Streamlining the Medicaid, Children's Health Insurance Program, and Basic Health Program Application, Eligibility Determination, Enrollment, and Renewal Processes, 54760-54855 [2022-18875]

Agencies

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

[Federal Register Volume 87, Number 172 (Wednesday, September 7, 2022)]
[Proposed Rules]
[Pages 54760-54855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18875]



[[Page 54759]]

Vol. 87

Wednesday,

No. 172

September 7, 2022

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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42 CFR Parts 431, 435, 457, et al.





Streamlining the Medicaid, Children's Health Insurance Program, and 
Basic Health Program Application, Eligibility Determination, 
Enrollment, and Renewal Processes; Proposed Rule

Federal Register / Vol. 87, No. 172 / Wednesday, September 7, 2022 / 
Proposed Rules

[[Page 54760]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 431, 435, 457, and 600

[CMS-2421-P]
RIN 0938-AU00


Streamlining the Medicaid, Children's Health Insurance Program, 
and Basic Health Program Application, Eligibility Determination, 
Enrollment, and Renewal Processes

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

ACTION: Proposed rule.

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SUMMARY: This rulemaking proposes changes to simplify the processes for 
eligible individuals to enroll and retain eligibility in Medicaid, the 
Children's Health Insurance Program (CHIP), and the Basic Health 
Program. This proposed rule would remove barriers and facilitate 
enrollment of new applicants, particularly those dually eligible for 
Medicare and Medicaid; align enrollment and renewal requirements for 
most individuals in Medicaid; establish beneficiary protections related 
to returned mail; create timeliness requirements for redeterminations 
of eligibility in Medicaid and CHIP; make transitions between programs 
easier; eliminate access barriers for children enrolled in CHIP by 
prohibiting premium lock-out periods, waiting periods, and benefit 
limitations; and modernize recordkeeping requirements to ensure proper 
documentation of eligibility and enrollment.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on November 7, 2022.

ADDRESSES: In commenting, please refer to file code CMS-2421-P.
    Because of staff and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-2421-P, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-2421-P, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Stephanie Bell, (410) 786-0617, 
[email protected].

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments.

I. Background

    Since 1965, Medicaid has been a cornerstone of America's health 
care system. The program provides free or low-cost health coverage to 
low-income individuals and families and helps to meet the diverse 
health care needs of children, pregnant individuals, parents and other 
caretaker relatives, older adults, and people with disabilities. For 25 
years, the Children's Health Insurance Program (CHIP) has served as a 
bridge from Medicaid to private insurance for somewhat higher-income 
children. As of May 2022, the most recent month for which enrollment 
data are available, nearly 89 million individuals were enrolled in 
Medicaid and CHIP.\1\
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    \1\ May 2022 Medicaid & CHIP Enrollment Data Highlights--https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/medicaid-chip-enrollment-data/monthly-medicaid-chip-application-eligibility-determination-and-enrollment-reports-data/.
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    Access to health coverage expanded significantly in 2010 with 
enactment of the Patient Protection and Affordable Care Act (Pub. L. 
111-148, enacted on March 23, 2010), as amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 
30, 2010), together referred to as the Affordable Care Act (ACA). The 
ACA expanded Medicaid eligibility to low-income adults under age 65 
without regard to parenting or disability status, simplified Medicaid 
and CHIP enrollment processes, and established health insurance 
Marketplaces where individuals without access to Medicaid, CHIP, or 
other comprehensive coverage could purchase coverage in a Qualified 
Health Plan (QHP). Many individuals with household income above the 
Medicaid and CHIP income standards became eligible for premium tax 
credits and/or cost-sharing reductions to help cover the cost of the 
coverage. In addition, the ACA provided States with the option of 
establishing a Basic Health Program (BHP), which provides affordable 
health coverage to individuals whose household income exceeds 133 
percent but does not exceed 200 percent of the Federal Poverty Level 
(FPL) (that is, lower income individuals who would otherwise be 
eligible to purchase coverage through the Marketplaces with financial 
subsidies). BHPs allow States to provide more affordable coverage for 
these individuals and to improve the continuity of care for those whose 
income fluctuates above and below the Medicaid and CHIP levels. To 
date, two States, New York and Minnesota, have established BHPs, 
covering over 1 million people.\2\
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    \2\ https://www.cms.gov/files/document/health-insurance-exchanges-2022-open-enrollment-report-final.pdf.
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    In addition to coverage expansion, the ACA also required the 
establishment of a seamless system of coverage for all insurance 
affordability programs (that is, Medicaid, CHIP, BHP, and the insurance 
affordability programs available through the Marketplaces). In 
accordance with sections 1943 and 2107(e)(1)(T) of the Social Security 
Act (the Act) and sections 1413 and 2201 of the ACA, individuals must 
be able to apply for, and enroll in, the program for which they qualify 
using a single application submitted to any program. In the March 23, 
2012 Federal Register, CMS issued implementing regulations titled 
``Medicaid program; Eligibility Changes Under the Affordable Care Act 
of 2010'' final rule, (77 FR 17144) (referred to hereafter as the 
``2012 eligibility final rule''), and the ``Medicaid and Children's 
Health Insurance Programs: Essential Health Benefits in Alternative 
Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, 
and Premiums and Cost Sharing; Exchanges: Eligibility and Enrollment'' 
final rule titled in July 2013 (78 FR 42160) (referred to hereafter

[[Page 54761]]

as the ``2013 eligibility final rule''). These regulations focused on 
establishing a single streamlined application, aligning financial 
methodologies and procedures across insurance affordability programs, 
and maximizing electronic verification in order to create a 
streamlined, coordinated, and efficient eligibility and enrollment 
process for eligibility determinations based on Modified Adjusted Gross 
Income (MAGI).
    Significant progress has been made in simplifying eligibility, 
enrollment, and renewal processes for applicants and enrollees, as well 
as reducing administrative burden on State agencies administering 
Medicaid, CHIP, and BHP, since the promulgation of these regulations. 
The dynamic online applications developed by States and the Federally 
Facilitated Marketplaces, which ask only those questions needed to 
determine eligibility have reduced burden on applicants. Greater 
reliance on electronic verifications has reduced the need for 
individuals to find and submit, and for eligibility workers to review, 
copies of paper documentation, decreasing burden on both States and 
individuals and increasing program integrity. Renewals completed using 
electronic information available to States have increased retention of 
eligible individuals, while also decreasing the administrative burden 
on both States and enrollees.
    Following a period of steady growth attributed to the ACA, 
enrollment in Medicaid and CHIP declined from 2017 through 2019. 
Evidence suggests that the economy was the primary driver of this 
decline. However, we also know that more restrictive State enrollment 
policies contribute to coverage disruptions and create churning as 
people lose their Medicaid or CHIP coverage and then re-enroll within a 
short period of time.\3\ The Georgetown University Center for Children 
and Families estimated that 4.4 million children were uninsured in 
2019, an increase from 2016 of 726,000 uninsured children. Looking at 
uninsurance among children by income, those with household income below 
138 percent of the FPL (133 percent of the FPL is the minimum income 
standard that States may establish for children in Medicaid, plus a 5 
percentage point disregard), the percentage of Medicaid-eligible 
children who did not have any health insurance coverage increased from 
6.8 percent in 2016 to 7.7 percent in 2019.\4\ Based on the most 
recently available data from the American Community Survey, children in 
poverty continued to experience an increase in uninsurance from 2018 
through 2020 as the uninsurance rate increased by 1.6 percentage points 
to 9.3 percent.\5\ The raw numbers represented by these percentage 
changes correspond to a large number of individual children who were 
uninsured despite having a household income low enough to be eligible 
for Medicaid and who may have deferred or foregone needed health care 
as a result.
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    \3\ Medicaid Churning and Continuity of Care: Evidence and 
Policy Considerations Before and After the COVID-19 Pandemic; 
accessed on 8/30/21 at https://aspe.hhs.gov/sites/default/files/private/pdf/265366/medicaid-churning-ib.pdf.
    \4\ Alker, Joan and Corcoran, Alexandra. 2020. ``Children's 
Uninsured Rate Rises by Largest Annual Jump in More than a Decade.'' 
Accessed on 03/16/2022 at https://ccf.georgetown.edu/wp-content/uploads/2020/10/ACS-Uninsured-Kids-2020_10-06-edit-3.pdf.
    \5\ Katherine Keisler-Starkey and Lisa N. Bunch, U.S. Census 
Bureau Current Population Reports, P60-274, Health Insurance 
Coverage in the United States: 2020, U.S. Government Publishing 
Office, Washington, DC, September 2021.
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    Additionally, enrollment in Medicare Savings Programs (MSPs), 
through which Medicaid provides coverage of Medicare premiums and/or 
cost-sharing for lower income Medicare beneficiaries, has remained 
relatively low. The MSPs are essential to the health and economic well-
being of those enrolled, promoting access to care and helping free up 
individuals' limited income for food, housing, and other of life's 
necessities. Yet a 2017 study conducted for Medicaid and CHIP Payment 
and Access Commission (MACPAC) estimated that only about half of 
eligible Medicare beneficiaries were enrolled in MSPs.\6\
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    \6\ Medicare Savings Program Enrollees and Eligible Non-
Enrollees, Kyle J. Caswell, Timothy A. Waidmann, The Urban 
Institute, June 2017: https://www.macpac.gov/wp-content/uploads/2017/08/MSP-Enrollees-and-Eligible-Non-Enrollees.pdf.
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    The critical role of Medicaid and CHIP providing timely health care 
access to the most vulnerable individuals was highlighted as the Novel 
Coronavirus 2019 (``COVID-19'') spread across our country beginning in 
2020. Medicaid and CHIP helped to provide a lifeline for those who may 
have lost their jobs or been exposed to COVID-19, or both, and they 
played a critical role in the national pandemic response. The Families 
First Coronavirus Response Act (Pub. L. 116-127) (FFCRA) conditioned a 
temporary increase in Federal Medicaid funding on State compliance with 
several conditions, including maintaining enrollment for beneficiaries 
enrolled in Medicaid through the end of the month in which the COVID-19 
public health emergency (PHE) ends (``continuous enrollment 
condition''). Additionally, the FFCRA, along with the Coronavirus Aid, 
Relief, and Economic Security Act (CARES Act; Pub. L. 116-135) and the 
American Rescue Plan Act of 2021 (ARP; Pub. L. 117-2), also ensured 
Medicaid and CHIP coverage of COVID-19 testing, treatment, and 
vaccines, as well as vaccine administration.
    The Biden-Harris Administration is committed to protecting and 
strengthening Medicaid and CHIP both during and following the COVID-19 
PHE. On January 20, 2021, President Biden issued an Executive Order on 
advancing racial equity and support for underserved communities. It 
charged Federal agencies with identifying potential barriers that 
underserved communities may face to enrollment in programs like 
Medicaid and CHIP.\7\ This was followed on January 28, 2021, by 
Executive Order 14009 with a specific call to strengthen Medicaid and 
the ACA and remove barriers to obtaining coverage for the millions of 
individuals who are potentially eligible but remain uninsured.\8\ In 
April 2022, President Biden issued another Executive Order, building on 
progress from the first and reflecting new Medicaid and CHIP 
flexibilities established by the ARP. The April 5, 2022 Executive Order 
14070, ``Continuing to Strengthen Americans' Access to Affordable, 
Quality Health Coverage'' charges Federal agencies with identifying 
ways to help more Americans enroll in quality health coverage.\9\ It 
calls upon Federal agencies to examine policies and practices that make 
it easier for individuals to enroll in and retain coverage. Following 
this charge, we reviewed the improvements made to implement the ACA, 
examined States' successes and challenges in enrolling eligible 
individuals, considered the changes brought about by the COVID-19 PHE, 
and looked for gaps in our regulatory framework that continue to impede 
access to coverage.
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    \7\ E.O. 13985, 86 FR 7009. Accessed online on July 19, 2022 at 
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \8\ E.O. 14009, 86 FR 7793. Accessed online on July 19, 2022 at 
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/28/executive-order-on-strengthening-medicaid-and-the-affordable-care-act/.
    \9\ E.O. 14070, 87 FR 20689. Accessed online on July 19, 2022 at 
https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/05/executive-order-on-continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage/.
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    We have learned through our experiences working with States and 
other stakeholders that certain policies continue to result in 
unnecessary administrative burden and create barriers to enrollment and 
retention of

[[Page 54762]]

coverage for eligible individuals. For example:
     There are no regulations to facilitate enrollment in the 
MSPs. In particular, CMS does not have regulations to link enrollment 
in other Federal programs with the MSPs, despite the high likelihood 
that individuals in such programs are eligible for the MSPs. This 
hinders States' ability to enroll those known to be eligible. 
Additionally, stakeholders report that burdensome documentation 
requirements substantially impede eligible individuals from enrolling 
in the MSPs.\10\
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    \10\ In October 2020, CMS engaged with 55 stakeholders across 
four States to better understand experiences when applying for the 
MSPs. One of the main findings was that burdensome documentation 
requirements substantially impede eligible individuals from 
enrolling in the MSPs and that easing these requirements is a 
critical step to ensuring individuals can obtain and retain these 
critical benefits.
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     Individuals whose eligibility is not based on MAGI (non-
MAGI individuals)--for example, those whose eligibility is based on 
being age 65 or older, having blindness, or having a disability--
generally were not included in the enrollment simplifications 
established under the ACA or our implementing regulations (the 2012 and 
2013 eligibility final rules), leaving such individuals at greater risk 
of being denied or losing coverage due to procedural reasons than their 
MAGI-based counterparts, even though, we believe, many are more likely 
to remain Medicaid eligible due to lower likelihood of changes in their 
income or other circumstances.
     Current regulations do not consistently provide clear 
timeframes for applicants and enrollees to return information needed by 
the State to make a determination of eligibility or for States to 
process and act upon information received. This may lead to unnecessary 
delay in processing applications and renewals, some ineligible 
individuals retaining coverage, and some individuals being denied 
increased assistance for which they have become eligible.
     Our recordkeeping regulations, which are critical to 
ensuring appropriate and effective oversight to identify errors in 
State policies and operations, were last updated in 1986 and are both 
outdated and lacking in needed specificity. We believe these outdated 
requirements have contributed to inconsistent documentation policies 
across States, which may have furthered the incidence of Medicaid 
improper payments.
     Barriers to coverage that are not permitted under any 
other insurance affordability program--including lock-outs for 
individuals terminated due to non-payment of premiums, required periods 
of uninsurance prior to enrollment, and annual or lifetime caps on 
benefits--remain a State option in separate CHIPs.
    In this rulemaking, we seek to close these and other gaps, thereby 
streamlining Medicaid and CHIP eligibility and enrollment processes, 
reducing administrative burden on States and enrollees, and increasing 
enrollment and retention of eligible individuals. We also seek to 
improve the integrity of Medicaid and CHIP. Through the PERM program, 
the Medicaid Eligibility Quality Control (MEQC) program, and other CMS 
eligibility reviews, we have regular opportunities to work with States 
in reviewing their eligibility and enrollment processes. As a result of 
these reviews, and other internal program integrity efforts, States are 
continually making improvements to their eligibility and enrollment 
systems both to enhance functionality and to correct any newly 
identified issues. We believe the changes proposed in this rule will 
further these program integrity efforts, and we will continue to work 
closely with States throughout implementation.
    Current regulations at 42 CFR 433.112 establish conditions that 
State eligibility and enrollment systems must meet in order to qualify 
for enhanced Federal matching funds. Among these conditions, Sec.  
433.112(b)(14) requires that each State system support accurate and 
timely processing and adjudications/eligibility determinations. As 
States submit proposed changes to their eligibility and enrollment 
systems and implement new and/or enhanced functionality, we will 
continue to provide them with technical assistance on the policy 
requirements, conduct ongoing reviews of both the State policy and 
State systems, and ensure that all proposed changes support more 
accurate and timely processing of eligibility determinations.
    We will also continue to explore other opportunities for reducing 
the incidence of beneficiary eligibility-related improper payments, 
including leveraging the enhanced funding available for design, 
implementation, and operation of State eligibility and enrollment 
systems, as well as mitigation and corrective action plans that address 
specific State challenges. Our goal is to ensure that eligible 
individuals can enroll and stay enrolled without unnecessary burden and 
that ineligible individuals are redirected to the appropriate coverage 
programs as quickly as possible.
    Finally, we recognize that the COVID-19 PHE and the continuous 
enrollment condition have disrupted routine eligibility and enrollment 
operations for Medicaid, CHIP, and BHP. As States look ahead toward the 
eventual end of the PHE and the resumption of routine operations, they 
are faced with providing coverage for a significantly larger pool of 
enrollees than they have ever had to manage in the past. From February 
2020 through May 2022, enrollment in Medicaid and CHIP increased by 
25.9 percent, or 18.3 million individuals, and new applications 
continue to be submitted. In May 2022, about 2.1 million new 
applications for Medicaid and CHIP were submitted to States. At the 
same time, many States report a shortage of eligibility workers.
    CMS is actively engaged with States as they plan for initiating 
eligibility and enrollment work over the course of a 12-month unwinding 
period when the COVID-19 PHE ends (hereinafter referred to as the 
``unwinding period''). A March 2022 report by the Urban Institute 
projected that as many as 15.8 million people could lose their Medicaid 
coverage when the PHE ends and the continuous enrollment requirement is 
no longer in effect.\11\ It is a CMS priority to ensure that renewals 
of eligibility and transitions between coverage programs occur in an 
orderly process that minimizes beneficiary burden and promotes 
continuity of coverage.
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    \11\ Buettgens, M. and Green, A. 2022. What will Happen to 
Medicaid Enrollees' Health Coverage after the Public Health 
Emergency. Washington, DC: Urban Institute. Accessed on July 19, 
2022 at https://www.urban.org/research/publication/what-will-happen-medicaid-enrollees-health-coverage-after-public-health-emergency.
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    As we consider the challenges faced by States during the unwinding 
period, we seek comment on reasonable implementation timelines for the 
provisions in this proposed rule, which would allow States to move 
these important protections forward without negatively impacting the 
resumption of routine eligibility and enrollment operations. Certain 
provisions designed to improve the retention of eligible individuals, 
such as the prospective deduction of medical expenses for medically 
needy individuals, agency actions on returned mail, and transitions 
between coverage programs, could reduce the likelihood of eligible 
individuals losing health coverage during unwinding. However, if 
implementing such provisions early would divert needed resources away

[[Page 54763]]

from critical unwinding-related activities, then a compliance date 
following the unwinding period may be preferred.
    We recognize that each State faces a unique set of challenges 
related to the unwinding period, with differing needs and 
opportunities. As we contemplate the timing of a final rule, we are 
considering adopting an effective date of 30 days following publication 
and a separate compliance date, which may vary by requirement, with 
full compliance no later than 12 months following the effective date of 
the final rule. This approach would provide States with immediate 
access to new options, like the option to establish an earlier 
effective date for coverage provided to individuals eligible in the QMB 
group. This approach also would allow States to immediately extend 
temporary options authorized under section 1902(e)(14)(A) of the Act as 
they prepare for unwinding, like the option to rely on certain third-
party information to update a beneficiary's mailing address. And it 
would permit States with greater capacity to implement new system 
changes to immediately adopt simplifications like removal of the 
requirement to apply for other benefits as a condition of Medicaid 
eligibility.
    At the same time, we recognize that certain changes proposed in 
this rule may require States to make changes to their own statute and/
or regulations, as well as systems changes prior to implementation, and 
this process can take time. For example, if the proposed prohibition on 
premium lock-out periods, which delay a child's ability to re-enroll in 
a separate CHIP following termination of coverage due to the family's 
failure to pay premiums, is finalized, we would provide CHIPs that 
currently impose such lockout periods with the time needed to comply 
with the new prohibition. At the same time, by making the final rule 
effective 30 days following enactment, States could not newly adopt a 
premium lock-out period.
    We seek comment on whether an effective date of 30 days following 
publication would be appropriate when combined with a later date for 
compliance for most provisions. We seek comment on the timeframe that 
would be most effective for compliance with each provision and whether 
the compliance date should vary by provision. We believe compliance 
with the proposed provision implementing current statutory requirements 
(the requirement to utilize Medicare Part D Low-Income Subsidy 
``leads'' data from SSA to initiate an MSP application) should be 
required 30 days following publication of the final rule, because we do 
not have flexibility to delay what is required under the statute. New 
State options established under the final rule would be effective 30 
days following publication, but do not require a compliance date, since 
States are not required to adopt optional policies. We would encourage 
States to come into compliance with all other new requirements as 
expeditiously as possible, not only because they would improve access 
for new applicants and improve retention of eligible enrollees, but 
also because they would streamline eligibility and enrollment processes 
and promote the overall integrity of Medicaid and CHIP. However, for 
proposed provisions that do not create State options and are not 
implementing statutory requirements, we are considering compliance 
dates of 90 days, 6 months, and/or 12 months following the effective 
date of the final rule. We seek comment on the appropriate compliance 
timeframe for each provision, and request that commenters explain why 
they believe finalizing a shorter or longer compliance timeframe is 
most appropriate.

II. Provisions of the Proposed Regulations

A. Facilitating Medicaid Enrollment

1. Facilitate Enrollment Through Medicare Part D Low-Income Subsidy 
``Leads'' Data (Sec. Sec.  435.4, 435.601, 435.911, and 435.952)
    The MSPs consist of several mandatory Medicaid eligibility groups 
that cover Medicare Part A and/or B premiums and, in some cases, cost-
sharing. State Medicaid agencies receive applications and adjudicate 
eligibility for full Medicaid, as well as MSP-only benefits. Currently, 
the MSP eligibility groups cover over 10 million low-income 
individuals. There are three primary MSP eligibility groups: \12\ the 
Qualified Medicare Beneficiary (QMB) group, which pays all of an 
individual's Medicare Parts A and B premiums and assumes liability for 
most associated Medicare cost-sharing charges for people with income 
that does not exceed 100 percent of the FPL; the Specified Low-Income 
Medicare Beneficiary (SLMB) group, which pays the Part B premium for 
people with income that exceeds 100 percent, but is less than 120 
percent, of the FPL; and the Qualifying Individuals (QI) group, which 
pays Part B premiums for people with income at least 120 percent but 
less than 135 percent of the FPL. Individuals also must meet 
corresponding resource criteria in order to be eligible for an MSP. The 
income and resource requirements for coverage under the MSPs, and the 
benefits to which eligible individuals are entitled, are set forth at 
sections 1905(p)(1) and 1902(a)(10)(E) of the Act. Among other things, 
section 1905(p) of the Act directs that the income and resource 
methodologies applied by the Social Security Administration (SSA) in 
determining SSI eligibility per sections 1612 and 1613 of the Act be 
used to determine financial eligibility for the MSPs, except that 
States may employ less restrictive income and/or resource methodologies 
than those applied in determining SSI eligibility under the authority 
of section 1902(r)(2) of the Act.
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    \12\ There is a separate and fourth MSP eligibility group 
generally referred to as the ``Qualified Disabled Working 
Individuals (QDWI) group,'' or QDWI group. As described in 
1902(a)(10)(E)(ii), eligibility in the QDWI group is limited to 
individuals whose incomes do not exceed 200 percent of the FPL; 
whose resources do not exceed twice the relevant SSI resource 
standard (that is, for a single individual or couple); and who are 
eligible to enroll in Part A under section 1818A of the Act. Section 
1818A of the Act permits individuals who became entitled to Part A 
on the basis of their receipt of Social Security disability 
insurance (SSDI) and who subsequently lose SSDI after returning to 
work (and, hence, entitlement to Part A) to enroll in Part A 
contingent on paying the Part A premiums. The medical assistance 
available to QDWIs is the coverage of the Part A premiums. The QDWI 
group is not included in this proposal, because the income limits of 
the QDWI group are significantly higher than LIS and there does not 
exist the flexibility to disregard resources that are available for 
the other MSPs.
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    The MSPs are essential to the health and economic well-being of 
low-income Medicare enrollees, helping to free up limited income for 
food, housing, and other life necessities. For example, in 2022, the 
Part B premium is $170.10 a month, which is more than 10 percent of the 
income of individuals who qualify for the QI group, and an even higher 
percentage of income for those who qualify for the QMB or SLMB groups. 
Despite the importance of the MSPs, a 2017 study conducted for MACPAC 
estimated that only about half of eligible individuals enrolled in 
Medicare were also enrolled in the MSPs.\13\ This means that millions 
of Medicare enrollees living in poverty are paying over 10 percent of 
their income to cover Medicare premiums alone. Complex MSP enrollment 
processes contribute to this low participation

[[Page 54764]]

rate.14 15 In order to address the barriers to 
accessing MSP coverage, in 2008 Congress enacted the Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA, Pub. L. 
110-275). MIPPA included new requirements for States to leverage the 
Medicare Part D Low-Income Subsidy (LIS) program to help enroll likely-
eligible individuals in MSPs.
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    \13\ Medicare Savings Program Enrollees and Eligible Non-
Enrollees, Kyle J. Caswell, Timothy A. Waidmann, The Urban 
Institute, June 2017: https://www.macpac.gov/wp-content/uploads/2017/08/MSP-Enrollees-and-Eligible-Non-Enrollees.pdf.
    \14\ Loss of Medicare-Medicaid Dual Eligible Status: Frequency, 
Contributing Factors, and Implications, Office of the Assistant 
Secretary for Planning and Evaluation, 2019. https://aspe.hhs.gov/basic-report/loss-medicare-medicaid-dual-eligible-status-frequency-contributing-factors-and-implications.
    \15\ Medicare Savings Programs: Implementation of Requirements 
Aimed at Increasing Enrollment, Government Accountability Office, 
2012. https://www.gao.gov/assets/gao-12-871.pdf.
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    The Medicare Part D LIS program, also sometimes referred to as 
``Extra Help,'' is administered by SSA and pays Medicare Part D 
prescription drug premiums and cost-sharing for over 13 million 
individuals with low income. Full premium subsidy LIS (or ``full LIS'') 
generally pays the Part D premiums and deductibles in full and sets co-
payments for drugs at between $0 and $9.85 (in 2022) for people with 
incomes below 135 percent of the FPL 16 17 who 
also meet certain resource criteria. To receive this benefit, 
individuals complete an application and submit it to SSA. Once 
received, SSA verifies the information provided on the LIS applications 
and determines eligibility. Income, resources and other eligibility 
criteria for the LIS program are defined at section 1860D-14 of the 
Act. Under section 1860D-14(a)(3)(C)(i) of the Act, income shall be 
determined in the manner described in section 1905(p)(1)(B) of the Act, 
without regard to the application of section 1902(r)(2) of the Act and 
except that support and maintenance furnished in kind shall not be 
counted as income. Section 1860D-14 of the Act provides that, for 
purposes of determining eligibility for the LIS program, applicants' 
resources be calculated ``as determined under section 1613 of the Act 
for the purposes of the supplemental security income (SSI) program 
subject to a life insurance exclusion policy.'' The SSA has also 
adopted several other regulatory and sub-regulatory methodological 
simplifications for the LIS program that deviate from SSI rules. These 
include the exclusion of interest and dividend income and non-liquid 
resources and burial funds.
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    \16\ Section 1860D-14 of the Act [42 U.S.C. 1395w-114].
    \17\ Partial premium subsidy LIS (or ``partial LIS'') generally 
pays for premiums on a sliding scale, from 100 percent to 25 percent 
paid, and sets deductibles and co-payments for drugs at a reduced 
level for people with income below 150 percent of the FPL who meet 
certain resource criteria.
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    The MSP and LIS programs both assist individuals with incomes below 
135 percent of the FPL \18\ in accessing the Medicare benefits to which 
they are entitled and, as illustrated above, generally use a common 
methodology to determine income and resource eligibility. Current 
regulations at 42 CFR 423.773(c) require that individuals enrolled in 
MSPs be automatically enrolled in LIS, but the reverse is not true, and 
many people enrolled in the LIS program are not enrolled in an MSP, 
despite likely being eligible. As mentioned above, MIPPA included 
several provisions to promote the enrollment of LIS applicants into the 
MSPs. In addition, section 112 of MIPPA amended section 1905(p)(1)(C) 
of the Act to increase the resource limit for the QMB, SLMB, and QI MSP 
eligibility groups to the same resource limit applied for full LIS 
established at section 1860D-14(a)(3) of the Act. The resource standard 
for the full LIS program and the QMB, SLMB, and QI eligibility groups 
for 2022 is $8,400 for a single individual and $12,600 for a couple.
---------------------------------------------------------------------------

    \18\ Section 11404 of the Inflation Reduction Act of 2022 (Pub. 
L. 117-169, enacted on August 16, 2022) increases the income limit 
for the full LIS program to income below 150 percent of the FPL and 
increases the resource limit to the same resource limit as applied 
for partial LIS program at section 1860D-14(a)(3)(E) of the Act 
beginning January 1, 2024.
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    Section 113 of MIPPA amended section 1144 of the Act to further 
eliminate barriers to enrollment in the MSP and LIS programs. Section 
1144(c)(3) of the Act requires SSA to transmit data from LIS 
applications (``leads data'') to State Medicaid agencies. Section 
1144(c)(3) of the Act also provides that the electronic transmission 
from SSA ``shall initiate'' an MSP application. MIPPA section 113 also 
added a new paragraph at section 1935(a)(4) of the Act that, beginning 
January 1, 2010, required States to accept leads data and ``act upon 
such data in the same manner and in accordance with the same deadlines 
as if the data constituted'' an MSP application submitted by the 
individual. As such, under Sec.  435.912, States have 45 days to make 
an MSP eligibility determination based on the LIS data. The date of the 
MSP application is defined as the date of the individual's application 
for LIS under section 1935(a) of the Act.
    Despite these statutory requirements, not all States initiate an 
MSP application upon receipt of leads data from SSA. CMS data reflect 
that over a million individuals enrolled in full LIS are not enrolled 
in an MSP. Given near alignment of MSP and LIS eligibility criteria, 
most of these individuals are likely eligible for an MSP eligibility 
group (See November 1, 2021 Center for Medicaid and CHIP Services 
Informational Bulletin, ``Opportunities to Increase Enrollment in 
Medicare Savings Programs'').\19\
---------------------------------------------------------------------------

    \19\ Available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib11012021.pdf.
---------------------------------------------------------------------------

    The January 28, 2021 Executive Order on Strengthening Medicaid and 
the ACA directs agencies to address policies and practices that may 
present unnecessary barriers to individuals and families attempting to 
access Medicaid coverage,\20\ the April 5, 2022 Executive Order on 
Continuing to Strengthen Americans' Access to Affordable, Quality 
Health Coverage charges Federal agencies with identifying ways to help 
more Americans enroll in quality health coverage,\21\ and the December 
13, 2021 Executive Order on Transforming Federal Customer Experience 
and Service Delivery to Rebuild Trust in Government supports 
streamlining State enrollment and renewal processes and removing 
barriers to ensure eligible individuals are automatically enrolled in 
and retain access to critical benefit programs.\22\ As such, we have 
evaluated CMS's regulatory authority to reduce barriers to enrollment 
of eligible individuals into the MSPs. Under the authority in section 
1902(a)(4) of the Act to specify ``methods of administration'' that the 
Secretary finds to be ``necessary for the proper administration'' of 
State plans, we propose several regulatory changes to promote efficient 
enrollment in the MSPs by maximizing State use of LIS leads data. We 
believe these proposals will also have a positive impact on health 
equity by helping to provide more low-income individuals with access to 
additional health coverage consistent with the January 20, 2021 
Executive Order.\23\
---------------------------------------------------------------------------

    \20\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/28/executive-order-on-strengthening-medicaid-and-the-affordable-care-act/.
    \21\ https://www.whitehouse.gov/briefing-room/presidential-actions/2022/04/05/executive-order-on-continuing-to-strengthen-americans-access-to-affordable-quality-health-coverage/.
    \22\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/13/executive-order-on-transforming-federal-customer-experience-and-service-delivery-to-rebuild-trust-in-government/.
    \23\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
---------------------------------------------------------------------------

    Accepting LIS leads data as an MSP application. As noted above, 
under section 1935(a)(4) of the Act, SSA must

[[Page 54765]]

transmit the LIS leads data to States, and States must use that data to 
initiate an application for the MSPs. On February 18, 2010, CMS issued 
a State Medicaid Director Letter (SMDL #10-003), ``Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA),'' 
explaining that, ``starting January 1, 2010, the State is directed to 
treat the [leads] data as an application for MSP benefits, as if it had 
been submitted directly by the applicant.'' Additionally, the guidance 
explained, ``States must act on the data as an application for MSP 
benefits, even if the LIS application was denied by SSA.'' \24\ We 
reiterated the 2010 guidance in 2020 through updates to the Manual for 
the State Payment of Medicare Premiums.\25\
---------------------------------------------------------------------------

    \24\ State Medicaid Director Letter, #10-003, ``Medicare 
Improvements for Patients and Providers Act of 2008 (MIPPA),'' page 
2. Available at https://www.medicaid.gov/federal-policy-guidance/downloads/smd10003.pdf.
    \25\ Chapter 1, section 1.11.
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    In this rulemaking, we propose to codify in regulation the 
statutory requirements for States to maximize the use of leads data to 
establish eligibility for Medicaid and the MSPs. We anticipate that 
codifying these requirements will lead to more eligible individuals 
enrolling in MSPs because we believe that some States may have been 
unaware or unclear of the steps required to meaningfully use the leads 
data to streamline eligibility and enrollment in the MSPs.
    Currently, all States receive leads data from SSA each business 
day. This data includes information on the individual's address, 
income, resources and household size that SSA has verified.\26\ Per 
section 113 of MIPPA, States must accept, via secure electronic 
transfer, the SSA leads data and process that information to initiate 
an MSP application. However, we are aware that several States do not 
use the leads data to begin the application process. For example, upon 
receipt of the leads data, some States simply send the individual a 
letter that encloses a blank application or instructions on how to 
apply for the MSPs. Such practices fall short of States' statutory 
obligation to treat receipt of leads data as an application and to 
evaluate individuals' eligibility using the leads data.
---------------------------------------------------------------------------

    \26\ The leads data also includes information on the LIS subsidy 
amount and denial reasons, which States can use to immediately 
identify if the individual is ineligible for MSPs.
---------------------------------------------------------------------------

    We propose to add a definition of LIS leads data at Sec.  435.4 and 
a new paragraph (e) to Sec.  435.911 of the regulations to clearly 
delineate the steps States must take upon receipt of leads data from 
SSA. We propose to define LIS leads data to mean data from an 
individual's application for low-income subsidies under section 1860D-
14 of the Act that the SSA electronically transmits to the appropriate 
State Medicaid agency as described in section 1144 (c)(1) of the Act. 
Proposed Sec.  435.911(e)(1) requires States to accept, via secure 
electronic interface, the SSA LIS leads data. Proposed paragraph (e)(2) 
requires that States treat receipt of the leads data as an application 
for Medicaid and promptly and without undue delay, consistent with the 
timeliness standards at Sec.  435.912, determine MSP eligibility 
without requiring submission of a separate application.
    We recognize that State Medicaid agencies generally will need to 
request additional information in order to make a determination of 
eligibility, as some differences remain in income and resource counting 
methodologies between the LIS and MSPs. In addition, the leads data 
transmitted to the State does not include information on an 
individual's citizenship or immigration status, and therefore, States 
will need to ask individuals for their status, which must be verified 
in accordance with sections 1137(d), 1902(ee) or 1903(x) of the Act and 
Sec. Sec.  435.956(a) and (b), 435.406 and 435.407, if such information 
is not already in the casefile and has been verified in a previous 
application. As such, we propose at paragraph (e)(3) of Sec.  435.911 
that States must request additional information in order to make a 
determination of eligibility for MSPs. We also recommend that when 
States request additional information from individuals, they include 
information on how to contact the local State Health Insurance 
Assistance Program (SHIP) for assistance.
    However, consistent with existing regulations at Sec. Sec.  
435.907(e) and 435.952(c), we propose at paragraph (e)(4) of Sec.  
435.911 that States may only require that individuals provide 
information needed to complete an eligibility determination if 
information needed for such determination is not available to the 
agency or if information available to the agency through an electronic 
data match or other means is not reasonably compatible with information 
provided by or on behalf of the individual. Thus, under the proposed 
rule, States may not request that individuals attest or otherwise 
provide documentation to establish information contained in leads data, 
which SSA has already verified and confirmed for the LIS eligibility 
determination.
    Note that a State is not in compliance with the statutory 
requirement in section 1935(a)(4) of the Act to initiate an application 
based on leads data or with the proposed regulation if it requires the 
individual to file a new application for MSP, since the leads data 
already provides much of the information that would otherwise be 
requested on an application. Further, as discussed in more detail 
below, States have the flexibility under section 1902(r)(2) of the Act 
to align the methodologies applied in determining MSP eligibility with 
the methodologies for determining eligibility for LIS. Additionally, we 
highly recommend completely aligning financial methodologies for 
determining LIS and MSP eligibility as a program integrity best 
practice. If a State chooses such complete alignment in financial 
methodologies between the LIS and MSP programs, under the proposed rule 
the State may not require additional financial information from an 
individual for whom the State has received leads data in order to make 
a determination of MSP eligibility.
    The LIS leads data that is transferred to State agencies has been 
verified by the SSA. Thus, we believe that State verification of this 
data prior to adjudicating eligibility is duplicative and inefficient. 
Consistent with the Secretary's authority under section 1902(a)(4) of 
the Act (relating to establishment of such methods of administration as 
the Secretary determines ``necessary for proper and efficient 
administration'' of the Medicaid program) and section 1902(a)(19) of 
the Act (relating to simplicity of administration and the best 
interests of recipients), we also propose at Sec.  435.911(e)(5) that 
States accept the information verified by SSA and provided through the 
leads data as verified, provided that the information provided through 
the LIS leads data supports a determination of eligibility under 
section 1902(a)(10)(E) of the Act.
    The Computer Matching and Privacy Protection Act at 5 U.S.C. 
522a(p)(1) requires States to take actions to independently verify 
information that SSA provides before the State may terminate, suspend, 
reduce, deny, or take other adverse action against an individual. 
Therefore, in instances in which the leads data would not support a 
determination of eligibility for MSPs, we propose at Sec.  
435.911(e)(7) to require that States use the attested information 
provided by the applicant to SSA through the LIS application process 
and separately verify the individual's eligibility for Medicaid in 
accordance with the State's verification policies.

[[Page 54766]]

Specifically, under proposed Sec.  435.911(e)(7), the State would be 
required to (1) determine whether additional information is needed to 
make a determination of eligibility for an MSP; (2) if additional 
information is needed, notify the individual that they may be eligible 
for assistance with their Medicare premium and/or cost sharing charges, 
but that additional information is needed for the agency to make a 
determination of such eligibility; (3) provide the individual with a 
minimum of 30 days to furnish any information needed by the agency to 
determine MSP eligibility; and (4) verify the individual's eligibility 
for an MSP in accordance with the State's verification plan developed 
in accordance with Sec.  435.945(j). We note that, in the case of an 
applicant who has attested to income or assets over the applicable 
income or resource standard, States can, but are not required to, 
request additional information from the individual to confirm 
ineligibility for coverage.
    We note that, under our proposal, States may continue to request 
from the individual information necessary to make an eligibility 
determination but that is missing from the leads data or other third-
party sources. Pursuant to Sec.  435.952(c), States may also seek 
information from the individual if the State has other information that 
is not reasonably compatible \27\ with the leads data; however, we 
anticipate such circumstances with respect to financial eligibility 
will be extremely rare since SSA generally relies on the same sources 
for financial eligibility data also relied upon by States and the data 
from SSA will in most instances be the most current.
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    \27\ Under 42 CFR 435.952(c)(1), income information obtained 
through an electronic data match shall be considered ``reasonably 
compatible'' with income information provided by or on behalf of an 
individual if both are either above or at or below the applicable 
income standard or other relevant income threshold.
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    Finally, individuals eligible for the LIS program may be eligible 
for full Medicaid benefits, in addition to the assistance with Medicare 
premiums and cost-sharing available under the MSPs. Under the current 
regulations at Sec.  435.911, for individuals who submit the single 
streamlined application used for individuals applying for Medicaid on 
the basis of MAGI, but who may be eligible on a basis other than MAGI, 
States are required to collect any additional information that is 
needed to make a determination on a non-MAGI basis, and to make such 
determination if the individual provides the needed information. 
Consistent with sections 1902(a)(4) and (a)(19) of the Act, we propose 
a similar requirement with respect to individuals whose application was 
initiated by receipt of LIS leads data. Specifically, under proposed 
Sec.  435.911(e)(6), States would be required to collect such 
additional information as may be needed to determine whether such 
individuals are eligible for Medicaid in any other eligibility groups 
(that is, other than the MSPs), including other non-MAGI groups and 
MAGI-based groups as well. We believe this proposal would codify a 
pathway for efficient enrollment of LIS enrollees into both the 
appropriate MSP eligibility group, as well as into a full-benefit group 
if eligible without imposing undue administrative burdens on States. We 
believe this would also promote program integrity. We note that 
individuals can be eligible for both an MSP and an eligibility group 
that confers full Medicaid benefits. Therefore, the requirement under 
proposed Sec.  435.911(e)(6) is in addition to the requirement to 
determine the individual's eligibility for an MSP.
    Streamlining Methodologies. As mentioned previously, the income 
standard for the LIS program and the highest income standard for the 
MSPs is similar, the resource standard for all MSPs and the LIS is the 
same until January 1, 2024, and the methodologies for both programs are 
very closely aligned. However, the differences in income and resource 
methodologies prevent LIS enrollees from being seamlessly enrolled into 
the MSPs unless the State has elected to align the MSP methodologies 
with LIS methodologies by adopting certain income and resource 
disregards under section 1902(r)(2) of the Act.
    As discussed above, the two methodologies differ slightly in that 
several types of income and resources that are counted in determining 
MSP eligibility are not counted in determining LIS eligibility.\28\ 
States have the flexibility to achieve full alignment of the MSP and 
LIS methodologies. Specifically, under section 1902(r)(2) of the Act, 
codified in regulation at Sec.  435.601(d), States have the option to 
use less restrictive income and resource methodologies in making 
eligibility determinations for most non-MAGI eligibility groups, 
including the MSPs. States can use this authority to align MSP 
methodologies with LIS methodologies by adopting less restrictive 
methodologies to disregard income and resources that are counted in 
determining MSP but not LIS eligibility. These include: (1) the 
following types of income: in-kind support and maintenance, dividend 
income, and interest income; and (2) the value of the following types 
of resources: non-liquid resources, burial funds, and life insurance. 
We expect that States have not maximized this opportunity due to 
competing priorities and the complexity of eligibility policy.
---------------------------------------------------------------------------

    \28\ For example, section 116 of MIPPA directs SSA not to count 
in-kind support and maintenance as income, and not to count the cash 
surrender value of life insurance policies as a resource, when 
determining eligibility for LIS. These statutory disregards apply 
only to LIS eligibility determinations and not to MSP eligibility 
groups.
---------------------------------------------------------------------------

    Under proposed Sec.  435.911(e), States that adopt less restrictive 
MSP eligibility methodologies to completely align with the LIS 
methodologies would be able to use leads data to make a determination 
of MSP financial eligibility without requesting additional information 
from the individual (as noted above, information on citizenship and 
immigration status would still be needed), thus reducing administrative 
burden for the State and relieving LIS recipients of the need to 
navigate a complex application process.
    States that have not fully aligned methodologies must continue to 
request the additional information needed to determine financial 
eligibility which is not provided through the leads data. In addition, 
as noted above, States must request information relating to U.S. 
citizenship and immigration status in order to verify such status in 
accordance with the State's usual processes. In accordance with Sec.  
435.406(a) and section 1137(d) of the Act, individuals must first make 
a declaration of U.S. citizenship or satisfactory immigration status in 
accordance with Sec.  435.406(a). After the declaration is made, per 
regulations at Sec.  435.956, States must attempt to electronically 
verify U.S. citizenship or satisfactory immigration status and, if such 
status cannot be promptly verified, the State must provide the 
individual with a reasonable opportunity period to provide 
documentation or other information needed to verify their status. 
During the reasonable opportunity period, the State must furnish 
benefits to individuals who otherwise meet all eligibility requirements 
and must itself continue efforts to verify the individual's status. 
These requirements apply equally to individuals being determined for 
eligibility in the MSPs following the State's receipt of leads data 
from SSA.
    However, in accordance with the authority at section 1902(a)(4) of 
the Act to promote the administrative efficiency of the program and 
section 1902(a)(19) of the Act relating to simplicity of administration 
and the best interests of beneficiaries, we propose to add a new

[[Page 54767]]

paragraph (e) to Sec.  435.952 to require that States adopt a number of 
enrollment simplification policies related to the income and resources 
that are counted in determining MSP, but not LIS, eligibility that 
would enable State agencies to use the leads data more efficiently, 
reduce burden on applicants and States, and increase the number of LIS 
enrollees successfully enrolled in the MSPs. We also anticipate these 
policies would have a positive health equity impact by increasing 
access to Medicare coverage for low-income individuals and increasing 
the financial security of those who successfully enroll consistent with 
the January 20, 2021 Executive Order.\29\
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    \29\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
---------------------------------------------------------------------------

    Finally, we anticipate that these enrollment simplifications will 
help reduce the high rate of churn that dually eligible individuals 
experience, largely due to administrative reasons such as providing 
documentation of certain income and assets to demonstrate their 
continued eligibility. Analysis by the Assistant Secretary for Planning 
and Evaluation (ASPE) for the Department of Health and Human Services 
in 2019 examined data from years 2007 through 2009 and found that 29.1 
percent of individuals lost Medicaid eligibility for at least 1 month 
during the first year of transitioning to full-benefit dual eligibility 
and 21.1 percent lost Medicaid eligibility for at least 3 months 
following the transition despite dually eligible individuals' 
relatively stable income and assets over time.\30\ Experts interviewed 
noted that dually eligible beneficiaries most often lost coverage 
because of failing to comply with administrative requirements as 
opposed to changes in income, assets, or functional status. In 2021, 
CMS performed similar analysis on data from years 2015 through 2018 and 
found similar results: 29.1 percent of individuals lost Medicaid 
eligibility for at least 1 month during the first year of transitioning 
to full-benefit dual eligibility and 24.1 percent lost Medicaid 
eligibility for at least 3 months following the transition.\31\ The 
proposed simplifications for each source of income and resource are 
discussed below.
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    \30\ Assistant Secretary for Planning and Evaluation (ASPE) 
(2019). Loss of Medicare-Medicaid dual eligible status: Frequency, 
contributing factors and implications. https://aspe.hhs.gov/system/files/pdf/261716/DualLoss.pdf.
    \31\ CMS completed an updated internal analysis of ASPE's study 
in 2021 using data from 2015-2018 that shows that dually eligible 
individuals continue to lose Medicaid at a high rate in their first 
year due to administrative reasons.
---------------------------------------------------------------------------

    We note that our proposals would not change the income and resource 
rules for individuals applying for non-MAGI eligibility groups other 
than the MSPs. We propose simplifying income and resource policies for 
the MSP eligibility groups given the narrow scope of assistance 
available under these groups (limited to assistance with Medicare 
premiums and/or cost-sharing assistance), their smaller numbers of 
eligible and enrolled individuals relative to other non-MAGI 
eligibility groups, and MIPPA provisions which closely align them with 
the LIS program, which does not count these types of income and 
resources. We seek comment on extending the proposals below to all 
individuals seeking eligibility on a non-MAGI basis. We also seek 
comment on extending the proposal relating to verification of dividend 
and interest income to individuals seeking eligibility based on MAGI, 
as well as whether there are additional income or resource types to 
which the proposals below could be extended for all individuals.
    Interest and Dividend Income. Regulations governing LIS eligibility 
determinations at 20 CFR 418.3350(d) exclude all interest and dividend 
income earned on resources owned by the applicant or their spouse. 
However, under the SSI income methodologies applicable to MSP 
determinations, States must count interest and dividend income, unless 
they have elected to disregard such income using the authority provided 
under section 1902(r)(2) of the Act and 42 CFR 435.601(d).
    Based on stakeholder reports and program experience, we believe 
that the vast majority of individuals likely to qualify for an MSP 
eligibility group do not have significant interest or dividend income, 
whereas the requirement to timely obtain and furnish acceptable 
statements from financial institutions, sometimes extending back over a 
lengthy period of time, to document interest and dividend income earned 
is unduly burdensome for applicants and provides negligible program 
integrity value. Therefore, consistent with section 1902(a)(19) of the 
Act, in order to minimize undue administrative burden on applicants, we 
are proposing at Sec.  435.952(e)(1)(i) and (ii) to prohibit States 
from requesting documentation of dividend and interest income prior to 
making a determination of MSP eligibility, except when the agency has 
information that is not reasonably compatible with the applicant's 
attestation. Under the proposed rule, States would be required to 
accept self-attestation of dividend and interest income for MSP 
applicants and their spouse, but would retain the option to verify such 
income after the individual has been enrolled (a process, currently 
available at State option with respect to most eligibility criteria, 
which we refer to as ``post-enrollment verification''), including the 
option to require the individual to provide documentation of interest 
or dividend income if electronic verification is not available.
    We seek comment on the utility of post-enrollment verification and 
whether it results in unnecessary procedural denials of eligible 
individuals. If a State chooses to conduct post-enrollment verification 
checks, under proposed Sec.  435.952(e)(1)(iii) it must allow 
individuals at least 90 calendar days to respond to requests for 
documentation. We seek comment on the proposal to require that States 
provide individuals with at least 90 calendar days to respond to 
requests for additional information in this situation and whether 
States should be required to provide, at a minimum, a shorter period of 
time, such as at least 30 or 60 calendar days. If a State found that an 
individual has income exceeding the income standard during the post-
enrollment verification process, the State would take appropriate 
action consistent with regulations at Sec.  435.916(d) (redesignated 
and revised at proposed regulations at Sec.  435.919 in this 
rulemaking), including determining eligibility on other potential bases 
and, if not eligible on any basis, providing advance notice and fair 
hearing rights prior to terminating MSP coverage. Section 
435.952(e)(1)(ii) clarifies that States must request documentation 
prior to making an initial determination to deny eligibility if they 
have information that is not reasonably compatible with the applicant's 
attestation in accordance with Sec.  435.952(c)(2).
    As discussed above, under section 1902(r)(2) of the Act, States 
also have the ability to disregard interest and dividend income 
entirely, which would bring treatment of interest and dividend income 
in determining eligibility for MSPs into alignment with the LIS 
program. We encourage States to consider adoption of such an income 
disregard, as it is unlikely that an applicant could have both 
investments large enough to generate significant interest or dividend 
income and resources and still satisfy the resource test for the LIS or 
MSP benefits.
    Non-liquid resources. For LIS eligibility determinations, under 20 
CFR 418.3405, SSA only counts liquid

[[Page 54768]]

resources, which it defines as cash, financial accounts, and other 
financial instruments that can be converted to cash within 20 workdays. 
Non-liquid resources, such as an automobile, are not counted for LIS 
eligibility.\32\ However, SSI rules in section 1613 of the Act, which 
apply to MSP determinations, have a broader definition of countable 
resources that includes non-liquid resources; for example, while SSI 
excludes one automobile for resource-eligibility purposes, a second 
automobile is countable. This can be onerous for MSP applicants because 
it can be difficult to timely determine, and furnish acceptable 
documentation of, the value of something that cannot easily be sold. 
Similar to interest and dividend income, consistent with section 
1902(a)(19) of the Act and in order to minimize administrative burdens 
on individuals, we are proposing at Sec.  435.952(e)(2)(i) to require 
that States accept applicants' attestation of the value of any non-
liquid resources, except, as described at proposed Sec.  
435.952(e)(2)(ii), when the State has information that is not 
reasonably compatible with the individual's attestation. However, as 
with dividend and interest income, as described at proposed Sec.  
435.952(e)(2)(iii), States would retain the option to conduct post-
enrollment verification, including the option to require the individual 
to provide documentation of non-liquid resources if electronic 
verification is not available, and to take appropriate action, 
consistent with regulations at Sec.  435.916(d) (redesignated and 
revised at proposed regulations at Sec.  435.919 in this rulemaking), 
if the State determines the individual greatly undervalued or failed to 
disclose resources. If the agency elects to conduct verifications post-
enrollment, and documentation is requested, the agency must provide the 
individual with at least 90 calendar days from the date of the request 
to respond and provide any necessary information requested. As with 
dividend and interest income, Sec.  435.952(e)(2)(ii) clarifies that 
States must request documentation prior to making an initial 
determination denying eligibility if they have information that is not 
reasonably compatible with the applicant's attestation in accordance 
with Sec.  435.952(c)(2). Finally, States also may use authority at 
section 1902(r)(2) of the Act to disregard the value of all non-liquid 
resources.
---------------------------------------------------------------------------

    \32\ The exception to this rule is that the equity value of any 
real property than an individual owns other than the individual's 
primary place of residence is counted as a resource.
---------------------------------------------------------------------------

    Burial funds. Under section 1613(d)(1) of the Act, which applies to 
both LIS and MSP determinations, up to $1,500 in burial fund are to be 
excluded for the applicant (and an additional $1,500 for their spouse) 
so long as the burial fund is ``separately identifiable and has been 
set aside.'' The statute does not, however, prescribe how the funds 
must be separately identifiable. Current SSA policy allows LIS 
applicants to attest to having $1,500 in burial funds, which may be co-
mingled with other funds in a single account (see SSA Program 
Operations Manual Systems [POMS] HI 03030.020 Resource Exclusions 
Section B.3.). However, consistent with section 1905(p)(1)(C) of the 
Act, which directs that SSI's resource methodologies be used to 
determine MSP-related resource eligibility, States typically require 
applicants to provide documentation that their burial funds are set 
aside in a separate account, as provided under SSI's burial fund-
related methodology described in 20 CFR 416.1231(b). This creates a 
misalignment between LIS and MSP methodologies and imposes additional 
burdens on MSP applicants.
    We propose in Sec.  435.952(e)(3)(i) to require that States, when 
determining eligibility for the MSPs, allow individuals to self-attest 
that up to $1,500 of their resources, and up to $1,500 of their 
spouse's resources, are set aside as burial funds in a separate account 
and therefore are not countable as resources for MSP determinations. 
Proposed Sec.  435.952(e)(3)(ii) clarifies that States must request 
documentation prior to making an initial determination of ineligibility 
if they have information that is not reasonably compatible with the 
applicant's attestation in accordance with Sec.  435.952(c)(2). As in 
the proposed provision for interest and dividend income and non-liquid 
resources, and described at Sec.  435.952(e)(3)(iii), States would 
retain the option to conduct post-enrollment verification, including 
obtaining documentation of resources in burial funds, and taking 
appropriate action, consistent with regulations at Sec.  435.916(d) 
(redesignated and revised at proposed regulations at Sec.  435.919 in 
this rulemaking). If the agency elects to conduct verifications post-
enrollment, and documentation is requested, the agency must provide the 
individual with at least 90 calendar days from the date of the request 
to respond and provide any necessary information requested. Again, we 
seek comment on the 90-day response period in this situation and 
whether States should be required to provide, at a minimum, a shorter 
period of time, such as least 30 or 60 calendar days. Finally, States 
may also use authority at section 1902(r)(2) of the Act to disregard 
all or a greater amount of burial funds or to not require that the 
burial funds be held in a separate set-aside account.
    Life Insurance Policies. Section 116 of MIPPA, codified at section 
1860D-14(a)(3)(G) of the Act, eliminated the value of life insurance 
policies as a countable resource for LIS determinations. However, under 
the SSI resource methodologies described in section 1613(a) of the Act, 
which, as noted above, apply to MSP-related resource eligibility 
determinations per section 1905(p)(1)(C) of the Act, the cash surrender 
value of life insurance with a total face value exceeding $1,500 is 
countable. Term life insurance policies do not have a cash surrender 
value and are not a countable resource under SSI methodologies 
described in 20 CFR 416.1230(a). Because term life insurance is not 
relevant to the Medicaid eligibility determination, States are not 
permitted to request information about the face value of such policies.
    We have received reports from advocates that obtaining 
documentation of a life insurance policy's cash surrender value is 
highly burdensome for applicants. A life insurance policy's cash 
surrender value depends on the market, the length of time the 
policyholder has paid premiums, and other factors. Further, the cash 
surrender value is not knowable solely from the documents a 
policyholder is likely to have. To obtain the current cash surrender 
value of a policy, an applicant generally must contact the company that 
has issued the policy, request a statement of the current cash 
surrender value and then submit that statement to the State agency once 
obtained. This can pose a significant hurdle to applicants, leading to 
denials for otherwise eligible applicants.
    To reduce this burden on applicants, we encourage States to use 
their authority under section 1902(r)(2) of the Act to disregard a 
higher face value of life insurance policies or to disregard the cash 
surrender value of life insurance policies altogether. A few States 
currently disregard policies with face values of at least up to 
$10,000, which eliminates administrative hurdles for most individuals, 
while ensuring that those comparatively few applicants who own 
substantial policies have the value of those policies counted in their 
eligibility determinations.
    Under proposed Sec.  435.952(e)(4)(i), if an individual attests to 
having a life insurance policy with a face value

[[Page 54769]]

below $1,500, States must accept the attested face value for purposes 
of making an initial eligibility determination for MSP coverage, unless 
the State has information that is not reasonably compatible with 
attested information. If the total face value of all of an individual's 
life insurance policies does not exceed $1,500, the cash surrender 
value of the individual's policies is not counted in determining MSP 
eligibility pursuant to sections 1613(a)(16) and 1905(p)(1)(C) of the 
Act. As with attested interest and dividend income, non-liquid assets, 
and burial funds, States would be required, as specified at proposed 
Sec.  435.952(e)(4)(ii), to request additional information if they have 
information not reasonably compatible with the attested value prior to 
enrolling the individual in coverage in accordance with Sec.  
435.952(c)(2). Per current Sec.  435.952(c)(2), the agency may accept a 
reasonable explanation from the applicant or require documentation.
    Under proposed Sec.  435.952(e)(4)(i)(A), if an individual attests 
to having a life insurance policy with a face value in excess of 
$1,500, consistent with current regulations at Sec.  435.948, States 
may accept the attested cash surrender value. If the State has 
information that is not reasonably compatible with the attested value 
of the policy, we propose, at Sec.  435.952(e)(4)(ii), that the State 
must seek additional information from the individual in accordance with 
Sec.  435.952(c)(2). Per current Sec.  435.952(c)(2), the agency may 
accept a reasonable explanation from the applicant or require 
documentation.
    Per proposed Sec.  435.952(e)(4)(iii), States would have the option 
to conduct post-enrollment verification for individuals enrolled based 
on an attested value. In conducting post-enrollment verification, if a 
State determines that the face value of the policy exceeds $1,500, then 
the State must redetermine the cash surrender value, consistent with 
regulations relating to changes in circumstances at Sec.  435.916(d) 
(redesignated and revised at Sec.  435.919 in this proposed rule), as 
described above and seek the cash surrender value on behalf of the 
individual consistent with Sec.  435.952(e)(4)(iv)(A). If, in 
redetermining eligibility, including the cash surrender value of the 
policy, once obtained, the State determines the individual to be 
ineligible for an MSP, the State would need to consider eligibility on 
other potential bases and provide advance notice and fair hearing 
rights in accordance with part 431 subpart E of the regulations prior 
to terminating MSP coverage.
    We also propose at Sec.  435.952(e)(4)(iv)(A) that when 
documentation of the cash surrender value of a life insurance policy is 
required, the State must assist the individual with obtaining this 
information and documentation by requesting that the individual provide 
the name of the insurance company and policy number and authorize the 
State to obtain such documentation on the individual's behalf, similar 
to the assistance that SSA provides SSI applicants, in which SSA 
obtains from the applicant basic information about the policy and 
authorization to contact the insurer, and then confirms the cash 
surrender value directly with the life insurance company itself.\33\ 
The agency may also request, but may not require, additional 
information from the applicant to assist the agency in obtaining 
documentation of the cash surrender value, such as the name of an 
agent. If the individual does not provide basic information about the 
policy and an authorization, under proposed Sec.  435.952(e)(4)(iv)(B), 
the State may require that the individual provide documentation of the 
cash surrender value. Under proposed Sec.  435.952(e)(4)(iv)(C), the 
State must provide the individual with at least 15 calendar days to 
provide such documentation if required pursuant to paragraph (e)(4)(i) 
or (ii) of this section (that is, if documentation of the cash 
surrender value is needed prior to the agency's making a determination 
of eligibility) and at least 90 calendar days if required pursuant to 
paragraph (e)(4)(iii) of this section (that is, post-enrollment). We 
note that the minimum of 15 calendar days in proposed Sec.  
435.952(e)(4)(iv)(C) for applicants to provide documentation of cash 
surrender value of a life insurance policy is consistent with the 
minimum 15 calendar days that we propose States must generally provide 
applicants to provide required documentation under proposed at Sec.  
435.907(d), discussed in section II.B.3 of this proposed rule. We seek 
comment on whether 15 calendar days or a longer minimum period, such as 
20 calendar days or 30 calendar days, appropriately balances the 
complexity of determining and obtaining documentation of the cash 
surrender value with the 45-day limit for States to complete Medicaid 
eligibility determinations for individuals applying on a basis other 
than disability status under Sec.  435.912(c)(3). The 90 calendar days 
proposed for individuals to obtain documentation of the cash surrender 
value of a life insurance policy during a post-enrollment verification 
process is consistent with the 90 calendar days in proposed paragraphs 
(e)(1)(iii), (e)(2)(iii), and (e)(3)(iii) of Sec.  435.952.
---------------------------------------------------------------------------

    \33\ See SSA POMS SI 01130.300.D., Developing Life Insurance 
Policies at https://policy.ssa.gov/poms.nsf/lnx/0501.130300.
---------------------------------------------------------------------------

    We recognize this proposal would represent a significant change for 
a number of States and could present some administrative challenges to 
implement. However, documenting the cash surrender value of life 
insurance is a considerable hurdle for many applicants. Because the 
cash surrender value of most applicants' policies is likely very 
modest, the value of any life insurance policy likely will have a 
minimal impact on their financial eligibility for coverage, whereas 
obtaining documentation of the cash surrender value may pose a 
substantial administrative barrier to access. We believe it is in the 
interest of efficient administration of the program, consistent with 
section 1902(a)(4) of the Act, to implement a process that places fewer 
burdens on applicants. We also believe that States are better able to 
navigate obtaining such documentation when needed. We seek comment on 
whether the burden shifted to States under the proposed rule is 
appropriate, or whether an alternative approach would be preferable.
    In-Kind Support and Maintenance. In-kind support and maintenance is 
assistance an applicant receives that is paid for by someone else, such 
as groceries or utilities paid for by an adult child. Section 1860D-
14(a)(3)(C)(i) of the Act, added by section 116 of MIPPA, excludes in-
kind support and maintenance as countable income for LIS 
determinations. Under SSI methodologies at 20 CFR 416.1131, which apply 
to MSP determinations, the value of in-kind support and maintenance, if 
both food and shelter are received by an applicant, is presumed to be 
one-third of the Federal benefit rate (FBR) ($841 per month in 2022 for 
a single person), unless the applicant provides documentation 
demonstrating a different amount. While documenting the amount of 
actual in-kind support and maintenance can be difficult for applicants, 
we do not believe it is common for applicants to attempt to rebut the 
one-third FBR presumption, and therefore, it is rare that applicants 
are faced with providing documentation of this type of income.
    Under the proposed rule, States would continue to be permitted to 
require documentation from individuals who seek to rebut the one-third 
FBR presumption. However, we seek comment on if obtaining documentation 
to rebut the one-third presumption

[[Page 54770]]

poses a barrier to eligibility and whether we should require States to 
accept self-attestation from individuals who seek to rebut a 
presumption of the amount of in-kind support and maintenance they 
receive subject to post-enrollment verification as discussed above. 
Alternatively, States can, and are encouraged to, further streamline 
the MSP eligibility and enrollment process for individuals with in-kind 
maintenance and support by disregarding in-kind support and maintenance 
entirely under section 1902(r)(2) of the Act.
2. Define ``Family of the Size Involved'' for the Medicare Savings 
Program Groups Using the Definition of ``Family Size'' in the Medicare 
Part D Low-Income Subsidy Program (Sec.  435.601)
    To further facilitate alignment of methodologies used to determine 
eligibility for the Medicare Part D LIS and MSP groups and facilitate 
enrollment in the MSPs based on LIS data, we propose to amend Sec.  
435.601 (``Application of financial eligibility methodologies'') to 
create a new paragraph (e), in which we propose to define ``family 
size'' for purposes of MSP eligibility.
    Each year, the U.S. Department of Health and Human Services (HHS) 
issues the Federal poverty guidelines (often referred to as the Federal 
poverty level or FPL), a measure of poverty used as an eligibility 
criterion by Medicaid and a number of other Federal programs. The FPL 
is a dollar amount that increases with the family size of an 
individual. For example, in 2022, in terms of annual income, the FPL is 
$13,590 for a single person, $18,310 for a couple, and $23,030 for a 
family of three.
    Under section 1905(p)(2)(A) and (B) of the Act, QMB-eligible 
individuals have incomes that do not exceed 100 percent of the FPL 
``applicable to a family of the size involved.'' Section 1905(s)(2) of 
the Act similarly directs that Qualified Disabled Working Individual 
(QDWI)-eligible individuals have incomes that do not exceed 200 percent 
of the FPL ``applicable to a family of the size involved.'' Section 
1902(a)(10)(E)(iii) and (iv) of the Act also direct that the income 
standards for the SLMB and QI eligibility groups be percentages of the 
FPL ``applicable to a family of the size involved.'' As described 
above, SLMBs have incomes greater than 100 percent of the FPL and less 
than 120 percent of the FPL, and QIs have incomes at least equal to 120 
percent of the FPL and less than 135 percent of the FPL. The statute 
does not define the phrase ``family of the size involved'' and CMS has 
historically permitted States to apply their own reasonable definition 
of this phrase.\34\
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    \34\ Memorandum from Director, Center for Medicaid and State 
Operations, to Regional Administrator, Re: Medicaid Eligibility--
Policy Governing Family Size in Determining Eligibility for 
Qualified Medicaid Beneficiaries and Specified Low-Income 
Beneficiaries. Oct. 2, 1997. Available at https://www.medicaid.gov/sites/default/files/2019-12/medicaid-eligibilty-memo.pdf.
---------------------------------------------------------------------------

    However, in light of the various statutory provisions to facilitate 
enrollment of LIS recipients into MSPs and vice versa, we believe it is 
appropriate to establish Federal standards governing the phrase 
``family of the size involved.''
    Specifically, we propose for purposes of determining eligibility 
for the MSP groups, consistent with our authority under section 
1902(a)(4) of the Act to facilitate methods of administration that 
promote the proper and efficient administration of the Medicaid 
program, that ``family of the size involved'' be defined to include at 
least the individuals included in the definition of ``family size'' in 
the LIS program. Under Sec.  423.772 (``Definitions'' relating to the 
LIS program), ``family size'' is defined to include the applicant, the 
applicant's spouse (if the spouse is living in the same household with 
the applicant), and all other individuals living in the same household 
who are related to the applicant and dependent on the applicant or 
applicant's spouse for one-half of their financial support.
    By proposing that a State's definition of ``family of the size 
involved'' include ``at least'' the individuals described in Sec.  
423.772 for purposes of the MSP groups, States would retain flexibility 
to include other individuals who are not described in Sec.  423.772. 
Additionally, this proposal would not affect the States' ability to 
adopt a different reasonable definition of the phrase for purposes of 
other eligibility groups. For example, in order to be eligible under 
section 1902(a)(10)(A)(ii)(XIII) of the Act (providing coverage for 
working individuals with disabilities), an individual must have income 
that is less than 250 percent of the FPL for a ``family of the size 
involved.'' States would not be required to adopt the definition at 
proposed Sec.  435.601(e) for purposes of determining income 
eligibility for this eligibility group. We seek comment on this 
proposal to define ``family of the size involved'' for purposes of the 
MSP groups.
3. Automatically Enroll Certain SSI Recipients Into the Qualified 
Medicare Beneficiaries Group (Sec.  435.909)
    SSI is a Federal cash assistance program that serves low-income 
individuals who are age 65 or older, or have blindness or a disability. 
SSI recipients typically qualify for other Federal and State programs. 
For example, many SSI recipients are entitled to Medicare under 42 CFR 
406.5(a) and (b). Additionally, in most States, the receipt of SSI is a 
mandatory basis for Medicaid eligibility pursuant to section 
1902(a)(10)(A)(i)(II)(aa) of the Act, implemented at Sec.  435.120 
(``Individuals receiving SSI group,'' hereafter the ``mandatory SSI 
group''). Thirty-three States and the District of Columbia (DC) that 
cover the mandatory SSI group have an agreement with SSA under section 
1634(a) of the Act under which SSA completes the determination of 
eligibility for the mandatory SSI group, and the Medicaid agency 
automatically enrolls the individual in Medicaid following a data 
exchange with SSA. These States commonly are referred to as ``1634 
States.'' A minority of States that cover the mandatory SSI group apply 
the SSI program's income and resource methodologies and disability 
criteria but require individuals to submit a separate application to 
the State Medicaid agency (``criteria States'').
    Eight States do not cover the mandatory SSI group. Instead, these 
States have elected the authority provided under section 1902(f) of the 
Act to apply financial methodologies and/or disability criteria more 
restrictive than the SSI program in determining eligibility for 
individuals 65 years old or older or who have blindness or a 
disability, subject to certain conditions. These States are referred to 
as ``209(b) States,'' after the provision of section 209(b) of the 
Social Security Act Amendments of 1972 (Pub. L. 92-603), which enacted 
what became codified at section 1902(f) of the Act. The eligibility 
group authorized by section 1902(f) of the Act is implemented at Sec.  
435.121 (``Individuals in States using more restrictive requirements 
for Medicaid than the SSI requirements,'' hereafter ``mandatory 209(b) 
State group'').
    Most Medicare-eligible SSI recipients also meet the eligibility 
requirements for the QMB eligibility group described in sections 
1902(a)(10)(E) and 1905(p) of the Act, which provides Medicaid coverage 
of Medicare premiums (both Part A, if applicable, and Part B) and cost- 
sharing (copayments, coinsurance, and deductibles).

[[Page 54771]]

    Section 1905(p)(1) of the Act provides that, to be eligible under 
the QMB group, an individual must be entitled to Medicare Part A or 
enrolled in Medicare Part B for coverage of immunosuppressive drugs 
under section 1836(b) of the Act, have income that does not exceed 100 
percent of the FPL for the applicable family size, and have resources 
that do not exceed the limits for the full-subsidy LIS program. As 
described at section 1860D-14(a)(3)(D) of the Act, the full-subsidy LIS 
resource limit is three times the SSI resource limit, adjusted annually 
based on changes to the Consumer Price Index.\35\ (See section II.A.1. 
of this proposed rule for discussion of the LIS program.) The income 
standard for SSI (that is, SSI's maximum Federal benefit rate) is 
typically 74 percent of the FPL for an individual and 83 percent of the 
FPL for married individuals. Thus, because the income and resource 
standards for the QMB group exceed the income and resource standards 
for SSI, individuals entitled to Medicare Part A who meet the income 
and resource requirements for the mandatory SSI group or mandatory 
209(b) group will always meet the income and resource requirements for 
the QMB group and be eligible for the QMB group.
---------------------------------------------------------------------------

    \35\ The resource limit for LIS is three times the SSI limit 
with yearly updates since January 1, 2010 to reflect to reflect 
Consumer Price Index (CPI). Note that the MSP resource test is 
determined without regard to the life insurance policy exclusion for 
Part D LIS, in accordance with section 1902(p)(1)(C).
---------------------------------------------------------------------------

    Most individuals enrolled in Medicare qualify for Part A without 
paying a premium (premium-free Part A). SSA automatically enrolls these 
individuals in premium-free Part A if they are age 65 or over and 
receive Social Security or Railroad Retirement Board (RRB) retirement 
benefits under title II of the Act or are under age 65 and have 
received Social Security or RRB disability benefits for 24 months under 
title II of the Act. See 42 CFR part 406 subpart A. In 2021, 
approximately 2.6 million individuals (approximately one third) of SSI 
recipients were entitled to premium-free Part A.\36\
---------------------------------------------------------------------------

    \36\ SSI Monthly Statistics, September 2021, Social Security 
Office of Retirement and Disability Policy 2021. https://www.ssa.gov/policy/docs/statcomps/ssi_monthly/2021-09/table01.html.
---------------------------------------------------------------------------

    Under Sec.  406.20, many individuals who are not eligible for 
premium-free Part A may still enroll in Part A by applying for benefits 
at SSA and paying a premium (``premium Part A''). In 2022, the premium 
for Medicare Part A was $499; however, based on prior work history, 
some individuals may qualify for a reduced rate of $274. Individuals 
who are not eligible for premium-free Part A are not automatically 
enrolled in premium Part A and they must enroll in Part B prior to or 
at the same time as they enroll in Part A. All Medicare beneficiaries 
must pay a monthly premium for enrollment in Part B, which is subject 
to an adjustment based on income. In 2022, the minimum Part B premium 
was $170.10.
    All States currently have a buy-in agreement with the Secretary 
under section 1843 of the Act which requires them to pay the Part B 
premiums for certain Medicaid beneficiaries, including individuals 
enrolled in the QMB group and those receiving SSI (known as ``Part B 
buy-in'') as described in the Medicare regulations at Sec.  407.42. A 
buy-in agreement permits States to directly enroll eligible individuals 
in Medicare Part B at any time of the year (without regard for Medicare 
enrollment periods or late enrollment penalties if applicable) and to 
pay the Part B premiums on the individual's behalf. In 1634 States, 
when SSA determines an individual eligible for both the mandatory SSI 
group and Medicare Part B, CMS automatically initiates Part B buy-in 
for the individual through a joint data exchange among CMS, the State 
Medicaid agency, and SSA (``buy-in data exchange'').\37\ In SSI 
criteria and 209(b) States, SSA notifies both the State and CMS that an 
individual has been determined eligible for SSI and Medicare Part B; 
however, because such individuals must submit a separate Medicaid 
application for determinations of eligibility, CMS does not 
automatically initiate Part B buy-in. Rather, once the State determines 
an individual eligible for the mandatory SSI or 209(b) group, the State 
must initiate Part B buy-in for the individual pursuant to its buy-in 
agreement through its daily exchange of enrollment data with CMS. See 
42 CFR 407.40(c)(4) and 407.42; CMS Manual for the State Payment of 
Medicare Premiums, chapter 2, section 2.5.1.
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    \37\ States with buy-in agreements must exchange buy-in 
enrollment data with CMS on a daily basis under Sec.  407.40(c)(4), 
and CMS also exchanges buy-in data with SSA on a daily basis. CMS 
collectively refers to these data exchange processes as the ``buy-in 
data exchange.'' See Manual for the State Payment of Medicare 
Premiums, chapter 2, sections 2.0 and 2.1.
---------------------------------------------------------------------------

    While individuals enrolled in the mandatory SSI or 209(b) group 
receive full Medicaid benefits, enrollment in the QMB group provides 
these individuals with additional protection from out-of-pocket health 
care costs--specifically Medicare premiums and cost-sharing charges. 
Moreover, Federal law prohibits all Medicare providers and suppliers, 
not just those participating in Medicaid, from charging QMBs for 
Medicare cost-sharing. Since 2018, CMS has notified Medicare providers 
and suppliers when an individual is enrolled in the QMB group and 
protected from Medicare cost-sharing liability.
    Maximizing the number of Medicaid beneficiaries who are also 
enrolled in Medicare is not only advantageous to the individual, but it 
can also result in cost savings for States. As a third-party payer, 
Medicare pays primary to Medicaid for Medicare Part A (inpatient 
hospital and skilled nursing facility services) and Medicare Part B 
(outpatient medical care). In addition, Medicaid beneficiaries who are 
enrolled in both Medicare Parts A and B may join Medicare-Medicaid 
integrated care plans, which provide more coordinated care across the 
two payers and may generate savings to the State by helping 
beneficiaries avoid institutional placement and by providing 
supplemental benefits, such as dental, transportation, hearing, or 
other benefits that otherwise would have been covered by Medicaid.
    Despite the potential benefits for Medicaid beneficiaries and State 
agencies, CMS data from 2022 indicates that over 500,000 or 16 percent 
of SSI recipients who are eligible to enroll in Medicare are not 
enrolled in the QMB eligibility group. We believe a major driver of 
eligible but unenrolled QMBs is that many States require SSI recipients 
to file a separate application with the State Medicaid agency in order 
to be evaluated for eligibility for the QMB group, even though they 
have been determined eligible for the mandatory SSI or 209(b) groups, 
and all SSI recipients who are entitled or able (with a premium) to 
enroll in Part A necessarily meet the requirements for QMB eligibility.
    To facilitate the enrollment of SSI recipients into the QMB 
eligibility group we propose, consistent with section 1902(a)(4) of the 
Act to promote the proper and efficient administration of the Medicaid 
program, the January 28, 2021 Executive Order on Strengthening Medicaid 
and the Affordable Care Act, the April 5, 2022 Executive Order on 
Continuing to Strengthen Americans' Access to Affordable, Quality 
Health Coverage, and the December 13, 2021 Executive Order on 
Transforming Federal Customer Experience and Service Delivery to 
Rebuild Trust in Government, to add a new paragraph (b) at Sec.  
435.909 that generally would require States to deem an individual 
enrolled in the mandatory SSI or 209(b) group eligible for the QMB 
group the

[[Page 54772]]

month the State becomes responsible for paying the individual's Part B 
premiums under its buy-in agreement pursuant to Sec.  407.47(b). We 
also propose technical changes to remove reserved paragraph (a) at 
Sec.  435.909, redesignate Sec.  435.909 paragraph (b) as (a) and add a 
new header to new Sec.  435.909(a).
    We note that under section 1902(e)(8) of the Act, QMB eligibility 
is effective the month following the month in which the determination 
of eligibility for the QMB group is made. Thus, under our proposal, QMB 
coverage would start the month following the month the State deems 
(that is, determines) an individual eligible for the QMB group and 
starts paying the individual's Part B premiums under the buy-in 
agreement. For example, if an individual is first enrolled in both the 
mandatory SSI or 209(b) Medicaid group and entitled to Part A in 
January 2025, the State would start paying the individual's Part B 
premiums under the buy-in agreement and deem the individual eligible 
for the QMB group in January 2025. The individual's QMB coverage would 
start February 1, 2025.
SSI Recipients Who Have Premium-Free Medicare Part A
    As noted above, SSA automatically enrolls individuals who receive 
Social Security or RRB retirement benefits or disability benefits for 
24 months into premium-free Part A. SSA data for States (including 
those with a 1634 agreement and those without a 1634 agreement) 
indicates whether an SSI recipient is entitled to premium-free Part A. 
As discussed above, because all SSI recipients meet the financial 
eligibility requirements for the QMB group, proposed Sec.  
435.909(b)(1)(i) would require all States to deem SSI recipients who 
are determined eligible for either the mandatory SSI group at Sec.  
435.120 or the mandatory 209(b) group at Sec.  435.121 as eligible for 
the QMB group if they are entitled to premium-free Medicare Part A. 
Under the proposed rule, when a 1634 State (which has delegated 
authority to SSA to make Medicaid eligibility determinations for SSI 
recipients) receives from CMS the Part B buy-in enrollment for an SSI 
recipient who is entitled to premium-free Medicare Part A, the State 
would automatically enroll the individual in both the mandatory SSI 
group and the QMB group; such individuals would not be required to 
submit a separate application to the Medicaid agency to determine 
eligibility for the QMB group.
    Criteria States and 209(b) States also obtain from CMS information 
that an SSI recipient is Medicare-eligible and entitled to premium-free 
Medicare Part A. However, in these States SSI recipients must submit a 
separate application to the Medicaid agency which determines 
eligibility for either the mandatory SSI or the 209(b) group. Under 
proposed Sec.  435.909(b)(1)(i), once the State has determined an SSI 
recipient eligible for the mandatory SSI or the 209(b) group, the State 
also would start paying the Part B premiums for the individual the 
first month they are entitled to Part A and receiving SSI-based 
Medicaid and start QMB group coverage the first day of the following 
month.
    From time to time, individuals enrolled in the mandatory SSI or 
209(b) group become retroactively entitled to premium-free Medicare 
Part A based on a retroactive award of Social Security Disability 
Insurance (SSDI). Under the Medicare regulations at Sec.  407.47(b), 
States generally become responsible for retroactive Part B premiums for 
such individuals dating back to the first month they were enrolled in 
the mandatory SSI or 209(b) group and eligible for Part B.\38\ In an 
April 27, 2022 proposed rule entitled, ``Implementing Certain 
Provisions of the Consolidated Appropriations Act and other Revisions 
to Medicare Enrollment and Eligibility Rules'' (87 FR 25090) (referred 
to hereafter as the ``2022 Medicare eligibility and enrollment proposed 
rule''), we proposed adding a new paragraph (f) at Sec.  407.47 to 
limit State liability for retroactive Part B premiums for full-benefit 
Medicaid beneficiaries, including individuals receiving SSI-based 
Medicaid, to a period of no greater than 36 months prior to the date of 
the Medicare enrollment determination. At 87 FR 25114 through 25115 of 
the proposed rule, we noted that this time limit would reduce burden on 
providers, help State Medicaid programs and the Medicare program run 
more efficiently, be consistent with a legal ruling in favor of States 
in at least one Federal court, and not harm Medicaid beneficiaries 
since Medicaid would have covered any medical costs the beneficiary 
incurred for periods in the past.
---------------------------------------------------------------------------

    \38\ Individuals who are entitled to premium-free Part A are 
eligible to enroll in Medicare Part B under Sec.  407.10(a)(1).
---------------------------------------------------------------------------

    To align with that change, under Sec.  435.909(b)(3), we propose 
that retroactive QMB coverage for individuals in the mandatory SSI or 
209(b) group be limited to the same period for retroactive Part B 
premium liability proposed at Sec.  407.47(f) in the 2022 Medicare 
eligibility and enrollment proposed rule. For example, if SSA 
determines an individual enrolled in the mandatory SSI or 209(b) group 
eligible for premium-free Part A in January 2025 with an effective date 
back to January 2023, the State would deem the individual eligible for 
the QMB group retroactive to January 2023. Because coverage under the 
QMB group begins the month after the month of the eligibility 
determination, QMB coverage in this example would be effective February 
1, 2023. Alternatively, if SSA determines an individual enrolled in the 
mandatory SSI or 209(b) group eligible for premium-free Part A in 
January 2025 with an effective date back to January 2021, the State 
would deem the individual eligible for the QMB group retroactive to 
January 2022, with QMB coverage effective February 1, 2022. We invite 
comment on this limit on retroactive QMB eligibility.
    Additionally, we remind States that individuals deemed eligible for 
Medicaid are not exempt from regularly-scheduled renewals of Medicaid 
eligibility in accordance with Sec.  435.916. However, for an 
individual eligible under both the mandatory SSI and QMB groups, the 
State need only verify that the individual still receives SSI and is 
entitled to Medicare Part A in order to renew their eligibility in both 
groups. States can do this verification electronically by confirming 
receipt of SSI in the State Verification Exchange System or State 
Online Query System, and we encourage them to do so to minimize burden. 
When a beneficiary no longer meets the eligibility requirements for the 
eligibility group under which they have been receiving coverage, the 
State must determine eligibility on all bases before terminating 
eligibility.
SSI Recipients Eligible for Premium Part A
    As mentioned above, individuals age 65 and over who lack the 
sufficient work history for premium-free Part A may qualify to pay, or 
have paid on their behalf, a monthly premium to receive Medicare Part A 
benefits.\39\ To meet the requirements for premium Part A at Sec.  
406.20(b), the individual must be: age 65 or older, a U.S. resident, 
not otherwise entitled to Part A, entitled to Part B or in the process 
of enrolling in it, and a U.S. citizen or lawful permanent resident who 
has resided in the U.S. continuously during the 5 years immediately 
preceding the month they enrolled in Medicare.
---------------------------------------------------------------------------

    \39\ Note that all individuals receiving title II benefits based 
on disability who have met the 24-month waiting period to enroll in 
Medicare are entitled to premium-free Part A.

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[[Page 54773]]

    All States must pay the Part A premium for individuals who are 
enrolled in the QMB eligibility group. However, States can choose one 
of two methods to pay the Part A premium for QMBs.\40\ First, States 
can expand their buy-in agreement with CMS under section 1818(g) of the 
Act to include enrollment and payment of Part A premiums for QMBs who 
do not have premium-free Part A. Currently, 36 States and the District 
of Columbia have chosen this option. States that include payment of 
Part A premiums for QMBs in their buy-in agreements are called ``Part A 
buy-in States.'' In Part A buy-in States, individuals determined 
eligible for the QMB group can enroll in premium Part A at any time of 
the year and without regard to late enrollment penalties. Fourteen 
States do not include Part A in their buy-in agreements and instead pay 
the Part A premiums for QMBs using a group payer arrangement, which 
allows certain third parties (for example, States) to pay the Part A 
premiums for a class of beneficiaries.\41\ States that use a group 
payer arrangement for QMBs are known as Part A ``group payer States.''
---------------------------------------------------------------------------

    \40\ See chapter 1, section 1.2 of the CMS Manual for the State 
Payment of Medicare Premiums.
    \41\ See Program Operations Manual System (POMS) HI 01001.230 
Group Collection-General at https://policynet.ba.ssa.gov/poms.nsf/lnx/0601001230.
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    As previously noted, in order to qualify for the QMB eligibility 
group under section 1905(p)(1) of the Act, an individual must be 
entitled to hospital insurance benefits under Part A of title XVIII. 
Being ``entitled to'' Part A means that if an individual receives Part 
A-covered services, the costs of those services will be covered by 
Medicare. See 42 CFR 406.3. In general, an individual becomes so 
entitled to Part A if--(1) they are eligible for premium-free Part A 
based on payment of a payroll tax; or (2) are eligible to enroll in 
Premium Part A and do enroll (creating a Part A premium obligation). 
The premium payment is due for each month beginning with the first 
month of coverage. 42 CFR 406.32(f).
    Further, section 1905(a) of the Act specifies that payments of 
Medicare cost-sharing for QMBs (including Part A premiums) are 
``medical assistance'' for purposes of FFP, if made in the month 
following the month in which the individual becomes a QMB. (Per the 
introductory paragraph of section 1905(a) of the Act, payments for 
Medicare premiums and cost sharing only qualify as medical assistance 
in the case of Medicare cost-sharing with respect to a QMB described in 
section 1905(p)(1) of the Act, if provided after the month in which the 
individual becomes such a beneficiary). Thus, under a literal reading 
of the words of the statute, a State cannot claim FFP under the QMB 
group until the month after the month in which the individual is 
``entitled to Part A,'' which requires first that a Part A premium be 
paid. This creates a ``catch 22'' in which low-income individuals can 
only be eligible for QMB coverage that makes Part A enrollment 
affordable if they first became liable for its premium.
    This result would eviscerate the purpose of sections 1843 and 
1818(g) of the Act (``buy-in statute''). Under a literal read, States 
with a Part A buy-in agreement could theoretically use State-only funds 
to pay Part A premiums the first month to allow the individual to 
become entitled to Part A and start QMB coverage the next month. 
However, in Harris v. McCrae, 448 U.S. 297 (1980), the U.S. Supreme 
Court held that States cannot be required to provide Medicaid using 
only State funds. Further, while individuals can enroll in Part A at 
any time of the year without regard for Medicare enrollment periods or 
late enrollment if the State pays their Part A premium under its buy-in 
agreement, this is not the case for individuals who are paying the 
premium themselves. Individuals who must pay the Part A premium 
themselves must wait until a Medicare enrollment period to enroll in 
Part A and may be subject to late enrollment penalties. Thus, a literal 
read of the statute would defeat the purpose of buy-in statute--to 
avoid delays in QMB enrollment by allowing QMB-eligible individuals who 
reside in Part A buy-in States to enroll in Part A at any time of the 
year, without regard to Medicare enrollment penalties.
    Recognizing that a literal read of the statute would produce a 
result that essentially nullifies the impact of the QMB and buy-in 
statutory provisions, CMS instituted a policy approximately 30 years 
ago under which States can receive FFP for paying an individual's Part 
A premium the first month of entitlement, thereby triggering both Part 
A entitlement and QMB coverage. Under this policy, Part A buy-in States 
can determine an individual eligible for QMB status, and thus for their 
Part A premiums to be paid, if they are enrolled in Part B but not yet 
entitled to Part A.\42\ Group payer States similarly can approve 
eligibility for individuals under the QMB eligibility group if SSA has 
determined them conditionally eligible for premium Part A, through a 
process known as ``conditional enrollment.'' The conditional enrollment 
process enables low-income individuals to apply at SSA for premium Part 
A on the condition that they will only be enrolled in Part A if the 
State determines they are eligible for the QMB group.\43\ Most group 
payer States recognize conditional enrollment in Part A for purposes of 
determining QMB eligibility, but they are not required to do so.
---------------------------------------------------------------------------

    \42\ Chapter 1, section 1.10 of the CMS Manual for the State 
Payment of Medicare Premiums and SSA Program Operations Manual 
System (POMS) HI 00801.140.C Premium Part A Enrollments for 
Qualified Medicare Beneficiaries (QMBs)--Part A Buy-In States and 
Group Payer States at https://policynet.ba.ssa.gov/poms.nsf/lnx/0600801140.
    \43\ The conditional enrollment process is described in chapter 
1, section 1.11 of the CMS Manual for the State Payment of Medicare 
Premiums and in SSA Program Operations Manual System (POMS) HI 
00801.140 Premium Part A Enrollments for Qualified Medicare 
Beneficiaries (QMBs)--Part A Buy-In States and Group Payer States at 
https://policynet.ba.ssa.gov/poms.nsf/lnx/0600801140.
---------------------------------------------------------------------------

    Individuals who lack premium-free Part A are more likely to have 
worked in the informal economy in low wage jobs.\44\ Internal analysis 
by CMS from 2017 found that, as compared to their QMB-eligible 
counterparts with premium-free Part A, QMB-eligible individuals who 
qualify for premium Part A tend to be poorer and more likely to be non-
native English speakers. For multiple decades, the conditional 
enrollment policy has helped hundreds of thousands of individuals 
obtain essential assistance with Medicare premiums and cost-sharing by 
allowing States to pay the first month's premium needed to trigger 
Medicare Part A entitlement. Without this policy, the subsidies 
available under the QMB group to make Part A affordable would only be 
available to individuals who somehow found a way to pay the initial 
Part A premium (including a late enrollment penalty if applicable) 
themselves. We estimate that precluding coverage of Part A premium 
payments under the QMB group until the month after an individual has 
become entitled to Part A would prevent over 78,000 individuals each 
year from enrolling in Part A with State payment of Part A 
premiums.\45\
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    \44\ Streamlining Medicare and QMB Enrollment for New Yorkers: 
Medicare Part A Buy-In Analysis and Policy Recommendations, Medicare 
Rights Center, February 2011. https://www.medicarerights.org/pdf/Part-A-Buy-In-Analysis.pdf.
    \45\ Based on internal CMS data from 2015-2019.
---------------------------------------------------------------------------

    We believe that we should implement the statute in a manner that 
gives full effect to what we believe to be Congress' intended policy in 
this rare instance in which implementing the plain meaning of the words 
of the statute would produce a result that is at odds with this 
statutory purpose. In United States v.

[[Page 54774]]

Ron Pair Enterprises, Inc., 489 U.S. 235 (1989), the U.S. Supreme Court 
found, ``The plain meaning of legislation should be conclusive, except 
in the `rare cases [in which] the literal application of a statute will 
produce a result demonstrably at odds with the intentions of its 
drafters.' Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571 
(1982). In such cases, the intention of the drafters, rather than the 
strict language, controls. Ibid.''
    More recently, in Donovan v. First Credit, Inc., 983 F.3d 246, 254 
(6th Cir. 2020) the Sixth Circuit reformulated this concept as follows: 
``Thus, the absurd-results doctrine sanctions the use of extra-textual 
sources to contravene statutory text only if there is no alternative 
and reasonable interpretation available that, consistent with 
legislative purpose, would avoid the absurd result.'' See id.; In re 
Corrin, 849 F.3d 653 at 657 (`When the language is ambiguous or leads 
to an absurd result, the court may look at the legislative history of 
the statute to help determine the meaning of the language.').''
    We note that there is precedent, in the Medicare Part D context, 
for not applying the plain meaning of the words of the statute when it 
leads to what we believe to be an absurd result contrary to the purpose 
of the statute. The following language from the preamble to the January 
28, 2005 final rule implementing Medicare part D explains:

    Section 1860D-1(b)(1)(C) of the Act requires CMS to auto-enroll 
into PDPs an individual ``who is a full benefit dual eligible 
individual'' who ``has failed to enroll in a prescription drug plan 
or an MA-PD plan.'' Although this statutory provision specifically 
references the statutory definition of ``full-benefit dual eligible 
individual'' under section 1935(c)(6) of the Act, if interpreted 
literally, section 1860D-1(b)(1)(C) of the Act would require CMS to 
auto-enroll into Part D plans only individuals receiving full-
benefits under Medicaid who are already enrolled in Part D but who 
have ``failed to enroll in'' a Part D plan, a patently absurd 
result. We have an obligation to interpret the statute so as to 
avoid an absurd result and give full effect to the Congress' 
intended policy. We think it is clear that the Congress required CMS 
to establish an auto-enrollment process to ensure that individuals 
who currently receive coverage for Part D drugs under Medicaid 
continue to receive coverage for such drugs through enrollment in 
Part D beginning in 2006.\46\
---------------------------------------------------------------------------

    \46\ 70 FR 4194 at 4370 and 4371 (January 28, 2005). https://www.govinfo.gov/content/pkg/FR-2005-01-28/pdf/05-1321.pdf.

    For the reasons set forth above, we believe that in this case also, 
reading the statute literally to require an individual to pay their 
first month's Part A premium in order to become eligible to receive 
coverage of Part A premiums under the QMB group would be contrary to 
the fundamental purpose of the QMB statutory provisions: to enable low-
income individuals to gain Medicare benefits they could not otherwise 
afford. A literal read of the statute is also at odds with the intent 
of the buy-in statute to avoid undue delays in QMB enrollment. 
Therefore, we propose to incorporate in the regulations our 
longstanding practice of providing FFP for State payments of the first 
month of an individual's Part A premium for individuals who are 
eligible for the QMB group based on conditional enrollment in Part A. 
This also will facilitate enrollment into the QMB group for SSI 
recipients who need to pay a premium to enroll in Part A.
    According to internal CMS estimates, in 2022 approximately 800,000 
SSI recipients were eligible for Part A by paying a premium. When an 
individual age 65 or older is determined eligible for SSI and Medicare 
Part B but lacks sufficient work history for premium-free Part A, SSA 
transmits the individual's record to CMS. In 1634 States, CMS 
automatically initiates Part B buy-in (that is, enrollment in Part B 
with the State paying the Part B premium); in criteria and 209(b) 
States, CMS alerts the State that the individual is eligible for SSI 
and Medicare. As described above, States must pay the Part B premiums 
for individuals once they are eligible for Part B and have been 
determined eligible for the mandatory SSI or 209(b) group under 
Sec. Sec.  407.42 and 407.47(b). Once the SSI recipient is enrolled in 
Part B buy-in, CMS notifies SSA, which also updates its SSI records to 
reflect Part B buy-in for the individual.
    As mentioned above, in Part A buy-in States, CMS considers 
enrollment in Part B sufficient to treat the individual as meeting the 
requirement that the individual be entitled to Part A for the purposes 
of the State's QMB eligibility determination. Because the SSI income 
and resource standards are below the standards for eligibility under 
the QMB group, individuals eligible for the mandatory SSI or 209(b) 
group will meet the financial eligibility requirements for the QMB 
group. Thus, in Part A buy-in States, when an SSI recipient who lacks 
sufficient work history for premium-free Part A has been determined 
eligible for the mandatory SSI or 209(b) group and is enrolled in Part 
B, the State can determine the individual eligible for the QMB 
eligibility group and enroll the individual in Part A buy-in.
    To streamline QMB enrollment for SSI recipients who must pay a 
premium to enroll in Part A, we propose at Sec.  435.909(b)(1)(ii) to 
require Part A buy-in States to deem those individuals who are 
determined eligible for the mandatory SSI or 209(b) groups as eligible 
for the QMB group and initiate their enrollment into Medicare Part A, 
pursuant to their buy-in agreement, the month they are enrolled in Part 
B buy-in.
    As noted, in States that have a 1634 agreement with SSA, when SSA 
determines an individual eligible for the mandatory SSI group, SSA also 
notifies CMS that an individual eligible for Medicare Part B has been 
determined eligible for the mandatory SSI group. CMS initiates the 
individual's enrollment in Medicare Part B buy-in and notifies the 
State after doing so. In Part A buy-in States with a 1634 agreement, 
once the State receives the automated Part B buy-in enrollment from CMS 
for an SSI recipient who lacks a sufficient work history for premium-
free Part A, under proposed Sec.  435.909(b)(1)(ii) the State would 
enroll the individual in the mandatory SSI group, deem the individual 
eligible for the QMB group, and effectuate enrollment in Medicare Part 
A through the buy-in agreement.
    As discussed above, in criteria and 209(b) States, when CMS 
receives information from SSA that an individual is eligible for SSI 
and Medicare Part B, CMS does not automatically initiate Part B 
enrollment, which is a prerequisite for entitlement to Part A for 
individuals subject to a Part A premium. In a Part A buy-in State 
without a 1634 agreement (that is, a criteria or 209(b) State), once 
the individual applies to the Medicaid agency, some States currently 
only determine eligibility for the mandatory SSI or 209(b) group, as 
applicable, and initiate Part B enrollment per their buy-in agreement. 
Under proposed Sec.  435.909(b)(1)(ii), these Part A buy-in States also 
would be required to deem any individuals determined by the State to be 
eligible for the mandatory SSI or 209(b) groups as eligible for the QMB 
group and initiate enrollment in both Medicare Part A and Part B buy-
in.
    In the 14 group payer States, it is more challenging for SSI 
recipients to enroll in Medicare Part A and the QMB eligibility group. 
Unlike in Part A buy-in States, individuals determined eligible for the 
mandatory SSI or 209(b) group in group payer States who are enrolled in 
Part B pursuant to the State's buy-in agreement will not necessarily 
satisfy the eligibility requirement for the QMB group that the 
individual be entitled to Part A. Even though the State will initiate 
enrollment of the

[[Page 54775]]

individual in Part B, pursuant to its buy-in agreement, it will not 
cover the individual's Part A premium or initiate Part A enrollment 
under the buy-in agreement. Instead, the individual must separately 
apply for premium Part A at SSA using the conditional enrollment 
process.
    Although the conditional enrollment process provides a way for 
individuals to enroll in the QMB eligibility group without paying their 
own Part A premiums upfront, the process is administratively burdensome 
for both individuals and the State, and the vast majority of 
individuals fail to complete the process unless an eligibility worker 
or other application assistor provides hands on assistance through 
every step of the process.\47\ Two other challenges currently make QMB 
enrollment harder for SSI recipients without premium-free Part A in 
group payer States. First, group payer States can only enroll 
individuals in premium Part A during the general Medicare enrollment 
period that runs from January through March each year. Second, group 
payer States are required to pay late enrollment penalties, if 
applicable, for those Medicaid beneficiaries who did not timely enroll 
in Medicare Part A when they first became eligible to do so.
---------------------------------------------------------------------------

    \47\ Streamlining Medicare and QMB Enrollment for New Yorkers: 
Medicare Part A Buy-In Analysis and Policy Recommendations, Medicare 
Rights Center, February 2011. https://www.medicarerights.org/pdf/Part-A-Buy-In-Analysis.pdf.
---------------------------------------------------------------------------

    To streamline QMB enrollment for SSI recipients without premium-
free Part A in group payer States, we propose to add a State option for 
deeming individuals eligible for the QMB group. Specifically, proposed 
Sec.  435.909(b)(2) would allow, but not require, group payer States to 
directly initiate Medicare Part A enrollment for individuals who are 
not entitled to premium-free Part A without first sending them to SSA 
to apply for conditional Part A enrollment. Under this proposed option, 
once the State has determined the individual eligible for the mandatory 
SSI or 209(b) group and become liable for paying their Part B premiums 
under the buy-in agreement pursuant to Sec.  407.42, the State would 
also deem them eligible for the QMB group.
    We are aware that State-specific variables can impact a State's 
decision to either enter into a Part A buy-in agreement or to remain a 
group payer State. By allowing, but not requiring, group payer States 
to adopt the same streamlined QMB enrollment procedures used in Part A 
buy-in States, we preserve the current statutory option for group payer 
States to operate differently than Part A buy-in States while still 
enabling them to modernize their processes and facilitate enrollment of 
these very low-income individuals into Medicare Part A and the QMB 
group. However, we seek comments on the administrative and fiscal 
impacts of our proposal and of other approaches, such as requiring 
group payer States to deem individuals determined eligible for the 
mandatory SSI or 209(b) groups as eligible for the QMB group once they 
have completed the conditional enrollment process at SSA.
4. Clarifying the Qualified Medicare Beneficiary Effective Date for 
Certain Individuals (Sec.  406.21)
    In the above section, we seek to facilitate enrollment for SSI 
recipients into QMB. Here, we propose to clarify the effective date of 
coverage under the QMB group for individuals who must pay a premium to 
enroll in Part A and reside in a group payer State in order to provide 
individuals with protection from Medicare premiums and cost-sharing 
costs on the earliest possible date.
    The first opportunity individuals have to enroll in premium Part A 
is during their initial enrollment period (IEP). For most individuals 
who become eligible for Medicare on or after 1966, under section 
1837(d) of the Act, the IEP begins on the first day of the third month 
before the month the individual turns 65 and ends 7 months later.
    Eligible individuals who do not enroll in premium Part A during 
their IEP, or who disenroll from premium Part A and wish to re-enroll, 
must generally do so during the general enrollment period (GEP). The 
GEP is established under section 1837(e) of the Act, and is the period 
beginning on January 1 and ending on March 31 of each year. For 
individuals who enroll in Medicare under the GEP in a month before 
January 1, 2023, Part A entitlement would begin the first of July 
following their enrollment, as provided in sections 1838(a)(2)(D)(i) 
and (ii) and (a)(3)(B)(i) and (ii) of the Act. Section 120 of the 
Consolidated Appropriations Act, 2021 (CAA) revised the Part A 
entitlement effective date for individuals who enroll during the GEP in 
a month beginning on or after January 1, 2023. Specifically, Part A 
entitlement for individuals who enroll in premium Part A during the GEP 
would begin with the first day of the month following the month in 
which they enroll.
    In the 2022 Medicare eligibility and enrollment proposed rule at 87 
FR 25094, we proposed to revise Sec.  406.21(c) to implement the GEP 
effective dates outlined in section 120 of the CAA. Specifically, Sec.  
406.21(c)(3)(i) would require that for individuals who enroll or 
reenroll during a GEP prior to January 1, 2023, entitlement would begin 
July 1 following their enrollment, while Sec.  406.21(c)(3)(ii) would 
require that for individuals who enroll or reenroll during a GEP on or 
after January 1, 2023, entitlement would begin on the first day of the 
month after the month of enrollment, consistent with section 
1838(a)(2)(D)(ii) of the Act (incorporated for premium Part A 
beneficiaries by reference in section 1818(c) of the Act).
    To align with that change, we propose to clarify the applicable 
effective date of QMB coverage for an individual who resides in a group 
payer State and enrolls in conditional Part A during the GEP. As 
discussed above in section II.A.3 of this preamble, in a Part A buy-in 
State, CMS considers enrollment in Part B sufficient to meet the 
requirement that an individual be entitled to Part A for the purposes 
of the QMB eligibility determination. However, in a group payer State, 
enrollment in QMB for individuals who need to pay a premium to enroll 
in Part A is always a two-step process. The State cannot determine 
individuals eligible for QMB and enroll them in Part A buy-in until SSA 
establishes actual or conditional Part A enrollment. With respect to 
QMB enrollment under a buy-in agreement under Sec.  406.26, Medicare 
Part A coverage begins the first month an individual is entitled to 
Part A under Sec.  406.20(b) and has QMB status. We consider a 
conditional Part A filing to be sufficient to fulfill the requirement 
for entitlement to Part A as applicable for QMB coverage.\48\
---------------------------------------------------------------------------

    \48\ See CMS Manual for the State Payment of Medicare Premiums, 
chapter 1, section 1.11.
---------------------------------------------------------------------------

    Specifically, in this rule we propose in new Sec.  406.21(c)(5) to 
codify existing policy for individuals who enroll in actual or 
conditional Part A during the GEP. Beginning on or after January 1, 
2023, the effective date of Medicare coverage for individuals who 
enroll in Medicare during the GEP is the month following the month of 
enrollment under section 1838(a)(2)(D)(1) and (a)(3)(B)(i) of the Act. 
For such individuals, QMB coverage starts the month premium Part A 
entitlement begins (if the State determines the individual has met the 
eligibility requirements for QMB coverage in the same month that Part A 
enrollment occurs), or a month later than the month of Part A 
entitlement (if the individual is determined eligible for QMB the month 
Part A entitlement begins or later).

[[Page 54776]]

    This proposal would clarify that individuals who reside in group 
payer States and enroll in actual or conditional Part A during the GEP 
can obtain QMB as early as the month Part A entitlement begins.
5. Facilitate Enrollment by Allowing Medically Needy Individuals To 
Deduct Prospective Medical Expenses (Sec.  435.831)
    The current medically needy income eligibility regulation at 42 CFR 
435.831 permits institutionalized individuals to deduct their 
anticipated medical and remedial care expenses from their income. We 
propose to amend the regulation to allow noninstitutionalized 
individuals, under certain circumstances, to do the same for purposes 
of medically needy eligibility determinations. This proposal is 
designed to eliminate the institutional bias inherent in only 
permitting projection of the cost of care for institutionalized 
individuals.
    Section 1902(a)(10)(C) of the Act provides States the option to 
extend Medicaid eligibility to ``medically needy'' individuals. 
Implementing regulations are codified at 42 CFR part 435, subpart D. 
The medically needy are individuals who have incomes too high to 
qualify in a categorically needy group described in section 
1902(a)(10)(A) of the Act, but who have certain significant and costly 
health needs. Consistent with section 1902(a)(10)(C)(i)(III) of the Act 
and regulations at Sec.  435.811(a), States establish a separate income 
standard to determine the income eligibility of medically needy 
individuals (referred to as the ``medically needy income level,'' or 
``MNIL''). As directed by section 1903(f)(2) of the Act and Sec.  
435.831(d), a State's determination of a prospective medically needy 
individual's income eligibility includes the deduction of the uncovered 
medical and remedial expenses incurred by the individual, the 
individual's family members, or the individual's financially 
responsible relatives, from the individual's countable income. This 
process of deducting incurred medical and remedial expenses from an 
individual's countable income is referred to as a ``spenddown.''
    To determine income eligibility for medically needy coverage, a 
State first determines an individual's countable income in accordance 
with Sec.  435.831(b), including application of any disregards imposed 
under the methodology appropriate for the individual (for example, a 
$20 monthly income disregard for an individual whose Medicaid is based 
on SSI methodologies), or approved under the State's Medicaid plan 
under the authority of section 1902(r)(2) of the Act and Sec.  
435.601(d).
    If the individual's remaining countable income is at or below the 
MNIL, they are income-eligible for the medically needy group. If the 
remaining countable income exceeds the MNIL, the individual will need 
to meet a spenddown; that is, the individual will need to reduce the 
amount of their income above the MNIL by the amount of their 
outstanding medical and remedial care expense liability, from bills the 
individual incurs during their current budget period, and, in some 
circumstances, previous to it (for example, under 42 CFR 435.831(f), 
bills incurred in previous budget periods that were not used to meet a 
spenddown because the individual had other bills that were sufficient 
to meet the spenddown in the previous budget periods may be used in the 
current budget period). As required by Sec.  435.831(a)(1), States must 
choose a budget period of between 1 and 6 months to be used for 
medically needy individuals. The State multiplies the amount that an 
individual's countable income exceeds the MNIL for a single month by 
the number of months in the budget period. The product is the amount of 
medical or remedial care expenses for which the individual must 
document being liable--the spenddown--to establish eligibility during 
the budget period. Once the individual confirms having the necessary 
medical expense liability to the State agency, the individual is 
eligible for the remainder of the budget period.
    For example, if an individual's countable monthly income is $1,200 
in a State in which the MNIL is $700, the individual's spenddown 
amount, based on monthly income, would be $500 ($1,200-$700 = $500). If 
the budget period elected by the State is 3 months, the State 
multiplies $500 by 3, and the individual's spenddown is $1,500 for the 
budget period. If the individual's budget period begins on January 1st, 
and the individual incurs unpaid medical expenses that are equal to or 
greater than $1,500 on February 15th, the individual will be eligible 
for Medicaid from February 15th through March 31st. To reestablish 
Medicaid eligibility in the next budget period, the individual will 
have to incur separate medical or remedial care expenses for $1,500. 
The individual will not become eligible for Medicaid again until the 
expenses have been incurred. This results in the individual 
consistently cycling on and off Medicaid, with eligibility starting at 
some point after the new budget period begins, causing a gap in 
coverage for the individual and additional administrative work for the 
State.
    Separately, section 1902(f) of the Act and regulations at Sec.  
435.121 authorize States to apply criteria more restrictive than the 
SSI program criteria in determining eligibility under the mandatory 
eligibility group for individuals seeking Medicaid on the basis of 
being 65 years old or older or having blindness or disabilities, 
provided that they offer Medicaid to any such individual who would have 
been eligible under the State's 1972 Medicaid plan. (States electing 
this option are referred to as ``209(b) States,'' after the provision 
in the Social Security Amendments of 1972, Public Law 92-603, that 
enacted section 1902(f) of the Act). In determining whether any such 
individual is income-eligible, section 1902(f) of the Act and Sec.  
435.121(f)(1)(iii) also require that uncovered medical expenses 
incurred by the individual, the individual's family, or individual's 
financially responsible relatives, be deducted from countable income, 
and that a spenddown be calculated for individuals with income 
exceeding the income limit for the mandatory 209(b) State group in 
generally the same manner it is calculated for the medically needy.
    In 1994, based on the authority granted to the Secretary under 
sections 1102 and 1902(a)(4) of the Act to create rules necessary for 
the efficient operation of the Medicaid program, and under section 
1902(a)(17) of the Act to prescribe the extent to which costs of 
medical care may be deducted from income, we established, under Sec.  
435.831(g)(1), that States have the option to ``include medical 
institutional expenses (other than expenses in acute care facilities) 
projected to the end of the budget period at the Medicaid reimbursement 
rate'' in calculations \49\ (59 FR 1659, January 12, 1994 referred to 
hereafter as the ``1994 rulemaking''). We further confirmed in the 
preamble to the 1994 rulemaking that 209(b) States are authorized to 
implement the authority established in the rule relating to the 
projection of medical institutional expenses.
---------------------------------------------------------------------------

    \49\ ``Medicaid Program; Deduction of Incurred Medical Expenses 
(Spenddown)'' Final Rule with Comment Period; https://www.govinfo.gov/content/pkg/FR-1994-01-12/html/94-547.htm.
---------------------------------------------------------------------------

    ``Projecting'' expenses means that a State includes in incurred 
medical expenses those costs that it anticipates an individual will 
incur during a budget period, which can make eligibility effective on 
the first day of an

[[Page 54777]]

individual's budget period, if the anticipated expenses equal or exceed 
the individual's spenddown. In promulgating the 1994 regulation, we 
reasoned that institutional services are, by their nature, constant and 
predictable, which supported a simplified approach for States to 
determine that an institutionalized individual will meet their 
spenddown amount each budget period. As required by regulations in 
Sec.  435.831(i)(2), States must reconcile the projected amounts with 
the actual amounts incurred at the end of the budget period in order to 
confirm that the individual's incurred expenses were at least equal to 
the individual's spenddown.
    For example, consider an individual in an institution on the first 
day of a month with a spenddown amount of $3,000 in a State in which 
the medically needy budget period is 1 month. The Medicaid rate for the 
facility is $4,500 ($150 daily), the private rate is $6,000 ($200 
daily), and the State does not project institutional expenses. Until 
eligibility for Medicaid is established, the individual will be charged 
the private daily rate, which would mean that, in a month in which the 
individual does not receive any services not included in the daily 
rate, the individual will incur $3,000 in expenses as of the 15th of 
the month (3,000 / 200 = 15), at which point the individual will be 
eligible for Medicaid, for the remainder of the month. If the 
individual does, however, receive any uncovered services beyond the 
basic services included in the daily rate, the individual would become 
eligible earlier in the month, although again only for the remainder of 
the month. The result is that the individual is consistently cycling on 
and off Medicaid, with an eligibility start date each budget period 
that is not predictable to either the institutionalized individual or 
State agency.
    On the other hand, if the State elects to project the individual's 
institutional expenses under the authority of Sec.  435.831(g)--that 
is, determine that the individual will incur the Medicaid rate of 
$4,500 for the month--the State can establish that the individual is 
eligible for Medicaid, and grant eligibility effective the first day of 
the month. No further eligibility-related determination is necessary. 
Projecting expenses can benefit both parties, by reducing 
administrative costs for the State and providing continuity of coverage 
for the beneficiary.
    We explained that we considered use of the Medicaid reimbursement 
rate in the projection of expenses necessary to achieve the highest 
level of certainty that an individual will incur the liability that the 
regulation was permitting States to anticipate prior to the actual 
receipt of the services (see 59 FR 1661). For example, if a State 
projects the private rate for the services for an institutionalized 
individual, and the private rate for a particular month exceeds the 
individual's spenddown and the individual is consequently deemed 
Medicaid eligible on the first day of the month, the individual will 
not be charged the private rate for any of the services that month, but 
instead will be charged the Medicaid rate, as the provider would have 
to accept the Medicaid reimbursement rate for the Medicaid-covered 
services. If, however, the individual's spenddown amount exceeds the 
cost of the Medicaid rate, the individual possibly will not end up 
incurring in the month the expenses necessary to meet his or her 
spenddown. Therefore, to avoid possible erroneous grants of 
eligibility, we determined that the use of the Medicaid reimbursement 
rate in the projection of expenses was more appropriate.
    The projection of expenses can have the effect of accelerating 
eligibility. However, only permitting projection of the cost of care 
for institutionalized individuals creates an inherent institutional 
bias. Further, we believe that there are noninstitutional services that 
may be similarly constant and predictable such that States could 
project them for individuals who must meet a spenddown to become 
income-eligible. Permitting projection of such noninstitutional 
services would reduce some of the complexity that both State agencies 
and individuals seeking coverage of home and community-based services 
(HCBS) currently experience and reduce institutional bias. Projecting 
noninstitutional expenses would reduce administrative costs associated 
with disenrolling and reenrolling individuals, as well as lead to 
better outcomes for individuals who would no longer cycle on and off 
Medicaid and experience disruptions to their continuity of care.
    We propose to amend Sec.  435.831(g) to permit States to project 
certain additional services that the State can determine with 
reasonable certainty will be constant and predictable. Similar to the 
explanation provided for institutional expenses in the preamble to the 
1994 rule, the projection of expenses for noninstitutional services is 
limited to those that are reasonably certain to be received by the 
individual, since only the amounts for which the individual is 
ultimately liable can be used to reduce income. Like the reconciliation 
process required for projected institutional expenses, under the 
proposed revisions to Sec.  435.831(g), States will have to reconcile 
actual noninstitutional services received with those projected at the 
end of budget periods to address erroneous grants of spenddown-related 
eligibility. Note that this proposal does not change the requirement 
that a State continue to apply any eligible expenses actually incurred 
by the individual in determining whether individuals have met the spend 
down amount, regardless of whether the expense was projected.
    We propose to include in the regulatory language examples of 
specific types of expenses that we believe meet this standard, while 
providing additional flexibility for States to identify additional 
expenses that meet the criteria of being constant and predictable. 
Specifically, we propose to allow projection of medical or remedial 
expenses for the HCBS that are included in a plan of care (care plan) 
for an individual receiving a section 1915(i), 1915(j), or 1915(k) 
benefit or participating in a section 1915(c) HCBS waiver. We believe 
these medical and remedial expenses are generally constant and 
predictable because States are required to develop a care plan that 
identifies the services, and the frequency with which they will be 
received, for individuals eligible for section 1915(c), (i), (j), and 
(k) services, as set forth in section 1915(c)(1), (i)(1)(E) and (G), 
(j)(1), (5)(C), and (k)(1)(A)(i) of the Act, and Sec. Sec.  
441.301(b)(1)(i), 441.468(a)(1), 441.540(b)(5), 441.720, and 441.725. 
States could reasonably calculate, and deduct, the anticipated cost, 
based on the Medicaid reimbursement rate, of the services in an 
individual's care plan. We believe this proposal would also have the 
effect of eliminating the institutional bias that is fostered by the 
existing regulation's allowance for the projection of only 
institutional expenses.
    The same may be true of individuals who have significant expenses 
related to high-cost drugs that treat a chronic condition. Pharmacies 
routinely keep a patient medication profile (``pharmacy profile'') for 
a patient, which could be used to determine which medications are for 
chronic conditions and which are for acute treatment. A State could, 
for example, use a pharmacy profile to review the 3-, 6-, or 12-month 
history of the prescriptions that an individual has been prescribed, 
and use that information to project expenses that are reasonably 
expected to be incurred in the current budget period.

[[Page 54778]]

    We recognize that the projection of institutional expenses is often 
a straightforward calculation, as it involves only one provider, with a 
fixed and easily identifiable rate. By contrast, the feasibility of 
projecting expenses for individuals receiving section 1915(c) or (i) 
services or prescriptions for chronic conditions will depend on the 
individual's specific circumstances. For example, it is possible that a 
section 1915(c) participant will not receive a service that is part of 
their care plan during a month, or that the frequency with which the 
individual receives one of the services, or multiple services, in the 
care plan varies on a periodic basis. For such HCBS beneficiaries who 
need a spenddown to qualify, it may take time before a State develops a 
reasonable degree of certainty regarding the predictable costs the 
individual incurs each month. For HCBS beneficiaries whose use of 
services in their care plan varies greatly over the course of multiple 
budget periods, a State may be unable to reasonably predict the 
individual's service costs in a forthcoming budget period. Therefore, 
we propose to expressly permit States to project the expenses of 
section 1915(c), (j), (k) and (i) services and prescription drug 
services, as well as other expenses in calculating whether an 
individual meets their spenddown, where the State has determined that 
such services are constant and predictable.
    For both the expenses for services expressly permitted under the 
examples in the proposed regulation text and for any other expenses for 
services that the agency has determined are reasonably constant and 
predictable, States would need to develop processes to evaluate the 
likelihood of an individual receiving the services in an upcoming 
budget period and the anticipated cost of the services. Discrepancies 
between a State's projections and the cost of services actually 
received inevitably will exist. Under proposed Sec.  435.831(g)(2), 
States would be required to project expenses to the end of the budget 
period with reasonable certainty. Consistent with current regulations 
at Sec.  435.831(i)(2), States would need to reconcile the projected 
amounts with the actual amounts incurred at the end of the budget 
period. Individuals who the State determines as a result of 
reconciliation did not actually meet their spenddown during the budget 
period may not have eligibility terminated retroactively. The State 
should use the findings made during reconciliation to prospectively 
determine whether the individual can be expected to incur reasonably 
constant and predictable expenses in the next budget period, and adjust 
the projection accordingly.
    We invite comment to identify any other types of services that 
individuals may receive on a constant and predictable basis, and for 
which a State could project, with a degree of relative certainty, 
consistent costs for an individual over the course of a prospective 
budget period. Such services would be considered for inclusion in the 
regulatory text in the final rule as specific examples of services that 
a State can determine with reasonable certainty to be constant and 
predictable.
    We propose to amend Sec.  435.831 to replace the current text in 
paragraph (g)(2) with the proposed State option to project 
noninstitutional expenses. Current paragraphs (g)(2) and (3) in Sec.  
435.831 will be redesignated at paragraphs (g)(3) and (4). Note that 
the proposed changes to Sec.  435.831(g) that would enable States to 
project reasonably certain noninstitutional expenses for medically 
needy individuals would also apply in projecting noninstitutional 
expenses in 209(b) States.
6. Application of Primacy of Electronic Verification and Reasonable 
Compatibility Standard for Resource Information (Sec. Sec.  435.952 and 
435.940)
    All 50 States and the District of Columbia are required to 
implement an asset verification system (AVS) under section 1940 of the 
Act to verify certain financial resources for all individuals applying 
for or receiving Medicaid as an aged, blind, or disabled (ABD) 
individual. An AVS enables States to verify assets held in virtually 
any financial institution in the United States through an electronic 
data matching process, although not all information returned through an 
AVS occurs in real time; information from smaller financial 
institutions may take as long as 30 days or more to be returned to the 
Medicaid agency. In our work with States implementing the AVS 
requirement, many States have asked whether they are permitted to 
request additional documentation from applicants and beneficiaries 
related to resources that can be verified through the State's AVS, or 
if they can apply a reasonable compatibility standard for resources 
when resource information returned from an electronic data source is 
comparable to the information provided by the applicant or beneficiary.
    The current regulation at Sec.  435.952(b) provides that, if 
information provided by or on behalf of an individual is ``reasonably 
compatible'' with information obtained by the State in accordance with 
Sec. Sec.  435.948, 435.949 or 435.956, that the State must determine 
or renew eligibility based on such information. Current Sec.  
435.952(c) provides that an individual must not be required to provide 
additional information or documentation unless information needed by 
the State in accordance with Sec. Sec.  435.948, 435.949 or 435.956 
cannot be obtained electronically or the information obtained 
electronically is not reasonably compatible with information provided 
by or on behalf of the individual. Section 435.952(c)(1) provides that 
States must consider income information obtained through an electronic 
data match to be reasonably compatible with attested income information 
if either both are above or both are at or below the applicable income 
standard or other relevant income threshold. Current Sec.  
435.952(c)(2) requires the agency to seek additional information, which 
may include documentation, if attested information is not reasonably 
compatible with information obtained through an electronic data match. 
However, documentation from the individual is permitted only to the 
extent electronic data are not available and establishing a data match 
would not be effective. In determining effectiveness, States must 
consider such factors as the administrative costs associated with 
establishing and using the data match compared with the administrative 
costs associated with relying on paper documentation, and the impact on 
program integrity in terms of the potential for ineligible individuals 
to be approved, as well as for eligible individuals to be denied 
coverage. We seek comment from States on potential implementation 
challenges, including any systems integration considerations or 
challenges, under this proposal which could impact the effectiveness 
and usefulness of such a data match.
    The language of Sec.  435.952 is written broadly to encompass all 
factors of eligibility, including income and resource criteria, when 
applicable. However, at the time Sec.  435.952 was promulgated in the 
2012 eligibility final rule, no State had implemented the AVS 
requirement and Federal requirements relating to verification of 
resources were not included in the regulations. Because Sec.  
435.952(b) and (c) apply specifically to information needed by the 
State to verify an individual's eligibility in accordance with 
Sec. Sec.  435.948 (relating to income), 435.949 (relating to 
information received through the

[[Page 54779]]

Federal Data Services Hub), or 435.956 (relating to non-financial 
eligibility requirements), some have interpreted this requirement not 
to apply to verification of resources. This interpretation is not 
consistent with our intent. The language in Sec.  435.952 is not 
specific to income. Indeed, the reasonable compatibility policies 
described in Sec.  435.952(b) and (c) also apply to verification of 
non-financial eligibility criteria, for example, State residency which 
can also be verified electronically (for example, through a data match 
with the State's department of motor vehicles). Applying Sec. Sec.  
435.952(b) and (c) to resources will help streamline enrollment for 
individuals applying for Medicaid on a non-MAGI basis, such as on the 
basis of age, blindness, or disability, and decrease burden for both 
States and beneficiaries. If attested resource information is found to 
be reasonably compatible with the resource information returned from 
the AVS, then these resources are considered verified and no further 
actions from the State or from the beneficiary are needed. Therefore, 
we propose to revise paragraphs (b) and (c) of Sec.  435.952 to clarify 
that these provisions apply also to verification of resources. 
Specifically, we propose to make clear that paragraphs (b) and (c) 
apply to any information obtained by the State--not just information 
obtained in accordance with Sec.  435.948, 435.949 or 435.956. We also 
propose to insert the words ``and resource'' after ``income'' in 
paragraph (c)(1) and to delete the word ``income'' where it appears 
before ``standard'' and ``threshold'' to require that States consider 
resource information obtained through an electronic data match to be 
reasonably compatible with attested resource information if both are 
either above or at or below the applicable standard or other relevant 
threshold.
    This proposal is intended to clarify that States are not permitted 
to request additional resource information from the beneficiary to 
determine eligibility if the resource information provided by an 
individual is reasonably compatible with the information received from 
an electronic data source, such as the AVS. If information provided by 
an individual is not reasonably compatible with the information 
received from the electronic data source, States must resolve any 
discrepancies per Sec.  435.952(c)(2), which is not revised in this 
rulemaking.
    Under the proposed regulations, resource information obtained from 
an electronic data source, such as an AVS, must be considered 
reasonably compatible with resource information provided by the 
applicant or beneficiary if both are either above or at or below the 
applicable resource standard or other applicable resource threshold. 
Further, while not required, States could establish a reasonable 
compatibility threshold, such that electronic data would be considered 
reasonably compatible with attested resources if the electronic data is 
no higher than attested resources plus the State's elected threshold 
amount (expressed as either a percentage or dollar amount). Some 
States, for example, apply a reasonable compatibility threshold of 5 or 
10 percent of attested income in verifying income eligibility. States 
would not be required to establish the same reasonable compatibility 
threshold for income and resources, and may apply different reasonable 
compatibility thresholds for different eligibility groups, provided 
that the State has a reasonable rationale for doing so.
    We also propose a corresponding technical change to amend Sec.  
435.940 to add section 1940 of the Act as a basis for the income and 
eligibility verification requirements. The proposed changes to Sec.  
435.952 in this rulemaking include resource information obtained from 
electronic data sources, such as an asset verification program 
described under section 1940 of the Act.
7. Verification of Citizenship and Identity (Sec.  435.407)
    In 2016, we revised the Medicaid and CHIP regulations governing the 
verification of citizenship and identity to require States to rely 
primarily on electronic verification to effectuate the streamlined and 
coordinated approach required by the ACA to reduce burden on 
individuals and increase administrative efficiency. These regulatory 
changes were issued by CMS in a November 2016 final rule titled, 
``Medicaid and Children's Health Insurance Programs: Eligibility 
Notices, Fair Hearing and Appeal Processes for Medicaid and Other 
Provisions Related to Eligibility and Enrollment for Medicaid and 
CHIP'' (81 FR 86453, November 30, 2016) (referred to hereafter as the 
``2016 eligibility and enrollment final rule''). Under the regulations, 
all States must first attempt to verify citizenship electronically 
using data from the SSA, and most States rely on a match through the 
Federal Data Services Hub (FDSH) for this data. In that final rule, we 
also streamlined and simplified the list of documents and other 
acceptable means of verification that can be used when citizenship 
cannot be verified electronically with SSA. One such alternative source 
of citizenship verifications, codified at Sec.  435.407(b), is a data 
match with the State's (or another State's) vital statistics system. We 
explained in the preamble to the 2016 eligibility and enrollment final 
rule that if citizenship verification cannot be completed through an 
electronic data match with SSA, the State must attempt to verify 
citizenship through an electronic data match with the State's (or 
another State's) vital statistics system, before requesting paper 
documentation from the individual, if such match is available within 
the meaning at Sec.  435.952(c)(2)(ii).
    Under current regulation, individuals whose citizenship is verified 
based on any of the sources identified in Sec.  435.407(b)--which 
includes, under the current regulations, a match with a State's vital 
statistics records or with the U.S. Department of Homeland Security 
(DHS) Systematic Alien Verification for Entitlements (SAVE) Program--
must also provide proof of identity. The documentary evidence 
identified in section 1903(x)(3)(B) of the Act, codified through the 
2016 eligibility and enrollment final rule at Sec.  435.407(a), in 
contrast, provides ``stand-alone'' proof of citizenship; separate proof 
of identity is not required. Section 1903(x)(3)(B)(vi) of the Act 
authorizes the Secretary to specify that other documents in addition to 
those specified in the statute, must be accepted as stand-alone 
satisfactory documentation of citizenship if they determine that such 
documents provide both proof of United States citizenship or 
nationality, as well as reliable documentation of personal identity. As 
explained below, verification with a State's vital statistics records 
or SAVE, like the data match with SSA, which provides both proof of 
U.S. citizenship or nationality and reliable documentation of personal 
identity, meets this standard.
    In this rule, we are proposing to further simplify the verification 
procedures by moving verification of citizenship with a State vital 
statistics agency or SAVE from paragraph (b) to paragraph (a) of Sec.  
435.407 for Medicaid, which is incorporated into CHIP regulations 
through existing cross-references at Sec. Sec.  457.380(b)(1)(i) and 
435.956(a). This change would mean that verification of birth with a 
State vital statistics agency or verification of citizenship with SAVE 
would be considered stand-alone evidence of citizenship; separate 
verification of identity would not be required, similar to the 
treatment afforded to verification of citizenship with SSA. This 
proposed change would reduce burden on

[[Page 54780]]

individuals and State Medicaid agencies and increase administrative 
efficiency.
    Turning first to citizens whose status can be verified with DHS' 
SAVE Program, SAVE can provide electronic verification of U.S. 
citizenship for individuals who have a DHS record of naturalized or 
derived citizenship, usually documented with a Certificate of 
Naturalization or Certificate of Citizenship. Any SAVE program 
requestor (for example, the Medicaid or CHIP agency or other benefit 
granting or licensing agency) that requests verification of U.S. 
citizenship or immigration status through the SAVE program must provide 
the SAVE program with the individual's biographic information (first 
name, last name, and date of birth) and a personalized numeric 
identifier (such as an Alien Number; Form I-94, Arrival/Departure 
Record Number; Student and Exchange Visitor Information System (SEVIS) 
ID number; or unexpired foreign passport number) unique to that 
individual. DHS verifies identity prior to providing a SAVE program 
response verifying citizenship or immigration status, reviewing 
multiple records and in some cases requiring additional information 
from the requestor. If an individual's immigration status is confirmed 
by SAVE, the State's verification of immigration status is complete 
under current regulations, whereas separate proof of identity is 
required if SAVE confirms the individual's citizenship. Because the 
process followed by SAVE is identical, we do not believe that the extra 
step required for citizens is justified. Therefore, we propose 
revisions to Sec.  435.407 to provide for comparable processes for 
individuals whose status is verified by SAVE, regardless of whether 
they are a citizen or non-citizen. Specifically, we propose to remove 
verification of citizenship with SAVE currently at Sec.  435.407(b)(11) 
(which requires separate proof of identify) and to add such 
verification at proposed Sec.  435.407(a)(8) (which would not require 
separate proof of identity) for Medicaid, which is incorporated into 
CHIP regulations through existing cross-references at Sec. Sec.  
457.380(b)(1)(i) and 435.956(a).
    Verification of U.S. citizenship with a State vital statistics 
agency provides a similarly robust data matching process because a 
State Medicaid or CHIP agency must provide the State vital statistics 
agency with a minimum set of identifiable information including the 
name, date of birth, and Social Security Number (SSN). Some States also 
use additional identifiers if they are available, such as the 
individual's birth county, the parents' names or the mother's maiden 
name. Based on State feedback, CMS understands that the process and 
data fields used to verify citizenship with a State vital statistics 
agency are similar across States. Conducting a data match with specific 
identifiers like date of birth and SSN is the same process that could 
be used to provide evidence of identity, thereby making a requirement 
to separately verify identity redundant. Therefore, we propose 
revisions to Sec.  435.407 under which verification of citizenship with 
a State vital statistics agency would serve as stand-alone proof of 
U.S. citizenship and no separate proof of identify would be required. 
Specifically, we propose to remove verification of citizenship with a 
State vital statistic's agency currently at Sec.  435.407(b)(2) (which 
requires separate proof of identify) and to add such verification at 
proposed Sec.  435.407(a)(7) (which would not require separate proof of 
identity) for Medicaid, which is incorporated into CHIP regulations 
through an existing cross-references at Sec. Sec.  457.380(b)(1)(i) and 
435.956(a). However, we recognize that different State Medicaid and 
CHIP agencies and vital statistics agencies may employ different 
processes and seek comment on what processes Medicaid and CHIP agencies 
use to verify citizenship with a State vital statistics agency, 
including what information and identifiers are used to complete 
verification, whether the data matching process with all State vital 
statistics agencies is sufficiently robust to appropriately apply this 
proposed change in policy to verification of citizenship in all States, 
or limit this change in policy only to States in which the vital 
statistic agency's processes are comparable to those of the SAVE 
program.
    We note that, if citizenship cannot be verified through an 
electronic match with SSA, States are required to verify citizenship 
using an electronic match prior to requesting other forms of 
documentation, if such match is available and effective in accordance 
with Sec.  435.952(c)(2)(ii). Inasmuch as State vital statistics 
agencies generally can provide electronic data matching, we are also 
proposing to delete the words ``at State option,'' which are included 
in existing Sec.  435.407(b)(2), from proposed Sec.  435.407(a)(7) for 
Medicaid, which is incorporated into CHIP regulations through an 
existing cross-reference at Sec.  457.380(b)(1)(i) to Sec.  435.956(a). 
Use of such match with a vital statistics agency is not voluntary if it 
is available and effective in accordance with Sec.  435.952(c)(2)(ii). 
This proposed revision does not necessarily require a State to develop 
a match with its vital statistics agency. However, States that do not 
currently perform such electronic matches must develop that capacity if 
such match is available and would be effective in accordance with the 
standard set forth in Sec.  435.952(c)(2)(ii). If a State already has 
established a match with a State vital statistics agency or it would be 
effective to establish such capability in accordance with the standard 
set forth in Sec.  435.952(c)(2)(ii), the State must utilize such match 
before requesting paper documentation.

B. Promoting Enrollment and Retention of Eligible Individuals

1. Aligning Non-MAGI Enrollment and Renewal Requirements With MAGI 
Policies (Sec. Sec.  435.907 and 435.916)
    The 2012 and 2013 eligibility final rules established a number of 
eligibility and enrollment simplifications for MAGI-based Medicaid and 
CHIP beneficiaries. Among these were streamlined processes that made it 
easier for eligible individuals to apply and remain enrolled in 
Medicaid and CHIP. However, beneficiary advocates raised concerns that 
these simplifications have not been afforded to Medicaid beneficiaries 
excepted from use of MAGI-based methodologies, which is particularly 
problematic given that individuals over age 65 and those who are 
eligible based on blindness or a disability are likely to have more 
stable eligibility. Therefore, in this proposed rule, we propose 
changes to both the application and renewal requirements for MAGI-
excepted applicants and beneficiaries to align with the requirements 
for populations based on MAGI.
    Beginning with the application process, individuals must be 
permitted to submit the single streamlined application developed by the 
Secretary, or an alternative single streamlined application described 
at Sec.  435.907(a)(2) of the current regulations, through all 
modalities specified at Sec.  435.907(a) (online, by telephone, by 
mail, or in person). Although not expressly stated in the regulations, 
States also are expected to accept applications and supplemental forms 
needed for individuals to apply for coverage on a non-MAGI basis via 
all modalities identified in Sec.  435.907(a). In addition, Sec.  
435.907(d) prohibits States from requiring an in-person interview as 
part of the application process, when determining eligibility based on 
MAGI, whereas States are still permitted to

[[Page 54781]]

require an in-person interview for MAGI-excepted applicants.
    At renewal, current Sec.  435.916(a) requires States to conduct 
renewals of Medicaid eligibility on an annual basis for individuals 
whose financial eligibility is determined using MAGI-based 
methodologies. However, for individuals excepted from use of the MAGI-
based methodologies, Sec.  435.916(b) of the current regulations 
permits States to conduct regularly-scheduled renewals more frequently 
(for example, every 6 months). States must renew eligibility for all 
Medicaid beneficiaries without requiring information from the 
individual if able to do so consistent with regulations at Sec. Sec.  
435.916(a)(2) and (b). However, when a beneficiary's eligibility cannot 
be renewed based on available information, States must follow a set of 
streamlined procedures for MAGI-based beneficiaries, which are not 
required for those excepted from MAGI. The procedures for requesting 
information from MAGI-based beneficiaries are described at Sec.  
435.916(a)(3) of the current regulations and include: (1) using a pre-
populated renewal form; (2) providing the individual a minimum of 30 
calendar days to sign and return the form along with any requested 
information; and (3) reconsidering eligibility for an individual 
terminated for failure to return the renewal form or other needed 
information if the form or other information is returned within 90 
calendar days after the date of termination. The procedures for 
requesting information from MAGI-based beneficiaries are described at 
Sec.  435.916(a)(3) of the current regulations and include: (1) using a 
pre-populated renewal form; (2) providing the individual a minimum of 
30 calendar days to sign and return the form along with any requested 
information; and (3) reconsidering eligibility for an individual 
terminated for failure to return the renewal form or other needed 
information if the form or other information is returned within 90 
calendar days after the date of termination. In addition, States may 
not require a MAGI beneficiary to complete an in-person interview as 
part of the renewal process under Sec.  435.916(a)(3)(iv) of the 
current regulations. States may, but are not required to, adopt the 
procedures at Sec.  435.916(a)(3) for individuals whose eligibility is 
determined on a basis other than MAGI, per Sec.  435.916(b) of the 
current regulations.
    While almost all States adopt at least one of the optional 
processes for renewals of non-MAGI beneficiaries,\50\ the differences 
in renewal requirements for MAGI and non-MAGI beneficiaries result in a 
less streamlined and more burdensome process for beneficiaries who 
qualify for Medicaid on a non-MAGI basis, such as being age 65 or older 
or having blindness or a disability. As a result of these differences, 
individuals who are Medicaid eligible on one of these bases may be 
required to spend more time completing renewal paperwork if their 
renewal form is not prepopulated. They may be provided less time to 
return their renewal form and requested information, even if the 
individual must provide information related to additional factors of 
eligibility associated with non-MAGI eligibility groups as compared to 
MAGI eligibility groups, such as asset information.
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    \50\ Kaiser Family Foundation (2019). Medicaid financial 
eligibility for seniors and people with disabilities: Findings from 
a 50-State survey, p. 19-20. https://www.kff.org/report-section/medicaid-financial-eligibility-for-seniors-and-people-with-disabilities-findings-from-a-50-state-survey-issue-brief/.
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    CMS finds this to be problematic for several reasons. First, 
individuals who are Medicaid eligible based on being age 65 or older or 
having blindness or a disability are more likely to live on a fixed 
income and, therefore, are more likely to remain financially eligible 
for coverage than the non-disabled beneficiaries under age 65 who 
qualify for Medicaid based on MAGI.\51\ We are concerned that, despite 
the generally greater stability of their income, and therefore, 
eligibility, a larger proportion of non-MAGI beneficiaries who lose 
coverage do so for procedural reasons. Indeed, as noted in section 
II.A.1. of this proposed rule, dually eligible for Medicaid and 
Medicare who lose Medicaid coverage within the first year of enrollment 
likely lose such coverage for reasons that are administrative in 
nature.\52\ Also, individuals who are Medicaid eligible based on being 
age 65 or older or having blindness or disability status may experience 
additional barriers related to document retention, communication (for 
example, limited English proficiency and low health literacy), 
technology (for example, printing costs, access to a computer or 
internet) and limited access to transportation, among others. Processes 
that provide greater flexibility, such as reduced documentation 
requests and more time for returning information, can reduce these 
barriers.53 54 As a result, we believe that when States do 
not use available streamlined renewal procedures for this population, 
there is a greater risk of terminations for procedural reasons.
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    \51\ Ku, L. & Steinmetz, E. (2013). Bridging the Gap: Continuity 
and Quality of Coverage in Medicaid. https://ccf.georgetown.edu/wp-content/uploads/2013/09/GW-Continuity-Report-9-10-13.pdf; Office of 
the Assistant Secretary for Planning and Evaluation, U.S. Department 
of Health and Human Services (2021). Medicaid Churning and 
Continuity of Care: Evidence and Policy Considerations Before and 
After the COVID-19 Pandemic. https://aspe.hhs.gov/sites/default/files/private/pdf/265366/medicaid-churning-ib.pdf.
    \52\ Assistant Secretary for Planning and Evaluation (2019). 
Loss of Medicare-Medicaid dual eligible status: Frequency, 
contributing factors and implications. https://aspe.hhs.gov/system/files/pdf/261716/DualLoss.pdf. CMS also recently completed an 
updated internal analysis of ASPE's study using data from 2015-2018 
that shows that dually eligible individuals continue to lose 
Medicaid at a high rate in their first year due to administrative 
reasons.
    \53\ CMS Office of Burden Reduction & Health Informatics (April 
2022). Navigating the Medicare Savings Program (MSP) Eligibility 
Experience. https://www.cms.gov/files/document/navigating-medicare-savings-program-msp-eligibility-experience-journey-map.pdf.
    \54\ CMS Office of Burden Reduction & Health Informatics (April 
2022). Navigating the Medicare Savings Program (MSP) Eligibility 
Experience. https://www.cms.gov/files/document/navigating-medicare-savings-program-msp-eligibility-experience-journey-map.pdf.
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    Using the authority provided in sections 1902(a)(4)(A) and (a)(19) 
of the Act to ensure the proper and efficient administration of the 
program and that eligibility is determined in a manner consistent with 
simplicity of administration and best interests of beneficiaries, we 
propose to revise current renewal regulations at Sec.  435.916 to 
require States to apply the same renewal procedures for MAGI and non-
MAGI beneficiaries. Specifically, we propose, by removing the reference 
in Sec.  435.916(a)(1) to MAGI beneficiaries, to require that States 
conduct regularly-scheduled renewals of eligibility once, and only 
once, every 12 months for all Medicaid beneficiaries, including non-
MAGI beneficiaries with limited exception, discussed below. We believe 
aligning the frequency of renewals for non-MAGI beneficiaries with the 
current requirement for MAGI beneficiaries is appropriate given that 
circumstances related to eligibility are generally more stable for non-
MAGI beneficiaries and will reduce beneficiary burden, consistent with 
sections 1902(a)(4) and (a)(19) of the Act. In addition, we believe 
this proposal promotes equity across enrolled populations since non-
MAGI beneficiaries, whose income tends to be more stable, would no 
longer be subject to more frequent requests to return renewal forms or 
provide documentation to verify continued eligibility than other 
beneficiaries. We also note that over 40 States currently conduct 
renewals only once every 12 months for all Medicaid beneficiaries.

[[Page 54782]]

    We seek comment on this proposal at Sec.  435.916(a)(1) to align 
the frequency of renewals for all beneficiaries, except as noted below. 
We are particularly interested in comments from State agencies on the 
administrative impact of conducting eligibility only once every 12 
months for non-MAGI beneficiaries and whether or not State agencies 
that currently conduct renewals only once every 12 months for all 
Medicaid beneficiaries have experienced more stable coverage among non-
MAGI beneficiaries or any program integrity concerns after shifting 
from a shorter renewal cycle to a 12-month renewal cycle. We are also 
interested in data regarding coverage losses among non-MAGI 
beneficiaries due to procedural reasons, such as failure to return 
renewal paperwork timely, versus changes to specific factors of 
eligibility, such as income or disability status. We are also 
interested in hearing from stakeholders and beneficiaries on the impact 
of more frequent renewals on maintaining coverage.
    Section 1902(e)(8) of the Act provides an option for States to 
renew eligibility for QMBs described in section 1905(p)(1) of the Act 
more frequently than once every 12 months, but no more frequently than 
once every 6 months. Thus, we cannot, propose to limit renewals for 
QMBs to once every 12 months, and proposed Sec.  435.916(a)(2) 
continues to allow States to conduct more frequent renewals of Medicaid 
eligibility for QMBs consistent with section 1902(e)(8) of the Act. 
However, States are permitted under current regulations at Sec.  
435.916(b) to conduct renewals once every 12 months for QMBs and would 
remain able to do so under proposed Sec.  435.916(a)(2). We encourage 
States to exercise their flexibility to schedule renewals only once 
every 12 months for QMBs to mitigate churn and ease administrative 
burden on beneficiaries and States that is associated with more 
frequent renewals of eligibility.
    Proposed Sec.  435.916(b)(3) also requires States to adopt the 
renewal processes at Sec.  435.916(a)(3) of the regulations, as revised 
at redesignated Sec.  435.916(b)(2), for non-MAGI beneficiaries when a 
State is unable to renew eligibility for an individual based on 
information available to the agency. Proposed Sec.  435.916(b)(2) and 
(3) would require States to provide all beneficiaries, including non-
MAGI beneficiaries, whose eligibility cannot be renewed in accordance 
with proposed Sec.  435.916(b)(1): (1) a renewal form that is pre-
populated with information available to the agency; (2) a minimum of 30 
calendar days to return the signed renewal form along with any required 
information; and (3) a 90-day reconsideration period for individuals 
terminated for failure to return their renewal form but who 
subsequently return their form within the reconsideration period. We 
believe aligning these renewal procedures would promote continuity of 
coverage and simplify the renewal process for non-MAGI beneficiaries in 
a manner that is in the best interest of beneficiaries, consistent with 
section 1902(a)(19) of the Act, including those in households with 
individuals enrolled on both a MAGI and non-MAGI basis who otherwise 
may be subject to more burdensome administrative requirements at 
renewal. In addition, we believe States will also experience reduced 
administrative burden associated with churn if individuals face fewer 
administrative barriers to maintaining coverage.
    We also propose to eliminate the option States have under current 
regulations at Sec. Sec.  435.907(d) and 435.916(b) to require an in-
person interview as part of the application and renewal process for 
non-MAGI beneficiaries. Stakeholder feedback on the beneficiary 
experience navigating State application and renewal processes indicate 
that it can be challenging for individuals who are Medicaid eligible 
based on being age 65 or older or having blindness or a disability 
status to coordinate, prepare for, and participate in an interview and 
missing and/or having to reschedule an interview, particularly when the 
process is not flexible for the individual, can result in 
determinations of ineligibility and/or terminations based on procedural 
reasons.\55\ We believe in-person interview requirements create a 
barrier for eligible individuals to obtain and maintain coverage 
without yielding any additional information than can be obtained 
through other modalities, particularly for individuals without access 
to reliable transportation or a consistent schedule.
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    \55\ CMS Office of Burden Reduction & Health Informatics (April 
2022). Navigating the Medicare Savings Program (MSP) Eligibility 
Experience. https://www.cms.gov/files/document/navigating-medicare-savings-program-msp-eligibility-experience-journey-map.pdf.
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    In addition to eliminating the option to require an in-person 
interview, we propose to codify longstanding policy to align enrollment 
requirements in the best interest of all applicants. Proposed Sec.  
435.907(c)(4) codifies longstanding policy that States accept all MAGI-
exempt applications and supplemental forms provided by applicants 
seeking coverage on a non-MAGI basis, through all the modalities listed 
in current regulations at Sec.  435.907(a). Eliminating the in-person 
interview requirement and codifying the requirements for accepting 
MAGI-exempt applications and supplemental forms through all modalities 
would further align eligibility and enrollment procedures for MAGI and 
non-MAGI applicants and beneficiaries and reduce applicant and 
beneficiary burden, consistent with sections 1902(a)(4) and (a)(19) of 
the Act.
    We propose removing the introductory language at the current Sec.  
435.916(b) related to the frequency of and process for renewals of 
eligibility for non-MAGI beneficiaries. We propose redesignating 
current regulations at Sec.  435.916(b)(1) and (2) (related to the 
agency's option to consider blindness and disability as continuing at 
renewal) at proposed Sec.  435.916(b)(3)(i) and (ii).
    In addition to the policy changes proposed to align application and 
renewal processes for MAGI and non-MAGI populations whenever possible, 
we propose several additional changes to current Sec.  435.916 to 
ensure that the renewal requirements are clear and consistent. We 
propose to redesignate current regulations at Sec.  435.916(a)(2) 
(related to renewals based on information available to the agency) and 
Sec.  435.916(a)(3) (related to renewals that require information from 
beneficiaries) to Sec.  435.916(b)(1) and (b)(2), respectively. States 
will continue to be required to attempt to renew eligibility for all 
Medicaid beneficiaries (MAGI and non-MAGI) based on available 
information before requesting information from the individual, as 
required at current Sec.  435.916(a)(2) and (b), and to send a renewal 
form to, and request information from, beneficiaries for whom the State 
does not have sufficient information to redetermine eligibility, and 
accept the renewal form through all modalities required at application 
at Sec.  435.907(a). (online, by telephone, by mail, or in person). We 
propose to modify the header in proposed Sec.  435.916(b)(2) from ``use 
of a pre-populated renewal form'' to ``renewals requiring information 
from the individual'' since the current regulations describe the steps 
States must take when conducting renewals that require information from 
the individual, which includes, but is not limited to, the use of pre-
populated renewal forms.
    At Sec.  435.916, we also propose to revise current paragraph 
(a)(3)(i)(B), redesignated at proposed paragraph (b)(2)(i)(B), to 
clarify that the 30 calendar days that States must provide 
beneficiaries to return their pre-

[[Page 54783]]

populated renewal form begins on the date the State sends the form. 
This would mean that beneficiaries have 30 calendar days from the date 
a form is postmarked or, for beneficiaries who elected to receive 
electronic notices, the date the electronic is sent. We believe 
starting the 30-day period from the date the State sends the form, 
instead of the date on the form, will ensure beneficiaries do not lose 
time to respond if the form is postmarked or sent after it is dated.
    We propose clarifying revisions to current Sec.  
435.916(a)(3)(i)(B) (related to renewal form signatures), redesignated 
at proposed Sec.  435.916(b)(2)(i)(B), by including a technical change 
to explicitly state that beneficiaries must sign their pre-populated 
renewal form under penalty of perjury; current regulations at Sec.  
435.916(a)(3)(i)(B) includes this requirement only by cross reference 
to Sec.  435.907(f).
    We propose to revise current Sec.  435.916(a)(3)(iii) (related to 
timely processing of renewal forms and information returned during the 
reconsideration period), redesignated at proposed Sec.  
435.916(b)(2)(iii), to specify explicitly in regulation our current 
policy that the returned renewal form and information received during 
the reconsideration period serve as an application and require, via 
cross reference to Sec.  435.912(c)(3) of the current regulation, that 
States determine eligibility within the same timeliness standards 
applicable to processing applications, that is, 90 calendar days for 
renewals based on disability status and 45 calendar days for all other 
renewals. Treatment of renewal forms returned during the 90-day 
reconsideration period as an application means that the availability of 
retroactive eligibility at Sec.  435.915 can close the gap in coverage 
that such beneficiaries otherwise would experience. Adherence to the 
timeliness standards applicable to applications will ensure eligible 
individuals are furnished coverage with reasonable promptness, 
consistent with sections 1902(a)(4) and 1902(a)(8) of the Act and will 
minimize the likelihood that individuals will forgo needed care. As 
revised, proposed Sec.  435.916(a)(3)(iii) is also consistent with 
guidance described in the December 4, 2020, CMCS Informational Bulletin 
``Medicaid and Children's Health Insurance Program (CHIP) Renewal 
Requirements'' (2020 Renewal CIB) that a renewal form returned within 
the reconsideration period serves as an application for the purposes of 
adherence to timeliness standards to make determinations of 
eligibility.56 57
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    \57\ CMCS Informational Bulletin: Medicaid and Children's Health 
Insurance Program (CHIP) Renewal Requirements (2020). Available at 
https://www.medicaid.gov/federal-policy-guidance/downloads/cib120420.pdf.
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    We propose to redesignate and revise current regulations at Sec.  
435.916(c) and (d), related to redeterminations based on changes in 
circumstances, at the new proposed Sec.  435.919. Proposed revisions to 
these regulations are discussed in section II.B.2. of this proposed 
rule.
    With the redesignation of current Sec.  435.916(c) and (d) to 
proposed Sec.  435.919, we also propose to redesignate current Sec.  
435.916(e) (related to requesting only information from beneficiaries 
needed to renew eligibility) at proposed Sec.  435.916(b)(2)(v). We 
propose to redesignate current Sec.  435.916(f) (related to determining 
eligibility on all bases and transmission of data pertaining to 
individuals no longer eligible for Medicaid) and Sec.  435.916(g) 
(relating to accessibility of renewal forms and notices) to proposed 
Sec.  435.916(d) and (e), respectively. Additionally, we modify current 
Sec.  435.916(f)(2), redesignated at Sec.  435.916(d)(2) in this 
proposed rule, to ensure that, prior to terminating coverage for an 
individual determined ineligible for Medicaid, States determine 
eligibility for CHIP and potential eligibility for other insurance 
affordability programs (that is, BHP and insurance affordability 
programs available through the Exchanges) and transfer the individual's 
account in compliance with the procedures set forth in Sec.  
435.1200(e), including proposed changes described in section II.B.5. of 
this proposed rule. We believe requiring that these actions be 
completed prior to termination is necessary to limit gaps in coverage 
for individuals transitioning between Medicaid and other insurance 
affordability programs, consistent with sections 1902(a)(4) and 
1902(a)(19) of the Act. We add a paragraph heading at proposed Sec.  
435.916(e) to format the provision consistent with other provisions in 
Sec.  435.916.
    Finally, as discussed in section II.B.3. of this proposed rule, we 
propose to establish time standards for States to complete renewals of 
eligibility in proposed Sec.  435.912(c)(4) and add a cross reference 
to these proposed time standards in proposed Sec.  435.916(c).
2. Acting on Changes in Circumstances Timeframes and Protections 
(Sec. Sec.  435.916, 435.919, and 457.344)
    Section 1902(a)(10) of the Act authorizes States to make medical 
assistance available under the State plan to individuals who meet 
certain eligibility criteria. Once an applicant has been determined 
eligible for coverage, Federal regulations include two basic 
requirements to ensure that individuals receiving medical assistance 
continue to be eligible. First, as described in section II.B.1. of this 
proposed rule, States are required to conduct regular renewals of 
eligibility per Sec.  435.916(a) and (b) of the current regulations. 
Second, per Sec.  435.916(c) and (d) of the current regulations, States 
must have a process to obtain information about changes in 
circumstances that may impact a beneficiary's eligibility and 
redetermine eligibility in between regular renewals when appropriate.
    Current regulations at Sec.  435.916(c) require that States have 
procedures designed to ensure that beneficiaries make timely and 
accurate reports of any changes in circumstances that may affect their 
eligibility and that such changes may be reported through any of the 
modes for submission of applications described in Sec.  435.907(a). 
Current regulations at Sec.  435.916(d) specify that the agency must 
promptly redetermine eligibility between regular renewals of 
eligibility whenever it receives information about a change in 
beneficiary circumstances that may affect eligibility, such as a change 
in income or the death of a beneficiary. The regulation does not define 
``promptly.''
    We are concerned that a number of States are not taking appropriate 
steps to follow up on reported or detected changes in beneficiaries' 
circumstances within a reasonable period of time or in a manner that 
promotes continuity of coverage for eligible beneficiaries. There is a 
potential risk to beneficiaries if a State delays processing a change 
in circumstances that may entitle a beneficiary to additional 
assistance or lower premiums or cost-sharing, as well as risk that 
beneficiaries may lose coverage for procedural reasons if States do 
follow up with a beneficiary to request additional information but do 
not provide sufficient time for the beneficiary to respond. Moreover, 
recent U.S. Department of Health and Human Services (HHS) Office of 
Inspector General (OIG) reports, as well as CMS audits and data 
analyses have cited cases in which States continued to provide coverage 
for many months after a change impacting eligibility was identified 
that should have prompted a redetermination based on a change in 
circumstances and other instances in which States continued to make

[[Page 54784]]

capitated payments to managed care plans for deceased 
beneficiaries.\58\
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    \58\ https://www.lla.la.gov/PublicReports.nsf/
1CDD30D9C8286082862583400065E5F6/$FILE/0001ABC3.pdf and https://oig.hhs.gov/oas/reports/region7/71604228.pdf; https://oig.hhs.gov/oas/reports/region5/51800026.pdf; https://oig.hhs.gov/oas/reports/region4/41806220.pdf; and https://oig.hhs.gov/oas/reports/region5/51700008.pdf.
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    Consistent with section 1902(a)(4) of the Act, to promote the 
proper and efficient administration of the Medicaid program, we propose 
to add a new Sec.  435.919 to clearly define the responsibilities 
States have to act on changes in circumstances. We propose to revise 
and redesignate Sec.  435.916(c) of the current regulations (related to 
procedures for reporting changes) to new Sec.  435.919(a). We propose 
to revise and redesignate current Sec.  435.916(d) (related to promptly 
acting on changes in circumstances) to proposed Sec.  435.919(b) and 
(c).
    Proposed Sec.  435.919(a)(1) would specify that States must have 
procedures for beneficiaries to make timely and accurate reports of 
changes in circumstances that may affect eligibility. Proposed Sec.  
435.919(a)(2) specifies that States must accept both reported changes 
in circumstances that may affect eligibility and any other beneficiary 
reported information through the same modes for submission of 
application at Sec.  435.907(a). We believe this is an important update 
that would ensure that beneficiaries can easily report information that 
supports continued enrollment in Medicaid, such as updating contact 
information or reporting an in-state address change, even if the 
information would not constitute a change in circumstances that affects 
eligibility.
    Proposed Sec.  435.919(b)(1) describes the steps that we believe 
States should be required to take in processing changes in 
circumstances reported by a beneficiary in between renewals of 
eligibility. Under the proposed regulation, States must first evaluate 
whether the reported change may result in ineligibility for Medicaid or 
a change in the amount of medical assistance for which the beneficiary 
is eligible (for example, a change in benefits or higher or lower 
premiums or cost sharing charges). If additional information is needed 
to determine whether the beneficiary remains eligible, the agency must 
redetermine eligibility based on available information, if able to do 
so, and if the additional information is not available to the agency, 
request such information from the beneficiary. When the agency requests 
information from the beneficiary to determine whether a change in 
circumstances results in coverage that is more beneficial to the 
individual (for example, additional benefits or lower premiums or cost 
sharing charges), the agency may not take adverse action if the 
beneficiary does not respond. In this situation, the agency would not 
provide the more beneficial coverage but would instead continue to 
provide the less beneficial coverage for which eligibility was already 
established. The agency must send the beneficiary written notice of 
this decision consistent with 42 CFR 435.917(b)(1), which must include 
information on the beneficiary's right to appeal their eligibility 
status or level of benefits and services approved.
    If the reported change adversely impacts the beneficiary's 
eligibility for Medicaid such that termination may be necessary, the 
State must consider whether the beneficiary may remain eligible on any 
other basis, as currently required under current regulations at Sec.  
435.916(f)(1), which is redesignated at Sec.  435.916(d)(1) in this 
proposed rule. If the beneficiary is determined to be ineligible for 
Medicaid on any basis, proposed Sec.  435.919(b)(1), cross-referencing 
to proposed Sec.  435.919(b)(4), provides that the State must provide 
advance notice of termination and fair hearing rights, consistent with 
42 CFR part 431, subpart E of the regulations. Prior to making a 
determination of ineligibility, the State also must determine potential 
eligibility for other insurance affordability programs and transfer the 
individual's account, as appropriate, consistent with existing 
regulations at Sec.  435.916(f)(2), redesignated at proposed Sec.  
435.916(d)(2). If the agency finds that the reported change results in 
other adverse action, such as higher premiums or cost sharing charges 
or a reduced benefit package, the State must provide advance notice of 
the adverse action and fair hearing rights, consistent with the 
requirements of 42 CFR part 431, subpart E. We note that, in accordance 
with 42 CFR 431.230, if the beneficiary requests a fair hearing prior 
to the date of action provided in the advance notice (for example, the 
date the individual's eligibility will be terminated), the State may 
not implement the adverse action until a fair hearing decision is 
rendered.
    If a beneficiary-reported change may result in an increase in the 
amount of assistance a beneficiary is entitled to, for example, a 
reduction in premiums or cost sharing, or additional benefit, the State 
must verify the reported information in accordance with Sec. Sec.  
435.940 through 435.960 and the State's verification plan prior to 
granting additional coverage or assistance. Such verification may 
include electronic data or other information available to the agency, 
attested information, or documentation from the beneficiary. States may 
not terminate the beneficiary's coverage or take other adverse action 
if the individual does not respond to requests for additional 
information to verify the beneficiary-reported change. If the reported 
change has no impact on eligibility or coverage, consistent with 
section 1902(a)(4) and (a)(19) of the Act, we propose at Sec.  
435.919(b)(1)(iv) that the agency must acknowledge the reported change 
by providing the beneficiary with notice acknowledging receipt of the 
information and explaining that there is no impact on eligibility or 
coverage.
    The process we are proposing for States to act on information 
obtained from a third party, such as information obtained through an 
electronic data match or from another program such as the Supplemental 
Nutrition Assistance Program (SNAP), is described at proposed Sec.  
435.919(b)(2). This process largely mirrors that described in proposed 
Sec.  435.919(b)(1), discussed above. Under proposed Sec.  
435.919(b)(2), the agency will need to evaluate the reliability of the 
information obtained and, if reliable information from a third party 
may result in an adverse action, the State must give the beneficiary an 
opportunity to provide information disputing the accuracy of the third-
party information in accordance with Sec.  435.952(d). If the 
beneficiary does not respond with the requested information or the 
information provided does not establish the beneficiary's continued 
eligibility or entitlement to the same level of assistance, the State 
must: (1) provide advance notice of termination or other adverse action 
and fair hearing rights consistent with part 431, subpart E; and (2) 
before terminating the beneficiary's coverage, assess eligibility for 
other insurance affordability programs in accordance with proposed 
revisions to current Sec.  435.916(f)(2), redesignated at Sec.  
435.916(d)(2) in this rulemaking, and transfer the individual's 
account, as appropriate.
    If a change identified by reliable third-party data may result in 
an increase in the amount of coverage or assistance a beneficiary is 
entitled to (for example, additional benefits or lower premiums or cost 
sharing), States retain flexibility under the proposed rule either to 
act on the third-party information without additional follow up or to 
contact the beneficiary to determine whether the information received 
is accurate. However, States that choose to contact the beneficiary to 
verify the accuracy of information prior

[[Page 54785]]

to furnishing additional assistance may not terminate the beneficiary's 
coverage or take other adverse action if the individual does not 
respond to the request for information. Additionally, if States choose 
to contact the beneficiary and the beneficiary does not respond to the 
request for information, the State may act on the third-party 
information. If third-party information is not reliable (for example, 
information is older than other information available to or obtained by 
the State or is incomplete) or does not impact the beneficiary's 
eligibility, there is no requirement for the agency to take further 
action or to provide notice to the beneficiary. Additionally, States 
may not take adverse action based on unreliable information.
    At Sec.  435.919(c)(1), we propose that States provide a minimum of 
30 calendar days from the date a request for information is sent, which 
is the date the request is postmarked or the date the notice is sent 
electronically if the beneficiary elected to receive electronic 
notices, for a beneficiary to obtain and submit information needed in 
order for the State to redetermine eligibility based on a change in 
circumstances. We believe specifying a minimum timeframe will ensure 
all States provide beneficiaries a reasonable time to respond to 
requests for information to demonstrate ongoing eligibility and 
mitigate churn that would otherwise occur when beneficiaries do not 
have sufficient time to respond to such requests. We believe the 30-day 
timeframe also provides beneficiaries consistency across program 
requirements as this aligns with the minimum timeframe MAGI 
beneficiaries are provided to return their renewal form in the current 
regulations Sec.  435.916(a)(3)(i)(B) and proposed timeline for all 
beneficiaries to return their renewal form at Sec.  435.916(a)(2)(i)(B) 
of this proposed rule. As discussed in section II.B.3. of this proposed 
rule, we propose to establish time standards for States to promptly act 
on changes in circumstances and standards for acting on anticipated 
changes in circumstances in proposed Sec.  435.912(c)(5) and (6), and 
we cross reference to these proposed time standards in proposed Sec.  
435.919(c)(2).
    At Sec.  435.919(d), we propose that States provide beneficiaries 
whose coverage was terminated due to failure to provide information 
requested in accordance with proposed Sec.  435.919(b)(1)(i) and (ii) 
with a 90-day reconsideration period. Under the proposal, if a 
beneficiary returns requested information within 90 calendar days of 
termination, the State would be required to redetermine the 
individual's eligibility without requiring a new application. While 
States may not require individuals to complete a new application within 
the reconsideration period, States may need to request additional 
information from the individual that is required at application, such 
as additional information needed to determine eligibility or a 
signature under penalty of perjury that information provided is 
accurate. Consistent with Sec.  435.915(a) of the current regulations, 
retroactive coverage during the 90-day period generally would be 
available, including for MSP eligibility groups described in section 
1902(a)(10)(ii), (iii) and (iv) \59\ of the Act, to help fill any gap 
in coverage for eligible individuals for whom retroactive eligibility 
may apply. Similar to the 90-day reconsideration period provided to 
individuals terminated for failure to complete a regularly-scheduled 
renewal under Sec.  435.916(a)(3)(iii) of the current regulations, we 
believe this proposed policy is important to reduce gaps in coverage as 
well as the administrative burden associated with churn, when 
beneficiaries terminated from coverage reapply within a few months 
thereafter, particularly beneficiaries enrolled in managed care. We 
propose that the application timeliness standards provided under Sec.  
435.912(c)(3) would apply to redeterminations initiated during the 90-
day reconsideration period proposed at Sec.  435.919(d). Application of 
the timeliness standards at Sec.  435.912(c)(3) in this situation 
aligns with the proposed revision of current regulations at Sec.  
435.916(a)(3)(iii), redesignated at proposed Sec.  435.916(b)(2)(iii), 
to apply the timeliness standards to redeterminations initiated during 
the 90-day reconsideration period afforded beneficiaries under current 
regulations to return renewal forms. Proposed revisions to current 
Sec.  435.916(a)(3)(iii), redesignated at proposed Sec.  
435.916(b)(2)(iii), are discussed in section II.B.1. of this proposed 
rule.
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    \59\ Retroactive eligibility is not available to individuals who 
qualify for coverage under the QMB group described in section 
1902(a)(10)(E)(i) of the Act. Per section 1902(e)(8) of the Act, 
coverage under the QMB group is effective the month following the 
month in which the QMB eligibility determination is made.
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    Proposed Sec.  435.919(e) includes the requirements in Sec.  
435.916(d)(1)(i) and (ii) of current regulation (relating to the 
limitation on requests for information to necessary information and the 
circumstances under which States may begin a new eligibility period, 
which is the period of time between application and renewal or 
regularly scheduled renewals, following a change in circumstances). We 
propose revisions to current Sec.  435.916(d)(1)(i), redesignated at 
Sec.  435.919(e)(1) in this proposed rule, to remove the reference to 
MAGI beneficiaries in order to apply the requirement that States 
evaluating a change in circumstances must limit requests for additional 
information to such change in circumstances to both MAGI and non-MAGI 
beneficiaries. We believe this change is necessary to ensure non-MAGI 
beneficiaries are not subject to a full renewal of eligibility more 
frequently than once every 12 months, consistent with proposed Sec.  
435.916(a). We redesignate current Sec.  435.916(d)(1)(ii), which 
allows States to begin a new 12-month eligibility period if the agency 
has enough information to renew eligibility with respect to all 
eligibility criteria when processing a change in circumstances, to 
proposed Sec.  435.919(e)(2). We also make technical changes to current 
Sec.  435.916(d)(1)(ii), redesignated at proposed Sec.  435.919(e)(2), 
to use the term ``eligibility period'' rather than ``renewal period'' 
and to remove the reference to the ``12-month'' eligibility period to 
align the length of the new eligibility period the State may begin for 
an individual consistent with the eligibility periods described in 
proposed Sec.  435.916(a).
    Finally, we propose to redesignate and modify Sec.  435.916(d)(2), 
which requires that States act on anticipated changes in circumstances 
at the appropriate time as proposed at Sec.  435.919(b)(3), as this 
provision also relates to changes in beneficiary circumstances. In 
proposed Sec.  435.919(b)(3), we modify language in the current 
regulations at Sec.  435.916(d)(2) to require that States act on 
anticipated changes at an appropriate time (instead of the appropriate 
time) and clarify that this means that the State would need to initiate 
a redetermination consistent with timeliness standards for processing 
anticipated changes in circumstances at proposed Sec.  435.912(c)(6). 
While CMS does not define for each State the appropriate time to act on 
an anticipated change in circumstances, we expect States to begin the 
process early enough in order to reasonably complete the 
redetermination prior to the anticipated change occurring. As discussed 
in section II.B.3. of this proposed rule, we propose to establish 
timelines for States to redetermine eligibility based on anticipated 
changes in circumstances in proposed Sec.  435.912(c)(6). In proposed

[[Page 54786]]

Sec.  435.919(c)(2), we require States to redetermine eligibility for a 
beneficiary with an anticipated change in circumstances within the time 
standards established in proposed Sec.  435.912(c)(6). We believe 
including the cross reference to proposed Sec.  435.912(c)(6) will 
ensure States determine the appropriate time to act based on their 
processes prior to the anticipated change in circumstances occurring 
such that the State can complete the redetermination according to the 
time standards in proposed Sec.  435.912(c)(6).
    With the proposed creation of Sec.  435.919 and the proposed re-
designation of Sec.  435.916(d), with revisions, to new Sec.  
435.919(b), we also propose technical changes at Sec. Sec.  435.911(c) 
and 435.1200(e)(1). Current Sec.  435.911(c) applies to individuals who 
submit an application described in Sec.  435.907 or whose eligibility 
is being renewed in accordance with Sec.  435.916. We propose to add a 
new clause to extend the application of this paragraph to individuals 
whose eligibility is being redetermined in accordance with Sec.  
435.919. At Sec.  435.1200(e)(1), we propose to replace the reference 
to Sec.  435.916(d) with a reference to proposed Sec.  435.919(b). 
Changes to Sec.  435.1200 are discussed in further detail in section 
II.B.5. of this preamble. Additionally, the application of the proposed 
requirements of Sec.  435.919 to CHIP is discussed in section II.E.2. 
of this preamble.
3. Timely Determination and Redetermination of Eligibility (Sec. Sec.  
435.907 and 435.912)
    Several regulatory requirements, currently codified in subpart J of 
part 435, establish parameters to ensure that applications for coverage 
are not unduly burdensome and that new applicants receive a timely 
determination of eligibility. Other provisions protect current 
beneficiaries from needlessly onerous renewal requirements and ensure 
that States keep individuals enrolled while they review potential 
Medicaid eligibility on other bases. Section 435.907 of the current 
regulations describes the requirements for States to make available an 
application for Medicaid, the limitations on the information that may 
be requested at application, and the modalities through which 
individuals must be able to apply. Similarly, Sec.  435.916 (discussed 
in section II.B.1. of this preamble) describes the requirements for 
States to conduct renewals and limitations on the information that may 
be requested from beneficiaries at renewal, and proposed Sec.  435.919 
(discussed in section II.B.2 of this preamble) would redesignate and 
revise current Sec.  435.916(c) and (d) with respect to 
redeterminations based on changes in circumstances.
    The requirements related to the timely determination of 
eligibility, including the maximum time period in which individuals are 
entitled to a determination of eligibility, exceptions to timeliness 
requirements, and considerations for States in establishing performance 
standards are found at Sec.  435.912. As described at current Sec.  
435.912(c)(3), States are required to determine the eligibility of new 
applicants within 90 calendar days if they apply on the basis of 
disability and within 45 calendar days for applicants applying on all 
other bases. These longstanding timeframes are important for ensuring 
eligible applicants receive timely access to coverage. However, the 
current regulations do not establish standards to ensure that 
applicants have enough time to gather and provide additional 
information and documentation requested by a State in adjudicating 
eligibility. In addition, the timeframes provided in current Sec.  
435.912(c) expressly apply only to new applications; they do not 
expressly apply to redeterminations either at renewal or based on 
changes in circumstances.
    Current regulations at Sec.  435.930(b) require that States 
continue furnishing Medicaid benefits to eligible individuals, until 
they are found to be ineligible. Under this provision, a beneficiary 
may not be disenrolled if the State has not completed a redetermination 
of eligibility, even after the end of an individual's scheduled renewal 
date. This provision is critical to ensuring that eligible 
beneficiaries are not inappropriately terminated from coverage. 
However, if completing a renewal is delayed, ineligible individuals may 
remain inappropriately enrolled.
    Ensuring the integrity of Medicaid and CHIP--both to prevent 
inappropriate enrollments and to protect the enrollment of eligible 
individuals--is an important component of CMS's work. From a program 
integrity perspective, both termination of coverage without an accurate 
determination of ineligibility and the extension of coverage beyond a 
beneficiary's period of eligibility would constitute an error. Through 
PERM, the MEQC program, and other CMS eligibility reviews, we partner 
with States to review their eligibility and enrollment processes and 
conduct case reviews to ensure that eligible individuals can enroll and 
stay enrolled without undue burden and that ineligible individuals are 
redirected to the appropriate coverage programs. Through this work, as 
well as our ongoing work with States prior to the COVID-19 PHE, we have 
become aware that in certain situations, redeterminations can remain 
incomplete for several months following the end of a beneficiary's 
eligibility period. For example, this may happen when a beneficiary 
does not timely return documentation or when a determination on another 
basis is required. While we recognize the challenges States may face in 
completing redeterminations by the end of a beneficiary's eligibility 
period or as quickly as possible when they become aware of a potential 
change in circumstances, it is important that States act promptly once 
all information and other documentation requested from the individual 
is received.
    Consistent with sections 1902(a)(4) and (19) of the Act to ensure 
the proper and efficient administration of the program and that 
eligibility is determined in a manner consistent with simplicity of 
administration and best interests of beneficiaries, we propose changes 
to Sec.  435.907 and Sec.  435.912 to ensure that applicants and 
beneficiaries have adequate time to furnish all requested information 
and that States complete initial determinations and redeterminations of 
eligibility within a reasonable timeframe at application, at regular 
renewals, and following changes in circumstances.
    With respect to new applicants, we propose to revise Sec.  435.907 
first to redesignate Sec.  435.907(d) (relating to a prohibition on 
requiring in-person interviews) as Sec.  435.907(d)(2). As discussed in 
section II.B.1 of this preamble, we also propose to revise newly 
redesignated paragraph (d)(2) of Sec.  435.907 to remove the clause 
that states, ``for a determination of eligibility using MAGI-based 
income'' such that the prohibition on requiring in-person interviews 
applies to both the MAGI-based and non-MAGI application processes. Then 
we propose to establish a new paragraph (d)(1) at Sec.  435.907, which 
would require that, if the State agency is unable to determine an 
applicant's eligibility based on the information provided on the 
application and verified through electronic data sources, and it must 
obtain additional information from the applicant, specified 
requirements would need to be met. This may occur, for example, if an 
applicant fails to complete a section of the application before signing 
and submitting it, or if an applicant provides information on the 
application that is not reasonably compatible with the

[[Page 54787]]

information available through electronic data sources.
    Proposed Sec.  435.907(d)(1)(i)(B) would require the agency to 
provide most applicants with at least 15 calendar days, from the date 
the request is postmarked or the electronic request is sent, to respond 
with the additional information. For applicants whose Medicaid 
eligibility is being considered on the basis of a disability, such as 
individuals under age 65 who may be eligible for the age and 
disability-related poverty level group described at section 
1902(a)(10)(A)(ii)(X) of the Act, proposed Sec.  435.907(d)(1)(i)(A) 
would require the agency to provide the applicant with at least 30 
calendar days, from the date the request is postmarked or the 
electronic request is sent, to respond. Additionally, as described at 
proposed Sec.  435.907(d)(1)(ii), applicants must be permitted to 
provide additional information through any of the modes by which an 
application may be submitted at current Sec.  435.907(a). This is 
current policy that we are proposing to codify through this proposed 
rule.
    As discussed in sections II.B.1 and II.B.2 of this preamble, 
current Sec.  435.916(a)(3)(i)(B), redesignated at proposed Sec.  
435.916(b)(2)(i)(B), and proposed Sec.  435.919(c)(3) would require the 
agency to provide current beneficiaries with at least 30 calendar days 
from the date the request is postmarked or the electronic request is 
sent to submit requested information, beginning on the date the State 
sends the request for additional information, which is the date the 
request is postmarked or the date the electronic request is sent. This 
is longer than the minimum timeframe of 15 calendar days that we 
propose for most applicants to furnish additional information or 
documentation. We considered establishing a 30-day requirement for all 
applicants, consistent with the timeframe proposed at redetermination, 
but we believe that a 15-day response period for most applicants is 
appropriate for several reasons. First, in determining eligibility for 
an applicant, the agency will have recently received information from 
the applicant (or a person acting responsibly on their behalf) who is 
newly seeking coverage, and we believe the applicant (or such other 
person) will typically be expecting a communication from the agency. By 
contrast, at renewal and when the agency is acting on information it 
has received from other sources, a beneficiary may be less likely to 
expect any communication from the State, and therefore, may be less 
prepared to respond. Second, while States are required to make 
eligibility effective on the date of application, or up to 3 months 
prior if the individual would have been eligible retroactively, 
applicants may be reluctant to access covered services before the 
eligibility determination is completed. Requiring the agency to make a 
final determination on applications within the maximum 45 calendar days 
permitted for individuals applying on a basis other than disability 
status while also providing the individual with at least 30 calendar 
days to respond to a request for additional information is 
unreasonable. However, to permit States more than 45 calendar days to 
complete applications when additional information is required also 
could result in eligible individuals delaying needed care. We believe 
that a minimum 15 calendar days strikes an appropriate balance for most 
applicants and we seek comment on whether States, beneficiaries, and 
other interested parties agree that this timeframe is appropriate.
    As noted above, we are proposing that States must provide 
applicants applying on the basis of disability with at least 30 
calendar days, from the date the request is postmarked or the 
electronic request is sent, to return additional information or 
documentation required by the agency. We believe the longer timeframe 
is appropriate because some individuals with disabilities may need more 
time to gather documentation related to their disability determination 
and since States have up to 90 calendar days to make a final 
determination of eligibility on disability-based applications, the 
additional time will not undermine States' ability to make a timely 
determination.
    We are considering aligning the minimum time that States must 
provide all applicants to submit additional information or 
documentation requested by the State, as well as finalizing a longer 
timeframe for all applicants. Timeframes under consideration include 15 
calendar days, 20 calendar days, 25 calendar days, and 30 calendar 
days. We are also considering a minimum requirement of 30 calendar days 
for all applicants, accompanied by a change to the timeliness 
requirements for application processing, which would establish an 
exception to the 45-day requirement at current Sec.  435.912(c)(3)(ii) 
and provide an additional 15 calendar days for a State to complete 
application processing when additional information is needed. We seek 
comment on the appropriate minimum timeframe for applicants to submit 
requested information at proposed Sec.  435.907(d) that will provide 
the greatest balance between ensuring that a State determines 
eligibility as quickly as possible and that applicants have adequate 
time to gather any information or documentation needed by the State to 
complete the determination. We also seek comment on whether the final 
rule should align the timeframe for all applicants or provide a longer 
period for individuals applying on the basis of disability, and whether 
a corresponding exception to the 45-day timeliness requirement at Sec.  
435.912(c)(3)(ii) should accompany a longer timeframe. In addition, we 
request comment on whether calendar days or business days would provide 
a more appropriate measure of timeliness here.
    Finally, when the State agency cannot determine an applicant's 
eligibility for Medicaid without additional information and the agency 
denies eligibility because the applicant does not timely respond to a 
request for additional information, per current regulations at Sec.  
435.917, the State must provide the individual with notice of the 
agency's decision. We propose at Sec.  435.907(d)(1)(iiii)(A) that, if 
the individual subsequently submits the requested information within 30 
calendar days of the date the notice of ineligibility is sent (or a 
longer period established by the State), the State must reconsider the 
individual's eligibility without requiring the individual to complete 
and submit a new, full application. This is similar to the 
reconsideration periods provided at current Sec.  435.916(a)(3)(iii) 
(redesignated at proposed Sec.  435.916(b)(2)(iii) in this proposed 
rule) for individuals whose eligibility is terminated at their 
regularly-scheduled renewal and proposed Sec.  435.919(d) for 
individuals whose eligibility is terminated following a change in 
circumstances due to failure to provide additional information 
requested by the agency.
    To ensure that a State has adequate time to complete the 
determination of eligibility when requested information is submitted 
during the reconsideration period, we propose at Sec.  
435.907(d)(1)(iii)(B) to begin a new clock for determining timeliness. 
This would provide the State with an additional 45 calendar days (or 90 
calendar days for disability-related determinations) to complete the 
eligibility determination in accordance with proposed Sec.  
435.912(c)(3), beginning on the date that the requested information is 
submitted. In addition, to protect the needs of applicants, the 
effective date of coverage would continue to be determined in 
accordance with the date upon which the application was submitted as 
described at proposed

[[Page 54788]]

Sec.  435.907(d)(1)(iii)(C). We believe this would provide the best 
balance for both the applicant and the State agency, by protecting the 
applicant's access to coverage while providing additional time for the 
State to complete a timely determination. We seek comment on whether 
the effective date of coverage should be determined in accordance with 
the application date or whether, consistent with the reconsideration 
period at renewal and the proposed reconsideration period following a 
change in circumstances (described in section II.B.2. of this 
preamble), the return of additional information would effectively 
constitute a new application with a new effective date of coverage.
    We are proposing a 30-day reconsideration period at application, 
rather than a 90-day reconsideration period similar to the 90-day 
period proposed at redetermination, because we believe applicants will 
generally be expecting a communication from the State regarding the 
status of the submitted application and will be less likely than 
current beneficiaries to miss requests for additional information. We 
also are concerned that a longer reconsideration period for applicants 
would mean that a longer period of time will have elapsed between the 
date the applicant has attested to information provided on the 
application and the date a determination is ultimately made. However, 
recognizing that a consistent 90-day period for all reconsiderations--
at application, at renewal, and following a change in circumstances--
may be clearer, we seek comment on whether the length of 
reconsideration period at application should align with the 90-day 
reconsideration period currently provided at renewal and proposed for 
redeterminations based on changes in circumstances in this rulemaking, 
or whether the reconsideration period for applicants should be somewhat 
longer than 30 calendar days (for example, 45 calendar days or 60 
calendar days) but still less than 90 calendar days.
    With respect to redeterminations, we propose revisions to Sec.  
435.912 to clearly specify expectations for the maximum time States 
have to complete redeterminations at regular renewals, as well as when 
the State learns of a change in circumstances that may impact an 
individual's eligibility. Current Sec.  435.912 requires States to 
establish timeliness and performance standards. Paragraph (a) of Sec.  
435.912 of the current regulations defines ``timeliness standards'' as 
the maximum period of time in which an individual is entitled to a 
determination of eligibility and ``performance standards'' as the 
overall standards for timely determinations of eligibility. Current 
Sec.  435.912(b) lists the types of eligibility determinations for 
which States must establish standards, while Sec.  435.912(c) sets 
forth criteria which the agency must account for in establishing these 
standards. Paragraphs (d) through (g) of current Sec.  435.912 require 
the agency to inform individuals of the timeliness standards, to 
provide for exceptions to the timeliness standards for determining 
eligibility, and to document any delays in completing the required 
actions, as well as prohibiting the agency from using the application 
time standards either as a waiting period or as a reason to deny 
eligibility.
    We propose first to revise the definition of ``timeliness 
standards'' in Sec.  435.912(a) to specify that these standards must 
include not only the maximum time period in which every applicant is 
entitled to a determination of eligibility at application in accordance 
with Sec.  435.907, but also the maximum period of time in which the 
agency must redetermine eligibility at renewal in accordance with Sec.  
435.916 and when an anticipated or known change in circumstances occurs 
in accordance with proposed Sec.  435.919(b)(3). The ``performance 
standards'' defined in current Sec.  435.912(a) would also be revised 
to clearly include standards for renewing and redetermining eligibility 
in a timely and efficient manner across a pool of beneficiaries. 
Section 435.911(c) of the regulations currently requires, in pertinent 
part, that agency must, promptly and without undue delay consistent 
with timeliness standards established under Sec.  435.912, provide 
coverage to individuals who have submitted an application described in 
Sec.  435.907 or whose eligibility is being renewed in accordance with 
Sec.  435.916. We propose a conforming amendment to the introductory 
language in Sec.  435.911(c) to include a cross reference to proposed 
Sec.  435.919 to make clear that the terms of Sec.  435.911(c) apply 
also to individuals whose eligibility is being redetermined following a 
change in circumstances.
    Second, we propose to add a paragraph heading for Sec.  435.912(b) 
that states, ``State plan requirements'' and expand upon the activities 
described in Sec.  435.912(b) for which States would be required to 
establish timeliness and performance standards in their State plan. 
Specifically, we propose to expand the requirement in current Sec.  
435.912(b)(2) to establish timeliness and performance standards to 
include not only determinations of eligibility for Medicaid and 
assessments of potential eligibility for other insurance affordability 
programs, as currently required, but also final determinations of 
eligibility for CHIP consistent with changes proposed at Sec.  
435.1200(e) and described in section II.B.5. of this preamble. We also 
propose to incorporate current paragraph (b)(2) of Sec.  435.912, which 
requires States to establish timeliness and performance standards for 
determining potential eligibility for and transferring an individual's 
electronic account to another insurance affordability program, into 
current paragraph (b)(1), such that proposed Sec.  435.912(b)(1) would 
require the agency to establish performance and timeliness standards 
for determining Medicaid eligibility for individuals who submit an 
application to the Medicaid agency, as well as determining eligibility 
for CHIP when an individual is determined ineligible for Medicaid (in 
accordance with proposed changes discussed in section II.B.5. of this 
preamble) and determining potential eligibility for insurance 
affordability programs available through the Exchanges as described at 
proposed Sec.  435.1200(e).
    We propose to redesignate current Sec.  435.912(b)(3) (regarding 
determining Medicaid eligibility for individuals transferred from other 
insurance affordability programs) as proposed Sec.  435.912(b)(2) and 
to add new paragraphs (b)(3), (4), and (5) to Sec.  435.912 as follows:
     Proposed Sec.  435.912(b)(3) would require States to 
establish specific standards for redetermining eligibility at renewal 
in accordance with Sec.  435.916;
     Proposed Sec.  435.912(b)(4) would require the 
establishment of specific standards for redeterminations of eligibility 
related to changes in circumstances reported by a beneficiary or 
received from a third party as described at proposed Sec.  
435.919(b)(1) and (b)(2) respectively; and
     Proposed Sec.  435.912(b)(5) would require the 
establishment of specific standards for redeterminations of eligibility 
at the time of an anticipated change in circumstances in accordance 
with proposed Sec.  435.919(b)(3).
    Third, current Sec.  435.912(c)(1) provides that the timeliness and 
performance standards adopted by the agency must cover the period from 
the date of application, or transfer from another insurance 
affordability program, to the date the agency notifies the applicant of 
its decision or the date the agency transfers the individual to another 
insurance affordability program. We would revise this to specify that 
they also include the periods of time covered by the timeliness and 
performance standard adopted by the

[[Page 54789]]

agency for renewals and redeterminations of eligibility.
    Preliminarily, we propose to redesignate the requirement at current 
Sec.  435.912(c)(1) (providing that the standards for these activities 
cover the period from the date of application or transfer to the 
Medicaid agency through the date that the agency notifies the applicant 
of its decision or transfers the account to another insurance 
affordability program) as proposed Sec.  435.912(c)(1)(i). Proposed 
Sec.  435.912(c)(1)(ii) would provide that timeliness and performance 
standards adopted by the agency for conducting regularly-scheduled 
renewals must cover the period from the date that the agency initiates 
the steps required to renew eligibility on the basis of information 
available to the agency, as required under Sec.  435.916(a)(2) 
(redesignated as Sec.  435.916(b)(1) in this proposed rule), to the 
date that the agency sends the beneficiary notice regarding their 
continued eligibility for coverage, or as applicable, terminates 
eligibility and transfers the individual to another insurance 
affordability program in accordance with Sec.  435.1200(e).
    Proposed Sec.  435.912(c)(1)(iii) would provide that timeliness and 
performance standards adopted by the agency for conducting 
redeterminations of eligibility based on a change in a beneficiary's 
circumstances must cover the period from the date that the agency 
receives information indicating a potential change in circumstances 
that may affect eligibility to the date that the agency sends the 
individual a notice regarding their continued eligibility for coverage, 
or as applicable, terminates eligibility and transfers the individual's 
electronic account to another insurance affordability program in 
accordance with Sec.  435.1200(e).
    Finally, proposed Sec.  435.912(c)(1)(iv) would provide that 
timeliness and performance standards adopted by the agency for 
conducting redeterminations of eligibility based on an anticipated 
change in a beneficiary's circumstances must cover the period from the 
date the agency begins the redetermination of eligibility based on an 
anticipated change, as described at Sec.  435.919(b)(3) of this 
subpart, to the date the agency notifies the individual of its decision 
or, as applicable the date the agency terminates eligibility and 
transfers the individual's electronic account to another insurance 
affordability program in accordance with Sec.  435.1200(e). We also 
propose to add a heading to paragraph (c) that reads, ``Timeliness and 
performance standard requirements.''
    Current Sec.  435.912(c)(1) also requires States to comply with the 
requirements of paragraph (c)(2) (relating to criteria that States must 
consider in establishing their timeliness and performance standards) so 
as ``to promote accountability and consistency of high-quality consumer 
experience among States and between insurance affordability programs.'' 
We propose to incorporate this requirement into proposed Sec.  
435.912(c)(2) and to expand the criteria that States must take into 
account to reflect the broader scope of activities for which States 
must account for in establishing their timeliness and performance 
standards.
    Current Sec.  435.912(c)(2) requires that, in establishing their 
timeliness and performance standards, States must account for the 
capabilities and cost of available systems and technology, the general 
availability of electronic data matching and ease of connections to 
authoritative sources of information to determine and verify 
eligibility, the demonstrated performance and timeliness experience of 
other State Medicaid, CHIP and other insurance affordability programs, 
and the needs of individuals, including their preferred mode of 
application submission and the relative complexity of adjudicating 
their eligibility. Proposed revisions to Sec.  435.912(c)(2) would add 
to these criteria the time needed by the agency to evaluate information 
obtained from electronic data sources and the time needed to provide 
advance notice to beneficiaries when the agency makes a determination 
that would result in the denial or termination of eligibility or 
another adverse action, since an adverse action cannot be effective 
until the end of the advance notice period (generally advance notice 
must be sent 10 days prior to the date of the action, in accordance 
with Sec. Sec.  431.211, 431.213 and 431.214). Proposed Sec.  
435.912(c)(2) also would provide that States account for the needs of 
beneficiaries, as well as applicants and the complexity of their cases 
in establishing their timeliness and performance standards.
    Paragraph (c)(3) of Sec.  435.912 provides parameters for States in 
setting a standard for the timely determination of Medicaid eligibility 
at application and when an account transfer is received from another 
insurance affordability program. The parameters in current Sec.  
435.912(c)(3), of no more than 90 calendar days for determining 
eligibility on the basis of disability and no more than 45 calendar 
days for determining eligibility on all other bases, remain unchanged 
in this proposed rule. However, we propose several technical changes to 
Sec.  435.912(c)(3), including the addition of a paragraph heading and 
additional references to the application and account transfer 
activities described in proposed paragraphs (b)(1) and (2) of this 
section.
    We also propose to add new paragraphs (c)(4), (5), and (6) to Sec.  
435.912 to establish separate parameters within which States must 
establish timeliness standards for the completion of regularly 
scheduled renewals, redeterminations based on changes in circumstances, 
and redeterminations based on anticipated changes. In establishing the 
maximum timeframes in proposed Sec.  435.912(c)(4) within which the 
agency must complete a regularly scheduled renewal, we take into 
account the additional time that States may need to complete a 
redetermination of eligibility when beneficiaries return needed 
information near the end of their eligibility period, as well as when 
the State may need to make a determination of eligibility on another 
basis, as required under Sec.  435.916(f)(1) of the current 
regulations, redesignated at Sec.  435.916(d)(1) in this proposed rule.
    Based on our experience in working with States, we believe that 
once the agency has received all information needed to complete a 
redetermination of eligibility, 25 calendar days is ample time for the 
agency to process the redetermination and provide the minimum 10 days 
of advance notice of termination or other adverse action, if needed. 
Therefore, in the case of an individual whose eligibility can be 
renewed based on available information or who returns all needed 
information at least 25 calendar days or more prior to the end of the 
eligibility period, we propose at Sec.  435.912(c)(4)(i) that the 
agency be required to complete a redetermination by the end of the 
eligibility period.
    Recognizing that in certain cases, a State will not receive all of 
the information needed to redetermine eligibility until closer to the 
end of the eligibility period, proposed Sec.  435.912(c)(4)(ii) would 
provide additional time in such cases. If information is returned 
before the end of the eligibility period, but with less than 25 
calendar days remaining, proposed Sec.  435.912(c)(4)(ii) would provide 
the agency with one additional month to complete a timely 
redetermination of eligibility. In such cases, the agency would be 
required to complete the redetermination, on the basis on which the 
beneficiary was last determined eligible, by no later than the end of 
the month following the month in which the individual's eligibility 
period ends.

[[Page 54790]]

    For example, suppose a beneficiary's 12-month eligibility period is 
scheduled to end on March 31st, but the individual does not return all 
information needed to redetermine eligibility until March 20th. This is 
less than 25 days prior to the end of the eligibility period, so in 
this example, the State would need to complete the renewal by no later 
than April 30th (the end of the month following the month in which the 
individual's eligibility period ends). We seek comment on whether 
proposed Sec.  435.912(c)(4)(i) and (ii) strike the right balance 
between maximizing completion of timely renewals and providing States 
with sufficient time to not only complete a renewal but also to provide 
advance notice of termination when necessary.
    Proposed Sec.  435.912(c)(4)(iii) addresses timelines for renewals 
in which eligibility must be considered on another basis. Current Sec.  
435.916(f) (redesignated at proposed Sec.  435.916(d)) requires the 
agency, when it determines that an individual is no longer eligible on 
the basis upon which he or she has been receiving coverage, to consider 
eligibility on all bases prior to completing a determination of 
ineligibility for Medicaid. When information in the individual's case 
record or renewal form indicates that the beneficiary may be eligible 
on another basis or bases (for example, an individual determined 
ineligible based on MAGI may be eligible based on disability), we 
recognize that additional time may be required for States to obtain the 
additional information needed to make a determination on such other 
basis. Proposed Sec.  435.912(c)(4)(iii)(B) provides the agency with 25 
days to make a determination of eligibility for most beneficiaries and 
to send advance notice of termination if the individual is ineligible. 
However, if a new determination based on disability is necessary, we 
propose in Sec.  435.912(c)(4)(iii)(A) a maximum of 90 days for States 
to complete a redetermination of eligibility on the basis of 
disability. The applicable time period (25 or 90 days) is measured in 
calendar days from the date the agency determines the individual not 
eligible on the basis on which he or she had been receiving coverage. 
We believe that a longer 90-day period is appropriate when a 
determination of disability is required because of the additional 
complexity in making a disability determination. This is consistent 
with the maximum 90 days provided for States making a determination of 
eligibility based on disability at initial application as described at 
current Sec.  435.912(c)(3)(i). Regulations governing determinations of 
disability are found at Sec.  435.541.
    These timeliness standards for regularly scheduled renewals are 
cross-referenced in proposed Sec.  435.916(c), which requires that a 
renewal be completed by the end of the beneficiary's eligibility period 
in accordance with proposed Sec.  435.912(c)(4)(i). If an individual 
returns the renewal form with less than 25 calendar days remaining 
before the end of their eligibility period, proposed Sec.  
435.912(c)(4)(ii) would permit the State to complete the renewal by the 
end of the month following the month in which the individual's 
eligibility period ends. This would be compliant with both the renewal 
requirement at proposed Sec.  435.916(c) and the timeliness requirement 
at proposed Sec.  435.912(c)(4)(ii). As noted previously, when a 
determination of eligibility is completed after the end date of a 
beneficiary's eligibility period, current Sec.  435.930(b) requires the 
agency to continue furnishing Medicaid to the individual while the 
determination of eligibility is pending. This permits the State to 
continue providing medical assistance to the individual until the 
renewal is completed, and if the individual is no longer eligible for 
Medicaid, it provides the State with adequate time to provide advance 
notice and fair hearing rights in accordance with part 431 subpart E of 
the regulations.
    Under proposed Sec.  435.912(c)(5), States must complete 
redeterminations based on changes in beneficiary circumstances reported 
by an individual or third party no later than the end of the month that 
occurs 30 calendar days from the date the State receives information 
indicating a potential change in circumstances, if the State has 
sufficient information to evaluate any potential impact and to 
redetermine eligibility without requesting additional information from 
the individual. Because most States continue coverage through the end 
of the month, we propose to extend the requirement to the end of the 
month in which the 30th day occurs. If additional information from the 
beneficiary is needed, we propose at Sec.  435.912(c)(5)(ii) that 
States have through the end of the month that occurs 60 calendar days 
from the date the State receives information indicating a change in 
circumstances that may impact eligibility to make a redetermination of 
eligibility. We note that proposed Sec.  435.919(c)(3) would require 
States to provide beneficiaries with at least 30 calendar days from the 
date the request is postmarked or the electronic request is sent to 
provide the information and that the State enable beneficiaries to do 
so through any of the modes of submission specified in Sec.  
435.907(a). This aligns with the 30 calendar days which States must 
provide beneficiaries to return a pre-populated renewal form and any 
needed documentation at renewal under current regulation at Sec.  
435.916(a)(3)(i)(B), redesignated at proposed Sec.  
435.916(b)(2)(i)(B).
    Proposed Sec.  435.912(c)(6) establishes requirements for 
redeterminations of eligibility based on anticipated changes in 
circumstances. As described in Sec.  435.916(d)(2) (redesignated as 
proposed Sec.  435.919(b)(3)), anticipated changes are events that the 
agency knows about in advance, like a beneficiary's birthday, and 
States must act on such changes at an appropriate time such that the 
State completes the redetermination prior to the anticipated change 
occurring. Thus, while CMS does not specify when a State must begin the 
redetermination process for an anticipated change in circumstances, 
under our proposal, the agency must determine the amount of time it 
needs to act on such changes and to begin the redetermination process 
with sufficient time to complete processing the redetermination prior 
to the change occurring. As such, we propose to apply the same basic 
requirements at proposed Sec.  435.912(c)(6) for States establishing 
standards for redeterminations based on anticipated changes in 
circumstances as those described at proposed Sec.  435.912(c)(4) for 
regularly scheduled renewals. At proposed Sec.  435.912(c)(6)(i), the 
agency would be required to complete a redetermination of eligibility 
based on an anticipated change in circumstances on or before the date 
of the anticipated change or the last day of the month in which the 
anticipated change occurs.
    When an individual is determined ineligible for Medicaid, States 
have flexibility to terminate coverage either on the date on which the 
individual becomes ineligible (provided that advance notice has been 
provided and other bases of eligibility have been considered) or at the 
end of the month. In States that have elected the option to continue 
coverage through the end of the month, the redeterminations described 
at proposed Sec.  435.912(c)(4), (c)(5), and (c)(6) must be completed 
prior to the end of the month. In all other States, the redetermination 
must be completed prior to the date specified.
    For example, suppose a State has a higher income standard for 
younger children in the eligibility group for children under age 19, 
and a beneficiary

[[Page 54791]]

whose household income exceeds the standard for children aged 6 through 
18 will be turning 6 years old on October 3rd in the middle of their 
eligibility period. This beneficiary lives in a State that continues 
coverage through the end of the month in which an individual becomes 
ineligible. If the State receives all information needed to determine 
the individual's continued eligibility (in either the eligibility group 
for children under age 19 or another eligibility group) on or before 
October 6th (25 days before the end of the month in which the change 
occurs), then the agency would be required to complete a timely 
redetermination of eligibility by no later than October 31st.
    If the State receives the information needed to complete a 
redetermination, but does not have at least 25 calendar days to process 
the information, then as described at proposed Sec.  435.912(c)(6)(ii), 
the State would have 1 additional month to complete a timely 
redetermination of eligibility. Using the example above, suppose the 
State receives all information needed to determine the individual's 
eligibility on or after October 7th, then the agency would be required 
to complete a timely redetermination of eligibility by no later than 
November 30th. Proposed Sec.  435.912(c)(6)(iii) establishes the same 
standards for completing a determination of another basis as that 
proposed at Sec.  435.912(c)(4)(iii) for regularly scheduled renewals.
    We seek comment on the amount of time provided for States to 
complete a redetermination of eligibility at a regularly-scheduled 
renewal or based on changes in circumstances at proposed Sec.  
435.912(c)(4), (c)(5), and (c)(6), whether the regulations should allow 
for a longer or shorter period of time, and whether the use of business 
days rather than calendar days would be more appropriate.
    Each of the standards proposed in paragraphs (c)(3) through (6) 
provides for an exception to the timeliness standards, which is 
described in current Sec.  435.912(e), when the agency cannot comply 
with the regulatory timelines due to an administrative or other 
emergency beyond the agency's control. States that use the timeliness 
exception Sec.  435.912(e) must document the reason for delay in the 
case record in accordance with Sec.  435.912(f). It is also important 
to note that, while the proposed timeliness standards provide maximum 
timeframes for completion of redeterminations at renewal or based on 
changes in circumstances, they do not constitute additional grace 
periods for States or beneficiaries to delay completion of 
redeterminations. States are, and will continue to be, expected to 
process redeterminations as expeditiously as possible, and additional 
time is only authorized beyond the prescribed eligibility period if a 
beneficiary responds to a request for information after the date 
required by the agency but prior to the date of termination or other 
adverse action identified in the beneficiary's advanced notice of 
termination or other adverse action.
    Finally, we propose a number of technical amendments to paragraphs 
(d), (e), (f), and (g) of this section to clearly specify that these 
provisions apply to applicants and applications as well as 
beneficiaries and redeterminations of eligibility. Because we are 
specifying that the timeliness standards in section Sec.  435.912 
include both applications and redeterminations, we also propose a 
related change to current Sec.  435.912(g). The current provision 
prohibits States from using the timeliness standards as a waiting 
period for new applicants or as a reason for denying eligibility 
because it is not determined within the required timeframe. We propose 
to add a new paragraph (g)(3) to Sec.  435.912 that would prohibit 
States from using the timeliness standards as a reason for delaying 
termination of an individual's coverage or delaying an adverse action.
    We propose to apply the same requirements to separate CHIPs through 
an existing reference to Sec.  435.912 of the Medicaid regulations in 
Sec.  457.340(d)(1). Changes to Sec. Sec.  457.340(d) are discussed in 
further detail in section II.E.1. of this preamble.
4. Agency Action on Returned Mail (Sec. Sec.  435.919 and 457.344)
    Section 1902(a)(10) of the Act requires States to make medical 
assistance available under the State plan to individuals who meet 
certain eligibility criteria and provides States with the option to 
provide medical assistance to certain other individuals. To ensure that 
individuals receiving such assistance continue to meet applicable 
eligibility requirements, States must have a process to obtain 
information about changes in circumstances and redetermine eligibility 
when appropriate, including at annual renewal. In this rulemaking, we 
propose at Sec.  435.919(f) certain actions that States must take when 
mail sent to a beneficiary is returned to the agency, regardless of 
whether the returned mail signals potential ineligibility.
    The United States Postal Service (USPS) returns mail sent to 
beneficiary when the address used is incorrect, or the individual has 
moved and USPS has no record of a forwarding address, or the time-
limited mail forwarding service has expired. That a beneficiary has 
moved does not necessarily mean the individual is no longer a State 
resident or ineligible on that basis. However, we are concerned that 
when a beneficiary's mail is returned to the agency, some States rely 
on that information to conclude that the individual cannot be located 
and terminate coverage without taking reasonable steps to ascertain the 
accuracy of the information received or attempting to locate the 
beneficiary and update their address. Additionally, if a State attempts 
to contact the beneficiary to verify a new in-state address received 
from USPS and the individual does not respond, many States continue to 
use the original address in the beneficiary's case record. If the new 
address from USPS is correct, the beneficiary has not elected to 
receive electronic notices, and an ex parte renewal based on 
information available to the agency is not successful, this will result 
in termination at the individual's regular renewal because such 
beneficiaries will not receive a mailed notice or renewal form and will 
be unable to respond as required.
    We believe that returned mail may result in a significant number of 
beneficiaries who continue to meet all eligibility requirements being 
terminated from coverage, and that it is critical for States to take 
reasonable steps to locate beneficiaries who may have moved and to 
update their address prior to taking any adverse action. Therefore, 
consistent with section 1902(a)(4) of the Act, to promote the proper 
and efficient administration of the Medicaid program, and section 
1902(a)(19) of the Act, to provide such safeguards as may be necessary 
to assure simplicity of administration and the best interests of 
beneficiaries, we propose adding new paragraph (f) at proposed Sec.  
435.919 to specify the steps States must take when beneficiary mail is 
returned to the agency.
    States rely heavily on communicating with beneficiaries by mail to 
facilitate essential eligibility and enrollment actions, such as 
renewals and requests for additional information. Returned mail with an 
out-of-state or no forwarding address indicates a potential change in 
circumstance with respect to State residency, but without additional 
follow up by the State, the receipt of returned mail alone is not 
sufficient to make a definitive determination as to whether 
beneficiaries no longer meet State residency requirements because they 
have moved out of State. Returned mail with an in-state forwarding 
address is not an indication of a change affecting

[[Page 54792]]

eligibility, but it nonetheless is important for the State to confirm 
the accuracy of the information to ensure future ability to contact the 
beneficiary, for example, so that the individual can receive and return 
a renewal form or other information needed by the State to renew their 
eligibility or can receive critical program information.
    Under proposed Sec.  435.919(f), when States receive returned 
beneficiary mail, they must take proactive steps to verify any 
forwarding address provided or to otherwise locate the individual. For 
all returned beneficiary mail, including returned mail with an in-
state, an out-of-state, or no forwarding address, we propose at 
Sec. Sec.  435.919(f)(1) through 435.919(f)(3), that States conduct a 
series of data checks and outreach attempts to locate the beneficiary 
and verify their address. If the State is unable to locate or verify a 
beneficiary's address after this series of outreach attempts, proposed 
Sec.  435.919(f)(4) through (f)(6) outlines required and permissible 
State actions based on the location of the address, if any, provided on 
the returned mail (that is, in-state or out-of-state). The proposed 
steps which States must or may take whenever beneficiary mail is 
returned are discussed in more detail, below.
Step 1: Check Available Data Sources for Updated Contact Information
    Under proposed Sec.  435.919(f)(1), whenever beneficiary mail is 
returned, the State must first check data sources available to the 
agency to identify any potential updated mailing address information 
available to the State prior to reaching out to the individual. At a 
minimum, a State must check for updated mailing contact information 
from the following sources: (1) the agency's Medicaid Enterprise System 
(MES); (2) the agency's contracted managed care plans, if applicable in 
the State; and (3) one or more other third-party data sources, 
discussed below.
    Updated beneficiary contact information from managed care plans, 
enrollment brokers, claims data, and in the case of integrated 
eligibility systems, other State administered public benefit systems 
may be available in the State's MES, and for this reason we believe it 
is critical that States check for potential updated address information 
that may be in this system, as reflected at proposed Sec.  
435.919(f)(1)(i). Many States have told CMS that individuals enrolled 
in a managed care plan are more likely to provide their plan, which 
generally has more frequent contact with their beneficiaries than the 
State agency, with updated address information. We therefore propose at 
Sec.  435.919(f)(1)(ii) that the State must obtain and check the 
address on file with the plan for any individual enrolled in a managed 
care plan. Finally, there are other third-party data sources available 
to State Medicaid agencies, and we propose at Sec.  435.919(f)(1)(iii) 
that the State must obtain and check at least one of the following: the 
State agency that administers SNAP, the State agency that administers 
TANF, the Department of Motor Vehicles, the USPS National Change of 
Address (NCOA) database, and other sources specified in the State's 
verification plan to determine if a different and more recent address 
is available.
    Discussed in more detail below, under proposed Sec.  435.919(f)(2) 
and 435.919(g), when a State receives a forwarding address on a piece 
of returned mail, the State must attempt to contact the individual to 
verify the forwarding address and provide them with an opportunity to 
confirm or dispute the information.
Step 2: Conduct Outreach Using at Least Two Different Modalities
    In verifying a forwarding address provided by USPS under the 
proposed rule, States must attempt to contact the beneficiary by both 
mail (at proposed Sec.  435.919(f)(2)), as well as a modality other 
than mail (at proposed Sec.  435.919(f)(3)), such as by phone, 
electronic notice, email, or text message. States have flexibility as 
to the order in which they attempt to contact the beneficiary through 
the different modalities.
    In attempting to contact the beneficiary by U.S. mail, we propose 
at Sec.  435.919(f)(2) that the State must send notices to both the 
current address on file, the forwarding address (if one is provided by 
USPS), and any address more recent than that in the beneficiary's case 
records obtained pursuant to proposed Sec.  435.919(f)(1). The notice 
must request that the individual confirm their current address. The 
State must provide the individual with a reasonable period of time to 
verify the accuracy of the new contact information. Consistent with 
proposed Sec.  435.919(c)(1), we propose that Sec.  435.919(f)(2)(i) 
define this reasonable period of time as 30 calendar days from the date 
the notice is sent to the beneficiary. Sending mail to the current 
address on file represents a key beneficiary protection to ensure that 
initial piece of returned mail was not incorrectly returned.
    We propose at Sec.  435.919(f)(3) that, in attempting to contact 
the beneficiary using a modality other than mail, the State must make 
at least two attempts with at least three business days between the 
first and last attempt. In implementing this requirement, States have 
flexibility to use any combination of available electronic or 
telephonic modalities. Such communications, initiated either directly 
by the State agency or through a State contractor or partner, must be 
compliant with Federal communications laws such as the Telephone 
Consumer Protection Act (47 U.S.C. 227).
    If it is not feasible to conduct outreach via an alternative 
modality, for example because there is no phone or other electronic 
contact information in the case record or obtained from third-party 
sources, the State must note that in the case record. For outreach 
conducted by electronic or telephonic modalities, States must use the 
contact information available on file. States also may leverage the 
electronic or telephonic contact information obtained by the State 
through data checks pursuant to Sec.  435.919(f)(1) and reach out to 
the beneficiary through other modalities pursuant to Sec.  
435.919(f)(3).
    We note that, under Sec.  435.918, beneficiaries must be provided a 
choice to receive notices via mail or in an electronic format. If a 
beneficiary has elected to receive notices and communications 
electronically, the State must send a notice via the individual's 
preferred electronic format and such notice must provide at least 30 
calendar days from the date the agency sends the notice to verify the 
accuracy of the new contact information. Regardless of the notice 
format a beneficiary elects, under the proposed rule States must 
attempt to contact individuals for whom they have received returned 
mail via both mail and an alternative electronic modality in an effort 
to confirm the beneficiary's correct current address. For a beneficiary 
who elected to receive electronic notices and communications in 
accordance with Sec.  435.918, if a previous electronic communication 
attempt failed, the agency cannot use that same electronic modality as 
the alternative modality to satisfy the requirement at proposed Sec.  
435.919(f)(3). States have flexibility under the proposed rule as to 
the order in which they attempt to contact the beneficiary through the 
different modalities.
Step 3: State Agency Action Based on Address or No Forwarding Address 
if Beneficiary Does Not Respond
    If a State agency has exhausted all outreach efforts described in 
Sec. Sec.  435.919(f)(1) through (f)(3), then the proposed actions that 
a State must or may take depend on whether USPS

[[Page 54793]]

returns an in-state forwarding address, an out-of-state forwarding 
address or no forwarding address.
    Returned mail with an in-state forwarding address reflects a 
potential change in circumstances that does not affect eligibility. 
Accordingly, if the beneficiary does not respond to the State's request 
to confirm their current address in a reasonable period after the State 
has taken the steps required under proposed Sec. Sec.  435.919(f)(1) 
through (f)(3), we propose at Sec.  435.919(f)(4)(i) that, consistent 
with current Federal policy, the State may not terminate the 
beneficiary's coverage if the State does not receive a response to its 
requests that the individual confirm their correct current address. 
However, while USPS may occasionally return mail sent to a beneficiary 
with an erroneous forwarding address, we believe that the USPS 
information generally is accurate, and certainly is accurate far more 
often than it is inaccurate. This accuracy is buoyed by controls 
implemented by USPS, which include charging a fee by credit card to 
validate online change of address (COA) requests, requiring individuals 
submitting a hardcopy COA request to verify that they understand an 
unauthorized COA order is a Federal offense, and sending two 
confirmation letters (to the new and old address) to authenticate the 
order. Therefore, we propose at Sec.  435.919(f)(4)(ii) that, if the 
State does not receive a response from the beneficiary that an in-state 
forwarding address provided by USPS is incorrect, the State must accept 
the new in-state address and update the beneficiary's account 
accordingly.
    Similarly, the USPS NCOA database includes the permanent change-of-
address records maintained by the USPS. Every time an individual or 
family moves and submits a change-of-address form to their local post 
office, their new address is recorded in the NCOA database. States can 
establish agreements with USPS to gain access to the NCOA database in 
order to utilize these address changes. Therefore, we propose at Sec.  
435.919(f)(4)(iv) that, if the State does not receive a response from 
the beneficiary that an in-state address provided by NCOA is incorrect, 
the State must accept the new in-state address and update the 
beneficiary's account accordingly. Additionally, we believe that 
updated in-state address information obtained from managed care plans 
may be treated as reliable data, provided that the updated contact 
information was received by the plan directly from, or was verified 
with, the beneficiary. Therefore, we propose at Sec.  
435.919(f)(4)(iii) that, if the State does not receive a response from 
the beneficiary that an in-state address obtained from a managed care 
plan is incorrect, the State must accept the new in-state address and 
update the beneficiary's account accordingly. We seek comment on 
whether States should be required to update a beneficiary's in-state 
address using more recent contact information reflected in a forwarding 
address from USPS or an address provided by NCOA or a managed care plan 
in this situation, when the beneficiary has not responded to the 
State's request to verify their current address.
    We note that CMS provided some States with authority under section 
1902(e)(14)(A) of the Act to rely on updated contact information from a 
reliable third-party source, such as an MCO, without first attempting 
to contact the individual and providing them with a reasonable period 
of time to verify the accuracy of the new contact information, in 
accordance with the State Health Official Letter, ``Promoting 
Continuity of Coverage and Distributing Eligibility and Enrollment 
Workload in Medicaid, the Children's Health Insurance Program (CHIP), 
and Basic Health Program (BHP) Upon Conclusion of the COVID-19 Public 
Health Emergency,'' published on March 2, 2022 (SHO letter #22-001). We 
seek comment on whether States should be permitted or should be 
required to update beneficiary contact information based on information 
obtained from an MCO, from the USPS NCOA, or other reliable data 
sources without first attempting to contact the beneficiary to provide 
them with an opportunity to verify or dispute the new information, 
because such third-party data is reliable, and, if so, which data 
sources should States be permitted to rely upon without attempting to 
contact beneficiaries. We are especially interested in comments from 
States that received authority under section 1902(e)(14)(A) of the Act 
to update beneficiary contact information based on information received 
from a reliable third party without first attempting to contact the 
individual, as described in SHO letter #22-001. We also seek comment on 
the efficacy of the requirement to send a notice to a beneficiary's 
address on file to ensure that initial piece of returned mail was not 
incorrectly returned.
    Returned mail with an out-of-state forwarding address indicates a 
potential change in circumstances (State residency) that may impact 
eligibility. Consistent with current requirements under Sec.  
435.916(d), we propose at Sec.  435.919(f)(5) that, if a beneficiary 
does not respond to the State's requests per proposed Sec.  
435.919(f)(1) through (f)(3) for information to verify their current 
address, or if information provided does not establish that the 
beneficiary continues to satisfy the State residency requirement, the 
State must provide advance notice of termination and fair hearing 
rights consistent with 42 CFR part 431 subpart E.
    Returned mail with no forwarding address. Current regulations at 
Sec.  435.916(d) require termination of the eligibility of a 
beneficiary for whom an out-of-state forwarding address has been 
received if the beneficiary does not respond with information 
establishing continued State residency, current regulations at Sec.  
431.213(d) provide for an exception to advance notice in the case of a 
beneficiary whose ``whereabouts are unknown and the post office returns 
agency mail directed to him indicating no forwarding address'' and 
current regulations at Sec.  431.231(d) provide for reinstatement of 
beneficiaries whose benefits were discontinued due to whereabouts 
unknown (``as evidenced by the return of unforwardable agency mail'') 
if their whereabouts subsequently become known. However, the current 
regulations are unclear with respect to what actions States must take 
in the case of beneficiaries who did not respond to the State's 
attempts to contact them to confirm their address and for whom the 
State has received no forwarding address and was unable to obtain an 
updated address from a reliable third-party source.
    While it is important that beneficiaries who remain in-state are 
not inappropriately terminated, continued enrollment of individuals 
whose State residency is unknown, particularly those enrolled in a 
managed care plan for whom the State pays a monthly capitation payment, 
may result in unnecessary expense to State Medicaid program and Federal 
government. To balance these two interests and provide clear 
requirements for such situations, we propose revising and redesignating 
current regulation at Sec.  431.231(d) at proposed Sec.  435.919(f)(6) 
to require that, when a State receives returned beneficiary mail with 
no forwarding address, the State must first take reasonable steps to 
locate the beneficiary consistent with proposed Sec. Sec.  
435.919(f)(1) through (f)(3). If, after taking such steps, the State is 
unable to locate the beneficiary, we propose at Sec.  435.919(f)(6)(i) 
that States must take appropriate steps to terminate coverage, suspend 
coverage, or move the beneficiary into a fee-for-service delivery 
system.
    Under Sec.  431.231(d) of the current regulations, redesignated at 
proposed

[[Page 54794]]

Sec.  435.919(f)(6), States are not required to provide advance notice 
of termination in the case of a beneficiary whose whereabouts remain 
unknown after the efforts required to locate the individual have been 
taken, but are required to provide notice of fair hearing rights. 
However, consistent with current regulations at Sec.  431.231(d), 
redesignated at proposed at Sec.  435.919(f)(6)(ii)(A), if the 
beneficiary's whereabouts become known prior to the beneficiary's 
originally-scheduled renewal date, the State must reinstate their 
coverage. We propose adding a requirement at Sec.  435.919(f)(6)(ii)(A) 
that States must reinstate coverage back to the date of termination if 
the individual's whereabouts become known before their next regularly-
scheduled renewal, without the need to verify eligibility. For example, 
suppose a beneficiary's eligibility is terminated in April 2023 on the 
basis of their whereabouts being unknown. In July 2023, the individual 
seeks care, but is told by the provider that their Medicaid coverage 
was terminated. If the individual contacts the agency before their next 
regularly-scheduled renewal, the agency must immediately reinstate 
their coverage retroactive to April 2023. Consistent with current Sec.  
435.916(d)(1)(ii), redesignated at proposed Sec.  435.919(e)(2), we are 
adding the option at proposed at Sec.  435.919(f)(6)(ii)(B) for States 
to begin a new eligibility period (defined in current regulations at 
Sec.  435.916(a), redesignated and revised at Sec.  435.916(b) in this 
proposed rule) for a beneficiary whose whereabouts become known if the 
agency has enough information available to it to renew eligibility with 
respect to all eligibility criteria without requiring additional 
information from the beneficiary.
    Proposed Sec.  435.919(g), describes the steps a State may take if 
it obtains updated mailing information from third-party sources other 
than returned mail from the USPS. Specifically, we propose at Sec.  
435.919(g)(1) that States that obtain updated in-state mailing 
information from NCOA or managed care plans may treat such information 
as reliable, provided that the State conducts the following outreach. 
When updated address information is obtained by the State from NCOA or 
from a managed care plan that has a contract with the State, the State 
must send a notice to the current address on file with the State and 
provide the individual with a reasonable period of time to verify the 
accuracy of the new contact information. Consistent with proposed Sec.  
435.919(c)(1), we propose that Sec.  435.919(g)(1)(v) define this 
reasonable period of time as 30 calendar days from the date the notice 
is sent to the beneficiary.
    States must also contact the beneficiary through other modalities, 
such as via telephone, electronic notice, email, or text message, where 
feasible, and must send information to the new address. We propose at 
Sec.  435.919(g)(1)(iii) that, in attempting to contact the beneficiary 
using a modality other than mail, the State must make at least two 
attempts with at least 3 business days between the first and last 
attempt. In implementing this requirement, States have flexibility to 
use any combination of available electronic or telephonic modalities. 
Such communications, initiated either directly by the State agency or 
through a State contractor or partner, must be compliant with Federal 
communications laws such as the Telephone Consumer Protection Act (47 
U.S.C. 227). If it is not feasible to conduct outreach via an 
alternative modality, for example because there is no phone or other 
electronic contact information in the case record or obtained from 
third-party sources, the State must note that in the case record. For 
outreach conducted by electronic or telephonic modalities, States must 
use the contact information available on file. If the beneficiary does 
not respond, the State may update the beneficiary record with the new 
contact information. If the beneficiary responds and confirms the new 
address, the State must update the beneficiary record with the new 
contact information. Critically, States should ensure that managed care 
plans only provide updated contact information received directly from 
or verified by the beneficiary, and not from a third party or other 
source. We remind States that the rules at Sec. Sec.  435.919(b) and 
435.952(d) apply for out-of-state address information obtained under 
Sec.  435.919(g).
    At Sec.  435.919(g)(2), we propose that States may treat updated 
in-state address information from other trusted data sources in 
accordance with proposed paragraph (g)(1) if the State obtains approval 
from the Secretary. At Sec.  435.919(g)(3), we propose the process that 
States must follow when obtaining any address information from any 
sources not listed in paragraph (g)(1) or (2) of this section. Under 
Sec.  435.919(g)(3), the agency must follow the steps outlined in Sec.  
435.919(f)(2) through (6), related to returned mail in order to confirm 
the address change with the beneficiary. We seek comment on whether 
States either should be permitted or should be required to update 
beneficiary contact information based on information obtained from an 
MCO, from the USPS NCOA, or other reliable data sources, such as Indian 
Health Care Providers, Federally Qualified Health Centers, Rural Health 
Clinics, Program of All-inclusive Care for the Elderly providers, 
Primary Care Case Managers, Accountable Care Organizations, Patient 
Centered Medical Homes, Enrollment Brokers, or other State Human 
Services Agencies (for example, SNAP), without first attempting to 
contact the individual to provide them with an opportunity to verify or 
dispute the new information, because such third-party data is reliable, 
and, if so, which data sources should States be permitted to rely upon 
without attempting to contact beneficiaries. We are especially 
interested in comments from States that received authority under 
section 1902(e)(14)(A) of the Act to update beneficiary contact 
information based on information received from a reliable third party 
without first attempting to contact the beneficiary, as described in 
SHO letter #22-001. We also seek comment on the efficacy of the 
requirement to send a notice to a beneficiary's address on file to 
ensure that initial piece of returned mail was not incorrectly 
returned, and on the efficacy of the requirement to conduct at least 
two outreach attempts to the beneficiary using a modality other than 
mail. We also seek comment on the requirements in proposed Sec.  
435.919(g)(3) paragraphs (f)(2) through (6), related to processing out-
of-state address information or address information from a source not 
identified in Sec.  435.919(g)(1), including whether CMS should 
consider including a requirement that a State check the available data 
sources outlined in Sec.  435.919(f)(1)(i) and Sec.  435.919(f)(1)(ii).
    Finally, we make a conforming amendment to Sec.  431.213(d), which 
currently cross references Sec.  431.231(d), to instead reference Sec.  
435.919(f). Proposed changes to Sec.  457.344 regarding the 
responsibilities of States administering a separate CHIP in the event 
of returned mail and when they receive information from a third party 
about a change in address for individuals enrolled in a separate CHIP 
are discussed in further detail in section II.E.3 of this preamble.
5. Transitions Between Medicaid, CHIP and BHP Agencies (Sec. Sec.  
431.10, 435.1200, 600.330)
    Section 1943 of the Act requires Medicaid agencies to collaborate 
with separate CHIP and BHP agencies, if such agencies exist in the 
State, and with the Exchanges to establish a coordinated

[[Page 54795]]

eligibility and enrollment process. Through this process, most 
applicants, as well as beneficiaries whose eligibility is being 
redetermined, are evaluated for eligibility for each of these insurance 
affordability programs and may enroll in the program for which they are 
eligible without having to complete separate applications. The 
requirements to coordinate eligibility and enrollment among insurance 
affordability programs were established in the 2012 eligibility final 
rule at Sec.  435.1200. State experience in implementing Sec.  435.1200 
has revealed some weaknesses in the requirements, which permit eligible 
individuals to experience unnecessary gaps in coverage and periods of 
uninsurance. Through this proposed rule, we seek to correct those 
weaknesses and reduce coverage gaps wherever possible.
    One weakness in the current requirements occurs when an agency has 
information indicating that a beneficiary is no longer Medicaid 
eligible and likely eligible for another insurance affordability 
program, but the individual does not respond to confirm this 
information. As discussed in sections II.B.1. and II.B.2. of this 
preamble, when the agency receives information reported by a 
beneficiary or from a reliable third-party source which may affect 
eligibility, the agency must promptly redetermine the individual's 
eligibility. If the third-party information would result in an adverse 
action, the agency must contact the beneficiary and request additional 
information to verify or dispute the information. Similarly, when a 
State accesses available information in attempting to renew an 
individual's eligibility during a regularly-scheduled renewal and 
obtains information indicating the individual may no longer be 
eligible, it must send the beneficiary a renewal form (which must be 
prepopulated for MAGI-based beneficiaries under the current 
regulations) and provide sufficient time for the individual to return 
the form and any other information or documentation needed to establish 
continued eligibility (at least 30 calendar days for MAGI-based 
beneficiaries under the current regulations). When a beneficiary or a 
beneficiary's representative does not respond to such requests, the 
agency must provide the individual with advance notice of termination 
and fair hearing rights, consistent with part 431 subpart E of the 
regulations.
    For most individuals determined ineligible for Medicaid, current 
Sec.  435.1200(e) requires the agency to determine potential 
eligibility for other insurance affordability programs and, as 
appropriate, transfer the individual's electronic account to the 
appropriate program. However, because this requirement applies only to 
a beneficiary who ``submits an application or renewal to the agency 
which includes sufficient information to determine Medicaid 
eligibility,'' the agency is not required to transfer an individual's 
account in all cases. When a beneficiary does not submit a required 
renewal form or other information needed to redetermine or renew 
eligibility, the Medicaid agency must send such advance notice of 
termination but is not required to transfer the individual's account to 
another insurance affordability program.
    These terminations, without a resulting transfer to another 
insurance affordability program, can create major disruptions in health 
insurance coverage for otherwise eligible individuals. For example, a 
family may receive notification of potential income ineligibility for 
Medicaid, but may not respond because the information described in the 
notification is correct, and the family does not understand that they 
need to confirm their increased income so their account will be 
transitioned to CHIP, BHP, or the Exchange in their State in accordance 
with current Sec.  435.1200(e).
    Disenrollment from health insurance coverage without a 
corresponding transition to enrollment in another insurance 
affordability program is a troubling outcome, particularly since 
regulatory requirements at Sec.  435.1200 for Medicaid, Sec. Sec.  
457.348 and 457.350 for CHIP, Sec.  600.330 for BHP, and 45 CFR 155.302 
for Exchanges were designed to ensure coordination of coverage and 
smooth transitions between insurance affordability programs. Losses of 
coverage are even more troubling when different programs share an 
eligibility system and a determination of eligibility for one program 
could be completed seamlessly as the individual is determined 
ineligible for another program.
    When developing the coordination requirements currently published 
at Sec. Sec.  435.1200, 457.348 and 457.350, and 600.330, and 45 CFR 
155.302, we recommended, but did not require States to utilize a shared 
eligibility system or service for all insurance affordability programs. 
Today, we believe every State with separate programs for Medicaid and 
CHIP \60\ utilizes a single eligibility system or shared eligibility 
service for eligibility determinations based on MAGI. As such, when a 
Medicaid beneficiary is determined ineligible due to an increase in 
household income, and the individual is screened for potential CHIP 
eligibility, the system effectively makes a determination of financial 
eligibility for CHIP. We believe the Medicaid agency could complete the 
determination of CHIP eligibility based on available information, so 
the individual does not need to be screened and then transferred to the 
separate CHIP agency before a determination of CHIP eligibility can be 
completed.
---------------------------------------------------------------------------

    \60\ As of June 1, 2022, 40 States have a separate CHIP; this 
includes 2 States with only a separate CHIP and 38 States with both 
a Medicaid expansion and a separate CHIP.
---------------------------------------------------------------------------

    Additionally, while Medicaid and CHIP are separate programs, both 
use MAGI-based methodologies described at section 1902(e)(14) of the 
Act, further detailed at Sec. Sec.  435.603 for Medicaid and cross-
referenced at Sec.  457.315 for CHIP, to determine financial 
eligibility. Further, States can, and often do, utilize the same 
policies and procedures to verify MAGI-based income eligibility for 
Medicaid and CHIP. In fact, current Sec.  435.1200(d)(4) requires the 
Medicaid agency to accept findings related to eligibility criteria made 
by a separate CHIP agency without further verification if that program 
applies the same verification policies as those used by the Medicaid 
agency. A similar requirement applies to CHIP at Sec.  457.348(c)(4). 
Because the same financial methodologies are used for each program, if 
the same verification requirements apply, a determination of financial 
eligibility used to determine CHIP eligibility must be accepted by the 
Medicaid agency in determining financial eligibility for Medicaid and 
vice versa.
    Through this rule, we propose changes to Sec.  435.1200 to improve 
transitions between Medicaid and a separate CHIP; corresponding changes 
to CHIP are described in section II.E.5 of this preamble. We note that 
these changes would apply only to transitions between Medicaid and a 
separate CHIP. They would not apply to transitions between title XIX 
funding and title XXI funding within Medicaid in States that implement 
CHIP through a Medicaid expansion, either in whole or in part.
    Current Sec.  435.1200 implements the ACA requirements established 
at section 1943(b) of the Act relating to the coordination of 
enrollment among insurance affordability programs. The general 
requirements for coordination are described at Sec.  435.1200(b). 
Paragraph (b)(1) requires the Medicaid agency to fulfill the general 
responsibilities described in later paragraphs, while paragraph (b)(2) 
requires the agency to certify, for the

[[Page 54796]]

other insurance affordability programs, the criteria for determining 
Medicaid eligibility. Current Sec.  435.1200(b)(3) requires the agency 
to enter into an agreement with the agency or agencies administering a 
separate CHIP, BHP, and the Exchange operating in the State; such 
agreement(s) must include a clear delineation of the responsibilities 
of each program with respect to eligibility determinations, notices, 
and fair hearings. Paragraphs (c) and (d) describe the Medicaid 
agency's responsibilities for eligibility and enrollment when an 
individual has been determined Medicaid eligible (paragraph (c)) or 
assessed as potentially Medicaid eligible (paragraph (d)) by a separate 
CHIP, BHP, or Exchange. Paragraph (e) of current Sec.  435.1200 
describes the responsibilities of the Medicaid agency to evaluate an 
individual's eligibility for CHIP, BHP, and coverage through the 
Exchanges when an individual is determined not eligible for Medicaid 
(Sec.  435.1200(e)(1)) or is undergoing a Medicaid eligibility 
determination on a non-MAGI basis (Sec.  435.1200(e)(2)). Paragraphs 
(f) through (i) of current Sec.  435.1200 describe the coordination 
requirements for an enrollment website, appeals, and notices.
    Among the requirements for enrollment simplification and 
coordination described in section 1943(b) of the Act, paragraph 
(b)(1)(F) specifically requires outreach and enrollment of underserved 
populations eligible for Medicaid. One of the populations called out 
for focused outreach and enrollment is children, including subsets of 
particularly underserved children, as well as racial and ethnic 
minorities, rural populations, and individuals with mental health and/
or substance use disorders. While the increase in uninsurance among 
children known to be eligible for Medicaid or another insurance 
affordability program has leveled off since 2020 when the PHE went into 
effect, likely due in large measure to the continuous enrollment 
condition under the FFCRA discussed in the background section of this 
preamble, in order to reduce the likelihood of future increases in 
uninsurance, we propose a new approach to implementing the coordination 
requirements in section 1943(b) of the Act.
    Section 1902(a)(19) of the Act requires that the Medicaid State 
plan include safeguards to ensure that eligibility is determined in a 
manner that is consistent with the simplicity of administration and the 
best interests of beneficiaries. We believe the language and 
requirements in Sec.  435.1200, which do not require transition of 
otherwise eligible individuals from one program to another when 
beneficiaries have failed to provide requested information to confirm 
or dispute third-party data indicating a change in eligibility, have 
contributed to an increase in uninsurance among individuals losing 
coverage under Medicaid and CHIP, even though they meet the eligibility 
requirements for another one of those programs. This result is 
inconsistent with both the simplicity of administration of the Medicaid 
program and the best interest of Medicaid beneficiaries.
    Utilizing the authority provided in sections 1902(a)(19) and 
1943(b)(1)(F) of the Act, we propose to revise paragraphs (b), (c), 
(e), and (h) of Sec.  435.1200 to improve enrollment of underserved 
populations and to reduce unnecessary administrative barriers to 
coverage by requiring Medicaid agencies, in States with a separate 
CHIP, to:
     Provide for an agreement with the separate CHIP agency to 
seamlessly transition the eligibility of beneficiaries between Medicaid 
and CHIP when their eligibility status changes;
     Accept determinations of MAGI-based Medicaid eligibility 
made by a separate CHIP;
     Establish procedures to receive determinations of Medicaid 
eligibility completed by a separate CHIP;
     Complete determinations of eligibility for a separate CHIP 
for individuals who are determined ineligible for Medicaid based on 
reliable third-party data; and
     Issue a combined notice indicating ineligibility for 
Medicaid and eligibility for CHIP when appropriate.
    In section II.E.4. of this preamble, we discuss proposed changes to 
the CHIP regulations that correspond with these proposed requirements 
for Medicaid agencies. When proposed changes to the Medicaid and CHIP 
regulations are read together, they would ensure that (1) when an 
individual is determined ineligible for Medicaid, the individual would 
receive a determination of CHIP eligibility (from the Medicaid agency) 
and, if eligible for CHIP, the individual's electronic account would be 
transferred from the Medicaid agency to the separate CHIP agency, with 
the separate CHIP agency completing any enrollment-related activities 
such as collection of an applicable enrollment fee or premium and/or 
plan selection; and (2) when CHIP determines that an enrollee has 
become ineligible for CHIP, the individual would receive a 
determination of MAGI-based Medicaid eligibility, and, if eligible for 
Medicaid, the individual's electronic account would be transferred from 
the separate CHIP agency to the Medicaid agency, with the Medicaid 
agency completing any enrollment related activities such as issuing a 
Medicaid card.
    We believe these changes could address potential declines in 
enrollment that may result from eligible individuals not being 
seamlessly transitioned to Medicaid from CHIP and from Medicaid to CHIP 
when available information indicates eligibility for the other program. 
We propose the following specific revisions to the coordination 
requirements for States with a separate CHIP.
    Preliminarily, we propose to add a new requirement to the list of 
requirements in current Sec.  435.1200(b)(3) that must be addressed in 
agreements between the Medicaid agency and other insurance 
affordability programs. Proposed Sec.  435.1200(b)(3)(vi) would require 
the Medicaid agency to include in its agreement with the State's 
separate CHIP agency, procedures for seamlessly transitioning the 
eligibility of individuals from Medicaid to CHIP when they are 
determined ineligible for Medicaid and eligible for CHIP. The agreement 
would also include procedures for seamlessly transitioning the 
eligibility of individuals from CHIP to Medicaid when they are 
determined ineligible for CHIP by that program and eligible for 
Medicaid. The agreement required under Sec.  435.1200(b)(3) would 
describe the responsibilities for each State agency administering 
Medicaid and CHIP to effectuate the required coordination.
    We propose to add a requirement at Sec.  435.1200(b)(4) that the 
Medicaid agency must accept a determination of MAGI-based Medicaid 
eligibility made by the State agency administering a separate CHIP (See 
section II.E.5. of this preamble for a discussion of the proposed 
requirements for agencies administering a separate CHIP to determine 
MAGI-based Medicaid eligibility.). There are a number of different 
options that the Medicaid agency could use to effectuate this 
requirement in compliance with the single State agency's responsibility 
to determine Medicaid eligibility described at Sec.  431.10(b)(3).
     If the separate CHIP is administered by the single State 
agency that administers the Medicaid program, then the single State 
agency itself can determine Medicaid eligibility at the same time as it 
is determining CHIP ineligibility.
     If the separate CHIP is not part of the single State 
agency, then as described at proposed Sec.  435.1200(b)(4)(i), the 
Medicaid and

[[Page 54797]]

CHIP agencies could agree to utilize the same MAGI-based methodologies 
under Sec. Sec.  435.603 and 457.315, and verification policies and 
procedures under Sec. Sec.  435.940 through 435.956 and 457.380, such 
that the Medicaid agency would accept any finding relating to a 
criterion of eligibility made by a separate CHIP agency without further 
verification in accordance with current regulations at Sec.  
435.1200(d)(4).
     As described at proposed Sec.  435.1200(b)(4)(ii), the 
agency may use a shared eligibility service that allows the Medicaid 
agency to maintain responsibility for the rules and requirements used 
to determine Medicaid eligibility, while permitting the separate CHIP 
agency to determine Medicaid eligibility by running the rules in the 
shared eligibility service maintained by the Medicaid agency when 
ineligibility for CHIP is determined. In such cases, any functions 
performed by the separate CHIP agency would be solely administrative in 
nature, and not reflective of a delegation of authority to make 
Medicaid eligibility determinations.
     If the separate CHIP agency does not use the same MAGI-
based methodologies and verification procedures as those used by 
Medicaid, and the two programs do not share an eligibility service with 
the Medicaid agency, we propose at Sec.  435.1200(b)(4)(iii) that the 
Medicaid agency may enter into an agreement in accordance with Sec.  
431.10(d) of the regulations, as amended in this proposed rule, and 
Sec.  431.10(c) under which the Medicaid agency delegates authority to 
make final Medicaid eligibility determinations to the entity that makes 
eligibility determinations for a separate CHIP agency. To effectuate 
this option, we propose to add the State agencies that administer the 
separate CHIP and BHP programs to the list of entities in Sec.  
431.10(c)(1)(i)(A) to which the Medicaid agency may delegate authority 
to make determinations of Medicaid eligibility. A separate BHP agency 
is added to the list of entities to which Medicaid may delegate 
eligibility determinations to accommodate either an option or a 
requirement for a State's BHP to complete determinations of Medicaid 
eligibility.
     Finally, at proposed Sec.  435.1200(b)(4)(iv), we would 
provide States with the option to utilize a different policy or 
procedure approved by the Secretary.
    We request comment on whether there are different ways that States 
with a separate CHIP agency should be permitted to effectuate a 
seamless transition of eligibility into Medicaid for individuals 
determined ineligible for CHIP.
    We also propose to expand the scope of paragraph (c) of Sec.  
435.1200, which provides for the provision of Medicaid to individuals 
determined eligible by another insurance affordability program. Current 
Sec.  435.1200(c) applies only to States that have entered into an 
agreement under which the Exchange or another insurance affordability 
program makes final determinations of Medicaid eligibility. We propose 
to amend Sec.  435.1200(c) to require Medicaid agencies, which must 
accept final determinations of Medicaid eligibility completed by a 
separate CHIP agency in accordance with proposed paragraph (b)(4), to 
do so in accordance with the requirements of paragraph (c), as 
described below.
    Current Sec.  435.1200(c)(1) through (c)(3) require the Medicaid 
agency to establish procedures to receive electronic accounts from 
another insurance affordability program; comply with the requirements 
of Sec.  435.911 (relating to determinations of Medicaid eligibility) 
to the same extent as if the Medicaid agency had received the 
application in an account transferred to it; and maintain proper 
oversight of the Medicaid program. We propose to redesignate the 
responsibilities described at current Sec.  435.1200(c)(1) through 
(c)(3) as paragraphs (c)(1)(i) through (iii), to delete the current 
introductory language in Sec.  435.1200(c), and to add a new paragraph 
(c)(2) to describe the individuals who would be subject to the 
requirements set out in proposed paragraph (c)(1).
    Specifically, proposed Sec.  435.1200(c)(2)(i) describes the 
individuals currently subject to the requirements in Sec.  
435.1200(c)--that is, individuals determined Medicaid eligible by the 
Exchanges or other insurance affordability programs (for example, a 
BHP), including as a result of a decision made by the appeals entity 
for such program, if the agency has entered into an agreement under 
which the Exchange or other insurance affordability program may make 
final determinations of Medicaid eligibility. Proposed Sec.  
435.1200(c)(2)(ii) describes individuals who are determined Medicaid 
eligible by a separate CHIP agency, including as the result of a 
decision made by a CHIP review entity in accordance with proposed 
435.1200(b)(4).
    Because we propose to require all States with a separate CHIP to 
fulfill the responsibilities of proposed Sec.  435.1200(c), not just 
those States that choose to enter into an agreement with another 
insurance affordability program, we also propose to revise the general 
requirement at Sec.  435.1200(b)(1) (which currently provides that the 
Medicaid agency fulfill the requirements set forth in Sec.  435.1200(d) 
through (h)) to include paragraph (c) in the list of requirements in 
Sec.  435.1200 which the Medicaid agency must fulfill. Similarly, we 
propose to revise Sec.  435.1200(b)(3)(ii), which provides that the 
agreements established between the Medicaid agency and other insurance 
affordability programs must ensure compliance with Sec.  435.1200(d) 
through (h), to include paragraph (c) of Sec.  435.1200.
    We do not propose to make any changes to Sec.  435.1200(d) in this 
proposed rule. Paragraph (d) requires the Medicaid agency to accept a 
determination of potential Medicaid eligibility made by another 
insurance affordability program. Because this rule would not require 
the Medicaid agency to enter into an agreement to accept eligibility 
determinations made by a BHP or Exchange or to make determinations of 
eligibility for BHP or for insurance affordability programs available 
through the Exchanges, we believe this paragraph will continue to be 
necessary in these cases. In addition, we recognize that there may be 
cases in which a separate CHIP agency does not have access to all 
information needed to determine eligibility for Medicaid (for example, 
on a non-MAGI basis), but may be able to complete a determination of 
potential eligibility and transfer the individual's electronic account 
to the Medicaid agency to request the additional information and 
complete the determination.
    The proposed revisions to Sec.  435.1200(c) aim to improve the 
seamless transition of individuals from a separate CHIP to Medicaid. We 
also propose changes to Sec.  435.1200(e) to improve the seamless 
transitioning of individuals from Medicaid to a separate CHIP. Current 
Sec.  435.1200(e)(1) describes the requirements that, for individuals 
determined ineligible for Medicaid, the Medicaid agency determine 
potential eligibility for and, as appropriate, transfer via a secure 
electronic interface the individual's electronic account to another 
insurance affordability program (that is, CHIP, BHP or Exchange).
    As mentioned previously, current Sec.  435.1200(e)(1) does not 
require the agency to transfer an individual's account to another 
insurance affordability if the individual fails to submit a ``renewal 
to the agency which includes sufficient information to determine 
Medicaid eligibility[.]'' We propose to remove reference to submission 
of a renewal form, such that

[[Page 54798]]

the Medicaid agency would be required to transfer the account of an 
individual who, during a regularly-scheduled renewal or redetermination 
based on a change in circumstances, has been determined ineligible for 
Medicaid and determined eligible, or potentially eligible, for another 
insurance affordability program based on available information. We note 
that this does not change the agency's obligation to provide 
individuals with an opportunity to dispute the information obtained by 
the agency indicating Medicaid ineligibility before the agency 
terminates their Medicaid eligibility, as required at current Sec.  
435.952(d), or to provide advance notice of termination and fair 
hearing rights in accordance with part 431 subpart E of the 
regulations.
    We also propose to revise Sec.  435.1200(e)(1) by breaking it into 
two paragraphs--paragraphs (e)(1)(i) and (ii)--establishing separate 
requirements for situations in which the Medicaid agency completes a 
determination of eligibility for a separate CHIP agency and situations 
in which the Medicaid agency makes a determination of potential 
eligibility for BHP or for insurance affordability programs available 
through the Exchanges.
    At proposed Sec.  435.1200(e)(1)(i), we would require that in a 
State that operates a separate CHIP, when the Medicaid agency 
determines an individual to be ineligible for Medicaid, it must also 
determine whether the individual is eligible for CHIP using information 
available to the agency. Information on the individual's financial 
eligibility will already be available in the eligibility system, along 
with certain non-financial eligibility factors such as State residency 
and citizenship or eligible immigration status. Other eligibility 
criteria which may be applicable to determining eligibility for CHIP, 
which are not relevant in a Medicaid determination, include enrollment 
in other insurance coverage and access to State employee health 
insurance. We believe State Medicaid agencies have access to other 
reliable data sources from which they can obtain any additional 
information that may be needed about these criteria. State Medicaid 
agencies have information on other insurance coverage that a 
beneficiary may have, which States are required to obtain from insurers 
for purposes of third-party liability and coordination of benefits per 
section 1902(a)(25)(I) of the Act. State Medicaid agencies also can 
access information on the availability of State employee health 
coverage from the State agency which administers such coverage. We 
believe it is consistent with simplicity of administration and the best 
interests of beneficiaries for the agency to be expected to access 
these data sources to make a determination of eligibility for CHIP.
    We recognize that it may be easier for some States to identify 
access to State employee health coverage than others. For example, in 
some States, a single State agency may administer the employee health 
plan for all State employees, and the plan may be available only to 
State employees and their dependents. While in other States, 
particularly those in which the government is more decentralized or in 
which local government agencies also participate in State employee 
health coverage, we believe it may be more difficult to access such 
information. We seek comment on State Medicaid agencies' ability to 
collect information on access to State employee health coverage, 
particularly if a child is not already enrolled in such coverage, 
without requiring additional information from the family.
    Ideally, an individual's enrollment in CHIP would be effectuated at 
the same time the State terminates coverage in Medicaid so the 
individual would not experience a period of uninsurance. However, we 
recognize that the separate CHIP agency may require payment of an 
enrollment fee or premium or other action, like plan selection, before 
enrollment can be completed. A combined notice, discussed later in this 
section, may mitigate some risk of a coverage gap by notifying the 
individual about the CHIP enrollment fee or premium requirement at the 
same time advance notice of Medicaid termination is issued, providing 
some additional time for families to make the required CHIP payment 
before Medicaid coverage ends. We seek comment on challenges States may 
face in smoothly transitioning enrollment from Medicaid to CHIP and 
processes that could be implemented to address these challenges. We 
also seek comment on whether there are situations in which the Medicaid 
agency would be able to complete only a determination of potential 
eligibility for CHIP, such that the final regulation would need to 
allow for situations in which the Medicaid agency would transfer the 
individual's electronic account to the agency administering a separate 
CHIP to finalize the determination for its own program.
    Proposed Sec.  435.1200(e)(1)(ii) would require that when the 
Medicaid agency determines an individual to be ineligible for both 
Medicaid and CHIP, the agency must determine potential eligibility for 
BHP if the State operates a BHP and if ineligible for BHP, the agency 
must determine potential eligibility for insurance affordability 
programs available through the Exchanges. This is consistent with the 
current regulatory requirement at Sec.  435.1200(e)(1).
    As important as it is to transition an individual from one 
insurance affordability program to another when eligibility changes, it 
is equally important to ensure that such individual receives clear and 
consistent information about the transition, both before the change is 
effectuated and when the transition occurs. It can be very confusing 
for individuals to receive separate notices from the Medicaid program 
and CHIP, particularly when they arrive at different times. 
Accordingly, we propose to require that individuals be provided with a 
combined eligibility notice when either the Medicaid agency determines 
the individual ineligible for Medicaid and eligible for CHIP or the 
separate CHIP agency determines the individual eligible for Medicaid 
and ineligible for CHIP.
    A ``combined eligibility notice'' is defined at current Sec.  435.4 
as an eligibility notice that informs an individual or multiple family 
members of a household of eligibility for each of the insurance 
affordability programs, for which a determination or denial of 
eligibility was made, as well as any right to request a fair hearing or 
appeal related to the determination made for each program. A combined 
notice must meet the general requirements described at Sec.  
435.917(a), along with the more specific requirements at Sec. Sec.  
435.917(b) (relating to required content) and 435.917(c) (relating to 
pursuing eligibility on a non-MAGI basis), except that information 
described in Sec. Sec.  435.917(b)(1)(iii) (relating to medically needy 
coverage) and 435.917(b)(1)(iv) (relating to covered benefits and 
services) may be included either in a combined notice issued by another 
insurance affordability program or in a supplemental notice provided by 
the agency. A combined eligibility notice must be issued in accordance 
with the agreement(s) between the agency and other insurance 
affordability program(s) per Sec.  435.1200(b)(3).
    Current Sec.  435.1200(h)(1) requires that, to the maximum extent 
feasible, individuals and households receive a single notice rather 
than separate notices from each applicable insurance affordability 
program, communicating the determination of eligibility as required 
under Sec. Sec.  435.917 and 457.340. In the preamble to the 2016 final 
rule,

[[Page 54799]]

we noted concerns from a number of commenters about the ability of 
State systems to issue a combined notice and described several 
considerations when looking at the feasibility of issuing combined 
notices. These considerations included whether the State uses a shared 
eligibility service, whether the State relies on a Federally-
facilitated Exchange to make determinations of Medicaid eligibility, 
and the maturity of the State's systems with greater use of combined 
eligibility notices expected as systems mature. In the 2016 final rule, 
we explained that it should be feasible to issue a combined notice when 
a single eligibility system or shared eligibility service is making 
determinations for multiple programs. As such, we believe that when the 
agency is enrolling an individual in Medicaid based on a determination 
of eligibility completed by another program, or vice versa, issuance of 
a combined eligibility notice should always be feasible.
    Therefore, we propose to revise Sec.  435.1200(h)(1) to require in 
all cases that individuals determined ineligible for Medicaid and 
eligible for CHIP in States with separate CHIP and Medicaid agencies in 
accordance with proposed Sec.  435.1200(e)(1)(i) receive a combined 
eligibility notice informing them that: (1) they have been determined 
no longer eligible for Medicaid; and (2) they have been determined 
eligible for CHIP. Similarly, we propose to require the Medicaid agency 
to ensure that an individual determined eligible for Medicaid by a 
separate CHIP agency also receives a combined notice. We propose to 
effectuate this requirement through a new paragraph (h)(1)(i) at Sec.  
435.1200, which would require that the Medicaid agency include in its 
agreement with a separate CHIP agency (as described in Sec.  
435.1200(b)(3) and revised in this rulemaking), that either the 
Medicaid agency or the CHIP agency will provide such combined 
eligibility notice explaining both the termination of eligibility for 
Medicaid and the determination of eligibility for CHIP or vice versa. 
States that operate its CHIP and Medicaid programs under the same 
agency and eligibility system that already provide a seamless, combined 
Medicaid and CHIP notice, may not need to make any changes. Note that 
regardless of which entity sends the combined notice, per the 
definition of combined notice in Sec.  435.4 of the current 
regulations, the Medicaid content of the notice must comply with the 
requirements set forth in Sec.  435.917.
    Proposed Sec.  435.1200(h)(1)(ii) would maintain the requirement in 
current Sec.  435.1200(h)(1) that, to the maximum extent feasible, a 
combined eligibility notice be issued in all other cases (that is, 
situations not described at proposed Sec.  435.1200(h)(1)(i)), 
consistent with current regulations. This provision would apply to 
situations in which the Medicaid agency has determined an individual to 
be potentially eligible for a BHP or insurance affordability programs 
available through the Exchanges, and to situations in which an 
Exchange, CHIP or BHP has made an assessment of potential Medicaid 
eligibility, including on a non-MAGI basis, but not a final 
determination. In addition, as currently required, when more than one 
individual is included on an application or renewal, Medicaid and the 
other insurance affordability programs would be expected to provide a 
single combined notice for all household members to the extent 
possible, even if members are eligible for different programs.
    We recognize that State eligibility systems still continue to 
mature and many States are still working through a backlog of system 
changes to correct issues arising from changes made in response to 
earlier rulemaking. We seek comment on the feasibility of implementing 
a combined notice for Medicaid and CHIP eligibility determinations, as 
well a combined notice with determinations of BHP and insurance 
affordability programs available through the Exchanges, both in States 
using a fully integrated eligibility system or shared system and in 
States utilizing separate systems. We also seek comment on the time 
that would be required for States to implement these changes if they 
are not already issuing combined eligibility notices.
    Finally, we propose one overarching policy change and several 
technical amendments to Sec.  435.1200. With respect to the policy 
change, we propose to clarify that the requirements at proposed Sec.  
435.1200(e)(1) (related to determining eligibility or potential 
eligibility for other insurance affordability programs) apply not only 
to individuals who have been determined ineligible for Medicaid on all 
bases, but also to individuals who have been determined ineligible for 
Medicaid coverage that is considered minimum essential coverage as 
defined at Sec.  435.4. We would effectuate this requirement through a 
new paragraph (e)(4) at Sec.  435.1200. Consider for example, an 
individual covered under the eligibility group for children under age 
19 (described at Sec.  435.118), which provides minimum essential 
coverage. If the agency determines that the individual's MAGI-based 
household income has increased such that it exceeds the income standard 
for that eligibility group and the only group for which that individual 
is eligible is the eligibility group in which coverage is limited to 
family planning and family planning-related services (described at 
Sec.  435.214), which does not provide minimum essential coverage, then 
in accordance with proposed Sec.  435.1200(e)(1), the agency would be 
required to determine that individual's eligibility for a separate 
CHIP. If the State either does not offer a separate CHIP, or the 
individual does not meet the eligibility requirements for that program, 
then the agency would need to determine that individual's potential 
eligibility for BHP and for insurance affordability programs available 
through the Exchanges and transfer the individual's account in 
accordance with proposed Sec.  435.1200(e)(1)(iii).
    Regarding the technical amendments, first we propose to remove 
``and definitions'' from the title of Sec.  435.1200(b), as definitions 
are currently included in Sec.  435.1200(a), and we propose to correct 
the spelling of ``programs'' in Sec.  435.1200(b)(3)(i). Second, we 
propose a technical change to 435.1200(e)(1) to replace the reference 
to Sec.  435.916(d) with a reference to proposed Sec.  435.919 to 
reflect the re-designation of current Sec.  435.916(d) at Sec.  435.919 
in this proposed rule. And third, we propose to correct a numbering 
error in Sec.  435.1200(h). The paragraph following Sec.  
435.1200(h)(3)(i)(B) was incorrectly numbered as (i), and we propose to 
renumber this paragraph as Sec.  435.1200(h)(3)(ii).
    In summary, the proposed changes to Sec.  435.1200 would require 
the Medicaid agency to:
     Ensure that the agreement between the agency and the 
separate CHIP agency includes procedures for the seamless transition of 
eligibility between programs;
     Accept determinations of Medicaid eligibility made by a 
separate CHIP agency;
     Make determinations of CHIP eligibility and transfer 
eligible individuals to the separate CHIP agency; and
     Provide for the issuance of a combined notice to an 
individual who is determined ineligible for Medicaid and eligible for 
CHIP or eligible for Medicaid and ineligible for CHIP.
    We considered applying these same changes to BHP agencies. 
Currently, the BHP regulation at Sec.  600.330(a) requires the BHP 
agency to establish eligibility and enrollment mechanisms and 
procedures to maximize coordination with the Exchange, Medicaid, and 
CHIP.

[[Page 54800]]

Additionally, it requires a State BHP agency to fulfill the 
requirements of Sec.  435.1200(d) and (e), and if applicable, paragraph 
(c) for BHP eligible individuals. In this proposed rule, we propose to 
revise Sec.  600.330(a) to limit the Medicaid requirements that a BHP 
agency must fulfill to those in Sec.  435.1200(d), (e)(1)(ii) and 
(e)(3). Paragraph (c) of Sec.  435.1200 would still be required when 
applicable (that is, when the BHP agency has entered into an agreement 
with another insurance affordability program to make final 
determinations of BHP eligibility).
    We seek comment on whether it is appropriate to apply the changes 
designed to create seamless transitions between Medicaid and a separate 
CHIP to BHP as well. This would include maintaining the current 
language in Sec.  600.330(a) and revising paragraphs (b), (c), (e), and 
(h) of Sec.  435.1200 to require the Medicaid agency to amend its 
agreement with the BHP agency to seamlessly transition eligibility 
between programs, to accept determinations of Medicaid eligibility made 
by the BHP agency, to make determinations of BHP eligibility, and to 
provide for the issuance of a combined Medicaid and BHP eligibility 
notice. or to maintain current coordination requirements, such that 
BHPs are required only to evaluate potential eligibility for Medicaid 
and CHIP and to accept determinations of potential BHP eligibility made 
by a Medicaid or separate CHIP agency. This would not prohibit a BHP 
from entering into an agreement with Medicaid and/or CHIP in which each 
agency completes determinations of eligibility for the other. These 
changes would require the State Medicaid agency to make a determination 
of eligibility for BHP based on information available through 
electronic or other data sources. We seek comment on whether it is 
possible for the Medicaid agency to gather the information necessary to 
complete such a determination, specifically, information on other 
affordable insurance coverage available to an individual.
6. Optional Group for Reasonable Classification of Individuals Under 21 
Who Meet Criteria for Another Optional Group (Sec.  435.223)
    Section 1902(a)(10)(A)(ii) of the Act authorizes States to provide 
Medicaid to one or more of the categorical populations described in 
section 1905(a) of the Act who also meet the requirements described in 
section 1902(a)(10)(A)(ii) of the Act (which lists the optional 
categorically needy eligibility groups). With specific regard to the 
categorical population described in section 1905(a)(i) of the Act--
individuals under age 21 or, at State option, under age 20, 19 or 18--
the introductory language in section 1902(a)(10)(A)(ii) of the Act 
permits States to extend medical assistance to ``reasonable 
categories'' of such individuals. Section 435.222 implemented optional 
coverage of individuals under the age of 21, 20, 19, or 18, or a 
reasonable category of such individuals (referred to as ``reasonable 
classifications'' in the regulations) who meet the AFDC income and 
resource requirements, as described in section 1902(a)(10)(A)(ii)(I) of 
the Act. Prior to January 1, 2014, and the implementation of MAGI-based 
methodologies under the ACA, States also were permitted to raise the 
effective income standard for eligibility for coverage under this group 
through adoption of income disregards under section 1902(r)(2) of the 
Act and Sec.  435.601(d) of the regulations. Many States used a 
combination of these authorities to provide Medicaid to all individuals 
under age 21, as well as to various State-defined reasonable 
classifications of such individuals up to varying income standards 
under their State plan.
    Revisions finalized in the 2016 eligibility and enrollment final 
rule reflect the adoption of MAGI-based methodologies in determining 
financial eligibility for most individuals under Medicaid, including 
individuals under age 21 eligible under Sec.  435.222. The elimination 
of income disregards under MAGI-based methodologies (see Sec.  
435.603(g)) also effectively limits the flexibility States previously 
had to raise the effective income standard for coverage under Sec.  
435.222 to meet the needs of new reasonable classifications of 
individuals under age 21 who are not eligible under the mandatory group 
for children at Sec.  435.118 or, in the case of 19 and 20-year-olds, 
under the adult group at Sec.  435.119. Other flexibilities, however, 
are provided in the statute which States may wish to employ to meet the 
coverage needs of reasonable classifications of children who are 
excepted from mandatory application of MAGI-based methods under the 
statute and regulations or otherwise fall outside the scope of Sec.  
435.222 (for example, individuals under age 21 seeking coverage on the 
basis of a disability or blindness or who meet a specified level-of-
care need).
    As noted above, States have the flexibility to provide coverage to 
individuals under age 21 (or, at State option, under age 20, 19 or 18) 
or to reasonable classifications of such individuals who meet the 
requirements of any subparagraph of section 1902(a)(10)(A)(ii) of the 
Act, which includes, but is not limited to, clause (I) of such section. 
For example, a State that has selected the eligibility category 
described in section 1902(a)(10)(A)(ii)(I) of the Act for individuals 
who meet AFDC requirements could define a reasonable classification of 
individuals under age 21 to include individuals who meet a level-of-
care need for HCBS. A State that has not selected the eligibility 
category described in section 1902(a)(10)(A)(ii)(I) of the Act but has 
instead selected the eligibility category described in section 
1902(a)(10)(A)(ii)(X) of the Act, relating to individuals who have 
disabilities or are 65 years old or older, could similarly define a 
reasonable classification of individuals who are under 21 and meet an 
HCBS-related level of care.
    The terms of the current Sec.  435.222, however, do not accommodate 
the adoption of such reasonable classifications, either because the 
regulation requires application of an income test that is based on 
``household income,'' which generally is defined in Sec.  435.4 to mean 
MAGI-based income, or limits inclusion of ``reasonable 
classifications'' to the eligibility categories described in section 
1902(a)(10)(A)(ii)(I) and (IV) of the Act (or both).
    To reflect the flexibility that we believe States are afforded 
under the statute, we are proposing to add a new Sec.  435.223 under 
which States may provide coverage to all individuals under age 21, 20, 
19, or 18, or to a reasonable classification of such individuals, who 
meet the requirements of any clause of section 1902(a)(10)(A)(ii) of 
the Act (as implemented in subpart C of part 435 of the regulations to 
the extent to which a given clause is so implemented).
    While coverage under proposed Sec.  435.223 is not expressly 
limited to individuals excepted from MAGI under Sec.  435.603(j), we 
believe that, as a practical matter, this will most typically be the 
case, as coverage for a reasonable classification of individuals under 
age 21 who are not excepted from the mandatory use of MAGI-based 
methodologies is already permitted by Sec.  435.222. Considering this 
and the need to distinguish Sec.  435.222 and the proposed Sec.  
435.223, we propose to change the heading for Sec.  435.222 to read, 
``Optional eligibility for reasonable classifications of individuals 
under 21 with income below a MAGI-equivalent standard.''
    For individuals excepted from the mandatory use of MAGI-based 
methodologies, Sec.  435.601 generally

[[Page 54801]]

requires that States apply the financial methodologies and requirements 
of the cash assistance program that is most closely categorically 
related to the individual's status. In the case of individuals who are 
under age 21 and who have blindness or disabilities, this generally 
means application of SSI-related financial methodologies. In the case 
individuals under age 21 who do not have blindness or disabilities, 
this means application of the financial methodologies in the State's 
former AFDC program.
    Because of the elimination of the AFDC program in 1996 and the 
replacement of AFDC-based methodologies with MAGI-based methodologies 
for determining financial eligibility for individuals not excepted from 
MAGI-based methods under the ACA, in the 2012 eligibility final rule, 
we provided States with flexibility under Sec.  435.831(b)(1)(ii) to 
apply either AFDC-based methodologies or MAGI-like methodologies, with 
limited exception, in determining eligibility for medically needy 
individuals under age 21, pregnant individuals, and parents and other 
caretaker relatives. Without this flexibility, States would be required 
to apply AFDC-based methodologies to these medically needy populations, 
even though the AFDC program ceased to exist over 25 years ago and 
those methodologies have no other applicability. Proposed Sec.  
435.601(f)(1)(i) and (ii) similarly provides States with flexibility to 
apply, at State option, either AFDC-based methods or MAGI-like methods 
in determining income eligibility for individuals under age 21, for 
whom the most closely categorically related cash assistance program is 
AFDC.
    The limited exception to application of ``true'' MAGI-based 
methodologies described in Sec.  435.603 of the regulations to 
medically needy individuals under Sec.  435.831(b)(1)(ii) stems from 
section 1902(a)(17)(D) of the Act. This statutory provision, 
implemented at Sec.  435.602 of the regulations, prohibits States from 
taking into account the financial responsibility of any individual in 
determining eligibility for any applicant or beneficiary under the 
State plan unless such applicant or recipient is the individual's 
spouse or the individual's child who is under age 21, or with blindness 
or disability. This limitation continues to apply to all individuals 
excepted from mandatory application of MAGI-based methods under section 
1902(e)(14)(D) of the Act, implemented at Sec.  435.603(j). Therefore, 
similar to the limitation on the flexibility afforded States under 
Sec.  435.831(b)(1)(ii) to apply MAGI-based methodologies for otherwise 
AFDC-related medically needy individuals, proposed Sec.  
435.601(f)(1)(ii)(B) requires that, in applying MAGI-based 
methodologies, States must ensure that there is no deeming of income or 
attribution of financial responsibility that would conflict with the 
requirements of section 1902(a)(17)(D) of the Act; that is, in 
determining eligibility under proposed Sec.  435.223 for an individual 
under age 21 who is described in Sec.  435.603(j) as exempt from the 
MAGI methodologies set forth in Sec.  435.603, no income other than the 
income of the individual or his or her parent(s) and/or spouse, would 
be counted, even if the income of someone else would be counted under 
the MAGI-based methods defined in Sec.  435.603.
    We also propose two technical changes related to the amendment of 
Sec.  435.601(f). In paragraphs (b)(2) and (d)(1) of Sec.  435.601, we 
replace the cross reference to Sec.  435.831(b)(1) (which provides an 
exception to the general rule to use the methods of the most closely 
categorically related cash assistance program) with a reference to the 
new subparagraph (f)(1)(ii)(B), which provides for the same exception. 
Note that, under section 1902(r)(2) of the Act and Sec.  435.601(d), a 
State also could apply less restrictive methodologies than either AFDC 
or the MAGI-like methodologies adopted in accordance with the option at 
proposed Sec.  435.601(e), including application of income disregards. 
By disregarding all resources, States, at their option, also could 
effectively eliminate application of an asset test for individuals 
excepted from MAGI-based methods in accordance with Sec.  435.603(j) 
who are seeking coverage under an optional coverage group adopted in 
accordance with proposed Sec.  435.223.

C. Eliminating Barriers to Access in Medicaid

1. Remove Optional Limitation on the Number of Reasonable Opportunity 
Periods (Sec. Sec.  435.956 and 457.380)
    Sections 1902(a)(46)(B), 1902(ee)(1)(B)(ii), 1903(x)(4), and 
1137(d)(4)(A) of the Act, implemented at Sec.  435.956(b) for Medicaid 
and through a cross-reference at Sec.  457.380(b)(1)(ii) for CHIP, set 
forth the requirement for States to provide a reasonable opportunity 
period (ROP) for individuals who have attested to citizenship or 
satisfactory immigration status, and for whom the State is unable to 
verify citizenship or satisfactory immigration status when the 
individual meets all other eligibility requirements, in accordance with 
Sec.  435.956(a).
    During the ROP, the State agency must continue efforts to complete 
verification of the individual's citizenship or satisfactory 
immigration status, or request documentation, if necessary. In 
accordance with Sec.  435.956(b)(2), during the ROP, the State agency 
must furnish Medicaid benefits to individuals who meet all other 
eligibility requirements, and may elect to do so effective as of the 
date of application or the first day of the month of application, 
consistent with Sec.  435.915(b).
    In the November 30, 2016 Federal Register, we issued the ``Medicaid 
and Children's Health Insurance Programs: Eligibility Notices, Fair 
Hearing and Appeal Processes for Medicaid and Other Provisions Related 
to Eligibility and Enrollment for Medicaid and CHIP'' Final Rule \61\ 
(81 FR 86382) (referred to hereafter as the ``2016 eligibility and 
enrollment final rule''), which set forth regulations governing the ROP 
at Sec.  435.956. At Sec.  435.956(b)(4), we provided an option for 
States to limit the number of ROPs that a given individual may receive, 
if the State demonstrates that the lack of limits jeopardizes program 
integrity and receives approval of a State plan amendment (SPA) prior 
to implementing such limits. This option to limit an individual's 
number of ROPs applies to individuals who re-apply for coverage after 
they have been determined to be ineligible for Medicaid due to failure 
to verify citizenship, U.S. national status, or satisfactory 
immigration status during the ROP provided in connection with a prior 
application.
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    We finalized this State option in the 2016 eligibility and 
enrollment final rule in response to public comments that we received 
on the ``Medicaid, Children's Health Insurance Programs, and Exchanges: 
Essential Health Benefits in Alternative Benefit Plans, Eligibility 
Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange 
Eligibility Appeals and Other Provisions Related to Eligibility and 
Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and 
Cost Sharing'' proposed rule that published in the January 22, 2013, 
Federal Register (78 FR 4593).\62\ In particular, one commenter stated 
that

[[Page 54802]]

the proposed rule could be interpreted to allow multiple (and 
unlimited) ROPs through the submission of subsequent applications 
despite the failure of verification of the individual's citizenship or 
immigration status. Another commenter questioned whether CMS considered 
limiting the number of ROPs that can be provided. In response to these 
comments, Sec.  435.956(b)(4) of the final rule established the State 
option to limit the number of ROPs, provided that before the State 
implements such a limitation, the State: (1) demonstrates that the lack 
of limits jeopardizes program integrity; and (2) receives approval of a 
SPA electing the option.
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    Since the option was finalized, only one State has submitted a SPA 
requesting to implement this option, which we approved as a one-year 
pilot program to provide the State with an opportunity to demonstrate 
that not limiting the number of ROPs jeopardized program integrity in 
the State. The State's pilot program limited individuals to two ROPs 
during the 12-month pilot period. During the pilot, the State monitored 
requests for multiple ROPs, and collected data on the frequency and 
characteristics of individuals who re-applied after failing to complete 
verification of their status during their first ROP. From its data 
analysis of the pilot period, the State observed that the number of 
repeat ROPs provided by the State was minimal and concluded that the 
availability of multiple ROPs posed negligible risk to program 
integrity. Following the pilot, the State suspended the policy of 
limiting the ROP period and removed the policy from its State Plan. 
Other than the one State, CMS has not received any inquiries about 
establishing such a limitation or raising program integrity concerns 
related to ROPs.
    Sections 1902(a)(46)(B), 1902(ee)(1)(B)(ii), 1903(x)(4), and 
1137(d)(4)(A) of the Act do not expressly limit the number of ROPs an 
individual may receive, nor do these provisions expressly provide 
discretion for States to establish such a limit. In light of the 
absence of any indication that the availability of multiple ROPs poses 
significant risks to program integrity, we believe that removing the 
option for States to impose limits on the number of ROPs that an 
individual may receive is warranted. Therefore, we are interpreting the 
ambiguity in 1902(a)(46)(B), 1902(ee)(1)(B)(ii), 1903(x)(4), and 
1137(d)(4)(A) of the Act with respect to this question of limiting the 
number of ROPs to remove the State option to limit the number of ROPs 
an applicant may receive after re-applying for benefits. We also find 
this proposal to be consistent with both section 1902(a)(19) of the 
Act, which requires that States provide safeguards as necessary to 
ensure that eligibility for care and services under the State plan are 
provided in a manner consistent with simplicity of administration and 
the best interests of the recipients, and section 1902(a)(8) of the 
Act, which requires that all individuals who wish to apply for Medicaid 
have the opportunity to do so. The ROP is integral to the Medicaid 
application process and ensuring prompt access to services for eligible 
individuals who have attested to U.S. citizenship, national, or 
satisfactory immigration status, but whose status cannot be promptly 
verified electronically. We note that an individual's status may change 
between the filing of applications or new information or evidence 
regarding U.S. citizenship/national status or satisfactory immigration 
status may become available. This policy revision supports the health 
and well-being of immigrants and their families in accordance with 
Executive Order 13993 ``Revision of Civil Immigration Enforcement 
Policies and Priorities'' and provides access to health coverage in 
Medicaid and CHIP for U.S. citizens and immigrants who are eligible to 
receive such coverage during a Reasonable Opportunity Period in 
accordance with Executive Order 14070 ``Continuing To Strengthen 
Americans' Access to Affordable, Quality Health Coverage.''
    Therefore, we propose to revise Sec.  435.956(b)(4) to remove the 
option for States to establish limits on the number of ROPs. Under 
proposed Sec.  435.956(b)(4) for Medicaid and the existing cross-
reference at Sec.  457.380(b)(1)(ii) for CHIP, States would be 
prohibited from imposing limitations on the number of ROPs that an 
individual may receive.
2. Remove or Limit Requirement To Apply for Other Benefits (Sec.  
435.608)
    Under Sec.  435.608(a) (relating to ``Applications for other 
benefits''), State Medicaid agencies must require that all Medicaid 
applicants and beneficiaries, as a condition of their eligibility, take 
all necessary steps to obtain other benefits to which they are 
entitled, unless they can show good cause for not doing so. Paragraph 
(b) of Sec.  435.608 describes such benefits to include, but not be 
limited to, annuities, pensions, retirement, and disability benefits. 
(Veterans' compensation and pensions, Social Security disability 
insurance and retirement benefits, and unemployment compensation are 
specifically identified as examples). This requirement applies to all 
Medicaid applicants and beneficiaries, without regard to the basis of 
their eligibility or the financial eligibility methodology used to 
determine their eligibility.
    This provision was originally promulgated in 1978 (see 43 FR 9810) 
and codified at the time at 42 CFR 448.3(b)(1)(ii) and 
448.21(a)(2)(i)(C). It was redesignated later in 1978 at Sec.  435.603 
(see 43 FR 45204), and redesignated again in 1993 at Sec.  435.608 (see 
58 FR 4931). When the rule was established in 1978, we noted that: 
``Section 1902(a)(17) of the Act requires that available income and 
resources must be considered in determining eligibility, except for 
amounts that would be disregarded (or set aside for future needs) by 
the AFDC [Aid to Families with Dependent Children] or SSI programs. 
Those programs require applicants and recipients to accept other cash 
benefits which are available to them; see: section 407(b)(2) of the Act 
and 45 CFR 233.20(a)(3)(ix) regarding AFDC; and section 1611(e)(2) of 
the Act and 20 CFR 416.230 and 416.1330 regarding SSI. Thus, this 
amendment conforms Medicaid requirements to those of the AFDC and SSI 
programs.'' (43 FR 9812).
    Section 1902(a)(17)(B) of the Act directs that a State plan ``must 
provide for taking into account only such income and resources as are, 
as determined in accordance with standards prescribed by the Secretary, 
available to the applicant or recipient and . . . as would not be 
disregarded (or set aside for future needs) in determining his 
eligibility for such aid, assistance or benefits'' under various 
Federal cash assistance programs, including the SSI program and the 
former AFDC program (emphasis added). This statutory language prohibits 
State Medicaid agencies from taking into account income and resources 
not counted in determining eligibility for various Federal cash 
assistance programs described in section 1902(a)(17)(B) of the Act. 
However, section 1902(a)(17)(B) of the Act does not mandate that States 
must take into account all types or sources of income and resources 
that are counted in the eligibility determinations for those programs. 
Instead, the language specifically provides discretion to the Secretary 
to establish the standards under which income and resources not 
disregarded by the various Federal cash assistance programs should be 
considered ``available,'' that is, taken into account, in determining 
an individual's Medicaid eligibility.

[[Page 54803]]

    Thus, while section 1902(a)(17)(B) of the Act authorizes the 
Secretary to consider as ``available'' income or resources Medicaid 
applicants and beneficiaries might receive if they applied for certain 
benefits, section 1902(a)(17)(B) of the Act does not require the 
Secretary to do so. Nor does section 1902(a)(17)(B) of the Act compel 
the Secretary to apply either the requirement in section 1611(e)(2) of 
the Act (that individuals seeking SSI apply for other benefits) or the 
requirement in former section 407(b)(2) of the Act (that individuals 
seeking AFDC benefits apply for AFDC) to individuals seeking Medicaid.
    Adoption of the rule imposed in the SSI and AFDC programs to 
Medicaid was reasonable in 1978, given that the primary path to 
Medicaid eligibility at the time was receipt of SSI or AFDC benefits; 
the Medicaid eligibility pathways available for individuals not 
receiving assistance from a Federal cash assistance program, or deemed 
to be receiving assistance from such programs, were very limited.
    However, Medicaid has significantly changed in the intervening 
years. For example, Medicaid eligibility was ``de-linked'' from cash 
assistance for a significant portion of the Medicaid population when 
the AFDC program was repealed and replaced with the Temporary 
Assistance for Needy Families (TANF) program in section 103 of the 
Personal Responsibility and Work Opportunity Reconciliation Act 
(PRWORA) of 1996 (Pub. L. 104-193). Unlike AFDC, eligibility for TANF 
does not confer automatic eligibility for Medicaid. Additionally, 
numerous eligibility groups have since been authorized under the 
statute, including groups for children, pregnant individuals, parents 
and caretaker relatives, and other adults with income higher than the 
income standard for cash assistance programs and eligibility groups 
that have no income test, such as the mandatory eligibility group for 
former foster care children described in section 1902(a)(10)(A)(i)(IX) 
of the Act (implemented in the regulations at Sec.  435.150), and the 
optional group serving individuals in need of breast or cervical cancer 
treatment described in section 1902(a)(10)(A)(ii)(XVIII) of the Act 
(implemented in the regulations at Sec.  435.213).
    Further, whereas financial eligibility for all eligibility groups 
previously had been based on the financial methodologies applied by a 
cash assistance program (primarily AFDC or SSI), effective January 1, 
2014, the ACA directed States to apply an entirely different financial 
methodology in determining eligibility for most individuals seeking 
Medicaid coverage, based on Federal income tax rules in the Internal 
Revenue Code. This methodology, based on MAGI as defined under section 
36B(d)(2) of the Internal Revenue Code, generally considers only 
amounts actually received by an individual and the individual's 
household members, and does not consider other amounts or benefits that 
the individual or other household members could receive if proactive 
steps were taken. Thus, there is no statutory mandate for the rule in 
Sec.  435.608(a) that currently requires application for other benefits 
by Medicaid applicants and beneficiaries.
    We have received a number of inquiries from States about the 
requirement to apply for other benefits. Some States specifically have 
requested flexibility to avoid applying this requirement to individuals 
otherwise eligible for the eligibility group for former foster care 
children which, as noted above, does not have an income test. These 
States noted that individuals who otherwise meet all requirements to be 
enrolled or remain enrolled in this group were losing Medicaid coverage 
due to failure to provide information on application for other 
benefits, such as unemployment compensation. Some States received 
beneficiary complaints related to the burden of this requirement and 
the impact on individuals who are required to apply for Social Security 
benefits before reaching their full retirement age. These States, in 
turn, reached out to CMS for guidance.
    Given that the Medicaid program has largely outgrown the foundation 
upon which Sec.  435.608 was based--that is, a close connection between 
Medicaid and cash assistance programs--and the barrier to coverage the 
requirement poses for some individuals, we believe it is appropriate to 
revisit this regulation. Specifically, we propose to reinterpret the 
meaning of ``such income and resources as are, as determined in 
accordance with standards prescribed by the Secretary, available to the 
applicant or recipient'' in section 1902(a)(17)(B) of the Act to 
encompass only the actual income and resources within the applicant's 
or beneficiary's immediate control, but not to encompass such income 
and resources that might be available if such individuals applied for, 
and were found eligible for, other benefits. This means that 
eligibility for Medicaid would no longer require that applicants and 
beneficiaries apply for benefits for which they may be entitled. We 
believe this interpretation is consistent with section 1902(a)(19) of 
the Act, which provides that eligibility be determined in a manner 
consistent with simplicity of administration and the best interests of 
recipients.
    In developing our proposal, we are considering several alternative 
options to address the requirement to apply for other benefits. These 
alternatives are not mutually exclusive and could be used in 
combination with one another.
     We are considering revising the requirement in Sec.  
435.608 to include benefits that would count as income under the 
financial methodology used to determine the applicant or beneficiary's 
income. Individuals whose financial eligibility is determined using 
MAGI-based methodologies would not be required to apply for other 
benefits that would not count as income. For example, such a person 
would not be required to apply for benefits such as TANF or veterans' 
benefits as a condition of Medicaid eligibility because those benefits 
are not counted as income under MAGI-based methodologies. Additionally, 
individuals who are eligible for, or applying for coverage under, a 
Medicaid eligibility group that does not include an income test, would 
not be required to apply for other benefits, as receipt of other 
benefits would not impact an individual's income for purposes of 
Medicaid eligibility because it would not impact their eligibility. 
This would be true of, for example, individuals who are eligible for 
the former foster care children eligibility group and the eligibility 
group serving individuals in need of breast or cervical cancer 
treatment. This would also be true of individuals who are eligible for 
Medicaid on the basis of their receipt of assistance under title IV-E 
of the Act (see Sec.  435.145). Under this option, however, individuals 
seeking coverage under an eligibility group applying the financial 
methodologies of the SSI program would be required, as a condition of 
eligibility, to apply for benefits that count as income in determining 
eligibility for SSI. For some individuals, in the course of processing 
an application, States must apply both the MAGI and non-MAGI 
methodologies before the most appropriate outcome is determined (see 
Sec.  435.911(c)); eliminating the requirement to apply for other 
benefits for MAGI-based individuals but maintaining the requirement for 
non-MAGI individuals could be administratively burdensome for States. 
Therefore, we consider a proposal to eliminate the requirement for all 
Medicaid applicants and beneficiaries to be the better approach.
     We also are considering exempting SSI beneficiaries from 
the requirement

[[Page 54804]]

to apply for other benefits, including SSI beneficiaries in States that 
have elected their option under section 1902(f) of the Act to apply 
eligibility criteria more restrictive than the SSI program for 
individuals who seek eligibility on the basis of being 65 years old or 
older or who have blindness or disabilities (that is, 209(b) States), 
but not other applicants and beneficiaries whose financial eligibility 
is based on SSI financial methodologies. As mentioned above, Federal 
law requires SSI applicants and beneficiaries to apply for other 
benefits for which they may be eligible. This means that an SSI 
beneficiary who applies for Medicaid will have already applied for 
other benefits for which the individual may be eligible, except where 
the SSA itself has determined: (a) that it does not believe that there 
are other benefits for which the individual may be eligible; or (b) 
that, even if there are potentially other such benefits, receipt of 
such benefits would not affect the individual's underlying SSI 
eligibility or payment amount (see 20 CFR 416.210 and SI 00510.001 
(``Overview of the Filing for Other Program Benefits Requirement'') in 
the SSA POMS). With this in mind, we believe that imposing the 
requirement in Sec.  435.608(a) on SSI recipients would be duplicative. 
We acknowledge that it may be theoretically possible that, in non-1634 
States (that is, criteria States and 209(b) States, as described 
above), there could be an SSI beneficiary who may be eligible for a 
benefit for which the SSA ultimately did not require the individual to 
apply but which could potentially affect the individual's Medicaid 
eligibility. However, we believe that such circumstances would be rare 
and do not outweigh the interests of the vast majority of individuals 
in 209(b) and criteria States, or simplicity of administration, 
consistent with section 1902(a)(19) of the Act, or efficiency of 
administration, consistent with section 1902(a)(19) of the Act. Even 
so, if the requirement were eliminated for all SSI beneficiaries, in 
addition to MAGI-based individuals, but preserved for non-SSI 
beneficiaries whose eligibility is based on either SSI methodologies or 
a 209(b) State's more restrictive methodologies, this approach could 
similarly create administrative burden for States. Therefore, we 
believe that a proposal to eliminate the requirement for all Medicaid 
populations is superior to this option as well.
    We invite comment on these possible alternatives. If CMS were to 
adopt an alternative to the proposal to eliminate the requirement to 
apply for other benefits in its entirety, we would consider making 
several modifications to such requirement, as follows:
    For those for whom we would maintain the requirement to apply for 
other benefits as a condition of eligibility, we are considering making 
the operation of the requirement a post-enrollment activity. Such a 
policy would be similar to, for example, the requirement that 
applicants attest that they will cooperate, while beneficiaries must 
cooperate, with identifying liable third parties under section 
1902(a)(25) of the Act, as implemented at Sec.  435.610(a)(2). Thus, 
applicants would need to attest to their agreement to apply for other 
benefits for which they may be eligible at application unless, 
consistent with the current regulation at Sec.  435.608(a), they can 
show good cause for not doing so. States would follow up with the 
individual on compliance with the requirement post-enrollment, and non-
cooperation by a beneficiary without good cause would be grounds for 
termination (subject to requirements for advance notice and fair 
hearing rights in 42 CFR part 431, subpart E).
    We are considering revising the ``good cause'' exception at Sec.  
435.608(a) to incorporate language included in the ``good reason'' 
exception in the SSI regulations at 20 CFR 416.210(e)(2). Specifically, 
we are considering including two examples of situations satisfying the 
good cause exemption that are in the SSI provision: (a) where an 
individual is incapacitated; or (b) where it ``would be useless'' for 
an individual to apply for other benefits because the individual has 
previously applied for the other benefits and been denied and has not 
experienced a relevant change in circumstances since that time. 
Additionally, the SSI policy also excuses compliance with the 
requirement to apply for other benefits where an individual will not 
receive a benefit that will affect eligibility. Therefore, we are 
considering adding these specific examples in the reference in the 
``good cause'' exception in Sec.  435.608.
    We are considering requiring States to provide written notice to 
each individual who is subject to the requirement in Sec.  435.608 of 
the benefits for which the State believes the individual may be 
eligible and that the individual's Medicaid eligibility may be affected 
by the individual's failure to apply for such benefits. This is the 
SSA's approach in requiring that SSI applicants and beneficiaries file 
for other benefits, as described in 20 CFR 416.210(c), and we would 
consider this to be a reasonable condition precedent to imposing the 
requirement.
    We seek comment on this proposal related to Sec.  435.608 and how 
CMS can update the regulation to reduce unnecessary barriers to 
enrollment and to reduce burden on individuals and States. We are 
interested, for example, in whether or not it is the experience of 
State agencies that imposition of the existing rule commonly results in 
applicants or beneficiaries receiving additional eligibility-altering 
income. We are also interested in the experiences of applicants and 
beneficiaries in their compliance with this rule, such as whether it 
commonly delays favorable eligibility determinations, and, by extension 
access to care. We are mindful that the requirement imposed by Sec.  
435.608(a) is not similarly imposed in eligibility determinations for 
CHIP, the BHP, or insurance affordability programs available through 
the Exchanges, and we are interested in comments on the whether the 
approach of the latter programs is more practical. We also welcome 
comments on each of the alternatives we are considering that might be 
adopted in a final rule based on comments received.
    In consideration of the foregoing analysis, we propose in this 
rulemaking to remove the requirement at Sec.  435.608 entirely for all 
Medicaid applicants and beneficiaries to apply for other benefits to 
which they are entitled.

D. Recordkeeping (Sec. Sec.  431.17, 435.914, and 457.965)

    Comprehensive recordkeeping is essential to the proper and 
efficient administration of any State Medicaid program, consistent with 
section 1902(a)(4) of the Act. State Medicaid agencies must maintain 
records needed to justify and support the decisions made regarding all 
applicants and beneficiaries, defend decisions challenged by an 
applicant or beneficiary who requests a fair hearing, enable State and 
Federal auditors and reviewers to conduct appropriate oversight, and 
support the State's own quality control processes. Applicants and 
beneficiaries (or their authorized representative) must also be able to 
review the content of their case record prior to a fair hearing 
challenging an agency's decision.
    Regulations at Sec. Sec.  431.17 and 435.914 currently require that 
State Medicaid agencies' records for applicants and beneficiaries 
include sufficient content to substantiate the eligibility 
determination made by the State. However, these regulations are largely 
outdated and unclear. In many instances, the requirements lack the 
specificity reflective of the range of

[[Page 54805]]

records and information used by today's Medicaid programs. The 
requirements do not reflect modern technology, specifically the use of 
electronic data, and do not specify how long applicant and beneficiary 
case records must be retained, resulting in a range of retention 
periods across States. Over the years, we have received questions from 
Medicaid agencies requesting clarification on record retention policy, 
storage modalities, and retention periods.
    HHS OIG reports also raise concerns about the adequacy of the case 
records maintained across State Medicaid agencies.\63\ The HHS OIG 
reports identified case records that lack documentation of income, 
citizenship, or immigration status verification and found case records 
in which auditors could not access documents needed to evaluate the 
accuracy of a State's determination of eligibility. Additionally, PERM 
eligibility reviews in the FYs 2019, 2020, and 2021 cycles found that 
insufficient documentation was a leading cause of eligibility 
errors.\64\
---------------------------------------------------------------------------

    \63\ California Made Medicaid Payments on Behalf of Non-Newly 
Eligible Beneficiaries Who Did Not Meet Federal and State 
Requirements, Office of Inspector General, 2018. Available at 
https://oig.hhs.gov/oas/reports/region9/91702002.pdf; New York Did 
Not Correctly Determine Medicaid Eligibility for Some newly Enrolled 
Beneficiaries, Office of Inspector General, 2018. Available at 
https://oig.hhs.gov/oas/reports/region2/21501015.pdf; Kentucky Did 
Not Always Perform Medicaid Eligibility Determinations for Non-Newly 
Eligible Beneficiaries in Accordance with Federal and State 
Requirements, Office of Inspector General, 2017. Available at 
https://oig.hhs.gov/oas/reports/region4/41608047.pdf; Colorado Did 
Not Correctly Determine Medicaid Eligibility for Some Newly Enrolled 
Beneficiaries, Office of Inspector General, 2019. Available at 
https://oig.hhs.gov/oas/reports/region7/71604228.pdf.
    \64\ Fiscal Year 2019 Agency Financial Report, US Department of 
Health and Human Services, 2019. Available at https://www.hhs.gov/sites/default/files/fy2019-hhs-agency-financial-report.pdf.
---------------------------------------------------------------------------

    To help States meet the requirement to maintain appropriate, 
comprehensive, and accessible records, consistent with section 
1902(a)(4) of the Act, we propose to revise Sec.  431.17 to more 
clearly delineate the types of information State Medicaid agencies must 
maintain in case records and to prescribe a minimum retention period. 
Reflecting modern forms of technology, we also propose to revise the 
regulations to require that States store their case records in an 
electronic format.
    We propose revisions to Sec.  431.17(b)(1) to detail the specific 
records and documentary evidence that must be retained as part of each 
applicant's and beneficiary's case record to support the determinations 
made by State Medicaid agencies. These records, which are critical to 
demonstrating that States are providing the proper amount of medical 
assistance to eligible individuals, include:
     All information provided on the initial application 
submitted by, or on behalf of, an applicant regardless of the modality 
through which a person applies for Medicaid (for example, online, by 
phone, in person or through the Exchange), including the signature and 
date of application;
     The electronic account and any information or 
documentation received from another insurance affordability program in 
accordance with Sec.  435.1200(c) and (d);
     Any changes in circumstances reported by the individual 
and any actions taken by the agency in response to such reports;
     All renewal forms and information returned by or on behalf 
of the beneficiary to the agency in accordance with Sec.  435.916, 
including the signature on any returned renewal form and the date the 
form was received;
     The date of and basis for any determination, denial, or 
other adverse action, including decisions made at application, at 
renewal, and as a result of a change in circumstance, affecting an 
applicant or beneficiary, as well as all documents or other evidence to 
support such action, including all information provided by, or on 
behalf of, the applicant or beneficiary and all information obtained 
electronically or otherwise by the agency or third-party sources. This 
includes information received from data sources as described in the 
regulations at Sec. Sec.  435.940 through 435.960.
     The provision of, and payment for, services, items and 
other medical assistance. This includes services or items provided and 
dates that the services or items were provided; diagnoses related to 
services or items provided; names of the providers rendering or 
referring/prescribing the services or items (as applicable), including 
their National Provider Identifier; the full amounts billed and paid or 
reimbursed for the services or items; and any liable third party and 
the amount of such liabilities;
     All notices provided to the applicant or beneficiary under 
Sec. Sec.  431.206, 435.917 or 435.918;
     All records pertaining to any fair hearings requested by, 
or on behalf of, the applicant or beneficiary, including each request 
submitted and the date of such request, the complete record of the 
hearing decision, as described in Sec.  431.244(b), and the final 
administrative action taken by the agency following the hearing 
decision and date of such action; and
     The disposition of information received by the agency when 
conducting verifications per regulations at Sec. Sec.  435.940 through 
435.960, including evidence that no information was returned from a 
given data source. In documenting the disposition of information 
received through this process, the disposition of information received 
by the agency includes documentation that the agency determined that 
information received was not useful to verifying eligibility.
    Neither the statute nor current regulations specify how long 
Medicaid records must be maintained. We believe that the length of 
record retention also is a critical factor to effective administration 
of the State plan and propose to revise Sec.  431.17(c) to require that 
States maintain all records described in this regulation for the period 
that the applicant or beneficiary's case is active, plus a minimum of 3 
years thereafter. In establishing this minimum time period, we assessed 
the areas of the Medicaid program for which there are time limits that 
would impact record retention, such as the PERM program, which operates 
on a 3-year cycle, and Medicaid timely filing, described at section 
1132(a)(2) of the Act, which requires that States file any claim for 
payment no later than 2 years from the calendar quarter of the 
expenditure. We consider 3 years to be a reasonable minimum based on 
these factors. We consider a case to be active starting at the date of 
application. For applicants determined ineligible (that is, the 
application is denied), the case would be active through the date that 
a determination of ineligibility is made. For applicants determined 
eligible (that is, the application is approved), the case would be 
active until their eligibility is terminated or coverage otherwise 
ends. A case would also remain active for any applicant or beneficiary 
who has a pending fair hearing or appeal. In the event that a case 
becomes active again prior to the expiration of the 3-year period, the 
records retention clock would restart. In this case, under the proposed 
rule, the State would need to retain all prior records until 3 years 
after the individual's eligibility is again terminated or their 
coverage otherwise ends. For example, if a beneficiary, who initially 
applied for coverage in 2020, is terminated in 2022 due to an increase 
in income and in 2024 (2 years later) reapplies and is determined 
eligible, the case would become active again. The records retention 
clock would restart, and all of the individual's records from

[[Page 54806]]

his or her initial application and enrollment from 2020 to 2022 must be 
retained during the new retention period.
    We believe that tying the retention period to the period of time 
that the case is active plus an additional 3 years will ensure that 
applicant and beneficiary records will be available for all 
circumstances in which such records may be needed, including after an 
individual is no longer enrolled in the Medicaid program. For example, 
if a formerly enrolled applicant reapplies to Medicaid 2 years after 
they lost coverage, States should rely on previously verified 
citizenship and immigration status unless the State has reason to 
believe something has changed. In order to rely on information 
previously verified, that information must be retained in the case 
record. Additionally, under the estate recovery program authorized by 
section 1917(b)(1) of the Act, States may recover payments for all 
Medicaid covered services. Therefore, States may need to access claims 
data in order to tally the cost of covered services for extended 
periods, depending on the length of the applicant's enrollment. We seek 
comment on the proposed retention period, as well as on whether a 
shorter or longer retention period should be required for certain types 
of records, including those pertaining to the provision of, and payment 
for, services, items and other medical assistance, or whether a shorter 
or longer period should be required for all records--for example, a 
period of 10 years for all records, similar to our policy regarding 
enrollee records for Medicare,\65\ as well as the record retention 
policy applied to managed care organizations under Sec.  438.3(u). We 
also seek comment on whether the retention period should be tied to the 
individual or the active case.
---------------------------------------------------------------------------

    \65\ CMS Records Schedule. Available at https://www.cms.gov/Regulations-and-Guidance/Guidance/CMSRecordsSchedule/.
---------------------------------------------------------------------------

    Current Sec.  431.17(d) contains outdated regulation text that 
references obsolete or rarely used technology, including microfilm 
systems. We propose to update this paragraph to require that State 
Medicaid agencies store records in an electronic format and that the 
State Medicaid agency make records available to the Secretary or other 
appropriate parties, such as State and Federal auditors, within 30 
calendar days of the date records are requested, if not otherwise 
specified. We seek comment on whether States should retain flexibility 
to maintain records in paper or other formats that reflect evolving 
technology. While each of the records and documentary evidence 
described in this section are considered part of the case record, we do 
not propose that these records must be stored in a single system.
    Finally, we propose conforming revisions to Sec.  431.17(a), 
relating to basis and purpose of Sec.  431.17. We also propose 
revisions to Sec.  435.914 of the current regulations, which also 
relates to case documentation, to reflect the full scope of records 
required under the proposed rule for both applicants and beneficiaries. 
Section 435.914(a) currently requires that States include in each 
applicant's case record facts to support the agency's decision on the 
application. Section 435.914(b) currently requires States to dispose of 
each application by either: (1) making a finding of eligibility or 
ineligibility; (2) documenting in the case record that the applicant 
voluntarily withdrew the application, and documenting that the agency 
sent a notice confirming such withdrawal; or (3) including an entry in 
the case record that the applicant has died or cannot be located. We 
propose to revise Sec.  435.914(a) to apply to both applicant and 
beneficiary case records and to provide that the records maintained in 
each individual's case record include all those described in Sec.  
431.17(b)(1), as revised in this proposed rule. We propose to revise 
Sec.  435.914(b) to provide that States must dispose of all 
applications and renewals by a finding of eligibility or ineligibility 
unless one of the three circumstances described above applies. The 
applicability of these requirements to a separate CHIP, including 
proposed changes to Sec.  457.965, is discussed further in section 
II.E.5 of this preamble.

E. CHIP Proposed Changes--Streamlining Enrollment and Promoting 
Retention and Beneficiary Protections in CHIP

    Current CHIP regulations adopt many of the Medicaid eligibility 
regulations, which require that States have methods of establishing and 
continuing eligibility, including coordinated and streamlined 
eligibility and enrollment processes between CHIP and other insurance 
affordability programs. In order to retain the alignment with Medicaid 
and other insurance affordability programs, we propose to adopt the 
same proposed policies for CHIP as are proposed for Medicaid in this 
proposed rule, except where otherwise noted. We discuss each of these 
proposed changes as they apply to CHIP below. We seek comment on 
whether there are any special considerations applicable to CHIP that 
warrant adoption of a different policy for CHIP than the proposed 
alignments with Medicaid requirements, which would include the various 
policies on which we specifically seek comment in the preamble 
discussing the proposed revisions to the Medicaid regulations.
1. Timely Determination and Redetermination of Eligibility and Related 
Reviews (Sec. Sec.  457.340 and 457.1170)
    As discussed in section II.B.3 of this proposed rule, we propose 
changes to Sec. Sec.  435.907(d) and 435.912 of the Medicaid 
regulations to ensure applicants are provided a meaningful opportunity 
to provide additional information needed by the State to make an 
eligibility determination and to establish specific timeliness 
standards for completion of regularly-scheduled renewals and 
redeterminations of eligibility due to changes in circumstances, 
including when a State receives information needed to redetermine 
eligibility too close to the end of an enrollee's eligibility period to 
complete a redetermination of eligibility prior to the end of the 
eligibility period.
    To ensure continued coordination between Medicaid and CHIP 
enrollment and renewal processes, as required by section 2102(b)(2)(E) 
of the Act, we propose to apply these changes equally to CHIP, except 
where otherwise noted. As discussed in section II.B.3 of this proposed 
rule, we propose revisions at Sec.  435.907(d) to require that, if a 
State cannot determine Medicaid eligibility based on the information 
provided on the application and the State needs additional information 
from the applicant, the State must: (1) give applicants for whom a 
disability determination is not needed at least 15 calendar days from 
the date the request is postmarked or electronic request is sent to 
provide the requested information and 30 calendar days from the date 
the request is postmarked or electronic request is sent for applicants 
whose eligibility is being determined on the basis of disability; (2) 
allow applicants to respond through any of the modes of submission that 
must be available for submission of the application; and (3) reconsider 
the eligibility of individuals whose application is denied for failure 
to provide needed information if the individual provides the needed 
information within 30 calendar days from the date the denial notice is 
postmarked or electronic notice is sent without requiring the 
individual to submit a new application. The terms of Sec.  435.907(d) 
are applicable to CHIP through an existing reference in Sec.  457.330 
to Sec.  435.907. Therefore, these

[[Page 54807]]

proposed changes would apply equally to CHIP, except as noted below 
with regard to a determination of disability, and no additional 
revisions to the CHIP regulations are needed.
    We note that, unlike Medicaid, there are no distinct eligibility 
groups in CHIP for which a determination of disability is needed. Some 
States, however, have established a separate CHIP for children with 
special health care needs (CSHCN). We seek comment on whether the 
longer time to return additional information requested by the State at 
application at proposed Sec.  435.907(d)(1)(i)(A) for individuals 
applying for Medicaid based on disability (a minimum of 30 calendar 
days), should be applied to children applying for a separate CHIP if a 
determination that the child qualifies as a CSHNC is required, as these 
families may similarly need more time to provide additional 
documentation or other information needed by the State to make a final 
determination on their application. We also seek comment on whether a 
minimum of 15 calendar days from the date the State's request for 
additional information is postmarked or electronically sent is 
sufficient for applicants generally (that is, regardless of any need 
for a determination of CSHCN status) or whether a longer timeframe, 
such as 20, 25, or 30 calendar days from the date the request is 
postmarked or electronically sent, similar to the longer time (30 
calendar days) proposed for individuals applying for Medicaid on the 
basis of disability, is appropriate. As discussed in section II.B.3 of 
this proposed rule, we are also considering a minimum requirement of 30 
calendar days from the date the request is postmarked or electronically 
sent for all applicants to provide additional information, along with 
an exception to the 45-day requirement at current Sec.  
435.912(c)(3)(ii) to provide States with an additional 15 calendar days 
to complete application processing if the State requested additional 
information from the applicant, which would apply to CHIP by existing 
references at Sec.  457.340(d). We also seek comment regarding whether 
States should be afforded additional time to make a determination of 
eligibility for applicants seeking coverage under a separate CHIP for 
CSHCN, similar to the additional time (maximum of 90 calendar days) 
provided at Sec.  435.912c)(3)(i)) for States to make a final 
determination of eligibility for individuals applying for Medicaid 
coverage based on disability and, if so, whether an a maximum of 60, 
75, or 90 calendar days is appropriate for determining eligibility for 
a separate CHIP for CSHCN. Additionally, we seek comment on whether 
calendar or business days would be better suited as an appropriate 
timeliness measure. Finally, we also seek comment on whether a longer 
reconsideration period of 45 calendar days, or 90 calendar days, would 
be appropriate, similar to the proposed 90-day reconsideration period 
discussed in section II.B.1 and II.B.2 of this preamble if a 
beneficiary provides the requested information within 90 calendar days 
of termination without requiring a new application.
    As also discussed in section II.B.3 of this proposed rule, we 
propose revisions to Sec.  435.912 to specify that States must 
establish timeliness and performance standards for conducting 
regularly-scheduled renewals, as well as redeterminations of 
eligibility due to changes in enrollee circumstances, including maximum 
timeframes within which States must complete these actions. Proposed 
revisions to Sec.  435.912 also specify the minimum timeframes that 
States must provide to enrollees to respond to requests for information 
when completing renewals. Similar to Medicaid, we also seek comment on 
the amount of time provided for States to complete a redetermination of 
eligibility at a regularly-scheduled renewal or based on changes in 
circumstances at proposed Sec.  435.912(c)(4), (c)(5), and (c)(6), 
whether the regulations should allow for a longer or shorter period of 
time, and whether the use of business days rather than calendar days 
would be more appropriate. Section 435.912 of the Medicaid regulations 
is applicable to CHIP through an existing reference at Sec.  
457.340(d). Therefore, these proposed changes would apply equally to 
CHIP, except that we propose to revise Sec.  457.340(d)(1) to exclude 
application of certain Medicaid requirements that are not applicable to 
CHIP. The Medicaid requirements not applicable to CHIP include Sec.  
435.912(c)(4)(iii) and (c)(6)(iii) (relating to timelines for 
completing renewals and redeterminations when States must consider 
other bases of eligibility per Sec.  435.916(f)(1), which is 
redesignated as Sec.  435.916(d)(1) in this proposed rule). We also 
propose to revise the title of Sec.  457.340(d) to clarify that the 
timeliness standards apply both at application and renewal.
    Finally, in order to support effective and efficient eligibility 
procedures, consistent with sections 2101(a) and 2102(b)(2) of the Act, 
we propose to modify section Sec.  457.1170 to require that States 
ensure the opportunity for continued enrollment in CHIP during a review 
of a State's failure to make a timely determination of eligibility. 
Currently, States using a program specific review process for separate 
CHIP must only provide the opportunity for continued enrollment in CHIP 
pending the completion of a review for a suspension or termination of 
CHIP eligibility. We believe this proposed change to Sec.  457.1170 
will support a CHIP enrollee's rights during a review if a State fails 
to meet the proposed timeliness standards at both application and 
renewal consistent with proposed changes in Sec.  435.912, as 
referenced in Sec.  457.340(d).
    Additionally, we propose to modify Sec.  457.1170 to clarify that 
continuation of enrollment includes the continued provision of health 
benefits during the review period. Currently, Sec.  457.1170 provides 
that States must ensure the opportunity for continuation of enrollment 
pending the completion of review of a suspension or termination of 
enrollment. While we acknowledge that, consistent with our definition 
of ``enrollee'' at Sec.  457.10, coverage of health benefits is 
intrinsic to enrollment, we propose to add explicit reference to 
benefits at Sec.  457.1170 to emphasize that continued enrollment 
without provision of benefits pending completion of a review of a 
termination or suspension of coverage does not satisfy the requirement 
at Sec.  457.1170. Finally, we propose to make explicit references to 
continuation of benefits in Sec. Sec.  457.1140 and 457.1180 when 
describing the process for continuation of enrollment or referencing in 
notices.
    As discussed above in section II.B.3 of the preamble, we seek 
comment for both Medicaid and CHIP on whether proposed Sec.  
435.912(c)(4)(ii) (incorporated in CHIP through Sec.  457.340(d)) 
balances maximizing the completion of timely renewals prior to the end 
of an enrollee's eligibility period and providing States with 
sufficient time to complete redeterminations and provide notice for 
enrollees who return needed documentation or other information prior to 
the end of their eligibility period, but not by the date requested by 
the agency to ensure completion of a timely renewal. The notice 
requirements for CHIP are located at Sec.  457.340(e)(1).
2. Changes in Circumstances (Sec. Sec.  457.344 and 457.960)
    As discussed in sections II.B.2 of this proposed rule, we propose 
to revise and redesignate paragraphs (c) and (d) of current Sec.  
435.916, related to changes in circumstances, to a new Sec.  435.919 
that is devoted specifically to State and enrollees' responsibilities 
for acting on changes in circumstances. Proposed Sec.  435.919 includes 
procedures for

[[Page 54808]]

enrollees to report changes to the Medicaid agency and specific steps 
States must take in promptly processing such changes.
    We propose at Sec.  435.919(c)(1) that States must provide a 
minimum of 30 calendar days for beneficiaries to respond to a request 
for additional information needed to determine eligibility based on a 
change in circumstances. We also propose at Sec.  435.919(d) that State 
Medicaid agencies provide beneficiaries whose coverage is terminated 
due to failure to provide information needed to redetermine eligibility 
following a change in circumstances with a 90-day reconsideration 
period. During this 90-day period, if a beneficiary returns the 
requested information, the agency would be required to redetermine the 
individual's eligibility without requiring a new application.
    Consistent with section 2102(b) of the Act related to a State's 
eligibility standards and methodologies, we propose to apply the 
changes at proposed Sec.  435.919 to CHIP. Regulations governing 
changes in circumstances for CHIP beneficiaries are currently found in 
Sec.  457.960. For greater transparency, we propose to remove Sec.  
457.960 in its entirety and incorporate the terms of proposed Sec.  
435.919 into a new Sec.  457.344. Some of the provisions in current 
Sec.  435.916 (redesignated at proposed Sec.  435.919) are not 
applicable to CHIP and we are not proposing to adopt them through 
proposed changes to Sec.  457.344. Specifically, we propose to not 
incorporate into Sec.  457.344 the requirement proposed at Sec.  
435.919(b)(4)(i) (currently at Sec.  435.916(f)(1)) related to 
determining eligibility upon all other bases. We do not believe this 
requirement is relevant for CHIP because the eligibility of all CHIP 
beneficiaries is based on MAGI, but we seek comment on whether it 
should be applied to CHIP in cases where a State has more than one 
separate CHIP population and an enrollee could transition between 
populations. For example, some States have a separate CHIP program 
specific to CSHCN or elect to provide coverage to other eligibility 
groups in CHIP, such as targeted low-income pregnant women.
    Currently Sec.  457.343 references Sec.  435.916, in its entirety 
as applicable. For example, the current regulations specify where noted 
that other CHIP regulations regarding verification and noticing 
requirements apply in place of Medicaid regulations referenced in Sec.  
435.916. Outside the redesignation of Sec.  435.916 (c) and (d) to 
Sec.  435.919, as discussed above, the remaining changes to the 
regularly-scheduled renewal requirements at proposed Sec.  435.916 will 
also apply to CHIP through this cross-reference. However, there are 
several proposed revisions to Sec.  435.916 that would not be 
applicable to CHIP populations, such as proposed Sec. Sec.  
435.916(a)(2) related to Medicare beneficiaries, 435.916(b)(3) related 
to non-MAGI determinations, and 435.916(d)(1) (a redesignation of 
current Sec.  435.916(f)(1)) related to considering eligibility on all 
bases prior to terminating a beneficiary.
3. Returned Mail (Sec.  457.344)
    As discussed in section II.B.4 of the preamble, we propose 
requirements at Sec.  435.919(f) describing the actions that States 
must take to verify an individual's address when the State receives 
returned mail, including the minimum amount of time States must provide 
to individuals to respond to such requests. Under this proposed rule, 
in addition to sending notices to the current address on file and the 
new address provided by USPS, the State must also attempt to contact 
the individual using other means, such as by telephone, email, text, or 
other electronic notice. Proposed Sec. Sec.  435.919(f)(1), (2), and 
(3) specify the actions States must take to verify an individual's 
address, and proposed Sec. Sec.  435.919(f)(4), (5) and (6) describe 
the actions States must take if an individual fails to confirm their 
address based on whether the forwarding address is in-state or out-of-
state or there is no forwarding address. This rule also re-designates 
existing Medicaid requirements at Sec.  431.231(d) as proposed Sec.  
435.919(f)(6). Under these requirements, States must reinstate coverage 
if an individual's whereabouts become known before their next renewal 
date. Finally, this rule proposes Sec.  435.919(g), which describes the 
actions States may and must take when they receive updated in-state 
address information from the USPS NCOA database or the State's 
contracted managed care entities as well as requirements when they 
receive updated address information from other third-party sources, 
regardless of whether those data sources have or have not been approved 
by the Secretary.
    Consistent with the section II.E.2 of the preamble, we are 
proposing that CHIP adopt the substance of proposed Sec.  435.919 as 
Sec.  457.344 with some exceptions. We also propose to apply the 
Medicaid provisions related to receipt of updated address information 
from returned mail, the USPS NCOA, a State's contracted managed care 
plans, and other third-party sources under Sec.  435.919(f) and (g) 
equally to CHIP. Additionally, we clarify at Sec.  457.344(f)(5) and 
(g)(1)(vii) that if any separate CHIP population is not available 
Statewide and the updated address lies outside of the specific 
geographic areas in which the State's separate CHIP provides coverage, 
the State is required to treat the newly identified address as out-of-
state and take the appropriate actions when trying to verify an 
enrollee's address, regardless of whether the address is obtained due 
to returned mail or obtained from another third-party data source.
    We seek also comment on several requirements in proposed Sec.  
457.344(f) and (g). Similar to the request for comments on proposed 
Sec.  435.919(f), we seek comment with respect to proposed Sec.  
457.344(f) on whether States should be required to update an enrollee's 
in-state address using more recent contact information reflected in a 
forwarding address from USPS or an address provided by NCOA or a 
managed care plan in this situation, when the enrollee has not 
responded to the State's request to verify their current address. 
Additionally, we seek comment on whether States should be permitted or 
should be required to update enrollee contact information based on 
information obtained from an MCO, from the USPS NCOA, or USPS 
forwarding without first attempting to contact the enrollee to provide 
them with an opportunity to verify or dispute the new information, 
because such third-party data is reliable, and, if so, which data 
sources should States be permitted to rely upon without attempting to 
contact enrollees. We are especially interested in comments from States 
that received authority under section 1902(e)(14)(A) of the Act (which 
applies to CHIP through section 2107(e)(1)(I) of the Act) to update 
enrollee contact information based on information received from a 
reliable third party (for example, an MCO, USPS NCOA or USPS forwarding 
address) without first attempting to contact the individual, as 
described in SHO letter #22-001. States that received such authority 
were temporarily permitted to accept updated enrollee contact 
information from designated reliable sources without first contacting 
the individual in an effort to verify the accuracy of the new contact 
information. We also seek comment on the efficacy of the requirement to 
send a notice to an enrollee's address on file to ensure that initial 
piece of returned mail was not incorrectly returned.
    We also seek comment on whether all States have a Medicaid 
Enterprise

[[Page 54809]]

System that encompasses both Medicaid and CHIP, as we have assumed 
under proposed Sec.  457.344(f)(1)(i). Finally, inasmuch as proposed 
Sec.  435.919(f)(6) (relating to individuals whose whereabouts become 
known) includes regulation text from an existing Medicaid regulation at 
Sec.  431.231(d), we seek comment on whether any provisions of Sec.  
435.919(f)(6) should not be applied to CHIP at proposed Sec.  
457.344(f)(6). We believe there may be operational challenges States 
may face when implementing these provisions and we seek further comment 
on the potential impact of these provisions.
    Finally, similar to Medicaid, we seek comment on whether under 
proposed Sec.  457.344(g) States either should be permitted or should 
be required to update enrollee contact information based on information 
obtained from an MCO, from the USPS NCOA, or other reliable data 
sources, such as Indian Health Care Providers, Federally Qualified 
Health Centers, Rural Health Clinics, Program of All-inclusive Care for 
the Elderly providers, Primary Care Case Managers, Accountable Care 
Organizations, Patient Centered Medical Homes, Enrollment Brokers, or 
other State Human Services Agencies (for example, SNAP), without first 
attempting to contact the individual to provide them with an 
opportunity to verify or dispute the new information, because such 
third-party data is reliable, and, if so, which data sources should 
States be permitted to rely upon without attempting to contact 
enrollees.
    We are especially interested in comments from States that received 
authority under section 1902(e)(14)(A) of the Act (which applies to 
CHIP through section 2107(e)(1)(I) of the Act) to update enrollee 
contact information based on information received from a reliable third 
party without first attempting to contact the enrollee, as described in 
SHO letter #22-001. We also seek comment on the efficacy of the 
requirement to send a notice to an enrollee's address on file to ensure 
that initial piece of returned mail was not incorrectly returned, and 
on the efficacy of the requirement to conduct at least two outreach 
attempts to the enrollee using a modality other than mail. We also seek 
comment on the requirements in proposed Sec.  457.344(g)(3) cross 
referencing Sec.  457.344(f)(2) through (6), related to processing out-
of-state address information or address information from a source not 
identified in Sec.  457.344(g)(1) or (2).
4. Transitions Between CHIP and Medicaid (Sec. Sec.  457.340, 457.348, 
and 457.350)
    As discussed in section II.B.5. of this preamble, every State with 
separate programs for Medicaid, CHIP, and BHP, and many States with a 
State-based Marketplace utilize a single eligibility system or shared 
eligibility service. As such, when an enrollee is determined ineligible 
for one program, and the individual is screened for potential 
eligibility in another program, the system is effectively making a 
determination of eligibility for the other program. An individual who 
applies at the Medicaid agency does not need to be screened and then 
transferred to the CHIP agency before a determination of CHIP 
eligibility can be completed, even if the CHIP agency operates 
separately from the Medicaid agency in the State. To improve 
transitions between programs and reduce the likelihood of individuals 
experiencing gaps in coverage, we proposed changes to the Medicaid 
transition requirements at Sec.  435.1200. As discussed in detail in 
section II.B.5., these changes would require the Medicaid agency to 
determine eligibility for CHIP when an individual is determined 
ineligible for Medicaid, and seamlessly transition the individual's 
electronic account to the separate CHIP agency when determined eligible 
for CHIP; these changes would also require the Medicaid agency to 
accept determinations of MAGI-based Medicaid eligibility made by 
separate CHIP agencies and enroll those eligible individuals into 
Medicaid, through one of the mechanisms described in Sec.  
435.1200(b)(4). We also propose changes to the Medicaid regulations at 
Sec.  435.1200(h)(1) to require States to provide a combined 
eligibility notice to individuals determined ineligible for Medicaid 
and eligible for separate CHIP. We similarly propose changes to Sec.  
457.340 to require the use of a combined notice for transitions between 
separate CHIP and Medicaid. Additionally, we propose changes to 
Sec. Sec.  457.340, 457.348, and 457.350 to improve transitions between 
separate CHIP and Medicaid, as described below.
    To help prevent children who are eligible for CHIP from becoming 
uninsured when their Medicaid eligibility is terminated, we propose to 
make several changes to current Sec.  457.348, which establishes 
requirements for the State to coordinate transitions of eligibility 
between and with other insurance affordability programs. First, we 
propose to add a new paragraph to Sec.  457.348 regarding agency 
responsibilities for transitioning eligibility. Paragraph (a) of 
current Sec.  457.348 requires the State to enter into agreements with 
the agencies administering other insurance affordability programs to 
fulfill a number of requirements in this section, such as minimizing 
burden on individuals during the eligibility process, and ensuring 
prompt determination of eligibility and enrollment in the appropriate 
program without undue delay. We propose to revise Sec.  457.348(a) to 
require that these agreements provide for not only coordination of 
notices, but also for a combined eligibility notice with other 
insurance affordability programs. We also propose to add a new 
paragraph (a)(6) to Sec.  457.348, which would require the State to 
have an agreement with the Medicaid agency which clearly describes the 
responsibilities of each agency for ensuring a seamless transition 
between separate CHIP and Medicaid when an individual is determined 
ineligible for one program and eligible for another program. This is 
consistent with the proposed Medicaid revision at Sec.  
435.1200(b)(3)(vi).
    Second, we propose to modify Sec.  457.348(b) to require the CHIP 
agency to accept determinations of separate CHIP eligibility made by 
Medicaid. Current Sec.  455.348(b) describes the responsibilities of 
the CHIP agency for individuals found CHIP eligible by another 
insurance affordability program, if the agency has elected to accept 
eligibility determinations made by other programs. We propose to 
require that the agency accept eligibility determinations made by 
Medicaid but retain the option to enter into an agreement with a BHP or 
Marketplace operating in the State to accept eligibility determinations 
made by those entities. To effectuate this change in regulation, and to 
improve clarity of existing regulations, we propose to delete the 
introductory language in current paragraph (b) and redesignate the 
requirements in current Sec.  457.348(b)(1) through (3) at proposed 
Sec.  457.348(b)(1)(i) through (iii). We propose to add a new paragraph 
(b)(2) to describe the individuals who are subject to the requirements 
in proposed paragraph (b)(1). Specifically, proposed Sec.  
457.348(b)(2)(i) describes the individuals who are subject to the 
requirements in paragraph (b) in the current regulations--that is, 
individuals determined eligible for CHIP by the Marketplace or another 
insurance affordability program (including as a result of a decision 
made by a Marketplace appeals entity), if the agency has entered into 
an agreement

[[Page 54810]]

under which the Exchange makes final determinations of CHIP 
eligibility. Proposed Sec.  457.348(b)(2)(ii) describes individuals who 
are determined CHIP eligible by a separate Medicaid (including as the 
result of a decision made by a Medicaid appeals entity). We also 
propose to add new introductory language at proposed Sec.  
457.348(b)(1) to explain that the requirements in proposed paragraph 
(b)(1) apply to individuals described in proposed paragraph (b)(2).
    Paragraph (c) of current Sec.  457.348(c) describes the CHIP 
agency's responsibilities when individuals are transferred from other 
insurance affordability programs based on their potential eligibility 
for CHIP. We are not proposing any revisions to these requirements, 
since they will continue to apply in States that do not elect to accept 
determinations of eligibility made by BHP or the Marketplace. 
Similarly, we do not propose any changes to current Sec.  457.384(d), 
which specifies that a State must certify for the Exchange and other 
insurance affordability programs the criteria applied in determining 
CHIP eligibility.
    Third, we propose to add a new paragraph (e) to Sec.  457.348 to 
clarify that the State must accept a determination of CHIP eligibility 
made by a separate Medicaid program. Similar to the proposed changes to 
the Medicaid regulations discussed in section II.B.5. of this rule, in 
order to comply with this requirement, we propose that the agency may: 
(1) apply the same MAGI-based methodologies without further 
verification as Medicaid; (2) enter into an agreement under which the 
State delegates authority to the Medicaid agency to make final 
determinations of CHIP eligibility; or (3) adopt other procedures 
approved by the Secretary. These options are described at proposed 
Sec.  457.348(e)(1), (2), and (3) respectively. We seek comment on 
whether these options encompass the full range of processes that a 
State may establish to accept determinations of eligibility made by 
Medicaid.
    When accepting a determination of CHIP eligibility made by 
Medicaid, we expect States to enroll the individual in separate CHIP as 
quickly and seamlessly as possible. Any action the State requires the 
individual to take prior to enrollment, such as payment of an 
enrollment fee or selection of a plan, should be described in the 
combined notice provided to the individual and the individual should be 
given adequate time to respond to prevent or minimize a gap in 
coverage. We request comment on the challenges a State may face in 
seamlessly transitioning eligibility from another program, as well as 
strategies to mitigate those challenges.
    Next, we propose changes to Sec.  457.350, which currently focuses 
on screening individuals for potential eligibility for other insurance 
affordability programs. We propose to require separate CHIP agencies to 
complete MAGI-based eligibility determinations for Medicaid and to 
screen for potential non-MAGI Medicaid, as well as eligibility for BHP 
and insurance affordability programs available through the Exchanges. 
As proposed, when a CHIP enrollee is determined ineligible due to a 
decrease in household income, the separate CHIP agency would also 
complete a determination of eligibility for Medicaid. The individual 
would no longer be screened for potential MAGI Medicaid eligibility, 
transferred to the Medicaid agency, and then receive a determination of 
Medicaid eligibility, as required by current Sec.  457.350(b). The 
separate CHIP agency must utilize the option the Medicaid agency has 
elected to accept determinations of MAGI-based Medicaid eligibility 
made by a separate CHIP. The options for the Medicaid agency to accept 
a CHIP eligibility determination and continue to comply with Medicaid 
single State agency responsibilities are discussed in section II.B.5 of 
the Medicaid preamble. We are proposing to add a new paragraph (b)(3) 
at 457.350 to require the State to ensure that Medicaid eligibility 
determinations are conducted in accordance with the option elected by 
the Medicaid agency at proposed Sec.  435.1200(b)(4) and that this be 
reflected in the agreement between the State and the Medicaid agency 
that is required at Sec.  457.348(a). We seek comment on the 
feasibility of a contractor for the separate CHIP agency having the 
ability to conduct the Medicaid determination in accordance with the 
options specified at Sec.  435.1200(b)(4).
    These changes correspond with the changes proposed to the Medicaid 
regulations at Sec.  435.1200(e). In addition to the changes related to 
Medicaid eligibility determinations, we also propose to restructure 
Sec.  457.350 in order to improve the clarity of both existing and 
proposed requirements for separate CHIP agencies evaluating eligibility 
for other insurance affordability programs. These proposed changes are 
effectuated as follows. Specifically, we propose:
     To amend Sec.  457.350(a)(2) to clarify that the State 
plan must describe how enrollment is facilitated for applicants found 
either potentially eligible for another insurance affordability program 
(that is, BHP or insurance affordability programs available through the 
Exchanges) or eligible for Medicaid in accordance with this section.
     To revise Sec.  457.350(b) to require States to determine 
an applicant's eligibility for MAGI Medicaid and to determine potential 
eligibility for non-MAGI Medicaid, BHP, or insurance affordability 
programs available through the Exchanges for individuals who are not 
eligible for MAGI-based Medicaid. Current Sec.  457.350(b) requires a 
State to identify potential eligibility for other insurance 
affordability programs (specifically MAGI-based Medicaid, non-MAGI 
Medicaid, and other insurance affordability programs), promptly and 
without undue delay and consistent with the State's timeliness 
standards, when an individual is determined ineligible for separate 
CHIP at application, at renewal, based on a change in circumstances, or 
following a review. At Sec.  457.350(b)(1) we propose to retain the 
introductory language at current Sec.  457.350(b) that a State act 
promptly and without undue delay, consistent with the timeliness 
standards established by the State, but we would add a new paragraph 
(b)(1)(i) requiring the State to determine eligibility for MAGI-based 
Medicaid. At proposed Sec.  457.350(b)(1)(ii), we would require a 
State, if unable to make a determination of eligibility for MAGI-based 
Medicaid to determine potential eligibility for non-MAGI Medicaid, BHP, 
or insurance affordability programs available through the Exchanges. 
Proposed Sec.  457.350(b)(2) would apply the requirements of proposed 
paragraphs (b)(1)(i) and (ii) to applicants, enrollees whose 
eligibility is being redetermined at renewal or based on a change in 
circumstances, and to individuals determined ineligible for separate 
CHIP as a result of a review conducted in accordance with subpart K of 
this part. This is consistent with the application of current paragraph 
(b) of Sec.  457.350, as described in the current introductory 
language.
     Technical changes to paragraph (c) of this section. 
Current Sec.  457.350(c) describes the income eligibility test that 
States must apply when determining an individual's eligibility for 
MAGI-based Medicaid, or potential eligibility for BHP or insurance 
affordability programs available through the Exchanges. We propose to 
revise the references to paragraph (b) to reflect the change at 
proposed Sec.  457.350(b)(1)(i) requiring the State to determine 
eligibility for MAGI-based Medicaid and the redesignation of the 
requirement to determine potential eligibility for BHP and insurance 
affordability programs available through the Exchanges at proposed 
Sec.  457.350(b)(1)(ii).

[[Page 54811]]

     To redesignate current paragraph (f) at proposed Sec.  
457.350(d), which is currently reserved. Current Sec.  457.350(f) 
applies to individuals determined by the separate CHIP agency to be 
potentially eligible for Medicaid based on MAGI and requires the State 
to transfer the individual's account to the Medicaid agency, find the 
applicant provisionally ineligible for CHIP until the Medicaid 
determination is completed, and redetermine CHIP eligibility if the 
individual is found ineligible when the Medicaid agency completes the 
determination. Because we propose to require States to complete 
determinations, rather than potential determinations, of eligibility 
for Medicaid based on MAGI, we propose several changes to Sec.  
457.350(f) (redesignated at proposed Sec.  457.350(d)). First, we 
propose to modify the title for proposed Sec.  457.350(d) to clarify 
that this provision applies to actions that States must take when 
determining an individual eligible for Medicaid based on MAGI, rather 
than actions the State must take for individuals found potentially 
eligibility for Medicaid. Next, we propose to amend the citation in the 
introductory language to reflect the changes proposed at paragraph 
(b)(1) of this section. We propose to revise Sec.  457.350(f)(2) 
(redesignated at Sec.  457.350(d)(2)) to require that the State find 
the applicant ineligible for CHIP (as opposed to provisionally 
ineligible for CHIP until the Medicaid determination is completed). 
Finally, we propose to delete current paragraph (f)(3), which requires 
the State to determine or redetermine eligibility when the Medicaid 
agency returns a determination of ineligibility for an individual whom 
the separate CHIP agency screened as potentially Medicaid eligible, 
since under proposed Sec.  457.350(b) the CHIP agency will have 
completed a determination of eligibility for MAGI-based Medicaid and 
proposed Sec.  435.1200(c) would require the Medicaid agency to accept 
the determination of eligibility made by the separate CHIP agency.
     To redesignate current Sec.  457.350(j), describing the 
requirements for individuals determined potentially eligible for non-
MAGI Medicaid, as proposed Sec.  457.350(e). Current Sec.  457.350(j) 
requires the State to transfer the individual's account to the Medicaid 
agency, complete a determination of CHIP eligibility and evaluate 
eligibility for other insurance affordability programs if ineligible 
for CHIP, include coordinated content in the CHIP eligibility notice, 
and disenroll the individual from CHIP if they ultimately are 
determined eligible for Medicaid. We propose several technical changes 
to paragraph (j) (redesignated as proposed paragraph (e)). We propose 
to revise the title to clarify that this paragraph applies not only to 
applicants but also to individuals whose eligibility is being 
redetermined at renewal or based on a change in circumstances and to 
individuals who are determined ineligible for CHIP upon review; we note 
that this is not a change in policy but simply a correction to the 
title. Then we propose to revise existing cross-references to align 
with proposed changes to paragraphs (b), (e), and (g) in Sec.  457.350.
     To redesignate, at Sec.  457.350, current paragraph (e) as 
paragraph (f). Current Sec.  457.350(e) applies only to States that use 
a screening procedure other than a full Medicaid eligibility 
determination and requires the State to provide certain information to 
the family when a child is found potentially ineligible for Medicaid. 
We propose to revise the title of Sec.  457.350(e) (redesignated at 
Sec.  457.350(f)) to clarify that, in accordance with other changes 
proposed to this section, this paragraph would apply to individuals who 
are determined ineligible for MAGI-based Medicaid and found potentially 
ineligible for Medicaid on a basis other than MAGI. We also propose to 
update the existing cross-reference in this paragraph to reflect the 
redesignation of current paragraph (e) as new paragraph (f).
     To delete current paragraph (g) of Sec.  457.350 in its 
entirety and to redesignate current Sec.  457.350(i) at proposed Sec.  
457.350(g). Currently, paragraph (g) describes information States must 
provide to help families make informed decisions about applying for 
Medicaid coverage. We believe that the separate CHIP agency is already 
required to provide similar information to families of children that 
may potentially be eligible for Medicaid on a non-MAGI basis in Sec.  
457.350(e) (redesignated as proposed Sec.  457.350(f)). Therefore, we 
propose to eliminate the current requirements at Sec.  457.350(g). 
Current Sec.  457.350(i) (which is revised in this rulemaking to remove 
references to individuals subject to a period of uninsurance, as 
discussed in section II.F.2 of this proposed rule) sets forth 
procedures that the State must undertake when an individual is found 
potentially eligible for another insurance affordability program, 
including transferring the individual's electronic account to the other 
program. We propose to revise Sec.  457.350(i) of the current 
regulations (redesignated as proposed Sec.  457.350(g)) as discussed in 
section II.F.2. of this preamble.
     To redesignate requirements at current Sec.  457.350(k) 
and (h) as proposed Sec.  457.350(h) and (i) respectively. Current 
paragraph (k) (redesignated at proposed paragraph (h)) permits the 
separate CHIP agency to make determinations of eligibility for advance 
payments of the premium tax credit and cost sharing reductions on 
behalf of the Exchange; we are not proposing any changes to this 
paragraph. Current Sec.  457.350(h) (redesignated at proposed Sec.  
457.350(i)) describes procedures for waiting lists, enrollment caps, 
and closed enrollment; we propose only a technical change to this 
section to update the cross-reference to reflect other changes proposed 
in this section.
    Similar to Medicaid, we seek comment on information that the 
separate CHIP agency would not be able to access through electronic or 
other data sources when determining MAGI-based eligibility for Medicaid 
and for which it may need to contact the individual before completing a 
determination of eligibility. Additionally, we seek comment on whether 
there are cases in which the separate CHIP agency would be able to 
complete only a determination of potential MAGI-based eligibility for 
Medicaid, types of situations that would result in only a determination 
of potential eligibility, and whether the separate CHIP agency may need 
the option to transfer the individual's electronic account to the 
separate Medicaid agency to finalize the determination.
    Similar to the proposed changes for coordination of notices in the 
Medicaid regulations at Sec.  435.1200(h), discussed in section II.B.5 
of this proposed rule, we propose changes to Sec.  457.340(f) related 
to coordination of notices with other programs. These changes 
correspond with Medicaid changes at Sec.  435.1200(h) to ensure that 
individuals receive a combined notice regardless of the agency that 
completes the eligibility determination or transfers the individual's 
electronic account to another insurance affordability program for a 
final eligibility determination. Providing individuals with a combined 
notice will be critical to ensuring that they understand the changes in 
coverage that are occurring and any additional obligations that may be 
imposed by the program to which their coverage is being transitioned. 
As previously mentioned above in the section related to transitions 
from Medicaid to CHIP, States that operate its CHIP and Medicaid 
programs under the same agency and eligibility system that

[[Page 54812]]

already provide a seamless, combined Medicaid and CHIP notice, may not 
need to make any changes.
    To effectuate this change to the combined notice requirements, we 
propose changes to Sec.  457.340(f)(1). Current Sec.  457.340(f)(1) 
requires States to provide combined notices, to the maximum extent 
feasible, to individuals and to multiple members of the same household 
who are included on the same application or renewal form; this 
paragraph also requires the State to include coordination of notices in 
its agreement with other insurance affordability programs as described 
at Sec.  457.348(a). We propose to separate current Sec.  457.340(f)(1) 
into three separate requirements--proposed paragraphs (f)(1)(i), (ii) 
and (iii)--each of which must be included in the agreement into which 
the State enters into, in accordance with Sec.  457.348(a). Proposed 
Sec.  457.340(f)(1)(i) would establish a new requirement for the State 
to ensure that individuals are provided with a combined notice when 
their Medicaid eligibility is determined by the separate CHIP agency, 
or their CHIP eligibility is determined by the agency administering 
Medicaid. Proposed Sec.  457.340(f)(1)(ii) and (iii) would restate the 
requirements currently described in paragraph (f)(1)--that is, at 
proposed Sec.  457.340(f)(1)(ii) to provide a combined notice to 
individuals transferred between the State and another insurance 
affordability program to the maximum extent feasible; and at proposed 
Sec.  457.340(f)(1)(iii) to require a combined notice for multiple 
members of the same household to the maximum extent feasible. We do not 
propose to make any changes to Sec.  457.340(f)(2). We seek comment on 
States' ability to issue a combined notice in accordance with proposed 
Sec.  457.340(f)(1)(i).
    Consistent with these changes to Sec.  457.350, we propose a 
conforming change to Sec.  457.348(a), which describes the agreements 
that States must establish with other insurance affordability programs. 
We propose to revise Sec.  457.348(a) to require that these agreements 
provide for not only coordination of notices, but also for a combined 
eligibility notice with other insurance affordability programs.
5. Recordkeeping (Sec.  457.965)
    As discussed in section II.D of this preamble, we propose to revise 
Sec.  431.17(b) to clearly detail the specific types of information 
that Medicaid agencies must retain as part of each applicant and/or 
enrollee's case records. We also propose changes to Sec.  431.17(c) to 
specify the minimum duration of time that the information that should 
be retained for both applicant and enrollee files. Finally proposed 
revisions at Sec.  431.17(d) would provide that States must be able to 
provide stored information within 30 calendar days after a request has 
been made if not otherwise specified. Additionally, we clarified in 
section II.D. of this preamble that we do not propose that all of the 
information that could be considered part of the case record be stored 
in a single system.
    To ensure effective and efficient administration of the CHIP 
program, consistent with section 2101(a) of the Act, we propose to 
modify existing CHIP documentation requirements at Sec.  457.965 by 
adopting the same requirements as we are proposing for Medicaid at 
Sec.  431.17, except that cross-references to other Medicaid 
regulations in proposed Sec.  431.17 are replaced with corresponding 
cross-references to existing CHIP regulations. As with Medicaid, we 
seek comment regarding whether 3 years is an appropriate minimum 
duration of time for States to retain case records after the case is 
active; additionally, we seek comment whether any longer or shorter 
duration would be appropriate for certain types of information, such as 
those related to payment and provision of child health assistance, to 
remain in the case records. We are also particularly interested in 
comments on whether the retention period should be tied to the 
individual or the active case. Finally, we seek comment whether States 
should retain flexibility to maintain records in paper or other formats 
that reflect evolving technology.

F. Eliminating Access Barriers in CHIP

    Following passage of the ACA, CMS focused on aligning methodologies 
and procedures in order to create a streamlined, coordinated 
eligibility and enrollment process across insurance affordability 
programs. In such rulemaking, we left in place certain flexibilities 
available to States in administering separate CHIPs which are not 
permitted in Medicaid, including the option to specify a period of time 
that CHIP beneficiaries whose families fail to pay required premiums 
are not permitted to reenroll in CHIP coverage or ``lock out'' such 
beneficiaries; the option to impose a waiting period prior to 
enrollment for beneficiaries previously enrolled in other coverage; and 
the option to impose annual and lifetime limits on benefits. Each of 
these policies, if adopted by a State, poses a barrier to obtaining and 
retaining coverage for CHIP beneficiaries who otherwise meet the 
eligibility requirements for the State's program. As discussed further 
below, we propose to eliminate each of these State options.
1. Prohibit Premium Lock-Out Periods (Sec. Sec.  457.570 and 
600.525(b)(2))
    Premium payment policies can directly influence the difficulty, or 
ease, eligible children and pregnant individuals face when enrolling in 
and retaining CHIP coverage. Under section 2103(e)(3)(C) of the Act, 
States must provide enrollees with a grace period of at least 30 days 
from the beginning of a new coverage period to make premium payments 
before the child or targeted low-income pregnant woman's coverage is 
terminated. If the premium remains unpaid at the end of the grace 
period, States must also offer the family an opportunity to show their 
income has decreased such that the CHIP enrollee may qualify for a 
lower premium payment in CHIP or be eligible for Medicaid. States also 
currently have the option under Sec.  457.570 to impose a premium lock-
out period, which is a specified period that a child or a pregnant 
individual must wait until being allowed to reenroll in the CHIP 
program after non-payment of premiums. There is no statutory provision 
expressly requiring CMS to provide States with the option to institute 
a premium lock-out period after non-payment of premiums.
    Under Medicaid, premiums are authorized under sections 1902(a)(14), 
1916, and 1916A of the Act, and implementing regulations at 42 CFR 
447.50 through 447.57. Medicaid permits disenrollment for failure to 
pay premiums is at 447.55(b)(2), but does not permit premium lock-out 
periods.
    Premium lock-out periods, by design, require children or pregnant 
individuals to go without coverage for a specified period. While not 
focused on the CHIP beneficiary populations specifically, a review of 
the literature on Medicaid lock-out periods previously authorized under 
section 1115 demonstrations indicates that premium lock-out periods 
pose a barrier to coverage and hinder access to care. Research on the 
impact of premium lock-out periods on access to care for Medicaid

[[Page 54813]]

beneficiaries authorized under section 1115(a) of the Act also shows 
that Medicaid beneficiaries who experience lock-outs are more likely to 
skip or delay provider visits, not fill prescriptions, and report 
financial barriers to accessing care.\66\ One study found that 
individuals who experienced interruptions in coverage had higher 
hospitalization rates for conditions, such as asthma and diabetes, that 
could have been managed in outpatient settings with consistent access 
to treatment.\67\ Gaps in coverage also make it less likely that 
families establish sustained relationships with health care providers, 
which also can undermine the quality of care they receive.\68\ The 
literature also shows that premium lock-out periods disproportionately 
affect non-White populations compared to White populations, which may 
further exacerbate existing disparities in health outcomes. 
Additionally, there is no evidence to demonstrate that lock-out periods 
incentivize families to comply with requirements.
---------------------------------------------------------------------------

    \66\ Ku, L., & Ross, D.C. (2002). Staying covered: the 
importance of retaining health insurance for low-income families. 
Commonwealth Fund, Task Force on the Future of Health Insurance. 
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_fund_report_2002_dec_staying_covered__the_importance_of_retaining_health_insurance_for_low_income_families_ku_stayingcovered_586_pdf.pdf.
    \67\ Bindman, A.B., Chattopadhyay, A., & Auerback, G.M. (2008). 
Interruptions in Medicaid coverage and risk for hospitalization for 
ambulatory care-sensitive conditions. Annals of internal medicine, 
149(12), 854-860.
    \68\ Ku, L., & Ross, D.C. (2002). Staying covered: the 
importance of retaining health insurance for low-income families. 
Commonwealth Fund, Task Force on the Future of Health Insurance. 
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_fund_report_2002_dec_staying_covered__the_importance_of_retaining_health_insurance_for_low_income_families_ku_stayingcovered_586_pdf.
---------------------------------------------------------------------------

    In order to improve continuity of care and align with Medicaid 
rules in this area, we propose to eliminate premium lock-out periods in 
CHIP. Section 2101(a) of the Act requires States to provide access to 
health care in an effective and efficient manner that is coordinated 
with other sources of health benefits coverage. In addition, the April 
5, 2022 Executive Order 14070, ``Continuing to Strengthen Americans' 
Access to Affordable, Quality Health Coverage'' requires agencies to 
identify ways to expand the availability of affordable health coverage, 
improve quality of coverage, and to strengthen benefits. Specifically, 
we propose to revise Sec.  457.570(c)(1) to prohibit States from 
imposing premium lock-out periods; to remove current paragraph (c)(2), 
and to redesignate and revise paragraph (c)(3) at paragraph (c)(2) to 
prohibit States from requiring collection of past due premiums or 
enrollment fees as a condition of eligibility for reenrollment once a 
lock-out period is over if an individual was terminated for failure to 
pay premiums.
    There are a multitude of promising practices described in the 
literature for helping to prevent late or missed premium payments, 
thereby avoiding even short-term disruptions to coverage,\69\ such as:
---------------------------------------------------------------------------

    \69\ Brooks, T. (2013). Handle with Care: How Premiums Are 
Administered in Medicaid, CHIP and the Marketplace Matters. 
Georgetown University Center for Children and Families. https://ccf.georgetown.edu/wp-content/uploads/2013/12/Handle-with-Care-How-Premiums-Are-Administered.pdf.
---------------------------------------------------------------------------

     Conducting new member calls to ensure that families 
understand their payment obligations and options.
     Ensuring eligibility staff who work directly with families 
are trained and knowledgeable about payment policies and procedures, 
and can explain them to people, particularly those experiencing a 
language or cultural barrier.
     Generating frequent payment notices and reminders.
     Providing multiple and convenient options for paying 
premiums.
     Providing advance payment incentives (such as pay for a 
certain number of months and permitting 1 free month).
    Another possible approach for States to reduce the disruptive 
effect of non-payment of premiums is to apply an affordable annual 
enrollment fee or provide families with the choice between paying 
monthly premiums or an annual enrollment fee. Similar to premiums, 
States may provide varying fees based on family income level to ensure 
that families at a lower income can afford the enrollment fee. We note 
that an annual enrollment fee would need to meet the conditions 
specified at section 2103(e)(3)(A)(i) of the Act relating to 
limitations on premiums and enrollment fees for children under 150 
percent of the FPL, section 2103(e)(3)(B) of the Act for all other 
children, and section 2112(b)(6) of the Act for targeted low-income 
women. To be affordable, an annual fee would likely need to be 
substantially lower than the equivalent of 12 monthly premium 
payments.\70\ For example, some States with a separate CHIP charge an 
annual enrollment fee of $50 for one child or $100 for a family with 
two or more children. Requiring a single affordable annual payment may 
improve retention, reduce disenrollment rates, and simplify program 
administration, for example, by reducing the cost of billing, 
collecting and processing premium payments.\71\ We solicit comments on 
the potential parameters for ensuring that an annual fee is affordable.
---------------------------------------------------------------------------

    \70\ Ku, L., & Ross, D.C. (2002). Staying covered: the 
importance of retaining health insurance for low-income families. 
Commonwealth Fund, Task Force on the Future of Health Insurance. 
https://www.commonwealthfund.org/sites/default/files/documents/___media_files_publications_fund_report_2002_dec_staying_covered__the_importance_of_retaining_health_insurance_for_low_income_families_ku_stayingcovered_586_pdf.
    \71\ Ibid.
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    States will continue to have the option to disenroll children or 
targeted low-income pregnant women from coverage due to non-payment of 
premiums, including enrollment fees, as long as the State provides 
families a minimum 30-day premium grace period, which is required under 
2103(e)(3)(C) of the Act. States must inform an individual, seven days 
after the first day of the grace period, that failure to make a payment 
within the premium grace period will result in termination of coverage, 
and of the individual's right to challenge the termination. Because 
States would no longer be able to require collection of past due 
premiums or enrollment fees as a condition of eligibility, a family 
could re-apply for coverage immediately following disenrollment. States 
retain the flexibility to determine whether families will be required 
to complete a new application in order to reenroll in coverage after 
disenrollment. Other States allow a period of time after disenrollment 
for families to make a payment and have coverage reinstated without 
requiring the submission of a new application.
    We note that, under 42 CFR 600.320(d), States that operate a BHP 
have the option to enroll eligible individuals in their BHP during 
enrollment and special enrollment periods that are no more restrictive 
than those required for an Exchange at 45 CFR 155.410 and 155.420 or 
follow the Medicaid and CHIP rules to permit continuous open enrollment 
throughout the year. Under Sec.  600.525(b)(2), States that elect to 
allow continuous open enrollment throughout the year must comply with 
the reenrollment standards set forth in the CHIP regulations at Sec.  
457.570(c). Thus, by eliminating the State option to impose a premium 
lock-out period in CHIP, we effectively would be eliminating the 
premium lock-out period for States with a BHP that allows continuous 
open enrollment throughout the year.
    As such, we propose to remove the requirement at Sec.  
600.525(b)(2) for a BHP State to define the length of the

[[Page 54814]]

premium lock-out period in its BHP Blueprint, as premium lock-out 
periods will no longer be permissible. We propose this change using our 
authority in section 1331(c)(4) of the ACA, which requires a State that 
operates a BHP to coordinate the administration of, and provision of 
benefits under its BHP with the State Medicaid, CHIP, and other State-
administered health programs to maximize the efficiency of such 
programs and to improve the continuity of care. We request comment 
regarding whether BHPs should be allowed to continue operating a 
premium lock-out period.
    We are also considering the option of permitting a 30-day lock-out 
period and invite comments on this option.
2. Prohibit Waiting Periods (Sec. Sec.  457.65, 457.340, 457.350, 
457.805, and 457.810)
    Currently, the CHIP regulations permit States to impose a ``period 
of uninsurance,'' or ``waiting period,'' on individuals who have 
recently disenrolled from a group health plan prior to allowing them to 
enroll in a separate CHIP. Section 457.805 provides some limitations on 
the use of waiting periods. Our experience in implementing the ACA 
provisions designed to increase access for families under Medicaid and 
CHIP and expand coverage through the Exchanges calls into question 
whether the use of waiting periods in CHIP continues to be appropriate. 
Waiting periods are a State option unique to CHIP programs, as waiting 
periods are not permitted in Medicaid, BHP, and individual market 
Exchange plans.\72\ Historically, we have interpreted section 
2102(b)(3)(C) of the Act, which requires States to ensure that coverage 
provided under CHIP does not substitute for (or ``crowd out'') coverage 
under group health plans, to permit States to adopt a waiting period. 
Corresponding regulations at Sec.  457.805 specify that State plans 
must include a description of ``reasonable procedures'' to prevent 
substitution.
---------------------------------------------------------------------------

    \72\ U.S. Department of Health and Human Services. (2016, May). 
Frequently Asked Questions on Health Insurance Market Reforms and 
Marketplace Standards. Retrieved from: https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Waiting-period-FAQ-05262016-Final-.pdf.
---------------------------------------------------------------------------

    Currently, 11 States use a waiting period in CHIP as a mechanism 
for preventing substitution. Children are denied eligibility under CHIP 
if they recently had group health coverage, within a State-prescribed 
waiting period, and have not qualified for a Federal or State-specified 
exception. Currently, States impose waiting periods that range from one 
month to 90 days. CHIP regulations at Sec.  457.805 provide that a 
waiting period may not exceed 90 days.
    At the inception of CHIP in 1997, employer-sponsored health 
insurance was the main alternative source of coverage for children in 
families within the CHIP income range. With passage of the ACA, 
coverage in a QHP through the Exchanges became available, and families 
may now qualify for premium tax credits to purchase coverage from the 
Exchange for their children while they wait for CHIP coverage during a 
waiting period.
    Waiting periods, which have historically resulted in a period of 
uninsurance between the end of private health coverage and the 
beginning of CHIP enrollment, were seen as a deterrent to families 
dropping private coverage in order to enroll their children in CHIP. 
However, the availability of coverage through the Exchanges during a 
waiting period warrants reconsideration of the use of waiting periods 
in CHIP.\73\
---------------------------------------------------------------------------

    \73\ Under current Treasury regulations, some children may not 
qualify for Exchange premium tax credits if they are deemed eligible 
for affordable health coverage through a family member's employer, 
based on whether the cost of self-only coverage for the family 
member is affordable. The Treasury Department has published a Notice 
of Proposed Rulemaking that would change this rule. 87 FR 20354 
(Apr. 7, 2022).
---------------------------------------------------------------------------

    The availability of Exchange coverage increases the complexity of 
implementing CHIP waiting periods, as coordinating coverage between the 
Exchanges and CHIP creates challenges that can lead to loss of coverage 
when affected children must transition from Exchange coverage to 
CHIP.\74\ As noted, families with children who are ineligible for CHIP 
during a waiting period are eligible for advance payments of the 
premium tax credit to enroll the child in a QHP through the Exchange, 
if they meet other applicable requirements. However, after a child is 
determined eligible for enrollment in a QHP, additional time is needed 
for the family to select and enroll in a health plan. By the time a 
child is enrolled in a health plan through the Exchange, the CHIP 
waiting period often will have expired, or be close to expiring, at 
which point the child is eligible for CHIP, and the CHIP agency and 
family must act to move the child from Exchange coverage to the State's 
CHIP program. Under current regulations at Sec.  457.350(i), the CHIP 
agency is expected to notify both the Exchange and family of the 
child's potential eligibility for CHIP at the end of the waiting 
period. The complexities of tracking waiting periods, sending notices 
to families, and requiring families to take additional steps to 
transition coverage likely result in children who are eligible for CHIP 
being unenrolled.75 76 77 Furthermore, health policy experts 
in a number of States that continue to implement waiting periods 
indicate that the burden imposed on families in some cases prevents 
them from seeking public coverage again, even once the children are 
eligible after the waiting period is over.78 79
---------------------------------------------------------------------------

    \74\ Brooks, Tricia. Now is the time to remove CHIP waiting 
periods and welcome kids into coverage. April 17, 2020. Retrieved 
from https://ccf.georgetown.edu/2020/04/17/now-is-the-time-to-remove-chip-waiting-periods-and-welcome-kids-into-coverage/.
    \75\ Medicaid and CHIP Payment and Access Commission. March 
2017. ``Chapter 1: The Future of CHIP and Children's Coverage'' in 
Report to Congress on Medicaid and CHIP. Retrieved from https://www.macpac.gov/wp-content/uploads/2017/03/The-Future-of-CHIP-and-Childrens-Coverage.pdf.
    \76\ Foster, Leslie. January 2016. ``Research Brief 3: 
Stakeholder perspectives from Texas'' in Health Care Coverage and 
Access for Children in Low-income Families. Mathematica Policy 
Research, funded by the David & Lucile Packard Foundation.
    \77\ Bruce, Giles. February 13, 2020. ``Why Do Some States Still 
Require Long Waits Before Kids Can Get Health Insurance?'' in 
Children's Health Matters. University of Southern California, Center 
for Health Journalism. Retrieved from https://centerforhealthjournalism.org/2020/01/30/why-do-some-states-still-require-long-waits-kids-can-get-health-insurance.
    \78\ Medicaid and CHIP Payment and Access Commission. March 
2017. ``Chapter 1: The Future of CHIP and Children's Coverage'' in 
Report to Congress on Medicaid and CHIP. Retrieved from https://www.macpac.gov/wp-content/uploads/2017/03/The-Future-of-CHIP-and-Childrens-Coverage.pdf.
    \79\ Foster, Leslie. January 2016. ``Research Brief 3: 
Stakeholder perspectives from Texas'' in Health Care Coverage and 
Access for Children in Low-income Families. Mathematica Policy 
Research, funded by the David & Lucile Packard Foundation.
---------------------------------------------------------------------------

    Even for families that successfully navigate the administrative 
hurdles of moving from Exchange to CHIP coverage, coverage transitions 
create care complexities. A move from the Exchange to CHIP may 
necessitate a change of providers and/or managed care plans, which 
interrupt care. These potential changes in coverage may limit a child's 
access to needed services following a waiting period.
    The 2013 eligibility final rule amended CHIP regulations at Sec.  
457.805(b)(1) to impose some limitations on waiting periods, including 
a 90-day maximum as mentioned above. Subsequent to this rule, the 
majority (23 of 36) of States elected to eliminate their CHIP waiting 
period. No state that has eliminated a waiting period has reported a 
substitution problem to CMS through their monitoring efforts. Eleven 
states still implement CHIP waiting periods; nine States have a 90-day 
waiting

[[Page 54815]]

period, one State has a 2-month waiting period, and one State has a one 
month waiting period. In the 2013 final rule, we also amended Sec.  
457.805(b)(3) to require that States adopt certain exemptions to any 
waiting period. Under this regulation, States may not apply a waiting 
period if:
     The premium paid by the family for coverage of the child 
under the group health plan exceeds 5 percent of household income;
     The child's parent is determined eligible for advance 
payments of the premium tax credit for enrollment in a QHP through the 
Exchange because the employer-sponsored insurance in which the family 
was enrolled is determined unaffordable in accordance with 26 CFR 
1.36B-2(c)(3)(v);
     The cost of family coverage that includes the child 
exceeds 9.5 percent of the household income;
     The employer stopped offering coverage of dependents (or 
any coverage) under an employer-sponsored health insurance plan;
     A change in employment, including involuntary separation, 
resulted in the child's loss of employer-sponsored insurance (other 
than through full payment of the premium by the parent under COBRA);
     The child has special health care needs; or
     The child lost coverage due to the death or divorce of a 
parent.
    In addition to the Federally required exemptions to CHIP waiting 
periods listed above, the majority of States apply other State-specific 
exemptions to the waiting period. Requirements at Sec.  457.810 apply 
the same 90-day maximum and Federal exceptions to waiting periods for 
CHIP premium assistance programs. As a result of these exceptions, 
States have anecdotally reported that few children are subject to 
waiting periods.
    Sections 2102(b)(1)(B)(iii), 2102(b)(1)(B)(iv) and 2112 (b)(5) of 
the Act reference circumstances in which waiting periods may not be 
applied to CHIP populations or coverage. These provisions, included in 
the statute when it was first enacted in 1997, place certain 
limitations on the use of waiting periods, which were implicitly 
recognized at the time as one of the potential strategies states could 
use to fulfill the requirement at section 2102(b)(3)(C) of the Act to 
address substitution of coverage. Since the inception of CHIP, the 
health coverage landscape has significantly changed, including the 
addition of the Exchange coverage option. Any gap in coverage created 
by a waiting period or the administrative process to transfer children 
between different coverage options, such as the Exchange, can 
compromise child health and development and access to preventive and 
primary health care during childhood and adolescence. As noted above, 
waiting periods have never been allowed under Medicaid and are not 
permitted in the Exchanges, either. Nor are waiting periods permitted 
in the private insurance market, for example, for individuals with pre-
existing conditions. These changes call into question the 
appropriateness of waiting periods as a tool to address substitution of 
coverage.
    In addition, Executive Order 14070 of April 5, 2022 titled 
``Continuing to Strengthen Americans' Access to Affordable, Quality 
Health Coverage'' instructs agencies to identify policy changes to 
ensure that enrollment and retention in coverage can be more easily 
navigated by consumers. The navigation of waiting periods for families 
is challenging, and CHIP is now an outlier among insurance providers 
compared to Medicaid and private insurance plans providing EHB coverage 
in allowing waiting periods to be applied before individuals can enroll 
in coverage. In addition, moving children between CHIP and the Exchange 
is not an efficient or effective use of State and Federal resources. In 
order to align with other programs, and consistent with the requirement 
in section 2101(a) of the Act to provide access for children to health 
care in an effective and efficient manner that is coordinated with 
other sources of health benefits coverage, as well as Executive Order 
number 14070 of April 5, 2022, we are proposing to eliminate all 
waiting periods in separate CHIPs. States will be required to continue 
monitoring efforts to prevent substitution of coverage in accordance 
with section 2012(b)(3)(c) of the Act.
    Specifically, we propose to revise Sec.  457.805(b) to provide that 
States may not impose a waiting period before enrolling eligible 
individuals in CHIP. We also propose the following conforming changes 
to other regulatory provisions to remove language referring to waiting 
periods.
     Revise Sec.  457.65 to remove references to State plan 
amendments that implement or extend the length of a required period of 
uninsurance.
     Remove Sec.  457.340(d)(3) (relating to facilitating 
enrollment in CHIP after a State-required period of uninsurance).
     Revise Sec.  457.350(i) (redesignated at proposed Sec.  
457.350(g) as discussed in section II.E.4. of this proposed rule) to 
remove references to individuals subject to a State-required period of 
uninsurance, and to remove paragraphs (2) and (3) of Sec.  457.350(i) 
(redesignated at proposed Sec.  457.350(g)) relating to State notices 
for individuals found eligible for other insurance affordability 
programs during the waiting period).
     Remove Sec.  457.805(b)(2) and (b)(3) (relating to Federal 
exceptions to waiting periods).
     Amend Sec.  457.810(a) to specify that waiting periods may 
not be applied to CHIP premium assistance programs and remove 
paragraphs (a)(1) and (2) (relating to the 90-day limit for, required 
exemptions from, waiting periods applied to CHIP premium assistance 
programs).
    Under the proposed rule, States would be required to continue to 
monitor the prevalence of substitution of coverage, consistent with 
requirements at Sec.  457.805, and to report annually to CMS on the 
effectiveness of strategies used to prevent substitution of coverage 
pursuant to Sec.  457.750(b)(2). In the preamble of the July 15, 2013 
final rule (78 FR 42159), we explained that effective January 1, 2014, 
monitoring of substitution is a sufficient approach for addressing 
substitution at all income levels. There are a number of ways States 
monitor substitution of coverage, such as matching applicants to a 
database that identifies sources of other coverage, including questions 
on the single streamlined application about private and group health 
coverage, and tracking the number of applicants that reported other 
coverage and are later enrolled in CHIP. We expect that if this 
monitoring demonstrates a high rate of substitution, a State will 
consider strategies such as offering premium assistance to children 
enrolled in group health plan coverage, and improving public outreach 
about the range of health coverage options that are available in that 
State. We are available to provide technical assistance to develop 
additional strategies to reduce crowd out if it is determined through 
monitoring activities that substitution of coverage exceeds an 
acceptable threshold determined by the State.
    We invite comments on our proposal to eliminate waiting periods to 
effectively balance the goal of preventing coverage gaps for children 
while ensuring that CHIP coverage does not substitute for coverage 
available under group health plans. We are also considering the option 
of permitting a 30-day waiting period for States that are able to 
demonstrate that high rates of substitution are a problem, and invite 
comments on this proposal.

[[Page 54816]]

3. Prohibit Annual and Lifetime Limits on Benefits (Sec.  457.480)
    Section 1001 of the ACA added section 2711 to the Public Health 
Service Act (PHS Act), which prohibits annual and lifetime limits on 
the provision of essential health benefits (EHBs), as defined in 
section 1302(b) of the ACA, by group health plans and health insurance 
issuer. As such, annual and lifetime limits are not permitted for 
individuals enrolled in QHPs through the Exchanges. Medicaid also does 
not permit annual or lifetime limits. However, the CHIP regulations do 
not prohibit annual or lifetime limits, and a number of States have 
implemented annual and lifetime limits on CHIP benefits. Specifically, 
12 States place an annual dollar limit on at least one CHIP benefit, 
and six States place a lifetime dollar limit on at least one benefit. 
Most commonly, annual and lifetime benefits are placed on dental, or 
specifically orthodontia, coverage. Ten States limit dental coverage to 
$500-$2,000 annually, and four States limit lifetime orthodontia 
coverage to $725-$1,250. These limits may present barriers to children 
receiving necessary dental and orthodontia care. Research on childhood 
oral health care indicates that dental care is the most common unmet 
treatment need in children.\80\ Many low-income families face barriers 
such as accessibility and costs that deter them from seeking oral care 
services, leading to increased risk of dental diseases or dental 
emergencies.\81\ Children in low-income families, including those 
covered by Medicaid and CHIP, are twice as likely to have untreated 
tooth decay compared to children with higher incomes.\82\ Thus, annual 
and lifetime limits further exacerbate unmet treatment needs for CHIP 
children by placing a financial burden on low-income families.
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    \80\ Newacheck, P. W., Hughes, D. C., Hung, Y. Y., Wong, S., & 
Stoddard, J. J. (2000). The unmet health needs of America's 
children. Pediatrics, 105(4 Pt 2), 989-997.
    \81\ U.S. Department of Health and Human 
Services.(2004,October). Guide to children's dental care in 
Medicaid. Centers for Medicare and Medicaid Services. Retrieved 
from: https://www.medicaid.gov/sites/default/files/2019-12/child-dental-guide.pdf.
    \82\ Dye, B. A., Mitnik, G. L., Iafolla, T. J., & Vargas, C. M. 
(2017). Trends in dental caries in children and adolescents 
according to poverty status in the United States from 1999 through 
2004 and from 2011 through 2014. Journal of the American Dental 
Association (1939), 148(8), 550-565.e7. Retrieved from: https://doi.org/10.1016/j.adaj.2017.04.013.
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    While many States limit specific benefits to an annual or lifetime 
dollar amount, currently, no State imposes an aggregate annual or 
lifetime limit on all CHIP benefits. However, some States did impose 
such limits in previous years. Section 2103(f)(2) of the Act requires 
that coverage offered under a separate CHIP comply with the 
requirements of subpart 2 of part A of Title XXVII of the PHS Act 
insofar as such requirements apply with respect to a health insurance 
issuer that offers group health insurance coverage. Because section 
2711 of the PHS Act is in subpart 2 of part A of Title XXVII of the PHS 
Act, which applies to separate CHIPs (by cross-reference in section 
2103(f)(2) of the Act), States cannot impose annual or lifetime limits 
in the provision of any EHBs covered under a separate CHIP.
    Under section 2103(a) of the Act, States may elect to provide 
benchmark coverage, benchmark-equivalent coverage, existing 
comprehensive State-based coverage, or Secretary-approved coverage to 
their separate population (where applicable). Regardless of the type of 
coverage provided, there are several required benefit categories that 
States must offer, including well-baby and well-child visits; dental 
benefits; mental health and substance use disorder services; testing, 
treatment, and vaccination for COVID-19; and age-appropriate 
immunizations.
    In accordance with section 2101(a) of the Act, which calls for the 
provision of CHIP in a manner that is effective and efficient and 
coordinated with other sources of health benefits coverage for 
children, and section 2103(f)(2) of the Act which generally prohibits 
annual and lifetime limits on EHBs, we are proposing to revise the 
regulations at Sec.  457.480 to prohibit all annual and lifetime dollar 
limits on all benefits in CHIP. Although title XXI of the Act does not 
apply EHB rules under a separate CHIP, the services which must be 
covered under title XXI also are EHBs. Specifically, pediatric services 
(including dental and vision services) and maternity and newborn care 
are EHBs. Because we believe that all of the benefits provided to 
children or targeted low-income pregnant women under a CHIP State plan 
are inherently pediatric, maternity, or newborn care services, we 
believe it is appropriate--indeed, the better application of the 
incorporated requirements in section 2711 of the PHS Act to separate 
CHIPs--to prohibit annual and lifetime limits on all covered CHIP 
benefits.
    We propose that this prohibition be applied both to aggregate 
annual and lifetime limits on all benefits, as well as annual and 
lifetime limits on specific benefits (for example, dental services). 
Such limits construct barriers for families to access health coverage 
and result in a lack of coverage for children with the greatest medical 
needs. Additionally, these limits create a financial hardship on low-
income families and/or an increase in uncompensated care that could 
raise costs for all health coverage payers. We note that the proposed 
prohibition on annual and lifetime dollar limits would not apply to 
non-monetary annual or lifetime limits on specific benefits. For 
example, a State could still implement a limitation on the number of 
physical therapy visits or eyeglasses that will be covered each year, 
provided such limitations are in compliance with all other Federal 
requirements. We encourage States to maintain processes that allow 
beneficiaries to exceed these non-financial limitations when medically 
necessary.
    We propose to redesignate current paragraphs (a) and (b) of Sec.  
457.480, as paragraphs (b) and (c) respectively, and to add a new 
paragraph (a) to prohibit annual and lifetime dollar limits in the 
provision of all CHIP medical and dental benefits.

III. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.) we are required to provide 60-day notice in the Federal Register 
and solicit public comment before a ``collection of information'' 
requirement is submitted to the Office of Management and Budget (OMB) 
for review and approval. For the purposes of the PRA and this section 
of the preamble, collection of information is defined under 5 CFR 
1320.3(c) of the PRA's implementing regulations.
    In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the PRA requires 
that we solicit comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this rule that contain information collection 
requirements. Comments, if received, will be responded to within the 
subsequent final rule.

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics'

[[Page 54817]]

May 2021 National Occupational Employment and Wage Estimates for all 
salary estimates (https://www.bls.gov/oes/current/oes_nat.htm). In this 
regard, the following table presents the BLS' mean hourly wage, our 
estimated cost of fringe benefits and overhead (calculated at 100 
percent of salary), and our adjusted hourly wage.
[GRAPHIC] [TIFF OMITTED] TP07SE22.000

    Wages for State Governments. As indicated, we are adjusting our 
employee hourly wage estimates by a factor of 100 percent. This is 
necessarily a rough adjustment, both because fringe benefits and 
overhead costs vary significantly from employer to employer, and 
because methods of estimating these costs vary widely from study to 
study. Nonetheless, we believe that doubling the hourly wage to 
estimate total cost is a reasonably accurate estimation method.
    Cost to State Governments. To estimate State costs, it was 
important to take into account the Federal government's contribution to 
the cost of administering the Medicaid, CHIP, and BHP programs. The 
Federal government provides funding based on a Federal Medical 
Assistance Percentage (FMAP) that is established for each State, based 
on the per capita income in the State as compared to the national 
average. FMAPs range from a minimum of 50 percent in States with higher 
per capita incomes to a maximum of 76.25 percent in States with lower 
per capita incomes. States receive an ``enhanced'' FMAP for 
administering their CHIP programs, ranging from 65 to 83 percent. For 
Medicaid, all States receive a 50 percent FMAP for administration. As 
noted previously, States also receive higher Federal matching rates for 
certain services and now for systems improvements or redesign, so the 
level of Federal funding provided to a State can be significantly 
higher. As such, in taking into account the Federal contribution to the 
costs of administering the Medicaid, CHIP, and BHP programs for 
purposes of estimating State burden with respect to collection of 
information, we elected to use the higher end estimate that the States 
would contribute 50 percent of the costs, even though the burden will 
likely be much smaller.
    Wages for Individuals. For enrollees, we believe that the burden 
will be addressed under All Occupations (at $28.01/hr) since the group 
of individual respondents varies widely from working and nonworking 
individuals and by respondent age, location, years of employment, and 
educational attainment, etc. Unlike our State adjustment to the 
respondent hourly wage, we did not adjust this figure for fringe 
benefits and overhead since the individuals' activities will occur 
outside the scope of their employment.

B. Proposed Information Collection Requirements (ICRs)

1. ICRs Regarding Facilitating Enrollment Through Medicare Part D Low-
Income Subsidy ``Leads'' (Sec. Sec.  435.601, 435.911, and 435.952)
    With the exception of the proposed changes under Sec.  
435.952(e)(4), the following changes will be submitted to OMB for 
review under control number 0938-1147 (CMS-10410), regarding the 
collection of eligibility data from State Medicaid and CHIP agencies. 
The proposed Sec.  435.952(e)(4) changes will be submitted to OMB under 
control number 0938-0467 (CMS-R-74), regarding the collection of 
information for income verification.
OMB Control Number 0938-1147 (CMS-10410)
    Proposed Sec.  435.911(e) focuses on using the SSA data from 
processing LIS applications ``leads data'' to streamline MSP 
eligibility determinations. Section 435.911(e)(1) would require States 
to accept, via secure electronic interface, the SSA LIS leads data, 
while Sec.  435.911(e)(2) would require that States treat receipt of 
the leads data as an application for Medicaid and promptly and without 
undue delay determine MSP eligibility without requiring submission of a 
separate application. Section 435.911(e)(4) would require States to 
refrain from requesting information from individuals already provided 
through leads data unless information available to the agency is not 
reasonably compatible with information provided by or on behalf of the 
individual, while Sec.  435.911(e)(5) requires States to accept 
information provided through the leads data relating to a criterion of 
eligibility without further verification.
    We estimate that States would be able to adjudicate over 90 percent 
of MSP applications for LIS enrollees without gathering additional 
documentation from the applicants. Therefore, if there are about 
400,000 new LIS applicants

[[Page 54818]]

approved annually in 51 States,\83\ we estimate that 90 percent of 
those applicants or 360,000 (400,000 x 0.9) would be able to enroll in 
an MSP without providing additional income and resource related 
documentation, and without the State receiving and adjudicating such 
data.
---------------------------------------------------------------------------

    \83\ Over the past 5 years (2017-2021), SSA approved an average 
of 394,025 LIS applications annually. https://www.ssa.gov/open/data/Data-about-Extra-Help-with-Medicare-Prescription-Drug-Plan-Cost.html.
---------------------------------------------------------------------------

    The provisions in Sec.  435.911(e) are associated with a reduction 
in burden for States and beneficiaries associated with application 
completion and eligibility determinations or redeterminations at the 
State Medicaid agency, including: reduced verification work for States 
that do not need to adjudicate the leads data for approximately 360,000 
new LIS applicants; reduced paperwork to submit for the LIS enrollees 
applying to MSPs in 51 States; reduced time and costs for enrollees who 
were previously expended to obtain, print, copy, mail and fax documents 
to the State to support the State's verification of income and 
resources; and reduced enrollee burden related to the need for public 
transportation and cell phone usage in relation to said document 
activities (obtaining, printing, copying, mailing and faxing).
    We estimate that the provisions in Sec.  435.911(e) would save an 
Eligibility Interviewer 25 minutes (0.42 hr = 25 min/60 min) per 
eligibility determination at $46.14/hr for the 360,000 new LIS 
applicants from reduced paperwork to review because of the proposed 
self-attestation requirements and reduced verification work due to 
considering the leads data as verified. In aggregate, we estimate an 
annual savings of minus 151,200 hours (360,000 applicants x 0.42 hr) 
and minus $6,976,368 (151,200 hr x $46.14/hr). Taking into account the 
50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State savings would be minus $3,488,184.
    We estimate these provisions would reduce the time needed for LIS 
enrollees applying to MSPs to submit paperwork from 4 hours to 15 
minutes, for a savings of 3.75 hours per enrollee per year across all 
51 States. In aggregate, we estimate an annual savings of minus 
1,350,000 hours (360,000 applicants x 3.75 hr) and minus $37,813,500 
(1,350,000 hr x $28.01/hr). We also estimate enrollee non-labor savings 
from the changes to Sec.  435.911(e) from public transportation, 
printing, copying, postage, and fax expenses to be about $10 [($4.50 
postage for small package or $1.75/page for faxing) + $4 roundtrip bus 
ride (from home to printing/copying place to post office and back home) 
+ $0.13/page for printing/copying)] per LIS enrollee per year for all 
51 States. In aggregate, we estimate an annual non-labor savings of 
minus $3,600,000 (360,000 enrollees x $10/enrollee).
    Under proposed Sec.  435.952(e)(1) through (e)(4), States would be 
required to accept self-attestation of certain income and resources for 
MSP applicants and beneficiaries, including dividend and interest 
income, burial funds of spouse and individual, and the face value of 
life insurance policy. Because 10 States (about 20 percent of all 
States) do not have asset tests and do not require documentation to 
complete an eligibility determination or redetermination at the State 
Medicaid agency, we expect the savings from the self-attestation 
proposals would only apply to approximately 8.4 million individuals (80 
percent of 11 million applications/renewals \84\ minus 400,000 
individuals who applied to LIS counted above) in the other 41 States. 
We estimate that under proposed Sec.  435.952(e)(1) through (e)(4), 
these 8.4 million individuals would see a reduction from 4 hours to 2 
hours, for a savings of 2 hours per individual, to complete an 
application/renewal in all 41 States. In aggregate, we estimate an 
annual savings of minus 16,800,000 hours (8,400,000 individuals x 2 hr) 
and minus $470,568,000 (16,800,000 hr x $28.01/hr). We estimate the 
non-labor savings under proposed Sec.  435.952(e)(1) through (e)(4) 
derived $10 [($4.50 postage for small package or $1.75/page for faxing) 
+ $4 roundtrip bus ride (to/from post office, printing/copying place 
and home) + $0.13/page for printing/copying)] per MSP applicant/renewal 
per year for all 51 States. In aggregate, we estimate an annual non-
labor savings of minus $84,000,000 (8,400,000 beneficiaries x $10/
beneficiary).
---------------------------------------------------------------------------

    \84\ Based on States adjudicating 1.5 million new applications 
and 10 million for redetermination annually.
---------------------------------------------------------------------------

    We also estimate that the proposal under Sec.  435.952(e)(1) 
through (e)(4) would save an Eligibility Interviewer 15 minutes (0.25 
hr) per eligibility determination or renewal for these 8,400,000 
applicants/beneficiaries. In aggregate, we estimate an annual labor 
savings for States of minus 2,100,000 hours (8,400,000 applicants x 
0.25 hr) and minus $96,894,000 (2,100,000 hr x $46.14/hr). Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State savings would be minus 
$48,447,000.
OMB Control Number 0938-0467 (CMS-R-74)
    We are also proposing to revise Sec.  435.952(e)(4) to require 
States to develop a verification process to determine the cash 
surrender value of life insurance policies over $1,500. We anticipate 
this proposal would be a change for 10 States in their process for 
verifying the cash surrender value of life insurance policies over 
$1,500. We do not anticipate an impact in the following 16 States 
because they are using authority in section 1902(r)(2) of the Act to 
disregard the cash surrender value of life insurance in whole or part: 
Alabama, Arizona, California, Connecticut, Delaware, Louisiana, 
Mississippi, Nevada, New Mexico, New York, North Carolina, Oregon, 
South Carolina, Vermont, Wyoming, and Washington, DC. Seventy percent 
of the remaining States would choose to use authority in section 
1902(r)(2) of the Act to disregard the cash surrender value of life 
insurance rather than opting to verify the cash surrender value of life 
insurance. As such, we expect that this change would only impact 20 
percent of all 50 States and Washington, DC (or 10 States).\85\ Based 
on enrollment in past years, we anticipate that all States would 
adjudicate 1,000,000 new MSP applications a year plus 10 million 
renewals. However, we anticipate this policy would only affect 2 
percent of applicants and beneficiaries across 10 States because of the 
small number of people who could both afford this type of life 
insurance (which is much more expensive than term life insurance) and 
also likely to apply for MSPs (which tends to be lower-income 
individuals) 44,000 individuals [(11,000,000 individuals x 0.02 x 0.2].
---------------------------------------------------------------------------

    \85\ We are not including impacts for territories in these 
estimates because territories do not have any enrollment in MSPs.
---------------------------------------------------------------------------

    The burden associated with proposed changes to Sec.  435.952(e)(4) 
would consist of the time and effort for eligibility workers in 10 
States to collect information regarding the cash surrender value of 
life insurance from 44,000 applicants; eligibility workers in 10 States 
not having to spend time coaching 44,000 applicants how to gather and 
find information on the cash surrender value of life insurance; and 
eligibility workers in 10 States not having to review life insurance 
documents for individuals with life insurance less than $1,500.
    We estimate that under proposed Sec.  435.952(e)(4) it would take 
an

[[Page 54819]]

Eligibility Interviewer about 1 hour at $46.14/hr to verify the cash 
surrender value of each life insurance policy over $1,500. In 
aggregate, we estimate an annual burden of 44,000 hours (1 hr x 44,000 
individuals) at a cost of $2,030,160 (44,000 hr x $46.14/hr). Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $1,015,080.
    We estimate the proposal under proposed Sec.  435.952(e)(4) would 
save Eligibility Interviewers an average 45 minutes (0.75 hr) per 
applicant from not needing to coach applicants on how to gather and 
find information on the cash surrender value of life insurance. In 
aggregate, we estimate an annual savings of minus 33,000 hours (44,000 
applicants x 0.75 hr) and $1,522,620 (33,000 hr x $46.14/hr). Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State savings would be minus 
$761,310.
    We also estimate State savings under proposed Sec.  435.952(e)(4) 
from eligibility workers not having to review life insurance documents 
for individuals with life insurance less than $1,500. We anticipate it 
would take an eligibility worker about 10 minutes (0.167 hr) to review 
a life insurance document and that this savings would affect 3 percent 
of applicants and beneficiaries or individuals (66,000 individuals = 
11,000,000 individuals x 0.03 x 0.2) across 10 States. In aggregate, we 
estimate an annual savings of minus 11,022 hours (66,000 individuals x 
-0.167 hr) and minus $508,555 (-11,022 hr x $46.14/hr). Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State savings would be minus 
$254,278.
    In total, taking into account the Federal contribution, we estimate 
a State annual burden reduction of minus $51,935,692 (-$3,488,184 + -
$48,447,000 + $1,015,080 + -$761,310 + -$254,278).
    For individuals, we estimate an annual burden reduction of minus 
18,150,000 hours (-1,350,000 + -16,800,000 hr) and minus $595,981,500 
(-$37,813,500 + -$3,600,000 + -470,568,000 +-$84,000,000).
    2. ICRs Regarding Defining ``Family of the Size Involved'' for the 
Medicare Savings Program Groups using the Definition of ``Family Size'' 
in the Medicare Part D Low-Income Subsidy Program (Sec.  435.601)
    The following proposed changes will be submitted to OMB for review 
under control numbers 0938-1188 (CMS-10434 #15) regarding the 
submission of a State plan amendment (SPA) and 0938-1147 (CMS-10410) 
regarding Medicaid application changes.
OMB 0938-1188 (CMS-10434 #15)
    Proposed Sec.  435.601 would align the definition of ``family 
size'' for purposes of MSP eligibility with that of the LIS program. 
Specifically, ``family of the size involved'' would be defined to 
include at least the individuals included in the definition of ``family 
size'' in the LIS program: the applicant, the applicant's spouse, and 
all other individuals living in the same household who are related to 
and dependent on the applicant or applicant's spouse. While some States 
either already define family size to match the LIS definition or use a 
family size that is less restrictive than this definition, we estimate 
that 10 States use SSI methodologies to determine family size, which 
means that these States only use an individual or couple and any other 
deemed individuals as part of the family size. As such, we estimate 
that 10 States would need to submit a SPA to change their definition of 
family size for MSP eligibility groups to comply with this regulation.
    We estimate that it would take each State 3 hours to submit a SPA 
to update the definition of ``family size'' in their Medicaid State 
plans. Of those 3 hours, we estimate it would take a Business 
Operations Specialist 2 hours at $77.28/hr and a General Operations 
Manager 1 hour at $110.82/hr to update and submit each SPA to CMS for 
review. In aggregate, we estimate a one-time burden of 30 hours (10 
States x 3 hr) at a cost of $2,654 (10 States x ([2 hr x $77.28/hr] + 
[1 hr x $110.82/hr]) for completing the necessary SPA updates. Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State cost would be $1,327.
OMB 0938-1147 (CMS-10410)
    We estimate that it would take each State 200 hours to develop and 
code the changes to its Medicaid application to add questions to 
identify other third parties in prospective MSP group households. We 
note that these changes do not create additional burden on 
beneficiaries as the new questions would be in lieu of prior questions. 
As such, the changes require the programming change reflected here with 
a neutral impact on applicants. Of those 200 hours, we estimate it 
would take a Database and Network Administrator and Architect 50 hours 
at $98.50/hr and a Computer Programmer 150 hours at $92.92/hr. In 
aggregate, we estimate a one-time burden of 2,000 hours (10 States x 
200 hr) at a cost of $188,630 (10 States x [(50 hr x $98.50/hr) + (150 
hr x $92.92/hr)]) for completing the necessary updates to the Medicaid 
application. Taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State cost 
would be $94,315.
    In total, taking into account the Federal contribution, we estimate 
a one-time State cost of $95,642 ($1,327 + $94,315).
3. ICRs Regarding Automatically Enrolling Certain SSI Recipients Into 
the Qualified Medicare Beneficiaries Group (Sec.  435.909)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    The proposal under Sec.  435.909 would require that States deem 
certain individuals who are eligible for Medicare Part A and SSI 
eligible for QMB without requiring an application. In particular, we 
propose that: (1) States with 1634 agreements must deem Supplemental 
Security Income (SSI) recipients who are entitled to premium-free 
Medicare Part A; (2) all other States must deem SSI recipients who are 
entitled to premium-free Medicare Part A and have been determined 
eligible for Medicaid under either Sec.  435.120 or Sec.  435.121; and 
(3) Part A buy-in States must deem if the individual is determined 
eligible for Medicaid under either Sec.  435.120 or Sec.  435.121, 
entitled to SSI, only qualifies for premium Part A, and is enrolled in 
Part B. To implement these new requirements, States would need to 
identify Medicare-eligible SSI recipients in order to enroll them in 
the MSPs. States would also need to trigger deeming of Medicare-
eligible SSI recipients to QMB by making eligibility systems changes to 
trigger QMB enrollment once the SSI-individual is Medicare eligible. 
Current regulations do not allow State Medicaid agencies to forgo an 
eligibility determination for Medicaid beneficiaries who are eligible 
for SSI when they become newly eligible for Medicare Part A and B. 
Therefore, this new requirement would mean system changes for all 50 
States and the District of Columbia, (altogether, 51 ``States'').
    While these deeming provisions are intended to enroll more SSI 
recipients in QMB, this rulemaking would not reach all SSI recipients 
eligible for QMB. We estimate currently 16 percent or 566,556 
(3,540,975 x 0.16) SSI recipients are eligible but not enrolled

[[Page 54820]]

in QMB, and nearly 500,000 new SSI recipients who are enrolled in 
Medicaid under either Sec.  435.120 or Sec.  435.121 would enroll in 
QMB as a result of the proposal under Sec.  435.909. As discussed in 
section II.A.3. of this proposed rule, in the 34 States with a 1634 
agreement, the Medicaid agency automatically enrolls the SSI recipients 
in Medicaid following a data exchange with SSA and then CMS 
automatically initiates Part B buy-in for the individual through the 
``buy-in data exchange.'' In the remaining States, individuals must 
submit a separate application to the State Medicaid agency to be 
determined eligible for Medicaid. CMS does not automatically initiate 
Part B buy-in for SSI individuals who live in SSI criteria and 209(b) 
States; rather, States must initiate Part B buy-in once the SSI 
recipient has separately applied for and been determined eligible for 
the mandatory SSI or 209(b) group. Additionally, SSI recipients who 
live in group payer States and are eligible for premium Part A are 
still required to go through a complicated two-step application process 
to establish QMB eligibility once an individual is determined eligible 
for the mandatory SSI or 209(b) groups and has been enrolled in Part B 
pursuant to the State's buy-in agreement. Under the proposed rule, the 
application process for SSI recipients who live in criteria and 209(b) 
States would remain the same and so would the two-step application 
process to establish QMB eligibility for SSI recipients living in group 
payer States and having premium part A.
    Based on SSA data and internal CMS analysis of the 566,556 SSI 
recipients eligible for QMB but not enrolled, we estimate almost 83 
percent (469,820) were likely eligible for premium-free Part A while 
approximately 17 percent (96,736) were eligible for premium Part A. Of 
the 469,820 who were eligible for premium-free Part A, we estimate 
405,963 reside in States with 1634 agreements, and 63,857 reside in 
209(b) or SSI criteria States. Because Medicaid is automatic in States 
with 1634 agreements, we estimate that 405,963 individuals (all of the 
above-mentioned SSI recipients in 1634 States) would be automatically 
enrolled in QMB under this new provision.
    In contrast, we estimate that only 65 percent of the above-
mentioned 63,857 SSI recipients in 209(b) or SSI criteria States, or 
41,507 individuals, would be enrolled under the new provision. This is 
because it is unlikely that all SSI recipients who live in SSI or 
209(b) States would complete the Medicaid application process in their 
State. Of the 96,736 eligible for premium Part A, we estimate 33 
percent (31,923) are in Part A buy-in States and 67 percent (64,813) of 
those eligible for premium Part A are in group payer States, where 
deeming would be optional. We estimate that 95 percent (30,327) of 
individuals in Part A buy-in States who are eligible for premium Part A 
would enroll as a result of the new provision because we estimate that 
all of those individuals live in States with 1634 agreements. However, 
for the individuals eligible for premium Part A in group payer States 
where deeming would be optional, we expect some more populous States to 
use this option, so we are estimating 33 percent (21,388 = 64,813 x 
0.33) of all individuals with premium Part A living in group payer 
States would newly enroll.
    Therefore, we estimate a total of 499,185 individuals (405,963 + 
41,507 + 30,327 + 21,388) would newly enroll without the need to 
complete an application. We estimate that those individuals would each 
save 2 hours from not filling out Medicaid applications and compiling 
associated documentation (going from 2 to zero hours) at $28.01/hr. We 
estimate an annual savings of minus 998,370 hours (499,185 individuals 
x 2 hr) and minus $27,964,344 (998,370 hr x $28.01/hr).
    All 51 States would need to make eligibility systems changes to 
deem an SSI individual in QMB once they are eligible for Medicare. We 
estimate it would take a Computer Programmer an average of 180 hours 
per State at $92.92/hr to make systems changes to set their systems to 
search for Medicare eligibility in Federal systems and then enroll that 
individual in QMB. In aggregate, we estimate a one-time burden of 9,180 
hours (51 States x 180 hr) at a cost of $853,006 (9,180 hr x $92.92/
hr). Taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State share 
would be $426,503.
    We also estimate that this provision would result in an annual 
reduction of burden for the State to no longer review and adjudicate 
QMB applications from SSI recipients. We estimate that this proposal 
would save an Eligibility Interviewer 1 hour (going from 1 hour to 
zero) per QMB determination at $46.14/hr. We also estimate that States 
conduct QMB eligibility determinations for approximately 250,000 SSI 
individuals across 51 States, which would no longer be necessary. In 
aggregate, we estimate an annual burden savings of minus 250,000 hours 
(250,000 individuals x -1 hr/response) and minus $11,535,000 (-250,000 
hr x $46.14/hr). Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State savings would be minus $5,767,500.
    In total, for the ICRs related to Sec.  435.601 under OMB control 
number 0938-1147 (CMS-10410), taking into account the Federal 
contribution, we estimate an annual State burden reduction of minus 
$5,340,997 ($426,503 + -$5,767,500).
4. ICRs Regarding Facilitating Enrollment by Allowing Medically Needy 
Individuals To Deduct Prospective Medical Expenses (Sec.  435.831)
    The following proposed changes will be submitted to OMB for review 
under control 0938-TBD (CMS-10819). At this time, the control number is 
to be determined (TBD). OMB will assign the control number upon their 
clearance of the proposed rule's new information collection request. 
The new control number will be set out in the final rule.
    The amendments proposed under Sec.  435.831(g) would permit States 
to project certain additional services that the State can determine 
with reasonable certainty will be constant in order to prevent those in 
the medically needy group from cycling on and off Medicaid, and 
preventing the occurrence of an eligibility start date each budget 
period that is not predictable to either the institutionalized 
individual or State agency. Over time, this would reduce the burden on 
the State by eliminating the need to process a new application or 
renewal each month for each individual in the medically needy group. 
This would also reduce the burden on the individual who would not need 
to reapply each month but instead would remain continuously enrolled. 
However, there would be an up-front cost to the States to program their 
eligibility systems to project the cost of care for the medically needy 
group and to remove the triggers to renew eligibility each month once 
the spenddown amount is reached.
    We estimate that all 56 States (50 States, 5 territories, and the 
District of Columbia; hereinafter ``56 States'') would need to make 
system changes to program their eligibility systems to project the cost 
of care for the medically needy group and to remove the triggers to 
renew eligibility each month once the spenddown amount is reached. We 
estimate it would take an average of 200 hours per State to develop and 
code the changes to each State's system to reschedule renewals for 
medically needy beneficiaries no more frequently than once every 12 
months. Of those 200 hours, we estimate it would take a

[[Page 54821]]

Database and Network Administrator and Architect 50 hours at $98.50/hr 
and a Computer Programmer 150 hours at $92.92/hr. Therefore, we 
estimate a one-time burden of 11,200 hours (56 States x 200 hr) at a 
cost of $1,056,328 (56 States x [(50 hr x $98.50/hr) + (150 hr x 
$92.92/hr)]) for completing the necessary system changes. Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $528,164.
    We estimate that under proposed Sec.  435.831(g), each of all 56 
States would no longer need to process a new application or renewal 
each month for 25 individuals in the medically needy group annually. We 
estimate it currently takes an Eligibility Interviewer, Government 
Programs, 2 hours at $46.14/hr and an Interpreter and Translator 1 hour 
at $56.16/hr to help process a new application or renewal each month 
for 6 months per year per beneficiary. Therefore, each State would save 
450 hours (3 hr x 6 months/year x 25 beneficiaries) and $22,266 (6 
months/year x 25 beneficiaries x [(2 hr x $46.14/hr) + (1 hr x $56.16/
hr)]) annually by not processing a new application or renewal each 
month for each individual in the medically needy group. In aggregate, 
we estimate this provision would save all States minus 25,200 hours 
(450 hr x 56 States) and minus $1,246,896 ($22,266 x 56 States). When 
taking into account the 50 percent Federal contribution to Medicaid and 
CHIP program administration, the estimated State savings would be minus 
$623,448.
    Likewise, we estimate that under proposed Sec.  435.831(g), those 
same 25 beneficiaries would no longer need to reapply each month but 
instead would remain continuously enrolled, thus reducing the burden on 
the individuals. We estimate that it currently takes a beneficiary 2 
hours at $28.01/hr to reapply each month in an average of 6 months per 
year. Therefore, beneficiaries in each State would save a total of 300 
hours (2 hr x 6 months/year x 25 beneficiaries/State) and $8,403 (300 
hr x $28.01/hr) annually. In aggregate, under this provision, 
beneficiaries across all 56 States would save 16,800 hours (300 hr x 56 
States) and $470,568 ($8,403 x 56 States) annually.
    In total, for the ICRs related to Sec.  435.831 under OMB control 
number 0938-TBD (CMS-10819), taking into account the Federal 
contribution, we estimate a one-time State cost of minus $95,284 
($528,164 + -$623,448).
5. ICRs Regarding Application of Primacy of Electronic Verification and 
Reasonable Compatibility Standard for Resource Information (Sec. Sec.  
435.952 and 435.940)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0467 (CMS-R-74).
    States have asked whether they are permitted to request additional 
documentation from applicants and beneficiaries related to resources 
that can be verified through the State's asset verification system 
(AVS), or if they can apply a reasonable compatibility standard for 
resources when resource information returned from an electronic data 
source is compared to the information provided by the applicant or 
beneficiary. We believe the requirements at Sec.  435.952(b) and (c), 
which require States to apply a reasonable compatibility test to income 
determinations, apply to resource determinations as well. We believe 
that clearly applying the requirements at Sec.  435.952(b) and (c) to 
resources will help streamline enrollment for individuals applying for 
Medicaid on a non-MAGI basis, such as on the basis of age, blindness, 
or disability, and decrease burden for both States and beneficiaries.
    The amendments proposed under Sec. Sec.  435.952 and 435.940 would 
clarify that, if information provided by an individual is reasonably 
compatible with information returned through an AVS, the State must 
determine or renew eligibility based on that information. They would 
also clarify that States must consider asset information obtained 
through an AVS to be reasonably compatible with attested information if 
either both are above or both are at or below the applicable resource 
standard or other relevant resource threshold.
    Under the proposed changes to Sec. Sec.  435.952 and 435.940, we 
estimate that the States would save an Eligibility Interviewer 1 hour 
per beneficiary at $46.70/hr to no longer reach out to 10,000 
individuals per State for additional information to verify their 
resources. In aggregate, we estimate a savings for all States of 
510,000 hours (51 States x 10,000 individuals/State x 1 hr) and 
$23,531,400 (510,000 hr x $46.14/hr). When taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State savings would be minus $11,765,700 
($23,531,400 x 0.5).
    Under the proposed changes to Sec. Sec.  435.952 and 435.940, we 
estimate that 10,000 individuals per State would save on average 1 hour 
each at $28.01/hr to no longer need to submit additional information to 
verify their resources. In aggregate for individuals in all States, we 
estimate a savings of minus 510,000 hours (1 hr x 10,000 individuals/
State x 51 States) and minus $14,285,100 (510,000 hr x $28.01/hr).
6. ICRs Regarding Verification of Citizenship and Identity (Sec.  
435.407)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-0467 (CMS-R-74).
    The amendments proposed under Sec.  435.407 would simplify 
eligibility verification procedures by considering verification of 
birth with a State vital statistics agency or verification of 
citizenship with SAVE as stand-alone evidence of citizenship. Likewise, 
under this provision, separate verification of identity would not be 
required. This proposed revision is not intended to require a State to 
develop a match with its vital statistics agency if it does not already 
have one in place. However, if a State already has established a match 
with a State vital statistics agency or it would be effective to 
establish such capability in accordance with the standard set forth in 
Sec.  435.952(c)(2)(ii), the State must utilize such match before 
requesting paper documentation from the applicant. We estimate this 
provision would apply to the roughly 100,000 applicants per year for 
whom States cannot verify U.S. citizenship with SSA.
    We estimate that the amendments proposed under Sec.  435.407 would 
take a Management Analyst 15 minutes (0.25 hr) per applicant at $96.66/
hr to check the State's vital statistics agency for verification of 
U.S. citizenship of an applicant. In aggregate for all 56 States, this 
provision would add a burden of 25,000 hours (0.25 hr x 100,000 
applicants) and $2,416,500 (25,000 hr x $96.66/hr). Taking into account 
the 50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $1,208,250.
    In contrast, we estimate that the amendments proposed under Sec.  
435.407 would save an Eligibility Interviewer 45 minutes (0.75 hr) at 
$46.70/hr by no longer needing to request and process paper 
documentation of citizenship. In aggregate, all 56 States would save 
minus 75,000 hours (0.75 hr x 100,000 applicants) and minus $3,460,500 
(75,000 hr x $46.14/hr). Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated

[[Page 54822]]

State savings would be minus $1,730,250.
    In total for the ICRs related to Sec.  435.407 under OMB control 
number 0938-0467 (CMS-R-74), taking into account the Federal 
contribution, we estimate an annual State savings of minus $522,000 
($1,208,250 + -$1,730,250). For individuals, we estimate that the 
amendments proposed under Sec.  435.407 would save each applicant 1 
hour at $28.01/hr plus an average of $10 in miscellaneous costs [($4.50 
postage for small package or $1.75/page for faxing) + $4 roundtrip bus 
ride (from home to printing/copying place to post office and back home) 
+ $0.13/page for printing/copying], to no longer need to gather and 
submit paper documentation of citizenship. In aggregate, all 100,000 
applicants would save 100,000 hours (1 hr x 100,000 applicants) and 
$2,801,000 (100,000 hr x $28.01/hr) in labor and + $1,000,000 ($10.00 x 
100,000 applicants) in non-labor related costs.
7. ICRs Regarding Aligning Non-MAGI Enrollment and Renewal Requirements 
With MAGI Policies (Sec.  435.916)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    The amendments proposed under Sec.  435.916(a) would align the 
frequency of renewals for non-MAGI beneficiaries with the current 
requirement for MAGI beneficiaries, which allows for renewals no more 
frequently than every 12 months. Proposed Sec.  435.916(b) also 
requires States to adopt the existing renewal processes required for 
MAGI beneficiaries for non-MAGI beneficiaries when a State is unable to 
renew eligibility for an individual based on information available to 
the agency. Proposed Sec.  435.916(b)(2) would require States to 
provide all beneficiaries, including non-MAGI beneficiaries, whose 
eligibility cannot be renewed without contacting the individual in 
accordance with proposed Sec.  435.916(b)(1), a renewal form that is 
pre-populated with information available to the agency, a minimum of 30 
calendar days to return the signed renewal form along with any required 
information, and a 90-day reconsideration period for individuals 
terminated for failure to return their renewal form but who 
subsequently return their form within the reconsideration period. 
Proposed Sec.  435.916(b)(2) no longer permits States to require an in-
person interview for non-MAGI beneficiaries as part of the renewal 
process.
    We estimate that in 2021, six States--Minnesota, New Hampshire, 
Texas, Utah, Washington, and West Virginia--have policies in place to 
conduct regularly-scheduled renewals for at least some non-MAGI 
beneficiaries more frequently than once every 12 months. One other 
State conducts more frequent renewals for non-MAGI populations during 
normal operations, but elected to conduct renewals only once every 12-
months for all beneficiaries during the COVID-19 PHE. We excluded the 
State from these estimates as it would have needed to make changes for 
the temporary authority in effect as of 2021 during the PHE.
    Under proposed Sec.  435.916(a), we estimate it would take an 
average of 200 hours per State to develop and code the changes to each 
State's system to reschedule renewals for non-MAGI beneficiaries no 
more frequently than once every 12 months. Of those 200 hours, we 
estimate it would take a Database and Network Administrator and 
Architect 50 hours at $98.50/hr and a Computer Programmer 150 hours at 
$92.92/hr. In aggregate, we estimate a one-time burden of 1,200 hours 
(6 States x 200 hr) at a cost of $113,178 (6 States x [(50 hr x $98.50/
hr) + (150 hr x $92.92/hr)]) for completing the necessary system 
changes. Taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State share 
would be $56,589.
    We also estimate that 21 States do not pull available non-MAGI 
beneficiary information to prepopulate a renewal form.\86\ Under 
proposed Sec.  435.916(b)(2), we estimate it would take an average of 
200 hours per State to develop and code the changes to each State's 
system to pull the existing non-MAGI beneficiary information to 
prepopulate a renewal form. Of those 200 hours, we estimate it would 
take a Business Operations Specialist 50 hours at $77.28/hr and a 
Management Analyst 150 hours at $96.66/hr. In aggregate, we estimate a 
one-time burden of 4,200 hours (21 States x 200 hr) at a cost of 
$385,592 (21 States x [(50 hr x $77.25/hr) + (150 hr x $96.66/hr)] for 
completing the necessary system changes and designing the form. Taking 
into account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $192,796.
---------------------------------------------------------------------------

    \86\ Kaiser Family Foundation. Medicaid Financial Eligibility 
for Seniors and People with Disabilities: Findings from a 50-State 
Survey. Available at: https://files.kff.org/attachment/Issue-Brief-Medicaid-Financial-Eligibility-for-Seniors-and-People-with-Disabilities-Findings-from-a-50-State-Survey.
---------------------------------------------------------------------------

    While we do not have evidence of how many States currently require 
an in-person interview, to calculate this burden, we will assume all 56 
States do so, with the understanding that the actual State savings will 
be much less. In 2020, there were about 2,688,386 non-MAGI 
beneficiaries \87\ for whom States would no longer need to conduct an 
in-person interview for non-MAGI beneficiaries as part of the renewal 
process. Under proposed Sec.  435.916(b)(2), we estimate that an 
Eligibility Interviewer would save on average 0.5 hours per beneficiary 
at $46.14/hr. In aggregate, we estimate this would save States minus 
1,344,193 hours (0.5 hr x 2,688,386 beneficiaries) and minus 
$62,021,065 (1,344,193 hr x $46.14/hr). Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State savings would be minus $31,010,533.
---------------------------------------------------------------------------

    \87\ Major Eligibility Group Information for Medicaid and CHIP 
Beneficiaries by Year, accessed from: https://data.medicaid.gov/dataset/267831f3-56d3-4949-8457-f6888d8babdd.
---------------------------------------------------------------------------

    In total for the ICRs related to Sec.  435.916 under OMB control 
number 0938-1147 (CMS-10410), taking into account the Federal 
contribution, we estimate a one-time State savings of minus $30,761,148 
($56,589 + $192,796 - $31,010,533) with an annual savings of minus 
$31,010,533. We estimate that in the six States--Minnesota, New 
Hampshire, Texas, Utah, Washington, and West Virginia--that currently 
have policies to conduct regularly-scheduled renewals for non-MAGI 
beneficiaries more frequently than once every 12 months during normal 
operations, in 2020, there were about 2,688,386 non-MAGI beneficiaries 
\88\ who would no longer need to submit a renewal under proposed Sec.  
435.916(a). Assuming impacted beneficiaries are evenly distributed 
across these six States, and assuming it currently takes each 
beneficiary 1 hour at $28.01/hr to submit a renewal form, in aggregate, 
beneficiaries across these six States would save minus 2,688,386 hours 
(2,688,386 non-MAGI beneficiaries x 1 hr) and minus $75,301,692 (-
2,688,386 hr x $28.01/hr).
---------------------------------------------------------------------------

    \88\ Ibid.
---------------------------------------------------------------------------

    While we do not have evidence of how many States currently require 
an in-person interview, to calculate this burden, we will assume all 56 
States do so, with the understanding that the actual individual burden 
will be much less. In 2020, there were about 2,688,386 non-MAGI 
beneficiaries \89\ who would

[[Page 54823]]

no longer need to travel to a Medicaid office to complete an in-person 
interview in order to maintain coverage under proposed Sec.  
435.916(b)(2). Assuming impacted beneficiaries are evenly distributed 
across these 56 States and assuming it currently takes each beneficiary 
1 hour to travel to and participate in an in-person interview, plus on 
average $10/person in travel expenses, in aggregate, beneficiaries 
across these 56 States would save minus 2,688,386 hours (2,688,386 
beneficiaries x 1 hr) and minus $75,301,692 (2,688,386 hr x $28.01/hr) 
in labor and minus $26,883,860 (2,688,386 non-MAGI beneficiaries x 
$10.00) in non-labor related costs.
---------------------------------------------------------------------------

    \89\ Ibid.
---------------------------------------------------------------------------

    Under proposed Sec.  435.916(b)(2), we estimate 37 States will need 
to establish a reconsideration period for non-MAGI beneficiaries or 
extend the timeframe of their existing reconsideration period for non-
MAGI beneficiaries to 90 calendar days. In 2020, there were up to 
2,688,386 non-MAGI beneficiaries in 56 States \90\ who would newly not 
need to complete a new application to regain coverage after being 
terminated for coverage for failure to return their renewal form under 
this provision. Approximately 4.2 percent of beneficiaries are 
disenrolled from coverage and reenroll within 90 days.\91\ Therefore, 
we estimate 74,603 beneficiaries (2,688,386 beneficiaries/56 States x 
0.042 x 37 States) would newly not need to complete a full application 
to reenroll in coverage because they would be in a 90-day 
reconsideration period under proposed Sec.  435.916(b)(2). Assuming 
impacted beneficiaries are evenly distributed across the 37 States and 
assuming it currently takes each beneficiary 1 hour at $28.01/hr to 
submit a new full application, this provision would save, in aggregate, 
beneficiaries across these 37 States a total of minus 74,603 hours 
(74,603 beneficiaries x 1 hr) and minus $2,089,630 (74,603 hr x $28.01/
hr).
---------------------------------------------------------------------------

    \90\ Ibid.
    \91\ Kaiser Family Foundation (2021). Medicaid Enrollment Churn 
and Implications for Continuous Coverage Policies. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
---------------------------------------------------------------------------

    For beneficiaries, we estimate a total burden reduction of minus 
$179,576,874 (-$75,301,692-$102,185,552 -$2,089,630).
8. ICRs Regarding Acting on Changes in Circumstances (Sec. Sec.  
435.916, 435.919, and 457.344)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    The amendments proposed under Sec.  435.919 would, if the State 
cannot redetermine the individual's eligibility after a change in 
circumstance using third party data and information available to the 
agency, allow beneficiaries at least 30 calendar days from the date the 
State sends a request for additional information to provide such 
information. In addition, the amendments would require States to 
provide beneficiaries terminated due to failure to provide information 
requested after a change in circumstance with a 90-day reconsideration 
period.
    Because the proposed requirements under Sec. Sec.  435.912, 
435.919, and 457.344 would result in more time for beneficiaries to 
respond to the State's request for additional information, it is likely 
that fewer beneficiaries would lose eligibility as a result of this 
provision. As well, because the proposed amendments would, for the 
first time, provide a 90-day reconsideration period after a change in 
circumstance for all approximately 85,809,179 Medicaid and CHIP 
beneficiaries (in the 51 States that reported enrollment data for 
November 2021),\92\ to submit additional information to maintain their 
eligibility, it is likely that beneficiaries would not need to complete 
and States would not need to process full applications for 4.2 percent 
of those individuals or 3,603,986 beneficiaries (85,809,179 
beneficiaries x 0.042) who lose coverage and later reenroll.\93\
---------------------------------------------------------------------------

    \92\ CMS, November 2021 Medicaid & CHIP Enrollment. Available at 
https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/.
    \93\ Kaiser Family Foundation. (2021). Medicaid Enrollment Churn 
and Implications for Continuous Coverage Policies. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
---------------------------------------------------------------------------

    Assuming the 40 States with a separate CHIP agency can adapt 
language from the Medicaid notice for their purposes, we estimate it 
would not take as long for those 40 States to revise the notice 
requesting additional information from beneficiaries regarding their 
eligibility after a change in circumstance to include language allowing 
the beneficiary 30 calendar days to respond. Therefore, we estimate it 
would take an average of 6 hours per State Medicaid agency and 3 hours 
per separate CHIP agency to complete this task. Of the 6 Medicaid 
hours, we estimate it would take a Business Operations Specialist 4 
hours (and 2 hr for CHIP) at $77.28/hr and a Management Analyst 2 hours 
(and 1 hr for CHIP) at $96.66/hr. We estimate an aggregate, one-time 
burden of 426 hours [(51 Medicaid States \94\ x 6 hr) + (40 CHIP States 
x 3 hr)] at a cost of $35,673 (51 States x [(4 hr x $77.28/hr) + (2 hr 
x $96.66/hr)] + (40 States x [(2 hr x $77.28/hr) + (1 hr x $96.66/hr)]) 
for revising the notice requesting additional information. Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $17,837.
---------------------------------------------------------------------------

    \94\ While this provision applies to all States, Washington, DC, 
and the 5 territories, we are only estimating the burden for the 51 
States for which we have current enrollment data, per the November 
2021 CMS enrollment snapshot, available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
---------------------------------------------------------------------------

    We also estimate it would take each State 6 hours to revise the 
termination notice to beneficiaries who did not respond to the State's 
request for additional information regarding their eligibility after a 
change in circumstance to include language allowing the beneficiary a 
90-day reconsideration period. Of those 6 hours, we estimate it would 
take a Business Operations Specialist an average of 4 hours at $77.28/
hr and a Management Analyst 2 hours at $96.66/hr. In aggregate, we 
estimate a one-time burden of 336 hours (56 States x 6 hr) at a cost of 
$28,137 (56 States x [(4 hr x $77.28/hr) + (2 hr x $96.66/hr)] for 
revising the termination notice. Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State share would be $14,068.
    We also estimate that it would save each State 50 hours to process 
full applications annually for beneficiaries who would no longer lose 
coverage and later reenroll. Specifically, we estimate it would save an 
Eligibility Interviewer 40 hours at $46.14/hr and an Interpreter and 
Translator 10 hours at $56.16/hr. In aggregate, we estimate an annual 
savings of minus 2,800 hours (56 States x 50 hr) and minus $134,803 
([(40 hr x $46.14/hr) + (10 hr x $56.16/hr)] x 56 States) for 
processing fewer full applications. Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State savings would be minus $67,402.
    In total, for ICRs related to Sec.  435.919 under OMB control 
number 0938-1147 (CMS-10410), taking into account the Federal 
contribution, we estimate a total State savings of minus $35,497 
($17,837 + $14,068-$67,402).

[[Page 54824]]

    We estimate that it would save each beneficiary who is disenrolled 
after a change in circumstance 2 hours at $28.01/hr to no longer submit 
a full application. As stated above, approximately 4.2 percent of 
beneficiaries are disenrolled from coverage and reenroll within 90 
days.\95\ Because this provision applies to all beneficiaries, which 
numbered approximately 85,809,179 individuals for Medicaid and CHIP (in 
the 51 States that reported enrollment data for November 2021),\96\ we 
estimate approximately 3,603,986 beneficiaries (85,809,179 
beneficiaries x 0.042) would save this time not reapplying after a 
change in circumstance. In aggregate, we estimate that this provision 
would save beneficiaries minus 7,207,972 hours (3,603,986 beneficiaries 
x 2 hr) and minus $201,895,296 (7,207,972 hr x $28.01/hr).
---------------------------------------------------------------------------

    \95\ Kaiser Family Foundation (2021). Medicaid Enrollment Churn 
and Implications for Continuous Coverage Policies. https://www.kff.org/medicaid/issue-brief/medicaid-enrollment-churn-and-implications-for-continuous-coverage-policies/.
    \96\ CMS, November 2021 Medicaid & CHIP Enrollment. Available at 
https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/.
---------------------------------------------------------------------------

9. ICRs Regarding Timely Determination and Redetermination of 
Eligibility in Medicaid (Sec.  435.912) and CHIP (Sec.  457.340)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1188 (CMS-10434 #15) for the State plan 
changes and 0938-1147 (CMS-10410) for the remaining burden related to 
updating notices and systems.
OMB Control Number 0938-1188 (CMS-10434 #15)
    The amendments in this section would establish standards to ensure 
that applicants have enough time to gather and provide additional 
information and documentation requested by a State in adjudicating 
eligibility. In addition, the proposed amendments would apply to 
redeterminations either at renewal or based on changes in 
circumstances, the current requirements which apply at application. To 
address the current situation where redeterminations remain unprocessed 
for several months following the end of a beneficiary's eligibility 
period due to the beneficiary failing to return needed information to 
the State, these proposed amendments would require States to establish 
timeliness standards for both beneficiaries to return requested 
information to the State, as well as for the State to complete a 
redetermination of eligibility when the beneficiary returns information 
too late to process before the end of the eligibility period. In 
addition, these proposed amendments would require States to establish 
performance and timeliness standards for determining Medicaid 
eligibility, as well as determining eligibility for CHIP and BHP when 
an individual is determined ineligible for Medicaid.
    Lastly, the amendments proposed under Sec.  435.912 would for the 
first time establish set timeframes for when States must complete 
existing requirements related to acting on change in circumstances. The 
amendments would require States to process a redetermination within 30 
calendar days from the date the State receives information indicating a 
potential change in a beneficiary's circumstance if no information is 
needed from the individual to redetermine eligibility and within 60 
calendar days if the State needs to request additional information from 
the individual.
    We estimate that it would take each State 3 hours to update their 
Medicaid State plans via a SPA to establish timeliness standards for 
the State to process redeterminations. Of those 3 hours per SPA, we 
estimate it would take a Business Operations Specialist 2 hours at 
$77.28/hr and a General Operations Manager 1 hour at $110.82/hr to 
update and submit each SPA to CMS for review. In aggregate, we estimate 
a one-time burden of 168 hours (56 States x 3 hr) at a cost of $14,861 
(56 responses x ([2 hr x $77.28/hr] + [1 hr x $110.82/hr])) for 
completing the necessary SPA updates. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $7,431.
OMB Control Number 0938-1147 (CMS-10410)
    We estimate that it would take each State 6 hours to update their 
notices to inform beneficiaries of the newly established timeframes 
within which they must return requested additional information in order 
for the State to process their redeterminations. Of those 6 hours, we 
estimate it would take a Business Operations Specialist 4 hours at 
$77.28/hr and a Computer Programmer 2 hours at $92.92/hr. In aggregate, 
we estimate a one-time burden of 336 hours (56 States x 6 hr) and 
$27,718 (56 States x ([4 hr x $92.92/hr] + [2 hr x $77.28/hr])) for all 
States to update the notices. Taking into account the 50 percent 
Federal contribution to Medicaid and CHIP program administration, the 
estimated State share would be $13,859.
    We also estimate it would take an average of 200 hours per State to 
develop and code the changes to each State's system to remove the edit 
to disenroll those beneficiaries who fail to return additional 
information within the newly established timeframes. Of those 200 
hours, we estimate it would take a Business Operations Specialist 50 
hours at $77.28/hr and a Management Analyst 150 hours at $96.66/hr. In 
aggregate, we estimate a one-time burden for all States of 11,200 hours 
(56 States x 200 hr) at a cost of $1,028,244 ([(50 hr x $77.25/hr) + 
(150 hr x $96.66/hr)] x 56 States) for completing the necessary system 
changes. Taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State share 
would be $514,122.
    In total for the ICRs related to Sec. Sec.  435.912 and 457.340 
under OMB control number 0938-1188 (CMS-10434 #15) and 0938-1147 (CMS-
10410), taking into account the Federal contribution, we estimate a 
total one-time State cost of $535,412 ($7,431 + $13,859 + $514,122).
10. ICRs Regarding Returned Mail (Sec. Sec.  435.919 and 457.344)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    This rule proposes to specify the steps States must take when 
beneficiary mail is returned to the agency. States would be required to 
first conduct a series of data checks to identify updated beneficiary 
contact information, including the State's Medicaid Enterprise System 
(MES), managed care plans, enrollment brokers, claims data, and other 
State administered public benefit systems, like TANF, SNAP, the DMV, as 
well as the NCOA. If updated contacted information is found, States 
must send a notice to that new address. Second, based on this 
information available to the State agency, the State must attempt to 
contact the beneficiaries by both mail, as well as a modality other 
than mail, such as by phone, electronic notice, email, or text message, 
as permissible. This provision also requires the State to send notices 
to both the current address on file and the forwarding address, if one 
is provided on the returned mail, requesting that the beneficiary 
confirm the new address. Third, only after the above has occurred with 
no response may the State take action, including updating the 
beneficiary's in-state address, terminating or suspending the

[[Page 54825]]

beneficiary's enrollment, or moving the beneficiary from managed care 
to fee-for-service Medicaid.
    We estimate that it would take all 42 Medicaid managed care States 
(and 34 States with managed care in separate CHIP) 40 hours to update 
their managed care contracts to enter into regular data-sharing 
arrangements with their MCOs to obtain up-to-date beneficiary contact 
information. While some of these States have both Medicaid and CHIP 
managed care and may even contract with the same plans for both 
programs, we assume there is no overlap for purposes of this estimate. 
Of those 40 hours, we estimate it would take a Procurement Clerk 10 
hours at $43.20/hr and a Management Analyst 30 hours at $96.66/hr. In 
aggregate, we estimate this would create a one-time burden for States 
of 3,040 hours [40 hr x (42 Medicaid States + 34 CHIP States] at a cost 
of $253,217 [(10 hr x $43.20/hr) + (30 hr x $96.66/hr) x 76 State 
agencies]. Taking into account the 50 percent Federal contribution to 
Medicaid and CHIP program administration, the estimated State share 
would be $126,609.
    We estimate, using CMS' own analysis, that about half of all States 
(56 States/2 = 28 States) currently check DMV data for updated 
beneficiary information, such as contact information, as a part of 
their routine verification plans. Using this as a proxy for whether the 
State has an agreement with third-party sources, for example, NCOA, 
DMV, etc., we estimate that it would take 28 States each 40 hours to 
establish these data-sharing agreements. Of those 40 hours, we estimate 
it would take a Procurement Clerk 10 hours at $43.20/hr and a 
Management Analyst 30 hours at $96.66/hr. In aggregate, we estimate a 
one-time burden of 1,120 hours (40 hr x 28 States) at a cost of $93,290 
([(10 hr x $43.20/hr) + (30 hr x $96.66/hr)] x 28 States). Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $46,645.
    Assuming 15 percent \97\ of all Medicaid beneficiaries (12,871,377 
beneficiaries = 85,809,179 beneficiaries x 0.15) \98\ generate returned 
mail each year, we estimate that it would take 51 States each 30 
seconds (approximately 0.0083 hr) per notice to send one additional 
notice by mail not only to the current address on file, but also to the 
forwarding address, if one is provided. We estimate that it would take 
a Management Analyst in each State 0.0083 hr/notice at $96.66/hr to 
program the sending of these extra notices for a total of 106,832 hours 
(0.0083 hr x 12,871,377 beneficiaries) at a cost of $10,326,381 
(106,832 hr x $96.66/hr). We also estimate this amendment would create 
additional burden in postage costs for all States and all beneficiaries 
totaling $7,722,826 ($0.60/notice \99\ x 12,871,377 \100\). Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $9,024,603.
---------------------------------------------------------------------------

    \97\ KHN, November 9, 2019, ``Return to Sender: A Single 
Undeliverable Letter Can Mean Losing Medicaid.'' Available at 
https://khn.org/news/tougher-returned-mail-policies-add-to-medicaid-enrollment-drop/.
    \98\ Centers for Medicare & Medicaid Services, ``October and 
November 2021 Medicaid and CHIP Enrollment Trends Snapshot,'' March 
28, 2022. Available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
    \99\ This amount is based on the current USPS postage rate for 
standard letters.
    \100\ While this provision applies to all States, Washington, 
DC, and the 5 territories, we are only estimating the burden for the 
51 States for which we have current enrollment data, per the 
November 2021 CMS enrollment snapshot available at https://www.medicaid.gov/medicaid/national-medicaid-chip-program-information/downloads/october-november-2021-medicaid-chip-enrollment-trend-snapshot.pdf.
---------------------------------------------------------------------------

    We estimate that it would take an Eligibility Interviewer an 
average of 5 minutes (5/60 = approximately 0.083 hr) per beneficiary at 
$46.14/hr to make one additional outreach attempt using a modality 
other than mail to the estimated 12,871,377 beneficiaries per year for 
whom the State receives returned mail. In aggregate, we estimate this 
would add a burden of 1,068,324 hours (0.083 hr x 12,871,377 
beneficiaries) at a cost of $49,292,469 (1,068,324 hr x $46.14/hr). 
Taking into account the 50 percent Federal contribution to Medicaid and 
CHIP program administration, the estimated State share would be 
$24,646,235.
    In total for the ICRs related to Sec. Sec.  435.919 and 457.344 
under OMB control number 0938-1147 (CMS-10410), and taking into account 
the 50 percent Federal contribution, we estimate a total State cost of 
$33,844,092 ($126,609 + $46,645 + $9,024,603 + $24,646,235).We estimate 
that current State policies on returned mail may have contributed to 
approximately 2.125 percent drop in enrollment.\101\ Applying that 
change, we estimate that 273,517 beneficiaries (12,871,377 
beneficiaries x 0.02125) would no longer be disenrolled after non-
response to a State notice generated by returned mail and would no 
longer need to reapply to Medicaid. Therefore, we estimate that these 
amendments would lead to a reduction in burden for 273,517 
beneficiaries who would otherwise be disenrolled after generating 
returned mail. We estimate that these beneficiaries at $28.01/hr would 
each save 2 hours of time not needed to reapply for Medicaid. In 
aggregate, we estimate this amendment would save beneficiaries in all 
States minus 547,034 hours (273,517 beneficiaries x 2 hr) and minus 
$15,322,422 (547,034 hr x $28.01/hr).
---------------------------------------------------------------------------

    \101\ KHN, November 9, 2019, ``Return to Sender: A Single 
Undeliverable Letter Can Mean Losing Medicaid.'' Available at 
https://khn.org/news/tougher-returned-mail-policies-add-to-medicaid-enrollment-drop/.
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11. ICRs Regarding Improving Transitions Between Medicaid and CHIP 
(Sec. Sec.  435.1200, 457.340, 457.348, 457.350, and 600.330)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    In States with separate Medicaid and CHIP programs, proposed Sec.  
435.1200 would require both the Medicaid and CHIP agencies to make 
system changes to more seamlessly transition the eligibility of 
individuals from one program to the other. We have not included a 
burden estimate for changes to the BHP regulations, since revisions to 
the Medicaid cross-references are intended to maintain current BHP 
policies.
    We estimate that proposed Sec.  435.1200 would take each of the 40 
States with a separate CHIP 40 hours to execute a delegation agreement 
between the Medicaid and CHIP agencies to implement more seamless 
coverage transitions. Of those 40 hours, we estimate it would take a 
Procurement Clerk 10 hours at $43.20/hr and a Management Analyst 30 
hours at $96.66/hr. In aggregate, we estimate a one-time burden of 
1,600 hours (40 hr x 40 States) at a cost of $133,272 [(10 hr x $43.20/
hr) + (30 hr x $96.66/hr) x 40 States]. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $66,636.
    We estimate that it would take all 40 States with a separate CHIP 
an average of 42 hours each to review any policy differences between 
their Medicaid and CHIP programs and make any necessary administrative 
actions to permit coordination of enrollment, such as a delegation of 
eligibility determinations or alignment of financial eligibility 
requirements between the two programs approximately. Of those 42 hours, 
we estimate it would take a Business Operations Specialist 22 hours at 
$77.28/hr and a Management Analyst 20 hours at $96.66/hr. In aggregate, 
we

[[Page 54826]]

estimate a one-time burden of 1,680 hours (40 States x 42 hr) at a cost 
of $145,334 ([(22 hr x $77.28/hr) + (20 hr x $96.66/hr)] x 40 States) 
to review and make necessary policy changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $72,667.
    We estimate that it would take all 40 States with a separate CHIP 
200 hours to make changes to their shared eligibility system or service 
to determine, based on available information, whether the individual is 
eligible for Medicaid or CHIP when determined ineligible for the other 
program and before a notice of ineligibility is sent. Of those 200 
hours, we estimate it would take a Business Operations Specialist 50 
hours at $77.28/hr and a Management Analyst 150 hours at $96.66/hr. In 
aggregate, we estimate a one-time burden for all 40 States of 8,000 
hours (40 States x 200 hr) at a cost of $734,520 ([(50 hr x $77.28/hr) 
+ (150 hr x $96.66/hr)] x 40 States) for completing the necessary 
system changes. Taking into account the 50 percent Federal contribution 
to Medicaid and CHIP program administration, the estimated State share 
would be $367,260.
    We estimate that 25 percent of States with a separate CHIP (40 
States x 0.25 = 10) are already using combined notices and would see no 
additional burden from this provision. For the 30 of the 40 States with 
separate CHIPs who do not currently use a combined notice, we estimate 
that it would take 6 hours to develop or update a combined eligibility 
notice for individuals determined ineligible for Medicaid and eligible 
for CHIP or vice versa and 40 hours to make the system changes 
necessary to implement it. Of those 46 hours, we estimate that it would 
take a Business Operations Specialist 14 hours at $77.28/hr and a 
Management Analyst 32 hours at $96.66/hr. In aggregate, we estimate a 
one-time burden of 1,380 hours (30 States x 46 hr) at a cost of 
$125,251 ([(14 hr x $77.28/hr) + (32 hr x $96.66/hr)] x 30 States) to 
develop the notice. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share would be $62,626.
    In total for the ICRs related to Sec. Sec.  435.1200, 457.340, 
457.348, 457.350, and 600.330 under OMB control number 0938-1147 (CMS-
10410), and taking into account the Federal contribution, we estimate a 
total cost of $1,138,377.60 ($66,636 + $72,667 + $367,260 + $62,626).We 
also estimate that this provision would save each beneficiary on 
average 3 hours to no longer submit a renewal form once they have been 
determined ineligible for one program and determined potentially 
eligible for another insurance affordability program based on available 
information. Assuming 1 percent of beneficiaries (85,809,179 
beneficiaries x 0.01 = 858,092 beneficiaries) currently submit a 
Medicaid renewal for this reason, in aggregate, we estimate an annual 
saving for beneficiaries in all States of minus 2,574,276 hours (3 hr x 
858,092 individuals) and minus $72,105,471 (2,574,276 hr x $28.01/hr).
    We estimate that it would save each beneficiary 4 hours previously 
spent reapplying for coverageAssuming 0.25 percent of beneficiaries 
(214,523 beneficiaries = 85,809,179 beneficiaries x 0.0025) currently 
lose coverage for failure to return a renewal form when no longer 
eligible, instead of being transitioned to the program for which they 
are eligible, we estimate an annual saving for beneficiaries in all 
States of minus 858,092 hours (4 hr x 214,523 individuals) and minus 
$24,035,157 (858,092 hr x $28.01/hr).
    For beneficiaries, we estimate a total savings of minus $96,140,628 
(-$72,105,471-$24,035,157).12. ICRs Regarding Eliminating Requirement 
to Apply for Other Benefits (Sec.  435.608)
    With regard to the burden associated with developing and coding the 
changes to each State's application system to eliminate the trigger for 
the Medicaid applicant to apply for other benefit programs, the 
proposed requirement and burden will be submitted to OMB for review 
under control number 0938-TBD (CMS-10819). At this time, the control 
number is to be determined (TBD). OMB will assign the control number 
upon their clearance of the proposed rule's new information collection 
request. The new control number will be set out in the final rule.
    This rule proposes to remove the requirement at Sec.  435.608 that 
State Medicaid agencies must require all Medicaid applicants and 
beneficiaries, as a condition of their eligibility, to take all 
necessary steps to obtain any benefits to which they are entitled. The 
requirement applies to adults only, which equates to approximately 
46,000,000 Medicaid applicants.\102\ Most individuals already apply for 
other benefits such as Veterans' compensation and pensions, Social 
Security disability insurance and retirement benefits, and unemployment 
compensation, because they want to receive them. As such, the 
requirement only impacts those individuals who only applied for a 
benefit because they had to in order to get or keep Medicaid.
---------------------------------------------------------------------------

    \102\ CMS, November 2021 Medicaid & CHIP Enrollment. Available 
at https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/.
---------------------------------------------------------------------------

    If we estimate that, in a given year, 5 percent of beneficiaries 
need to apply for another benefit, that would be 2,300,000 people to 
whom the requirement would no longer apply by removing this provision. 
However, the burden of this requirement on beneficiaries with respect 
to the collection of information relates to the application 
requirements of other agencies, and therefore an estimate of burden 
reduction is not reflected in this section.
    We estimate it would take an average of 200 hours per State to 
develop and code the changes to each State's application system to 
eliminate the trigger for the Medicaid applicant to apply for other 
benefit programs. Of those 200 hours, we estimate it would take a 
Database and Network Administrator and Architect 50 hours at $98.50/hr 
and a Computer Programmer 150 hours at $92.92/hr. For States, we 
estimate a total one-time burden of 11,200 hours (56 States x 200 hr) 
at a cost of $1,056,328 ([(50 hr x $98.50/hr) + (150 hr x $92.92/hr)] x 
56 States) to complete the necessary system changes.
    Taking into account the 50 percent Federal contribution to Medicaid 
and CHIP program administration, the estimated State share would be 
$528,164.
13. ICRs Regarding Removing Optional Limitation on the Number of 
Reasonable Opportunity Periods (Sec.  435.956)
    This provision does not create any new or revised reporting, 
recordkeeping, or third party disclosure requirements or burden. The 
requirements and burden are addressed as part of the single streamlined 
application that is approved by OMB under control number 0938-1191 
(CMS-10440).
    We propose to revise Sec.  435.956(b)(4) to remove the option for 
States to establish limits on the number of ROPs. Under proposed Sec.  
435.956(b)(4), all 56 States would be prohibited from imposing 
limitations on the number of ROPs that an individual may receive.
    Since the option was finalized, only one State submitted a SPA 
requesting to implement this option, and implemented via a 12-month 
pilot. Following the pilot, the State suspended the policy of limiting 
the ROP period and removed the option from its State Plan. Other than 
the one State, CMS has not received any inquiries about establishing 
such a limitation. Therefore, we estimate that the

[[Page 54827]]

proposed amendments to Sec.  435.956(b)(4) will not lead to any change 
in burden on States.
14. ICRs Regarding Recordkeeping (Sec. Sec.  431.17 and 457.965)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-TBD (CMS-10819). At this time, the control 
number is to be determined (TBD). OMB will assign the control number 
upon their clearance of the proposed rule's new information collection 
request. The new control number will be set out in the final rule.
    The amendments proposed under Sec. Sec.  431.17 (Medicaid) and 
457.965 (CHIP) would clearly delineate the types of information that 
States must maintain in Medicaid and CHIP case records while the case 
is active in addition to the minimum retention period of 3 years. This 
proposal clearly defines the records, such as the date and basis of any 
determination and the notices provided to the applicant/beneficiary. 
While current regulations do not include a timeframe for records 
retention, proposed Sec. Sec.  431.17(c) and 457.965(c) would establish 
a minimum retention period of 3 years, and proposed Sec. Sec.  
431.17(d) and 457.965(d) would require that records be stored in an 
electronic format and that such records be made available to 
appropriate parties within 30 days of a request if not otherwise 
specified.
    We recognize that States are in various stages of electronic 
recordkeeping today and that a portion of non-MAGI beneficiary case 
records are currently stored in a paper-based format, along with a 
small portion of MAGI-based beneficiary case records. Therefore, under 
proposed Sec. Sec.  431.17(c) and 457.965(c), we estimate it would take 
an average of 20 hours per State for a Management Analyst at $96.66/hr 
to update each State's policies and procedures to retain records 
electronically for 3 years minimum. In aggregate, we estimate a one-
time burden of 1,120 hours (56 States x 20 hr) at a cost of $108,259 
(1,120 hr x $96.66/hr) for completing the necessary updates.
    Taking into account the 50 percent Federal contribution to Medicaid 
and CHIP program administration, the estimated State share would be 
$54,130 ($108,259 x 0.5).
15. ICRs Regarding Prohibiting Premium Lock-Out Periods and 
Disenrollment for Failure To Pay Premiums (Sec. Sec.  457.570 and 
600.525(b)(2))
    The following proposed CHIP State plan changes will be submitted to 
OMB for review under control number 0938-1147 (CMS-10410). The BHP 
Blueprint changes will be submitted to OMB for review under control 
number 0938-1218 (CMS-10510).
OMB Control Number 0938-1147 (CMS-10410)
    The amendments proposed to Sec. Sec.  457.570 and 600.525(b)(2) 
would eliminate the option for States to impose premium lock-out 
periods in CHIP and in States with a BHP that allows continuous open 
enrollment throughout the year.
    Under proposed Sec.  457.570, we estimate it would take a 
Management Analyst 2 hours at $96.66/hr and a General and Operations 
Manager 1 hour at $110.82/hr in all 15 States that currently impose 
lock-out periods to amend their CHIP State plans to remove the lock-out 
period and submit in MMDL for review. We estimate an aggregate one-time 
burden of 45 hours (15 States x 3 hr) at a cost of $4,562 (([2 hr x 
$96.66/hr] + [1 hr x $110.82/hr]) x 15 States). Taking into account the 
50 percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $2,281.
OMB Control Number 0938-1218 (CMS-10510)
    Our proposed amendments would require BHP States to revise their 
BHP Blueprints to remove the premium lock-out period. Under proposed 
Sec.  600.525(b)(2), in the one BHP State that imposes a lock-out 
period, we estimate it would take a Management Analyst 2 hours at 
$96.66/hr and a General and Operations Manager 1 hour at $110.82/hr to 
revise their BHP Blueprints to remove the premium lock-out period. We 
estimate an aggregate one-time burden of 3 hours (1 State x 3 hr) at a 
cost of $304 (([2 hr x $96.66/hr] + [1 hr x $110.82/hr]) x 1 State).
    In total for the ICRs related to Sec. Sec.  457.570 and 
600.525(b)(2) under OMB control numbers 0938-1147 (CMS-10410), and OMB 
Control Number 0938-1218 (CMS-10510), taking into account the Federal 
contribution for the CHIP-related changes, we estimate a total one-time 
cost for the State of $2,585 ($2,281+ $304).
16. ICRs Regarding Prohibiting Waiting Periods in CHIP (Sec. Sec.  
457.65, 457.340, 457.350, 457.805, and 457.810)
    The following proposed changes will be submitted to OMB for review 
under control number 0938-1147 (CMS-10410).
    The amendments proposed to Sec. Sec.  457.65, 457.340, 457.350, 
457.805, and 457.810 would eliminate the State option to impose a 
waiting period for families with children eligible for CHIP who were 
recently enrolled in a group health plan. Currently, 11 States with a 
separate CHIP program impose waiting periods between 1 month and 90 
days. We estimate that the proposed amendments would require these 11 
States to process CHIP applications earlier than under current rules 
and without evaluating whether the applicant just lost coverage through 
a group health plan. Therefore, these States would need to update their 
applications to eliminate the question asking for attestation of 
recently lost coverage and all related follow-up questions, such as to 
evaluate whether the person falls into an exception for a waiting 
period. If the State uses a data source to check for other coverage, 
the State would need to update the application to remove the trigger to 
query the data source.
    We estimate it would take an average of 200 hours in each of these 
11 States to develop and code the changes to each State's application 
to remove all questions and queries related to recently lost coverage. 
Of those 200 hours, we estimate it would take a Database and Network 
Administrator and Architect 50 hours at $98.50/hr and a Computer 
Programmer 150 hours at $92.92/hr. In aggregate, we estimate a one-time 
burden of 2,200 hours (11 States x 200 hr) at a cost of $207,493 ([(50 
hr x $98.50/hr) + (150 hr x $92.92/hr)] x 11 States) for completing the 
necessary system changes. Taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share would be $103,747.
    We estimate it would take an average of 3 hours in each of 11 
unique States to update each State's CHIP SPAs in MMDL to document the 
other strategy(ies) the states will use to monitor substitution of 
coverage. We estimate it would take a General and Operations Mgr. 1 
hour at $110.82/hr and a Business Operations Specialist 2 hours at 
$77.25/hr for a per State total of $265. In aggregate, we estimate a 
one-time burden for all States of 33 hours (11 States x 3 hr) and 
$2,915 ([(1 hr x $110.82/hr) + (2 hr x $77.25/hr)] x 11 States) for 
completing the necessary SPA updates. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $1,458.
    In total for the ICRs related to Sec. Sec.  457.65, 457.340, 
457.350, 457.805,

[[Page 54828]]

and 457.810, and taking into account the 50 percent Federal 
contribution to Medicaid and CHIP program administration, the estimated 
State share would be $105,205 ($103,747 + $1,458).
17. ICRs Regarding Prohibiting Annual and Lifetime Limits on Benefits 
(Sec.  457.480)
    The following proposed CHIP State plan changes will be submitted to 
OMB for review under control number 0938-1148 (CMS-10398 #17) as they 
relate to updating CHIP SPAs and under control number 0938-TBD (CMS-
10819) as they relate to programming in necessary system changes. At 
this time, the control number for CMS-10819 is to be determined (TBD). 
OMB will assign the control number upon their clearance of the proposed 
rule's new information collection request. The new control number will 
be set out in the final rule.
OMB Control Number 0938-TBD (CMS-10819)
    The amendments proposed to Sec.  457.480 would prohibit annual and 
lifetime dollar limits in the provision of all CHIP medical and dental 
benefits. Currently, 13 unique States place either an annual or 
lifetime dollar limit on at least 1 CHIP benefit. Twelve of the 13 
States place an annual dollar limit on at least one CHIP benefit (AL, 
AR, CO, IA, MI, MS, MT, OK, PA, TN, TX, and UT), and 6 of the 13 States 
place a lifetime dollar limit on at least one benefit (CO, CT, MS, PA, 
TN, and TX). We estimate that the proposed amendments would require 13 
States to update their systems and their CHIP SPAs to eliminate annual 
or lifetime benefit limits.
    We estimate it would take an average of 20 hours to develop and 
code the changes to remove just 1 limit on either an annual or lifetime 
benefit. Of those 20 hours, we estimate it would take a Database and 
Network Administrator and Architect 5 hours at $98.50/hr and a Computer 
Programmer 15 hours at $92.92/hr. In aggregate, we estimate a one-time 
burden across all 13 States of 260 hours (20 hr x 13 States) and 
$24,522 ([(5 hr x $98.50/hr) + (15 hr x $92.92/hr)] x 13 States) for 
completing the necessary system changes. Taking into account the 50 
percent Federal contribution to Medicaid and CHIP program 
administration, the estimated State share would be $12,261.
OMB Control Number 0938-1148 (CMS-10398 #17)
    The amendments proposed to Sec.  457.480 would require States 
submit updated CHIP SPAs. We estimate it would take an average of 3 
hours in each of 13 unique States to update each State's CHIP SPAs in 
MMDL to remove 21 different limits on annual and/or lifetime benefits 
(calculated as 21/13, or approximately 1.62, limits per State). Of 
those 3 hours, we estimate it would take a General and Operations Mgr. 
1 hour at $110.82/hr and a Business Operations Specialist 2 hours at 
$77.25/hr for a per State total of 5 hours (3 hr/limit x 1.62 limits). 
In aggregate, we estimate a one-time burden for all States of 65 hours 
(13 States x 5 hr) and $5,573 ([(1 hr x $110.82/hr) + (2 hr x $77.25/
hr)] x 21 limits) for completing the necessary SPA updates. Taking into 
account the 50 percent Federal contribution to Medicaid and CHIP 
program administration, the estimated State share would be $2,786.
    In total for the ICRs related to Sec.  457.480 under control 
numbers 0938-TBD (CMS-10819) and 0938-1148 (CMS-10398 #17), taking into 
account the 50 percent Federal contribution, we estimate a total one-
time State cost of $15,047 ($12,261 + $2,786).

C. Summary of Proposed Burden Estimates

    In Table 2, we present a summary of the proposed requirements and 
burden estimates.
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D. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection requirements. The 
requirements are not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the proposed collections discussed above, please visit the CMS 
website at www.cms.hhs.gov/PaperworkReductionActof1995, or call the 
Reports Clearance Office at 410-786-1326.
    We invite public comments on these potential information collection 
requirements. If you wish to comment, please submit your comments 
electronically as specified in the DATES and ADDRESSES section of this 
proposed rule and identify the rule (CMS-2421-P), the ICR's CFR 
citation, and OMB control number.

IV. Response to Comments

    Because of the large number of public comments, we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the DATES section of this preamble, 
and, when we proceed with a subsequent document, we will respond to the 
comments in the preamble to that document.

V. Regulatory Impact Analysis

A. Statement of Need

    We have learned through our experiences in working with States and 
other stakeholders that there are gaps in our regulatory framework 
related to Medicaid, CHIP, and BHP eligibility and enrollment. While we 
have made great strides in expanding access to coverage over the past 
decade, certain policies continue to result in unnecessary burdens and 
create barriers to enrollment and retention of coverage. In response to 
the President's Executive Order on Continuing to Strengthen Americans' 
Access to Affordable, Quality Health Coverage, we reviewed existing 
regulations to look for areas where access could be improved.
    In this rulemaking, we seek to eliminate obstacles that make it 
harder for eligible people to remain enrolled, particularly those 
individuals who are exempted from MAGI and did not benefit from many of 
the enrollment simplifications in our 2012 and 2013 eligibility final 
rules. We seek to streamline enrollment for individuals known to be 
Medicaid eligible, like current enrollees who are also eligible for but 
not enrolled in the MSPs. We seek to remove coverage barriers, like 
premium lock-out periods and waiting periods that are not permitted 
under other insurance affordability programs, and to reduce coverage 
gaps as individuals transition from one insurance affordability program 
to another. Together, the changes in this proposed rule would 
streamline Medicaid, CHIP and BHP eligibility and enrollment processes, 
reduce administrative burden on States and enrollees, expand coverage 
of eligible applicants, increase retention of eligible enrollees, and 
improve health equity.

B. Overall Impact

    We have examined the impacts of this rule as required by E.O. 12866 
on Regulatory Planning and Review (September 30, 1993), E.O. 13563 on 
Improving Regulation and Regulatory Review (January 18, 2011), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96354), 
section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform 
Act (UMRA) of 1995 (March 22, 1995; Pub. L. 104-4), E.O. 13132 on 
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C. 
804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) (having 
an annual effect on the economy of $100 million or more in any 1 year, 
or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with significant regulatory action(s) or with economically significant 
effects ($100 million or more in any 1 year). Based on our estimates, 
OMB's Office of Information and Regulatory Affairs has determined this 
rulemaking is ``economically significant'' as measured by the $100 
million threshold. Accordingly, we have prepared a Regulatory Impact 
Analysis that to the best of our ability presents the costs and 
benefits of the rulemaking.
    The aggregate economic impact of this proposed rule is estimated to 
be $61.93 billion (in real FY 2023 dollars) over 5 years. This 
represents additional health care spending made by the Medicaid and 
CHIP programs on behalf of Medicaid and CHIP beneficiaries, with $41.41 
billion paid by the Federal government and $20.52 billion paid by the 
States.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $8.0 million to $41.5 million in any one year. Individuals 
and States are not included in the definition of a small entity. Since 
this proposed rule would only impact States and individuals, therefore, 
we do not believe that this proposed rule will have a significant 
economic impact on a substantial number of small businesses. We seek 
comment on the relevant impact.
    In addition, section 1102(b) of the Act requires CMS to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 603 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside a Metropolitan Statistical Area and has fewer than 
100 beds. This proposed rule applies to State Medicaid and CHIP 
agencies and would not add requirements to rural hospitals or other 
small providers. Therefore, we are not preparing an analysis for 
section 1102(b) of the Act because we have determined, and the 
Secretary certifies, that this proposed rule would not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the UMRA also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any one year of $100 million in 1995 dollars, 
updated annually for inflation.

[[Page 54834]]

In 2022, that is approximately $165 million. We believe that this 
proposed rule would have such an effect on spending by State, local, or 
tribal governments but not by private sector entities.
Overall Assumptions
    In developing these estimates, we have relied on several global 
assumptions. All estimates are based on the projections from the 
President's FY 2023 Budget. We have assumed that new enrollees would 
have the same average costs as current enrollees by eligibility group, 
unless specified in the description of the estimates (for example, some 
enrollees only would receive Medicare premium assistance). We have 
assumed that the rule would be effective on April 1, 2023. In addition, 
we have relied on the data sources and assumptions described in the 
next section to develop estimates for specific provisions of this 
proposed rule.

C. Anticipated Effects

1. Facilitate Enrollment Through Medicare Part D LIS Leads Data
    To calculate the impact of easing enrollment for persons already 
receiving the LIS benefit, we analyzed data from the Medicare 
Integrated Data Repository (IDR) from July 2020. We determined the 
number of people who were enrolled in the LIS program by: (1) State; 
(2) the category of LIS benefit they received; and (3) whether or not 
they were also enrolled in Medicaid. We identified 13.1 million persons 
receiving the Part D LIS, of which 11.1 million were enrolled in 
Medicaid and 2.0 million were not.
    We developed a regression using the percentage of LIS enrollees who 
were also enrolled as dual eligibles as the dependent variable, and 
used several policy factors as independent variables: State use of 
MIPPA applications; verification policies and procedures; grace period 
for providing verifications after initial denial; redetermination grace 
period; counting children towards income; income disregard; and asset 
disregard. While the latter three policies would not change under the 
proposed rule, we believed that they may explain some of the variation 
in the percentage of LIS recipients who are dual eligibles. We found 
that this model explained some amount of the variation in the 
percentage of LIS enrollees who are enrolled as dual eligibles, and 
that the most significant variable was the State use of MIPPA 
applications. Other policies appeared to have weak correlations. The 
model suggested that the use of these policies--and in particular the 
use of the Part D LIS leads data--would result in an average increase 
in the percentage of LIS recipients who are dual eligible enrollees 
from 84.6 percent to 88.0 percent (an increase of 3.4 percentage 
points). We estimated that about 0.44 million additional persons would 
have been enrolled in Medicaid as a result of these changes, had they 
been made in 2020.
    We assumed these enrollees, as QMBs, would receive payment for the 
Medicare Part B premium. The premium is $170.10 per month in 2022.
    To calculate future impacts to enrollment, we assumed that the 
increase in enrollment due to this provision would grow at the same 
rate as Medicaid enrollment among aged persons and persons with 
disabilities. We estimate that this would increase enrollment by about 
0.52 million persons by FY 2027, and would increase total Medicaid 
spending by $4.84 billion from FY 2023 through FY 2027. Detailed 
estimates are shown in Table 3.
[GRAPHIC] [TIFF OMITTED] TP07SE22.005

2. Automatically Enroll Certain SSI Recipients Into QMB Program
    To calculate the impact of automatically enrolling SSI recipients 
into QMB Medicaid coverage, we examined data on SSI recipients and 
their health care coverage.\103\ As of 2017, about 17 percent of all 
SSI recipients had Medicare coverage but were not dually enrolled in 
Medicaid.
---------------------------------------------------------------------------

    \103\ https://www.census.gov/content/dam/Census/library/publications/2021/demo/p70br-171.pdf.
---------------------------------------------------------------------------

    First, we estimated how many persons would enroll who already 
receive Medicare Part A without paying a premium. We estimated that 
there are 2.6 million people enrolled in SSI who are enrolled in Part A 
and do not pay the premium. Of these, we estimated about 67 percent 
reside in ``1634 States'' (about 1.7 million) and therefore are 
automatically enrolled in Medicaid. Of the remaining 0.9 million, we 
have assumed that 90 percent would enroll in the QMB group and receive 
Medicare Part B premium and cost-sharing assistance. We estimated those 
benefits to be about $5,000 per enrollee per year for 2022.
    Second, we estimated how many persons would enroll who receive 
Medicare Part A but have to pay a premium. We estimate that there are 
5.2 million such people enrolled in SSI. We estimated that 27 percent 
of this population lives in States that do not automatically enroll 
these individuals in the QMB group. Of States that do not automatically 
enroll these individuals in the QMB group, we assumed that about 20 
percent of States would use the option provided in this proposed rule, 
and that about 50 percent of this population would be enrolled in the 
QMB group as a result. In total, this would result in an increase of 
about 0.15 million enrollees in the QMB group. We assumed these 
beneficiaries would receive Medicare Part B premium and cost-sharing 
assistance as well as Medicare Part A premium assistance. We estimated 
those benefits would be about $11,000 per enrollee per year in 2022.

[[Page 54835]]

[GRAPHIC] [TIFF OMITTED] TP07SE22.006

3. Other Provisions To Facilitate Medicaid Enrollment
    For other provisions that would facilitate Medicaid enrollment 
(including the definition of family size; making the QMB effective date 
earlier; the electronic verification and reasonable compatibility 
standard; and the verification of citizenship and identity), we assumed 
that these provisions would increase enrollment by about 0.1 percent 
among aged enrollees and enrollees with disabilities, and would have a 
negligible impact on other categories of enrollees. We estimated that 
this would increase enrollment by about 20,000 person-year equivalents 
by 2027.
[GRAPHIC] [TIFF OMITTED] TP07SE22.007

    It is likely that those SSI enrollees newly gaining Medicaid 
coverage would also have higher Medicare costs following enrollment. 
Primarily, receiving cost-sharing assistance for Medicare would lead to 
these individuals seeking out more care that may have been difficult to 
afford previously, also known as induction.
    To estimate these impacts, we reviewed research on the effects of 
changing out of pocket costs on total health care costs, and 
specifically on Medicare. In general, we have historically estimated 
that reductions in out of pocket costs would increase total spending by 
$0.60 to $1.30 for every $1.00 reduction in out of pocket costs. Among 
research on health care costs, we relied primarily on research that 
examined the impacts on changing Medicare out of pocket costs.\104\
---------------------------------------------------------------------------

    \104\ B Garrett, A Gangopadhyaya, A Shartzer, and D Arnos, ``A 
Unified Cost-Sharing Design for Medicare: Effects on Beneficiary and 
Program Spending,'' The Urban Institute, July 2019. https://www.urban.org/sites/default/files/publication/100528/a_unified_cost-sharing_design_for_medicare_effects_on_beneficiary_an_1.pdf. 
[Accessed August 3 2022].
---------------------------------------------------------------------------

    This research is useful, particularly because of the analysis 
reviewing cost-sharing among those Medicare enrollees without any other 
coverage, those with supplemental coverage (such as ``Medigap'' plans 
or retiree health benefits), and those with Medicaid. First, the 
analysis found that Medicare enrollees without other coverage had an 
average of $13,693 in costs, of which $2,399 was paid out of pocket (18 
percent). Among those with supplemental coverage, average costs were 
$14,349, with $594 paid out of pocket (4 percent) and $2,095 paid 
through supplemental coverage (15 percent). Enrollees with Medicaid 
coverage had $26,181 in average costs, with $209 paid out of pocket (1 
percent) and $3,190 paid by Medicaid (12 percent). A significant amount 
of cost differences is likely due to health status. Most notably, those 
with Medicaid coverage are on average older and more likely to have a 
disability or chronic condition, which would result in higher costs 
regardless of who pays for care.
    The analysis also examines the effect of changing Medicare cost-
sharing structures on total, Medicare, and out of pocket spending. 
While the specific proposed benefit changes are not related to this 
proposed rule, it does provide the relative magnitude of changes 
between Medicare and out of pocket costs. The analysis found a larger 
change in costs for those without any other coverage than those with 
supplemental coverage. For those without other coverage, out of pocket 
costs decreased by $428 while total costs increased by $764 (or $1.80 
for every $1.00 reduction in out of pocket costs). For those with 
supplemental coverage, there was a decrease of $158 in out of pocket 
costs and an increase of $130 in total costs (or $0.80 for every $1.00 
reduction in out of pocket costs).
    We also reviewed how many Medicare enrollees have supplemental 
coverage or Medicaid. Research from the Kaiser Family Foundation 
recently looked at this.\105\ This analysis found that 26 percent of 
Medicare beneficiaries had annual income of less than $20,000 (which is 
reasonably close to the SSI income limit of $1,767 monthly, which would 
be $21,204 annually). Of these beneficiaries, 37 percent had Medicaid 
and 11 percent had supplemental coverage. Excluding those with Medicaid 
and assuming the two groups are mutually exclusive, 17 percent of low-
income beneficiaries without Medicaid had supplemental coverage. We 
believe it is reasonable to assume that very few beneficiaries had both 
Medicaid and other supplemental coverage.
---------------------------------------------------------------------------

    \105\ W Koma, J Cubanski, and T Neuman, ``A Snapshot of Coverage 
Among Medicare Beneficiaries in 2018,'' Kaiser Family Foundation, 
March 23 2021. https://www.kff.org/medicare/issue-brief/a-snapshot-of-sources-of-coverage-among-medicare-beneficiaries-in-2018/. 
[Accessed August 3 2022].
---------------------------------------------------------------------------

    We estimated the impact assuming that the overall increase in total 
costs would be $0.80 for every $1.00 reduction in out of pocket costs. 
For

[[Page 54836]]

those without supplemental coverage, this would be expected to result 
in an increase of 14 percent in total costs and 20 percent in Medicare 
costs, and for those without supplemental coverage, increases of 3 
percent for total costs and 10 percent for Medicare costs. Using the 
analysis on SSI enrollees and coverage, this is a weighted average of 
an 18 percent increase in Medicare costs for those newly gaining 
Medicaid.
    To calculate the annual impacts, we multiply the Medicare per 
enrollee costs each year by 18 percent and by the number of SSI 
enrollees newly receiving Medicaid, and then adjust for cost-sharing to 
calculate the Federal Medicare spending amounts. Using total Medicare 
per enrollee costs (as projected in the 2022 Trustees Report),\106\ we 
project that this would increase Medicare spending by $11.1 billion 
over 2023 to 2027 under this proposed rule. Annual impacts are shown in 
Table 6.
---------------------------------------------------------------------------

    \106\ ``2022 Annual Report of the Boards of Trustees of the 
Federal Hospital Insurance and Federal Supplementary Medical 
Insurance Trust Funds.'' https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf. [Accessed August 3 2022].
[GRAPHIC] [TIFF OMITTED] TP07SE22.008

    There is a wide range of possible costs due to this effect of the 
proposed rule. Most notably, and described previously in this section, 
is that the impact of reducing out of pocket costs could have different 
impacts than estimated here. Thus, individuals could use greater or 
lesser levels of additional services, resulting in different levels of 
Medicare spending changes than estimated here. This uncertainty is 
addressed in the high and low range estimates provided in the 
accounting statement (see section V.F. of this proposed rule).
4. Promoting Enrollment and Retention of Eligible Individuals
    These provisions are expected to increase coverage by assisting 
persons with gaining and maintaining Medicaid coverage. We have 
considered several effects of the provisions in this proposed rule.
    First, we estimated the impacts of aligning non-MAGI enrollment and 
renewal requirements with MAGI policy. We anticipate that this 
provision would increase the number of member months of coverage among 
enrollees eligible based on non-MAGI criteria (older adults and persons 
with disabilities). In an analysis of dually eligible enrollees from 
2015 to 2018, CMS found that about 29 percent of new dually eligible 
enrollees lost coverage for at least 1 month in the first year of 
coverage, and about 24 percent lost coverage for at least 3 months. 
While some of this loss of coverage is likely due to enrollees no 
longer being eligible, we expect that many enrollees may still be 
eligible despite losing coverage, and that this provision would assist 
enrollees in continuing coverage. We assumed that this provision would 
increase enrollment among aged enrollees and enrollees with 
disabilities by about 1 percent.
    For all other provisions under this section, we assumed that they 
would increase coverage for children by about 1 percent and for all 
other enrollees by about 0.75 percent. In particular, we assumed that 
provisions for acting on changes in circumstances, timely eligibility 
determinations and redeterminations, and action on returned mail would 
all contribute to modest increases in enrollment (mostly through 
continuing coverage for persons already enrolled) and that the 
provision to improve transitions between Medicaid and CHIP would 
further increase Medicaid enrollment.
    In total, we estimated these provisions would increase enrollment 
by about 880,000 person-year equivalents by 2027.
[GRAPHIC] [TIFF OMITTED] TP07SE22.009


[[Page 54837]]


5. Eliminating Barriers To Access in Medicaid
    We assumed that removing or limit requirements to apply for other 
benefits as a condition of Medicaid enrollment would lead to an 
increase in Medicaid coverage. We have not assessed the impacts across 
different benefits (that is, SSI, TANF, etc.). We assumed that this 
would increase overall enrollment by about 0.5 percent, or about 
410,000 person-year equivalents by 2027.
    We have assumed that removing optional limitations on the number of 
reasonable opportunity periods would have a negligible impact on 
Medicaid enrollment and expenditures.
[GRAPHIC] [TIFF OMITTED] TP07SE22.010

6. CHIP Proposed Changes and Eliminating Access Barriers in CHIP
    We estimated that proposed changes to CHIP enrollment (including 
timely determinations and redeterminations, acting on changes in 
circumstances, acting on returned mail, and improving transitions 
between CHIP and Medicaid) would increase CHIP enrollment by about 1 
percent. These are comparable to the impacts on Medicaid children of 
the comparable Medicaid provisions.
    For prohibitions on premium lockout periods and waiting periods, 
there are currently 14 States that have such lockout periods and 11 
States that have waiting periods for CHIP enrollment. We assumed that 
in those States, removing these barriers to coverage would increase 
enrollment by about 1 percent. We assumed that prohibiting annual and 
lifetime limits on benefits in CHIP would have a negligible impact.
    In total, we estimate these provisions would increase enrollment by 
about 120,000 by 2027.
[GRAPHIC] [TIFF OMITTED] TP07SE22.011

7. Impacts on the Marketplaces
    We anticipate that many of the enrollees that would either be 
gaining Medicaid or CHIP coverage or retaining Medicaid or CHIP 
coverage as a result of this proposed rule would have had other 
coverage under current policies. In particular, we expect that many of 
the children and adults would have enrolled in the Marketplace and been 
eligible for subsidized care (excluding those age 65 or older and those 
with disabilities who are enrolled in Medicare).
    To estimate the impacts this proposed rule would have on 
Marketplace expenditures, we started by calculating the cost of care 
and Federal subsidy payments for different households shifting from 
Marketplace coverage to Medicaid and CHIP. We made the following 
assumptions. We estimated that health care prices are 30 percent higher 
in Marketplace plans than in Medicaid and CHIP, and that the average 
percentage of costs for non-benefit costs in managed care was 10 
percent--this also considers that some beneficiaries receive all or 
part of their care outside of managed care. Next, we assumed that 
individuals would reduce health spending by 10 percent in the 
Marketplace due to increased cost sharing requirements. We used an 
actuarial value of 70 percent, consistent with silver level plans on 
the Marketplace, and assumed that the average percentage of non-benefit 
costs in Marketplace plans was 20 percent. Finally, we assumed that the 
average income of persons shifting from Marketplace coverage to 
Medicaid and CHIP would be 125 percent of the Federal poverty level 
(FPL) and that the premium tax credits would be calculated assuming 
that they would not have to pay any contribution in 2023, 2024, and 
2025 under the Inflation Reduction Act of 2022, and that they would 
have to pay 2 percent of income for coverage for 2026 and beyond.
    We calculated the amount of Federal subsidies (measured by premium 
tax credits) for households of one adult, two adults, one adult and one 
child, one adult and two children, and two adults and two children, and 
then calculated the total Federal cost of Marketplace coverage to be 
consistent with the distribution of projected enrollment change in 
Medicaid and CHIP under the proposed rule. We made a final assumption 
that 60 percent of individuals would have enrolled in Marketplace 
coverage, and the remaining 40 percent would have either received other 
coverage or become uninsured.
    We estimated that Marketplace costs would have decreased by $3.8 
billion in 2022 under the policies in the proposed rule. To project 
costs for future years that would be affected by the proposed rule, we 
assumed that per capita costs,

[[Page 54838]]

premiums, and Federal subsidies would increase consistent with the 
projected growth rates in the President's Budget with adjustments to 
account for the impacts of the Inflation Reduction Act of 2022, and 
that enrollment would increase consistent with the projections made for 
the Medicaid and CHIP provisions of this proposed rule.
[GRAPHIC] [TIFF OMITTED] TP07SE22.012

    There is a wide range of possible savings due to this effect of the 
proposed rule. For these estimates, participation in the Marketplace 
and health care costs and prices may vary from what we assumed here. 
Thus, actual savings could be greater or lesser than estimated here. 
This uncertainty is addressed in the high and low range estimates 
provided in the accounting statement (see section V.F. of this proposed 
rule).
8. Total
    In total, we project that these provisions would increase Medicaid 
enrollment by 2.81 million by 2027, and would increase total Medicaid 
spending by $99,290 million from 2023 through 2027. Of that amount, we 
estimate that $60,280 million would be paid by the Federal government 
and $39,010 million would be paid by the States. We expect the majority 
of the additional enrollment and cost to be provided for older adults 
and persons with disabilities. We also estimate that CHIP enrollment 
would increase by 0.12 million by 2027, and that total CHIP 
expenditures would increase by $1,690 million from 2023 to 2027 ($1,170 
Federal and $520 million State costs). Table 11 shows the net impacts 
for Medicaid and for CHIP.
[GRAPHIC] [TIFF OMITTED] TP07SE22.013

[GRAPHIC] [TIFF OMITTED] TP07SE22.014

    In addition to the effects on Medicaid and CHIP, we have also 
estimated impacts on Medicare and the Federal subsidies for Marketplace 
coverage. Table 13 shows the net impact on Federal spending for 
Medicaid, CHIP, Medicare, and Federal Marketplace subsidies.

[[Page 54839]]

[GRAPHIC] [TIFF OMITTED] TP07SE22.015

9. Administrative Burden
    We anticipate a reduction in administrative burden for States 
resulting from the proposed elimination of the requirement to apply for 
other benefits outlined in the preamble of this proposed rule. 
Specifically, we estimate that this provision would save State 
Eligibility Interviewers on average 1 hour per enrollee at $46.70/hr 
from no longer needing to prepare and send notices and requests for 
additional information about applying for other benefits, or to process 
requests for good cause exemptions. In aggregate for all States, we 
estimate an annual savings of minus 2,300,000 hours (1 hr x 2.3M 
enrollees) and minus $106,122,000 (2,300,000 hrs x $46.70/hr).
    We also estimate that this provision would save each enrollee who 
otherwise meets all requirements to be enrolled or remain enrolled in 
Medicaid but who, absent this provision, would lose Medicaid coverage 
due to failure to provide information on application for other benefits 
on average 2 hours at $28.01/hr. In aggregate, we estimate that 
enrollees in all States would save minus 4,600,000 hours (2 hrs x 
2,300,000 enrollees) and $128,846,000 (4,600,000 hrs x $28.01/hr) 
annually.

D. Alternatives Considered

    In developing this proposed rule, the following alternatives were 
considered:
1. Not Proposing the Rule
    We considered not proposing this rule and maintaining the status 
quo. However, we believe this proposed rule will lead to more eligible 
individuals gaining access to coverage and maintaining their coverage 
across all States. In addition, we believe that provisions in this 
proposed rule, such as updates to the recordkeeping requirements, will 
reduce the incidence of improper payments and improve the integrity of 
the Medicaid program and CHIP.
2. Providing States With Discretion Regarding the Date of Application 
for QMBs
    Section 406.26 describes enrollment in Medicare Part A through the 
buy-in process. We considered proposing modifications to Sec.  
406.26(b) to provide States with discretion to use the Part A 
conditional enrollment filing date as the date of the Medicaid 
application for QMB eligibility. As background, the QMB eligibility 
group covers Part A premiums for individuals who do not qualify for 
premium-free Part A. However, to apply for the QMB eligibility group, 
an individual must be entitled to Part A--and many cannot afford the 
monthly premium ($499 in 2022). Such individuals have to navigate a 
complex two-step process where they first apply for conditional 
enrollment in Part A at SSA, then go to the State Medicaid agency to 
apply for the QMB eligibility group. Providing States the option to use 
the date of application at SSA for conditional enrollment as the date 
of application for a QMB application could permit States to offer an 
earlier effective date for QMB. We chose not to propose a regulatory 
change at this time because we do not have enough information to 
accurately assess its impact. However, we seek comments on this 
alternative considered that might be adopted in the final rule based on 
comments received.
3. Maintaining Records in Paper Format
    We considered allowing States, which have not yet transitioned 
their enrollee records into an electronic format, to continue to 
maintain a paper-based record keeping system. As documented by the OIG 
and PERM eligibility reviews, many existing enrollee case records lack 
adequate information to verify decisions of Medicaid eligibility. A 
move to electronic recordkeeping will not only help States to ensure 
adequate documentation of their eligibility decisions, but will also 
make it easier to report such information to State auditors and other 
relevant parties. Therefore, we proposed to require State Medicaid 
agencies to store records in electronic format (estimated above, in the 
Collection of Information section, as a one-time cost of $108,260) and 
sought comment on whether States should retain flexibility to maintain 
records in paper or other formats that reflect evolving technology.

E. Limitations of the Analysis

    There are a number of caveats to these estimates. Foremost, there 
is significant uncertainty about the actual effects of these 
provisions. Each of these provisions could be more or less effective 
than we have assumed in developing these estimates, and for many of 
these provisions we have made assumptions about the impacts they would 
have. In many cases, determining the reasons why a person may not be 
enrolled despite being eligible for Medicaid or CHIP is difficult to do 
in an analysis such as this. Therefore, these assumptions rely heavily 
on our judgment about the impacts of these provisions. While we believe 
these are reasonable estimates, we note that this could have a 
substantially greater or lesser impact than we have projected.
    Second, there is uncertainty even under current policy in Medicaid 
and CHIP. Due to the COVID-19 pandemic and legislation to address the 
pandemic, Medicaid enrollment (and to a lesser extent, CHIP enrollment) 
have experienced significant increases in enrollment since the 
beginning of 2020. Actual underlying economic and public health 
conditions may differ than what we assume here.
    In addition to the sources of uncertainty described previously, 
there are other reasons the actual impacts of these provisions may 
differ from the estimates. There may be differences in the impacts of 
these provisions across eligibility groups or States that are not 
reflected in these estimates. There may also be different costs per 
enrollee than we have assumed here--those gaining coverage altogether 
or keeping coverage for longer durations of time may have different 
costs than those who were already assumed to be enrolled in the 
program. Lastly, to the extent that States have discretion in 
provisions that are

[[Page 54840]]

optional in this proposed rule or in the administration of their 
programs more broadly, States' efforts to implement these provisions 
may lead to larger or smaller impacts than estimated here.
    To address these limitations, we have developed a range of impacts. 
We believe that the actual impacts would likely fall within a range 50 
percent higher or lower than the estimates we have developed. While 
this is a significant range, we would note that in the context of the 
entire Medicaid program ($743 billion in FY 2021), this is still a 
relatively narrow range.

F. Accounting Statement

    As required by OMB Circular A-4 (available at https://www.whitehouse.gov/wp-content/uploads/legacy_drupal_files/omb/circulars/A4/a-4.pdf), we have prepared an accounting statement in 
Table 14 showing the classification of the transfer payments with the 
provisions of this proposed rule. These impacts are classified as 
transfers, with the Federal government and States incurring additional 
costs and beneficiaries receiving medical benefits and reductions in 
out-of-pocket health care costs.
    This provides our best estimates of the transfer payments outlined 
in the ``Section C. Detailed Economic Analysis'' above. To address the 
significant uncertainty related to these estimates, we have assumed 
that the costs could be 50 percent greater than or lesser than we have 
estimated here. We recognize that this is a relatively wide range, but 
we note several reasons for uncertainty regarding these estimates. 
First, there are numerous provisions that affect Medicaid and CHIP in 
this rule. For several provisions, we have limited information, 
analysis, or comparisons to prior experience to use in developing our 
estimates. Thus, the range reflects that impacts of these provisions 
could be greater or lesser than we assume. In addition, given the 
number of provisions, there may be cases where multiple provisions 
would help an individual maintain coverage. This could lead to these 
estimates ``double counting'' some effects. We also note that there are 
expected impacts on Medicare and the Marketplace subsidies; we believe 
this range adequately accounts for the potential variation in costs or 
savings to those programs as well. Finally, given the significant 
effects of the COVID-19 pandemic and legislation intended to address 
this, the current outlook for Medicaid and CHIP are less certain than 
typically. We provide this wider range to account for this uncertainty 
as well. This range provides the high cost and low cost ranges shown in 
Table 14.
[GRAPHIC] [TIFF OMITTED] TP07SE22.016

    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on August 25, 2022.

List of Subjects

42 CFR Part 406

    Diseases, Health facilities, Medicare.

42 CFR Part 431

    Grant programs--health, Health facilities, Medicaid, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

42 CFR Part 457

    Administrative practice and procedure, Grant programs--health, 
Health insurance, Reporting and recordkeeping requirements.

42 CFR Part 600

    Administrative practice and procedure, Health care, Health 
insurance, Intergovernmental relations, Penalties, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth 
below:

PART 406--HOSPITAL INSURANCE ELIGIBILITY AND ENTITLEMENT

0
1. The authority citation for part 406 is revised to read as follows:

    Authority:  42 U.S.C. 1302, 1395i-2, 1395i-2a, 1395p, 1395q and 
1395hh.

0
2. Section 406.21 is amended by adding paragraph (c)(5) to read as 
follows:


Sec.  406.21  Individual enrollment.

* * * * *
    (c) * * *
    (5) If an individual resides in a State that pays premium hospital 
insurance for Qualified Medicare Beneficiaries under Sec.  406.32(g) 
and enrolls or reenrolls during a general enrollment period after 
January 1, 2023, QMB coverage is effective the month entitlement begins 
(if the individual is determined eligible for QMB before the month 
following the month of enrollment), or a month later than the month 
entitlement begins (if the individual is determined eligible for QMB 
the month entitlement begins or later).
* * * * *

PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION

0
3. The authority citation for part 431 is revised to read as follows:

    Authority: 42 U.S.C. 1302.

0
4. Section 431.10 is amended by--
0
a. Redesignating paragraphs (c)(1)(i)(A)(2) and (3) as (c)(1)(i)(A)(4) 
and (5), respectively; and
0
b. Adding new paragraphs (c)(1)(i)(A)(2) and (3).
    The additions read as follows:

[[Page 54841]]

Sec.  431.10  Single State agency.

* * * * *
    (c) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) The separate Children's Health Insurance Program agency;
    (3) The Basic Health Program agency;
* * * * *
0
5. Section 431.17 is revised to read as follows:


Sec.  431.17   Maintenance of records.

    (a) Basis and purpose. This section, based on section 1902(a)(4) of 
the Act, prescribes the kinds of records a Medicaid agency must 
maintain, the minimum retention period for such records, and the 
conditions under which those records must be provided or made 
available.
    (b) Content of records. A State plan must provide that the Medicaid 
agency will maintain or supervise the maintenance of the records 
necessary for the proper and efficient operation of the plan. The 
records must include all of the following--
    (1) Individual records on each applicant and beneficiary that 
contain all of the following:
    (i) All information provided on the initial application submitted 
through any modality described in Sec.  435.907 of this subchapter by, 
or on behalf of, the applicant or beneficiary, including the signature 
on and date of application.
    (ii) The electronic account and any information or other 
documentation received from another insurance affordability program in 
accordance with Sec.  435.1200(c) and (d) of this subchapter.
    (iii) The date of, basis for, and all documents or other evidence 
to support any determination, denial, or other adverse action, 
including decisions made at application, renewal, and as a result of a 
change in circumstance, taken with respect to the applicant or 
beneficiary, including all information provided by, or on behalf of, 
the applicant or beneficiary, and all information obtained 
electronically or otherwise by the agency from third-party sources.
    (iv) The provision of, and payment for, services, items and other 
medical assistance, including the service or item provided, relevant 
diagnoses, the date that the service or item was provided, the 
practitioner or provider rendering, providing or prescribing the 
service or item, including their National Provider Identifier, and the 
full amount paid or reimbursed for the service or item, and any third-
party liabilities.
    (v) Any changes in circumstances reported by the individual and any 
actions taken by the agency in response to such reports.
    (vi) All renewal forms and documentation returned by, or on behalf 
of, a beneficiary, to the Medicaid agency in accordance with Sec.  
435.916 of this subchapter, regardless of the modality through which 
such forms are submitted, including the signature on the form and date 
received.
    (vii) All notices provided to the applicant or beneficiary in 
accordance with Sec.  431.206 and Sec. Sec.  435.917 and 435.918 of 
this subchapter.
    (viii) All records pertaining to any fair hearings requested by, or 
on behalf of, the applicant or beneficiary, including each request 
submitted and the date of such request, the complete record of the 
hearing decision, as described in Sec.  431.244(b), and the final 
administrative action taken by the agency following the hearing 
decision and date of such action.
    (ix) The disposition of income and eligibility verification 
information received under Sec. Sec.  435.940 through 435.960 of this 
subchapter, including evidence that no information was returned from an 
electronic data source.
    (2) Statistical, fiscal, and other records necessary for reporting 
and accountability as required by the Secretary.
    (c) Retention of records. The State plan must provide that the 
records required under paragraph (b) of this section will be retained 
for the period when the applicant or beneficiary's case is active, plus 
a minimum of 3 years thereafter.
    (d) Accessibility and availability of records. The agency must--
    (1) Maintain the records described in paragraph (b) of this section 
in an electronic format; and
    (2) Make the records available to the Secretary, Federal and State 
auditors and other parties who request, and are authorized to review, 
such records within 30 calendar days of the request, if not otherwise 
specified, and to the extent permissible by Federal law.


Sec.  431.213   [Amended]

0
6. Section 431.213 is amended by removing and reserving paragraph (d).

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
7. The authority citation for part 435 is revised to read as follows:

    Authority:  42 U.S.C. 1302.

0
8. Section 435.4 is amended by adding a definition for ``Low Income 
Subsidy Application data (LIS leads data)'' in alphabetical order to 
read as follows:


Sec.  435.4   Definitions and use of terms.

* * * * *
    Low-Income Subsidy Application data (LIS leads data) means data 
from an individual's application for low-income subsidies under section 
1860D-14 of the Act that the Social Security Administration 
electronically transmits to the appropriate State Medicaid agency as 
described in section 1144 (c)(1) of the Act.
* * * * *
0
9. Section 435.222 is amended by revising the section heading to read 
as follows:


Sec.  435.222  Optional eligibility for reasonable classifications of 
individuals under age 21 with income below a MAGI-equivalent standard.

* * * * *
0
10. Section 435.223 is added as follows:


Sec.  435.223  Other optional eligibility for reasonable 
classifications of individuals under age 21.

    (a) Basis. This section implements section 1902(a)(10)(A)(ii) of 
the Act.
    (b) Eligibility. The agency may provide Medicaid to individuals 
under age 21 (or, at State option, under age 20, 19, or 18) or to one 
or more reasonable classifications of individuals under age 21 who meet 
the requirements described in any clause of section 1902(a)(10)(A)(ii) 
of the Act and implementing regulations in this subpart, if any.
0
11. Section 435.407 is amended by--
0
a. Adding paragraphs (a)(7) and (8);
0
b. Removing paragraphs (b)(2) and (11);
0
c. Redesignating paragraphs (b)(3) through (b)(10) as paragraphs (b)(2) 
through (b)(9), and paragraphs (b)(12) through (b)(18) as paragraphs 
(b)(10) through (b)(16), respectively; and
0
d. In newly redesignated paragraph (b)(16), removing the reference to 
paragraph ``(17)'' and adding in its place a reference to paragraph 
``(15)''.
    The additions read as follows:


Sec.  435.407   Types of acceptable documentary evidence of 
citizenship.

    (a) * * *
    (7) Verification with a State vital statistics agency documenting a 
record of birth.
    (8) A data match with the Department of Homeland Security 
Systematic Alien Verification for Entitlements (SAVE) Program or any 
other process

[[Page 54842]]

established by DHS to verify that an individual is a citizen.
* * * * *
0
12. Section 435.601 is amended--
0
a. In paragraph (b)(2) by removing the phrase ``specified in paragraphs 
(c) and (d) of this section or in Sec.  435.121 or as permitted under 
Sec.  435.831(b)(1), in determining'' and adding in its place the 
phrase ``specified in paragraphs (c) through (e) of this section or in 
Sec.  435.121 of this part or as permitted under (f)(1)(ii)(B) of this 
paragraph, in determining'';
0
b. In paragraph (d)(1) introductory text by removing the phrase 
``permitted under Sec.  435.831(b)(1) in determining eligibility'' and 
adding in its place the phrase ``permitted under paragraph (e) or 
(f)(1)(ii)(B) of this section in determining eligibility'';
0
c. By adding paragraph (e); and
0
d. By revising paragraph (f).
    The addition and revision read as follows:


Sec.  435.601   Application of financial eligibility methodologies.

* * * * *
    (e) Procedures for determining eligibility for the Medicare Savings 
Program groups. When a State determines eligibility for a Medicare 
Savings Program group, for income eligibility the agency must include 
at least the individuals described in Sec.  423.772 in determining 
family of the size involved.
    (f) State plan requirements. (1)(i) The State plan must specify 
that, except to the extent precluded in Sec.  435.602, in determining 
financial eligibility of individuals, the agency will apply the cash 
assistance financial methodologies and requirements, unless the agency 
chooses the option described in paragraph (f)(1)(ii)(B) of this 
section, or chooses to apply less restrictive income and resource 
methodologies in accordance with paragraph (d) of this section, or 
both.
    (ii) In the case of individuals for whom the program most closely 
categorically-related to the individual's status is AFDC (individuals 
under age 21, pregnant individuals and parents and other caretaker 
relatives who are not disabled, blind or age 65 or older), the agency 
may apply--
    (A) The financial methodologies and requirements of the AFDC 
program; or
    (B) The MAGI-based methodologies defined in Sec.  435.603, except 
that, the agency must comply with the terms of Sec.  435.602.
    (2) [Reserved]


Sec.  435.608  [Removed and Reserved]

0
13. Section 435.608 is removed and reserved.
0
14. Section 435.831 is amended by--
0
a. Redesignating paragraphs (g)(2) and (3) as paragraphs (g)(3) and 
(4), respectively; and
0
b. Adding new paragraph (g)(2).
    The addition reads as follows:


Sec.  435.831   Income eligibility.

* * * * *
    (g) * * *
    (2) May include expenses for services that the agency has 
determined are reasonably constant and predictable, including, but not 
limited to, services identified in a person-centered service plan 
developed pursuant to Sec.  441.301(b)(1)(i), Sec.  441.468(a)(1), 
Sec.  441.540(b)(5), or Sec.  441.725 and expenses for prescription 
drugs, projected to the end of the budget period at the Medicaid 
reimbursement rate.
* * * * *
0
15. Section 435.907 is amended by adding paragraph (c)(4) and revising 
paragraph (d) to read as follows:


Sec.  435.907   Application.

* * * * *
    (c) * * *
    (4) Any MAGI-exempt applications and supplemental forms must be 
accepted through all modalities described at 435.907(a).
    (d)(1) If the agency needs to request additional information from 
the applicant to determine and verify eligibility in accordance with 
Sec.  435.911, the agency must--
    (i) Provide the applicant with no less than the following number of 
days, measured from the date the agency sends the request, to respond 
and provide any necessary information:
    (A) Thirty (30) calendar days for applicants who apply for Medicaid 
on the basis of disability, and
    (B) Fifteen (15) calendar days for all other applicants;
    (ii) Allow applicants to provide requested information through any 
of the modes of submission specified in paragraph (a) of this section; 
and
    (iii)(A) In the case of an individual who is denied eligibility for 
failure to submit requested information and who subsequently submits 
the requested information within the period allowed by the agency in 
accordance with paragraph (d)(1)(ii) of this section, reconsider 
eligibility without requiring a new application;
    (B) For purposes of the application timeliness standards at Sec.  
435.912(c)(3) of this subpart, the date of application for individuals 
described in paragraph (d)(1)(iv)(A) of this section is considered the 
date upon which the individual submits the additional information 
requested by the agency; and
    (C) For purposes of the effective date of eligibility under Sec.  
435.915 of this subpart, the date of application for individuals 
described in paragraph (d)(1)(iiii)(A) of this section is date on which 
the original application was submitted.
    (2) The agency may not require an in-person interview as part of 
the application process.
* * * * *
0
16. Section 435.909 is revised to read as follows:


Sec.  435.909  Automatic entitlement to Medicaid following a 
determination of eligibility under other programs.

    (a) Automatic enrollment of certain individuals in Medicaid. The 
agency must not require a separate application for Medicaid from an 
individual, if the agency has an agreement with the Social Security 
Administration (SSA) under section 1634 of the Act for determining 
Medicaid eligibility; and--
    (1) The individual receives SSI;
    (2) The individual receives a mandatory State supplement under 
either a federally-administered or State-administered program; or
    (3) The individual receives an optional State supplement and the 
agency provides Medicaid to beneficiaries of optional supplements under 
Sec.  435.230.
    (b) Automatic enrollment of SSI recipients in the Qualified 
Medicare Beneficiary group. (1) The agency must deem individuals 
eligible for the Qualified Medicare Beneficiary group as described in 
Sec.  400.200 of this chapter if the individual receives SSI and is 
determined eligible for medical assistance under Sec.  435.120 or Sec.  
435.121 and--
    (i) The individual is entitled to Part A under part 406, subpart B 
of this chapter; or
    (ii) The individual is entitled to Part A under Sec.  406.20 of 
this chapter and the agency has a State buy-in agreement authorized 
under section 1843 of the Act and modified under section 1818(g) of the 
Act.
    (2) The agency may deem individuals eligible for the Qualified 
Medicare Beneficiary group as described in Sec.  400.200 of this 
chapter if the individual receives SSI and is determined eligible for 
medical assistance under Sec.  435.120 or Sec.  435.121; and--
    (i) The individual is entitled to Part A under Sec.  406.5(b) of 
this chapter; and
    (ii) The agency uses the group payer arrangement under Sec.  
406.32(g) of this chapter to pay Part A premiums for Qualified Medicare 
Beneficiaries.
    (3) The automatic enrollment of SSI recipients in the Qualified 
Medicare

[[Page 54843]]

Beneficiaries group described in paragraphs (b)(1) and (2) of this 
section is effective no earlier than the effective date of coverage 
under a buy-in agreement for individuals described in Sec.  407.47(b) 
of this chapter.
0
17. Section 435.911 is amended by revising paragraph (c) introductory 
text and adding paragraph (e) to read as follows:


Sec.  435.911   Determination of eligibility.

* * * * *
    (c) For each individual who has submitted an application described 
in Sec.  435.907, whose eligibility is being renewed in accordance with 
Sec.  435.916, or whose eligibility is being redetermined in accordance 
with Sec.  435.919 and who meets the non-financial requirements for 
eligibility (or for whom the agency is providing a reasonable 
opportunity to verify citizenship or immigration status in accordance 
with Sec.  435.956(b)), the State Medicaid agency must comply with the 
following--
* * * * *
    (e) The agency must--
    (1) Accept, via secure electronic interface, Low Income Subsidy 
application data (LIS leads data) transmitted to the agency from the 
Social Security Administration;
    (2) Treat received LIS leads data relating to an individual as an 
application for eligibility under section 1902(a)(10)(E) of the Act 
and, promptly and without undue delay, consistent with timeliness 
standards established under Sec.  435.912, determine the eligibility of 
the individual under such section, without requiring submission of 
another application;
    (3) Request additional information needed by the agency to make a 
determination of eligibility for the Medicare Savings Programs;
    (4) Not request information or documentation from the individual 
already provided to SSA through the LIS application and included in the 
transmission to the agency by the Social Security Administration; and
    (5) Accept any information verified by SSA, without further 
verification, if the information provided through the LIS leads data 
supports a determination of eligibility under section 1902(a)(10)(E) of 
the Act.
    (6) Collect such additional information as may be needed--
    (i) Consistent with Sec.  435.907(b), to determine whether such 
individual is eligible for Medicaid on the basis of the applicable 
modified adjusted gross income standard, and furnish Medicaid on such 
basis;
    (ii) Consistent with Sec.  435.907(c), to determine whether such 
individual is eligible for Medicaid benefits on any basis other than 
the applicable modified adjusted gross income standard or under section 
1902(a)(10)(E) of the Act, and furnish Medicaid on such basis; and
    (iii) Consistent with Sec.  435.956, to verify an individual's U.S. 
citizenship or satisfactory immigration status, including providing the 
required reasonable opportunity period under 435.956(b).
    (7) If any of the LIS leads data does not support a determination 
of eligibility under section 1902(a)(10)(E) of the Act, the agency 
must--
    (i) Determine whether additional information is needed to make a 
determination of eligibility under section 1902(a)(10)(E) of the Act;
    (ii) If such information is needed, notify the individual that they 
may be eligible for assistance with their Medicare premium and/or cost 
sharing charges, but that additional information is needed for the 
agency to make a determination of such eligibility;
    (iii) Provide the individual with a minimum of 30 days to furnish 
information any information needed by the agency to make such 
determination of eligibility; and
    (iv) Verify the individual's eligibility under section 
1902(a)(10)(E) of the Act in accordance with the agency's verification 
plan developed in accordance with Sec.  435.945(j).
0
18. Section 435.912 is revised to read as follows:


Sec.  435.912  Timely determination and redetermination of eligibility.

    (a) Definitions. For purposes of this section--
    Performance standards are overall standards for determining, 
renewing and redetermining eligibility in an efficient and timely 
manner across a pool of applicants or beneficiaries, and include 
standards for accuracy and consumer satisfaction, but do not include 
standards for an individual applicant's determination, renewal, or 
redetermination of eligibility.
    Timeliness standards refer to the maximum periods of time, subject 
to the exceptions in paragraph (e) of this section and in accordance 
with Sec.  435.911(c), in which every applicant is entitled to a 
determination of eligibility, a redetermination of eligibility at 
renewal, and a redetermination of eligibility based on a change in 
circumstances.
    (b) State plan requirements. Consistent with guidance issued by the 
Secretary, the agency must establish in its State plan timeliness and 
performance standards for, promptly and without undue delay--
    (1) Determining eligibility for Medicaid for individuals who submit 
applications to the single State agency or its designee in accordance 
with Sec.  435.907, including determining eligibility or potential 
eligibility for, and transferring individuals' electronic accounts to, 
other insurance affordability programs pursuant to Sec.  435.1200(e);
    (2) Determining eligibility for Medicaid for individuals whose 
accounts are transferred from other insurance affordability programs, 
including at initial application, as well as at a regularly-scheduled 
renewal or due to a change in circumstances;
    (3) Redetermining eligibility for current beneficiaries at 
regularly-scheduled renewals in accordance with Sec.  435.916, 
including determining eligibility or potential eligibility for, and 
transferring individuals' electronic accounts to, other insurance 
affordability programs pursuant to 435.1200(e);
    (4) Redetermining eligibility for current beneficiaries based on a 
change in circumstances reported by the beneficiary in accordance with 
Sec.  435.919(b)(1) or received from a third party in accordance with 
Sec.  435.919(b)(2), including determining eligibility or potential 
eligibility for, and transferring individuals' electronic accounts to, 
other insurance affordability programs pursuant to 435.1200(e); and
    (5) Redetermining eligibility for current beneficiaries based on 
anticipated changes in circumstances in accordance with Sec.  
435.919(b)(3), including determining eligibility or potential 
eligibility for, and transferring individuals' electronic accounts to, 
other insurance affordability programs pursuant to 435.1200(e).
    (c) Timeliness and performance standard requirements--(1) Period 
covered. The timeliness and performance standards adopted by the agency 
under paragraph (b) of this section must--
    (i) For determinations of eligibility at initial application or 
upon receipt of an account transfer from another insurance 
affordability program, as described in paragraphs (b)(1) and (2) of 
this section, cover the period from the date of application or transfer 
from another insurance affordability program to the date the agency 
notifies the applicant of its decision or the date the agency transfers 
the individual's electronic account to another insurance affordability 
program in accordance with Sec.  435.1200(e);

[[Page 54844]]

    (ii) For regularly-scheduled renewals of eligibility under Sec.  
435.916, cover the period from the date that the agency initiates the 
steps required to renew eligibility on the basis of information 
available to the agency, as required under Sec.  435.916(b)(1), to the 
date the agency sends the individual notice required under Sec.  
435.916(b)(1)(i) or (b)(2)(i)(C) of its decision to approve their 
renewal of eligibility or, as applicable, to the date the agency 
terminates eligibility and transfers the individual's electronic 
account to another insurance affordability program in accordance with 
Sec.  435.1200(e);
    (iii) For redeterminations of eligibility due to changes in 
circumstances under Sec.  435.919(b), cover the period from the date 
the agency receives information reported by the beneficiary, as 
described at Sec.  435.919(b)(1)(i), or received from the third party, 
as described at Sec.  435.919(b)(2)(i), to the date the agency notifies 
the individual of its decision or, as applicable, to the date the 
agency terminates eligibility and transfers the individual's electronic 
account to another insurance affordability program in accordance with 
Sec.  435.1200(e); and
    (iv) For redeterminations of eligibility based on anticipated 
changes in circumstances under Sec.  435.919(b)(3), cover the period 
from the date the agency begins the redetermination of eligibility, to 
the date the agency notifies the individual of its decision or, as 
applicable, to the date the agency terminates eligibility and transfers 
the individual's electronic account to another insurance affordability 
program in accordance with Sec.  435.1200(e).
    (2) Criteria for establishing standards. To promote accountability 
and a consistent, high quality consumer experience among States and 
between insurance affordability programs, the timeliness and 
performance standards included in the State plan must address--
    (i) The capabilities and cost of generally available systems and 
technologies;
    (ii) The general availability of electronic data matching, ease of 
connections to electronic sources of authoritative information to 
determine and verify eligibility, and the time needed by the agency to 
evaluate information obtained from electronic data sources;
    (iii) The demonstrated performance and timeliness experience of 
State Medicaid, CHIP and other insurance affordability programs, as 
reflected in data reported to the Secretary or otherwise available;
    (iv) The needs of applicants and beneficiaries, including 
preferences for mode of application and submission of information at 
renewal or redetermination (such as through an internet website, 
telephone, mail, in-person, or other commonly available electronic 
means), the time needed to return a renewal form or any additional 
information needed to complete a determination of eligibility at 
application or renewal, as well as the relative complexity of 
adjudicating the eligibility determination based on household, income 
or other relevant information; and
    (v) The advance notice that must be provided to beneficiaries in 
accordance with Sec. Sec.  431.211, 431.213, and 431.214 of this 
subchapter when the agency makes a determination resulting in 
termination or other action as defined in Sec.  431.201 of this 
subchapter.
    (3) Standard for new applications and transferred accounts. Except 
as provided in paragraph (e) of this section, the determination of 
eligibility for any applicant or individual whose account was 
transferred from another insurance affordability program may not 
exceed--
    (i) Ninety (90) days for applicants who apply for Medicaid on the 
basis of disability; and
    (ii) Forty-five (45) days for all other applicants.
    (4) Standard for renewals. Except as provided in paragraph (e) of 
this section, the redetermination of eligibility for a beneficiary at a 
regularly-scheduled renewal may not exceed--
    (i) The end of the beneficiary's eligibility period, in the case of 
a beneficiary whose eligibility can be renewed based on information 
available to the agency as described at Sec.  435.916(b)(1) or in the 
case of a beneficiary whose renewal requires additional information and 
who returns a renewal form 25 or more calendar days prior to the end of 
the eligibility period described in Sec.  435.916(a);
    (ii) The end of the month following the end of the beneficiary's 
eligibility period, in the case of a beneficiary whose eligibility is 
being redetermined on the basis for which the beneficiary has been 
receiving Medicaid (the applicable modified adjusted gross income 
standard described in Sec.  435.911(b)(1) and (2) or another basis) and 
who returns a renewal form less than 25 calendar days prior to the end 
of the beneficiary's eligibility period; and
    (iii) The following time periods, in the case of a beneficiary who 
is determined ineligible on the basis for which they are currently 
receiving Medicaid and for whom the agency is considering eligibility 
on another basis--
    (A) Ninety (90) calendar days from the date the agency determines 
the beneficiary is not eligible on the current basis, if eligibility is 
being determined on the basis of disability;
    (B) Twenty-five (25) calendar days from the date the agency 
determines the beneficiary is not eligible on the current basis, for 
all bases of determination other than the basis of disability.
    (5) Standard for redeterminations based on changes in 
circumstances. Except as provided in paragraph (e) of this section, the 
redetermination of eligibility for a beneficiary based on a change in 
circumstances reported by the beneficiary or received from a third 
party may not exceed the end of the month that occurs--
    (i) Thirty (30) calendar days following the agency's receipt of 
information related to the change in circumstances, unless the agency 
needs to request additional information from the beneficiary; and
    (ii) Sixty (60) calendar days following the agency's receipt of 
information related to the change in circumstances if the agency must 
request additional information from the beneficiary.
    (6) Standard for redeterminations based on anticipated changes. 
Except as provided in paragraph (e) of this section, the 
redetermination of eligibility for a beneficiary based on an 
anticipated change in circumstances, may not exceed--
    (i) The date of the anticipated change, or at State option the last 
day of the month in which the anticipated change occurs, in the case of 
a beneficiary who returns requested information or documentation 25 or 
more calendar days prior to the date of the change (or the last day of 
the month if elected by the State);
    (ii) The end of the month following the month in which the 
anticipated change occurs, in the case of a beneficiary whose 
eligibility is being redetermined on the basis for which the 
beneficiary has been receiving Medicaid (the applicable modified 
adjusted gross income standard described in Sec.  435.911(b)(1) and (2) 
or another basis, as described in Sec.  435.911(c)(2)) and who returns 
requested information or documentation less than 25 calendar days prior 
to the date of the change (or the last day of the month if elected by 
the State); and
    (iii) The following time periods, in the case of a beneficiary who 
is determined ineligible on the basis for which they are currently 
receiving Medicaid and for whom the agency is considering eligibility 
on another basis--

[[Page 54845]]

    (A) Ninety (90) calendar days from the date the agency determines 
the beneficiary is not eligible on the current basis, if eligibility is 
being determined on the basis of disability;
    (B) Twenty-five (25) calendar days from the date the agency 
determines the beneficiary is not eligible on the current basis, for 
all other beneficiaries.
    (d) Availability of information. The agency must inform individuals 
of the timeliness standards adopted in accordance with this section.
    (e) Exceptions. The agency must determine or redetermine 
eligibility within the standards except in unusual circumstances, for 
example--
    (1) When the agency cannot reach a decision because the applicant 
or beneficiary, or an examining physician, delays or fails to take a 
required action, or
    (2) When there is an administrative or other emergency beyond the 
agency's control.
    (f) Case documentation. The agency must document the reason(s) for 
delay in the applicant's or beneficiary's case record.
    (g) Prohibitions. The agency must not use the timeliness 
standards--
    (1) As a waiting period before determining eligibility;
    (2) As a reason for denying or terminating eligibility (because it 
has not determined or redetermined eligibility within the timeliness 
standards); or
    (3) As a reason for delaying termination of a beneficiary's 
coverage or taking other adverse action.


Sec.  435.914   [Amended]

0
19. Section 435.914 is amended--
0
a. In paragraph (a), by removing the phrase ``case record facts to 
support the agency's decision on his application'' and adding in its 
place the phrase ``and beneficiary's case record the information and 
documentation described in Sec.  431.17(b)(1) of this subchapter''; and
0
b. In paragraph (b) introductory text, by removing the phrase ``by a 
finding of eligibility or ineligibility'' and adding in its place the 
phrase ``and renewal by a finding of eligibility or ineligibility''.
0
20. Section 435.916 is revised to read as follows:


Sec.  435.916   Regularly-scheduled renewals of Medicaid eligibility.

    (a) Frequency of renewals. Except as provided in Sec.  435.919:
    (1) The eligibility of all Medicaid beneficiaries not described in 
paragraph (a)(2) of this section must be renewed once every 12 months, 
and no more frequently than once every 12 months.
    (2) The eligibility of qualified Medicare beneficiaries described 
in section 1905(p)(1) of the Act must be renewed at least once every 12 
months, and no more frequently than once every 6 months.
    (b) Renewals of eligibility. (1) Renewal on basis of information 
available to agency. The agency must make a redetermination of 
eligibility for all Medicaid beneficiaries without requiring 
information from the individual if able to do so based on reliable 
information contained in the individual's account or other more current 
information available to the agency, including but not limited to 
information through any data bases accessed by the agency under 
Sec. Sec.  435.948, 435.949, and 435.956. If the agency is able to 
renew eligibility based on such information, the agency must, 
consistent with the requirements of this subpart and subpart E of part 
431 of this subchapter, notify the individual--
    (i) Of the eligibility determination, and basis; and
    (ii) That the individual must inform the agency, through any of the 
modes permitted for submission of applications under Sec.  435.907(a), 
if any of the information contained in such notice is inaccurate, but 
that the individual is not required to sign and return such notice if 
all information provided on such notice is accurate.
    (2) Renewals requiring information from the individual. If the 
agency cannot renew eligibility for beneficiaries in accordance with 
paragraph (b)(1) of this section, the agency --
    (i) Must provide the individual with--
    (A) A pre-populated renewal form containing information, as 
specified by the Secretary, available to the agency that is needed to 
renew eligibility.
    (B) At least 30 calendar days from the date the agency sends the 
renewal form to respond and provide any necessary information through 
any of the modes of submission specified in Sec.  435.907(a), and to 
sign the renewal form under penalty of perjury in a manner consistent 
with Sec.  435.907(f);
    (C) Notice of the agency's decision concerning the renewal of 
eligibility in accordance with this subpart and subpart E of part 431 
of this chapter;
    (ii) Must verify any information provided by the beneficiary in 
accordance with Sec. Sec.  435.945 through 435.956;
    (iii) If the individual subsequently submits the renewal form or 
other needed information within 90 calendar days after the date of 
termination, or a longer period elected by the State, must treat the 
renewal form as an application and reconsider the eligibility of an 
individual whose coverage is terminated for failure to submit the 
renewal form or necessary information in accordance with the 
application time standards at Sec.  435.912(c)(3) without requiring a 
new application;
    (iv) Not require an individual to complete an in-person interview 
as part of the renewal process.
    (v) May request from beneficiaries only the information needed to 
renew eligibility. Requests for non-applicant information must be 
conducted in accordance with Sec.  435.907(e).
    (3) Special rules related to beneficiaries whose Medicaid 
eligibility is determined on a basis other than modified adjusted gross 
income.
    (i) The agency may consider blindness as continuing until the 
reviewing physician under Sec.  435.531 determines that a beneficiary's 
vision has improved beyond the definition of blindness contained in the 
plan; and
    (ii) The agency may consider disability as continuing until the 
review team, under Sec.  435.541, determines that a beneficiary's 
disability no longer meets the definition of disability contained in 
the plan.
    (c) Timeliness of renewals. The agency must complete the renewal of 
eligibility in accordance with this section by the end of the 
beneficiary's eligibility period described in paragraph (a) of this 
section and in accordance with the time standards in Sec.  
435.912(c)(4).
    (d) Determination of ineligibility and transmission of data 
pertaining to individuals no longer eligible for Medicaid. (1) Prior to 
making a determination of ineligibility, the agency must consider all 
bases of eligibility, consistent with Sec.  435.911.
    (2) Prior to terminating coverage for individuals determined 
ineligible for Medicaid, the agency must determine eligibility or 
potential eligibility for other insurance affordability programs and 
comply with the procedures set forth in Sec.  435.1200(e).
    (e) Accessibility of renewal forms and notices. Any renewal form or 
notice must be accessible to persons who are limited English proficient 
and persons with disabilities, consistent with Sec.  435.905(b).
0
21. Section 435.919 is added to read as follows:


Sec.  435.919   Changes in circumstances.

    (a) Procedures for reporting changes. The agency must:
    (1) Have procedures designed to ensure that beneficiaries 
understand the importance of making timely and accurate reports of 
changes in

[[Page 54846]]

circumstances that may affect their eligibility; and
    (2) Accept reports made under paragraph (a)(1) of this section and 
any other beneficiary reported information through any of the modes 
permitted for submission of applications under Sec.  435.907(a);
    (b) Agency action on information about changes. Consistent with the 
requirements of Sec.  435.952, the agency must promptly redetermine 
eligibility between regularly-scheduled renewals of eligibility 
required under Sec.  435.916(a) whenever it receives information about 
a change in a beneficiary's circumstances.
    (1) Changes reported by the beneficiary. When a beneficiary reports 
information about a change in circumstances, the agency must:
    (i) Evaluate whether the reported change may impact the 
beneficiary's eligibility for Medicaid or the amount of medical 
assistance for which the beneficiary is eligible, premiums or cost 
sharing charges. If additional information is needed to determine 
whether the beneficiary is no longer eligible due to the reported 
change, the agency must redetermine eligibility based on available 
information, if able to do so, and if the additional information is not 
available to the agency, request such information from the beneficiary;
    (ii) If the agency determines that the reported change results in 
an adverse action, as defined in Sec.  431.201 of this subchapter, take 
appropriate action in accordance with paragraph (b)(4) of this section.
    (iii) If the agency finds that the reported change may result in 
eligibility for additional medical assistance or lower premium or cost 
sharing charges, the agency must verify the reported change in 
accordance with Sec. Sec.  435.940 through 435.960 and the agency's 
verification plan developed under Sec.  435.945(j) prior to furnishing 
additional assistance or lowering applicable premiums or cost sharing 
charges. The agency may not terminate the beneficiary's coverage if the 
beneficiary does not respond to agency requests for additional 
information under this paragraph;
    (iv) If the agency's evaluation pursuant to paragraph (b)(1)(i) of 
this section indicates that the reported change has no impact on 
eligibility, the agency must provide the beneficiary with notice 
acknowledging receipt of the information from the beneficiary and 
explaining that the beneficiary's eligibility is not impacted.
    (2) Information received from a third party. If the agency receives 
information regarding a beneficiary's change in circumstances from a 
third party, the agency must:
    (i) Evaluate the reliability of the information received and 
determine whether, if accurate, the information received would impact 
the beneficiary's eligibility, the amount of medical assistance for 
which the beneficiary is eligible, premiums or cost sharing charges;
    (ii) If the agency finds that the third-party information is 
reliable and may adversely impact the beneficiary, the agency must 
request information from the beneficiary to verify or dispute the 
information received, consistent with Sec.  435.952. If the agency 
determines that the reported change results in an adverse action, take 
appropriate action in accordance with paragraph (b)(4) of this section.
    (iii) If the agency determines that the third-party information is 
reliable and results in eligibility for additional medical assistance 
or lower premium or cost sharing charges, the agency must notify the 
beneficiary of such determination. Prior to providing such notice or 
additional medical assistance or lowering premium or cost sharing 
charges, the agency may verify third-party information with the 
beneficiary; the agency may not terminate the beneficiary's coverage if 
the beneficiary does not respond to the agency's request for additional 
assistance under this paragraph (b). The agency may accept the third-
party information if the beneficiary does not respond to agency 
requests for additional information under this paragraph (b);
    (iv) Except as provided in paragraphs (f) and (g) of this section, 
if the agency determines that the third-party information is not 
reliable or does not impact the beneficiary's eligibility, no action is 
required.
    (3) Anticipated changes. If the agency has information about 
anticipated changes in a beneficiary's circumstances that may affect 
his or her eligibility, it must initiate a redetermination of 
eligibility at an appropriate time based on such changes consistent 
with the timeliness standards at Sec.  435.912(c)(6).
    (4) Determination of ineligibility and transmission of data 
pertaining to individuals no longer eligible for Medicaid. (i) The 
agency must comply with the requirements at Sec.  435.916(d)(1) 
(relating to consideration of eligibility on other bases) and Sec.  
435.916(d)(2) (relating to determining potential eligibility for other 
insurance affordability programs) prior to terminating a beneficiary in 
accordance with this section.
    (ii) The agency must provide advance notice of adverse action and 
fair hearing rights, in accordance with the requirements of part 431, 
subpart E of this chapter, prior to taking any adverse action resulting 
from a change in a beneficiary's circumstances.
    (c) Response times and time standards--(1) Beneficiary response 
times. The agency must--
    (i) Provide beneficiaries with at least 30 days from the date the 
agency sends the notice requesting the beneficiary to provide the 
agency with any additional information needed for the agency to 
redetermine eligibility.
    (ii) Allow beneficiaries to provide any requested information 
through any of the modes of submission specified in Sec.  435.907(a).
    (2) Time standards for redetermining eligibility. The agency must 
redetermine eligibility within the time standards described in Sec.  
435.912(c)(5) and (6), except in unusual circumstances, such as those 
described in Sec.  435.912(e); States must document the reason for 
delay in the individual's case record.
    (d) Ninety (90)-day reconsideration period. If an individual 
terminated for not returning requested information in accordance with 
this section subsequently submits the information within 90 days after 
the date of termination, or a longer period elected by the State, the 
agency must--
    (1) Reconsider the individual's eligibility without requiring a new 
application in accordance with the application timeliness standards 
established under Sec.  435.912(c)(3).
    (2) Request additional information needed to determine eligibility 
consistent with Sec.  435.907(e) and obtain a signature under penalty 
of perjury consistent with Sec.  435.907(f) if such information or 
signature is not available to the agency or included in the information 
described in this paragraph (d).
    (e) Scope of redeterminations following a change in circumstance. 
For redeterminations of eligibility for Medicaid beneficiaries 
completed in accordance with this section--
    (1) The agency must limit any requests for additional information 
under this section to information relating to a change in circumstance 
that may impact the beneficiary's eligibility.
    (2) If the agency has enough information available to it to renew 
eligibility with respect to all eligibility criteria, the agency may 
begin a new eligibility period, as defined in Sec.  435.916(a).
    (f) Agency action on returned mail: Whenever beneficiary mail is 
returned

[[Page 54847]]

to the agency by the United States Postal Service (USPS), the agency--
    (1) Must check the following sources for updated mailing address 
and other contact information--
    (i) The agency's Medicaid Enterprise System;
    (ii) The agency's contracted managed care plans, if applicable; and
    (iii) One or more of the following: the State agency that 
administers Supplemental Nutrition Assistance Program; the State agency 
that administers Temporary Assistance for Needy Families; the State 
Department of Motor Vehicles; the USPS National Change of Address 
(NCOA) database; or other sources specified in the State's verification 
plan described in Sec.  435.945(j).
    (2) Must send the beneficiary a notice by mail to the address 
currently on file in the beneficiary's case record, the forwarding 
address (if provided on the returned mail), and any address identified 
by the agency per paragraph (f)(1) of this section.
    (i) Consistent with paragraph (c)(1) of this section, the agency 
must provide beneficiaries with at least 30 days from the date the 
agency sends the notice to verify the accuracy of the new contact 
information.
    (ii) [Reserved]
    (3) Must send the beneficiary at least two notices, by one or more 
modalities other than mail, such as by phone, electronic notice, email 
or text messaging.
    (i) For a beneficiary who elected to receive electronic notices and 
communications in accordance with Sec.  435.918, at least one 
communication attempt must use the beneficiary contact information on 
file via the preferred electronic format and such notice must provide 
at least 30 days from the date the agency sends the notice to verify 
the accuracy of the new contact information. If there is a failed 
electronic communication attempt then the agency cannot use that same 
electronic modality as the alternative modality to satisfy this 
proposed requirement and may use telephonic or electronic contact 
information obtained in (f)(1) of this section, as feasible.
    (ii) The notices required under this paragraph must be sent to the 
contact information in the beneficiary's case record, if available, and 
may be sent to other contact information obtained by the agency per 
paragraph (f)(1) of this section.
    (iii) The agency may elect to utilize any combination or order of 
other modalities.
    (iv) The first and last such notice must be separated by no less 
than 3 business days.
    (v) If the agency does not have contact information for any 
alternative modality, the agency must make a note of that fact in the 
beneficiary's case record.
    (4) In the case of beneficiary mail returned with an in-state 
forwarding address, whose current address the agency is unable to 
confirm pursuant to paragraphs (f)(1) through (3) of this section--
    (i) May not terminate a beneficiary's coverage for failure to 
respond to a request to confirm their address or State residency.
    (ii) Must accept and update the beneficiary's case record with--
    (A) The in-state forwarding address provided on the returned 
beneficiary mail;
    (B) An in-state address obtained from the managed care organization 
pursuant to paragraph (f)(1)(i) or (ii) of this section, provided that 
such address was received by the plan directly from, or was verified 
with, the beneficiary; or
    (C) The in-state address obtained from the USPS NCOA database 
pursuant to paragraph (f)(1)(iii) of this section.
    (5) In the case of a beneficiary mail returned with an out-of-state 
address, whose current address the agency is unable to confirm pursuant 
to paragraphs (f)(1) through (3) of this section, the agency must 
provide advance notice of termination and fair hearing rights 
consistent with 42 CFR part 431, subpart E.
    (6) If a beneficiary's whereabouts are unknown, as indicated by the 
return of beneficiary mail with no forwarding address and the 
beneficiary's failure to respond to the notices described in paragraphs 
(f)(2) and (3) of this section, and the agency has not updated the 
beneficiary's address based on a reliable third-party source pursuant 
to paragraph (f)(1) of this section, the agency must take appropriate 
steps to terminate or suspend the beneficiary's coverage or move the 
beneficiary to a fee-for-service delivery system.
    (i) If the agency elects to terminate or suspend coverage in 
accordance with this paragraph, the agency must send notice to the 
beneficiary's last known address or via electronic notification, in 
accordance with the beneficiary's election under Sec.  435.918 of this 
subpart, no later than the date of termination or suspension and 
provide notice of fair hearing rights in accordance with 42 CFR part 
431 subpart E.
    (ii) If whereabouts of a beneficiary whose coverage was terminated 
or suspended in accordance with this paragraph become known within the 
beneficiary's eligibility period, as defined in Sec.  435.916(b), the 
agency--
    (A) Must reinstate coverage back to the date of termination without 
requiring the individual to provide additional information to verify 
their eligibility, unless the agency has other information available to 
it that indicates the beneficiary may not meet all eligibility 
requirements.
    (B) May begin a new eligibility period, consistent paragraph (e)(2) 
of this section, if the agency has sufficient information available to 
it to renew eligibility with respect to all eligibility criteria 
without requiring additional information from the beneficiary.
    (g) Agency action on updated address information from other 
sources. (1) Whenever the agency obtains updated in-state mailing 
address information from the United States Postal Service National 
Change of Address (NCOA) or agency's contracted managed care plans, the 
agency--
    (i) In the case of updated mailing address information from a 
contracted managed care plan, must ensure that an address was received 
by the plan directly from, or was verified with, the beneficiary;
    (ii) Must send the beneficiary a notice by mail to both the address 
currently on file in the beneficiary's case record and the new in-state 
address and provide the individual with a reasonable period of time to 
verify the accuracy of the new contact information;
    (iii) Must send the beneficiary at least two notices, by one or 
more modalities other than mail, such as by phone, electronic notice, 
email or text messaging consistent with paragraph (f)(3) of this 
section;
    (iv) May not terminate a beneficiary's coverage for failure to 
respond to a request to confirm an in-state change of address;
    (v) May accept the in-state address as the beneficiary's new 
address and update the beneficiary's case record accordingly, if the 
beneficiary does not respond to a request to confirm their address or 
State residency, provided the beneficiary is given at least 30 days 
from the date the agency sent the notice; and
    (vi) Must accept the in-state address as the beneficiary's new 
address and update the beneficiary's case record accordingly, if the 
beneficiary confirms their address or State residency.
    (2) Upon approval from the Secretary, the agency may treat updated 
in-state address information from other trusted data sources in 
accordance with paragraph (g)(1) of this section.
    (3) Whenever the agency obtains updated mailing address information

[[Page 54848]]

from any source not listed in paragraph (g)(1) or (2) of this section, 
including out-of-state mailing address information, the agency must 
follow the steps outlined in paragraphs (f)(2) through (6) of this 
section.
0
22. Section 435.940 is revised as follows:


Sec.  435.940   Basis and scope.

    The income and eligibility verification requirements set forth in 
this section and Sec. Sec.  435.945 through 435.960 are based on 
sections 1137, 1902(a)(4), 1902(a)(19), 1902(a)(46)(B), 1902(ee), 
1903(r)(3), 1903(x), 1940, and 1943(b)(3) of the Act, and section 1413 
of the Affordable Care Act. Nothing in the regulations in this subpart 
should be construed as limiting the State's program integrity measures 
or affecting the State's obligation to ensure that only eligible 
individuals receive benefits, consistent with parts 431 and 455 of this 
subchapter, or its obligation to provide for methods of administration 
that are in the best interest of applicants and beneficiaries and are 
necessary for the proper and efficient operation of the plan, 
consistent with Sec.  431.15 of this subchapter and section 1902(a)(19) 
of the Act.
0
23. Section 435.952 is amended by revising paragraphs (b) and (c) and 
adding paragraph (e) to read as follows:


Sec.  435.952   Use of information and requests for additional 
information from individuals.

* * * * *
    (b) If information provided by or on behalf of an individual (on 
the application or renewal form or otherwise) is reasonably compatible 
with information obtained by the agency, including information obtained 
in accordance with Sec.  435.948, Sec.  435.949, or Sec.  435.956, the 
agency must determine or renew eligibility based on such information.
    (c) An individual must not be required to provide additional 
information or documentation unless information needed by the agency in 
accordance with Sec.  435.948, Sec.  435.949, or Sec.  435.956 cannot 
be obtained electronically or information obtained electronically is 
not reasonably compatible, as provided in the verification plan 
described in Sec.  435.945(j), with information provided by or on 
behalf of the individual.
    (1) Income and resource information obtained through an electronic 
data match shall be considered reasonably compatible with income and 
resource information provided by or on behalf of an individual if both 
are either above or at or below the applicable standard or other 
relevant threshold.
    (2) [Reserved]
* * * * *
    (e) When determining eligibility for individuals applying for the 
Medicare Savings Programs specified in sections 1902(a)(10)(E)(i), 
(iii), and (iv) and 1905(p) of the Act, the agency must accept 
attestation (either self-attestation by the individual or attestation 
by an adult who is in the applicant's household, as defined in Sec.  
435.603(f), or family, as defined in section 36B(d)(1) of the Internal 
Revenue Code, an authorized representative, or, if the individual is a 
minor or incapacitated, someone acting responsibly for the individual) 
of the following income and asset information without requiring further 
information (including documentation) from the individual:
    (1) Income and interest income. (i) Except as provided in paragraph 
(e)(1)(ii) of this section, the agency must accept an applicant's 
attestation of the value of any dividend and interest income earned on 
resources owned by the applicant or the applicant's spouse.
    (ii) If the agency has information that is not reasonably 
compatible with an applicant's attestation, the agency must seek 
additional information from the individual in accordance with paragraph 
(c) of this section.
    (iii) The agency may verify interest and dividend income after the 
agency has determined that an applicant is eligible for the Medicare 
Savings Programs, in accordance with paragraph (c) of this section. If 
the agency requests documentation in accordance with this paragraph, 
the agency must provide the individual with at least 90 days from the 
date of the request to provide any necessary information requested and 
must allow the individual to submit such documentation through any of 
the modalities described in Sec.  435.907(a).
    (2) Non-liquid resources. (i) Except as provided in paragraph 
(e)(2)(ii) of this section, the agency must accept an applicant's 
attestation of the value of any non-liquid resources owned.
    (ii) If the agency has information that is not reasonably 
compatible with an applicant's attestation, the agency must seek 
additional information from the individual in accordance with paragraph 
(c) of this section.
    (iii) The agency may verify the value of non-liquid resources after 
the agency has determined that an applicant is eligible for the 
Medicare Savings Programs, in accordance with paragraph (c) of this 
section. If the agency requests documentation in accordance with this 
paragraph, the agency must provide the individual with at least 90 days 
from the date of the request to provide any necessary information 
requested and must allow the individual to submit such documentation 
through any of the modalities described in Sec.  435.907(a).
    (3) Burial funds. (i) Except as provided in paragraph (e)(3)(ii) of 
this section, the agency must accept an applicant's attestation that up 
to $1,500 of their resources, and up to $1,500 of their spouse's 
resources, are set aside in a separate account and are not countable as 
resources when determining eligibility for the Medicare Savings 
Programs.
    (ii) If the agency has information that is not reasonably 
compatible with an applicant's attestation, the agency must seek 
additional information from the individual in accordance with paragraph 
(c) of this section.
    (iii) The agency may verify resources in burial funds after the 
agency has determined that an applicant is eligible for the Medicare 
Savings Programs, in accordance with paragraph (c) of this section. If 
the agency requests documentation in accordance with this paragraph, 
the agency must provide the individual with at least 90 days from the 
date of the request to provide any necessary information requested and 
must allow the individual to submit such documentation through any of 
the modalities described in Sec.  435.907(a).
    (4) Life insurance policies. (i) Except as provided in paragraph 
(e)(4)(ii) of this section, the agency must accept an applicant's 
attestation of the face value of life insurance.
    (A) If an individual attests to a face value of life insurance 
policy that is above $1,500, the State may accept an attestation of the 
cash surrender value of the life insurance policy for the purpose of 
determining resource eligibility for the Medicare Savings Programs.
    (ii) If the agency has information about either the face value or 
the cash surrender value that is not reasonably compatible with an 
applicant's attestation, the agency must seek additional information 
from the individual in accordance with paragraph (c) of this section, 
which may include a reasonable explanation of the discrepancy or 
documentation.
    (iii) The agency may verify the face value of a life insurance 
policy after the agency has determined that an applicant is eligible 
for a Medicare Savings Program, in accordance with paragraph (c) of 
this section.
    (iv)(A) When an individual must provide documentation of the cash 
surrender value of a life insurance policy, the agency must assist the 
individual with obtaining this information and documentation by 
requesting that the individual provide

[[Page 54849]]

the name of the insurance company and policy number and authorize the 
agency to obtain such documentation from the issuer of the policy on 
the individual's behalf. The agency may also request, but may not 
require, additional information from the applicant to assist the agency 
is obtaining the needed documentation, such as the name of an agent.
    (B) If the individual does not provide the information and 
authorization in paragraph (e)(4)(iv)(A), the agency may require that 
the individual provide documentation of the cash surrender value.
    (C) The agency must allow the individual to submit documentation 
through any of the modalities described in Sec.  435.907(a) and provide 
the individual with at least 15 days to provide information or 
documentation described in this paragraph if such information or 
documentation is requested pursuant to paragraph (e)(4)(i) or (ii) of 
this section and at least 90 days if required pursuant to paragraph 
(e)(4)(iii) of this section.
0
24. Section 435.956 is amended by revising paragraph (b)(4) to read as 
follows:


Sec.  435.956  Verification of other non-financial information.

* * * * *
    (b) * * *
    (4) The agency may not limit the number of reasonable opportunity 
periods an individual may receive.
* * * * *
0
25. Section 435.1200 is amended--
0
a. By revising the heading for paragraph (b) introductory text;
0
b. By revising paragraph (b)(1);
0
c. In paragraph (b)(3)(i), by removing the phrase ``one or more 
insurance affordability program'' and adding in its place the phrase 
``one or more insurance affordability programs'';
0
d. By revising paragraph (b)(3)(ii);
0
e. By adding paragraphs (b)(3)(vi) and (b)(4);
0
f. By revising paragraphs (c) and (e)(1);
0
g. By adding paragraph (e)(4);
0
h. By revising paragraphs (h)(1) and (h)(3)(i) introductory text; and
0
i. By redesignating the ``(i)'' paragraph following (h)(3)(i)(B) as 
paragraph (h)(3)(ii).
    The revisions and additions read as follows:


Sec.  435.1200   Medicaid agency responsibilities for a coordinated 
eligibility and enrollment process with other insurance affordability 
programs.

* * * * *
    (b) General requirements. * * *
    (1) Fulfill the responsibilities set forth in paragraphs (c) 
through (h) of this section.
* * * * *
    (3) * * *
    (ii) Ensure compliance with paragraphs (c) through (h) of this 
section;
* * * * *
    (vi) Seamlessly transition the eligibility of beneficiaries between 
Medicaid and the Children's Health Insurance Program (CHIP) when an 
agency administering one of these programs determines that a 
beneficiary is eligible for the other program.
    (4) Accept a determination of eligibility for Medicaid made using 
MAGI-based methodologies by the State agency administering a separate 
CHIP in the State. In order to comply with this requirement, the agency 
may:
    (i) Apply the same MAGI-based methodologies in accordance withSec.  
435.603, and verification policies and procedures in accordance with 
Sec. Sec.  435.940 through 435.956 as those used by the separate CHIP 
in accordance with Sec. Sec.  457.315 and 457.380 of subchapter D, such 
that the agency will accept any finding relating to a criterion of 
eligibility made by a separate CHIP without further verification, in 
accordance with this paragraph (d)(4);
    (ii) Utilize a shared eligibility service through which 
determinations of Medicaid eligibility are governed exclusively by the 
Medicaid agency and any functions performed by the separate CHIP are 
solely administrative in nature;
    (iii) Enter into an agreement in accordance with Sec.  431.10(d) of 
this chapter under which the Medicaid agency delegates authority to the 
separate CHIP in accordance with Sec.  431.10(c) of this chapter to 
make final determinations of Medicaid eligibility; or
    (iv) Adopt other procedures approved by the Secretary.
    (c) Provision of Medicaid for individuals found eligible for 
Medicaid by another insurance affordability program. (1) For each 
individual determined Medicaid eligible in accordance with paragraph 
(c)(2) of this section, the agency must--
    (i) Establish procedures to receive, via secure electronic 
interface, the electronic account containing the determination of 
Medicaid eligibility;
    (ii) Comply with the provisions of Sec.  435.911 to the same extent 
as if an application had been submitted to the Medicaid agency; and
    (iii) Comply with the provisions of Sec.  431.10 of this chapter to 
ensure it maintains oversight for the Medicaid program.
    (2) For purposes of paragraph (c)(1) of this section, individuals 
determined eligible for Medicaid in this paragraph include:
    (i) Individuals determined eligible for Medicaid by another 
insurance affordability program, including the Exchange, pursuant to an 
agreement between the agency and the other insurance affordability 
program in accordance with Sec.  431.10(d) of this chapter (including 
as a result of a decision made by the program or the program's appeals 
entity in accordance with paragraph (g)(6) or (g)(7)(i)(A) of this 
section); and
    (ii) Individuals determined eligible for Medicaid by a separate 
CHIP (including as the result of a decision made by a CHIP review 
entity) in accordance with paragraph (b)(4) of this section.
* * * * *
    (e) * * *
    (1) Individuals determined not eligible for Medicaid. For each 
individual who submits an application to the agency which includes 
sufficient information to determine Medicaid eligibility or whose 
eligibility is being renewed in accordance with Sec.  435.916 
(regarding regularly-scheduled renewals of eligibility) or Sec.  
435.919 (regarding changes in circumstances) and whom the agency 
determines is ineligible for Medicaid, and for each individual 
determined ineligible for Medicaid in accordance with a fair hearing 
under subpart E of part 431 of this chapter, the agency must promptly 
and without undue delay, consistent with timeliness standards 
established under Sec.  435.912:
    (i) Determine eligibility for a separate CHIP if operated in the 
State, and if eligible, transfer the individual's electronic account, 
via secure electronic interface, to the separate CHIP agency and ensure 
that the individual receives a combined eligibility notice as defined 
at Sec.  435.4; and
    (ii) If not eligible for CHIP, determine potential eligibility for 
BHP (if offered by the State) and coverage available through the 
Exchange, and if potentially eligible, transfer the individual's 
electronic account, via secure electronic interface, to the program for 
which the individual is potentially eligible.
* * * * *
    (4) Ineligible individuals. For purposes of paragraph (e)(1) of 
this section, an individual is considered ineligible for Medicaid if 
they are not eligible for any eligibility group covered by the agency 
that provides minimum essential coverage as defined at Sec.  435.4. An 
individual who is eligible only for

[[Page 54850]]

a limited benefit group, such as the eligibility group for individuals 
with tuberculosis described at Sec.  435.215, would be considered 
ineligible for Medicaid for purposes of paragraph (e)(1).
* * * * *
    (h) * * *
    (1) Include in the agreement into which the agency has entered 
under paragraph (b)(3) of this section that a combined eligibility 
notice, as defined in Sec.  435.4, will be provided:
    (i) To an individual, by either the agency or a separate CHIP, when 
a determination of Medicaid eligibility is completed for such 
individual by the State agency administering a separate CHIP in 
accordance with paragraph (b)(4) of this section, or a determination of 
CHIP eligibility is completed by the Medicaid agency in accordance with 
paragraph (e)(1)(i) of this section; and
    (ii) To the maximum extent feasible to an individual who is not 
described in paragraph (i) of this section but who is transferred 
between the agency and another insurance affordability program by the 
agency, Exchange, or other insurance affordability program, as well as 
to multiple members of the same household included on the same 
application or renewal form.
* * * * *
    (3) * * *
    (i) Provide the individual with notice, consistent with Sec.  
435.917, of the final determination of eligibility on all bases, 
including coordinated content regarding, as applicable.
* * * * *

PART 457--ALLOTMENTS AND GRANTS TO STATES

0
26. The authority citation for part 457 continues to read as follows:

    Authority:  42 U.S.C. 1302.

0
27. Section 457.65 is amended by revising paragraph (d) to read as 
follows:


Sec.  457.65   Effective date and duration of State plans and plan 
amendments.

* * * * *
    (d) Amendments relating to enrollment procedures. A State plan 
amendment that institutes or extends the use of waiting lists, 
enrollments caps or closed enrollment periods is considered an 
amendment that restricts eligibility and must meet the requirements in 
paragraph (b) of this section.
* * * * *
0
28. Section 457.340 is amended by--
0
a. Revising the paragraph (d) heading;
0
b. Revising paragraph (d)(1);
0
c. Removing paragraph (d)(3); and
0
d. Revising paragraph (f)(1),
    The revisions read as follows:


Sec.  457.340   Application for and enrollment in CHIP.

* * * * *
    (d) Timely determination and redetermination of eligibility. (1) 
The terms in Sec.  435.912 of this chapter apply equally to CHIP, 
except that--
    (i) The terms of Sec.  435.912(c)(4)(iii) and (c)(6)(iii) of this 
chapter (relating to timelines for completing renewals and 
redeterminations when States must consider other bases of eligibility) 
do not apply; and
    (ii) The standards for transferring electronic accounts to other 
insurance affordability programs are pursuant to Sec.  457.350 and the 
standards for receiving applications from other insurance affordability 
programs are pursuant to Sec.  457.348.
* * * * *
    (f) * * *
    (1) Include in the agreement into which the State has entered under 
Sec.  457.348(a) that, a combined eligibility notice, as defined in 
Sec.  457.10, will be provided:
    (i) To an individual, by the State agency administering a separate 
CHIP or the Medicaid agency, when a determination of CHIP eligibility 
is completed for such individual by the State agency administering 
Medicaid in accordance with Sec.  457.348(e), or a determination of 
Medicaid eligibility is completed by the State in accordance with Sec.  
457.350(b)(1);
    (ii) To the maximum extent feasible, to an individual who is not 
described in paragraph (f)(1)(i) of this section but who is transferred 
between the State and another insurance affordability program in 
accordance with Sec.  457.348 or Sec.  457.350; and
    (iii) To the maximum extent feasible, to multiple members of the 
same household included on the same application or renewal form.
* * * * *
0
29. Section 457.344 is added to read as follows:


Sec.  457.344   Changes in circumstances.

    (a) Procedures for reporting changes. The State must:
    (1) Have procedures designed to ensure that enrollees understand 
the importance of making timely and accurate reports of changes in 
circumstances that may affect their eligibility; and
    (2) Accept reports made under paragraph (a)(1) of this section and 
any other enrollee reported information through any of the modes 
permitted for submission of applications under Sec.  435.907(a), as 
referenced at Sec.  457.330.
    (b) State action on information about changes. Consistent with the 
requirements of Sec.  457.380(f), the State must promptly redetermine 
eligibility between regularly-scheduled renewals of eligibility 
required under Sec.  457.343, whenever it receives information about a 
change in an enrollee's circumstances.
    (1) Changes reported by the enrollee. When an enrollee reports 
information about a change in circumstances, the State must:
    (i) Evaluate whether the reported change may impact the enrollee's 
eligibility for CHIP or the amount of child health assistance or 
pregnancy-related assistance for which the enrollee is eligible, 
premiums or cost sharing charges. If additional information is needed 
to determine whether the enrollee is no longer eligible due to the 
reported change, the State must redetermine eligibility based on 
available information, if able to do so, and if the additional 
information is not available to the State, request such information 
from the enrollee;
    (ii) If the State determines that the reported change results in an 
adverse action, take appropriate action in accordance with paragraph 
(b)(4) of this section.
    (iii) If the State finds that the reported change may result in 
eligibility for additional child health or pregnancy-related assistance 
or lower premium or cost sharing charges, the State must verify the 
information in accordance with Sec.  457.380 and the State's 
verification plan prior to furnishing additional assistance or lowering 
applicable premiums or cost sharing charges. The State may not 
terminate the enrollee's coverage if the enrollee does not respond to 
agency requests for additional information under this paragraph (b).
    (iv) If the State's evaluation pursuant to paragraph (b)(1)(i) of 
this section indicates that the reported change has no impact on 
eligibility, the State must provide the enrollee with notice 
acknowledging receipt of the information from the enrollee and 
explaining that the enrollee's eligibility is not impacted.
    (2) Information received from a third party. If the State receives 
information regarding an enrollee's change in circumstances from a 
third party, the State must:
    (i) Evaluate the reliability of the information received and 
whether, if accurate, the information received would impact the 
enrollee's eligibility for CHIP, the amount of child health assistance 
or pregnancy-related

[[Page 54851]]

assistance for which the enrollee is eligible, premiums or cost sharing 
charges.
    (ii) If the State finds that the third-party information is 
reliable and may adversely impact the enrollee, the State must request 
information from the enrollee to verify or dispute the information 
received, consistent with Sec.  457.380(f). If the State determines 
that the reported change results in an adverse action, take appropriate 
action in accordance with paragraph (b)(4) of this section.
    (iii) If the State determines that the third-party information is 
reliable and results in eligibility for additional child health 
assistance or pregnancy-related assistance or lower premium or cost 
sharing charges, the State must notify the enrollee of such 
determination. Prior to providing such notice or additional child 
health assistance or pregnancy-related assistance or lowering premium 
or cost sharing charges, the State may verify third-party information 
with the enrollee; the State may not terminate the enrollee's coverage 
if the enrollee does not respond to the State's request for additional 
or pregnancy-related assistance under this paragraph.
    (iv) Except as provided paragraphs (f) and (g) of this section, if 
the State determines that the third-party information is not reliable 
or does not impact the enrollee's eligibility, no action is required.
    (3) Anticipated changes. If the State has information about 
anticipated changes in an enrollee's circumstances that may affect his 
or her eligibility, it must initiate a determination of eligibility at 
the appropriate time based on such changes consistent with the 
requirements at Sec.  435.912(c)(6) of this chapter as referenced in 
Sec.  457.340(d)(1).
    (4) Determination of ineligibility and transmission of data 
pertaining to individuals no longer eligible for CHIP. (i) The State 
must comply with the requirements at Sec.  435.916(d)(2) of this 
chapter as referenced in Sec.  457.343 (relating to determining 
potential eligibility for other insurance affordability programs), 
prior to terminating an enrollee's eligibility in accordance with this 
section.
    (ii) The State must provide notice of adverse action and State 
review rights, in accordance with the requirements of Sec.  457.340(e), 
Sec.  457.1260 (if enrolled in managed care), and subpart K of this 
part, prior to taking any adverse action resulting from a change in an 
enrollee's circumstances.
    (c) Enrollee response times--(1) State requirements. The State 
must--
    (i) Provide enrollees with at least 30 days from the date the State 
sends the notice requesting the enrollee to provide the State with any 
additional information needed for the State to redetermine eligibility.
    (ii) Allow enrollees to provide any requested information through 
any of the modes of submission specified in Sec.  435.907(a) of this 
chapter as referenced in Sec.  457.330 of this subpart.
    (2) Time standards for redetermining eligibility. The State must 
redetermine eligibility within the time standards described in Sec.  
435.912(c)(5) and (6) of this chapter, except in unusual circumstances, 
such as those as described in Sec.  435.912(e) of this chapter, as 
referenced in Sec.  457.340(d); States must document the reason for 
delay in the individual's case record.
    (d) Ninety (90)-day reconsideration period. If an individual 
terminated for not returning requested information in accordance with 
this section subsequently submits the information within 90 days after 
the date of termination, or a longer period elected by the State, the 
State must--
    (1) Reconsider the individual's eligibility without requiring a new 
application in accordance with the timeliness standards described at 
Sec.  435.912(c)(3) of this chapter as referenced in Sec.  457.340(d).
    (2) Request additional information needed to determine eligibility 
and obtain a signature under penalty of perjury consistent with Sec.  
435.907(e) and (f) of this chapter respectively as referenced in Sec.  
457.330 if such information or signature is not available to the State 
or included in the information described in this paragraph (d).
    (e) Scope of redeterminations following a change in circumstances. 
For redeterminations of eligibility for CHIP enrollees completed in 
accordance with this section--
    (1) The State must limit any requests for additional information 
under this section to information relating to change in circumstances 
which may impact the enrollee's eligibility.
    (2) If the State has enough information available to it to renew 
eligibility with respect to all eligibility criteria, the State may 
begin a new eligibility period under Sec.  457.343.
    (f) State action on returned mail. Whenever beneficiary mail is 
returned to the State by the United States Postal Service (USPS), the 
State--
    (1) Must check the following sources for updated mailing address 
and other contact information--
    (i) The State's Medicaid Enterprise System;
    (ii) The State's contracted managed care plans, if applicable; and
    (iii) One or more of the following: the State agency that 
administers Supplemental Nutrition Assistance Program; the State agency 
that administers Temporary Assistance for Needy Families; the State 
Department of Motor Vehicles; the USPS National Change of Address 
(NCOA) database; or other sources specified in the State's verification 
plan described in Sec.  457.380(j).
    (2) Must send the enrollee a notice by mail to the address 
currently on file in the enrollee's case record, the forwarding address 
(if provided on the returned mail), and any address identified by the 
State per paragraph (f)(1) of this section;
    (i) Consistent with paragraph (c)(1) of this section, the State 
must provide beneficiaries with at least 30 days from the date the 
State sends the notice to verify the accuracy of the new contact 
information.
    (ii) [Reserved]
    (3) Must send the enrollee at least two notices, by one or more 
modalities other than mail, such as by phone, electronic notice, email 
or text messaging.
    (i) For an enrollee who elected to receive electronic notices and 
communications in Sec.  457.110, at least one communication attempt 
must use the enrollee contact information on file via the preferred 
electronic format and such notice must provide at least 30 days from 
the date the agency sends the notice to verify the accuracy of the new 
contact information. If there is a failed electronic communication 
attempt then the State cannot use that same electronic modality as the 
alternative modality to satisfy this proposed requirement and may use 
telephonic or electronic contact information obtained in paragraph 
(f)(1) of this section, as feasible.
    (ii) The notices required under this paragraph must be sent to the 
contact information in the enrollee's case record, if available, and 
may be sent to other contact information obtained by the State per 
paragraph (f)(1) of this section.
    (iii) The State may elect to utilize any combination or order of 
other modalities.
    (iv) The first and last such notice must be separated by no less 
than 3 business days.
    (v) If the State does not have contact information for any 
alternative modality, the State must make a note of that fact in the 
enrollee's case record.
    (4) In the case of enrollee mail returned with an in-state 
forwarding address, whose current address the State is unable to 
confirm pursuant to

[[Page 54852]]

paragraphs (f)(1) through (3) of this section, a State--
    (i) May not terminate an enrollee's coverage for failure to respond 
to a request to confirm their address or State residency.
    (ii) Must accept and update the enrollee's case record with--
    (A) The in-state forwarding address provided on the returned 
enrollee mail;
    (B) An in-state address obtained from the managed care organization 
pursuant to paragraph (f)(1)(i) or (ii) of this section, provided that 
such address was received by the plan directly from, or was verified 
with, the enrollee; or
    (C) The in-state address obtained from the USPS NCOA database 
pursuant to paragraph (f)(1)(iii) of this section.
    (5) In the case of an enrollee whose mail is returned with an out-
of-state address (or an address outside of the geographic area for 
separate CHIPs that are not Statewide) and whose current address the 
State is unable to confirm pursuant to paragraphs (f)(1) through (3) of 
this section, the State must provide sufficient notice of termination 
including information describing an individual's right to a CHIP review 
process, consistent with Sec.  457.340(e)(1).
    (6) If an enrollee's whereabouts are unknown, as indicated by the 
return of enrollee mail with no forwarding address and the enrollee's 
failure to respond to the notices described in paragraphs (f)(2) and 
(3) of this section, and the State has not updated the enrollee's 
address based on a reliable third-party source pursuant to paragraph 
(f)(1) of this section, the State must take appropriate steps to 
terminate coverage, suspend coverage, or move the individual to the 
fee-for-service delivery system, if available.
    (i) If the State elects to terminate or suspend coverage in 
accordance with this paragraph, the State must send notice to the 
enrollee's last known address or via electronic notification, in 
accordance with the enrollee's election under Sec.  457.110, no later 
than the date of termination or suspension and provide notice of an 
individual's rights to a CHIP review in accordance with Sec.  
457.340(e).
    (ii) If whereabouts of a beneficiary whose coverage was terminated 
or suspended in accordance with this paragraph become known within the 
beneficiary's eligibility period, as defined in Sec.  435.916(b) of 
this chapter as referenced in Sec.  457.343, the State--
    (A) Must reinstate coverage back to the date of termination without 
requiring the individual to provide additional information to verify 
their eligibility, unless the agency has other information available to 
it that indicates the enrollee may not meet all eligibility 
requirements.
    (B) May begin a new eligibility period, consistent paragraph (e)(2) 
of this section, if the State has sufficient information available to 
it to renew eligibility with respect to all eligibility criteria 
without requiring additional information from the enrollee.
    (g) State action on updated address information from other sources. 
(1) Whenever the State obtains updated in-state mailing address 
information from the United States Postal Service National Change of 
Address (NCOA) or the State's contracted managed care plans, if 
applicable, the State--
    (i) In the case of updated mailing address information from a 
contracted managed care plan, must ensure that an address was received 
by the plan directly from, or was verified with, the enrollee;
    (ii) Must send the enrollee a notice by mail to both the address 
currently on file in the enrollee's case record and the new in-state 
address and provide the individual with a reasonable period of time to 
verify the accuracy of the new contact information;
    (iii) Must send the enrollee at least two notices, by one or more 
modalities other than mail, such as by phone, electronic notice, email 
or text messaging consistent with paragraph (f)(3) of this section;
    (iv) May not terminate an enrollee's coverage for failure to 
respond to a request to confirm an in-state change of address;
    (v) May accept the in-state address as the enrollee's new address 
and update the enrollee's case record accordingly, if the enrollee does 
not respond to a request to confirm their address or State residency, 
provided the beneficiary is given at least 30 days from the date the 
agency sent the notice; and
    (vi) Must accept the in-state address as the enrollee's new address 
and update the beneficiary's case record accordingly, if the enrollee 
confirms their address or State residency.
    (vii) For separate CHIPs that are not Statewide, if the address 
obtained from NCOA or the State's managed care plans are outside of the 
State's specific geographic area for its separate CHIP, the 
requirements of paragraphs (f)(1) through (3) of this section to verify 
out-of-state addresses are applicable.
    (2) Upon approval from the Secretary, the State may treat updated 
in-state address information from other trusted data sources in 
accordance with paragraph (g)(1) of this section.
    (3) Whenever the State obtains updated mailing address information 
from any source not listed in paragraph (g)(1) or (2) of this section, 
including out-of-state mailing address information, the State must 
follow the steps outlined in paragraphs (f)(2) through (6) of this 
section.
0
30. Section 457.348 is amended--
0
a. In paragraph (a)(4), by removing the phrase ``Provide for 
coordination of notices with other insurance'' and adding in its place 
the phrase ``Provide for a combined eligibility notice and coordination 
of notices with other insurance'';
0
b. By adding paragraph (a)(6);
0
c. By revising paragraph (b);
0
d. In paragraph (c)(3), by removing the reference to ``Sec.  
457.350(i)'' and adding in its place the reference ``Sec.  
457.350(g)''; and
0
e. By adding paragraph (e).
    The additions and revision read as follows:


Sec.  457.348  Determinations of Children's Health Insurance Program 
eligibility by other insurance affordability programs.

    (a) * * *
    (6) Seamlessly transition the enrollment of beneficiaries between 
CHIP and Medicaid when a beneficiary is determined eligible for one 
program by the agency administering the other.
    (b) Provision of CHIP for individuals found eligible for CHIP by 
another insurance affordability program. (1) For each individual 
determined CHIP eligible in accordance with paragraph (b)(2) of this 
section, the State must--
    (i) Establish procedures to receive, via secure electronic 
interface, the electronic account containing the determination of CHIP 
eligibility and notify such program of the receipt of the electronic 
account;
    (ii) Comply with the provisions of Sec.  457.340 to the same extent 
as if the application had been submitted to the State; and
    (iii) Maintain proper oversight of the eligibility determinations 
made by the other program.
    (2) For purposes of paragraph (b)(1) of this section, individuals 
determined eligible for CHIP in this paragraph include:
    (i) Individuals determined eligible for CHIP by another insurance 
affordability program, including the Exchange, pursuant to an agreement 
between the State and the other insurance affordability program 
(including as a result of a decision made by the program or the 
program's appeal entity in accordance with paragraph (a) of this 
section)); and
    (ii) Individuals determined eligible for CHIP by the State Medicaid 
agency (including as the result of a decision made by the Medicaid 
appeals entity) in

[[Page 54853]]

accordance with paragraph (e) of this section.
* * * * *
    (e) CHIP determinations made by other insurance affordability 
programs. The State must accept a determination of eligibility for CHIP 
from the Medicaid agency in the State. In order to comply with this 
requirement, the agency may:
    (1) Apply the same MAGI-based methodologies in accordance withSec.  
457.315, and verification policies and procedures in accordance with 
Sec.  457.380 as those used by the Medicaid agency in accordance with 
Sec. Sec.  435.940 through 435.956 of subchapter C, such that the 
agency will accept any finding relating to a criterion of eligibility 
made by a Medicaid agency without further verification;
    (2) Enter into an agreement under which the State delegates 
authority to the Medicaid agency to make final determinations of CHIP 
eligibility; or
    (3) Adopt other procedures approved by the Secretary.
0
31. Section 457.350 is revised to read as follows:


Sec.  457.350   Eligibility screening and enrollment in other insurance 
affordability programs.

    (a) State plan requirement. The State plan shall include a 
description of the coordinated eligibility and enrollment procedures 
used, at an initial and any follow-up eligibility determination, 
including any periodic redetermination, to ensure that:
    (1) Only targeted low-income children are furnished CHIP coverage 
under the plan; and
    (2) Enrollment is facilitated for applicants and enrollees found to 
be eligible or potentially eligible for other insurance affordability 
programs in accordance with this section.
    (b) Evaluation of eligibility for other insurance affordability 
programs. (1) For individuals described in paragraph (b)(2) of this 
section, promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), the State 
must:
    (i) Determine eligibility for Medicaid on the basis of having 
household income at or below the applicable modified adjusted gross 
income standard, as defined in Sec.  435.911(b) of this chapter 
(``MAGI-based Medicaid''); and
    (ii) If unable to make a determination of eligibility for MAGI-
based Medicaid, identify potential eligibility for other insurance 
affordability programs, including Medicaid on a basis other than MAGI, 
eligibility for the Basic Health Program (BHP) in accordance with 42 
CFR 600.305(a), or insurance affordability programs available through 
the Exchange as indicated by information provided on the application or 
renewal form provided by or on behalf of the beneficiary.
    (2) Individuals to whom paragraph (b)(1) of this section applies 
include:
    (i) Any applicant who submits an application to the State which 
includes sufficient information to determine CHIP eligibility;
    (ii) Any enrollee whose eligibility is being redetermined at 
renewal or due to a change in circumstance per Sec.  457.343; and
    (iii) Any enrollee whom the State determines is not eligible for 
CHIP, or who is determined not eligible for CHIP as a result of a 
review conducted in accordance with subpart K of this part.
    (3) In determining eligibility for Medicaid as described in 
paragraph (b)(1) of this section, the State must utilize the option the 
Medicaid agency has elected at Sec.  435.1200(b)(4) of this chapter to 
accept determinations of MAGI-based Medicaid eligibility made by a 
separate CHIP, and which must be detailed in the agreement described at 
Sec.  457.348(a).
    (c) Income eligibility test. To determine eligibility as described 
in paragraph (b)(1)(i) of this section and to identify the individuals 
described in paragraph (b)(1)(ii) of this section who are potentially 
eligible for BHP or insurance affordability programs available through 
an Exchange, a State must apply the MAGI-based methodologies used to 
determine household income described in Sec.  457.315 or such 
methodologies as are applied by such other programs.
    (d) Individuals found eligible for Medicaid based on MAGI. For 
individuals identified in paragraph (b)(1) of this section, the State 
must--
    (1) Promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), transfer the 
individual's electronic account to the Medicaid agency via a secure 
electronic interface; and
    (2) Except as provided in Sec.  457.355, find the applicant 
ineligible for CHIP.
    (e) Individuals potentially eligible for Medicaid on a basis other 
than MAGI. For individuals identified as potentially eligible for 
Medicaid on a non-MAGI basis, as described in paragraph (b)(1)(ii) of 
this section, the State must--
    (1) Promptly and without undue delay, consistent with the 
timeliness standards established under Sec.  457.340(d), transfer the 
electronic account to the Medicaid agency via a secure electronic 
interface.
    (2) Complete the determination of eligibility for CHIP in 
accordance with Sec.  457.340 or evaluation for potential eligibility 
for other insurance affordability programs in accordance with paragraph 
(b) of this section.
    (3) Include in the notice of CHIP eligibility or ineligibility 
provided under Sec.  457.340(e), as appropriate, coordinated content 
relating to--
    (i) The transfer of the individual's electronic account to the 
Medicaid agency per paragraph (e)(1) of this section;
    (ii) The transfer of the individual's account to another insurance 
affordability program in accordance with paragraph (g) of this section, 
if applicable; and
    (iii) The impact that an approval of Medicaid eligibility will have 
on the individual's eligibility for CHIP or another insurance 
affordability program, as appropriate.
    (4) Dis-enroll the enrollee from CHIP if the State is notified in 
accordance with Sec.  435.1200(d)(5) of this chapter that the applicant 
has been determined eligible for Medicaid.
    (f) Children found ineligible for Medicaid based on MAGI, and 
potentially ineligible for Medicaid on a basis other than MAGI. If a 
State uses a screening procedure other than a full determination of 
Medicaid eligibility under all possible eligibility groups, and the 
screening process reveals that the child does not appear to be eligible 
for Medicaid, the State must provide the child's family with the 
following in writing:
    (1) A statement that based on a limited review, the child does not 
appear eligible for Medicaid, but Medicaid eligibility can only be 
determined based on a full review of a Medicaid application under all 
Medicaid eligibility groups;
    (2) Information about Medicaid eligibility rules, covered benefits, 
and restrictions on cost sharing; and
    (3) Information about how and where to apply for Medicaid under all 
eligibility groups.
    (4) The State will determine the written format and timing of the 
information regarding Medicaid eligibility, benefits, and the 
application process required under this paragraph (f).
    (g) Individuals found potentially eligible for other insurance 
affordability programs. For individuals identified in paragraph 
(b)(1)(ii) of this section who have been identified as potentially 
eligible for BHP or insurance affordability programs available through 
the Exchange, the State must promptly and without undue delay, 
consistent

[[Page 54854]]

with the timeliness standards established under Sec.  457.340(d), 
transfer the electronic account to the other insurance affordability 
program via a secure electronic interface.
    (h) Evaluation of eligibility for Exchange coverage. A State may 
enter into an arrangement with the Exchange for the entity that 
determines eligibility for CHIP to make determinations of eligibility 
for advance payments of the premium tax credit and cost sharing 
reductions, consistent with 45 CFR 155.110(a)(2).
    (i) Waiting lists, enrollment caps and closed enrollment. The State 
must establish procedures to ensure that--
    (1) The procedures developed in accordance with this section have 
been followed for each child applying for a separate child health 
program before placing the child on a waiting list or otherwise 
deferring action on the child's application for the separate child 
health program;
    (2) Children placed on a waiting list or for whom action on their 
application is otherwise deferred are transferred to other insurance 
affordability programs in accordance with paragraph (h) of this 
section; and
    (3) Families are informed that a child may be eligible for other 
insurance affordability programs, while the child is on a waiting list 
for a separate child health program or if circumstances change, for 
Medicaid.
0
32. Section 457.480 is amended by--
0
a. Revising the section heading;
0
b. Redesignating paragraphs (a) and (b) as paragraphs (b) and (c), 
respectively; and
0
c. Adding a new paragraph (a).
    The revision and addition read as follows:


Sec.  457.480   Prohibited coverage limitations, preexisting condition 
exclusions, and relation to other laws.

    (a) Prohibited coverage limitations. The State may not impose any 
annual, lifetime or other aggregate dollar limitations on any medical 
or dental services which are covered under the State plan.
* * * * *
0
33. Section 457.570 is amended by--
0
a. Revising paragraph (c)(1);
0
b. Removing paragraph (c)(2);
0
c. Redesignating paragraph (c)(3) as paragraph (c)(2); and
0
d. Revising newly redesignated paragraph (c)(2).
    The revisions read as follows:


Sec.  457.570   Disenrollment protections.

* * * * *
    (c) * * *
    (1) Impose a specified period of time that a CHIP eligible targeted 
low-income child or targeted low-income pregnant woman who has an 
unpaid premium or enrollment fee will not be permitted to reenroll for 
coverage in CHIP.
    (2) Require the collection of past due premiums or enrollment fees 
as a condition of eligibility for reenrollment if an individual was 
terminated for failure to pay premiums.
* * * * *
0
34. Section 457.805 is amended by revising paragraph (b) to read as 
follows:


Sec.  457.805   State plan requirement: Procedures to address 
substitution under group health plans.

* * * * *
    (b) Limitations. A State may not, under this section, impose a 
waiting period before enrolling an eligible individual in CHIP that has 
been disenrolled from group health plan coverage. States should conduct 
monitoring activities to prevent substitution of coverage.
0
35. Section 457.810 is amended by revising paragraph (a) to read as 
follows:


Sec.  457.810   Premium assistance programs: Required protections 
against substitution.

* * * * *
    (a) Prohibition of imposing a waiting period. A State may not, 
under this section, impose a waiting period before enrolling an 
eligible individual who has, but is not enrolled in, group health plan 
coverage into CHIP premium assistance coverage.
* * * * *


Sec.  457.960  [Removed]

0
36. Section 457.960 is removed.
0
37. Section 457.965 is revised to read as follows:


Sec.  457.965   Documentation.

    (a) Basis and purpose. This section, based on section 2101 of the 
Act, prescribes the kinds of records a State must maintain, the minimum 
retention period for such records, and the conditions under which those 
records must be provided or made available.
    (b) Content of records. A State plan must provide that the State 
will maintain or supervise the maintenance of the records necessary for 
the proper and efficient operation of the plan. The records must 
include all of the following--
    (1) Individual records on each applicant and enrollee that 
contain--
    (i) All information provided on the initial application submitted 
through any modality described in Sec.  435.907(a) of this chapter as 
referenced in Sec.  457.330, by, or on behalf of, the applicant or 
enrollee, including the signature on and date of application;
    (ii) The electronic account and any information or other 
documentation received from another insurance affordability program in 
accordance with Sec.  457.348(c) and (d);
    (iii) The date of, basis for, and all documents or other evidence 
to support any determination, denial, or other adverse action taken 
with respect to the applicant or enrollee, including all information 
provided by the applicant or enrollee, and all information obtained 
electronically or otherwise by the State from third-party sources;
    (iv) The provision of, and payment for, services, items and other 
child health assistance or pregnancy-related assistance, including the 
service or item provided, relevant diagnoses, the date that the item or 
service was provided, the practitioner or provider rendering, providing 
or prescribing the service or item, including their National Provider 
Identifier, and the full amount paid or reimbursed for the service or 
item, and any third-party liabilities;
    (v) Any changes in circumstances reported by the individual and any 
actions taken by the State in response to such reports;
    (vi) All renewal forms returned by, or on behalf of, a beneficiary, 
to the State in accordance with Sec.  457.343, regardless of the 
modality through which such forms are submitted, including the 
signature on the form and date received.
    (vii) All notices provided to the applicant or enrollee in 
accordance with Sec. Sec.  457.340(e) and 457.1180; and
    (viii) All records pertaining to any State reviews requested by, or 
on behalf of, the applicant or enrollee, including each request 
submitted and the date of such request, the complete record of the 
review decision, as described in subpart K of this part, and the final 
administrative action taken by the agency following the review decision 
and date of such action; and
    (ix) The disposition of income and eligibility verification 
information received under Sec.  457.380, including evidence that no 
information was returned from an electronic data source.
    (2) Statistical, fiscal, and other records necessary for reporting 
and accountability as required by the Secretary.
    (c) Retention of records. The State plan must provide that the 
records required under paragraph (b) of this section will be retained 
for the period when the applicant or enrollee's case is active, plus a 
minimum of 3 years thereafter.
    (d) Accessibility and availability of records. The agency must--

[[Page 54855]]

    (1) Maintain the records described in paragraph (b) of this section 
in paper in an electronic format; and
    (2) Make the records available to the Secretary, Federal and State 
auditors and other parties who request, and are authorized to review, 
such records within 30 calendar days of the request if not otherwise 
specified, and to the extent permissible by Federal law.
0
38. Section 457.1140 is amended by revising paragraph (d)(4) to read as 
follows:


Sec.  457.1140   Program specific review process: Core elements of 
review.

* * * * *
    (d) * * *
    (4) Receive continued enrollment and benefits in accordance with 
Sec.  457.1170.
0
39. Section 457.1170 is revised to read as follows:


Sec.  457.1170   Program specific review process: Continuation of 
enrollment.

    (a) A State must ensure the opportunity for continuation of 
enrollment and benefits pending the completion of review of the 
following:
    (1) A suspension or termination of enrollment, including a decision 
to disenroll for failure to pay cost sharing and;
    (2) A failure to make a timely determination of eligibility at 
application and renewal.
    (b) [Reserved]
0
40. Section 457.1180 is revised to read as follows:


Sec.  457.1180   Program specific review process: Notice.

    A State must provide enrollees and applicants timely written notice 
of any determinations required to be subject to review under Sec.  
457.1130 that includes the reasons for the determination, an 
explanation of applicable rights to review of that determination, the 
standard and expedited time frames for review, the manner in which a 
review can be requested, and the circumstances under which enrollment 
and benefits may continue pending review.

PART 600--ADMINISTRATION, ELIGIBILITY, ESSENTIAL HEALTH BENEFITS, 
PERFORMANCE STANDARDS, SERVICE DELIVERY REQUIREMENTS, PREMIUM AND 
COST SHARING, ALLOTMENTS, AND RECONCILATION

0
41. The authority citation for part 600 continues to read as follows:

    Authority: Section 1331 of the Patient Protection and Affordable 
Care Act of 2010 (Pub. L. 111-148, 124 Stat. 119), as amended by the 
Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-
152, 124 Stat 1029).

0
42. Section 600.330 is amended by revising paragraph (a) to read as 
follows:


Sec.  600.330  Coordination with other insurance affordability 
programs.

    (a) Coordination. The State must establish eligibility and 
enrollment mechanisms and procedures to maximize coordination with the 
Exchange, Medicaid, and CHIP. The terms of 45 CFR 155.345(a) regarding 
the agreements between insurance affordability programs apply to a BHP. 
The State BHP agency must fulfill the requirements of 42 CFR 
435.1200(d), (e)(1)(ii), and (e)(3) and, if applicable, paragraph (c) 
of this section for BHP eligible individuals.
* * * * *
0
43. Section 600.525 is amended by revising paragraph (b)(2) to read as 
follows:


Sec.  600.525   Disenrollment procedures and consequences for 
nonpayment of premiums.

* * * * *
    (b) * * *
    (2) A State electing to enroll eligible individuals throughout the 
year must comply with the reenrollment standards set forth in Sec.  
457.570(c) of this chapter.

    Dated: August 29, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-18875 Filed 8-31-22; 4:15 pm]
BILLING CODE 4120-01-P