(b)(3)(D) of the SCHIP 
statute provides for special treatment of such individuals, when it 
requires procedures to ensure that AI/AN targeted low-income children 
receive child health assistance. We have interpreted that SCHIP 
requirement to authorize the position at Sec.  457.535 requiring 
exemption of AI/AN children from premiums, deductibles, coinsurance, 
co-payments, or any other cost sharing charges. In light of the absence 
of a similar statutory authorization, we are unable to adopt a similar 
policy under Medicaid.
    Comment: One commenter indicated that according to the DRA, AI/ANs 
are required to prove both citizenship and identity in order to obtain 
Medicaid services. The commenter stated that Native Americans have been 
told that tribal documentation is insufficient to prove eligibility for 
Medicaid services. The commenters also stated that many Navajo elders 
were born at home and do not have birth certificates and it is a 
substantial burden to obtain birth certificates in this situation. 
Hence, this new rule limits the Navajo elders ability to access 
Medicaid. Further, the commenter stated that CMS issued the August 17 
State Officials letter that restricts States from requesting health 
care expansions for SCHIP up to 250 percent limit until the State can 
prove enrollment of 95 percent of children under the 200 percent of the 
poverty line. The August 17 directive is unrealistic in obtaining this 
type of proof of participation. All of these CMS efforts have the 
collective effect of limiting health care for the poor and AI/AN 
populations, and present barriers to receiving health care.
    Response: The citizenship documentation and identity requirements 
and the August 17 State Health Officials letter are not part of this 
rule.
    Comment: Several commenters stated that this rule is contrary to 
the Department of Health and Human Services Tribal Consultation policy 
since CMS did not consult with Tribes in the development of these 
regulations before they were promulgated. The commenters indicated that 
CMS did not obtain advice and input from the CMS Tribal Technical 
Advisory Group (TTAG) even though the TTAG meets on a monthly basis via 
conference calls and holds quarterly face to face meetings. In 
addition, the commenter stated that CMS did not consult with the CMS 
TTAG Policy Subcommittee which was specifically established by CMS for 
the very purpose of obtaining advice and input in the development of 
policy guidance and regulations.
    Furthermore the commenter stated that the proposed rule does not 
contain a Tribal summary impact statement describing the extent of the 
tribal consultation or lack thereof; or an explanation of how the 
concerns of Tribal officials have been met. Several commenters request 
that these regulations not be made applicable to AI/AN Medicaid 
beneficiaries until Tribal consultation is conducted.
    Response: We follow the Department of Health and Human Services' 
Tribal Consultation Policy. The Departmental guidelines provide for 
determination of critical events that require special consultation 
efforts. This action was not considered as a critical event under the 
Departmental guidelines and thus special consultation efforts were not 
undertaken. Tribes have had an opportunity to review the proposed rule 
and submit comments either directly or through the CMS TTAG that has 
been

[[Page 71835]]

established to facilitate consultation. We are currently developing our 
own consultation guidelines to better serve its tribal stakeholders, 
consistent with the Departmental guidelines. Even under those draft CMS 
consultation guidelines, we would not routinely require consultation 
before notice and comment rulemaking on policies that do not 
specifically refer to AI/ANs, or tribes. In this instance, it appears 
that tribes are not directly affected by the provisions of greater 
flexibility to States, but only by the manner in which individual 
States choose to exercise that flexibility. We encourage States which 
decided to implement alternative premiums and cost sharing to consult 
with tribes and notify them whenever possible on implementation 
policies that will directly affect the Tribes.
    Comment: Several commenters indicated that in the event CMS 
proceeds to make these regulations effective on Indian tribes, the CMS 
TTAG should strongly encourage that the proposed rule be modified to 
require State Medicaid programs to consult with Indian Tribes before 
the development of any policy that would impose any premium or cost 
sharing requirements on AI/ANs served by Indian Health Service or 
tribal health programs similar to the way consultation takes place with 
Indian Tribes in the development of waiver proposals.
    Response: This rule is not ``effective on Indian tribes''. The rule 
will implement a statutory provision that affects federal review of 
State Medicaid plans. While we recognize that the resulting changes in 
State Medicaid programs may have an impact on Indian tribes, we believe 
these concerns should be raised on a State level. The statutory 
framework appears to reflect the principle that States are in the best 
position to weigh the commenters' concerns and determine the 
appropriate levels and scope of alternative cost sharing. States have 
the option to impose lower cost sharing than the maximum levels 
permitted, and/or to exempt additional classes of individuals or 
additional items or services from cost sharing.
    Comment: One commenter stated that it is laudable that the proposed 
rule would not affect existing waiver authority with respect to 
premiums and cost sharing but, in the interest of consistency, using 
similar methodologies under waivers and the State plan should be 
allowable. For automated eligibility systems and tracking purposes, 
having one method of charging and defining co-payments would simplify 
the process for all providers.
    Response: We agree that similar methodologies for calculating 
premiums and cost sharing should be allowable. For example, States can 
use similar methodologies for determining family income and 
eligibility. States can use similar methodologies for tracking cost 
sharing as under approved waivers, or can use the methods that SCHIP 
programs use to track cost sharing. States can program their automated 
systems to track and compute recipients' cost sharing.
    We note that the DRA provides States with flexibility to choose not 
to use the same methodologies in determining family income and 
eligibility. It is up to the States to determine what methodologies 
work best for them in providing health care coverage to their Medicaid 
beneficiaries and in imposing alternative premiums and cost sharing. 
The DRA provisions provide States with unprecedented flexibilities and 
we have maintained that flexibility in promulgating this rule.
    Comment: One commenter appreciates and supports making explicit the 
Secretary's authority to waive the limitations on premiums and cost 
sharing.
    Response: The DRA did not expand or contract the Secretary's waiver 
authority with respect to premiums and cost sharing. We note that 
States may no longer need waivers from the Secretary for certain 
programmatic options. This could be particularly advantageous for 
States since waivers need to be periodically renewed.
    Comment: One commenter stated that the collection of co-payments 
and deductibles is especially problematic when health care services 
(for example, home health) are delivered in the community. The barriers 
that exist to the collection of fees by clinicians during home visits 
are the potential negative impact on the clinician/patient relationship 
and safety concerns for clinicians collecting and transporting cash, 
despite the fact that the amounts may be small.
    Several commenters stated that States would experience increased 
costs because States would be required to develop new accounting 
systems in order to reflect cost sharing payments timely, disenroll 
recipients for failure to pay premiums, identify and transfer 
individuals in and out of exception groups, and hear and adjudicate 
exception eligibility decisions. In addition, several commenters stated 
that cost sharing responsibilities that are shifted to the provider of 
service may discourage participation, thereby increasing access 
problems.
    Response: In response to the burden to develop systems to track 
premiums and cost sharing, we are not requiring that States develop 
electronic or new accounting systems to track Medicaid beneficiaries' 
cost sharing obligations. We only require that States indicate the 
method they will use in tracking cost sharing. We believe that using 
electronic systems to comply with the requirement is ideal, however, it 
is not a requirement under this rule.
    We note that this provision is at the State option. States are not 
required to impose premiums and cost sharing on Medicaid beneficiaries 
and providers have the statutory authority under 1916A(d)(2) of the Act 
to waive or reduce cost sharing if they believe imposing cost sharing 
produces a negative relationship between providers and clients. Safety 
for providers collecting co-payments should be a consideration by 
States before choosing to adopt the flexibilities outlined in this 
rule.
3. Alternative Premiums, Enrollment Fees, or Similar Fees: State Plan 
Requirements (Sec.  447.64)
    Section 1916A(a)(1) of the Act requires that the State plan specify 
the group or groups of individuals upon which it will impose alternate 
premiums. In accordance with the statute, at Sec.  447.64(a), we 
proposed that the State plan describe the group or groups of 
individuals that may be subject to such premiums, enrollment fees, or 
similar charges. We further proposed in Sec.  447.64(b) that the State 
plan must include a schedule of the premiums, enrollment fees, or 
similar charges and the process for informing recipients, applicants, 
providers, and the public of the schedule. States may vary the 
premiums, enrollment fees, or similar charges among the groups of 
individuals.
    Section 1916A(b)(4) of the Act requires that the State plan specify 
the manner and the period for which the State determines family income. 
In accordance with the statute, at Sec.  447.64(c), we proposed that 
the State plan describe the methodology used to determine family 
income, including the period and periodicity of those determinations. 
We also proposed in Sec.  447.64(d) that the State plan describe the 
methodology the State would use to ensure that the aggregate amount of 
premiums and cost sharing imposed for all individuals in the family 
does not exceed 5 percent of family income as applied during the 
monthly or quarterly period specified by the State.
    Section 1916A(d)(1) of the Act requires that the State specify the 
group

[[Page 71836]]

or group of individuals for whom payment of premiums is a condition of 
eligibility. In accordance with the statute, at Sec.  447.64(e), we 
proposed that the State plan list the group or groups of individuals. 
We further propose in Sec.  447.64(f) that the State plan describe the 
premium payment terms for the group or groups.
    Specific comments on this section and our responses to those 
comments are as follows:
    Comment: One commenter stated that States should be required to 
notify pharmacists, providers, recipients, and the public no later than 
60 days before the effective date of any changes in cost sharing 
requirements under the State plan.
    Response: We proposed at Sec.  447.76 to require issuance of a 
public schedule that includes current cost sharing requirements. We 
required contemporaneous but not advance notice of any change in that 
schedule. As we discuss below, we have revised the proposed provision 
to require at least 1 month before notice of any change in premiums or 
cost sharing, to permit individuals and providers an opportunity to 
plan for the increased financial responsibility.
    Comment: Several commenters stated that States should be required 
to include in their State plan amendment a schedule of prescription 
drug cost sharing for the various covered populations and indicate in 
this schedule whether these cost sharing amounts must be paid by the 
Medicaid patient in order to receive the prescription. The commenters 
stated that the schedule should be posted to the State Medicaid program 
Web site and to the CMS Web site. This information should be 
distributed to patients and include a statement regarding the 
expectation that patients would pay the cost sharing amounts. Other 
commenters stated that the State plans should indicate how the State 
would communicate to providers that some individuals are exempt from 
co-payment obligations.
    Response: We agree that any changes to cost sharing should be made 
available to pharmacists, providers, recipients, and the general 
public. Section 447.76 requires that a public schedule be prepared and 
made available that includes a current listing of cost sharing charges. 
We also require that the public schedule be made available to 
recipients, at the time of enrollment and reenrollment, and when 
charges are revised.
    We plan to include an assurance concerning the public schedule 
requirement in the State plan.
    In terms of the commenter's recommendation to post the public 
schedule to the State Web site and the CMS Web site, we have not 
prescribed that public schedules or State plans be posted to the State 
Web site or CMS Web site because we wish to maintain State flexibility 
in this regard.
    Comment: Several commenters complained that the proposed rule 
contained no requirement that the State facilitate pharmacy providers' 
attempts at point-of-sale to determine whether specific patients are 
subject to cost sharing for a transaction at hand. Some commenters 
stated that it is necessary for States to set up systems for tracking 
and computing recipients' co-payments at point-of-sale and to adopt 
policies that support electronic identification of non-preferred drugs 
to minimize confusion for recipients and providers. The commenters 
stated that the information should include the level of cost sharing 
imposed, whether the recipient has met his or her aggregate limit for 
the month or quarter, and whether the co-payme