Medicaid Program; State Flexibility for Medicaid Benefit Packages, 73694-73727 [E8-28330]

Agencies

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

[Federal Register Volume 73, Number 233 (Wednesday, December 3, 2008)]
[Rules and Regulations]
[Pages 73694-73727]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-28330]



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Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services



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42 CFR Part 440



Medicaid Program; State Flexibility for Medicaid Benefit Packages; 
Final Rule

Federal Register / Vol. 73, No. 233 / Wednesday, December 3, 2008 / 
Rules and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 440

[CMS-2232-F]
RIN 0938 A048


Medicaid Program; State Flexibility for Medicaid Benefit Packages

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

ACTION: Final rule.

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SUMMARY: This final rule will implement provisions of section 6044 of 
the Deficit Reduction Act of 2005, which amends the Social Security Act 
by adding a new section 1937 related to the coverage of medical 
assistance under approved State plans. It also provides States 
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. 
In addition, this final rule responds to public comments on the 
February 22, 2008, proposed rule that pertain to the State Medicaid 
benefit package provisions.

DATES: Effective Date: These regulations are effective on February 2, 
2009.

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

SUPPLEMENTARY INFORMATION:

I. Background

    Under title XIX of the Social Security Act (the Act), the Secretary 
is 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 
services, 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. On March 31, 2006, we issued a State Medicaid Director 
letter providing guidance on the implementation of section 6044 of the 
DRA.

II. Provisions of the Proposed Regulations

    We published a proposed rule in the Federal Register on February 
22, 2008 (73 FR 9714) that implemented the provisions of the DRA of 
2005, which amends the Act by adding a new section 1937 related to the 
coverage of medical assistance under approved State plans. Under this 
new provision, 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. For a complete and full description of 
the States' Medicaid Benefit Packages provisions as required by the 
DRA, see the February 2008 State Flexibility for Medicaid Benefit 
Packages proposed rule. In the February 2008 proposed rule, we proposed 
to add a new subpart C beginning with Sec.  440.300 as follows:

A. 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 who are within the statutory 
exemptions, 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 who are 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).

B. 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 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

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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 proposed 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 did not propose a 
definition for medically frail populations but we invited 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 the 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 who is a woman 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 who 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 who 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.

C. 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 would 
identify in its State plan the exempt groups for which this coverage is 
available. There may be instances in which an exempt individual may 
benefit from enrolling in a benchmark or benchmark-equivalent benefit 
package. States would be permitted to elect in the State plan to offer 
exempt 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.

D. 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 would 
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 would 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 would 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 
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.

E. 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 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

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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.

F. 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.

G. Section 440.340 Actuarial Report for Benchmark-Equivalent Health 
Benefit Coverage

    In accordance with 1937(a)(3) of the Act, at Sec.  440.340, we 
proposed to 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 Sec.  440.340, we proposed to 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 following:
     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.

H. Section 440.345 EPSDT Services Requirement

    At Sec.  440.345, we proposed to 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 expected 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 section 
1905(r) of the Act. The State plan would 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 would need to first seek coverage of EPSDT 
services through the benchmark or benchmark-equivalent plan before 
seeking coverage of such through wrap-around benefits.

I. Section 440.350 Employer Sponsored Insurance Health Plans

    At Sec.  440.350, we proposed that 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 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

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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.

J. Section 440.355 Payment of Premiums

    At Sec.  440.355, we proposed that 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 section 
1905(a) of the Act.

K. Section 440.360 State Plan Requirement for Providing Additional 
Wrap-Around Services

    At Sec.  440.360, we proposed that 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 would need to 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.

L. Section 440.365 Coverage of Rural Health Clinic and Federally 
Qualified Health Center (FQHC) Services

    At Sec.  440.365, we proposed that 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.

M. Section 440.370 Cost Effectiveness

    At Sec.  440.370, we proposed that 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.

N. Section 440.375 Comparability

    At Sec.  440.375, we proposed that a State may at its option amend 
its State plan to provide benchmark or benchmark-equivalent coverage to 
recipients without regard to comparability.

O. Section 440.380 Statewideness

    At Sec.  440.380, we proposed that a State may at its option amend 
its State plan to provide benchmark or benchmark-equivalent coverage to 
recipients without regard to statewideness.

P. Section 440.385 Freedom of Choice

    At Sec.  440.385, we proposed that 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.

Q. Section 440.390 Assurance of Transportation

    At Sec.  440.390, we proposed that 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 Sec.  431.53.

III. Analysis of and Responses to Public Comments

    In response to the February 2008 proposed rule, we received over 
1,100 timely items of correspondence. The majority of the commenters 
represented transportation providers, medical providers, and Medicaid 
beneficiaries, particularly Medicaid beneficiaries who rely on dialysis 
treatments. Other commenters represented State and local advocacy 
groups, national associations that represent various aspects of 
beneficiary groups, State Medicaid agency senior officials, and human 
services agencies. In this section, we provide a discussion of the 
public comments we received on the proposed rule. Comments related to 
the impact of this rule are addressed in the ``Collection of 
Information Requirements'' section of this regulation.
    Additionally, we published a proposed rule in the Federal Register 
on February 22, 2008 (73 FR 9727) titled, ``Medicaid Program: Premiums 
and Cost Sharing'' (CMS-2244-P). Comments on CMS-2244-P were also due 
March 24, 2008 similar to this rule. Some comments for CMS-2244-P were 
forwarded as comments to this rule (CMS-2232-P). Consistent with the 
Administrative Procedures Act, CMS is not responding to those comments 
in this regulation, but we addressed the issues raised by otherwise 
timely comments in our publication of CMS-2244-F.

A. General Comments

    Comments: A few commenters supported the rule. Some commenters also 
requested a more restrictive interpretation of the statutory 
provisions. However, most commenters oppose the rule. Many commenters 
are concerned that the benchmark or benchmark-equivalent benefit 
packages are inadequate benefit packages for, among others, individuals 
with mental illness, children with serious emotional disturbance, the 
disabled and elderly, individuals with end-stage renal disease, and 
American Indians. Many of the commenters believed that to enroll 
Medicaid beneficiaries in benchmark or benchmark-equivalent benefit 
packages without the assurance of transportation could lead to poorer 
health outcomes, costlier care because individuals will be forced into 
hospital emergency rooms, and shifts in costs to the Emergency Medical 
Services.
    Response: We thank those commenters who supported the rule. Those 
who opposed the rule generally raised concerns about the underlying 
wisdom of the statutory provision at section 1937 of the Act, which 
this final rule implements. CMS is charged with implementing the 
statute as written. We address suggestions for restrictive 
interpretations below in the discussion of specific proposed 
provisions.
    Comment: Several commenters believe that the accelerated pace of 
this short comment period, given the broad implications, will lead to a 
short-cited, onerous rule that has dangerous health impacts for the 
poor. This rule was issued in the Federal Register on

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February 22, 2008. The deadline for submission of comments was March 
24, 2008. Other rulemaking has taken a longer period. Given the impact 
of the discussion, a longer time period is warranted.
    Some commenters stated that the 30-day comment period was not 
sufficient for Tribes to comment on a regulation that could potentially 
have a significant impact on Tribal communities.
    Other commenters noted that while the Department views the rule as 
merely formalizing its earlier policy statements delivered only to 
State Medicaid Directors, a 30-day public comment period is too short 
for meaningful public review, analysis, and comment. Some commenters 
believe that the 30-day comment period is discouraging of full review 
and consideration by States.
    One commenter requests that the public comment period be extended 
60 days for a total of a 90-day comment period. Additional time is 
needed to provide sufficient time for stakeholders to be able to 
adequately assess the potential effects of the proposed rule.
    Response: We disagree with the commenters suggesting that 30 days 
is too short of a time period to respond to the regulation. Section 
553(c) of the Administrative Procedures Act requires that after the 
publication of a proposed rule, the Agency shall give interested 
persons an opportunity to participate in the rulemaking. Neither the 
Administrative Procedures Act nor the Medicaid statute specify a time 
period for submission of comments. 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. We elected a 30-day comment period 
because of the limited deviation from plain statutory requirements and 
the interest of getting guidance quickly to States on the DRA 
flexibilities contained herein. Since this provision of the DRA was 
effective March 31, 2006 it made sense to provide guidance to States as 
quickly as possible.

B. Section 440.300 Basis

    Comment: One commenter believed that the proposed limitations on 
eligibility groups who can be provided alternative benefit packages are 
overly restrictive. The commenter suggested that the rule should allow 
application to any eligibility category the State had the option to 
implement on or before the date of enactment of section 1937 (February 
8, 2006). The commenter reasoned that States are continually adding and 
changing eligibility requirements and these program changes are 
inherent in Medicaid programs. The commenter asserted that, if the rule 
is considered beneficial for recipients in eligibility categories that 
existed before February 8, 2006, it is logical to suppose it would also 
be beneficial for those created after that date.
    Response: The language in section 1937(a)(1)(B) of the Act 
specifies that the State may only exercise the option to offer 
benchmark or benchmark-equivalent coverage for an individual eligible 
under an eligibility category that had been established under the State 
plan on or before February 8, 2006. In an effort to provide States with 
maximum flexibility, we have interpreted this statutory term to mean 
any eligibility category listed under section 1905(a) of the Act. Thus, 
all recipients within a category covered or potentially covered under 
the State's Medicaid plan would be eligible to participate in a 
benchmark or benchmark-equivalent plan at the State's option, unless 
specifically excluded by statute, even when the State makes 
modifications to the income and resource eligibility levels or 
methodologies, ages covered, etc., for a group or category after 
February 8, 2006.

C. Section 440.305 Scope

    Comment: Numerous commenters believed that offering benchmark and 
benchmark-equivalent benefit packages to certain Medicaid recipients 
will deter those individuals, including children, from receiving 
appropriate care. Commenters indicated that individuals with low 
incomes are likely to forgo needed treatment if all medically necessary 
services and transportation are not included in the benchmark program. 
Most commenters believed that our most vulnerable populations, those 
with chronic medical needs, 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 benefits and the need to provide their own 
method of transportation.
    Response: We have developed these policies based on what is 
provided for in statue. And, since the Medicaid program is administered 
broadly by the States, they have the flexibility to determine how they 
will design their programs. We do review and approve all State plan 
amendments to assure continuity of and access to necessary medical 
health care.
    Comment: Other commenters indicated that the DRA does not require 
that States offer the same Medicaid benefits statewide, meaning States 
could design different benefit packages for rural and urban areas. 
States may also ``tailor'' packages for different populations, although 
the commenter acknowledges, certain groups are exempt from mandatory 
changes to their Medicaid benefits package. In States where this has 
already been done, behavioral healthcare advocates report the changes 
have been unsatisfactory. Several commenters believed that allowing 
States to ``tailor'' benefit packages would mean that individuals may 
not have access to the services they need. Benefit packages designed 
outside the important consumer protections in traditional Medicaid may 
fail to meet beneficiaries' needs, and will not save money if these 
individuals experience significant unmet needs that escalate into 
problems that require treatment in emergency rooms.
    One commenter mentioned that private health plans such as those 
listed as benchmarks under the law, frequently have limited coverage of 
mental health services. The commenter asserted that few cover any of 
the intensive community services that are covered by Medicaid under the 
rehabilitation category or the home and community-based services 
option. The commenter noted that, under the DRA, these limited mental 
health benefits can be further reduced by 25 percent of their actuarial 
value. Other commenters expressed concern that the reliance on 
commercial benefit plans is inappropriate for Medicaid recipients. 
Those commenters are concerned that many private insurance plans do not 
provide adequate mental health services. And other commenters noted 
that benchmark coverage is likely to prove entirely inadequate for 
individuals who need mental health services. They noted that children 
with serious mental and/or physical disorders often qualify for 
Medicaid on a basis of family income and are not, for various reasons, 
receiving Supplemental Security Income (SSI) benefits or otherwise 
recognized as children with disabilities and would not be exempt from 
mandatory enrollment. In addition, they noted that many low-income 
parents on Medicaid have been found to have serious depression, which 
could not be adequately treated with a very limited mental health 
benefit.
    In a similar vein, many commenters believed that 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

[[Page 73699]]

a developmental disability. They asserted that, in the end, 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.
    Another commenter believed that it is critical for beneficiaries 
with life-threatening conditions such as HIV/AIDS to maintain access to 
the comprehensive range of medical and support services required to 
effectively manage HIV disease. The commenter stated that allowing 
States to ``tailor'' benefit packages in ways that essentially 
eliminate coverage for critical health services places the health of 
Medicaid beneficiaries with HIV/AIDS in serious jeopardy.
    Response: The DRA was enacted in response to States' desire for 
more flexibility in modernizing their Medicaid programs and adopting 
benefit programs tailored to the needs of the varied populations they 
serve. This regulation is consistent with Congressional intent and 
reflects little interpretive policy by CMS. The DRA provides that 
States can impose alternative benchmark or benchmark-equivalent benefit 
packages at their option; that is, States are not required to implement 
these provisions.
    As a result, we believe that the concerns expressed by these 
commenters on the sufficiency of potential alternative benefit packages 
should be addressed to States for consideration in determining whether 
to elect alternative benefit packages, and the scope of such packages.
    We disagree that benchmark and benchmark-equivalent programs 
necessarily lead to barriers to access and care. Benchmark and 
benchmark-equivalent plans are simply tools that States can use to 
contain costs and inhibit over-utilization of health care through 
Medicaid, particularly through the emergency room, while at the same 
time providing States new opportunities to provide benefit plans to 
meet the appropriate health care needs of Medicaid populations. We 
believe States may use this flexibility to create innovative Medicaid 
programs that further strengthen and support the overall health care 
system.
    This new flexibility provides States the tools they need to provide 
person-centered care to maximize health outcomes for individuals. These 
tools may be used in conjunction with other Medicaid and State 
Children's Health Insurance Program (SCHIP) authorities to 
strategically align the Medicaid program with today's health care 
environment and expand access to affordable mainstream coverage and 
improve quality and coordination of care.
    Regarding the coverage of mental health services, children and 
adults with special medical needs, individuals with HIV/AIDS, and long-
term care and community-based service options, benchmark and benchmark-
equivalent plans must be appropriate to meet the health care needs of 
the population being served, which may mean that benchmark coverage may 
be more generous than a State's Medicaid plan. Benchmark 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, targeting the specific 
needs of individuals with special health needs.
    We also think it is important to note that children under the age 
of 19 are required to receive EPSDT services either as a wrap-around 
service or as part of the benchmark or benchmark-equivalent benefit 
plan.
    Moreover, certain Medicaid eligibility coverage groups cannot be 
included in a mandatory enrollment for an alternative benefit package--
among others, pregnant women, dual eligibles, terminally ill 
individuals receiving hospice, inpatients in institutional settings, 
and individuals who are medically frail or have special medical needs. 
These individuals may be offered a choice to enroll and, in considering 
the choice, must be provided a comparison of benchmark benefits versus 
the traditional Medicaid State plan benefit. Their decision to enroll 
is voluntary and individuals must be provided the opportunity to revert 
back to traditional Medicaid at any time. The law provides that States 
can offer these alternative benefit packages and we do not believe this 
rule poses a barrier to accessing health care.
    Comment: One commenter noted that the preamble language refers to 
meeting the ``* * * needs of today's Medicaid populations and the 
health care environment.'' The commenter believed the preamble should 
describe these needs in some detail so that there is a shared 
understanding of the types of needs this new flexibility is intended to 
address.
    Response: We agree that it is important to understand the needs of 
today's Medicaid populations and the health care environment. States 
requested maximum flexibility in designing their Medicaid programs in 
order to provide appropriate health care coverage to our Nation's most 
vulnerable populations and to maintain growth and provide for the 
sustainability of the Medicaid program over the long term. Congress, in 
working with our Nation's leaders, responded and enacted the DRA of 
2005.
    In providing for benchmark benefit packages, several innovative 
ways of providing coverage to the Medicaid populations have been 
provided to States. Benchmark options include Federal Employees Health 
Benefits Plan Equivalent coverage, State Employee coverage, Health 
Maintenance Organization coverage, or Secretary approved coverage. 
States have the option of considering Employer Sponsored Insurance 
coverage as long as the Employer Sponsored Insurance coverage meets the 
criteria of benchmark coverage. States can also consider benchmark-
equivalent coverage as long as the coverage includes basic services 
consisting of 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, such as emergency services. 
Specifically, benchmark plans can be designed to address the specific 
health care needs of specific populations, and a State may select one 
or more benchmark coverage options. The flexibility granted to States 
in considering these options provides that States can tailor benefits 
to better meet the needs of their low-income populations.
    Comment: One commenter stated that the proposed rule, read together 
with other CMS rules like the citizenship documentation requirement and 
CMS's SCHIP crowd-out directive of August 17, 2007, create major 
barriers to access to appropriate health care, and that the proposed 
rule has a devastating impact on the low-income populations. In 
particular, some commenters raised concerns about requirements for 
Native Americans to prove both citizenship and identity in order to 
obtain Medicaid services. Commenters also raised concerns about the 
SCHIP review strategy outlined in an August 17, 2007 letter sent to 
State Health Officials. And commenters asserted that other proposed 
rules released by CMS like the Rehabilitation Rule and the Targeted 
Case Management Rule coupled with this rule will have a devastating 
effect on individuals in need of transportation since these rules also 
eliminate non-emergency medical transportation services.
    Response: We disagree that providing States with benefit 
flexibility creates

[[Page 73700]]

barriers to accessing appropriate care and instead contend that this 
provides flexibilities to States in an effort to create benefit 
packages that appropriately meet the needs of their Medicaid 
populations. Citizenship documentation requirements, the August 17 
State Health Officials letter, and the Rehabilitation and Case 
Management requirements are not part of this rule and we do not address 
them here. This regulation implements the statutory provisions of 
section 1937, and CMS policy discretion was very limited.
    Comment: Several comments were provided by organizations that have 
an interest in how the benchmark and benchmark-equivalent benefit 
packages impact American Indians and Alaska Natives (AI/ANs). The 
commenters believed that alternative benefit packages serve as a 
substantial barrier to AI/AN enrollment in the Medicaid program. They 
noted that, because of the Federal Government's trust responsibility to 
provide health care to AI/ANs, implementing benchmark and benchmark-
equivalent benefit packages have specific tribal implications that were 
not addressed in these proposed rules. Several commenters believed that 
AI/ANs should be exempt from mandatory enrollment in benchmark and 
benchmark-equivalent benefit programs entirely.
    Response: In Medicaid, there is no statutory basis to exempt AI/ANs 
from Medicaid alternative benefit provisions. Section 1937 of the Act 
does not provide for such an exemption. Section 1937 provides some 
specific exemptions from mandatory enrollment into benchmark or 
benchmark-equivalent benefit packages and it is possible that some AI/
ANs would fit into one of these exempt groups. Section 1937 does not 
give CMS authority to identify additional exempt groups.
    To address the unique needs of the AI/AN population, we recommend 
working with States to ensure that alternative benefit packages 
recognize the unique services offered by IHS and tribal providers, and 
the unique health needs of the AI/AN population.
    Comment: One commenter contended that there are no provisions to 
require States to ensure that AI/ANs continue to have access to 
culturally competent health services through the Indian Health Service 
(IHS) or tribally operated health programs. The commenter stated that 
the proposed rules allow States to offer coverage without regard to 
comparability, statewideness, freedom of choice, the assurance of 
transportation to medically necessary services, and other requirements. 
There are large disparities between AI/ANs' health care status and the 
health care status of the rest of the country. The commenter added that 
for AI/ANs, the patient should always have the option of the provider 
being an Indian Health Service or tribal health program.
    Response: State Medicaid programs provide health care services to 
many diverse populations including AI/ANs. We believe that culturally 
competent services are important for all Medicaid beneficiaries and 
access to care and facilities in remote parts of the country, where it 
is especially difficult to find providers who will agree to participate 
in the Medicaid program, is paramount. The Medicaid statute does not 
provide any special protections for benefit packages applicable to AI/
AN recipients, but this does not mean that benefit packages will be 
deficient. As noted above, to address the unique needs of the AI/AN 
population, we recommend working with States to ensure that alternative 
benefit packages recognize the unique services offered by IHS and 
tribal providers, and the unique health needs of the AI/AN population. 
Futhermore, AI/AN beneficiaries are not prevented from going to IHS or 
tribal facilities for health care as a result of this rule.
    Comment: Another commenter stated on behalf of AI/ANs, the Indian 
and tribal health care system is woefully under-funded and tribal 
providers rely on Medicaid revenues to supplement that meager funding. 
Forcing AI/ANs into benchmark plans, which may have dramatically 
reduced coverage or payments, would thus jeopardize Indian health, 
injure tribal health systems, and thereby violate the Federal trust 
obligation to care for the health needs of Indian people.
    Response: CMS does not anticipate a dramatic decrease in services 
furnished under benchmark plans versus traditional Medicaid benefits. 
In fact, to date CMS has approved nine benchmark benefit programs, and 
most offer State plan services plus additional services like preventive 
care, personal assistance services, or disease management services. 
Indeed, for individuals under the age of 19, section 1937 ensures that 
all needed services will be available through the requirement that 
EPSDT services must be provided either as wrap-around to, or as part 
of, the benchmark or benchmark-equivalent plan.
    Moreover, section 1937 does not provide a basis to exclude IHS or 
tribal health providers from participation in the delivery system for 
alternative benefits. In terms of the assertion of overall under-
funding for IHS and tribal health programs, CMS does not determine 
those funding levels.
    Comment: Some commenters believed that the proposed rule did not 
comply with 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.
    These commenters noted 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 through conference calls and holds 
quarterly face to face meetings in Washington, DC. They also noted that 
CMS did not utilize the CMS TTAG Policy Subcommittee, which was 
specifically established by CMS for the purpose of obtaining advice and 
input in the development of policy guidance and regulations.
    These commenters also noted that the proposed rule does not contain 
a Tribal summary impact statement describing the extent of the tribal 
consultation or lack thereof, nor 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, or be modified to specifically 
require State Medicaid programs to consult with Indian Tribes before 
the development of any policy which would require mandatory enrollment 
of AI/ANs in benchmark or benchmark-equivalent plans. One commenter 
suggested that this consultation should be similar to the way in which 
consultation takes place with Indian Tribes in the development of 
waiver proposals. And, a commenter urged that, after appropriate tribal 
consultation and revision reflecting these and other comments, the rule 
be republished with a longer public comment period.
    One Tribe commented that the proposed rule does not honor treaty 
obligations for health services that are required by the Federal 
Government's unique legal relationship with Tribal governments.
    Response: CMS currently operates under the Department of Health and 
Human Services' Tribal Consultation Policy. The Departmental guidelines 
provide information as to the regulatory activities that rise to the 
level that require consultation (include prior notification of 
rulemaking). We have considered the Departmental guidelines and believe 
that there was no requirement for consultation on this rule, since the 
effect on AI/AN

[[Page 73701]]

recipients results from the statute itself, and not this rule. The rule 
itself does not have a direct effect on such individuals, or on the 
relationship between the Federal government and Tribes. Therefore, we 
have concluded that this rule does not reach the threshold of requiring 
consultation.
    We encourage States which decide to implement alternative benefit 
packages to consult with Tribes and notify them whenever possible on 
policies that will directly affect the Tribes. In terms of exempting 
AI/ANs from benchmark plans, it is important to note that this 
rulemaking was taken directly from provisions of section 1937 of the 
Act, as added by section 6044 of the DRA. These provisions give States 
increased flexibilities in the management of their Medicaid programs. 
This regulation exempts from mandatory enrollment in an alternative 
benefit package the groups specifically set forth in section 1937. The 
statute provides no authority to mandate exemption of other groups. It 
is possible that some AI/ANs fit into one of the exempt groups.
    These regulations implement section 1937 of the Act, as enacted by 
Congress, and do not address treaty rights of American Indians. These 
regulations neither diminish nor increase such treaty rights.
    Comment: Several commenters believed that States should not have 
the ability to create benchmarks that allow for increases in cost 
sharing. Specifically, States can establish a benchmark coverage 
package that requires copays for health care access, whereby the cost 
sharing will actually be a limitation on coverage. However, if the 
selected benchmark plan indicates that it provides coverage for only 
half of the cost of mental health services, CMS views that as a 
coinsurance requirement rather than as a limitation on coverage. 
Premiums and cost sharing act as a deterrent to those receiving health 
care and may cause low-income populations to choose between health care 
and basic needs such as food. The commenter indicated that Native 
Americans and other low-income groups should be exempt from premiums 
and cost-sharing requirements.
    Response: This rule concerns new flexibility for States in 
providing health care coverage through alternate benefit packages that 
was authorized under section 1937 of the Act. To the extent that these 
benchmark packages impose premiums or cost sharing, this final 
regulation stipulates that any cost sharing and premiums for recipients 
may not exceed cost-sharing limits applicable under sections 1916 and 
1916A of the Act. Under section 1916A of the Act, there are tiered 
individual service limits based on family income, and an aggregate cap 
of 5 percent of family income. These limits protect individuals in 
benchmark plans.
    It is important to note, first, that alternative benefit package 
programs are at a State's option. Second, numerous Medicaid eligibility 
categories are exempt from mandatory enrollment in alternative benefit 
packages and can be enrolled only voluntarily. Such individuals must be 
provided a comparison of the benchmark option versus the State plan 
option before they choose to enroll. That comparison would include 
information on the cost-sharing obligations of beneficiaries. In 
choosing the benchmark option over the State plan option, these 
individuals would thus have made an informed choice. And if the 
benchmark option is not meeting the exempt individual's needs, they may 
revert back to traditional Medicaid at any time.
    Comment: One commenter urged CMS to add provisions to provide 
special protections for individuals with disabilities, dual-eligibles, 
and persons with other chronic medical conditions to ensure access to 
benchmark packages that are uniquely designed to address physical 
impairments and rehabilitation needs.
    Another commenter believed CMS should require State Medicaid 
agencies to provide access to care management and care coordination 
services to Medicaid recipients who are incapable of managing their 
benchmark plan services. The commenter further believed that home 
health services should be included in all benchmark plan packages.
    Several commenters recommended that all State programs include 
prevention services and promote health, wellness, and fitness. Physical 
therapists are involved in prevention by promoting health, wellness and 
fitness, and in performing screening activities.
    One commenter is concerned that the managed care model is better 
suited for a ``well'' population as opposed to children with chronic 
special health care needs and adults with disabilities.
    Response: To the extent that the commenter is concerned that 
alternative benefit packages will result in a reduction in services, we 
do not believe that will necessarily be the case. For the nine 
benchmark State plan amendments approved to date, most offer 
traditional State plan services as well as additional services like 
prevention and disease management.
    By tying benefit flexibility to benchmark plans, Congress ensured 
that alternative benefit packages will be similar to those available in 
the marketplace. This protects Medicaid recipients from significant 
reductions in benefits. Benchmark options include Federal Employees 
Health Benefits Plan coverage, State Employee coverage, coverage 
offered by a Health Maintenance Organization in the State with the 
largest commercial non-Medicaid population, or Secretary approved 
coverage. States have the option of considering Employer Sponsored 
Insurance coverage so long as the Employer Sponsored Insurance coverage 
meets the criteria of benchmark coverage. States can also consider 
benchmark-equivalent coverage as long as the coverage includes basic 
services such as 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. We have 
determined that other appropriate preventive services should include 
emergency services.
    Benchmark equivalent plans may include care management, care 
coordination, and/or home health services, but it is possible that some 
plans will not include these services and we do not believe that a 
requirement that States include these specific services would be 
consistent with the statutory goal of increasing State flexibility.
    Another important protection from benefit reduction is that the 
alternative benefit package is required to include the EPSDT benefit 
for children under the age of 19. If the services are not provided as 
part of the benchmark or benchmark-equivalent plan, these services must 
be provided by the State as wrap-around benefits. Further, States, at 
their option, can provide for additional services or wrap-around 
services to benchmark or benchmark-equivalent programs.
    Another protection is that exempt individuals have the opportunity 
to make an informed choice before enrolling in benchmark or benchmark-
equivalent plans. This includes the requirement that States must 
provide exempt individuals with a comparison of the benefits included 
in the benchmark or benchmark-equivalent plan versus the benefits 
included in traditional State plan coverage. If the benchmark or 
benchmark-equivalent is not meeting the exempt individual's health care 
needs, the exempt individual has the option to return to State plan 
coverage immediately. If the exempt individual is in need of these 
services and they are not offered in the

[[Page 73702]]

benchmark plan, the individual can return to the regular Medicaid 
benefit package.
    Comment: One commenter believed current regulations governing 
managed care in Medicaid that describe the information States must 
provide and how that information should be provided should be 
incorporated in the rule governing benchmark benefit plans. The 
information should include a comparison of features between Medicaid 
and the benchmark plan, whenever they differ.
    Other commenters urged CMS to allow States to deviate from the 
lock-in provisions of Medicaid managed care regulations at 42 CFR part 
438. They assert that, if beneficiaries covered by an alternative 
benefit package, rather than full Medicaid benefits, can pick and 
choose benefits during an enrollment period by plan-hopping, plans will 
have no way to establish cost-effective premiums tied to the limited 
benefit package. The commenters requested that CMS allow States 
providing alternate benefit packages to offer as little as a 30-day 
change period after initial assignment, and that differences in covered 
benefits be excluded as a justifiable cause for beneficiaries to switch 
health plans after the change period.
    Response: We have revised the regulation at Sec.  440.305 to 
incorporate compliance with managed care requirements at section 1932 
of the Act and at 42 CFR part 438 of Federal regulations, except when 
the State demonstrates that such requirements are impractical in the 
context of, or inconsistent with, methods of offering coverage that is 
appropriate to meet the needs of the targeted population. This would 
mean that, in providing information to beneficiaries who are offered 
managed care plans to obtain alternate benefit coverage, States would 
be required to comply with the requirements at Sec.  438.10, so that 
States must provide all enrollment notices, informational materials, 
and instructional materials relating to the enrollees and potential 
enrollees in a manner and format that may be easily understood. This 
informational material must include, among other things, information 
concerning enrollment rights and protections; any restrictions on 
freedom of choice among providers; procedures for obtaining benefits 
including prior authorization requirements; information on grievances 
and fair hearings procedures; information on physicians, the amount, 
duration, and scope of benefits; and the process and procedures for 
obtaining emergency services.
    In order to maintain State flexibility, State plan amendments will 
be reviewed on an individual case-by-case basis and could provide for 
exceptions from managed care requirements when impractical or 
inconsistent with the methods of delivering appropriate coverage to the 
targeted population. This would mean that, if States can meet the 
standard of offering benchmark or benchmark-equivalent coverage that is 
appropriate to meet the health care needs of the targeted population, 
CMS would consider State program designs that require flexibility in 
this regard.
    Comment: Some commenters believed that CMS should require that all 
non-managed care plans ensure adequate access to providers that accept 
assignment of benefits and bill benchmark plans directly.
    Response: If States choose to offer benchmark or benchmark-
equivalent plans to Medicaid beneficiaries, States must assure that 
access to providers and claims payment must be in compliance with 
current Federal regulations.
    Comment: One commenter raised potential problems of billing 
alternate benefit insurers. The commenter believed CMS should ensure 
that benchmark plan options should impose no additional administrative 
burdens on participating Medicaid providers. Providers should not be 
depended upon to refund payments and rebill plans in the event that a 
plan is billed for a Medicaid recipient who is retroactively enrolled 
into a different plan. Individual plan requirements should be 
streamlined into the existing system to minimize complexity to the 
already complex billing requirements.
    Response: This rule does not address provider billing issues 
because this is the kind of administrative issue that is more properly 
handled on a State level. Provider billing procedures will vary among 
the States based on the particular health care delivery system in the 
State at issue. We do not anticipate that provider billing under an 
alternative benefit program will necessarily differ from the way in 
which providers currently bill for Medicaid services, or that providers 
will have to establish new processes and systems to calculate, track, 
bill, and report benchmark services. Moreover, because most States 
already offer managed care enrollment, they already have experience 
ensuring coordination of provider claims among different managed care 
entities. Thus, we do not believe that the offering of alternate 
benefit packages will impose significant administrative burdens on 
providers.
    Comment: One commenter asserted that the final rule should require 
States to provide an exceptions process in which beneficiaries can 
obtain services not covered by a benchmark pl