Medicaid Program: Implementation of Section 614 of the Children's Health Insurance Program Reauthorization Act of 2009 for Adjustments to the Federal Medical Assistance Percentage for Medicaid Federal Matching Funds, 63480-63482 [2010-25977]
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63480
Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Notices
ESTIMATED ANNUALIZED BURDEN TABLE—Continued
Number of
respondents
Number of
responses per
respondent
Average
burden per
response
(in hrs.)
Total burden
hours
Forms (if necessary)
Type of respondent
Subsequent updates to the State
Plan.
State Government or Qualified State
Designated Entity.
56
1
500
28,000
Total ...........................................
...........................................................
........................
........................
........................
589,244
Terry Nicolosi,
Director, Office of Resources Management;
Office of the Chief Information Officer.
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
[FR Doc. 2010–25918 Filed 10–14–10; 8:45 am]
Medicaid Program: Implementation of
Section 614 of the Children’s Health
Insurance Program Reauthorization
Act of 2009 for Adjustments to the
Federal Medical Assistance
Percentage for Medicaid Federal
Matching Funds
BILLING CODE 4150–45–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Office of the Secretary
Office of the Secretary,
Department of Health and Human
Services.
ACTION: Final notice.
AGENCY:
Centers for Medicare & Medicaid
Services
mstockstill on DSKH9S0YB1PROD with NOTICES
Delegation of Authorities
Notice is hereby given that I have
delegated to the Administrator, Centers
for Medicare & Medicaid Services
(CMS), or his or her successor,
authorities vested in the Secretary under
Section 6409(a) and (b) of the Patient
Protection and Affordable Care Act
(ACA), Public Law 111–148, as
amended hereafter, relating to the
development of a Medicare self-referral
disclosure protocol and the reduction of
amounts due and owing under Section
1877(g) [42 U.S.C. 1395nn(g)] of the
Social Security Act.
This delegation of authorities
excludes the authority under Section
6409(c) of ACA to submit a report to
Congress on the implementation of
Section 6409.
This delegation of authorities granted
herein may be re-delegated.
These authorities shall be exercised
under the Department’s policy on
regulations and the existing delegation
of authority to approve and issue
regulations.
I hereby affirm and ratify any actions
taken by the Administrator, CMS, or his
or her subordinates, which involved the
exercise of the authorities delegated
herein prior to the effective date of this
delegation.
This delegation of authorities granted
herein is effective immediately.
Authority: 44 U.S.C. 3101.
Dated: September 29, 2010.
Kathleen Sebelius,
Secretary.
[FR Doc. 2010–25976 Filed 10–14–10; 8:45 am]
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For purposes of Title XIX
(Medicaid) of the Social Security Act,
the Federal Medical Assistance
Percentage (FMAP), defined in section
1905(b) of the Social Security Act, for
each State beginning with fiscal year
2006 is subject to adjustment pursuant
to section 614 of the Children’s Health
Insurance Program Reauthorization Act
of 2009 (CHIPRA), Public Law 111–3.
Section 614 provides for a recalculation
of the FMAP disregarding identifiable
significantly disproportionate employer
pension or insurance fund contributions
for a State. These contributions, when
counted, increase State personal income
and, by operation of the statutory
formula to calculate the FMAP, would
decrease the FMAP for the State. This
final notice announces the methodology
that the U.S. Department of Health and
Human Services will use to determine
the need for, and amount of, any such
recalculation of the FMAP for a State.
SUMMARY:
A. Background
Section 1905(b) of the Social Security
Act defines the Federal Medical
Assistance Percentage (FMAP), which is
used to determine the share of Federal
matching funds paid to each State for
medical assistance payments under an
approved Medicaid State plan under
Title XIX of the Social Security Act.
These FMAP rates are also used to
determine Federal matching fund rates
for State expenditures for assistance
payments under certain social service
programs under Title IV of the Social
Security Act and for child health
assistance expenditures under the
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Children’s Health Insurance Program
under title XXI of the Social Security
Act. In other Federal Register issuances,
we have addressed changes to these
FMAP rates required under the
American Recovery and Reinvestment
Act of 2009 (Pub. L. 111–5).
This notice addresses adjustments to
the FMAP rates that are applicable only
to the Medicaid program and required
by Section 614 of the Children’s Health
Insurance Program Reauthorization Act
of 2009 (CHIPRA). Section 614 specifies
that certain significantly
disproportionate employer pension or
insurance fund contributions shall be
disregarded when computing the per
capita income used to calculate the
FMAP. The statutory formula for
calculating the FMAP is based on the
ratio of the State’s per capita income to
the per capita income of the entire
United States. Under this formula,
States with higher per capita income
levels could have lower FMAP rates
than States with lower per capita
income levels. Significantly
disproportionate employer pension or
insurance fund contributions increase
State personal income and, by operation
of the statutory formula, could result in
lower FMAPs than if those
contributions were disregarded.
CHIPRA requires adjustments to the
Fiscal Year 2006 (FY06) through Fiscal
Year 2010 (FY10) Medicaid FMAP rates
and to any future FMAP calculation.
A notice with comment on the
proposed implementation of Section
614 was published in the Federal
Register on June 7, 2010. Only one
person sent in comments during the 30day period.
B. Calculation of the FMAP Adjustment
Under CHIPRA
Section 614 of CHIPRA requires that
the Title XIX Medicaid FMAP shall be
adjusted for any States that had
significantly disproportionate employer
pension and insurance fund
contributions. A significantly
disproportionate employer contribution
is defined as any identifiable employer
contribution towards pension or other
employee insurance funds that is
estimated to accrue to residents of such
E:\FR\FM\15OCN1.SGM
15OCN1
Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Notices
State for a calendar year if the increase
exceeds 25 percent of the total increase
in State personal income. The personal
income data set originally used in
calculating FMAP rates shall be used for
making this adjustment to the FMAP
rates.
The required adjustment is a
recalculation of the FMAP rate
disregarding any significantly
disproportionate employer pension or
insurance fund contribution in
computing the State per capita income,
but not disregarding such contributions
in computing the United States per
capita income used in the FMAP
calculation. Section 614(c) provides that
in no case shall a State have its FMAP
reduced because of the application of
this disregard.
Section 614(b)(3) specifies a special
adjustment for negative growth in State
personal income. In that instance, for
the purposes of calculating the FMAP
for a calendar year, an employer
pension and insurance fund
contribution shall be disregarded to the
extent that it exceeds 125 percent of the
amount of employer contribution in the
previous calendar year. The
methodology to implement this
provision will be addressed in a future
Federal Register notice.
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C. Analysis of and Responses to
Comments
In response to the June 2010 proposed
regulation, we received correspondence
from one commenter. The commenter
posed several questions and
suggestions.
Application of FMAP Adjustment
Comment: The commenter asked if
HHS anticipates the adjustment
applying to only one particular State or
is there a reasonable expectation that
other States may qualify? In addition,
the commenter asked whether HHS will
provide guidance to States in the form
of thresholds above which a State may
determine that a review of employer
contributions is warranted for a
potential FMAP adjustment.
Response: Except for Louisiana with a
negative growth in personal income in
2005, all other States had increases in
State personal income of between $359
million and $1.4 billion or more during
the 2003–2008 time period. A
contribution attributed to a particular
State’s personal income of at least 25
percent of these amounts would be
necessary to trigger an FMAP
adjustment. At this time, HHS knows of
only one disproportionate employer
contribution, attributed to Michigan in
2003. HHS does not think it is likely
that another employer contribution in
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16:01 Oct 14, 2010
Jkt 223001
2003–2008 would be considered
disproportionate, but does not rule out
the possibility. It is possible, however,
that additional States may qualify at any
point in the future. HHS does not intend
to issue guidance with each FMAP
notice on a State’s potential threshold
where a review of its employer
contributions may be warranted. States
can determine for themselves using
Department of Commerce Bureau of
Economic Analysis (BEA) data, whether
an employer’s contribution would meet
the threshold for triggering an FMAP
adjustment.
Definition of Employer Pension and
Insurance Fund Contribution
Comment: The commenter asked
whether the definition of ‘‘employer
pension and insurance fund
contribution’’ is the same as the BEA
definition.
Response: HHS intends to use the
BEA definition: contributions consisting
of employer payments (including
payments-in-kind) to private pension
and profit-sharing plans, publicly
administered government employee
retirement plans, private group health
and life insurance plans, privately
administered workers’ compensation
plans, and supplemental unemployment
benefit plans, formerly called ‘‘other
labor income’’.
Accounting for Employer’s
Contributions
Comment: The commenter asked if it
is the intent of the methodology to
identify single employers with
disproportionate pension and insurance
fund contributions. The commenter also
asked whether contributions from any
employer (public, private for-profit,
private non-profit, self-employed, S
Corporations, C corporations, LLCs, etc)
are eligible.
Response: The legislation states that a
significantly disproportionate employer
pension and insurance fund
contribution is any identifiable
employer contribution meeting the
threshold. HHS reads this language to
refer to the contribution of a single
employer. The legislation does not
exclude any employer.
Adjustment for Negative Growth in State
Income
Comment: The commenter asked
whether the cumulative amount of
contributions in excess of 125 percent
from all such qualifying employers
would be disregarded for the special
adjustment for negative growth in State
personal income.
Response: This comment concerns the
special adjustment for negative growth
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63481
in State personal income, which is not
covered in this notice. HHS intends to
issue another notice on the special
adjustment for negative growth in State
personal income.
Acceptable Evidence Submission
Comment: The commenter suggested
that it would be beneficial for HHS to
describe in more detail what evidence of
disproportionate employer pension and
insurance fund contribution is
acceptable and asked what methodology
will be used to determine the amounts
of employer contributions estimated to
accrue to residents of a State.
Response: In order to give States as
much flexibility as possible in the type
of information that can be submitted to
request an adjustment, HHS does not
want to prescribe the specific type or
format of their submission, but the
information should be documented in
such a way to permit effective review
and verification. HHS will be using the
same methodology employed by BEA
which is based on a distribution of
industry wages to allocate employer
contributions to States.
Time Period for Adjustment and Data
Submission
Comment: The commenter asked
whether it is correct that there is no end
date to this provision. The commenter
believed that the time frame for
submitting data for employer
contributions made between 2003 and
2008 by the end of FY 2010 is
unreasonable and that States should be
given up to 4 years to supply
information for future years. The
commenter also asked how long the
verification process will take in
considering a request to adjust a State’s
FMAP and indicates that States would
appreciate a response within their fiscal
year.
Response: The commenter correctly
noted that the legislation does not
indicate an end date to this provision.
HHS finds the commenter’s suggestion
for a longer time frame for submitting
initial data for the years 2003 through
2008 reasonable. HHS therefore extends
the time frame for submitting data for
employer contributions made between
2003 and 2008 to the end of FY 2011.
Similarly, HHS agrees to extend the
time frame for submitting data from
2009 and beyond such that the deadline
for submission of data from 2009 and
beyond will be the end of the second
fiscal year following the year end of the
employer’s annual financial statement
that includes the disproportionate
employer contribution.
Because it is not known what
information a State may submit as
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63482
Federal Register / Vol. 75, No. 199 / Friday, October 15, 2010 / Notices
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justification for an FMAP adjustment,
we cannot predetermine how much time
will be required to verify the
information, but will review and verify
a State’s submission and request for an
adjustment to its FMAP as expeditiously
as possible.
D. Methodology Utilized in the
Calculation of the Adjustment to the
Medicaid FMAP
This Final Notice announces the
methodology that the U.S. Department
of Health and Human Services (HHS)
will use in implementing the employer
contribution disregard required by
Section 614 of CHIPRA. The approach
reflects the absence of a Federal source
of reliable and timely data on pension
and insurance contributions by
individual employer and State.
We will use the BEA definition of
pension and insurance contributions:
contributions consisting of employer
payments (including payments-in-kind)
to private pension and profit-sharing
plans, publicly administered
government employee retirement plans,
private group health and life insurance
plans, privately administered workers’
compensation plans, and supplemental
unemployment benefit plans, formerly
called ‘‘other labor income’’.
We will identify significantly
disproportionate employer pension or
insurance contributions for a State by
reviewing contributions identified by
the State. We believe that States may
have greater access to timely and
relevant data on such contributions than
is available from Federal data sources.
We would request that any State that
believes an individual employer has
made a significantly disproportionate
employer or insurance contribution
provide data on that individual
employer contribution to HHS. The
State may submit official audited
financial statements for the employer for
the year of the contribution (starting
with the year 2003) and the prior year.
If the State does not submit official
audited financial statements for the
employer, the State may submit other
evidence that the increase in the
employer’s contribution is likely to
exceed 25 percent of the increase in the
State’s personal income in that year.
After a State submits written
notification that such a contribution
occurred, HHS will verify the State’s
data. As part of this verification process,
HHS will search the Security Exchange
Commission (SEC) filings or the Internal
Revenue Service (IRS) 5500 Annual
Return/Report of Employee Benefit Plan
database to find the employer’s
contributions for the relevant two-year
period. If HHS is unable to verify the
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16:01 Oct 14, 2010
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State’s submitted data, no FMAP
adjustment will be made.
After the State’s data for an employer
is verified, HHS will allocate employer
contributions in both years to the State
according to the methodology used by
the BEA. Under that methodology,
employer contributions to pension and
insurance funds are distributed
according to State wages and salaries by
the employer’s industry subsector.
Then, HHS will determine whether the
State increase in the employer
contribution exceeds the trigger of 25
percent of the increase in total State
personal income.
If the employer contribution is
significantly disproportionate, HHS will
disregard the State-allocated
contribution, i.e., subtract it from the
State’s personal income in that year.
HHS will calculate the FMAP
adjustment for the State using the
revised State per capita income based
on the newly calculated State personal
income. Since the FMAP calculation
involves the average per capita income
for three years, the FMAP adjustment
will be calculated for each fiscal year
affected by the State’s revised per capita
income. For instance, a significantly
disproportionate employer contribution
in 2003 would affect the FMAPs for
FY06 (based on State per capita income
for calendar years 2001, 2002, and
2003), FY07 (based on State per capita
income for calendar years 2002, 2003,
and 2004), and FY08 (based on State per
capita income for calendar years 2003,
2004, and 2005).
States may submit data on
disproportionate employer
contributions made between 2003 and
2008 to HHS by the end of FY 2011. The
deadline for 2009 and beyond will be
the end of the second fiscal year
following the year end of the employer’s
annual financial statement that includes
the disproportionate employer
contribution.
To summarize this methodology, after
receipt of a State submission, HHS will
verify the employer contributions from
SEC filings or IRS 5500 reports for the
year of the contribution and the prior
year. If the employer contributions are
verified, HHS will allocate the employer
contributions for the State for both years
and determine whether the State
increase in the employer contribution
exceeds the trigger of 25 percent of the
increase in the State’s personal income.
If the employer contribution meets the
definition of significantly
disproportionate by exceeding the
trigger, HHS will recalculate the FMAP
rates for the corresponding fiscal years.
The Centers for Medicare & Medicaid
Services (CMS) will then calculate the
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changes in Federal medical assistance
payments resulting from the adjusted
FMAP rates for the State’s applicable
fiscal years. If HHS is unable to verify
the State’s submitted data, then no
FMAP adjustment will be made.
DATES: Effective Dates: This final notice
is effective 30 days after publication and
sets forth a methodology for adjusted
percentages applicable under title XIX
of the Social Security Act for fiscal years
2006 and beyond, beginning October 1,
2005.
FOR FURTHER INFORMATION CONTACT: Rose
Chu or Thomas Musco, Office of Health
Policy, Office of the Assistant Secretary
for Planning and Evaluation, Room
447D—Hubert H. Humphrey Building,
200 Independence Avenue, SW.,
Washington, DC 20201, (202) 690–6870.
Dated: September 10, 2010 .
Kathleen Sebelius,
Secretary.
[FR Doc. 2010–25977 Filed 10–14–10; 8:45 am]
BILLING CODE 4210–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
[Document Identifier: CMS–10304 and CMS–
10315]
Agency Information Collection
Activities: Submission for OMB
Review; Comment Request
Centers for Medicare &
Medicaid Services, HHS.
In compliance with the requirement
of section 3506(c)(2)(A) of the
Paperwork Reduction Act of 1995, the
Centers for Medicare & Medicaid
Services (CMS), Department of Health
and Human Services, is publishing the
following summary of proposed
collections for public comment.
Interested persons are invited to send
comments regarding this burden
estimate or any other aspect of this
collection of information, including any
of the following subjects: (1) The
necessity and utility of the proposed
information collection for the proper
performance of the Agency’s function;
(2) the accuracy of the estimated
burden; (3) ways to enhance the quality,
utility, and clarity of the information to
be collected; and (4) the use of
automated collection techniques or
other forms of information technology to
minimize the information collection
burden.
1. Type of Information Collection
Request: New collection; Title of
Information Collection: Information
AGENCY:
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]]>Agencies
[Federal Register Volume 75, Number 199 (Friday, October 15, 2010)]
[Notices]
[Pages 63480-63482]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-25977]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Medicaid Program: Implementation of Section 614 of the Children's
Health Insurance Program Reauthorization Act of 2009 for Adjustments to
the Federal Medical Assistance Percentage for Medicaid Federal Matching
Funds
AGENCY: Office of the Secretary, Department of Health and Human
Services.
ACTION: Final notice.
-----------------------------------------------------------------------
SUMMARY: For purposes of Title XIX (Medicaid) of the Social Security
Act, the Federal Medical Assistance Percentage (FMAP), defined in
section 1905(b) of the Social Security Act, for each State beginning
with fiscal year 2006 is subject to adjustment pursuant to section 614
of the Children's Health Insurance Program Reauthorization Act of 2009
(CHIPRA), Public Law 111-3. Section 614 provides for a recalculation of
the FMAP disregarding identifiable significantly disproportionate
employer pension or insurance fund contributions for a State. These
contributions, when counted, increase State personal income and, by
operation of the statutory formula to calculate the FMAP, would
decrease the FMAP for the State. This final notice announces the
methodology that the U.S. Department of Health and Human Services will
use to determine the need for, and amount of, any such recalculation of
the FMAP for a State.
A. Background
Section 1905(b) of the Social Security Act defines the Federal
Medical Assistance Percentage (FMAP), which is used to determine the
share of Federal matching funds paid to each State for medical
assistance payments under an approved Medicaid State plan under Title
XIX of the Social Security Act. These FMAP rates are also used to
determine Federal matching fund rates for State expenditures for
assistance payments under certain social service programs under Title
IV of the Social Security Act and for child health assistance
expenditures under the Children's Health Insurance Program under title
XXI of the Social Security Act. In other Federal Register issuances, we
have addressed changes to these FMAP rates required under the American
Recovery and Reinvestment Act of 2009 (Pub. L. 111-5).
This notice addresses adjustments to the FMAP rates that are
applicable only to the Medicaid program and required by Section 614 of
the Children's Health Insurance Program Reauthorization Act of 2009
(CHIPRA). Section 614 specifies that certain significantly
disproportionate employer pension or insurance fund contributions shall
be disregarded when computing the per capita income used to calculate
the FMAP. The statutory formula for calculating the FMAP is based on
the ratio of the State's per capita income to the per capita income of
the entire United States. Under this formula, States with higher per
capita income levels could have lower FMAP rates than States with lower
per capita income levels. Significantly disproportionate employer
pension or insurance fund contributions increase State personal income
and, by operation of the statutory formula, could result in lower FMAPs
than if those contributions were disregarded. CHIPRA requires
adjustments to the Fiscal Year 2006 (FY06) through Fiscal Year 2010
(FY10) Medicaid FMAP rates and to any future FMAP calculation.
A notice with comment on the proposed implementation of Section 614
was published in the Federal Register on June 7, 2010. Only one person
sent in comments during the 30-day period.
B. Calculation of the FMAP Adjustment Under CHIPRA
Section 614 of CHIPRA requires that the Title XIX Medicaid FMAP
shall be adjusted for any States that had significantly
disproportionate employer pension and insurance fund contributions. A
significantly disproportionate employer contribution is defined as any
identifiable employer contribution towards pension or other employee
insurance funds that is estimated to accrue to residents of such
[[Page 63481]]
State for a calendar year if the increase exceeds 25 percent of the
total increase in State personal income. The personal income data set
originally used in calculating FMAP rates shall be used for making this
adjustment to the FMAP rates.
The required adjustment is a recalculation of the FMAP rate
disregarding any significantly disproportionate employer pension or
insurance fund contribution in computing the State per capita income,
but not disregarding such contributions in computing the United States
per capita income used in the FMAP calculation. Section 614(c) provides
that in no case shall a State have its FMAP reduced because of the
application of this disregard.
Section 614(b)(3) specifies a special adjustment for negative
growth in State personal income. In that instance, for the purposes of
calculating the FMAP for a calendar year, an employer pension and
insurance fund contribution shall be disregarded to the extent that it
exceeds 125 percent of the amount of employer contribution in the
previous calendar year. The methodology to implement this provision
will be addressed in a future Federal Register notice.
C. Analysis of and Responses to Comments
In response to the June 2010 proposed regulation, we received
correspondence from one commenter. The commenter posed several
questions and suggestions.
Application of FMAP Adjustment
Comment: The commenter asked if HHS anticipates the adjustment
applying to only one particular State or is there a reasonable
expectation that other States may qualify? In addition, the commenter
asked whether HHS will provide guidance to States in the form of
thresholds above which a State may determine that a review of employer
contributions is warranted for a potential FMAP adjustment.
Response: Except for Louisiana with a negative growth in personal
income in 2005, all other States had increases in State personal income
of between $359 million and $1.4 billion or more during the 2003-2008
time period. A contribution attributed to a particular State's personal
income of at least 25 percent of these amounts would be necessary to
trigger an FMAP adjustment. At this time, HHS knows of only one
disproportionate employer contribution, attributed to Michigan in 2003.
HHS does not think it is likely that another employer contribution in
2003-2008 would be considered disproportionate, but does not rule out
the possibility. It is possible, however, that additional States may
qualify at any point in the future. HHS does not intend to issue
guidance with each FMAP notice on a State's potential threshold where a
review of its employer contributions may be warranted. States can
determine for themselves using Department of Commerce Bureau of
Economic Analysis (BEA) data, whether an employer's contribution would
meet the threshold for triggering an FMAP adjustment.
Definition of Employer Pension and Insurance Fund Contribution
Comment: The commenter asked whether the definition of ``employer
pension and insurance fund contribution'' is the same as the BEA
definition.
Response: HHS intends to use the BEA definition: contributions
consisting of employer payments (including payments-in-kind) to private
pension and profit-sharing plans, publicly administered government
employee retirement plans, private group health and life insurance
plans, privately administered workers' compensation plans, and
supplemental unemployment benefit plans, formerly called ``other labor
income''.
Accounting for Employer's Contributions
Comment: The commenter asked if it is the intent of the methodology
to identify single employers with disproportionate pension and
insurance fund contributions. The commenter also asked whether
contributions from any employer (public, private for-profit, private
non-profit, self-employed, S Corporations, C corporations, LLCs, etc)
are eligible.
Response: The legislation states that a significantly
disproportionate employer pension and insurance fund contribution is
any identifiable employer contribution meeting the threshold. HHS reads
this language to refer to the contribution of a single employer. The
legislation does not exclude any employer.
Adjustment for Negative Growth in State Income
Comment: The commenter asked whether the cumulative amount of
contributions in excess of 125 percent from all such qualifying
employers would be disregarded for the special adjustment for negative
growth in State personal income.
Response: This comment concerns the special adjustment for negative
growth in State personal income, which is not covered in this notice.
HHS intends to issue another notice on the special adjustment for
negative growth in State personal income.
Acceptable Evidence Submission
Comment: The commenter suggested that it would be beneficial for
HHS to describe in more detail what evidence of disproportionate
employer pension and insurance fund contribution is acceptable and
asked what methodology will be used to determine the amounts of
employer contributions estimated to accrue to residents of a State.
Response: In order to give States as much flexibility as possible
in the type of information that can be submitted to request an
adjustment, HHS does not want to prescribe the specific type or format
of their submission, but the information should be documented in such a
way to permit effective review and verification. HHS will be using the
same methodology employed by BEA which is based on a distribution of
industry wages to allocate employer contributions to States.
Time Period for Adjustment and Data Submission
Comment: The commenter asked whether it is correct that there is no
end date to this provision. The commenter believed that the time frame
for submitting data for employer contributions made between 2003 and
2008 by the end of FY 2010 is unreasonable and that States should be
given up to 4 years to supply information for future years. The
commenter also asked how long the verification process will take in
considering a request to adjust a State's FMAP and indicates that
States would appreciate a response within their fiscal year.
Response: The commenter correctly noted that the legislation does
not indicate an end date to this provision. HHS finds the commenter's
suggestion for a longer time frame for submitting initial data for the
years 2003 through 2008 reasonable. HHS therefore extends the time
frame for submitting data for employer contributions made between 2003
and 2008 to the end of FY 2011. Similarly, HHS agrees to extend the
time frame for submitting data from 2009 and beyond such that the
deadline for submission of data from 2009 and beyond will be the end of
the second fiscal year following the year end of the employer's annual
financial statement that includes the disproportionate employer
contribution.
Because it is not known what information a State may submit as
[[Page 63482]]
justification for an FMAP adjustment, we cannot predetermine how much
time will be required to verify the information, but will review and
verify a State's submission and request for an adjustment to its FMAP
as expeditiously as possible.
D. Methodology Utilized in the Calculation of the Adjustment to the
Medicaid FMAP
This Final Notice announces the methodology that the U.S.
Department of Health and Human Services (HHS) will use in implementing
the employer contribution disregard required by Section 614 of CHIPRA.
The approach reflects the absence of a Federal source of reliable and
timely data on pension and insurance contributions by individual
employer and State.
We will use the BEA definition of pension and insurance
contributions: contributions consisting of employer payments (including
payments-in-kind) to private pension and profit-sharing plans, publicly
administered government employee retirement plans, private group health
and life insurance plans, privately administered workers' compensation
plans, and supplemental unemployment benefit plans, formerly called
``other labor income''.
We will identify significantly disproportionate employer pension or
insurance contributions for a State by reviewing contributions
identified by the State. We believe that States may have greater access
to timely and relevant data on such contributions than is available
from Federal data sources. We would request that any State that
believes an individual employer has made a significantly
disproportionate employer or insurance contribution provide data on
that individual employer contribution to HHS. The State may submit
official audited financial statements for the employer for the year of
the contribution (starting with the year 2003) and the prior year. If
the State does not submit official audited financial statements for the
employer, the State may submit other evidence that the increase in the
employer's contribution is likely to exceed 25 percent of the increase
in the State's personal income in that year.
After a State submits written notification that such a contribution
occurred, HHS will verify the State's data. As part of this
verification process, HHS will search the Security Exchange Commission
(SEC) filings or the Internal Revenue Service (IRS) 5500 Annual Return/
Report of Employee Benefit Plan database to find the employer's
contributions for the relevant two-year period. If HHS is unable to
verify the State's submitted data, no FMAP adjustment will be made.
After the State's data for an employer is verified, HHS will
allocate employer contributions in both years to the State according to
the methodology used by the BEA. Under that methodology, employer
contributions to pension and insurance funds are distributed according
to State wages and salaries by the employer's industry subsector. Then,
HHS will determine whether the State increase in the employer
contribution exceeds the trigger of 25 percent of the increase in total
State personal income.
If the employer contribution is significantly disproportionate, HHS
will disregard the State-allocated contribution, i.e., subtract it from
the State's personal income in that year. HHS will calculate the FMAP
adjustment for the State using the revised State per capita income
based on the newly calculated State personal income. Since the FMAP
calculation involves the average per capita income for three years, the
FMAP adjustment will be calculated for each fiscal year affected by the
State's revised per capita income. For instance, a significantly
disproportionate employer contribution in 2003 would affect the FMAPs
for FY06 (based on State per capita income for calendar years 2001,
2002, and 2003), FY07 (based on State per capita income for calendar
years 2002, 2003, and 2004), and FY08 (based on State per capita income
for calendar years 2003, 2004, and 2005).
States may submit data on disproportionate employer contributions
made between 2003 and 2008 to HHS by the end of FY 2011. The deadline
for 2009 and beyond will be the end of the second fiscal year following
the year end of the employer's annual financial statement that includes
the disproportionate employer contribution.
To summarize this methodology, after receipt of a State submission,
HHS will verify the employer contributions from SEC filings or IRS 5500
reports for the year of the contribution and the prior year. If the
employer contributions are verified, HHS will allocate the employer
contributions for the State for both years and determine whether the
State increase in the employer contribution exceeds the trigger of 25
percent of the increase in the State's personal income. If the employer
contribution meets the definition of significantly disproportionate by
exceeding the trigger, HHS will recalculate the FMAP rates for the
corresponding fiscal years. The Centers for Medicare & Medicaid
Services (CMS) will then calculate the changes in Federal medical
assistance payments resulting from the adjusted FMAP rates for the
State's applicable fiscal years. If HHS is unable to verify the State's
submitted data, then no FMAP adjustment will be made.
DATES: Effective Dates: This final notice is effective 30 days after
publication and sets forth a methodology for adjusted percentages
applicable under title XIX of the Social Security Act for fiscal years
2006 and beyond, beginning October 1, 2005.
FOR FURTHER INFORMATION CONTACT: Rose Chu or Thomas Musco, Office of
Health Policy, Office of the Assistant Secretary for Planning and
Evaluation, Room 447D--Hubert H. Humphrey Building, 200 Independence
Avenue, SW., Washington, DC 20201, (202) 690-6870.
Dated: September 10, 2010 .
Kathleen Sebelius,
Secretary.
[FR Doc. 2010-25977 Filed 10-14-10; 8:45 am]
BILLING CODE 4210-01-P
