Last updated on March 14th, 2023 at 03:47 pm
Title 42 – Public Health–Volume 4
CHAPTER IV – CENTERS FOR MEDICARE & MEDICAID SERVICES, DEPARTMENT OF HEALTH AND HUMAN SERVICES (CONTINUED)
SUBCHAPTER C – MEDICAL ASSISTANCE PROGRAMS
PART 430 – GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS
Subpart A – Introduction; General Provisions
§ 430.0 Program description.
Title XIX of the Social Security Act, enacted in 1965, authorizes Federal grants to States for medical assistance to low-income persons who are age 65 or over, blind, disabled, or members of families with dependent children or qualified pregnant women or children. The program is jointly financed by the Federal and State governments and administered by States. Within broad Federal rules, each State decides eligible groups, types and range of services, payment levels for services, and administrative and operating procedures. Payments for services are made directly by the State to the individuals or entities that furnish the services.
§ 430.1 Scope of subchapter C.
The regulations in subchapter C set forth State plan requirements, standards, procedures, and conditions for obtaining Federal financial participation (FFP). Each part (or subpart of section) in the subchapter describes the specific statutory basis for the regulation. However, where the basis is the Secretary’s general authority to issue regulations for any program under the Act (section 1102 of the Act), or his general authority to prescribe State plan requirements needed for proper and efficient administration of the plan (section 1902(a)(4)), those statutory provisions are simply cited without further description.
§ 430.2 Other applicable Federal regulations.
Other regulations applicable to State Medicaid programs include the following:
(a) 5 CFR part 900, subpart F, Administration of the Standards for a Merit System of Personnel Administration.
(b) The following HHS Regulations in 45 CFR subtitle A:
§ 430.3 Appeals under Medicaid.
Three distinct types of disputes may arise under Medicaid.
(a) Compliance with Federal requirements. Disputes that pertain to whether a State’s plan or proposed plan amendments, or its practice under the plan meet or continue to meet Federal requirements are subject to the hearing provisions of subpart D of this part.
(b) FFP in Medicaid expenditures. Disputes that pertain to disallowances of FFP in Medicaid expenditures (mandatory grants) are heard by the Departmental Appeals Board (the Board) in accordance with procedures set forth in 45 CFR part 16.
(c) Discretionary grants disputes. Disputes pertaining to discretionary grants, such as grants for special demonstration projects under sections 1110 and 1115 of the Act, which may be awarded to a Medicaid agency, are also heard by the Board. 45 CFR part 16, appendix A, lists all the types of disputes that the Board hears.
§ 430.5 Definitions.
As used in this subchapter, unless the context indicates otherwise –
Contractor means any entity that contracts with the State agency, under the State plan, in return for a payment, to process claims, to provide or pay for medical services, or to enhance the State agency’s capability for effective administration of the program.
Representative has the meaning given the term by each State consistent with its laws, regulations, and policies.
Subpart B – State Plans
§ 430.10 The State plan.
The State plan is a comprehensive written statement submitted by the agency describing the nature and scope of its Medicaid program and giving assurance that it will be administered in conformity with the specific requirements of title XIX, the regulations in this Chapter IV, and other applicable official issuances of the Department. The State plan contains all information necessary for CMS to determine whether the plan can be approved to serve as a basis for Federal financial participation (FFP) in the State program.
§ 430.12 Submittal of State plans and plan amendments.
(a) Format. A State plan for Medicaid consists of a standardized template, issued and updated by CMS, that includes both basic requirements and individualized content that reflects the characteristics of the State’s program. The Secretary will periodically update the template and format specifications for State plans and plan amendments through a process consistent with the requirements of the Paperwork Reduction Act.
(b) Governor’s review – (1) Basic rules. Except as provided in paragraph (b)(2) of this section –
(i) The Medicaid agency must submit the State plan and State plan amendments to the State Governor or his designee for review and comment before submitting them to the CMS regional office.
(ii) The plan must provide that the Governor will be given a specific period of time to review State plan amendments, long-range program planning projections, and other periodic reports on the Medicaid program, excluding periodic statistical, budget and fiscal reports.
(iii) Any comments from the Governor must be submitted to CMS with the plan or plan amendment.
(2) Exceptions. (i) Submission is not required if the Governor’s designee is the head of the Medicaid agency.
(ii) Governor’s review is not required for preprinted plan amendments that are developed by CMS if they provide absolutely no options for the State.
(c) Plan amendments. (1) The plan must provide that it will be amended whenever necessary to reflect –
(i) Changes in Federal law, regulations, policy interpretations, or court decisions; or
(ii) Material changes in State law, organization, or policy, or in the State’s operation of the Medicaid program. For changes related to advance directive requirements, amendments must be submitted as soon as possible, but no later than 60 days from the effective date of the change to State law concerning advance directives.
(2) Prompt submittal of amendments is necessary –
(i) So that CMS can determine whether the plan continues to meet the requirements for approval; and
(ii) To ensure the availability of FFP in accordance with § 430.20.
§ 430.14 Review of State plan material.
CMS regional staff reviews State plans and plan amendments, discusses any issues with the Medicaid agency, and consults with central office staff on questions regarding application of Federal policy.
(a) Basis for action. (1) Determinations as to whether State plans (including plan amendments and administrative practice under the plans) originally meet or continue to meet the requirements for approval are based on relevant Federal statutes and regulations.
(2) Guidelines are furnished to assist in the interpretation of the regulations.
(b) Approval authority. The Regional Administrator exercises delegated authority to approve the State plan and plan amendments on the basis of policy statements and precedents previously approved by the Administrator.
(c) Disapproval authority. (1) The Administrator retains authority for determining that proposed plan material is not approvable or that previously approved material no longer meets the requirements for approval.
(2) The Administrator does not make a final determination of disapproval without first consulting the Secretary.
§ 430.16 Timing and notice of action on State plan material.
(a) Timing. (1) A State plan or plan amendment will be considered approved unless CMS, within 90 days after receipt of the plan or plan amendment in the regional office, sends the State –
(i) Written notice of disapproval; or
(ii) Written notice of any additional information it needs in order to make a final determination.
(2) If CMS requests additional information, the 90-day period for CMS action on the plan or plan amendment begins on the day it receives that information.
(b) Notice of final determination. (1) The Regional Administrator or the Administrator notifies the Medicaid agency of the approval of a State plan or plan amendment.
(2) Only the Administrator gives notice of disapproval of a State plan or plan amendment.
§ 430.18 Administrative review of action on State plan material.
(a) Request for reconsideration. Any State dissatisfied with the Administrator’s action on plan material under § 430.15 may, within 60 days after receipt of the notice provided under § 430.16(b), request that the Administrator reconsider the issue of whether the plan or plan amendment conforms to the requirements for approval.
(b) Notice and timing of hearing. (1) Within 30 days after receipt of the request, the Administrator notifies the State of the time and place of the hearing.
(2) The hearing takes place not less than 30 days nor more than 60 days after the date of the notice, unless the State and the Administrator agree in writing on an earlier or later date.
(c) Hearing procedures. The hearing procedures are set forth in subpart D of this part.
(d) Decision. A decision affirming, modifying, or reversing the Administrator’s original determination is made in accordance with § 430.102.
(e) Effect of hearing decision. (1) Denial of Federal funds, if required by the Administrator’s original determination, will not be delayed pending a hearing decision.
(2) However, if the Administrator determines that his or her original decision was incorrect, CMS pays the State a lump sum equal to any funds incorrectly denied.
§ 430.20 Effective dates of State plans and plan amendments.
For purposes of FFP, the following rules apply:
(a) New plans. The effective date of a new plan –
(1) May not be earlier than the first day of the quarter in which an approvable plan is submitted to the regional office; and
(2) With respect to expenditures for medical assistance, may not be earlier than the first day on which the plan is in operation on a statewide basis.
(b) Plan amendment. (1) For a plan amendment that provides additional services to individuals eligible under the approved plan, increases the payment amounts for services already included in the plan, or makes additional groups eligible for services provided under the approved plan, the effective date is determined in accordance with paragraph (a) of this section.
(2) For a plan amendment that changes the State’s payment method and standards, the rules of § 447.256 of this chapter apply.
(3) For other plan amendments, the effective date may be a date requested by the State if CMS approves it.
§ 430.25 Waivers of State plan requirements.
(a) Scope of section. This section describes the purpose and effect of waivers, identifies the requirements that may be waived and the other regulations that apply to waivers, and sets forth the procedures that CMS follows in reviewing and taking action on waiver requests.
(b) Purpose of waivers. Waivers are intended to provide the flexibility needed to enable States to try new or different approaches to the efficient and cost-effective delivery of health care services, or to adapt their programs to the special needs of particular areas or groups of beneficiaries. Waivers allow exceptions to State plan requirements and permit a State to implement innovative programs or activities on a time-limited basis, and subject to specific safeguards for the protection of beneficiaries and the program. Detailed rules for waivers are set forth in subpart B of part 431, subpart A of part 440, and subpart G of part 441 of this chapter.
(c) Effect of waivers. (1) Waivers under section 1915(b) allow a State to take the following actions:
(i) Implement a primary care case-management system or a specialty physician system.
(ii) Designate a locality to act as central broker in assisting Medicaid beneficiaries to choose among competing health care plans.
(iii) Share with beneficiaries (through provision of additional services) cost-savings made possible through the beneficiaries’ use of more cost-effective medical care.
(iv) Limit beneficiaries’ choice of providers (except in emergency situations and with respect to family planning services) to providers that fully meet reimbursement, quality, and utilization standards, which are established under the State plan and are consistent with access, quality, and efficient and economical furnishing of care.
(2) A waiver under section 1915(c) of the Act allows a State to include as “medical assistance” under its plan home and community based services furnished to beneficiaries who would otherwise need inpatient care that is furnished in a hospital, SNF, ICF, or ICF/IID, and is reimbursable under the State plan.
(3) A waiver under section 1916 (a)(3) or (b)(3) of the Act allows a State to impose a deduction, cost-sharing or similar charge of up to twice the “nominal charge” established under the plan for outpatient services, if –
(i) The outpatient services are received in a hospital emergency room but are not emergency services; and
(ii) The State has shown that Medicaid beneficiaries have actually available and accessible to them alternative services of nonemergency outpatient services.
(d) Requirements that are waived. In order to permit the activities described in paragraph (c) of this section, one or more of the title XIX requirements must be waived, in whole or in part.
(1) Under section 1915(b) of the Act, and subject to certain limitations, any of the State plan requirements of section 1902 of the Act may be waived to achieve one of the purposes specified in that section.
(2) Under section 1915(c) of the Act, the following requirements may be waived:
(i) Statewideness – section 1902(a)(1).
(ii) Comparability of services – section 1902(a)(10)(B).
(iii) Income and resource rules – section 1902(a)(10)(C)(i)(III).
(3) Under section 1916 of the Act, paragraphs (a)(3) and (b)(3) require that any cost-sharing imposed on beneficiaries be nominal in amount, and provide an exception for nonemergency services furnished in a hospital emergency room if the conditions of paragraph (c)(3) of this section are met.
(e) Submittal of waiver request. The State Governor, the head of the Medicaid agency, or an authorized designee may submit the waiver request.
(f) Review of waiver requests. (1) This paragraph applies to initial waiver requests and to requests for renewal or amendment of a previously approved waiver.
(2) CMS regional and central office staff review waiver requests and submit a recommendation to the Administrator, who –
(i) Has the authority to approve or deny waiver requests; and
(ii) Does not deny a request without first consulting the Secretary.
(3) A waiver request is considered approved unless, within 90 days after the request is received by CMS, the Administrator denies the request, or the Administrator or the Regional Administrator sends the State a written request for additional information necessary to reach a final decision. If additional information is requested, a new 90-day period begins on the day the response to the additional information request is received by the addressee.
(g) Basis for approval – (1) Waivers under section 1915 (b) and (c). The Administrator approves waiver requests if the State’s proposed program or activity meets the requirements of the Act and the regulations at § 431.55 or subpart G of part 441 of this chapter.
(2) Waivers under section 1916. The Administrator approves a waiver under section 1916 of the Act if the State shows, to CMS’s satisfaction, that the Medicaid beneficiaries have available and accessible to them sources, other than a hospital emergency room, where they can obtain necessary nonemergency outpatient services.
(h) Effective date and duration of waivers – (1) Effective date. Waivers receive a prospective effective date determined, with State input, by the Administrator. The effective date is specified in the letter of approval to the State.
(2) Duration of waivers – (i) Home and community-based services under section 1915(c) of the Act. (A) The initial waiver is for a period of 3 years and may be renewed thereafter for periods of 5 years.
(B) For waivers that include individuals who are dually eligible for Medicare and Medicaid, 5-year initial approval periods may be granted at the discretion of the Secretary for waivers meeting all necessary programmatic, financial and quality requirements, and in a manner consistent with the interests of beneficiaries and the objectives of the Medicaid program.
(ii) Waivers under section 1915(b) of the Act. (A) The initial waiver is for a period of 2 years and may be renewed for additional periods of up to 2 years as determined by the Administrator.
(B) For waivers that include individuals who are dually eligible for Medicare and Medicaid, 5-year initial and renewal approval periods may be granted at the discretion of the Secretary for waivers meeting all necessary programmatic, financial and quality requirements, and in a manner consistent with the interests of beneficiaries and the objectives of the Medicaid program.
(iii) Waivers under section 1916 of the Act. The initial waiver is for a period of 2 years and may be renewed for additional periods of up to 2 years as determined by the Administrator.
(3) Renewal of waivers. (i) A renewal request must be submitted at least 90 days (but not more than 120 days) before a currently approved waiver expires, to provide adequate time for CMS review.
(ii) If a renewal request for a section 1915(c) waiver proposes a change in services provided, eligible population, service area, or statutory sections waived, the Administrator may consider it a new waiver, and approve it for a period of three years.
Subpart C – Grants; Reviews and Audits; Withholding for Failure To Comply; Deferral and Disallowance of Claims; Reduction of Federal Medicaid Payments
§ 430.30 Grants procedures.
(a) General provisions. (1) Once CMS has approved a State plan, it makes quarterly grant awards to the State to cover the Federal share of expenditures for services, training, and administration.
(2) The amount of the quarterly grant is determined on the basis of information submitted by the State agency (in quarterly estimate and quarterly expenditure reports) and other pertinent documents.
(b) Quarterly estimates. The Medicaid agency must submit Form CMS-37 (Medicaid Program Budget Report; Quarterly Distribution of Funding Requirements) to the central office (with a copy to the regional office) 45 days before the beginning of each quarter.
(c) Expenditure reports. (1) The State must submit Form CMS-64 (Quarterly Medicaid Statement of Expenditures for the Medical Assistance Program) to the central office (with a copy to the regional office) not later than 30 days after the end of each quarter.
(2) This report is the State’s accounting of actual recorded expenditures. The disposition of Federal funds may not be reported on the basis of estimates.
(d) Grant award – (1) Computation by CMS. Regional office staff analyzes the State’s estimates and sends a recommendation to the central office. Central office staff considers the State’s estimates, the regional office recommendations and any other relevant information, including any adjustments to be made under paragraph (d)(2) of this section, and computes the grant.
(2) Content of award. The grant award computation form shows the estimate of expenditures for the ensuring quarter, and the amounts by which that estimate is increased or decreased because of an underestimate or overestimate for prior quarters, or for any of the following reasons:
(i) Penalty reductions imposed by law.
(ii) Accounting adjustments.
(iii) Deferrals or disallowances.
(iv) Interest assessments.
(v) Mandated adjustments such as those required by section 1914 of the Act.
(3) Effect of award. The grant award authorizes the State to draw Federal funds as needed to pay the Federal share of disbursements.
(4) Drawing procedure. The draw is through a commercial bank and the Federal Reserve system against a continuing letter of credit certified to the Secretary of the Treasury in favor of the State payee. (The letter of credit payment system was established in accordance with Treasury Department regulations – Circular No. 1075.)
(e) General administrative requirements. With the following exceptions, the provisions of 45 CFR 75, which establish uniform administrative requirements and cost principles, apply to all grants made to States under this subpart:
(1) Cost sharing or matching, 45 CFR 75.306; and
(2) Financial reporting, 45 CFR 75.341.
§ 430.32 Program reviews.
(a) Review of State and local administration. In order to determine whether the State is complying with the Federal requirements and the provisions of its plan, CMS reviews State and local administration through analysis of the State’s policies and procedures, on-site review of selected aspects of agency operation, and examination of samples of individual case records.
(b) Quality control program. The State itself is required to carry out a continuing quality control program as set forth in part 431, subpart P, of this chapter.
(c) Action on review findings. If Federal or State reviews reveal serious problems with respect to compliance with any Federal requirement, the State must correct its practice accordingly.
§ 430.33 Audits.
(a) Purpose. The Department’s Office of Inspector General (OIG) periodically audits State operations in order to determine whether –
(1) The program is being operated in a cost-efficient manner; and
(2) Funds are being properly expended for the purposes for which they were appropriated under Federal and State law and regulations.
(b) Reports. (1) The OIG releases audit reports simultaneously to State officials and the Department’s program officials.
(2) The reports set forth OIG opinion and recommendations regarding the practices it reviewed, and the allowability of the costs it audited.
(3) Cognizant officials of the Department make final determinations on all audit findings.
(c) Action on audit exceptions – (1) Concurrence or clearance. The State agency has the opportunity of concurring in the exceptions or submitting additional facts that support clearance of the exceptions.
(2) Appeal. Any exceptions that are not disposed of under paragraph (c)(1) of this section are included in a disallowance letter that constitutes the Department’s final decision unless the State requests reconsideration by the Administrator or the Departmental Appeals Board. (Specific rules are set forth in § 430.42.)
(3) Adjustment. If the decision by the Board requires an adjustment of FFP, either upward or downward, a subsequent grant award promptly reflects the amount of increase or decrease.
§ 430.35 Withholding of payment for failure to comply with Federal requirements.
(a) Basis for withholding. CMS withholds payments to the State, in whole or in part, only if, after giving the agency reasonable notice and opportunity for a hearing in accordance with subpart D of this part, the Administrator finds –
(1) That the plan no longer complies with the provisions of section 1902 of the Act; or
(2) That in the administration of the plan there is failure to comply substantially with any of those provisions.
(b) Noncompliance of the plan. A question of noncompliance of a State plan may arise from an unapprovable change in the approved State plan or the failure of the State to change its approved plan to conform to a new Federal requirement for approval of State plans.
(c) Noncompliance in practice. A question of noncompliance in practice may arise from the State’s failure to actually comply with a Federal requirement, regardless of whether the plan itself complies with that requirement.
(d) Notice and implementation of withholding. If the Administrator makes a finding of noncompliance under paragraph (a) of this section, the following rules apply:
(1) The Administrator notifies the State:
(i) That no further payments will be made to the State (or that payments will be made only for those portions or aspects of the program that are not affected by the noncompliance); and
(ii) That the total or partial withholding will continue until the Administrator is satisfied that the State’s plan and practice are, and will continue to be, in compliance with Federal requirements.
(2) CMS withholds payments, in whole or in part, until the Administrator is satisfied regarding the State’s compliance.
§ 430.38 Judicial review.
(a) Right to judicial review. Any State dissatisfied with the Administrator’s final determination on approvability of plan material (§ 430.18) or compliance with Federal requirements (§ 430.35) has a right to judicial review.
(b) Petition for review. (1) The State must file a petition for review with the U.S. Court of Appeals for the circuit in which the State is located, within 60 days after it is notified of the determination.
(2) The clerk of the court will file a copy of the petition with the Administrator and the Administrator will file in the court the record of the proceedings on which the determination was based.
(c) Court action. (1) The court is bound by the Administrator’s findings of fact if they are supported by substantial evidence.
(2) The court has jurisdiction to affirm the Administrator’s decision, to set it aside in whole or in part, or, for good cause, to remand the case for additional evidence.
(d) Response to remand. (1) If the court remands the case, the Administrator may make new or modified findings of fact and may modify his or her previous determination.
(2) The Administrator will certify to the court the transcript and record of the further proceedings.
(e) Review by the Supreme Court. The judgment of the appeals court is subject to review by the U.S. Supreme Court upon certiorari or certification, as provided in 28 U.S.C. 1254.
§ 430.40 Deferral of claims for FFP.
(a) Requirements for deferral. Payment of a claim or any portion of a claim for FFP is deferred only if –
(1) The Administrator or current Designee questions its allowability and needs additional information to resolve the question; and
(2) CMS takes action to defer the claim (by excluding the claimed amount from the grant award) within 60 days after the receipt of a Quarterly Statement of Expenditures (prepared in accordance with CMS instructions) that includes that claim.
(b) Notice of deferral and State’s responsibility. (1) Within 15 days of the action described in paragraph (a)(2) of this section, the current Designee sends the State a written notice of deferral that –
(i) Identifies the type and amount of the deferred claim and specifies the reason for deferral; and
(ii) Requests the State to make available all the documents and materials the regional office then believes are necessary to determine the allowability of the claim.
(2) It is the responsibility of the State to establish the allowability of a deferred claim.
(c) Handling of documents and materials. (1) Within 60 days (or within 120 days if the State requests an extension) after receipt of the notice of deferral, the State must make available to the regional office, in readily reviewable form, all requested documents and materials except any that it identifies as not being available.
(2) Regional office staff usually initiates review within 30 days after receipt of the documents and materials.
(3) If the current Designee finds that the materials are not in readily reviewable form or that additional information is needed, he or she promptly notifies the State that it has 15 days to submit the readily reviewable or additional materials.
(4) If the State does not provide the necessary materials within 15 days, the current Designee disallows the claim.
(5) The current Designee has 90 days, after all documentation is available in readily reviewable form, to determine the allowability of the claim.
(6) If the current Designee cannot complete review of the material within 90 days, CMS pays the claim, subject to a later determination of allowability.
(d) Effect of decision to pay a deferred claim. Payment of a deferred claim under paragraph (c)(6) of this section does not preclude a subsequent disallowance based on the results of an audit or financial review. (If there is a subsequent disallowance, the State may request reconsideration as provided in paragraph (e)(2) of this section.)
(e) Notice and effect of decision on allowability. (1) The Administrator or current Designee gives the State written notice of his or her decision to pay or disallow a deferred claim.
(2) If the decision is to disallow, the notice informs the State of its right to reconsideration in accordance with 45 CFR part 16.
§ 430.42 Disallowance of claims for FFP.
(a) Notice of disallowance and of right to reconsideration. When the Administrator or current Designee determines that a claim or portion of claim is not allowable, he or she promptly sends the State a disallowance letter that includes the following, as appropriate:
(1) The date or dates on which the State’s claim for FFP was made.
(2) The time period during which the expenditures in question were made or claimed to have been made.
(3) The date and amount of any payment or notice of deferral.
(4) A statement of the amount of FFP claimed, allowed, and disallowed and the manner in which these amounts were computed.
(5) Findings of fact on which the disallowance determination is based or a reference to other documents previously furnished to the State or included with the notice (such as a report of a financial review or audit) which contain the findings of fact on which the disallowance determination is based.
(6) Pertinent citations to the law, regulations, guides and instructions supporting the action taken.
(7) A request that the State make appropriate adjustment in a subsequent expenditure report.
(8) Notice of the State’s right to request reconsideration of the disallowance and the time allowed to make the request.
(9) A statement indicating that the disallowance letter is the Department’s final decision unless the State requests reconsideration under paragraph (b)(2) or (f)(2) of this section.
(b) Reconsideration of a disallowance. (1) The Administrator will reconsider Medicaid disallowance determinations.
(2) To request reconsideration of a disallowance, a State must complete the following:
(i) Submit the following within 60 days after receipt of the disallowance letter:
(A) A written request to the Administrator that includes the following:
(1) A copy of the disallowance letter.
(2) A statement of the amount in dispute.
(3) A brief statement of why the disallowance should be reversed or revised, including any information to support the State’s position with respect to each issue.
(4) Additional information regarding factual matters or policy considerations.
(B) A copy of the written request to the Regional Office.
(C) Send all requests for reconsideration via registered or certified mail to establish the date the reconsideration was received by CMS.
(ii) In all cases, the State has the burden of documenting the allowability of its claims for FFP.
(iii) Additional information regarding the legal authority for the disallowance will not be reviewed in the reconsideration but may be presented in any appeal to the Departmental Appeals Board under paragraph (f)(2) of this section.
(3) A State may request to retain the FFP during the reconsideration of the disallowance under section 1116(e) of the Act, in accordance with § 433.38 of this subchapter.
(4) The State is not required to request reconsideration before seeking review from the Departmental Appeals Board.
(5) The State may also seek reconsideration, and following the reconsideration decision, request a review from the Board.
(6) If the State elects reconsideration, the reconsideration process must be completed or withdrawn before requesting review by the Board.
(c) Procedures for reconsideration of a disallowance. (1) Within 60 days after receipt of the disallowance letter, the State shall, in accordance with (b)(2) of this section, submit in writing to the Administrator any relevant evidence, documentation, or explanation and shall simultaneously submit a copy thereof to the Regional Office.
(2) After consideration of the policies and factual matters pertinent to the issues in question, the Administrator shall, within 60 days from the date of receipt of the request for reconsideration, issue a written decision or a request for additional information as described in paragraph (c)(3) of this section.
(3) At the Administrator’s option, CMS may request from the State any additional information or documents necessary to make a decision. The request for additional information must be sent via registered or certified mail to establish the date the request was sent by CMS and received by the State.
(4) Within 30 days after receipt of the request for additional information, the State must submit to the Administrator, with a copy to the Regional Office in readily reviewable form, all requested documents and materials.
(i) If the Administrator finds that the materials are not in readily reviewable form or that additional information is needed, he or she shall notify the State via registered or certified mail that it has 15 business days from the date of receipt of the notice to submit the readily reviewable or additional materials.
(ii) If the State does not provide the necessary materials within 15 business days from the date of receipt of such notice, the Administrator shall affirm the disallowance in a final reconsideration decision issued within 15 days from the due date of additional information from the State.
(5) If additional documentation is provided in readily reviewable form under the paragraph (c)(4) of this section, the Administrator shall issue a written decision, within 60 days from the due date of such information.
(6) The final written decision shall constitute final CMS administrative action on the reconsideration and shall be (within 15 business days of the decision) mailed to the State agency via registered or certified mail to establish the date the reconsideration decision was received by the State.
(7) If the Administrator does not issue a decision within 60 days from the date of receipt of the request for reconsideration or the date of receipt of the requested additional information, the disallowance shall be deemed to be affirmed upon reconsideration.
(8) No section of this regulation shall be interpreted as waiving the Department’s right to assert any provision or exemption under the Freedom of Information Act.
(d) Withdrawal of a request for reconsideration of a disallowance. (1) A State may withdraw the request for reconsideration at any time before the notice of the reconsideration decision is received by the State without affecting its right to submit a notice of appeal to the Board. The request for withdrawal must be in writing and sent to the Administrator, with a copy to the Regional Office, via registered or certified mail.
(2) Within 60 days after CMS’ receipt of a State’s withdrawal request, a State may, in accordance with (f)(2) of this section, submit a notice of appeal to the Board.
(e) Implementation of decisions for reconsideration of a disallowance. (1) After undertaking a reconsideration, the Administrator may affirm, reverse, or revise the disallowance and shall issue a final written reconsideration decision to the State in accordance with paragraph (c)(4) of this section.
(2) If the reconsideration decision requires an adjustment of FFP, either upward or downward, a subsequent grant award will be issued in the amount of such increase or decrease.
(3) Within 60 days after the receipt of a reconsideration decision from CMS a State may, in accordance with paragraph (f)(2) of this section, submit a notice of appeal to the Board.
(f) Appeal of Disallowance. (1) The Departmental Appeals Board reviews disallowances of FFP under title XIX.
(2) A State that wishes to appeal a disallowance to the Board must:
(i) Submit a notice of appeal to the Board at the address given on the Departmental Appeals Board’s web site within 60 days after receipt of the disallowance letter.
(A) If a reconsideration of a disallowance was requested, within 60 days after receipt of the reconsideration decision; or
(B) If reconsideration of a disallowance was requested and no written decision was issued, within 60 days from the date the decision on reconsideration of the disallowance was due to be issued by CMS.
(ii) Include all of the following:
(A) A copy of the disallowance letter.
(B) A statement of the amount in dispute.
(C) A brief statement of why the disallowance is wrong.
(3) The Board’s decision of an appeal under paragraph (f)(2) of this section shall be the final decision of the Secretary and shall be subject to reconsideration by the Board only upon a motion by either party that alleges a clear error of fact or law and is filed during the 60-day period that begins on the date of the Board’s decision or to judicial review in accordance with paragraph (f)(2)(i) of this section.
(g) Appeals procedures. The appeals procedures are those set forth in 45 CFR part 16 for Medicaid and for many other programs administered by the Department.
(1) In all cases, the State has the burden of documenting the allowability of its claims for FFP.
(2) The Board shall conduct a thorough review of the issues, taking into account all relevant evidence, including such documentation as the State may submit and the Board may require.
(h) Implementation of decisions. (1) The Board may affirm the disallowance, reverse the disallowance, modify the disallowance, or remand the disallowance to CMS for further consideration.
(2) The Board will issue a final written decision to the State consistent with 45 CFR part 16.
(3) If the appeal decision requires an adjustment of FFP, either upward or downward, a subsequent grant award will be issued in the amount of increase or decrease.
§ 430.45 Reduction of Federal Medicaid payments.
(a) Methods of reduction. CMS may reduce Medicaid payments to a State as required under the Act by reducing –
(1) The Federal Medical Assistance Percentage;
(2) The amount of State expenditures subject to FFP;
(3) The rates of FFP; or
(4) The amount otherwise payable to the State.
(b) Right to reconsideration. A state that receives written final notice of a reduction under paragraph (a) of this section has a right to reconsideration. The provisions of § 430.42 (b) and (c) apply.
(c) Other applicable rules. Other rules regarding reduction of Medicaid payments are set forth in parts 433 and 447 of this chapter.
§ 430.48 Repayment of Federal funds by installments.
(a) Basic conditions. When Federal payments have been made for claims that are later found to be unallowable, the State may repay the Federal funds by installments if all of the following conditions are met:
(1) The amount to be repaid exceeds 0.25 percent of the estimated or actual annual State share for the Medicaid program.
(2) The State has given the Regional Office written notice, before total repayment was due, of its intent to repay by installments.
(b) Annual State share determination. CMS determines whether the amount to be repaid exceeds 0.25 percent of the annual State share as follows:
(1) If the Medicaid program is ongoing, CMS uses the annual estimated State share of Medicaid expenditures for the current year, as shown on the State’s latest Medicaid Program Budget Report (CMS-37). The current year is the year in which the State requests the repayment by installments.
(2) If the Medicaid program has been terminated by Federal law or by the State, CMS uses the actual State share that is shown on the State’s CMS-64 Quarterly Expense Report for the last four quarters filed.
(c) Standard Repayment amounts, schedules, and procedures – (1) Repayment amount. The repayment amount may not include any amount previously approved for installment repayment.
(2) Repayment schedule. The maximum number of quarters allowed for the standard repayment schedule is 12 quarters (3 years), except as provided in paragraphs (c)(4) and (e) of this section.
(3) Quarterly repayment amounts. (i) The quarterly repayment amounts for each of the quarters in the repayment schedule will be the larger of the repayment amount divided by 12 quarters or the minimum repayment amount;
(ii) The minimum quarterly repayment amounts for each of the quarters in the repayment schedule is 0.25 percent of the estimated State share of the current annual expenditures for Medicaid;
(iii) The repayment period may be less than 12 quarters when the minimum repayment amount is required.
(4) Extended schedule. (i) The repayment schedule may be extended beyond 12 quarterly installments if the total repayment amount exceeds 100 percent of the estimated State share of the current annual expenditures;
(ii) The quarterly repayment amount will be 8
(5) Repayment process. (i) Repayment is accomplished through deposits into the State’s Payment Management System (PMS) account;
(ii) A State may choose to make payment by Automated Clearing House (ACH) direct deposit, by check, or by Fedwire transfer.
(6) Reductions. If the State chooses to repay amounts representing higher percentages during the early quarters, any corresponding reduction in required minimum percentages is applied first to the last scheduled payment, then to the next to the last payment, and so forth as necessary.
(d) Alternate repayment amounts, schedules, and procedures for States experiencing economic distress immediately prior to the repayment period – (1) Repayment amount. The repayment amount may not include amounts previously approved for installment repayment if a State initially qualifies for the alternate repayment schedule at the onset of an installment repayment period.
(2) Qualifying period of economic distress. (i) A State will qualify to avail itself of the alternate repayment schedule if it demonstrates the State is experiencing a period of economic distress;
(ii) A period of economic distress is one in which the State demonstrates distress for at least each of the previous 6 months, ending the month prior to the date of the State’s written request for an alternate repayment schedule, as determined by a negative percent change in the monthly Philadelphia Federal Reserve Bank State coincident index.
(3) Repayment schedule. The maximum number of quarters allowed for the alternate repayment schedule is 12 quarters (3 years), except as provided in paragraph (d)(5) of this section.
(4) Quarterly repayment amounts. (i) The quarterly repayment amounts for each of the first 8 quarters in the repayment schedule will be the smaller of the repayment amount divided by 12 quarters or the maximum quarterly repayment amount;
(ii) The maximum quarterly repayment amounts for each of the first 8 quarters in the repayment schedule is 0.25 percent of the annual State share determination as defined in paragraph (b) of this section;
(iii) For the remaining 4 quarters, the quarterly repayment amount equals the remaining balance of the overpayment amount divided by the remaining 4 quarters.
(5) Extended schedule. (i) For a State that initiated its repayment under an alternate payment schedule for economic distress, the repayment schedule may be extended beyond 12 quarterly installments if the total repayment amount exceeds 100 percent of the estimated State share of current annual expenditures;
(A) In these circumstances, paragraph (d)(3) of this section is followed for repayment of the amount equal to 100 percent of the estimated State share of current annual expenditures.
(B) The remaining amount of the repayment is in quarterly amounts equal to 8
(ii) Upon request by the State, the repayment schedule may be extended beyond 12 quarterly installments if the State has qualifying periods of economic distress in accordance with paragraph (d)(2) of this section during the first 8 quarters of the alternate repayment schedule.
(A) To qualify for additional quarters, the States must demonstrate a period of economic distress in accordance with paragraph (d)(2) of this section for at least 1 month of a quarter during the first 8 quarters of the alternate repayment schedule.
(B) For each quarter (of the first 8 quarters of the alternate payment schedule) identified as qualified period of economic distress, one quarter will be added to the remaining 4 quarters of the original 12 quarter repayment period.
(C) The total number of quarters in the alternate repayment schedule shall not exceed 20 quarters.
(6) Repayment process. (i) Repayment is accomplished through deposits into the State’s Payment Management System (PMS) account;
(ii) A State may choose to make payment by Automated Clearing House (ACH) direct deposit, by check, or by Fedwire transfer.
(7) If the State chooses to repay amounts representing higher percentages during the early quarters, any corresponding reduction in required minimum percentages is applied first to the last scheduled payment, then to the next to the last payment, and so forth as necessary.
(e) Alternate repayment amounts, schedules, and procedures for States entering into distress during a standard repayment schedule – (1) Repayment amount. The repayment amount may include amounts previously approved for installment repayment if a State enters into a qualifying period of economic distress during an installment repayment period.
(2) Qualifying period of economic distress. (i) A State will qualify to avail itself of the alternate repayment schedule if it demonstrates the State is experiencing economic distress;
(ii) A period of economic distress is one in which the State demonstrates distress for each of the previous 6 months, that begins on the date of the State’s request for an alternate repayment schedule, as determined by a negative percent change in the monthly Philadelphia Federal Reserve Bank State coincident index.
(3) Repayment schedule. The maximum number of quarters allowed for the alternate repayment schedule is 12 quarters (3 years), except as provided in paragraph (e)(5) of this section.
(4) Quarterly repayment amounts. (i) The quarterly repayment amounts for each of the first 8 quarters in the repayment schedule will be the smaller of the repayment amount divided by 12 quarters or the maximum repayment amount;
(ii) The maximum quarterly repayment amounts for each of the first 8 quarters in the repayment schedule is 0.25 percent of the annual State share determination as defined in paragraph (b) of this section;
(iii) For the remaining 4 quarters, the quarterly repayment amount equals the remaining balance of the overpayment amount divided by the remaining 4 quarters.
(5) Extended schedule. (i) For a State that initiated its repayment under the standard payment schedule and later experienced periods of economic distress and elected an alternate repayment schedule, the repayment schedule may be extended beyond 12 quarterly installments if the total repayment amount of the remaining balance of the standard schedule, exceeds 100 percent of the estimated State share of the current annual expenditures;
(ii) In these circumstances, paragraph (d)(3) of this section is followed for repayment of the amount equal to 100 percent of the estimated State share of current annual expenditures;
(iii) The remaining amount of the repayment is in quarterly amounts equal to 8
(6) Repayment process. (i) Repayment is accomplished through deposits into the State’s Payment Management System (PMS) account;
(ii) A State may choose to make payment by Automated Clearing House (ACH) direct deposit, by check, or by Fedwire transfer.
(7) If the State chooses to repay amounts representing higher percentages during the early quarters, any corresponding reduction in required minimum percentages is applied first to the last scheduled payment, then to the next to the last payment, and so forth as necessary.
Subpart D – Hearings on Conformity of State Medicaid Plans and Practice to Federal Requirements
§ 430.60 Scope.
(a) This subpart sets forth the rules for hearings to States that appeal a decision to disapprove State plan material (under § 430.18) or to withhold Federal funds (under § 430.35), because the State plan or State practice in the Medicaid program is not in compliance with Federal requirements.
(b) Nothing in this subpart is intended to preclude or limit negotiations between CMS and the State, whether before, during, or after the hearing to resolve the issues that are, or otherwise would be, considered at the hearing. Such negotiations and resolution of issues are not part of the hearing, and are not governed by the rules in this subpart except as expressly provided.
§ 430.62 Records to be public.
All pleadings, correspondence, exhibits, transcripts of testimony, exceptions, briefs, decisions, and other documents filed in the docket in any proceeding may be inspected and copied in the office of the CMS Docket Clerk. Inquiries may be made to the Docket Clerk, Hearing Staff, Bureau of Eligibility, Reimbursment and Coverage, 300 East High Rise, 6325 Security Boulevard, Baltimore, Maryland, 21207. Telephone: (301) 594-8261.
§ 430.63 Filing and service of papers.
(a) Filing. All papers in the proceedings are filed with the CMS Docket Clerk, in an original and two copies. Originals only of exhibits and transcripts of testimony need be filed.
(b) Service. All papers in the proceedings are served on all parties by personal delivery or by mail. Service on the party’s designated attorney is considered service upon the party.
§ 430.64 Suspension of rules.
Upon notice to all parties, the Administrator or the presiding officer may modify or waive any rule in this subpart upon determination that no party will be unduly prejudiced and the ends of justice will thereby be served.
§ 430.66 Designation of presiding officer for hearing.
(a) The presiding officer at a hearing is the Administrator or his designee.
(b) The designation of the presiding officer is in writing. A copy of the designation is served on all parties.
§ 430.70 Notice of hearing or opportunity for hearing.
The Administrator mails the State a notice of hearing or opportunity for hearing that –
(a) Specifies the time and place for the hearing;
(b) Specifies the issues that will be considered;
(c) Identifies the presiding officer; and
(d) Is published in the
§ 430.72 Time and place of hearing.
(a) Time. The hearing is scheduled not less than 30 nor more than 60 days after the date of notice to the State. The scheduled date may be changed by written agreement between CMS and the State.
(b) Place. The hearing is conducted in the city in which the CMS regional office is located or in another place fixed by the presiding officer in light of the circumstances of the case, with due regard for the convenience and necessity of the parties or their representatives.
§ 430.74 Issues at hearing.
The list of issues specified in the notice of hearing may be augmented or reduced as provided in this section.
(a) Additional issues. (1) Before a hearing under § 430.35, the Administrator may send written notice to the State listing additional issues to be considered at the hearing. That notice is published in the
(2) If the notice of additional issues is furnished to the State less than 20 days before the scheduled hearing date, postponement is granted if requested by the State or any other party. The new date may be 20 days after the date of the notice, or a later date agreed to by the presiding officer.
(b) New or modified issues. If, as a result of negotiations between CMS and the State, the submittal of plan amendment, a change in the State program, or other actions by the State, any issue is resolved in whole or in part, but new or modified issues are presented, as specified by the presiding officer, the hearing proceeds on the new or modified issues.
(c) Issues removed from consideration – (1) Basis for removal. If at any time before, during, or after the hearing, the presiding officer finds that the State has come into compliance with Federal requirements on any issue or part of an issue, he or she removes the appropriate issue or part of an issue from consideration. If all issues are removed, the hearing is terminated.
(2) Notice to parties. Before removing any issue or part of an issue from consideration, the presiding officer provides all parties other than CMS and the State with –
(i) A statement of the intent to remove and the reasons for removal; and
(ii) A copy of the proposed State plan provision on which CMS and the State have agreed.
(3) Opportunity for written comment. The notified parties have 15 days to submit, for consideration by the presiding officer, and for the record, their views as to, or any information bearing upon, the merits of the proposed plan provision and the merits of the reasons for removing the issue from consideration.
(d) Remaining issues. The issues considered at the hearing are limited to those issues of which the State is notified as provided in § 430.70 and paragraph (a) of this section, and new or modified issues described in paragraph (b) of this section. They do not include issues or parts of issues removed in accordance with paragraph (c) of this section.
§ 430.76 Parties to the hearing.
(a) CMS and the State. CMS and the State are parties to the hearing.
(b) Other individuals – (1) Basis for participation. Other individuals or groups may be recognized as parties if the issues to be considered at the hearing have caused them injury and their interest is within the zone of interests to be protected by the governing Federal statute.
(2) Petition for participation. Any individual or group wishing to participate as a party must, within 15 days after notice of hearing is published in the
(i) Petitioner’s interest in the proceeding;
(ii) Who will appear for petitioner;
(iii) The issues on which petitioner wishes to participate; and
(iv) Whether petitioner intends to present witnesses.
(3) Comments on petition. Any party may, within 5 days of receipt of the copy of the petition, file comments on it.
(4) Action on petition. (i) The presiding officer promptly determines whether each petitioner has the requisite interest in the proceedings and approves or denies participation accordingly.
(ii) If petitions are made by more than one individual or group with common interests, the presiding officer may –
(A) Request all those petitioners to designate a single representative; or
(B) Recognize one or more of those petitioners to represent all of them.
(iii) The presiding officer gives each petitioner written notice of the decision and, if the decision is to deny, briefly states the grounds for denial.
(c) Amicus curiae (friend of the court) – (1) Petition for participation. Any person or organization that wishes to participate as amicus curiae must, before the hearing begins, file with the CMS Docket Clerk, a petition that concisely states –
(i) The petitioners’ interest in the hearing;
(ii) Who will represent the petitioner; and
(iii) The issues on which the petitioner intends to present argument.
(2) Action on amicus curiae petition. The presiding officer may grant the petition if he or she finds that the petitioner has a legitimate interest in the proceedings, that such participation will not unduly delay the outcome and may contribute materially to the proper disposition of the issues.
(3) Nature of amicus participation. An amicus curiae is not a party to the hearing but may participate by –
(i) Submitting a written statement of position to the presiding officer before the beginning of the hearing;
(ii) Presenting a brief oral statement at the hearing, at the point in the proceedings specified by the presiding officer; and
(iii) Submitting a brief or written statement when the parties submit briefs.
§ 430.80 Authority of the presiding officer.
(a) The presiding officer has the duty to conduct a fair hearing, to avoid delay, maintain order, and make a record of the proceedings. He or she has the authority necessary to accomplish those ends, including but not limited to authority to take the following actions:
(1) Change the date, time, and place of the hearing after due notice to the parties. This includes authority to postpone or adjourn the hearing in whole or in part. In a hearing on disapproval of a State plan, or State plan amendments, changes in the date of the hearing are subject to the time limits imposed by section 1116(a)(2) of the Act.
(2) Hold conferences to settle or simplify the issues, or to consider other matters that may aid in the expeditious disposition of the issues.
(3) Regulate participation of parties and amici curiae and require parties and amici curiae to state their position with respect to the various issues in the proceeding.
(4) Administer oaths and affirmations.
(5) Rule on motions and other procedural items, including issuance of protective orders or other relief to a party against whom discovery is sought.
(6) Regulate the course of the hearing and conduct of counsel.
(7) Examine witnesses.
(8) Receive, rule on, exclude or limit evidence or discovery.
(9) Fix the time for filing motions, petitions, briefs, or other items.
(10) If the presiding officer is the Administrator, make a final decision.
(11) If the presiding officer is a designee of the Administrator, certify the entire record including recommended findings and proposed decision to the Administrator.
(12) Take any action authorized by the rules in this subpart or in conformance with the provisions of 5 U.S.C. 551 through 559.
(b) The presiding officer does not have authority to compel by subpoena the production of witnesses, papers, or other evidence.
(c) If the presiding officer is a designee of the Administrator, his or her authority pertains to the issues of compliance by a State with Federal requirements, and does not extend to the question of whether, in case of any noncompliance, Federal payments will be denied in respect to the entire State plan or only for certain categories under, or parts of, the State plan affected by the noncompliance.
§ 430.83 Rights of parties.
All parties may:
(a) Appear by counsel or other authorized representative, in all hearing proceedings.
(b) Participate in any prehearing conference held by the presiding officer.
(c) Agree to stipulations as to facts which will be made a part of the record.
(d) Make opening statements at the hearing.
(e) Present relevant evidence on the issues at the hearing.
(f) Present witnesses who then must be available for cross-examination by all other parties.
(g) Present oral arguments at the hearing.
(h) Submit written briefs, proposed findings of fact, and proposed conclusions of law, after the hearing.
§ 430.86 Discovery.
CMS and any party named in the notice issued under § 430.70 has the right to conduct discovery (including depositions) against opposing parties. Rules 26-37 of the Federal Rules of Civil Procedures apply to such proceedings; there will be no fixed rule on priority of discovery. Upon written motion, the presiding officer promptly rules upon any objection to discovery action initiated under this section. The presiding officer also has the power to grant a protective order or relief to any party against whom discovery is sought and to restrict or control discovery so as to prevent undue delay in the conduct of the hearing. Upon the failure of any party to make discovery, the presiding officer may issue any order and impose any sanction (other than contempt orders) authorized by Rule 37 of the Federal Rules of Civil Procedure.
§ 430.88 Evidence.
(a) Evidentiary purpose. The hearing is directed to receiving factual evidence and expert opinion testimony related to the issues involved in the proceeding. Argument is not received in evidence. It must be presented in statements, memoranda, or briefs, as determined by the presiding officer. Brief opening statements, concerning the party’s position and what he or she intends to prove, may be made at hearings.
(b) Testimony. Testimony is given orally under oath or affirmation by witnesses at the hearing. Witnesses are available at the hearing for cross-examination by all parties.
(c) Stipulations and exhibits. Two or more parties may agree to stipulations of fact. Those stipulations, and any exhibit proposed by any party, are exchanged before the hearing if the presiding officer so requires.
(d) Rules of evidence. (1) Technical rules of evidence do not apply to hearings conducted under this subpart. However, rules or principles designed to ensure production of the most credible evidence available and to subject testimony to test by cross-examination are applied by the presiding officer when reasonably necessary.
(2) A witness may be cross-examined on any matter material to the proceeding without regard to the scope of his or her direct examination.
(3) The presiding officer may exclude irrelevant, immaterial, or unduly repetitious evidence.
(4) All documents and other evidence offered or taken for the record are open to examination by the parties and an opportunity is given to refute facts and arguments advanced on either side of the issues.
§ 430.90 Exclusion from hearing for misconduct.
The presiding officer may immediately exclude from the hearing any person who –
(a) Uses disrespectful, disorderly, or contumacious language or engages in contemptuous behavior;
(b) Refuses to comply with directions; or
(c) Uses dilatory tactics.
§ 430.92 Unsponsored written material.
Letters expressing views or urging action and other unsponsored written material regarding matters in issue in a hearing are placed in the correspondence section of the docket of the proceeding. These data are not considered part of the evidence or record in the hearing.
§ 430.94 Official transcript.
(a) Filing. The official transcripts of testimony, together with any stipulations, briefs, or memoranda of law, are filed with CMS.
(b) Availability of transcripts. CMS designates an official reporter for each hearing. Transcripts of testimony in hearings may be obtained from the official reporter by the parties and the public at rates not in excess of the maximum rates fixed by the contract between CMS and the reporter.
(c) Correction of transcript. Upon notice to all parties, the presiding officer may authorize corrections that affect substantive matters in the transcript.
§ 430.96 Record for decision.
The transcript of testimony, exhibits, and all papers and requests filed in the proceedings, except the correspondence section of the docket, including rulings and any recommended or initial decision constitute the exclusive record for decision.
§ 430.100 Posthearing briefs.
The presiding officer fixes the time for filing posthearing briefs, which may contain proposed findings of fact and conclusions of law. The presiding officer may also permit reply briefs.
§ 430.102 Decisions following hearing.
(a) Administrator presides. If the presiding officer is the Administrator, he or she issues the hearing decision within 60 days after expiration of the period for submission of posthearing briefs.
(b) Administrator’s designee presides. If the presiding officer is other than the Administrator, the procedure is as follows:
(1) Upon expiration of the period allowed for submission of posthearing briefs, the presiding officer certifies the entire record, including his or her recommended findings and proposed decision, to the Administrator. The Administrator serves a copy of the recommended findings and proposed decision upon all parties and amici, if any.
(2) Any party may, within 20 days, file with the Administrator exceptions to the recommended findings and proposed decision and a supporting brief or statement.
(3) The Administrator reviews the recommended decision and, within 60 days of its issuance, issues his or her own decision.
(c) Effect of Administrator’s decision. The decision of the Administrator under this section is the final decision of the Secretary and constitutes “final agency action” within the meaning of 5 U.S.C. 704 and a “final determination” within the meaning of section 1116(a)(3) of the Act and § 430.38. The Administrator’s decision is promptly served on all parties and amici.
§ 430.104 Decisions that affect FFP.
(a) Scope of decisions. If the Administrator concludes that withholding of FFP is necessary because a State is out of compliance with Federal requirements, in accordance with § 430.35, the decision also specifies –
(1) Whether no further payments will be made to the State or whether payments will be limited to parts of the program not affected by the noncompliance; and
(2) The effective date of the decision to withhold.
(b) Consultation. The Administrator may ask the parties for recommendations or briefs or may hold conferences of the parties on the question of further payments to the State.
(c) Effective date of decision. The effective date of a decision to withhold Federal funds will not be earlier than the date of the Administrator’s decision and will not be later than the first day of the next calendar quarter. The provisions of this section may not be waived under § 430.64.
PART 431 – STATE ORGANIZATION AND GENERAL ADMINISTRATION
§ 431.1 Purpose.
This part establishes State plan requirements for the designation, organization, and general administrative activities of a State agency responsible for operating the State Medicaid program, directly or through supervision of local administering agencies.
Subpart A – Single State Agency
§ 431.10 Single State agency.
(a) Basis, purpose, and definitions. (1) This section implements section 1902(a)(4) and (5) of the Act.
(2) For purposes of this part –
Appeals decision means a decision made by a hearing officer adjudicating a fair hearing under subpart E of this part.
Exchange has the meaning given to the term in 45 CFR 155.20.
Exchange appeals entity has the meaning given to the term “appeals entity,” as defined in 45 CFR 155.500.
Medicaid agency is the single State agency for the Medicaid program.
(b) Designation and certification. A State plan must –
(1) Specify a single State agency established or designated to administer or supervise the administration of the plan; and
(2) Include a certification by the State Attorney General, citing the legal authority for the single State agency to –
(i) Administer or supervise the administration of the plan; and
(ii) Make rules and regulations that it follows in administering the plan or that are binding upon local agencies that administer the plan.
(3) The single State agency is responsible for determining eligibility for all individuals applying for or receiving benefits in accordance with regulations in part 435 of this chapter and for fair hearings filed in accordance with subpart E of this part.
(c) Delegations. (1) Subject to the requirement in paragraph (c)(2) of this section, the Medicaid agency –
(i)(A) May, in the approved state plan, delegate authority to determine eligibility for all or a defined subset of individuals to –
(1) The single State agency for the financial assistance program under title IV-A (in the 50 States or the District of Columbia), or under title I or XVI (AABD), in Guam, Puerto Rico, or the Virgin Islands;
(2) The Federal agency administering the supplemental security income program under title XVI of the Act; or
(3) The Exchange.
(B) Must in the approved state plan specify to which agency, and the individuals for which, authority to determine eligibility is delegated.
(ii) Delegate authority to conduct fair hearings under subpart E of this part for denials of eligibility for individuals whose income eligibility is determined based on the applicable modified adjusted gross income standard described in § 435.911(c) of this chapter, to an Exchange or Exchange appeals entity, provided that individuals who have requested a fair hearing of such a denial are given a choice to have their fair hearing instead conducted by the Medicaid agency.
(2) The Medicaid agency may delegate authority to make eligibility determinations or to conduct fair hearings under this section only to a government agency which maintains personnel standards on a merit basis.
(3) The Medicaid agency –
(i) Must ensure that any agency to which eligibility determinations or appeals decisions are delegated –
(A) Complies with all relevant Federal and State law, regulations and policies, including, but not limited to, those related to the eligibility criteria applied by the agency under part 435 of this chapter; prohibitions against conflicts of interest and improper incentives; and safeguarding confidentiality, including regulations set forth at subpart F of this part.
(B) Informs applicants and beneficiaries how they can directly contact and obtain information from the agency; and
(ii) Must exercise appropriate oversight over the eligibility determinations and appeals decisions made by such agencies to ensure compliance with paragraphs (c)(2) and (c)(3)(i) of this section and institute corrective action as needed, including, but not limited to, rescission of the authority delegated under this section.
(iii) If authority to conduct fair hearings is delegated to the Exchange or Exchange appeals entity under paragraph (c)(1)(ii) of this section, the agency may establish a review process whereby the agency may review fair hearing decisions made under that delegation, but that review will be limited to the proper application of federal and state Medicaid law and regulations, including sub-regulatory guidance and written interpretive policies, and must be conducted by an impartial official not directly involved in the initial determination.
(d) Agreement with Federal, State or local entities making eligibility determinations or appeals decisions. The plan must provide for written agreements between the Medicaid agency and the Exchange or any other State or local agency that has been delegated authority under paragraph (c)(1)(i) of this section to determine Medicaid eligibility and for written agreements between the agency and the Exchange or Exchange appeals entity that has been delegated authority to conduct Medicaid fair hearings under paragraph (c)(1)(ii) of this section. Such agreements must be available to the Secretary upon request and must include provisions for:
(1) The relationships and respective responsibilities of the parties, including but not limited to the respective responsibilities to effectuate the fair hearing rules in subpart E of this part;
(2) Quality control and oversight by the Medicaid agency, including any reporting requirements needed to facilitate such control and oversight;
(3) Assurances that the entity to which authority to determine eligibility or conduct fair hearings will comply with the provisions set forth in paragraph (c)(3) of this section.
(4) For appeals, procedures to ensure that individuals have notice and a full opportunity to have their fair hearing conducted by either the Exchange or Exchange appeals entity or the Medicaid agency.
(e) Authority of the single State agency. The Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.
§ 431.11 Organization for administration.
(a) Basis and purpose. This section, based on section 1902(a)(4) of the Act, prescribes the general organization and staffing requirements for the Medicaid agency and the State plan.
(b) Description of organization. (1) The plan must include a description of the organization and functions of the Medicaid agency.
(2) When submitting a state plan amendment related to the designation, authority, organization or functions of the Medicaid agency, the Medicaid agency must provide an organizational chart reflecting the key components of the Medicaid agency and the functions each performs.
(c) Eligibility determined or fair hearings decided by other entities. If eligibility is determined or fair hearings decided by Federal or State entities other than the Medicaid agency or by local agencies under the supervision of other State agencies, the plan must include a description of the staff designated by those other entities and the functions they perform in carrying out their responsibilities.
§ 431.12 Medical care advisory committee.
(a) Basis and purpose. This section, based on section 1902(a)(4) of the Act, prescribes State plan requirements for establishment of a committee to advise the Medicaid agency about health and medical care services.
(b) State plan requirement. A State plan must provide for a medical care advisory committee meeting the requirements of this section to advise the Medicaid agency director about health and medical care services.
(c) Appointment of members. The agency director, or a higher State authority, must appoint members to the advisory committee on a rotating and continuous basis.
(d) Committee membership. The committee must include –
(1) Board-certified physicians and other representatives of the health professions who are familiar with the medical needs of low-income population groups and with the resources available and required for their care;
(2) Members of consumers’ groups, including Medicaid beneficiaries, and consumer organizations such as labor unions, cooperatives, consumer-sponsored prepaid group practice plans, and others; and
(3) The director of the public welfare department or the public health department, whichever does not head the Medicaid agency.
(e) Committee participation. The committee must have opportunity for participation in policy development and program administration, including furthering the participation of beneficiary members in the agency program.
(f) Committee staff assistance and financial help. The agency must provide the committee with –
(1) Staff assistance from the agency and independent technical assistance as needed to enable it to make effective recommendations; and
(2) Financial arrangements, if necessary, to make possible the participation of beneficiary members.
(g) Federal financial participation. FFP is available at 50 percent in expenditures for the committee’s activities.
§ 431.15 Methods of administration.
A State plan must provide for methods of administration that are found by the Secretary to be necessary for the proper and efficient operation of the plan.
§ 431.16 Reports.
A State plan must provide that the Medicaid agency will –
(a) Submit all reports required by the Secretary;
(b) Follow the Secretary’s instructions with regard to the form and content of those reports; and
(c) Comply with any provisions that the Secretary finds necessary to verify and assure the correctness of the reports.
§ 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 retention period, and the conditions under which microfilm copies may be substituted for original records.
(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 –
(1) Individual records on each applicant and beneficiary that contain information on –
(i) Date of application;
(ii) Date of and basis for disposition;
(iii) Facts essential to determination of initial and continuing eligibility;
(iv) Provision of medical assistance;
(v) Basis for discontinuing assistance;
(vi) The disposition of income and eligibility verification information received under §§ 435.940 through 435.960 of this subchapter; and
(2) Statistical, fiscal, and other records necessary for reporting and accountability as required by the Secretary.
(c) Retention of records. The plan must provide that the records required under paragraph (b) of this section will be retained for the periods required by the Secretary.
(d) Conditions for optional use of microfilm copies. The agency may substitute certified microfilm copies for the originals of substantiating documents required for Federal audit and review, if the conditions in paragraphs (d)(1) through (4) of this section are met.
(1) The agency must make a study of its record storage and must show that the use of microfilm is efficient and economical.
(2) The microfilm system must not hinder the agency’s supervision and control of the Medicaid program.
(3) The microfilm system must –
(i) Enable the State to audit the propriety of expenditures for which FFP is claimed; and
(ii) Enable the HHS Audit Agency and CMS to properly discharge their respective responsibilities for reviewing the manner in which the Medicaid program is being administered.
(4) The agency must obtain approval from the CMS regional office indicating –
(i) The system meets the conditions of paragraphs (d)(2) and (3) of this section; and
(ii) The microfilming procedures are reliable and are supported by an adequate retrieval system.
§ 431.18 Availability of agency program manuals.
(a) Basis and purpose. This section, based on section 1902(a)(4) of the Act, prescribes State plan requirements for facilitating access to Medicaid rules and policies by individuals outside the State Medicaid agency.
(b) State plan requirements. A State plan must provide that the Medicaid agency meets the requirements of paragraphs (c) through (g) of this section.
(c) Availability in agency offices. (1) The agency must maintain, in all its offices, copies of its current rules and policies that affect the public, including those that govern eligibility, provision of medical assistance, covered services, and beneficiary rights and responsibilities.
(2) These documents must be available upon request for review, study, and reproduction by individuals during regular working hours of the agency.
(d) Availability through other entities. The agency must provide copies of its current rules and policies to –
(1) Public and university libraries;
(2) The local or district offices of the Bureau of Indian Affairs;
(3) Welfare and legal services offices; and
(4) Other entities that –
(i) Request the material in order to make it accessible to the public;
(ii) Are centrally located and accessible to a substantial number of the beneficiary population they serve; and
(iii) Agree to accept responsibility for filing all amendments or changes forwarded by the agency.
(e) Availability in relation to fair hearings. The agency must make available to an applicant or beneficiary, or his representative, a copy of the specific policy materials necessary –
(1) To determine whether to request a fair hearing; or
(2) To prepare for a fair hearing.
(f) Availability for other purposes. The agency must establish rules for making program policy materials available to individuals who request them for other purposes.
(g) Charges for reproduction. The agency must make copies of its program policy materials available without charge or at a charge related to the cost of reproduction.
§ 431.20 Advance directives.
(a) Basis and purpose. This section, based on section 1902(a) (57) and (58) of the Act, prescribes State plan requirements for the development and distribution of a written description of State law concerning advance directives.
(b) A State Plan must provide that the State, acting through a State agency, association, or other private nonprofit entity, develop a written description of the State law (whether statutory or as recognized by the courts of the State) concerning advance directives, as defined in § 489.100 of this chapter, to be distributed by Medicaid providers and health maintenance organizations (as specified in section 1903(m)(1)(A) of the Act) in accordance with the requirements under part 489, subpart I of this chapter. Revisions to the written descriptions as a result of changes in State law must be incorporated in such descriptions and distributed as soon as possible, but no later than 60 days from the effective date of the change in State law, to Medicaid providers and health maintenance organizations.
Subpart B – General Administrative Requirements
§ 431.40 Basis and scope.
(a) This subpart sets forth State plan requirements and exceptions that pertain to the following administrative requirements and provisions of the Act:
(1) Statewideness – section 1902(a)(1);
(2) Proper and efficient administration – section 1902(a)(4);
(3) Comparability of services – section 1902(a)(10) (B)-(E);
(4) Payment for services furnished outside the State – section 1902(a)(16);
(5) Free choice of providers – section 1902(a)(23);
(6) Special waiver provisions applicable to American Samoa and the Northern Mariana Islands – section 1902(j); and
(7) Exceptions to, and waiver of, State plan requirements – sections 1915 (a)-(c) and 1916 (a)(3) and (b)(3).
(b) Other applicable regulations include the following:
(1) Section 430.25 Waivers of State plan requirements.
(2) Section 440.250 Limits on comparability of services.
§ 431.50 Statewide operation.
(a) Statutory basis. Section 1902(a)(1) of the Act requires a State plan to be in effect throughout the State, and section 1915 permits certain exceptions.
(b) State plan requirements. A State plan must provide that the following requirements are met:
(1) The plan will be in operation statewide through a system of local offices, under equitable standards for assistance and administration that are mandatory throughout the State.
(2) If administered by political subdivisions of the State, the plan will be mandatory on those subdivisions.
(3) The agency will ensure that the plan is continuously in operation in all local offices or agencies through –
(i) Methods for informing staff of State policies, standards, procedures, and instructions;
(ii) Systematic planned examination and evaluation of operations in local offices by regularly assigned State staff who make regular visits; and
(iii) Reports, controls, or other methods.
(c) Exceptions. (1) “Statewide operation” does not mean, for example, that every source of service must furnish the service State-wide. The requirement does not preclude the agency from contracting with a comprehensive health care organization (such as an HMO or a rural health clinic) that serves a specific area of the State, to furnish services to Medicaid beneficiaries who live in that area and chose to receive services from that HMO or rural health clinic. beneficiaries who live in other parts of the State may receive their services from other sources.
(2) Other allowable exceptions and waivers are set forth in §§ 431.54 and 431.55.
§ 431.51 Free choice of providers.
(a) Statutory basis. This section is based on sections 1902(a)(23), 1902(e)(2), and 1915(a) and (b) and 1932(a)(3) of the Act.
(1) Section 1902(a)(23) of the Act provides that beneficiaries may obtain services from any qualified Medicaid provider that undertakes to provide the services to them.
(2) Section 1915(a) of the Act provides that a State shall not be found out of compliance with section 1902(a)(23) solely because it imposes certain specified allowable restrictions on freedom of choice.
(3) Section 1915(b) of the Act authorizes waiver of the section 1902(a)(23) freedom of choice of providers requirement in certain specified circumstances, but not with respect to providers of family planning services.
(4) Section 1902(a)(23) of the Act provides that a beneficiary enrolled in a primary care case management system or Medicaid managed care organization (MCO) may not be denied freedom of choice of qualified providers of family planning services.
(5) Section 1902(e)(2) of the Act provides that an enrollee who, while completing a minimum enrollment period, is deemed eligible only for services furnished by or through the MCO or PCCM, may, as an exception to the deemed limitation, seek family planning services from any qualified provider.
(6) Section 1932(a) of the Act permits a State to restrict the freedom of choice required by section 1902(a)(23), under specified circumstances, for all services except family planning services.
(b) State plan requirements. A State plan, except the plan for Puerto Rico, the Virgin Islands, or Guam, must provide as follows:
(1) Except as provided under paragraph (c) of this section and part 438 of this chapter, a beneficiary may obtain Medicaid services from any institution, agency, pharmacy, person, or organization that is –
(i) Qualified to furnish the services; and
(ii) Willing to furnish them to that particular beneficiary.
(2) A beneficiary enrolled in a primary care case-management system, a Medicaid MCO, or other similar entity will not be restricted in freedom of choice of providers of family planning services.
(c) Exceptions. Paragraph (b) of this section does not prohibit the agency from –
(1) Establishing the fees it will pay providers for Medicaid services;
(2) Setting reasonable standards relating to the qualifications of providers; or
(3) Subject to paragraph (b)(2) of this section, restricting beneficiaries’ free choice of providers in accordance with one or more of the exceptions set forth in § 431.54, or under a waiver as provided in § 431.55; or
(4) Limiting the providers who are available to furnish targeted case management services defined in § 440.169 of this chapter to target groups that consist solely of individuals with developmental disabilities or with chronic mental illness. This limitation may only be permitted so that the providers of case management services for eligible individuals with developmental disabilities or with chronic mental illness are capable of ensuring that those individuals receive needed services.
(d) Certification requirement – (1) Content of certification. If a State implements a project under one of the exceptions allowed under § 431.54 (d), (e) or (f), it must certify to CMS that the statutory safeguards and requirements for an exception under section 1915(a) of the Act are met.
(2) Timing of certification. (i) For an exception under § 431.54(d), the State may not institute the project until after it has submitted the certification and CMS has made the findings required under the Act, and so notified the State.
(ii) For exceptions under § 431.54 (e) or (f), the State must submit the certificate by the end of the quarter in which it implements the project.
§ 431.52 Payments for services furnished out of State.
(a) Statutory basis. Section 1902(a)(16) of the Act authorizes the Secretary to prescribe State plan requirements for furnishing Medicaid to State residents who are absent from the State.
(b) Payment for services. A State plan must provide that the State will pay for services furnished in another State to the same extent that it would pay for services furnished within its boundaries if the services are furnished to a beneficiary who is a resident of the State, and any of the following conditions is met:
(1) Medical services are needed because of a medical emergency;
(2) Medical services are needed and the beneficiary’s health would be endangered if he were required to travel to his State of residence;
(3) The State determines, on the basis of medical advice, that the needed medical services, or necessary supplementary resources, are more readily available in the other State;
(4) It is general practice for beneficiaries in a particular locality to use medical resources in another State.
(c) Cooperation among States. The plan must provide that the State will establish procedures to facilitate the furnishing of medical services to individuals who are present in the State and are eligible for Medicaid under another State’s plan.
§ 431.53 Assurance of transportation.
A State plan must –
(a) Specify that the Medicaid agency will ensure necessary transportation for beneficiaries to and from providers; and
(b) Describe the methods that the agency will use to meet this requirement.
§ 431.54 Exceptions to certain State plan requirements.
(a) Statutory basis – (1) Section 1915(a) of the Act provides that a State shall not be deemed to be out of compliance with the requirements of sections 1902(a)(1), (10), or (23) of the Act solely because it has elected any of the exceptions set forth in paragraphs (b) and (d) through (f) of this section.
(2) Section 1915(g) of the Act provides that a State may provide, as medical assistance, targeted case management services under the plan without regard to the requirements of sections 1902(a)(1) and 1902(a)(10)(B) of the Act.
(3) Section 1915(i) of the Act provides that a State may provide, as medical assistance, home and community-based services under an approved State plan amendment that meets certain requirements, without regard to the requirements of sections 1902(a)(10)(B) and 1902(a)(10)(C)(i)(III) of the Act, with respect to such services.
(b) Additional services under a prepayment system. If the Medicaid agency contracts on a prepayment basis with an organization that provides services additional to those offered under the State plan, the agency may restrict the provision of the additional services to beneficiaries who live in the area served by the organization and wish to obtain services from it.
(c) [Reserved]
(d) Special procedures for purchase of medical devices and laboratory and X-ray tests. The Medicaid agency may establish special procedures for the purchase of medical devices or laboratory and X-ray tests (as defined in § 440.30 of this chapter) through a competitive bidding process or otherwise, if the State assures, in the certification required under § 431.51(d), and CMS finds, as follows:
(1) Adequate services or devices are available to beneficiaries under the special procedures.
(2) Laboratory services are furnished through laboratories that meet the following requirements:
(i) They are independent laboratories, or inpatient or outpatient hospital laboratories that provide services for individuals who are not hospital patients, or physician laboratories that process at least 100 specimens for other physicians during any calendar year.
(ii) They meet the requirements of subpart M of part 405 or part 482 of this chapter.
(iii) Laboratories that require an interstate license under 42 CFR part 74 are licensed by CMS or receive an exemption from the licensing requirement by the College of American Pathologists. (Hospital and physician laboratories may participate in competitive bidding only with regard to services to non-hospital patients and other physicians’ patients, respectively.)
(3) Any laboratory from which a State purchases services under this section has no more than 75 percent of its charges based on services to Medicare beneficiaries and Medicaid beneficiaries.
(e) Lock-in of beneficiaries who over-utilize Medicaid services. If a Medicaid agency finds that a beneficiary has utilized Medicaid services at a frequency or amount that is not medically necessary, as determined in accordance with utilization guidelines established by the State, the agency may restrict that beneficiary for a reasonable period of time to obtain Medicaid services from designated providers only. The agency may impose these restrictions only if the following conditions are met:
(1) The agency gives the beneficiary notice and opportunity for a hearing (in accordance with procedures established by the agency) before imposing the restrictions.
(2) The agency ensures that the beneficiary has reasonable access (taking into account geographic location and reasonable travel time) to Medicaid services of adequate quality.
(3) The restrictions do not apply to emergency services furnished to the beneficiary.
(f) Lock-out of providers. If a Medicaid agency finds that a Medicaid provider has abused the Medicaid program, the agency may restrict the provider, through suspension or otherwise, from participating in the program for a reasonable period of time.
Before imposing any restriction, the agency must meet the following conditions:
(1) Give the provider notice and opportunity for a hearing, in accordance with procedures established by the agency.
(2) Find that in a significant number or proportion of cases, the provider has:
(i) Furnished Medicaid services at a frequency or amount not medically necessary, as determined in accordance with utilization guidelines established by the agency; or
(ii) Furnished Medicaid services of a quality that does not meet professionally recognized standards of health care.
(3) Notify CMS and the general public of the restriction and its duration.
(4) Ensure that the restrictions do not result in denying beneficiaries reasonable access (taking into account geographic location: and reasonable travel time) to Medicaid services of adequate quality, including emergency services.
(g) Targeted case management services. The requirements of § 431.50(b) relating to the statewide operation of a State plan and § 440.240 of this chapter related to comparability of services do not apply with respect to targeted case management services defined in § 440.169 of this chapter.
(h) State plan home and community-based services. The requirements of § 440.240 of this chapter related to comparability of services do not apply with respect to State plan home and community-based services defined in § 440.182 of this chapter.
§ 431.55 Waiver of other Medicaid requirements.
(a) Statutory basis. Section 1915(b) of the Act authorizes the Secretary to waive most requirements of section 1902 of the Act to the extent he or she finds proposed improvements or specified practices in the provision of services under Medicaid to be cost effective, efficient, and consistent with the objectives of the Medicaid program. Sections 1915 (f) and (h) prescribe how such waivers are to be approved, continued, monitored, and terminated. Section 1902(p)(2) of the Act conditions FFP in payments to an entity under a section 1915(b)(1) waiver on the State’s provision for exclusion of certain entities from participation.
(b) General requirements. (1) General requirements for submittal of waiver requests, and the procedures that CMS follows for review and action on those requests are set forth in § 430.25 of this chapter.
(2) In applying for a waiver to implement an approvable project under paragraph (c), (d), (e), or (f) of this section, a Medicaid agency must document in the waiver request and maintain data regarding:
(i) The cost-effectiveness of the project;
(ii) The effect of the project on the accessibility and quality of services;
(iii) The anticipated impact of the project on the State’s Medicaid program and;
(iv) Assurances that the restrictions on free choice of providers do not apply to family planning services.
(3) No waiver under this section may be granted for a period longer than 2 years, unless the agency requests a continuation of the waiver.
(4) CMS monitors the implementation of waivers granted under this section to ensure that requirements for such waivers are being met.
(i) If monitoring demonstrates that the agency is not in compliance with the requirements for a waiver under this section, CMS gives the agency notice and opportunity for a hearing.
(ii) If, after a hearing, CMS finds an agency to be out of compliance with the requirements of a waiver, CMS terminates the waiver and gives the agency a specified date by which it must demonstrate that it meets the applicable requirements of section 1902 of the Act.
(5) The requirements of section 1902(s) of the Act, with regard to adjustments in payments for inpatient hospital services furnished to infants who have not attained age 1 and to children who have not attained age 6 and who receive these services in disproportionate share hospitals, may not be waived under a section 1915(b) waiver.
(c) Case-management system. (1) Waivers of appropriate requirements of section 1902 of the Act may be authorized for a State to implement a primary care case-management system or specialty physician services system.
(i) Under a primary care case-management system the agency assures that a specific person or persons or agency will be responsible for locating, coordinating, and monitoring all primary care or primary care and other medical care and rehabilitative services on behalf of a beneficiary. The person or agency must comply with the requirements set forth in part 438 of this chapter for primary care case management contracts and systems.
(ii) A specialty physician services system allows States to restrict beneficiaries of specialty services to designated providers of such services, even in the absence of a primary care case-management system.
(2) A waiver under this paragraph (c) may not be approved unless the State’s request assures that the restrictions –
(i) Do not apply in emergency situations; and
(ii) Do not substantially impair access to medically necessary services of adequate quality.
(d) Locality as central broker. Waivers of appropriate requirements of section 1902 of the Act may be authorized for a State to allow a locality to act as a central broker to assist beneficiaries in selecting among competing health care plans. States must ensure that access to medically necessary services of adequate quality is not substantially impaired.
(1) A locality is any defined jurisdiction, e.g., district, town, city, borough, county, parish, or State.
(2) A locality may use any agency or agent, public or private, profit or nonprofit, to act on its behalf in carrying out its central broker function.
(e) Sharing of cost savings. (1) Waivers of appropriate requirements of section 1902 of the Act may be authorized for a State to share with beneficiaries the cost savings resulting from the beneficiaries’ use of more cost-effective medical care.
(2) Sharing is through the provision of additional services, including –
(i) Services furnished by a plan selected by the beneficiary; and
(ii) Services expressly offered by the State as an inducement for beneficiaries to participate in a primary care case-management system, a competing health care plan or other system that furnishes health care services in a more cost-effective manner.
(f) Restriction of freedom of choice – (1) Waiver of appropriate requirements of section 1902 of the Act may be authorized for States to restrict beneficiaries to obtaining services from (or through) qualified providers or practitioners that meet, accept, and comply with the State reimbursement, quality and utilization standards specified in the State’s waiver request.
(2) An agency may qualify for a waiver under this paragraph (f) only if its applicable State standards are consistent with access, quality and efficient and economic provision of covered care and services and the restrictions it imposes –
(i) Do not apply to beneficiaries residing at a long-term care facility when a restriction is imposed unless the State arranges for reasonable and adequate beneficiary transfer.
(ii) Do not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services; and
(iii) Do not apply in emergency circumstances.
(3) Demonstrated effectiveness and efficiency refers to reducing costs or slowing the rate of cost increase and maximizing outputs or outcomes per unit of cost.
(4) The agency must make payments to providers furnishing services under a freedom of choice waiver under this paragraph (f) in accordance with the timely claims payment standards specified in § 447.45 of this chapter for health care practitioners participating in the Medicaid program.
(g) [Reserved]
(h) Waivers approved under section 1915(b)(1) of the Act – (1) Basic rules. (i) An agency must submit, as part of it’s waiver request, assurance that the entities described in paragraph (h)(2) of this section will be excluded from participation under an approved waiver.
(ii) FFP is available in payments to an entity that furnishes services under a section 1915(b)(1) waiver only if the agency excludes from participation any entity described in paragraph (h)(2) of this section.
(2) Entities that must be excluded. The agency must exclude an entity that meets any of the following conditions:
(i) Could be excluded under section 1128(b)(8) of the Act as being controlled by a sanctioned individual.
(ii) Has a substantial contractual relationship (direct or indirect) with an individual convicted of certain crimes, as described in section 1128(b)(8)(B) of the Act.
(iii) Employs or contracts directly or indirectly with one of the following:
(A) Any individual or entity that, under section 1128 or section 1128A of the Act, is precluded from furnishing health care, utilization review, medical social services, or administrative services.
(B) Any entity described in paragraph (h)(2)(i) of this section.
(3) Definitions. As used in this section, substantial contractual relationship means any contractual relationship that provides for one or more of the following services:
(i) The administration, management, or provision of medical services.
(ii) The establishment of policies, or the provision of operational support, for the administration, management, or provision of medical services.
§ 431.56 Special waiver provisions applicable to American Samoa and the Northern Mariana Islands.
(a) Statutory basis. Section 1902(j) of the Act provides for waiver of all but three of the title XIX requirements, in the case of American Samoa and the Northern Mariana Islands.
(b) Waiver provisions. American Samoa or the Northern Mariana Islands may request, and CMS may approve, a waiver of any of the title XIX requirements except the following:
(1) The Federal medical assistance percentage specified in section 1903 of the Act and § 433.10(b) of this chapter.
(2) The limit imposed by section 1108(c) of the Act on the amount of Federal funds payable to American Samoa or the Northern Mariana Islands for care and services that meet the section 1905(a) definition for Medicaid assistance.
(3) The requirement that payment be made only with respect to expenditure made by American Samoa or the Northern Mariana Islands for care and services that meet the section 1905(a) definition of medical assistance.
§ 431.60 Beneficiary access to and exchange of data.
(a) Application Programming Interface to support Medicaid beneficiaries. A State must implement and maintain a standards-based Application Programming Interface (API) that permits third-party applications to retrieve, with the approval and at the direction of a current beneficiary or the beneficiary’s personal representative, data specified in paragraph (b) of this section through the use of common technologies and without special effort from the beneficiary.
(b) Accessible content. A State must make the following information accessible to its current beneficiaries or the beneficiary’s personal representative through the API described in paragraph (a) of this section:
(1) Data concerning adjudicated claims, including claims data for payment decisions that may be appealed, were appealed, or are in the process of appeal, and provider remittances and beneficiary cost-sharing pertaining to such claims, no later than one (1) business day after a claim is processed;
(2) Encounter data no later than one (1) business day after receiving the data from providers, other than MCOs, PIHPs, and PAHPs, compensated on the basis of capitation payments;
(3) Clinical data, including laboratory results, if the State maintains any such data, no later than one (1) business day after the data is received by the State; and
(4) Information about covered outpatient drugs and updates to such information, including, where applicable, preferred drug list information, no later than one (1) business day after the effective date of any such information or updates to such information.
(c) Technical requirements. A State implementing an API under paragraph (a) of this section:
(1) Must implement, maintain, and use API technology conformant with 45 CFR 170.215;
(2) Must conduct routine testing and monitoring, and update as appropriate, to ensure the API functions properly, including assessments to verify that the API is fully and successfully implementing privacy and security features such as, but not limited to, those required to comply with HIPAA privacy and security requirements in 45 CFR parts 160 and 164, 42 CFR parts 2 and 3, and other applicable law protecting the privacy and security of individually identifiable data;
(3) Must comply with the content and vocabulary standards requirements in paragraphs (c)(3)(i) and (ii) of this section, as applicable to the data type or data element, unless alternate standards are required by other applicable law:
(i) Content and vocabulary standards at 45 CFR 170.213 where such standards are applicable to the data type or element, as appropriate; and
(ii) Content and vocabulary standards at 45 CFR part 162 and § 423.160 of this chapter where required by law, or where such standards are applicable to the data type or element, as appropriate.
(4) May use an updated version of any standard or all standards required under paragraph (c)(1) or (3) of this section, where:
(i) Use of the updated version of the standard is required by other applicable law, or
(ii) Use of the updated version of the standard is not prohibited under other applicable law, provided that:
(A) For content and vocabulary standards other than those at 45 CFR 170.213, the Secretary has not prohibited use of the updated version of a standard for purposes of this section or 45 CFR part 170;
(B) For standards at 45 CFR 170.213 and 45 CFR 170.215, the National Coordinator has approved the updated version for use in the ONC Health IT Certification Program; and
(C) Use of the updated version of a standard does not disrupt an end user’s ability to access the data described in paragraph (b) of this section through the API described in paragraph (a) of this section.
(d) Documentation requirements for APIs. For each API implemented in accordance with paragraph (a) of this section, a State must make publicly accessible, by posting directly on its website or via publicly accessible hyperlink(s), complete accompanying documentation that contains, at a minimum the information listed in this paragraph. For the purposes of this section, “publicly accessible” means that any person using commonly available technology to browse the internet could access the information without any preconditions or additional steps, such as a fee for access to the documentation; a requirement to receive a copy of the material via email; a requirement to register or create an account to receive the documentation; or a requirement to read promotional material or agree to receive future communications from the organization making the documentation available;
(1) API syntax, function names, required and optional parameters supported and their data types, return variables and their types/structures, exceptions and exception handling methods and their returns;
(2) The software components and configurations an application must use in order to successfully interact with the API and process its response(s); and
(3) All applicable technical requirements and attributes necessary for an application to be registered with any authorization server(s) deployed in conjunction with the API.
(e) Denial or discontinuation of access to the API. A State may deny or discontinue any third-party application’s connection to the API required under paragraph (a) of this section if the State:
(1) Reasonably determines, consistent with its security risk analysis under 45 CFR part 164 subpart C, that allowing an application to connect or remain connected to the API would present an unacceptable level of risk to the security of protected health information on the State’s systems; and
(2) Makes this determination using objective, verifiable criteria that are applied fairly and consistently across all applications and developers through which beneficiaries seek to access their electronic health information as defined at 45 CFR 171.102, including but not limited to criteria that may rely on automated monitoring and risk mitigation tools.
(f) Beneficiary resources regarding privacy and security. The State must provide in an easily accessible location on its public website and through other appropriate mechanisms through which it ordinarily communicates with current and former beneficiaries seeking to access their health information held by the State Medicaid agency, educational resources in non-technical, simple and easy-to-understand language explaining at a minimum:
(1) General information on steps the individual may consider taking to help protect the privacy and security of their health information, including factors to consider in selecting an application including secondary uses of data, and the importance of understanding the security and privacy practices of any application to which they will entrust their health information; and
(2) An overview of which types of organizations or individuals are and are not likely to be HIPAA covered entities, the oversight responsibilities of the Office for Civil Rights (OCR) and the Federal Trade Commission (FTC), and how to submit a complaint to:
(i) The HHS Office for Civil Rights (OCR); and
(ii) The Federal Trade Commission (FTC).
(g) Data availability. (1) The State must comply with the requirements in paragraph (a) through (f) of this section beginning January 1, 2021 with regard to data:
(i) With a date of service on or after January 1, 2016; and
(ii) That are maintained by the State.
(2) [Reserved]
§ 431.70 Access to published provider directory information.
(a) The State must implement and maintain a publicly accessible, standards-based Application Programming Interface (API) that is conformant with the technical requirements at § 431.60(c), excluding the security protocols related to user authentication and authorization and any other protocols that restrict the availability of this information to particular persons or organizations, the documentation requirements at § 431.60(d), and is accessible via a public-facing digital endpoint on the State’s website.
(b) The API must provide a complete and accurate directory of –
(1) The State’s provider directory information specified in section 1902(a)(83) of the Act, updated no later than 30 calendar days after the State receives provider directory information or updates to provider directory information.
(2) [Reserved]
(c) This section is applicable beginning January 1, 2021.
Subpart C – Administrative Requirements: Provider Relations
§ 431.105 Consultation to medical facilities.
(a) Basis and purpose. This section implements section 1902(a)(24) of the Act, which requires that the State plan provide for consultative services by State agencies to certain institutions furnishing Medicaid services.
(b) State plan requirements. A State plan must provide that health agencies and other appropriate State agencies furnish consultative services to hospitals, nursing homes, home health agencies, clinics, and laboratories in order to assist these facilities to –
(1) Qualify for payments under the maternal and child health and crippled children’s program (title V of the Act), Medicaid or Medicare;
(2) Establish and maintain fiscal records necessary for the proper and efficient administration of the Act; and
(3) Provide information needed to determine payments due under the Act for services furnished to beneficiaries.
(c) State plan option: Consultation to other facilities. The plan may provide that health agencies and other appropriate State agencies furnish consultation to other types of facilities if those facilities are specified in the plan and provide medical care to individuals receiving services under the programs specified in paragraph (b) of this section.
§ 431.107 Required provider agreement.
(a) Basis and purpose. This section sets forth State plan requirements, based on sections 1902(a)(4), 1902(a)(27), 1902(a)(57), and 1902(a)(58) of the Act, that relate to the keeping of records and the furnishing of information by all providers of services (including individual practitioners and groups of practitioners).
(b) Agreements. A State plan must provide for an agreement between the Medicaid agency and each provider or organization furnishing services under the plan in which the provider or organization agrees to:
(1) Keep any records necessary to disclose the extent of services the provider furnishes to beneficiaries;
(2) On request, furnish to the Medicaid agency, the Secretary, or the State Medicaid fraud control unit (if such a unit has been approved by the Secretary under § 455.300 of this chapter), any information maintained under paragraph (b)(1) of this section and any information regarding payments claimed by the provider for furnishing services under the plan;
(3) Comply with the disclosure requirements specified in part 455, subpart B of this chapter; and
(4) Comply with the advance directives requirements for hospitals, nursing facilities, providers of home health care and personal care services, hospices, and HMOs specified in part 489, subpart I, and § 417.436(d) of this chapter.
(5)(i) Furnish to the State agency its National Provider Identifier (NPI) (if eligible for an NPI); and
(ii) Include its NPI on all claims submitted under the Medicaid program.
§ 431.108 Effective date of provider agreements.
(a) Applicability – (1) General rule. Except as provided in paragraph (a)(2) of this section, this section applies to Medicaid provider agreements with entities that, as a basis for participation in Medicaid –
(i) Are subject to survey and certification by CMS or the State survey agency; or
(ii) Are deemed to meet Federal requirements on the basis of accreditation by an accrediting organization whose program has CMS approval at the time of accreditation survey and accreditation decision.
(2) Exception. A Medicaid provider agreement with a laboratory is effective only while the laboratory has in effect a valid CLIA certificate issued under part 493 of this chapter, and only for the specialty and subspecialty tests it is authorized to perform.
(b) All requirements are met on the date of survey. The agreement is effective on the date the onsite survey (including the Life Safety Code survey if applicable) is completed, if on that date the provider meets –
(1) All applicable Federal requirements as set forth in this chapter; and
(2) Any other requirements imposed by the State for participation in the Medicaid program. (If the provider has a time-limited agreement, the new agreement is effective on the day following expiration of the current agreement.)
(c) All requirements are not met on the date of survey. If on the date the survey is completed the provider fails to meet any of the requirements specified in paragraph (b) of this section, the following rules apply:
(1) An NF provider agreement is effective on the date on which –
(i) The NF is found to be in substantial compliance as defined in § 488.301 of this chapter; and
(ii) CMS or the State survey agency receives from the NF, if applicable, an approvable waiver request.
(2) For an agreement with any other provider, the effective date is the earlier of the following:
(i) The date on which the provider meets all requirements.
(ii) The date on which a provider is found to meet all conditions of participation but has lower level deficiencies, and CMS or the State survey agency receives from the provider an acceptable plan of correction for the lower level deficiencies, or an approvable waiver request, or both. (The date of receipt is the effective date of the agreement, regardless of when CMS approves the plan of correction or waiver request, or both.)
(d) Accredited provider requests participation in the Medicaid program – (1) General rule. If a provider is currently accredited by a national accrediting organization whose program had CMS approval at the time of accreditation survey and accreditation decision, and on the basis of accreditation, CMS has deemed the provider to meet Federal requirements, the effective date depends on whether the provider is subject to requirements in addition to those included in the accrediting organization’s approved program.
(i) Provider subject to additional requirements. For a provider that is subject to additional requirements, Federal or State, or both, the effective date is the date on which the provider meets all requirements, including the additional requirements.
(ii) Provider not subject to additional requirements. For a provider that is not subject to additional requirements, the effective date is the date of the provider’s initial request for participation if on that date the provider met all Federal requirements.
(2) Special rule: Retroactive effective date. If the provider meets the requirements of paragraphs (d)(1) and (d)(1)(i) or (d)(1)(ii) of this section, the effective date may be retroactive for up to one year, to encompass dates on which the provider furnished, to a Medicaid beneficiary, covered services for which it has not been paid.
§ 431.110 Participation by Indian Health Service facilities.
(a) Basis. This section is based on section 1902(a)(4) of the Act, proper and efficient administration; 1902(a)(23), free choice of provider; and 1911, reimbursement of Indian Health Service facilities.
(b) State plan requirements. A State plan must provide that an Indian Health Service facility meeting State requirements for Medicaid participation must be accepted as a Medicaid provider on the same basis as any other qualified provider. However, when State licensure is normally required, the facility need not obtain a license but must meet all applicable standards for licensure. In determining whether a facility meets these standards, a Medicaid agency or State licensing authority may not take into account an absence of licensure of any staff member of the facility.
§ 431.115 Disclosure of survey information and provider or contractor evaluation.
(a) Basis and purpose. This section implements –
(1) Section 1902(a)(36) of the Act, which requires a State plan to provide that the State survey agency will make publicly available the findings from surveys of health care facilities, laboratories, agencies, clinics, or organizations; and
(2) Section 1106(d) of the Act, which places certain restrictions on the Medicaid agency’s disclosure of contractor and provider evaluations.
(b) Definition of State survey agency. The State survey agency referred to in this section means the agency specified under section 1902(a)(9) of the Act as responsible for establishing and maintaining health standards for private or public institutions in which Medicaid beneficiaries may receive services.
(c) State plan requirements. A State plan must provide that the requirements of this section and § 488.325 of this chapter are met.
(d) Disclosure procedure. The Medicaid agency must have a procedure for disclosing pertinent findings obtained from surveys made by the State survey agency to determine if a health care facility, laboratory, agency, clinic or health care organization meets the requirements for participation in the Medicaid program.
(e) Documents subject to disclosure. Documents subject to disclosure include –
(1) Survey reports, except for Joint Commission on the Accreditation of Hospitals reports prohibited from disclosure under § 422.426(b)(2) of this chapter;
(2) Official notifications of findings based on survey reports:
(3) Pertinent parts of written documents furnished by the health care provider to the survey agency that relate to the reports and findings; and
(4) Ownership and contract information as specified in § 455.104 of this subchapter.
(f) Availability for inspection and copy of statements listing deficiencies. The disclosure procedure must provide that the State survey agency will –
(1) Make statements of deficiencies based on the survey reports available for inspection and copying in both the public assistance office and the Social Security Administration district office serving the area where the provider is located; and
(2) Submit to the Regional Medicaid Director, through the Medicaid agency, a plan for making those findings available in other public assistance offices in standard metropolitian statistical areas where this information would be helpful to persons likely to use the health care provider’s services.
(g) When documents must be made available. The disclosure procedure must provide that the State survey agency will –
(1) Retain in the survey agency office and make available upon request survey reports and current and accurate ownership information; and
(2) Make available survey reports, findings, and deficiency statements immediately upon determining that a health care provider is eligible to begin or continue participation in the Medicaid program, or within 90 days after completion of the survey, whichever occurs first.
(h) Evaluation reports on providers and contractors. (1) If the Secretary sends the following reports to the Medicaid agency, the agency must meet the requirements of paragraphs (h) (2) and (3) of this section in releasing them:
(i) Individual contractor performance reviews and other formal performance evaluations of carriers, intermediaries, and State agencies, including the reports of followup reviews;
(ii) Comparative performance evaluations of those contractors, including comparisons of either overall performance or of any particular aspect of contractor operations; and
(iii) Program validation survey reports and other formal performance evaluations of providers, including the reports of followup reviews.
(2) The agency must not make the reports public until –
(i) The contractor or provider has had a reasonable opportunity, not to exceed 30 days, to comment on them; and
(ii) Those comments have been incorporated in the report.
(3) The agency must ensure that the reports contain no identification of individual patients, individual health care practitioners or other individuals.
§ 431.120 State requirements with respect to nursing facilities.
(a) State plan requirements. A State plan must –
(1) Provide that the requirements of subpart D of part 483 of this chapter are met; and
(2) Specify the procedures and rules that the State follows in carrying out the specified requirements, including review and approval of State-operated programs.
(3) To an NF or ICF/IID that is dissatisfied with a determination as to the effective date of its provider agreement.
(b) Basis and scope of requirements. The requirements set forth in part 483 of this chapter pertain to the following aspects of nursing facility services and are required by the indicated sections of the Act.
(1) Nurse aide training and competency programs, and evaluation of nurse aide competency (1919(e)(1) of the Act).
(2) Nurse aide registry (1919(e)(2) of the Act).
Subpart D – Appeals Process for NFs and ICFs/IID
§ 431.151 Scope and applicability.
(a) General rules. This subpart sets forth the appeals procedures that a State must make available as follows:
(1) To a nursing facility (NF) that is dissatisfied with a State’s finding of noncompliance that has resulted in one of the following adverse actions:
(i) Denial or termination of its provider agreement.
(ii) Imposition of a civil money penalty or other alternative remedy.
(2) To an intermediate care facility for Individuals with Intellectual Disabilities (ICF/IID) that is dissatisfied with a State’s finding of noncompliance that has resulted in the denial, termination, or nonrenewal of its provider agreement.
(3) To an NF or ICF/IID that is dissatisfied with a determination as to the effective date of its provider agreement.
(b) Special rules. This subpart also sets forth the special rules that apply in particular circumstances, the limitations on the grounds for appeal, and the scope of review during a hearing.
§ 431.152 State plan requirements.
The State plan must provide for appeals procedures that, as a minimum, satisfy the requirements of §§ 431.153 and 431.154.
§ 431.153 Evidentiary hearing.
(a) Right to hearing. Except as provided in paragraph (b) of this section, and subject to the provisions of paragraphs (c) through (j) of this section, the State must give the facility a full evidentiary hearing for any of the actions specified in § 431.151.
(b) Limit on grounds for appeal. The following are not subject to appeal:
(1) The choice of sanction or remedy.
(2) The State monitoring remedy.
(3) [Reserved]
(4) The level of noncompliance found by a State except when a favorable final administrative review decision would affect the range of civil money penalty amounts the State could collect.
(5) A State survey agency’s decision as to when to conduct an initial survey of a prospective provider.
(c) Notice of deficiencies and impending remedies. The State must give the facility a written notice that includes:
(1) The basis for the decision; and
(2) A statement of the deficiencies on which the decision was based.
(d) Request for hearing. The facility or its legal representative or other authorized official must file written request for hearing within 60 days of receipt of the notice of adverse action.
(e) Special rules: Denial, termination or nonrenewal of provider agreement – (1) Appeal by an ICF/IID. If an ICF/IID requests a hearing on denial, termination, or nonrenewal of its provider agreement –
(i) The evidentiary hearing must be completed either before, or within 120 days after, the effective date of the adverse action; and
(ii) If the hearing is made available only after the effective date of the action, the State must, before that date, offer the ICF/IID an informal reconsideration that meets the requirements of § 431.154.
(2) Appeal by an NF. If an NF requests a hearing on the denial or termination of its provider agreement, the request does not delay the adverse action and the hearing need not be completed before the effective date of the action.
(f) Special rules: Imposition of remedies. If a State imposes a civil money penalty or other remedies on an NF, the following rules apply:
(1) Basic rule. Except as provided in paragraph (f)(2) of this section (and notwithstanding any provision of State law), the State must impose all remedies timely on the NF, even if the NF requests a hearing.
(2) Exception. The State may not collect a civil money penalty until after the 60-day period for request of hearing has elapsed or, if the NF requests a hearing, until issuance of a final administrative decision that supports imposition of the penalty.
(g) Special rules: Dually participating facilities. If an NF is also participating or seeking to participate in Medicare as an SNF, and the basis for the State’s denial or termination of participation in Medicaid is also a basis for denial or termination of participation in Medicare, the State must advise the facility that –
(1) The appeals procedures specified for Medicare facilities in part 498 of this chapter apply; and
(2) A final decision entered under the Medicare appeals procedures is binding for both programs.
(h) Special rules: Adverse action by CMS. If CMS finds that an NF is not in substantial compliance and either terminates the NF’s Medicaid provider agreement or imposes alternative remedies on the NF (because CMS’s findings and proposed remedies prevail over those of the State in accordance with § 488.452 of this chapter), the NF is entitled only to the appeals procedures set forth in part 498 of this chapter, instead of the procedures specified in this subpart.
(i) Required elements of hearing. The hearing must include at least the following:
(1) Opportunity for the facility –
(i) To appear before an impartial decision-maker to refute the finding of noncompliance on which the adverse action was based;
(ii) To be represented by counsel or other representative; and
(iii) To be heard directly or through its representative, to call witnesses, and to present documentary evidence.
(2) A written decision by the impartial decision-maker, setting forth the reasons for the decision and the evidence on which the decision is based.
(j) Limits on scope of review: Civil money penalty cases. In civil money penalty cases –
(1) The State’s finding as to a NF’s level of noncompliance must be upheld unless it is clearly erroneous; and
(2) The scope of review is as set forth in § 488.438(e) of this chapter.
§ 431.154 Informal reconsideration for ICFs/IID.
The informal reconsideration must, at a minimum, include –
(a) Written notice to the facility of the denial, termination or nonrenewal and the findings upon which it was based;
(b) A reasonable opportunity for the facility to refute those findings in writing, and
(c) A written affirmation or reversal of the denial, termination, or nonrenewal.
Subpart E – Fair Hearings for Applicants and Beneficiaries
General Provisions
§ 431.200 Basis and scope.
This subpart –
(a) Implements section 1902(a)(3) of the Act, which requires that a State plan provide an opportunity for a fair hearing to any person whose claim for assistance is denied or not acted upon promptly;
(b) Prescribes procedures for an opportunity for a hearing if the State agency or non-emergency transportation PAHP (as defined in § 438.9(a) of this chapter) takes action, as stated in this subpart, to suspend, terminate, or reduce services, or of an adverse benefit determination by an MCO, PIHP or PAHP under subpart F of part 438 of this chapter; and
(c) Implements sections 1919(f)(3) and 1919(e)(7)(F) of the Act by providing an appeals process for any person who –
(1) Is subject to a proposed transfer or discharge from a nursing facility; or
(2) Is adversely affected by the pre-admission screening or the annual resident review that are required by section 1919(e)(7) of the Act.
(d) Implements section 1943(b)(3) of the Act and section 1413 of the Affordable Care Act to permit coordinated hearings and appeals among insurance affordability programs.
§ 431.201 Definitions.
For purposes of this subpart:
Action means a termination, suspension of, or reduction in covered benefits or services, or a termination, suspension of, or reduction in Medicaid eligibility or an increase in beneficiary liability, including a determination that a beneficiary must incur a greater amount of medical expenses in order to establish income eligibility in accordance with § 435.121(e)(4) or § 435.831 of this chapter or is subject to an increase in premiums or cost-sharing charges under subpart A of part 447 of this chapter. It also means a determination by a skilled nursing facility or nursing facility to transfer or discharge a resident and an adverse determination by a State with regard to the preadmission screening and resident review requirements of section 1919(e)(7) of the Act.
Adverse determination means a determination made in accordance with sections 1919(b)(3)(F) or 1919(e)(7)(B) of the Act that the individual does not require the level of services provided by a nursing facility or that the individual does or does not require specialized services.
Date of action means the intended date on which a termination, suspension, reduction, transfer or discharge becomes effective. It also means the date of the determination made by a State with regard to the preadmission screening and annual resident review requirements of section 1919(e)(7) of the Act.
De novo hearing means a hearing that starts over from the beginning.
Evidentiary hearing means a hearing conducted so that evidence may be presented.
Joint fair hearing request means a request for a Medicaid fair hearing which is included in an appeal request submitted to an Exchange or Exchange appeals entity under 45 CFR 155.520 or other insurance affordability program or appeals entity, in accordance with the signed agreement between the agency and an Exchange or Exchange appeals entity or other program or appeals entity described in § 435.1200(b)(3) of this chapter .
Local evidentiary hearing means a hearing held on the local or county level serving a specified portion of the State.
Notice means a written statement that meets the requirements of § 431.210.
Request for a hearing means a clear expression by the applicant or beneficiary, or his authorized representative, that he wants the opportunity to present his case to a reviewing authority.
Send means deliver by mail or in electronic format consistent with § 435.918 of this chapter.
Service authorization request means a managed care enrollee’s request for the provision of a service.
§ 431.202 State plan requirements.
A State plan must provide that the requirements of §§ 431.205 through 431.246 of this subpart are met.
§ 431.205 Provision of hearing system.
(a) The Medicaid agency must be responsible for maintaining a hearing system that meets the requirements of this subpart.
(b) The State’s hearing system must provide for –
(1) A hearing before –
(i) The Medicaid agency; or
(ii) For the denial of eligibility for individuals whose income eligibility is determined based on the applicable modified adjusted gross income standard described in§ 435.911(c) of this chapter, the Exchange or Exchange appeals entity to which authority to conduct fair hearings has been delegated under § 431.10(c)(1)(ii), provided that individuals who have requested a fair hearing are given the choice to have their fair hearing conducted instead by the Medicaid agency; at state option the Exchange or Exchange appeals entity decision may be subject to review by the Medicaid agency in accordance with § 431.10(c)(3)(iii); or
(2) An evidentiary hearing at the local level, with a right of appeal to the Medicaid agency.
(c) The agency may offer local hearings in some political subdivisions and not in others.
(d) The hearing system must meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254 (1970), and any additional standards specified in this subpart.
(e) The hearing system must be accessible to persons who are limited English proficient and persons who have disabilities, consistent with § 435.905(b) of this chapter.
(f) The hearing system must comply with the United States Constitution, the Social Security Act, title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, and section 1557 of the Affordable Care Act and implementing regulations.
§ 431.206 Informing applicants and beneficiaries.
(a) The agency must issue and publicize its hearing procedures.
(b) The agency must, at the time specified in paragraph (c) of this section, inform every applicant or beneficiary in writing –
(1) Of his or her right to a fair hearing and right to request an expedited fair hearing;
(2) Of the method by which he may obtain a hearing;
(3) That he may represent himself or use legal counsel, a relative, a friend, or other spokesman; and
(4) Of the time frames in which the agency must take final administrative action, in accordance with § 431.244(f).
(c) The agency must provide the information required in paragraph (b) of this section – (1) At the time that the individual applies for Medicaid;
(2) At the time the agency denies an individual’s claim for eligibility, benefits or services; or denies a request for exemption from mandatory enrollment in an Alternative Benefit Plan; or takes other action, as defined at § 431.201; or whenever a hearing is otherwise required in accordance with § 431.220(a);
(3) At the time a skilled nursing facility or a nursing facility notifies a resident in accordance with § 483.15 of this chapter that he or she is to be transferred or discharged; and
(4) At the time an individual receives an adverse determination by the State with regard to the preadmission screening and annual resident review requirements of section 1919(e)(7) of the Act.
(d) If, in accordance with § 431.10(c)(1)(ii), the agency has delegated authority to the Exchange or Exchange appeals entity to conduct the fair hearing, the agency must inform the individual in writing that –
(1) He or she has the right to have his or her hearing before the agency, instead of the Exchange or the Exchange appeals entity; and
(2) The method by which the individual may make such election;
(e) The information required under this subpart must be accessible to individuals who are limited English proficient and to individuals with disabilities, consistent with § 435.905(b) of this chapter, and may be provided in electronic format in accordance with § 435.918 of this chapter.
Notice
§ 431.210 Content of notice.
A notice required under § 431.206 (c)(2), (c)(3), or (c)(4) of this subpart must contain –
(a) A statement of what action the agency, skilled nursing facility, or nursing facility intends to take and the effective date of such action;
(b) A clear statement of the specific reasons supporting the intended action;
(c) The specific regulations that support, or the change in Federal or State law that requires, the action;
(d) An explanation of –
(1) The individual’s right to request a local evidentiary hearing if one is available, or a State agency hearing; or
(2) In cases of an action based on a change in law, the circumstances under which a hearing will be granted; and
(e) An explanation of the circumstances under which Medicaid is continued if a hearing is requested.
§ 431.211 Advance notice.
The State or local agency must send a notice at least 10 days before the date of action, except as permitted under §§ 431.213 and 431.214.
§ 431.213 Exceptions from advance notice.
The agency may send a notice not later than the date of action if –
(a) The agency has factual information confirming the death of a beneficiary;
(b) The agency receives a clear written statement signed by a beneficiary that –
(1) He no longer wishes services; or
(2) Gives information that requires termination or reduction of services and indicates that he understands that this must be the result of supplying that information;
(c) The beneficiary has been admitted to an institution where he is ineligible under the plan for further services;
(d) The beneficiary’s whereabouts are unknown and the post office returns agency mail directed to him indicating no forwarding address (See § 431.231 (d) of this subpart for procedure if the beneficiary’s whereabouts become known);
(e) The agency establishes the fact that the beneficiary has been accepted for Medicaid services by another local jurisdiction, State, territory, or commonwealth;
(f) A change in the level of medical care is prescribed by the beneficiary’s physician;
(g) The notice involves an adverse determination made with regard to the preadmission screening requirements of section 1919(e)(7) of the Act; or
(h) The date of action will occur in less than 10 days, in accordance with § 483.15(b)(4)(ii) and (b)(8), which provides exceptions to the 30 days notice requirements of § 483.15(b)(4)(i) of this chapter.
§ 431.214 Notice in cases of probable fraud.
The agency may shorten the period of advance notice to 5 days before the date of action if –
(a) The agency has facts indicating that action should be taken because of probable fraud by the beneficiary; and
(b) The facts have been verified, if possible, through secondary sources.
Right to Hearing
§ 431.220 When a hearing is required.
(a) The State agency must grant an opportunity for a hearing to the following:
(1) Any individual who requests it because he or she believes the agency has taken an action erroneously, denied his or her claim for eligibility or for covered benefits or services, or issued a determination of an individual’s liability, or has not acted upon the claim with reasonable promptness including, if applicable –
(i) An initial or subsequent decision regarding eligibility;
(ii) A determination of the amount of medical expenses that an individual must incur in order to establish eligibility in accordance with § 435.121(e)(4) or § 435.831 of this chapter; or
(iii) A determination of the amount of premiums and cost sharing charges under subpart A of part 447 of this chapter;
(iv) A change in the amount or type of benefits or services; or
(v) A request for exemption from mandatory enrollment in an Alternative Benefit Plan.
(2) Any resident who requests it because he or she believes a skilled nursing facility or nursing facility has erroneously determined that he or she must be transferred or discharged.
(3) Any individual who requests it because he or she believes the State has made an erroneous determination with regard to the preadmission and annual resident review requirements of section 1919(e)(7) of the Act.
(4) Any MCO, PIHP, or PAHP enrollee who is entitled to a hearing under subpart F of part 438 of this chapter.
(5) Any enrollee in a non-emergency medical transportation PAHP (as that term is defined in § 438.9 of this chapter) who has an action as stated in this subpart.
(6) Any enrollee who is entitled to a hearing under subpart B of part 438 of this chapter.
(b) The agency need not grant a hearing if the sole issue is a Federal or State law requiring an automatic change adversely affecting some or all beneficiaries.
§ 431.221 Request for hearing.
(a)(1) The agency must establish procedures that permit an individual, or an authorized representative as defined at § 435.923 of this chapter, to –
(i) Submit a hearing request via any of the modalities described in § 435.907(a) of this chapter, except that the requirement to establish procedures for submission of a fair hearing request described in § 435.907(a)(1), (2) and (5) of this chapter (relating to submissions via Internet Web site, telephone and other electronic means) is effective no later than the date described in § 435.1200(i) of this chapter; and
(ii) Include in a hearing request submitted under paragraph (a)(1)(i) of this section, a request for an expedited fair hearing.
(2) [Reserved]
(b) The agency may not limit or interfere with the applicant’s or beneficiary’s freedom to make a request for a hearing.
(c) The agency may assist the applicant or beneficiary in submitting and processing his request.
(d) The agency must allow the applicant or beneficiary a reasonable time, not to exceed 90 days from the date that notice of action is mailed, to request a hearings.
§ 431.222 Group hearings.
The agency –
(a) May respond to a series of individual requests for hearing by conducting a single group hearing;
(b) May consolidate hearings only in cases in which the sole issue involved is one of Federal or State law or policy;
(c) Must follow the policies of this subpart and its own policies governing hearings in all group hearings; and
(d) Must permit each person to present his own case or be represented by his authorized representative.
§ 431.223 Denial or dismissal of request for a hearing.
The agency may deny or dismiss a request for a hearing if –
(a) The applicant or beneficiary withdraws the request. The agency must accept withdrawal of a fair hearing request via any of the modalities available per § 431.221(a)(1)(i). For telephonic hearing withdrawals, the agency must record the individual’s statement and telephonic signature. For telephonic, online and other electronic withdrawals, the agency must send the affected individual written confirmation, via regular mail or electronic notification in accordance with the individual’s election under § 435.918(a) of this chapter.
(b) The applicant or beneficiary fails to appear at a scheduled hearing without good cause.
§ 431.224 Expedited appeals.
(a) General rule. (1) The agency must establish and maintain an expedited fair hearing process for individuals to request an expedited fair hearing, if the agency determines that the time otherwise permitted for a hearing under § 431.244(f)(1) could jeopardize the individual’s life, health or ability to attain, maintain, or regain maximum function.
(2) The agency must take final administrative action within the period of time permitted under § 431.244(f)(3) if the agency determines that the individual meets the criteria for an expedited fair hearing in paragraph (a)(1) of this section.
(b) Notice. The agency must notify the individual whether the request is granted or denied as expeditiously as possible. Such notice must be provided orally or through electronic means in accordance with § 435.918 of this chapter, if consistent with the individual’s election under such section; if oral notice is provided, the agency must follow up with written notice, which may be through electronic means if consistent with the individual’s election under § 435.918.
Procedures
§ 431.230 Maintaining services.
(a) If the agency sends the 10-day or 5-day notice as required under § 431.211 or § 431.214 of this subpart, and the beneficiary requests a hearing before the date of action, the agency may not terminate or reduce services until a decision is rendered after the hearing unless –
(1) It is determined at the hearing that the sole issue is one of Federal or State law or policy; and
(2) The agency promptly informs the beneficiary in writing that services are to be terminated or reduced pending the hearing decision.
(b) If the agency’s action is sustained by the hearing decision, the agency may institute recovery procedures against the applicant or beneficiary to recoup the cost of any services furnished the beneficiary, to the extent they were furnished solely by reason of this section.
§ 431.231 Reinstating services.
(a) The agency may reinstate services if a beneficiary requests a hearing not more than 10 days after the date of action.
(b) The reinstated services must continue until a hearing decision unless, at the hearing, it is determined that the sole issue is one of Federal or State law or policy.
(c) The agency must reinstate and continue services until a decision is rendered after a hearing if –
(1) Action is taken without the advance notice required under § 431.211 or § 431.214 of this subpart;
(2) The beneficiary requests a hearing within 10 days from the date that the individual receives the notice of action. The date on which the notice is received is considered to be 5 days after the date on the notice, unless the beneficiary shows that he or she did not receive the notice within the 5-day period; and
(3) The agency determines that the action resulted from other than the application of Federal or State law or policy.
(d) If a beneficiary’s whereabouts are unknown, as indicated by the return of unforwardable agency mail directed to him, any discontinued services must be reinstated if his whereabouts become known during the time he is eligible for services.
§ 431.232 Adverse decision of local evidentiary hearing.
If the decision of a local evidentiary hearing is adverse to the applicant or beneficiary, the agency must –
(a) Inform the applicant or beneficiary of the decision;
(b) Inform the applicant or beneficiary in writing that he or she has a right to appeal the decision to the State agency within 10 days after the individual receives the notice of the adverse decision. The date on which the notice is received is considered to be 5 days after the date on the notice, unless the individual shows that he or she did not receive the notice within the 5-day period; and
(c) Inform the applicant or beneficiary of his right to request that his appeal be a de novo hearing; and
(d) Discontinue services after the adverse decision.
§ 431.233 State agency hearing after adverse decision of local evidentiary hearing.
(a) Unless the applicant or beneficiary specifically requests a de novo hearing, the State agency hearing may consist of a review by the agency hearing officer of the record of the local evidentiary hearing to determine whether the decision of the local hearing officer was supported by substantial evidence in the record.
(b) A person who participates in the local decision being appealed may not participate in the State agency hearing decision.
§ 431.240 Conducting the hearing.
(a) All hearings must be conducted –
(1) At a reasonable time, date, and place;
(2) Only after adequate written notice of the hearing; and
(3) By one or more impartial officials or other individuals who have not been directly involved in the initial determination of the action in question.
(b) If the hearing involves medical issues such as those concerning a diagnosis, an examining physician’s report, or a medical review team’s decision, and if the hearing officer considers it necessary to have a medical assessment other than that of the individual involved in making the original decision, such a medical assessment must be obtained at agency expense and made part of the record.
(c) A hearing officer must have access to agency information necessary to issue a proper hearing decision, including information concerning State policies and regulations.
§ 431.241 Matters to be considered at the hearing.
The hearing must cover –
(a) Any matter described in § 431.220(a)(1) for which an individual requests a fair hearing.
(b) A decision by a skilled nursing facility or nursing facility to transfer or discharge a resident; and
(c) A State determination with regard to the preadmission screening and annual resident review requirements of section 1919(e)(7) of the Act.
]
§ 431.242 Procedural rights of the applicant or beneficiary.
The applicant or beneficiary, or his representative, must be given an opportunity to –
(a) Examine at a reasonable time before the date of the hearing and during the hearing:
(1) The content of the applicant’s or beneficiary’s case file and electronic account, as defined in § 435.4 of this chapter; and
(2) All documents and records to be used by the State or local agency or the skilled nursing facility or nursing facility at the hearing;
(b) Bring witnesses;
(c) Establish all pertinent facts and circumstances;
(d) Present an argument without undue interference; and
(e) Question or refute any testimony or evidence, including opportunity to confront and cross-examine adverse witnesses.
(f) Request an expedited fair hearing.
§ 431.243 Parties in cases involving an eligibility determination.
If the hearing involves an issue of eligibility and the Medicaid agency is not responsible for eligibility determinations, the agency that is responsible for determining eligibility must participate in the hearing.
§ 431.244 Hearing decisions.
(a) Hearing recommendations or decisions must be based exclusively on evidence introduced at the hearing.
(b) The record must consist only of –
(1) The transcript or recording of testimony and exhibits, or an official report containing the substance of what happened at the hearing;
(2) All papers and requests filed in the proceeding; and
(3) The recommendation or decision of the hearing officer.
(c) The applicant or beneficiary must have access to the record at a convenient place and time.
(d) In any evidentiary hearing, the decision must be a written one that –
(1) Summarizes the facts; and
(2) Identifies the regulations supporting the decision.
(e) In a de novo hearing, the decision must –
(1) Specify the reasons for the decision; and
(2) Identify the supporting evidence and regulations.
(f) The agency must take final administrative action as follows:
(1) Ordinarily, within 90 days from:
(i) The date the enrollee filed an MCO, PIHP, or PAHP appeal, not including the number of days the enrollee took to subsequently file for a State fair hearing; or
(ii) For all other fair hearings, the date the agency receives a request for a fair hearing in accordance with § 431.221(a)(1).
(2) As expeditiously as the enrollee’s health condition requires, but no later than 3 working days after the agency receives, from the MCO, PIHP, or PAHP, the case file and information for any appeal of a denial of a service that, as indicated by the MCO, PIHP, or PAHP –
(i) Meets the criteria for expedited resolution as set forth in § 438.410(a) of this chapter, but was not resolved within the timeframe for expedited resolution; or
(ii) Was resolved within the timeframe for expedited resolution, but reached a decision wholly or partially adverse to the enrollee.
(3) In the case of individuals granted an expedited fair hearing in accordance with § 431.224(a) –
(i) For a claim related to eligibility described in § 431.220(a)(1), or any claim described in § 431.220(a)(2) (relating to a nursing facility) or § 431.220(a)(3) (related to preadmission and annual resident review), as expeditiously as possible and, effective no later than the date described in § 435.1200(i) of this chapter, no later than 7 working days after the agency receives a request for expedited fair hearing; or
(ii) For a claim related to services or benefits described in § 431.220(a)(1) as expeditiously as possible and, effective no later than the date described in § 435.1200(i) of this chapter, within the time frame in paragraph (f)(2) of this section.
(iii) For a claim related to services or benefits described in § 431.220(a)(4), (5) or (6), in accordance with the time frame in paragraph (f)(2) of this section.
(4)(i) The agency must take final administrative action on a fair hearing request within the time limits set forth in this paragraph except in unusual circumstances when –
(A) The agency cannot reach a decision because the appellant requests a delay or fails to take a required action; or
(B) There is an administrative or other emergency beyond the agency’s control.
(ii) The agency must document the reasons for any delay in the appellant’s record.
(g) The public must have access to all agency hearing decisions, subject to the requirements of subpart F of this part for safeguarding of information.
§ 431.245 Notifying the applicant or beneficiary of a State agency decision.
The agency must notify the applicant or beneficiary in writing of –
(a) The decision; and
(b) His right to request a State agency hearing or seek judicial review, to the extent that either is available to him.
§ 431.246 Corrective action.
The agency must promptly make corrective payments, retroactive to the date an incorrect action was taken, and, if appropriate, provide for admission or readmission of an individual to a facility if –
(a) The hearing decision is favorable to the applicant or beneficiary; or
(b) The agency decides in the applicant’s or beneficiary’s favor before the hearing.
Federal Financial Participation
§ 431.250 Federal financial participation.
FFP is available in expenditures for –
(a) Payments for services continued pending a hearing decision;
(b) Payments made –
(1) To carry out hearing decisions; and
(2) For services provided within the scope of the Federal Medicaid program and made under a court order.
(c) Payments made to take corrective action prior to a hearing;
(d) Payments made to extend the benefit of a hearing decision or court order to individuals in the same situation as those directly affected by the decision or order;
(e) Retroactive payments under paragraphs (b), (c), and (d) of this section in accordance with applicable Federal policies on corrective payments; and
(f) Administrative costs incurred by the agency for –
(1) Transportation for the applicant or beneficiary, his representative, and witnesses to and from the hearing;
(2) Meeting other expenses of the applicant or beneficiary in connection with the hearing;
(3) Carrying out the hearing procedures, including expenses of obtaining the additional medical assessment specified in § 431.240 of this subpart; and
(4) Hearing procedures for Medicaid and non-Medicaid individuals appealing transfers, discharges and determinations of preadmission screening and annual resident reviews under part 483, subparts C and E of this chapter.
Subpart F – Safeguarding Information on Applicants and Beneficiaries
§ 431.300 Basis and purpose.
(a) Section 1902(a)(7) of the Act requires that a State plan must provide safeguards that restrict the use or disclosure of information concerning applicants and beneficiaries to purposes directly connected with the administration of the plan. This subpart specifies State plan requirements, the types of information to be safeguarded, the conditions for release of safeguarded information, and restrictions on the distribution of other information.
(b) For purposes of this subpart, information concerning an applicant or beneficiary includes information on a non-applicant, as defined in § 435.4 of this subchapter.
(c) Section 1137 of the Act, which requires agencies to exchange information to verify the income and eligibility of applicants and beneficiaries (see § 435.940 through § 435.965 of this subchapter), requires State agencies to have adequate safeguards to assure that –
(1) Information exchanged by the State agencies is made available only to the extent necessary to assist in the valid administrative needs of the program receiving the information, and information received under section 6103(l)(7) of the Internal Revenue Code is exchanged only with agencies authorized to receive that information under that section of the Code; and
(2) The information is adequately stored and processed so that it is protected against unauthorized disclosure for other purposes.
(d) Section 1943 of the Act and section 1413 of the Affordable Care Act.
§ 431.301 State plan requirements.
A State plan must provide, under a State statute that imposes legal sanctions, safeguards meeting the requirements of this subpart that restrict the use or disclosure of information concerning applicants and beneficiaries to purposes directly connected with the administration of the plan.
Purposes directly related to plan administration include –
(a) Establishing eligibility;
(b) Determining the amount of medical assistance;
(c) Providing services for beneficiaries; and
(d) Conducting or assisting an investigation, prosecution, or civil or criminal proceeding related to the administration of the plan.
The Medicaid agency must have authority to implement and enforce the provisions specified in this subpart for safeguarding information about applicants and beneficiaries.
§ 431.304 Publicizing safeguarding requirements.
(a) The agency must publicize provisions governing the confidential nature of information about applicants and beneficiaries, including the legal sanctions imposed for improper disclosure and use.
(b) The agency must provide copies of these provisions to applicants and beneficiaries and to other persons and agencies to whom information is disclosed.
§ 431.305 Types of information to be safeguarded.
(a) The agency must have criteria that govern the types of information about applicants and beneficiaries that are safeguarded.
(b) This information must include at least –
(1) Names and addresses;
(2) Medical services provided;
(3) Social and economic conditions or circumstances;
(4) Agency evaluation of personal information;
(5) Medical data, including diagnosis and past history of disease or disability; and
(6) Any information received for verifying income eligibility and amount of medical assistance payments (see § 435.940 through § 435.965 of this subchapter). Income information received from SSA or the Internal Revenue Service must be safeguarded according to the requirements of the agency that furnished the data, including section 6103 of the Internal Revenue Code, as applicable.
(7) Any information received in connection with the identification of legally liable third party resources under § 433.138 of this chapter.
(8) Social Security Numbers.
§ 431.306 Release of information.
(a) The agency must have criteria specifying the conditions for release and use of information about applicants and beneficiaries.
(b) Access to information concerning applicants or beneficiaries must be restricted to persons or agency representatives who are subject to standards of confidentiality that are comparable to those of the agency.
(c) The agency must not publish names of applicants or beneficiaries.
(d) The agency must obtain permission from a family or individual, whenever possible, before responding to a request for information from an outside source, unless the information is to be used to verify income, eligibility and the amount of medical assistance payment under section 1137 of this Act and §§ 435.940 through 435.965 of this chapter.
(e) The agency’s policies must apply to all requests for information from outside sources, including governmental bodies, the courts, or law enforcement officials.
(f) If a court issues a subpoena for a case record or for any agency representative to testify concerning an applicant or beneficiary, the agency must inform the court of the applicable statutory provisions, policies, and regulations restricting disclosure of information.
(g) Before requesting information from, or releasing information to, other agencies to verify income, eligibility and the amount of assistance under § 435.940 through § 435.965 of this subchapter, the agency must execute data exchange agreements with those agencies, as specified in § 435.945(i) of this subchapter.
(h) Before requesting information from, or releasing information to, other agencies to identify legally liable third party resources under § 433.138(d) of this chapter, the agency must execute data exchanges agreements, as specified in § 433.138(h)(2) of this chapter.
§ 431.307 Distribution of information materials.
(a) All materials distributed to applicants, beneficiaries, or medical providers must –
(1) Directly relate to the administration of the Medicaid program;
(2) Have no political implications except to the extent required to implement the National Voter Registration Act of 1993 (NVRA) Pub. L. 103-931; for States that are exempt from the requirements of NVRA, voter registration may be a voluntary activity so long as the provisions of section 7(a)(5) of NVRA are observed;
(3) Contain the names only of individuals directly connected with the administration of the plan; and
(4) Identify those individuals only in their official capacity with the State or local agency.
(b) The agency must not distribute materials such as “holiday” greetings, general public announcements, partisan voting information and alien registration notices.
(c) The agency may distribute materials directly related to the health and welfare of applicants and beneficiaries, such as announcements of free medical examinations, availability of surplus food, and consumer protection information.
(d) Under NVRA, the agency must distribute voter information and registration materials as specified in NVRA.
Subpart G – Section 1115 Demonstrations
§ 431.400 Basis and purpose.
(a) Basis. This subpart implements provisions in section 1115(d) of the Act, which requires all of the following:
(1) The establishment of application requirements for Medicaid and CHIP demonstration projects that provide for:
(i) A process for public notice and comment at the State level, including public hearings, sufficient to ensure a meaningful level of public input and that does not impose requirements that are in addition to, or duplicative of, requirements imposed under the Administrative Procedure Act, or requirements that are unreasonable or unnecessarily burdensome with respect to State compliance.
(ii) Requirements relating to all of the following:
(A) The goals of the program to be implemented or renewed under the demonstration project.
(B) Expected State and Federal costs and coverage projections of the State demonstration project.
(C) Specific plans of the State to ensure the demonstration project will be in compliance with titles XIX or XXI of the Act.
(2) A process for public notice and comment after a demonstration application is received by the Secretary that is sufficient to ensure a meaningful level of public input.
(3) A process for the submission of reports to the Secretary by a State relating to the implementation of a demonstration project.
(4) Periodic evaluation of demonstration projects by the Secretary.
(b) Purpose. This subpart sets forth a process for application and review of Medicaid and CHIP demonstration projects that provides for transparency and public participation.
§ 431.404 Definitions.
For the purposes of this subpart:
Demonstration means any experimental, pilot, or demonstration project which the Secretary approves under the authority of section 1115 of the Act because, in the judgment of the Secretary, it is likely to assist in promoting the statutory objectives of the Medicaid or CHIP program.
Indian Health Program means a program as defined at section 4(12) of the Indian Health Care Improvement Act, (Pub. L. 94-437).
Public notice means a notice issued by a government agency or legislative body that contains sufficient detail to notify the public at large of a proposed action, consistent with the provisions of § 431.408 of this subpart.
§ 431.408 State public notice process.
(a) General. A State must provide at least a 30-day public notice and comment period regarding applications for a demonstration project, or an extension of an existing demonstration project that the State intends to submit to CMS for review and consideration.
(1) Public notice and comment period. Prior to submitting an application to CMS for a new demonstration project or an extension of a previously approved demonstration project, the State must provide at least a 30-day public notice and comment period, and the public notice shall include all of the following information:
(i) A comprehensive description of the demonstration application or extension to be submitted to CMS that contains a sufficient level of detail to ensure meaningful input from the public, including:
(A) The program description, goals, and objectives to be implemented or extended under the demonstration project, including a description of the current or new beneficiaries who will be impacted by the demonstration.
(B) To the extent applicable, the proposed health care delivery system and the eligibility requirements, benefit coverage and cost sharing (premiums, co-payments, and deductibles) required of individuals that will be impacted by the demonstration, and how such provisions vary from the State’s current program features.
(C) An estimate of the expected increase or decrease in annual enrollment, and in annual aggregate expenditures, including historic enrollment or budgetary data, if applicable. This includes a financial analysis of any changes to the demonstration requested by the State in its extension request.
(D) The hypothesis and evaluation parameters of the demonstration.
(E) The specific waiver and expenditure authorities that the State believes to be necessary to authorize the demonstration.
(ii) The locations and Internet address where copies of the demonstration application are available for public review and comment.
(iii) Postal and Internet email addresses where written comments may be sent and reviewed by the public, and the minimum 30-day time period in which comments will be accepted.
(iv) The location, date, and time of at least two public hearings convened by the State to seek public input on the demonstration application.
(2) Statement of public notice and public input procedures. (i) The State shall publish its public notice process, public input process, planned hearings, the demonstration application(s), and a link to the relevant Medicaid demonstration page(s) on the CMS Web site in a prominent location on either the main page of the public Web site of the State agency responsible for making applications for demonstrations or on a demonstration-specific Web page that is linked in a readily identifiable way to the main page of the State agency’s Web site. The State must maintain and keep current the public Web site throughout the entire public comment and review process.
(ii) The State shall also publish an abbreviated public notice which must include a summary description of the demonstration, the location and times of the two or more public hearings, and an active link to the full public notice document on the State’s Web site in the State’s administrative record in accordance with the State’s Administrative Procedure Act, provided that such notice is provided at least 30 days prior to the submission of the demonstration application to CMS or in the newspapers of widest circulation in each city with a population of 100,000, or more, provided that such notice is provided at least 30 days prior to the submission of the demonstration application to CMS, or both.
(iii) The State must also utilize additional mechanisms, such as an electronic mailing list, to notify interested parties of the demonstration application(s).
(3) Public hearings. At least 20 days prior to submitting an application for a new demonstration project or extension of an existing demonstration project to CMS for review, the State must have conducted at least two public hearings, on separate dates and at separate locations, regarding the State’s demonstration application at which members of the public throughout the State have an opportunity to provide comments. The State must use telephonic and/or Web conference capabilities for at least one of the two required public hearings to ensure statewide accessibility to the public hearing unless it can document it has afforded the public throughout the State the opportunity to provide comment, such as holding the two public hearings in geographically distinct areas of the State. The State must use at least two of the following public forums:
(i) The Medical Care Advisory Committee that operates in accordance with § 431.12 of this subpart; or
(ii) A commission or other similar process, where meetings are open to members of the public; or
(iii) A State legislative process, which would afford an interested party the opportunity to learn about the contents of the demonstration application, and to comment on its contents; or
(iv) Any other similar process for public input that would afford an interested party the opportunity to learn about the contents of the demonstration application, and to comment on its contents.
(b) Tribal consultation and seeking advice from Indian health providers and urban Indian organizations. A State with Federally-recognized Indian tribes, Indian health programs, and/or urban Indian health organizations shall include a process to consult with the Indian tribes, and seek advice from Indian Health programs and urban Indian health organizations in the State, prior to submission of an application to CMS for a new demonstration project, or an extension of a previously approved demonstration project, that has or would have a direct effect on Indians, tribes, on Indian health programs, or on urban Indian health organizations.
(1) For initial applications and applications extending existing demonstration projects that have a direct effect on Indians, tribes, Indian health programs, and urban Indian health organizations in the State, the State must demonstrate that it has conducted consultation activities with tribes and sought advice from Indian health programs and urban Indian health organizations prior to submission of such application.
(2) Consultation with Federally-recognized Indian tribes and solicitation of advice from affected Indian health providers and urban Indian organizations must be conducted in accordance with the consultation process outlined in the July 17, 2001 letter or the State’s formal tribal consultation agreement or process and the process for seeking advice from Indian Health providers must be conducted as outlined in the State’s approved Medicaid State Plan.
(3) Documentation of the State’s consultation activities must be included in the demonstration application, which must describe the notification process, the entities involved in the consultation(s), the date(s) and location(s) of the consultation(s), issues raised, and the potential resolution for such issues.
§ 431.412 Application procedures.
(a) Initial demonstration application content. (1) Applications for initial approval of a demonstration will not be considered complete unless they comply with the public notice process set forth in § 431.408(a) of this subpart, and include the following:
(i) A comprehensive program description of the demonstration, including the goals and objectives to be implemented under the demonstration project.
(ii) A description of the proposed health care delivery system, eligibility requirements, benefit coverage and cost sharing (premiums, copayments, and deductibles) required of individuals who will be impacted by the demonstration to the extent such provisions would vary from the State’s current program features and the requirements of the Act.
(iii) An estimate of the expected increase or decrease in annual enrollment, and in annual aggregate expenditures, including historic enrollment or budgetary data, if applicable.
(iv) Current enrollment data, if applicable, and enrollment projections expected over the term of the demonstration for each category of beneficiary whose health care coverage is impacted by the demonstration.
(v) Other program features that the demonstration would modify in the State’s Medicaid and CHIP programs.
(vi) The specific waiver and expenditure authorities that the State believes to be necessary to authorize the demonstration.
(vii) The research hypotheses that are related to the demonstration’s proposed changes, goals, and objectives, a plan for testing the hypotheses in the context of an evaluation, and, if a quantitative evaluation design is feasible, the identification of appropriate evaluation indicators.
(viii) Written documentation of the State’s compliance with the public notice requirements set forth in § 431.408 of this subpart, with a report of the issues raised by the public during the comment period, which shall be no less than 30 days, and how the State considered those comments when developing the demonstration application.
(2) CMS may request, or the State may propose application modifications, as well as additional information to aid in the review of the application. If an application modification substantially changes the original demonstration design, CMS may, at its discretion, direct an additional 30-day public comment period.
(3) This section does not preclude a State from submitting to CMS a pre-application concept paper or from conferring with CMS about its intent to seek a demonstration prior to submitting a completed application.
(b) Demonstration application procedures. A State application for approval of a new demonstration project or an extension of an existing demonstration project must be submitted to CMS as both printed and electronic documents. Electronic documents must be submitted in a format that will be accessible to individuals with disabilities.
(1) Consistent with § 431.416(a) of this subpart, within 15 days of receipt of a complete application, CMS will send the State a written notice informing the State of receipt of the submitted application, the date in which the Secretary received the State’s demonstration application and the start date of the 30-day Federal public notice process set forth in § 431.416 of this subpart. The written notice –
(i) Is provided for purposes of initiating the Federal-level public comment period and does not preclude a determination that, based on further review, further information is required to supplement or support the application, or that the application cannot be approved because a required element is missing or insufficient.
(ii) Does not prevent a State from modifying its application or submitting any supplementary information it determines necessary to support CMS’ review of its application.
(2) Within 15 days of receipt of a demonstration application that CMS determines is incomplete, CMS will send the State a written notice of the elements missing from the application.
(3) CMS will publish on its Web site at regular intervals the status of all State submissions, including information received from the State while the State works with CMS to meet the demonstration application process set forth in this section.
(c) Demonstration extension request. A request to extend an existing demonstration under sections 1115(a), (e), and (f) of the Act will be considered only if it is submitted at least 12 months prior to the expiration date of the demonstration when requesting an extension under section 1115(e) of the Act or 6 months prior to the expiration date of the demonstration when requesting an extension under section 1115(a) or (f) of the Act, unless a longer time frame is specified in the Special Terms and Conditions for the original demonstration. An extension application, including an extension for the purpose of phasing out a demonstration, must be sent from the Governor of the State to the Secretary.
(1) Changes to existing demonstration. If an extension application includes substantial changes to the existing demonstration, CMS may, at its discretion, treat the application as an application for a new demonstration.
(2) Demonstration extension application. An application to extend an existing demonstration will be considered complete, for purposes of initiating the Federal-level public notice period, when the State provides the following:
(i) A historical narrative summary of the demonstration project, which includes the objectives set forth at the time the demonstration was approved, evidence of how these objectives have or have not been met, and the future goals of the program.
(ii) If changes are requested, a narrative of the changes being requested along with the objective of the change and the desired outcomes.
(iii) A list and programmatic description of the waivers and expenditure authorities that are being requested for the extension period, or a statement that the State is requesting the same waiver and expenditure authorities as those approved in the current demonstration.
(iv) Summaries of External Quality Review Organization (EQRO) reports, managed care organization (MCO) and State quality assurance monitoring, and any other documentation of the quality of and access to care provided under the demonstration, such as the CMS Form 416 EPSDT/CHIP report.
(v) Financial data demonstrating the State’s historical and projected expenditures for the requested period of the extension, as well as cumulatively over the lifetime of the demonstration. This includes a financial analysis of changes to the demonstration requested by the State.
(vi) An evaluation report of the demonstration, inclusive of evaluation activities and findings to date, plans for evaluation activities during the extension period, and if changes are requested, identification of research hypotheses related to the changes and an evaluation design for addressing the proposed revisions.
(vii) Documentation of the State’s compliance with the public notice process set forth in § 431.408 of this subpart, including the post-award public input process described in § 431.420(c) of this subpart, with a report of the issues raised by the public during the comment period and how the State considered the comments when developing the demonstration extension application.
(3) CMS may request, or the State may propose application modifications, as well as additional information to aid in the review of an application to extend a demonstration. If an application modification substantially changes the original demonstration design, CMS may, at its discretion, direct an additional 30-day public comment period.
(4) Upon application from the State, the Secretary may extend existing demonstration projects on a temporary basis for the period during which a successor demonstration is under review, without regard to the date when the application was submitted.
(d) Approvals. Approval of a new demonstration or a demonstration extension will generally be prospective only and Federal Financial Participation (FFP) will not be available for changes to the demonstration that have not been approved by CMS.
§ 431.416 Federal public notice and approval process.
(a) General. Within 15 days of receipt of a complete application from the State for a new demonstration project or an extension of a previously approved demonstration project, CMS will:
(1) Send the State a written notice informing the State of receipt of the demonstration application, the date in which the Secretary received the State’s demonstration application, the start dates of the 30-day Federal public notice process, and the end date of the 45-day minimum Federal decision-making period.
(2) Publish the written notice acknowledging receipt of the State’s completed application on its Web site within the same 15-day timeframe.
(b) Public comment period. Upon notifying a State of a completed application, CMS will solicit public comment regarding such demonstration application for 30 days by doing the following:
(1) Publishing the following on the CMS Web site:
(i) The written notice of CMS receipt of the State’s complete demonstration application.
(ii) Demonstration applications, including supporting information submitted by the State as part of the complete application, and associated concept papers, as applicable.
(iii) The proposed effective date of the demonstration.
(iv) Addresses to which inquiries and comments from the public may be directed to CMS by mail or email.
(2) Notifying interested parties through a mechanism, such an electronic mailing list, that CMS will create for this purpose.
(c) Public disclosure. CMS will publish on its Web site, at regular intervals, appropriate information, which may include, but is not limited to the following:
(1) Relevant status update(s);
(2) A listing of the issues raised through the public notice process.
(d) Publishing of comments. (1) CMS will publish written comments electronically through its Web site or an alternative Web site.
(2) CMS will review and consider all comments received by the deadline, but will not provide written responses to public comments. While comments may be submitted after the deadline, CMS cannot assure that these comments will be considered.
(e) Approval of a demonstration application. (1) CMS will not render a final decision on a demonstration application until at least 45 days after notice of receipt of a completed application, to receive and consider public comments.
(2) CMS may expedite this process under the exception to the normal public notice process provisions in § 431.416(g) of this subpart.
(f) Administrative record. (1) CMS will maintain, and publish on its public Web site, an administrative record that may include, but is not limited to the following:
(i) The demonstration application from the State.
(ii) The State’s disaster exemption request and CMS’ response, if applicable.
(iii) Written public comments sent to the CMS and any CMS responses.
(iv) If an application is approved, the final special terms and conditions, waivers, expenditure authorities, and award letter sent to the State.
(v) If an application is denied, the disapproval letter sent to the State.
(vi) The State acceptance letter, as applicable.
(vii) Specific requirements related to the approved and agreed upon terms and conditions, such as implementation reviews, evaluation design, quarterly progress reports, annual reports, and interim and/or final evaluation reports.
(viii) Notice of the demonstration’s suspension or termination, if applicable.
(2) To ensure that the public has access to all documentation related to the demonstration project, including the aforementioned items, we will also provide a link to the State’s public Web site.
(g) Exemption from the normal public notice process. (1) CMS may waive, in whole or in part, the Federal and State public notice procedures to expedite a decision on a proposed demonstration or demonstration extension request that addresses a natural disaster, public health emergency, or other sudden emergency threats to human lives.
(2) The Secretary may exempt a State from the normal public notice process or the required time constraints imposed in this section or § 431.408(a) of this subpart when the State demonstrates to CMS the existence of unforeseen circumstances resulting from a natural disaster, public health emergency, or other sudden emergency that directly threatens human lives that warrant an exception to the normal public notice process.
(i) The State is expected to discharge its basic responsibilities in submitting demonstration applications to the Secretary as required in § 431.412 of this subpart.
(ii) Such applications will be posted on the CMS Web site.
(3) A State must establish (or meet) all of the following criteria to obtain such an exemption from the normal public notice process requirements:
(i) The State acted in good faith, and in a diligent, timely, and prudent manner.
(ii) The circumstances constitute an emergency and could not have been reasonably foreseen.
(iii) Delay would undermine or compromise the purpose of the demonstration and be contrary to the interests of beneficiaries.
(4) CMS will publish on its Web site any disaster exemption determinations within 15 days of approval, as well as the revised timeline for public comment or post-award processes, if applicable.
§ 431.420 Monitoring and compliance.
(a) General. (1) Any provision of the Social Security Act that is not expressly waived by CMS in its approval of the demonstration project are not waived, and States may not stop compliance with any of these provisions not expressly waived. Waivers may be limited in scope to the extent necessary to achieve a particular purpose or to the extent of a particular regulatory requirement implementing the statutory provision.
(2) States must comply with the terms and conditions of the agreement between the Secretary and the State to implement a State demonstration project.
(b) Implementation reviews. (1) The terms and conditions will provide that the State will perform periodic reviews of the implementation of the demonstration.
(2) CMS will review documented complaints that a State is failing to comply with requirements specified in the special terms and conditions and implementing waivers of any approved demonstration.
(3) CMS will promptly share with the State complaints that CMS has received and will also provide notification of any applicable monitoring and compliance issues.
(c) Post award. Within 6 months after the implementation date of the demonstration and annually thereafter, the State must hold a public forum –
(1) To solicit comments on the progress of a demonstration project.
(2) At which members of the public have an opportunity to provide comments and in such time as to include a summary of the forum in the quarterly report associated with the quarter in which the forum was held, as well as in its annual report to CMS.
(3) The public forum to solicit feedback on the progress of a demonstration project must occur using one of the following:
(i) A Medical Care Advisory Committee that operates in accordance with § 431.412 of this subpart.
(ii) A commission or other similar process, where meetings are open to members of the public, and would afford an interested party the opportunity to learn about the demonstration’s progress.
(iii) The State must publish the date, time, and location of the public forum in a prominent location on the State’s public Web site, at least 30 days prior to the date of the planned public forum.
(4) [Reserved]
(d) Terminations and suspensions. (1) The Secretary may suspend or terminate a demonstration in whole or in part, any time before the date of expiration, whenever it determines that the State has materially failed to comply with the terms of the demonstration project.
(2) The Secretary may also withdraw waivers or expenditure authorities based on a finding that the demonstration project is not likely to achieve the statutory purposes.
(3) The terms and conditions for the demonstration will detail any notice and appeal rights for the State for a termination, suspension or withdrawal of waivers or expenditure authorities.
(e) Closeout costs. When a demonstration is terminated, suspended, or if waivers or expenditure authority are withdrawn, Federal funding is limited to normal closeout costs associated with an orderly termination of the demonstration or expenditure authority, including service costs during any approved transition period, and administrative costs of disenrolling participants.
(f) Federal evaluators. (1) The State must fully cooperate with CMS or an independent evaluator selected by CMS to undertake an independent evaluation of any component of the demonstration.
(2) The State must submit all requested data and information to CMS or the independent evaluator.
§ 431.424 Evaluation requirements.
(a) General. States are permitted and encouraged to use a range of appropriate evaluation strategies (including experimental and other quantitative and qualitative designs) in the application of evaluation techniques with the approval of CMS.
(b) Demonstration evaluations. Demonstration evaluations will include the following:
(1) Quantitative research methods. (i) These methods involve the empirical investigation of the impact of key programmatic features of the demonstration.
(ii) CMS will consider alternative evaluation designs when quantitative designs are technically infeasible or not well suited to the change made by the demonstration.
(2) Approaches that minimize beneficiary impact. The evaluation process must minimize burden on beneficiaries and protect their privacy in terms of implementing and operating the policy approach to be demonstrated while ensuring the impact of the demonstration is measured.
(c) Evaluation design plan. (1) The State will submit and receive CMS approval of a design for an evaluation of the demonstration project and publish this document to the State’s public Web site within 30 days of CMS approval.
(2) The draft demonstration evaluation design must include all of the following:
(i) A discussion of the demonstration hypotheses that are being tested including monitoring and reporting on the progress towards the expected outcomes.
(ii) The data that will be utilized and the baseline value for each measure.
(iii) The methods of data collection.
(iv) A description of how the effects of the demonstration will be isolated from those other changes occurring in the State at the same time through the use of comparison or control groups to identify the impact of significant aspects of the demonstration.
(v) A proposed date by which a final report on findings from evaluation activities conducted under the evaluation plan must be submitted to CMS.
(vi) Any other information pertinent to the State’s research on the policy operations of the demonstration operations.
(d) Evaluations for demonstration extensions. (1) In the event that the State requests to extend the demonstration beyond the current approval period under the authority of section 1115(a), (e), or (f) of the Act, the State must submit an interim evaluation report as part of the State’s request for a subsequent renewal of the demonstration.
(2) State evaluations must be published on the State’s public Web site within 30 days of submission to CMS.
(e) Approved evaluation designs. The State must publish the CMS-approved demonstration evaluation design on the State’s public Web site within 30 days of CMS approval.
(f) Federal evaluations. The State must comply with all requirements set forth in this subpart.
(g) Federal public notice. CMS will post, or provide a link to the State’s public Web site, all evaluation materials, including research and data collection, on its Web site for purposes of sharing findings with the public within 30 days of receipt of materials.
§ 431.428 Reporting requirements.
(a) Annual reports. The State must submit an annual report to CMS documenting all of the following:
(1) Any policy or administrative difficulties in the operation of the demonstration.
(2) The status of the health care delivery system under the demonstration with respect to issues and/or complaints identified by beneficiaries.
(3) The impact of the demonstration in providing insurance coverage to beneficiaries and uninsured populations.
(4) Outcomes of care, quality of care, cost of care and access to care for demonstration populations.
(5) The results of beneficiary satisfaction surveys, if conducted during the reporting year, grievances and appeals.
(6) The existence or results of any audits, investigations or lawsuits that impact the demonstration.
(7) The financial performance of the demonstration.
(8) The status of the evaluation and information regarding progress in achieving demonstration evaluation criteria.
(9) Any State legislative developments that may impact the demonstration.
(10) The results/impact of any demonstration programmatic area defined by CMS that is unique to the demonstration design or evaluation hypothesis.
(11) A summary of the annual post-award public forum, including all public comments received regarding the progress of the demonstration project.
(b) Submitting and publishing annual reports. States must submit a draft annual report to CMS no later than 90 days after the end of each demonstration year, or as specified in the demonstration’s STCs. The State must publish its draft annual report on its public Web site within 30 days of submission to CMS.
(1) Within 60 days of receipt of comments from CMS, the State must submit to CMS the final annual report for the demonstration year.
(2) The final annual report is to be published on the State’s public Web site within 30 days of approval by CMS.
Subparts H-L [Reserved]
Subpart M – Relations With Other Agencies
§ 431.610 Relations with standard-setting and survey agencies.
(a) Basis and purpose. This section implements –
(1) Section 1902(a)(9) of the Act, concerning the designation of State authorities to be responsible for establishing and maintaining health and other standards for institutions participating in Medicaid; and
(2) Section 1902(a)(33) of the Act, concerning the designation of the State licensing agency to be responsible for determining whether institutions and agencies meet requirements for participation in the State’s Medicaid program.
(3) Section 1919(g)(1)(A) of the Act, concerning responsibilities of the State for certifying the compliance of non-State operated NFs with requirements of participation in the State’s Medicaid program.
(b) Designated agency responsible for health standards. A State plan must designate, as the State authority responsible for establishing and maintaining health standards for private or public institutions that provide services to Medicaid beneficiaries, the same State agency that is used by the Secretary to determine qualifications of institutions and suppliers of services to participate in Medicare (see 42 CFR 405.1902). The requirement for establishing and maintaining standards does not apply with respect to religious nonmedical institutions as defined in § 440.170(b) of this chapter.
(c) Designated agency responsible for standards other than health standards. The plan must designate the Medicaid agency or other appropriate State authority or authorities to be responsible for establishing and maintaining standards, other than those relating to health, for private or public institutions that provide services to Medicaid beneficiaries.
(d) Description and retention of standards. (1) The plan must describe the standards established under paragraphs (b) and (c) of this section.
(2) The plan must provide that the Medicaid agency keeps these standards on file and makes them available to the Administrator upon request.
(e) Designation of survey agency. The plan must provide that –
(1) The agency designated in paragraph (b) of this section, or another State agency responsible for licensing health institutions in the State, determines for the Medicaid agency whether institutions and agencies meet the requirements for participation in the Medicaid program; and
(2) The agency staff making the determination under paragraph (e)(1) of this section is the same staff responsible for making similar determinations for institutions or agencies participating under Medicare; and
(3) The agency designated in paragraph (e)(1) of this section makes recommendations regarding the effective dates of provider agreements, as determined under § 431.108.
(f) Written agreement required. The plan must provide for a written agreement (or formal written intra-agency arrangement) between the Medicaid agency and the survey agency designated under paragraph (e) of this section, covering the activities of the survey agency in carrying out its responsibilities. The agreement must specify that –
(1) Federal requirements and the forms, methods and procedures that the Administrator designates will be used to determine provider eligibility and certification under Medicaid;
(2) Inspectors surveying the premises of a provider will –
(i) Complete inspection reports;
(ii) Note on completed reports whether or not each requirement for which an inspection is made is satisfied; and
(iii) Document deficiencies in reports;
(3) The survey agency will keep on file all information and reports used in determining whether participating facilities meet Federal requirements; and
(4) The survey agency will make the information and reports required under paragraph (f)(3) of this section readily accessible to HHS and the Medicaid agency as necessary –
(i) For meeting other requirements under the plan; and
(ii) For purposes consistent with the Medicaid agency’s effective administration of the program.
(g) Responsibilities of survey agency. The plan must provide that, in certifying NFs, HHAs, and ICF-IIDs, the survey agency designated under paragraph (e) of this section will –
(1) Review and evaluate medical and independent professional review team reports obtained under part 456 of this subchapter as they relate to health and safety requirements;
(2) Have qualified personnel perform on-site inspections periodically as appropriate based on the timeframes in the correction plan and –
(i) At least once during each certification period or more frequently if there is a compliance question; and
(ii) For non-State operated NFs, within the timeframes specified in § 488.308 of this chapter.
(3) Have qualified personnel perform on-site inspections –
(i) At least once during each certification period or more frequently if there is a compliance question; and
(ii) For intermediate care facilities with deficiencies as described in §§ 442.112 and 442.113 of this subchapter, within 6 months after initial correction plan approval and every 6 months thereafter as required under those sections.
(h) FFP for survey responsibilities. (1) FFP is available in expenditures that the survey agency makes to carry out its survey and certification responsibilities under the agreement specified in paragraph (f) of this section.
(2) FFP is not available in any expenditures that the survey agency makes that are attributable to the State’s overall responsibilities under State law and regulations for establishing and maintaining standards.
§ 431.615 Relations with State health and vocational rehabilitation agencies and title V grantees.
(a) Basis and purpose. This section implements section 1902(a)(11) and (22)(C) of the Act, by setting forth State plan requirements for arrangements and agreements between the Medicaid agency and –
(1) State health agencies;
(2) State vocational rehabilitation agencies; and
(3) Grantees under title V of the Act, Maternal and Child Health and Crippled Children’s Services.
(b) Definitions. For purposes of this section –
“Title V grantee” means the agency, institution, or organization receiving Federal payments for part or all of the cost of any service program or project authorized by title V of the Act, including –
(1) Maternal and child health services;
(2) Crippled children’s services;
(3) Maternal and infant care projects;
(4) Children and youth projects; and
(5) Projects for the dental health of children.
(c) State plan requirements. A state plan must –
(1) Describe cooperative arrangements with the State agencies that administer, or supervise the administration of, health services and vocational rehabilitation services designed to make maximum use of these services;
(2) Provide for arrangements with title V grantees, under which the Medicaid agency will utilize the grantee to furnish services that are included in the State plan;
(3) Provide that all arrangements under this section meet the requirements of paragraph (d) of this section; and
(4) Provide, if requested by the title V grantee in accordance with the arrangements made under this section, that the Medicaid agency reimburse the grantee or the provider for the cost of services furnished beneficiaries by or through the grantee.
(d) Content of arrangements. The arrangements referred to in paragraph (c) must specify, as appropriate –
(1) The mutual objectives and responsibilities or each party to the arrangement;
(2) The services each party offers and in what circumstances;
(3) The cooperative and collaborative relationships at the State level;
(4) The kinds of services to be provided by local agencies; and
(5) Methods for –
(i) Early identification of individuals under 21 in need of medical or remedial services;
(ii) Reciprocal referrals;
(iii) Coordinating plans for health services provided or arranged for beneficiaries;
(iv) Payment or reimbursement;
(v) Exchange of reports of services furnished to beneficiaries;
(vi) Periodic review and joint planning for changes in the agreements;
(vii) Continuous liaison between the parties, including designation of State and local liaison staff; and
(viii) Joint evaluation of policies that affect the cooperative work of the parties.
(e) Federal financial participation. FFP is available in expenditures for Medicaid services provided to beneficiaries through an arrangement under this section.
(a) Basis and purpose. This section implements section 1902(a)(20)(A) of the Act, for States offering Medicaid services in institutions for mental diseases for beneficiaries aged 65 or older, by specifying the terms of the agreement those States must have with other State authorities and institutions. (See part 441, subpart C of this chapter for regulations implementing section 1902(a)(20) (B) and (C).)
(b) Definition. For purposes of this section, an “institution for mental diseases” means an institution primarily engaged in providing diagnosis, treatment, or care of persons with mental diseases. This includes medical attention, nursing care, and related services.
(c) State plan requirement. A State plan that includes Medicaid for persons aged 65 or older in institutions for mental diseases must provide that the Medicaid agency has in effect a written agreement with –
(1) The State authority or authorities concerned with mental diseases; and
(2) Any institution for mental diseases that is not under the jurisdiction of those State authorities, and that provides services under Medicaid to beneficiaries aged 65 or older.
(d) Provisions required in an agreement. The agreement must specify the respective responsibilities of the agency and the authority or institution, including arrangements for –
(1) Joint planning between the parties to the agreement;
(2) Development of alternative methods of care;
(3) Immediate readmission to an institution when needed by a beneficiary who is in alternative care;
(4) Access by the agency to the institution, the beneficiary, and the beneficiary’s records when necessary to carry out the agency’s responsibilities;
(5) Recording, reporting, and exchanging medical and social information about beneficiaries; and
(6) Other procedures needed to carry out the agreement.
§ 431.621 State requirements with respect to nursing facilities.
(a) Basis and purpose. This section implements sections 1919(b)(3)(F) and 1919(e)(7) of the Act by specifying the terms of the agreement the State must have with the State mental health and Intellectual Disability authorities concerning the operation of the State’s preadmission screening and annual resident review (PASARR) program.
(b) State plan requirement. The State plan must provide that the Medicaid agency has in effect a written agreement with the State mental health and Intellectual Disability authorities that meets the requirements specified in paragraph (c) of this section.
(c) Provisions required in an agreement. The agreement must specify the respective responsibilities of the agency and the State mental health and Intellectual Disability authorities, including arrangements for – (1) Joint planning between the parties to the agreement;
(2) Access by the agency to the State mental health and Intellectual Disability authorities’ records when necessary to carry out the agency’s responsibilities;
(3) Recording, reporting, and exchanging medical and social information about individuals subject to PASARR;
(4) Ensuring that preadmission screenings and annual resident reviews are performed timely in accordance with §§ 483.112(c) and 483.114(c) of this part;
(5) Ensuring that, if the State mental health and Intellectual Disability authorities delegate their respective responsibilities, these delegations comply with § 483.106(e) of this part;
(6) Ensuring that PASARR determinations made by the State mental health and Intellectual Disability authorities are not countermanded by the State Medicaid agency, except through the appeals process, but that the State mental health and Intellectual Disability authorities do not use criteria which are inconsistent with those adopted by the State Medicaid agency under its approved State plan;
(7) Designating the independent person or entity who performs the PASARR evaluations for individuals with MI; and
(8) Ensuring that all requirements of §§ 483.100 through 483.136 are met.
§ 431.625 Coordination of Medicaid with Medicare part B.
(a) Basis and purpose. (1) Section 1843(a) of the Act requires the Secretary to have entered into an agreement with any State that requested that agreement before January 1, 1970, or during calendar year 1981, under which the State could enroll certain Medicare-eligible beneficiaries under Medicare Part B and agree to pay their premiums.
(2) Section 1902(a)(10) of the Act (in clause (II) following subparagraph (D)), allows the State to pay the premium, deductibles, cost sharing, and other charges for beneficiaries enrolled under Medicare Part B without obligating itself to provide the range of Part B benefits to other beneficiaries; and
(3) Section 1903 (a)(1) and (b) of the Act authorizes FFP for State payment of Medicare Part B premiums for certain beneficiaries.
(4) This section –
(i) Specifies the exception, relating to Part B coverage, from the requirement to provide comparable services to all beneficiaries; and
(ii) Prescribes FFP rules concerning State payment for Medicare premiums and for services that could have been covered under Medicare.
(5) Section 1902(a)(15) of the Act requires that if a State chooses to pay only a portion of deductibles, cost sharing or other charges for beneficiaries enrolled under Medicare Part B, the portion that is to be paid by a Medicaid beneficiary must be reasonably related to the beneficiary’s income and resources.
(b) Exception from obligation to provide comparable services; State plan requirement. (1) The State’s payment of premiums, deductibles, cost sharing, or similar charges under Part B does not obligate it to provide the full range of Part B services to beneficiaries not covered by Medicare.
(2) The State plan must specify this exception if it applies.
(c) Effect of payment of premiums on State liability for cost sharing. (1) State payment of Part B premiums on behalf of a Medicaid beneficiary does not obligate it to pay on the beneficiary’s behalf the Part B deductible and coinsurance amounts for those Medicare Part B services not covered in the Medicaid State plan.
(2) If a State pays on a beneficiary’s behalf any portion of the deductible or cost sharing amounts under Medicare Part B, the portion paid by a State must be reasonably related to the beneficiary’s income and resources.
(d) Federal financial participation: Medicare Part B premiums – (1) Basic rule. Except as provided in paragraph (d)(2) of this section, FFP is not available in State expenditures for Medicare Part B premiums for Medicaid beneficiaries unless the beneficiaries receive money payments under title I, X, XIV, XVI (AABD or SSI) of the Act, or State supplements as permitted under section 1616(a) of the Act, or as required by section 212 of Pub. L. 93-66.
(2) Exception. FFP is available in expenditures for Medicare Part B premiums for the following groups:
(i) Beneficiaries required to be covered under §§ 435.134, and 436.112 of this subchapter, those eligible for continued Medicaid coverage despite increased income from monthly insurance benefits under title II of the Act;
(ii) Beneficiaries required to be covered under § 435.135 of this subchapter, those eligible for continued Medicaid coverage despite increased income from cost-of-living increases under title II of the Act;
(iii) Beneficiaries whom States must consider to be recipients of AFDC, including those who receive adoption assistance, foster care or guardianship care, under part E of title IV of the Act, in accordance with §§ 435.145 and 436.114(e) of this subchapter, or who receive Medicaid coverage for low income families, in accordance with section 1931(b) of the Act.
(iv) Individuals required to be covered under § 435.120 of this subchapter, that is, blind or disabled individuals who, under section 1619(b) of the Act, are considered to be receiving SSI;
(v) Certain beneficiaries of Veterans Administration pensions during the limited time they are, under section 310(b) of Pub. L. 96-272, considered as receiving SSI, mandatory State supplements, or AFDC;
(vi) Disabled children living at home to whom the State provides Medicaid under § 435.225 of this subchapter.
(vii) Beneficiaries required to be covered under §§ 435.115 and 436.114(f) and (h) of this subchapter, that is, those who remain eligible for 4 months of temporary Medicaid coverage because of the increased collection of spousal support under part D of title IV of the Act.
(viii) Individuals required to be covered under the QMB, SLMB, and QI eligibility groups, each separately defined in §§ 435.123 through 435.125 of this subchapter.
(ix) Adult children with disabilities, as described in 1634(c) of the Act.
(3) No FFP is available in State Medicaid expenditures that could have been paid for under Medicare Part B but were not because the person was not enrolled in Part B. This limit applies to all beneficiaries eligible for enrollment under Part B, whether individually or through an agreement under section 1843(a) of the Act. However, FFP is available in expenditures required by §§ 435.914 and 436.901 of this subchapter for retroactive coverage of beneficiaries.
§ 431.630 Coordination of Medicaid with QIOs.
(a) The State plan may provide for the review of Medicaid services through a contract with a QIO designated under part 462 of this chapter. Medicaid requirements for medical and utilization review are deemed to be met for those services or providers subject to review under the contract.
(b) The State plan must provide that the contract with the QIO –
(1) Meets the requirements of § 434.6(a) of this part;
(2) Includes a monitoring and evaluation plan by which the State ensures satisfactory performance by the QIO;
(3) Identifies the services and providers subject to QIO review;
(4) Ensures that the review activities performed by the QIO are not inconsistent with QIO review activities of Medicare services and includes a description of whether and to what extent QIO determinations will be considered conclusive for Medicaid payment purposes.
§ 431.635 Coordination of Medicaid with Special Supplemental Food Program for Women, Infants, and Children (WIC).
(a) Basis. This section implements sections 1902(a)(11)(C) and 1902(a) (53) of the Act, which provide for coordination of Medicaid with the Special Supplemental Food Program for Women, Infants, and Children (WIC) under section 17 of the Child Nutrition Act of 1966.
(b) Definitions. As used in this section, the terms breastfeeding women, postpartum women, and pregnant women mean women as defined in section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)).
(c) State plan requirements. A State Plan must provide for –
(1) Coordinating operation of the Medicaid program with the State’s operation of the Special Supplemental Food Program for Women, Infants, and Children;
(2) Providing timely written notice of the availability of WIC benefits to all individuals in the State who are determined to be eligible (including presumptively eligible) for Medicaid and who are:
(i) Pregnant women;
(ii) Postpartum women;
(iii) Breastfeeding women; and
(iv) Children under the age of 5.
(3) Referring individuals described under paragraphs (c)(2) (i) through (iv) of this section to the local agency responsible for administering the WIC program.
(d) Notification requirements. (1) The agency must give the written notice required under paragraph (c) of this section as soon as the agency identifies the individual (e.g., at the time of an eligibility determination for Medicaid) or immediately thereafter (e.g., at the time of notice of eligibility).
(2) The agency, no less frequently than annually, must also provide written notice of the availability of WIC benefits, including the location and telephone number of the local WIC agency or instructions for obtaining further information about the WIC program, to all Medicaid beneficiaries (including those found to be presumptively eligible) who are under age 5 or who are women who might be pregnant, postpartum, or breastfeeding as described in paragraphs (c)(2) (i) through (iv) of this section.
(3) The agency must effectively inform those individuals who are blind or deaf or who cannot read or understand the English language.
Subpart N – State Programs for Licensing Nursing Home Administrators
§ 431.700 Basis and purpose.
This subpart implements sections 1903(a)(29) and 1908 of the Act which require that the State plan include a State program for licensing nursing home administrators.
§ 431.701 Definitions.
Unless otherwise indicated, the following definitions apply for purposes of this subpart:
Agency means the State agency responsible for licensing individual practitioners under the State’s healing arts licensing act.
Board means an appointed State board established to carry out a State program for licensing administrators of nursing homes, in a State that does not have a healing arts licensing act or an agency as defined in this section.
Licensed means certified by a State agency or board as meeting all of the requirements for a licensed nursing home administrator specified in this subpart.
Nursing home means any institution, facility, or distinct part of a hospital that is licensed or formally recognized as meeting nursing home standards established under State law, or that is determined under § 431.704 to be included under the requirements of this subpart. The term does not include –
(a) A religious nonmedical institution as defined in § 440.170(b) of this chapter; or
(b) A distinct part of a hospital, if the hospital meets the definition in § 440.10 or § 440.140 of this subchapter, and the distinct part is not licensed separately or formally approved as a nursing home by the State even though it is designated or certified as a skilled nursing facility.
Nursing home administrator means any person who is in charge of the general administration of a nursing home whether or not the person –
(a) Has an ownership interest in the home; or
(b) Shares his functions and duties with one or more other persons.
§ 431.702 State plan requirement.
A State plan must provide that the State has a program for licensing administrators of nursing homes that meets the requirements of §§ 431.703 through 431.713 of this subpart.
§ 431.703 Licensing requirement.
The State licensing program must provide that only nursing homes supervised by an administrator licensed in accordance with the requirements of this subpart may operate in the State.
§ 431.704 Nursing homes designated by other terms.
If a State licensing law does not use the term “nursing home,” the CMS Administrator will determine the term or terms equivalent to “nursing home” for purposes of applying the requirements of this subpart. To obtain this determination, the Medicaid agency must submit to the Regional Medicaid Director copies of current State laws that define institutional health care facilities for licensing purposes.
(a) The State licensing program must provide for licensing of nursing home administrators by –
(1) The agency designated under the healing arts act of the State; or
(2) A State licensing board.
(b) The State agency or board must perform the functions and duties specified in §§ 431.707 through 431.713 and the board must meet the membership requirements specified in § 431.706 of this subpart.
§ 431.706 Composition of licensing board.
(a) The board must be composed of persons representing professions and institutions concerned with the care and treatment of chronically ill or infirm elderly patients. However –
(1) A majority of the board members may not be representative of a single profession or category of institution; and
(2) Members not representative of institutions may not have a direct financial interest in any nursing home.
(b) For purposes of this section, nursing home administrators are considered representatives of institutions.
§ 431.707 Standards.
(a) The agency or board must develop, impose, and enforce standards that must be met by individuals in order to be licensed as a nursing home administrator.
(b) The standards must be designed to insure that nursing home administrators are –
(1) Of good character;
(2) Otherwise suitable; and
(3) Qualified to serve because of training or experience in institutional administration.
§ 431.708 Procedures for applying standards.
The agency or board must develop and apply appropriate procedures and techniques, including examinations and investigations, for determining if a person meets the licensing standards.
§ 431.709 Issuance and revocation of license.
Except as provided in § 431.714 of this subpart, the agency or board must –
(a) Issue licenses to persons who meet the agency’s or board’s standards; and
(b) Revoke or suspend a license if the agency or board determines that the person holding the license substantially fails to meet the standards.
§ 431.710 Provisional licenses.
To fill a position of nursing home administrator that unexpectedly becomes vacant, the agency or board may issue one provisional license, for a single period not to exceed 6 months. The license may be issued to a person who does not meet all of the licensing requirements established under § 431.707 but who –
(a) Is of good character and otherwise suitable; and
(b) Meets any other standards established for provisional licensure by the agency or board.
§ 431.711 Compliance with standards.
The agency or board must establish and carry out procedures to insure that licensed administrators comply with the standards in this subpart when they serve as nursing home administrators.
§ 431.712 Failure to comply with standards.
The agency or board must investigate and act on all complaints it receives of violations of standards.
§ 431.713 Continuing study and investigation.
The agency or board must conduct a continuing study of nursing homes and administrators within the State to improve –
(a) Licensing standards; and
(b) The procedures and methods for enforcing the standards.
§ 431.714 Waivers.
The agency or board may waive any standards developed under § 431.707 of this subpart for any person who has served in the capacity of a nursing home administrator during all of the 3 calendar years immediately preceding the calendar year in which the State first meets the requirements in this subpart.
§ 431.715 Federal financial participation.
No FFP is available in expenditures by the licensing board for establishing and maintaining standards for the licensing of nursing home administrators.
Subpart O [Reserved]
Subpart P – Quality Control
Medicaid Eligibility Quality Control (MEQC) Program
§ 431.800 Basis and scope.
This subpart establishes State requirements for the Medicaid Eligibility Quality Control (MEQC) Program designed to reduce erroneous expenditures by monitoring eligibility determinations and a claims processing assessment that monitors claims processing operations. MEQC will work in conjunction with the Payment Error Rate Measurement (PERM) Program established in subpart Q of this part. In years in which the State is required to participate in PERM, as stated in subpart Q of this part, it will only participate in the PERM program and will not be required to conduct a MEQC pilot. In the 2 years between PERM cycles, the State is required to conduct a MEQC pilot, as set forth in this subpart.
§ 431.804 Definitions.
As used in this subpart –
Active case means an individual determined to be currently authorized as eligible for Medicaid or CHIP by the State.
Corrective action means action(s) to be taken by the State to reduce major error causes, trends in errors or other vulnerabilities for the purpose of reducing improper payments in Medicaid and CHIP.
Deficiency means a finding in processing identified through active case review or negative case review that does not meet the definition of an eligibility error.
Eligibility means meeting the State’s categorical and financial criteria for receipt of benefits under the Medicaid or CHIP programs.
Eligibility error is an error resulting from the States’ improper application of Federal rules and the State’s documented policies and procedures that causes a beneficiary to be determined eligible when he or she is ineligible for Medicaid or CHIP, causes a beneficiary to be determined eligible for the incorrect type of assistance, causes applications for Medicaid or CHIP to be improperly denied by the State, or causes existing cases to be improperly terminated from Medicaid or CHIP by the State. An eligibility error may also be caused when a redetermination did not occur timely or a required element of the eligibility determination process (for example income) cannot be verified as being performed/completed by the state.
Medicaid Eligibility Quality Control (MEQC) means a program designed to reduce erroneous expenditures by monitoring eligibility determinations and work in conjunction with the PERM program established in subpart Q of this part.
MEQC pilot refers to the process used to implement the MEQC Program.
MEQC review period is the 12-month timespan from which the State will sample and review cases.
Negative case means an individual denied or terminated eligibility for Medicaid or CHIP by the State.
Off-years are the scheduled 2-year period of time between a States’ designated PERM years.
Payment Error Rate Measurement (PERM) Program means the program set forth at subpart Q of this part utilized to calculate a national improper payment rate for Medicaid and CHIP.
PERM year is the scheduled and designated year for a State to participate in, and be measured by, the PERM Program set forth at subpart Q of this part.
§ 431.806 State requirements.
(a) General requirements. (1) In a State’s PERM year, the PERM measurement will meet the requirements of section 1903(u) of the Act.
(2) In the 2 years between each State’s PERM year, the State is required to conduct one MEQC pilot, which will span parts of both off years.
(i) The MEQC pilot review period will span 12 months of a calendar year, beginning the January 1 following the end of the State’s PERM year through December 31.
(ii) The MEQC pilot planning document described in § 431.814 is due no later than the first November 1 following the end of the State’s PERM year.
(iii) A State must submit its MEQC pilot findings and its plan for corrective action(s) by the August 1 following the end of its MEQC pilot review period.
(b) PERM measurement. Requirements for the State PERM review process are set forth in subpart Q of this part.
(c) MEQC pilots. MEQC pilot requirements are specified in §§ 431.812 through 431.820.
(d) Claims processing assessment system. Except in a State that has an approved Medicaid Management Information System (MMIS) under subpart C of part 433 of this subchapter, a State plan must provide for operating a Medicaid quality control claims processing assessment system that meets the requirements of §§ 431.830 through 431.836.
§ 431.808 Protection of beneficiary rights.
Any individual performing activities under the MEQC program or the claims processing assessment system specified in this subpart must do so in a manner that is consistent with the provisions of §§ 435.902 and 436.901 of this subchapter concerning the rights of beneficiaries.
§ 431.810 Basic elements of the Medicaid Eligibility Quality Control (MEQC) Program.
(a) General requirements. The State must operate the MEQC pilot in accordance with this section and §§ 431.812 through 431.820, as well as other instructions established by CMS.
(b) Review requirements. The State must conduct reviews for the MEQC pilot in accordance with the requirements specified in § 431.812 and other instructions established by CMS.
(c) Pilot planning requirements. The State must develop a MEQC pilot planning proposal in accordance with requirements specified in § 431.814 and other instructions established by CMS.
(d) Reporting requirements. The State must report the finding of the MEQC pilots in accordance with the requirements specified in § 431.816 and other instructions established by CMS.
(e) Corrective action requirements. The State must conduct corrective actions based on the findings of the MEQC pilots in accordance with the requirements specified in § 431.820 and other instructions established by CMS.
§ 431.812 Review procedures.
(a) General requirements. Each State is required to conduct a MEQC pilot during the 2 years between required PERM cycles in accordance with the approved pilot planning document specified in § 431.814, as well as other instructions established by CMS. The agency and personnel responsible for the development, direction, implementation, and evaluation of the MEQC reviews and associated activities, must be functionally and physically separate from the State agencies and personnel that are responsible for Medicaid and CHIP policy and operations, including eligibility determinations.
(b) Active case reviews. (1) The State must review all active cases selected from the universe of cases, as established in the State’s approved MEQC pilot planning document, under § 431.814 to determine if the cases were eligible for services, as well as to identify deficiencies in processing subject to corrective actions.
(2) The State must select and review, at a minimum, 400 active cases in total from the Medicaid and CHIP universe.
(i) The State must review at least 200 Medicaid cases.
(ii) The State will identify in the pilot planning document at § 431.814 the sample size per program.
(iii) The State may sample more than 400 cases.
(3) The State may propose to focus the active case reviews on recent changes to eligibility policies and processes, areas where the state suspects vulnerabilities, or proven error prone areas.
(i) Unless otherwise directed by CMS, the State must propose its active case review approach in the pilot planning document described at § 431.814 or perform a comprehensive review.
(ii) When the State has a PERM eligibility improper payment rate that exceeds the 3 percent national standard for two consecutive PERM cycles, the State must follow CMS direction for its active case reviews. CMS guidance will be provided to any state meeting this criteria.
(c) Negative case reviews. (1) As established in the State’s approved MEQC pilot planning document under § 431.814, the State must review negative cases selected from the State’s universe of cases that are denied or terminated in the review month to determine if the denial, or termination, was correct, as well as to identify deficiencies in processing subject to corrective actions.
(2) The State must review, at a minimum, 200 negative cases from Medicaid and 200 negative cases from CHIP.
(i) The State may sample more than 200 cases from Medicaid and/or more than 200 cases from CHIP.
(ii) [Reserved]
(d) Error definition. (1) An active case error is an error resulting from the State’s improper application of Federal rules and the State’s documented policies and procedures that causes a beneficiary to be determined eligible when he or she is ineligible for Medicaid or CHIP, causes a beneficiary to be determined eligible for the incorrect type of assistance, or when a determination did not occur timely or cannot be verified.
(2) Negative case errors are errors, based on the State’s documented policies and procedures, resulting from either of the following:
(i) Applications for Medicaid or CHIP that are improperly denied by the State.
(ii) Existing cases that are improperly terminated from Medicaid or CHIP by the State.
(e) Active case payment reviews. In accordance with instructions established by CMS, the State must also conduct payment reviews to identify payments for active case errors, as well as identify the individual’s understated or overstated liability, and report payment findings as specified in § 431.816.
§ 431.814 Pilot planning document.
(a) Plan approval. For each MEQC pilot, the State must submit a MEQC pilot planning document that meets the requirements of this section to CMS for approval by the first November 1 following the end of the State’s PERM year. The State must receive approval for a plan before the plan can be implemented.
(b) Plan requirements. The State must have an approved pilot planning document in effect for each MEQC pilot that must be in accordance with instructions established by CMS and that includes, at a minimum, the following for –
(1) Active case reviews. (i) Focus of the active case reviews in accordance with § 431.812(b)(3) and justification for focus.
(ii) Universe development process.
(iii) Sample size per program.
(iv) Sample selection procedure.
(v) Case review process.
(2) Negative case reviews. (i) Universe development process.
(ii) Sample size per program.
(iii) Sample selection procedure.
(iv) Case review process.
§ 431.816 Case review completion deadlines and submittal of reports.
(a) The State must complete case reviews and submit reports of findings to CMS as specified in paragraph (b) of this section in the form and at the time specified by CMS.
(b) In addition to the reporting requirements specified in § 431.814 relating to the MEQC pilot planning document, the State must complete case reviews and submit reports of findings to CMS in accordance with paragraphs (b)(1) and (2) of this section.
(1) For all active and negative cases reviewed, the State must submit a detailed case-level report in a format provided by CMS.
(2) All case-level findings will be due by August 1 following the end of the MEQC review period.
§ 431.818 Access to records.
The State, upon written request, must submit to the HHS staff, or other designated entity, all records, including complete local agency eligibility case files or legible copies and all other documents pertaining to its MEQC reviews to which the State has access, including information available under part 435, subpart I of this chapter.
§ 431.820 Corrective action under the MEQC program.
The State must –
(a) Take action to correct any active or negative case errors, including deficiencies, found in the MEQC pilot sampled cases in accordance with instructions established by CMS;
(b) By the August 1 following the MEQC review period, submit to CMS a report that –
(1) Identifies the root cause and any trends found in the case review findings.
(2) Offers corrective actions for each unique error and deficiency finding based on the analysis provided in paragraph (b)(1) of this section.
(c) In the corrective action report, the State must provide updates on corrective actions reported for the previous MEQC pilot.
Medicaid Quality Control (MQC) Claims Processing Assessment System
§ 431.830 Basic elements of the Medicaid quality control (MQC) claims processing assessment system.
An agency must –
(a) Operate the MQC claims processing assessment system in accordance with the policies, sampling methodology, review procedures, reporting forms, requirements, and other instructions established by CMS.
(b) Identify deficiencies in the claims processing operations.
(c) Measure cost of deficiencies;
(d) Provide data to determine appropriate corrective action;
(e) Provide an assessment of the State’s claims processing or that of its fiscal agent;
(f) Provide for a claim-by-claim review where justifiable by data; and
(g) Produce an audit trail that can be reviewed by CMS or an outside auditor.
§ 431.832 Reporting requirements for claims processing assessment systems.
(a) The agency must submit reports and data specified in paragraph (b) of this section to CMS, in the form and at the time specified by CMS.
(b) Except when CMS authorizes less stringent reporting, States must submit:
(1) A monthly report on claims processing reviews sampled and or claims processing reviews completed during the month;
(2) A summary report on findings for all reviews in the 6-month sample to be submitted by the end of the 3rd month following the scheduled completion of reviews for that 6 month period; and
(3) Other data and reports as required by CMS.
§ 431.834 Access to records: Claims processing assessment systems.
The agency, upon written request, must provide HHS staff with access to all records pertaining to its MQC claims processing assessment system reviews to which the State has access, including information available under part 435, subpart J, of this chapter.
§ 431.836 Corrective action under the MQC claims processing assessment system.
The agency must –
(a) Take action to correct those errors identified through the claims processing assessment system review and, if cost effective, to recover those funds erroneously spent;
(b) Take administrative action to prevent and reduce the incidence of those errors; and
(c) By August 31 of each year, submit to CMS a report of its error analysis and a corrective action plan on the reviews conducted since the cut-off-date of the previous corrective action plan.
Subpart Q – Requirements for Estimating Improper Payments in Medicaid and CHIP
§ 431.950 Purpose.
This subpart requires States and providers to submit information and provide support to Federal contractors as necessary to enable the Secretary to produce national improper payment estimates for Medicaid and the Children’s Health Insurance Program (CHIP).
§ 431.954 Basis and scope.
(a) Basis. The statutory bases for this subpart are as follows:
(1) Sections 1102, 1902(a)(6), and 2107(b)(1) of the Act, which contain the Secretary’s general rulemaking authority and obligate States to provide information, as the Secretary may require, to monitor program performance.
(2) The Improper Payments Information Act of 2002 (Pub. L. 107-300), which requires Federal agencies to review and identify annually those programs and activities that may be susceptible to significant erroneous payments, estimate the amount of improper payments, report such estimates to the Congress, and submit a report on actions the agency is taking to reduce erroneous payments.
(3) Section 1902(a)(27)(B) of the Act requires States to require providers to agree to furnish the State Medicaid agencies and the Secretary with information regarding payments claimed by Medicaid providers for furnishing Medicaid services.
(4) Section 601 of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (Pub. L. 111-3) which requires that the new PERM regulations include the following: Clearly defined criteria for errors for both States and providers; Clearly defined processes for appealing error determinations; clearly defined responsibilities and deadlines for States in implementing any corrective action plans; requirements for State verification of an applicant’s self-declaration or self-certification of eligibility for, and correct amount of, medical assistance under Medicaid or child health assistance under CHIP; and State-specific sample sizes for application of the PERM requirements.
(b) Scope. (1) This subpart requires States under the statutory provisions cited in paragraph (a) of this section to submit information as set forth in § 431.970 for, among other purposes, estimating improper payments in the fee-for-service (FFS) and managed care components of the Medicaid and CHIP programs and to determine whether eligibility was correctly determined. This subpart also requires providers to submit to the Secretary any medical records and other information necessary to disclose the extent of services provided to individuals receiving assistance, and to furnish information regarding any payments claimed by the provider for furnishing such services, as requested by the Secretary.
(2) All information must be furnished in accordance with section 1902(a)(7)(A) of the Act, regarding confidentiality.
(3) This subpart does not apply with respect to Puerto Rico, Guam, the Virgin Islands, the Northern Mariana Islands or American Samoa.
§ 431.958 Definitions and use of terms.
Adjudication date means either the date on which money was obligated to pay a claim or the date the decision was made to deny a claim.
Annual sample size means the number of fee-for-service claims, managed care payments, or eligibility cases that will be sampled for review in a given PERM cycle.
Appeals means a process that allows the State to dispute the PERM Review Contractor and Eligibility Review Contractor findings with CMS after the difference resolution process has been exhausted.
Beneficiary means an applicant for, or beneficiary of, Medicaid or CHIP program benefits.
Children’s Health Insurance Program (CHIP) means the program authorized and funded under Title XXI of the Act.
Corrective action means actions to be taken by the State to reduce errors or other vulnerabilities for the purpose of reducing improper payments in Medicaid and CHIP.
Deficiency means a finding in which a claim or payment had a medical, data processing, and/or eligibility error that did not result in federal and/or state improper payment.
Difference resolution means a process that allows the State to dispute the PERM Review Contractor and Eligibility Review Contractor findings directly with the contractor.
Disallowance means the percentage of Federal medical assistance funds the State is required to return to CMS in accordance with section 1903(u) of the Act.
Eligibility means meeting the State’s categorical and financial criteria for receipt of benefits under the Medicaid or CHIP programs.
Eligibility Review Contractor (ERC) means the CMS contractor responsible for conducting state eligibility reviews for the PERM Program.
Federal contractor means the ERC, RC, or SC which support CMS in executing the requirements of the PERM program.
Federally Facilitated Exchange (FFE) means the health insurance exchange established by the Federal government with responsibilities that include making Medicaid and CHIP determinations for states that delegate authority to the FFE.
Federally Facilitated Exchange – Determination (FFE-D) means cases determined by the FFE in states that have delegated the authority to make Medicaid/CHIP eligibility determinations to the FFE.
Federal financial participation means the Federal Government’s share of the State’s expenditures under the Medicaid program and CHIP.
Finding means errors and/or deficiencies identified through the medical, data processing, and eligibility reviews.
Improper payment means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and includes any payment to an ineligible beneficiary, any duplicate payment, any payment for services not received, any payment incorrectly denied, and any payment that does not account for credits or applicable discounts.
Improper payment rate means an annual estimate of improper payments made under Medicaid and CHIP equal to the sum of the overpayments and underpayments in the sample, that is, the absolute value of such payments, expressed as a percentage of total payments made in the sample.
Lower limit means the lower bound of the 95-percent confidence interval for the State’s eligibility improper payment rate.
Medicaid means the joint Federal and State program, authorized and funded under Title XIX of the Act, that provides medical care to people with low incomes and limited resources.
Payment means any payment to a provider, insurer, or managed care organization for a Medicaid or CHIP beneficiary for which there is Medicaid or CHIP Federal financial participation. It may also mean a direct payment to a Medicaid or CHIP beneficiary in limited circumstances permitted by CMS regulation or policy.
Payment error means any claim or payment where federal and/or state dollars were paid improperly based on medical, data processing, and/or eligibility reviews.
PERM means the Payment Error Rate Measurement process to measure improper payment in Medicaid and CHIP.
PERM review period means the timeframe in which claims and eligibility are reviewed for national annual improper payment rate calculation purposes, July through June.
Provider means any qualified provider recognized under Medicaid and CHIP statute and regulations.
Provider error includes, but is not limited to, medical review errors as described in § 431.960(c) of this subpart, as determined in accordance with documented State or Federal policies or both.
Recoveries mean those monies for which the State is responsible to pay back to CMS based on the identification of Federal improper payments.
Review Contractor (RC) means the CMS contractor responsible for conducting state data processing and medical record reviews for the PERM Program.
Review year means the year being analyzed for improper payments under the PERM Program.
State eligibility system means any system, within the State or with a state-delegated contractor, that is used by the state to determine Medicaid and/or CHIP eligibility and/or that maintains documentation related to Medicaid and/or CHIP eligibility determinations.
State error includes, but is not limited to, data
processing errors and eligibility errors as described in § 431.960(b) and (d), as determined in accordance with documented State and Federal policies. State errors do not include the errors described in paragraph § 431.960(e)(2).
State payment system means any system within the State or with a state-delegated contractor that is used to adjudicate and pay Medicaid and/or CHIP FFS claims and/or managed care payments.
State-specific sample size means the sample size determined by CMS that is required from each individual State to support national improper payment rate precision requirements.
Statistical Contractor (SC) means the contractor responsible for collecting and sampling fee-for-service claims and managed care capitation payment data, as well as calculating Medicaid and CHIP state and national improper payment rates.
States means the 50 States and the District of Columbia.
§ 431.960 Types of payment errors.
(a) General rule. Errors identified for the Medicaid and CHIP improper payments measurement under the Improper Payments Information Act of 2002 must affect payment under applicable Federal or State policy, or both.
(b) Data processing errors. (1) A data processing error is an error resulting in an overpayment or underpayment that is determined from a review of the claim and other information available in the State’s Medicaid Management Information System, related systems, or outside sources of provider verification resulting in Federal and/or State improper payments.
(2) The difference in payment between what the State paid (as adjusted within improper payment measurement guidelines) and what the State should have paid, in accordance with federal and state documented policies, is the dollar measure of the payment error.
(3) Data processing errors include, but are not limited to, the following:
(i) Payment for duplicate items.
(ii) Payment for non-covered services.
(iii) Payment for fee-for-service claims for managed care services.
(iv) Payment for services that should have been paid by a third party but were inappropriately paid by Medicaid or CHIP.
(v) Pricing errors.
(vi) Logic edit errors.
(vii) Data entry errors.
(viii) Managed care rate cell errors.
(ix) Managed care payment errors.
(c) Medical review errors. (1) A medical review error is an error resulting in an overpayment or underpayment that is determined from a review of the provider’s medical record or other documentation supporting the service(s) claimed, Code of Federal Regulations that are applicable to conditions of payment, the State’s written policies, and a comparison between the documentation and written policies and the information presented on the claim resulting in Federal and/or State improper payments.
(2) The difference in payment between what the State paid (as adjusted within improper payment measurement guidelines) and what the State should have paid, in accordance with the applicable conditions of payment per 42 CFR parts 440 through 484, this part (431), and in accordance with the State’s documented policies, is the dollar measure of the payment error.
(3) Medical review errors include, but are not limited to, the following:
(i) Lack of documentation.
(ii) Insufficient documentation.
(iii) Procedure coding errors.
(iv) Diagnosis coding errors.
(v) Unbundling.
(vi) Number of unit errors.
(vii) Medically unnecessary services.
(viii) Policy violations.
(ix) Administrative errors.
(d) Eligibility errors. (1) An eligibility error is an error resulting in an overpayment or underpayment that is determined from a review of a beneficiary’s eligibility determination, in comparison to the documentation used to establish a beneficiary’s eligibility and applicable federal and state regulations and policies, resulting in Federal and/or State improper payments.
(2) Eligibility errors include, but are not limited to, the following:
(i) Ineligible individual, but authorized as eligible when he or she received services.
(ii) Eligible individual for the program, but was ineligible for certain services he or she received.
(iii) Lacked or had insufficient documentation in his or her case record, in accordance with the State’s documented policies and procedures, to make a definitive review decision of eligibility or ineligibility.
(iv) Was ineligible for managed care but enrolled in managed care.
(3) The dollars paid in error due to an eligibility error is the measure of the payment error.
(4) A State eligibility error does not result from the State’s verification of an applicant’s self-declaration or self-certification of eligibility for, and the correct amount of, medical assistance or child health assistance, if the State process for verifying an applicant’s self-declaration or self-certification satisfies the requirements in Federal law or guidance, or, if applicable, has the Secretary’s approval.
(e) Errors for purposes of determining the national improper payment rates. (1) The Medicaid and CHIP national improper payment rates include, but are not limited to, the errors described in paragraphs (b) through (d) of this section.
(2) Eligibility errors resulting solely from determinations of Medicaid or CHIP eligibility delegated to, and made by, the Federally Facilitated Exchange will be included in the national improper payment rate.
(f) Errors for purposes of determining the State improper payment rates. The Medicaid and CHIP State improper payment rates include, but are not limited to, the errors described in paragraphs (b) through (d) of this section, and do not include the errors described in paragraph (e)(2) of this section.
(g) Error codes. CMS will define different types of errors within the above categories for analysis and reporting purposes. Only Federal and/or State dollars in error will factor into the State’s PERM improper payment rate.
§ 431.970 Information submission and systems access requirements.
(a) The State must submit information to the Secretary for, among other purposes, estimating improper payments in Medicaid and CHIP, that include, but are not limited to –
(1) Adjudicated fee-for-service or managed care claims information, or both, on a quarterly basis, from the review year;
(2) Upon request from CMS, provider contact information that has been verified by the State as current;
(3) All medical, eligibility, and other related policies in effect, and any quarterly policy updates;
(4) Current managed care contracts, rate information, and any quarterly updates applicable to the review year;
(5) Data processing systems manuals;
(6) Repricing information for claims that are determined during the review to have been improperly paid;
(7) Information on claims that were selected as part of the sample, but changed in substance after selection, for example, successful provider appeals;
(8) Adjustments made within 60 days of the adjudication dates for the original claims or line items, with sufficient information to indicate the nature of the adjustments and to match the adjustments to the original claims or line items;
(9) Case documentation to support the eligibility review, as requested by CMS;
(10) A corrective action plan for purposes of reducing erroneous payments in FFS, managed care, and eligibility; and
(11) Other information that the Secretary determines is necessary for, among other purposes, estimating improper payments and determining improper payment rates in Medicaid and CHIP.
(b) Providers must submit information to the Secretary for, among other purposes, estimating improper payments in Medicaid and CHIP, which include but are not limited to Medicaid and CHIP beneficiary medical records, within 75 calendar days of the date the request is made by CMS. If CMS determines that the documentation is insufficient, providers must respond to the request for additional documentation within 14 calendar days of the date the request is made by CMS.
(c) The State must provide the Federal contractor(s) with access to all payment system(s) necessary to conduct the medical and data processing review, including the Medicaid Management Information System (MMIS), any systems that include beneficiary demographic and/or provider enrollment information, and any document imaging systems that store paper claims.
(d) The State must provide the Federal contractor(s) with access to all eligibility system(s) necessary to conduct the eligibility review, including any eligibility systems of record, any electronic document management system(s) that house case file information, and systems that house the results of third party data matches.
§ 431.972 Claims sampling procedures.
(a) General requirements. The State will submit quarterly FFS claims and managed care payments, as identified in § 431.970(a), to allow federal contractors to conduct data processing, medical record, and eligibility reviews to meet the requirements of the PERM measurement.
(b) Claims universe. (1) The PERM claims universe includes payments that were originally paid (paid claims) and for which payment was requested but denied (denied claims) during the PERM review period, and for which there is FFP (or would have been if the claim had not been denied) through Title XIX (Medicaid) or Title XXI (CHIP).
(2) The State must establish controls to ensure FFS and managed care universes are accurate and complete, including comparing the FFS and managed care universes to the Form CMS-64 and Form CMS-21 as appropriate.
(c) Sample size. CMS estimates each State’s annual sample size for the PERM review at the beginning of the PERM cycle.
(1) Precision and confidence levels. The national annual sample size will be estimated to achieve at least a minimum National-level improper payment rate with a 90 percent confidence interval of plus or minus 2.5 percent of the total amount of all payments for Medicaid and CHIP.
(2) State-specific sample sizes. CMS will develop State-specific sample sizes for each State. CMS may take into consideration the following factors in determining each State’s annual state-specific sample size for the current PERM cycle:
(i) State-level precision goals for the current PERM cycle;
(ii) The improper payment rate and precision of that improper payment rate from the State’s previous PERM cycle;
(iii) The State’s overall Medicaid and CHIP expenditures; and
(iv) Other relevant factors as determined by CMS.
§ 431.992 Corrective action plan.
(a) The State must develop a separate corrective action plan for Medicaid and CHIP for each improper payment rate measurement, designed to reduce improper payments in each program based on its analysis of the improper payment causes in the FFS, managed care, and eligibility components.
(1) The corrective action plan must address all errors that are included in the State improper payment rate defined at § 431.960(f)(1) and all deficiencies.
(2) For eligibility, the corrective action plan must include an evaluation of whether actions the State takes to reduce eligibility errors will also avoid increases in improper denials.
(b) In developing a corrective action plan, the State must take the following actions:
(1) Error analysis. The State must conduct analysis such as reviewing causes, characteristics, and frequency of errors that are associated with improper payments. The State must review the findings of the analysis to determine specific programmatic causes to which errors are attributed (for example, provider lack of understanding of the requirement to provide documentation), if any, and to identify root improper payment causes.
(2) Corrective action planning. The State must determine the corrective actions to be implemented that address the root improper payment causes and prevent that same improper payment from occurring again.
(3) Implementation and monitoring. (i) The State must develop an implementation schedule for each corrective action and implement those actions in accordance with the schedule.
(ii) The implementation schedule must identify all of the following for each action:
(A) The specific corrective action.
(B) Status.
(C) Scheduled or actual implementation date.
(D) Key personnel responsible for each activity.
(E) A monitoring plan for monitoring the effectiveness of the action.
(4) Evaluation. The State must submit an evaluation of the corrective action plan from the previous measurement. The State must evaluate the effectiveness of the corrective action(s) by assessing all of the following:
(i) Improvements in operations.
(ii) Efficiencies.
(iii) Number of errors.
(iv) Improper payments.
(v) Ability to meet the PERM improper payment rate targets assigned by CMS.
(c) The State must submit to CMS and implement the corrective action plan for the fiscal year it was reviewed no later than 90 calendar days after the date on which the State’s Medicaid or CHIP improper payment rates are posted on the CMS contractor’s Web site.
(d) The State must provide updates on corrective action plan implementation progress annually and upon request by CMS.
(e) In addition to paragraphs (a) through (d) of this section, each State that has an eligibility improper payment rates over the allowable threshold of 3 percent for consecutive PERM years, must submit updates on the status of corrective action implementation to CMS every other month. Status updates must include, but are not limited to the following:
(1) Details on any setbacks along with an alternate corrective action or workaround.
(2) Actual examples of how the corrective actions have led to improvements in operations, and explanations for how the improvements will lead to a reduction in the number of errors, as well as the State’s next PERM eligibility improper payment rate.
(3) An overall summary on the status of corrective actions, planning, and implementation, which demonstrates how the corrective actions will provide the State with the ability to meet the 3 percent threshold.
§ 431.998 Difference resolution and appeal process.
§ 431.998 Difference resolution and appeal process.
(a) The State may file, in writing, a request with the relevant Federal contractor to resolve differences in the Federal contractor’s findings based on medical, data processing, or eligibility reviews in Medicaid or CHIP.
(b) The State must file requests to resolve differences based on the medical, data processing, or eligibility reviews within 25 business days after the report of review findings is shared with the State.
(c) To file a difference resolution request, the State must be able to demonstrate all of the following:
(1) Have a factual basis for filing the request.
(2) Provide the appropriate Federal contractor with valid evidence directly related to the finding(s) to support the State’s position.
(d) For a finding in which the State and the Federal contractor cannot resolve the difference in findings, the State may appeal to CMS for final resolution by filing an appeal within 15 business days from the date the relevant Federal contractor’s finding as a result of the difference resolution is shared with the State. There is no minimum dollar threshold required to appeal a difference in findings.
(e) To file an appeal request, the State must be able to demonstrate all of the following:
(1) Have a factual basis for filing the request.
(2) Provide CMS with valid evidence directly related to the finding(s) to support the State’s position.
(f) All differences, including those pending in CMS for final decision that are not overturned in time for improper payment rate calculation, will be considered as errors in the improper payment rate calculation in order to meet the reporting requirements of the IPIA.
§ 431.1002 Recoveries.
(a) Medicaid. States must return to CMS the Federal share of overpayments based on medical and processing errors in accordance with section 1903(d)(2) of the Act and related regulations at part 433, subpart F of this chapter. Payments based on erroneous Medicaid eligibility determinations are addressed under section 1903(u) of the Act and related regulations at part 431, subpart P of this chapter.
(b) CHIP. Quarterly Federal payments to the States under Title XXI of the Act must be reduced in accordance with section 2105(e) of the Act and related regulations at part 457, subpart B of this chapter.
§ 431.1010 Disallowance of Federal financial participation for erroneous State payments (for PERM review years ending after July 1, 2020).
(a) Purpose. (1) This section establishes rules and procedures for disallowing Federal financial participation (FFP) in erroneous medical assistance payments due to eligibility improper payment errors, as detected through the PERM program required under this subpart, in effect on and after July 1, 2020.
(2) After the State’s eligibility improper rate has been established for each PERM review period, CMS will compute the amount of the disallowance, removing any underpayments due to eligibility errors, and adjust the FFP payable to each State. The disallowance or withholding is only applicable to the State’s PERM year.
(3) CMS will compute the amount to be withheld or disallowed as follows:
(i) Subtract the 3 percent allowable threshold from the lower limit of the State’s eligibility improper payment rate percentage excluding underpayments.
(ii) If the difference is greater than zero, the Federal medical assistance funds for the period, are multiplied by that percentage. This product is the amount of the disallowance or withholding.
(b) Notice to States and showing of good faith. (1) If CMS is satisfied that the State did not meet the 3 percent allowable threshold despite a good faith effort, CMS will reduce the funds being disallowed in whole.
(2) CMS may find that a State did not meet the 3 percent allowable threshold despite a good faith effort if the State has taken the action it believed was needed to meet the threshold, but the threshold was not met. CMS will grant a good faith waiver only if the State both:
(i) Participates in the MEQC pilot program in accordance with §§ 431.800 through 431.820, and
(ii) Implements PERM CAPs in accordance with § 431.992.
(3) Each State that has an eligibility improper payment rate above the allowable threshold will be notified by CMS of the amount of the disallowance.
(c) Disallowance subject to appeal. If the State does not agree with a disallowance imposed under paragraph (e) of this section, it may appeal to the Departmental Appeals Board within 30 days from the date of the final disallowance notice from CMS. The regular procedures for an appeal of a disallowance will apply, including review by the Appeals Board under 45 CFR part 16.
PART 432 – STATE PERSONNEL ADMINISTRATION
Subpart A – General Provisions
§ 432.1 Basis and purpose.
This part prescribes regulations to implement section 1902(a)(4) of the Act, which relates to a merit system of State personnel administration and training and use of subprofessional staff and volunteers in State Medicaid programs, and section 1903(a), rates of FFP for Medicaid staffing and training costs. It also prescribes regulations, based on the general administrative authority in section 1902(a)(4), for State training programs for all staff.
§ 432.2 Definitions.
As used in this part –
Community service aides means subprofessional staff, employed in a variety of positions, whose duties are an integral part of the agency’s responsibility for planning, administration, and for delivery of health services.
Directly supporting staff means secretarial, stenographic, and copying personnel and file and records clerks who provide clerical services that directly support the responsibilities of skilled professional medical personnel, who are directly supervised by the skilled professional medical personnel, and who are in an employer-employee relationship with the Medicaid agency.
Fringe benefits means the employer’s share of premiums for workmen’s compensation, employees’ retirement, unemployment compensation, health insurance, and similar expenses.
Full-time training means training that requires employees to be relieved of all responsibility for performance of current agency work to participate in a training program.
Part-time training means training that allows employees to continue full-time in their agency jobs or requires only partial reduction of work activities to participate in the training activity.
Skilled professional medical personnel means physicians, dentists, nurses, and other specialized personnel who have professional education and training in the field of medical care or appropriate medical practice and who are in an employer-employee relationship with the Medicaid agency. It does not include other nonmedical health professionals such as public administrators, medical analysts, lobbyists, senior managers or administrators of public assistance programs or the Medicaid program.
Staff of other public agencies means skilled professional medical personnel and directly supporting staff who are employed in State or local agencies other than the Medicaid agency who perform duties that directly relate to the administration of the Medicaid program.
Subprofessional staff means persons performing tasks that demand little or no formal education; a high school diploma; or less than 4 years of college.
Supporting staff means secretarial, stenographic, clerical, and other subprofessional staff whose activities are directly necessary to the carrying out of the functions which are the responsibility of skilled professional medical personnel, as defined in this section.
Training program means a program of educational activities based on the agency’s training needs and aimed at insuring that agency staff acquire the knowledge and skills necessary to perform their jobs.
Volunteer means a person who contributes personal service to the community through the agency’s program but is not a replacement or substitute for paid staff.
§ 432.10 Standards of personnel administration.
(a) State plan requirement. A State plan must provide that the requirements of paragraphs (c) through (h) of this section are met.
(b) Terms. In this section, “standards” refer to those specified in paragraph (c) of this section.
(c) Methods of personnel administration. Methods of personnel administration must be established and maintained, in the Medicaid agency and in local agencies administering the propgram, in conformity with:
(1) [Reserved]
(2) 5 CFR part 900, subpart F, Administration of the Standards for Merit System of Personnel Administration.
(d) Compliance of local jurisdictions. The Medicaid agency must have in effect methods to assure compliance with the standards by local jurisdictions included in the plan.
(e) Review and adequacy of State laws, regulations, and policies. The agency must –
(1) Assure that the U.S. Civil Service Commission has determined the adequacy of current State laws, regulations, and policy statements that effect methods of personnel administration in conformity with the standards, and
(2) Submit any changes in them to the Commission for review.
(f) Statements of acceptance by local agencies. If the Medicaid agency changes from a State-administered to a State-supervised, locally administered program, it must obtain statements of acceptance of the standards from the local agencies.
(g) Affirmative action plan. The Medicaid agency must have in effect an affirmative action plan for equal employment opportunity, that includes specific action steps and timetables to assure that opportunity, and meets all other requirements of 45 CFR 70.4.
(h) Submittal of requested materials. The Medicaid agency must submit to HHS, upon request, copies of the affirmative action plan and of the State and local materials that assure compliance with the standards.
Subpart B – Training Programs; Subprofessional and Volunteer Programs
§ 432.30 Training programs: General requirements.
(a) A State plan must provide for a program of training for Medicaid agency personnel. (See also §§ 432.31 and 432.32 for training programs for subprofessional staff and for volunteers.)
(b) The program must –
(1) Include initial inservice training for newly appointed staff, and continuing training opportunities to improve the operation of the program;
(2) Be related to job duties performed or to be performed by the persons trained; and
(3) Be consistent with the program objectives of the agency.
§ 432.31 Training and use of subprofessional staff.
(a) State plan requirement. A State plan must provide for the training and effective use of subprofessional staff as community service aides, in accordance with the requirements of this section.
(b) Recruitment and selection. The Medicaid agency must have methods of recruitment and selection that afford opportunity for full-time or part-time employment of persons of low income, including:
(1) Young, middle-aged, and older persons;
(2) Physically and mentally disabled; and
(3) Beneficiaries.
(c) Merit system. Subprofessional positions must be subject to merit system requirements except where special exemption is approved on the basis of a State alternative plan for employment of disadvantaged persons.
(d) Staffing plan. The agency staffing plan must include the kinds of jobs that subprofessional staff can perform.
(e) Career service. The agency must have a career service program that allows persons:
(1) To enter employment at the subprofessional level; and
(2) To progress to positions of increasing responsibility and reward:
(i) In accordance with their abilities; and
(ii) Through work experience and pre-service and in-service training.
(f) Training, supervision and supportive services. The agency must have an organized training program, supervision, and supportive services for subprofessional staff.
(g) Progressive expansion. The agency must provide for annual increase in the number of subprofessional staff until:
(1) An appropriate ratio of subprofessional and professional staff has been achieved; and
(2) There is maximum use of subprofessional staff as community aides in the operation of the program.
§ 432.32 Training and use of volunteers.
(a) State plan requirement. A State plan must provide for the training and use of non-paid or partially paid volunteers in accordance with the requirements of this section.
(b) Functions of volunteers. The Medicaid agency must make use of volunteers in:
(1) Providing services to applicants and beneficiaries; and
(2) Assisting any advisory committees established by the agency.
(c) Staffing. The agency must designate a position whose incumbent is responsible for:
(1) The development, organization, and administration of the volunteer program; and
(2) Coordination of the program with related functions.
(d) Recruitment, selection, training, and supervision. The agency must have:
(1) Methods of recruitment and selection that assure participation of volunteers of all income levels, in planning capacities and service provision; and
(2) A program of organized training and supervision of volunteers.
(e) Reimbursement of expenses. The agency must –
(1) Reimburse volunteers for actual expenses incurred in providing services; and
(2) Assure that no volunteer is deprived of the opportunity to serve because of the expenses involved.
(f) Progressive expansion. The agency must provide for annual increase in the number of volunteers used until the volunteer program is adequate for the achievement of the agency’s service goals.
Subpart C – Staffing and Training Expenditures
§ 432.45 Applicability of provisions in subpart.
The rates of FFP specified in this subpart C do not apply to State personnel who conduct survey activities and certify facilities for participation in Medicaid, as provided for under section 1902(a)(33)(B) of the Act.
§ 432.50 FFP: Staffing and training costs.
(a) Availability of FFP. FFP is available in expenditures for salary or other compensation, fringe benefits, travel, per diem, and training, at rates determined on the basis of the individual’s position, as specified in paragraph (b) of this section.
(b) Rates of FFP. (1) For skilled professional medical personnel and directly supporting staff of the Medicaid agency or of other public agencies (as defined in § 432.2), the rate is 75 percent.
(2) For personnel engaged directly in the operation of mechanized claims processing and information retrieval systems, the rate is 75 percent.
(3) For personnel engaged in the design, development, or installation of mechanized claims processing and information retrieval systems, the rate is 50 percent for training and 90 percent for all other costs specified in paragraph (a) of this section.
(4) [Reserved]
(5) For personnel administering family planning services and supplies, the rate is 90 percent.
(6) For all other staff of the Medicaid agency or other public agencies providing services to the Medicaid agency, and for training and other expenses of volunteers, the rate is 50 percent.
(c) Application of rates. (1) FFP is prorated for staff time that is split among functions reimbursed at different rates.
(2) Rates of FFP in excess of 50 percent apply only to those portions of the individual’s working time that are spent carrying out duties in the specified areas for which the higher rate is authorized.
(3) The allocation of personnel and staff costs must be based on either the actual percentages of time spent carrying out duties in the specified areas, or another methodology approved by CMS.
(d) Other limitations for FFP rate for skilled professional medical personnel and directly supporting staff – (1) Medicaid agency personnel and staff. The rate of 75 percent FFP is available for skilled professional medical personnel and directly supporting staff of the Medicaid agency if the following criteria, as applicable, are met:
(i) The expenditures are for activities that are directly related to the administration of the Medicaid program, and as such do not include expenditures for medical assistance;
(ii) The skilled professional medical personnel have professional education and training in the field of medical care or appropriate medical practice. “Professional education and training” means the completion of a 2-year or longer program leading to an academic degree or certificate in a medically related profession. This is demonstrated by possession of a medical license, certificate, or other document issued by a recognized National or State medical licensure or certifying organization or a degree in a medical field issued by a college or university certified by a professional medical organization. Experience in the administration, direction, or implementation of the Medicaid program is not considered the equivalent of professional training in a field of medical care.
(iii) The skilled professional medical personnel are in positions that have duties and responsibilities that require those professional medical knowledge and skills.
(iv) A State-documented employer-employee relationship exists between the Medicaid agency and the skilled professional medical personnel and directly supporting staff; and
(v) The directly supporting staff are secretarial, stenographic, and copying personnel and file and records clerks who provide clerical services that are directly necessary for the completion of the professional medical responsibilities and functions of the skilled professional medical staff. The skilled professional medical staff must directly supervise the supporting staff and the performance of the supporting staff’s work.
(2) Staff of other public agencies. The rate of 75 percent FFP is available for staff of other public agencies if the requirements specified in paragraph (d)(1) of this section are met and the public agency has a written agreement with the Medicaid agency to verify that these requirements are met.
(e) Limitations on FFP rates for staff in mechanized claims processing and information retrieval systems. The special matching rates for persons working on mechanized claims processing and information retrieval systems (paragraphs (b)(2) and (3) of this section) are applicable only if the design, development and installation, or the operation, have been approved by the Administrator in accordance with part 433, subchapter C, of this chapter.
§ 432.55 Reporting training and administrative costs.
(a) Scope. This section identifies activities and costs to be reported as training or administrative costs on quarterly estimate and expenditure reports to CMS.
(b) Activities and costs to be reported on training expenditures. (1) For fulltime training (with no assigned agency duties): Salaries, fringe benefits, dependency allowances, travel, tuition, books, and educational supplies.
(2) For part-time training: Travel, per diem, tuition, books and educational supplies.
(3) For State and local Medicaid agency staff development personnel (including supporting staff) assigned fulltime training functions: Salaries, fringe benefits, travel, and per diem. Costs for staff spending less than full time on training for the Medicaid program must be allocated between training and administration in accordance with § 433.34 of this subchapter.
(4) For experts engaged to develop or conduct special programs: Salary, fringe benefits, travel, and per diem.
(5) For agency training activities directly related to the program: Use of space, postage, teaching supplies, and purchase or development of teaching materials and equipment, for example, books and audiovisual aids.
(6) For field instruction in Medicaid: Instructors’ salaries and fringe benefits, rental of space, travel, clerical assistance, teaching materials and equipment such as books and audiovisual aids.
(c) Activities and costs not to be reported as training expenditures. The following activities are to be reported as administrative costs:
(1) Salaries of supervisors (day-to-day supervision of staff is not a training activity); and
(2) Cost of employing students on a temporary basis, for instance, during summer vacation.
PART 433 – STATE FISCAL ADMINISTRATION
§ 433.1 Purpose.
This part specifies the rates of FFP for services and administration, and prescribes requirements, prohibitions, and FFP conditions relating to State fiscal activities.
Subpart A – Federal Matching and General Administration Provisions
§ 433.8 [Reserved]
§ 433.10 Rates of FFP for program services.
(a) Basis. Sections 1903(a)(1), 1903(g), 1905(b), 1905(y), and 1905(z) provide for payments to States, on the basis of a Federal medical assistance percentage, for part of their expenditures for services under an approved State plan.
(b) Federal medical assistance percentage (FMAP) – Computations. The FMAP is determined by the formula described in section 1905(b) of the Act. Under the formula, if a State’s per capita income is equal to the national average per capita income, the Federal share is 55 percent. If a State’s per capita income exceeds the national average, the Federal share is lower, with a statutory minimum of 50 percent. If a State’s per capita income is lower than the national average, the Federal share is increased, with a statutory maximum of 83 percent. The formula used in determining the State and Federal share is as follows:
(c) Special provisions. (1) Under section 1903(a)(5) of the Act, the Federal share of State expenditures for family planning services is 90 percent.
(2) Under section 1905(b), the Federal share of State expenditures for services provided through Indian Health Service facilities is 100 percent.
(3) Under section 1903(g), the FMAP is reduced if the State does not have an effective program to control use of institutional services.
(4) Under section 1905(b) of the Social Security Act, the Federal share of State expenditures described in § 433.11(a) for services provided to children, is the enhanced FMAP rate determined in accordance with § 457.622(b) of this chapter, subject to the conditions explained in § 433.11(b).
(5)(i) Under section 1933(d) of the Act, the Federal share of State expenditures for Medicare Part B premiums described in section 1905(p)(3)(A)(ii) of the Act on behalf of Qualifying Individuals described in section 1902(a)(10)(E)(iv) of the Act, is 100 percent, to the extent that the assistance does not exceed the State’s allocation under paragraph (c)(5)(ii) of this section. To the extent that the assistance exceeds that allocation, the Federal share is 0 percent.
(ii) Under section 1933(c)(2) of the Act and subject to paragraph (c)(5)(iii) of this section, the allocation to each State is equal to the total allocation specified in section 1933(g) of the Act multiplied by the Secretary’s estimate of the ratio of the total number of individuals described in section 1902(a)(10)(E)(iv) of the Act in the State to the total number of individuals described in section 1902(a)(10)(E)(iv) of the Act for all eligible States. In estimating that ratio, the Secretary will use data from the U.S. Census Bureau.
(iii) If, based on projected expenditures for a fiscal year, or for a shorter period for which funding is available under section 1933 of the Act, the Secretary determines that the expenditures described in paragraph (c)(5)(i) of this section for one or more States are projected to exceed the allocation made to the State, the Secretary may adjust each State’s fiscal year allocation, as follows:
(A) The Secretary will compare each State’s projected total expenditures for the expenses described in paragraph (c)(5)(i) of this section to the State’s initial allocation determined under paragraph (c)(5)(ii) of this section, to determine the extent of each State’s projected surplus or deficit.
(B) The surplus of each State with a projected surplus, as determined in accordance with paragraph (c)(5)(iii)(A) of this section will be added together to arrive at the Total Projected Surplus.
(C) The deficit of each State with a projected deficit, as determined in accordance with paragraph (c)(5)(iii)(A) of this section will be added together to arrive at the Total Projected Deficit.
(D) Each State with a projected deficit will receive an additional allocation equal to the amount of its projected deficit, or a prorated amount of such deficit, if the Total Projected Deficit is greater than the Total Projected Surplus. Except as described in paragraph (c)(5)(iii)(E) of this section, the amount to be reallocated from each State with a projected surplus will be equal to A × B, where A equals the Total Projected Deficit and B equals the amount of the State’s projected surplus as a percentage of the Total Projected Surplus.
(E) If the Total Projected Deficit determined under paragraph (c)(5)(iii)(C) of this section is greater than the Total Projected Surplus determined under paragraph (c)(5)(iii)(B) of this section, each State with a projected deficit will receive an additional allocation amount equal to the amount of the Total Projected Surplus multiplied by the amount of the projected deficit for such State as a percentage of the Total Projected Deficit. The amount to be reallocated from each State with a projected surplus will be equal to the amount of the projected surplus.
(iv) CMS will notify States of any changes in allotments resulting from any reallocations.
(v) The provisions in paragraph (c)(5) of this section will be in effect through the end of the period for which funding authority is available under section 1933 of the Act.
(6)(i) Newly eligible FMAP. Beginning January 1, 2014, under section 1905(y) of the Act, the FMAP for a State that is one of the 50 States or the District of Columbia, including a State that meets the definition of expansion State in § 433.204(b), for amounts expended by such State for medical assistance for newly eligible individuals, as defined in § 433.204(a)(1), will be an increased FMAP equal to:
(A) 100 percent, for calendar quarters in calendar years (CYs) 2014 through 2016;
(B) 95 percent, for calendar quarters in CY 2017;
(C) 94 percent, for calendar quarters in CY 2018;
(D) 93 percent, for calendar quarters in CY 2019;
(E) 90 percent, for calendar quarters in CY 2020 and all subsequent calendar years.
(ii) The FMAP specified in paragraph (c)(6)(i) of this section will apply to amounts expended by a State for medical assistance for newly eligible individuals in accordance with the requirements of the methodology applied by the State under § 433.206.
(7)(i) Temporary FMAP increase. During the period January 1, 2014, through December 31, 2015, under section 1905(z)(1) of the Act for a State described in paragraph (c)(7)(ii) of this section, the FMAP determined under paragraph (b) of this section will be increased by 2.2 percentage points.
(ii) A State qualifies for the targeted increase in the FMAP under paragraph (c)(7)(i) of this section, if the State:
(A) Is an expansion State, as described in § 433.204(b) of this section;
(B) Does not qualify for any payments on the basis of the increased FMAP under paragraph (c)(6) of this section, as determined by the Secretary; and
(C) Has not been approved by the Secretary to divert a portion of the disproportionate share hospital allotment for the State under section 1923(f) of the Act to the costs of providing medical assistance or other health benefits coverage under a demonstration that is in effect on July 1, 2009.
(iii) The increased FMAP under paragraph (c)(7)(i) of this section is available for amounts expended by the State for medical assistance for individuals that are not newly eligible as defined in § 433.204(a)(1).
(8) Expansion State FMAP. Beginning January 1, 2014, under section 1905(z)(2) of the Act, the FMAP for an expansion State defined in § 433.204(b), for amounts expended by such State for medical assistance for individuals described in § 435.119 of this chapter who are not newly eligible as defined in § 433.204(a)(1), and who are nonpregnant childless adults with respect to whom the State may require enrollment in benchmark coverage under section 1937 of the Act, will be determined in accordance with the expansion State FMAP formula in paragraph (c)(8)(i).
(i) Expansion State FMAP.
(ii) Transition percentage. For purposes of paragraph (c)(8)(i) of this section, the transition percentage is equal to:
(A) 50 percent, for calendar quarters in CY 2014;
(B) 60 percent, for calendar quarters in CY 2015;
(C) 70 percent, for calendar quarters in CY 2016;
(D) 80 percent, for calendar quarters in CY 2017;
(E) 90 percent, for calendar quarters in CY 2018; and
(F) 100 percent, for calendar quarters in CY 2019 and all subsequent calendar years.
§ 433.11 Enhanced FMAP rate for children.
(a) Subject to the conditions in paragraph (b) of this section, the enhanced FMAP determined in accordance with § 457.622 of this chapter will be used to determine the Federal share of State expenditures, except any expenditures pursuant to section 1923 of the Act for payments to disproportionate share hospitals for –
(1) Services provided to optional targeted low-income children described in § 435.4 or § 436.3 of this chapter; and
(2) Services provided to children born before October 1, 1983, with or without group health coverage or other health insurance coverage, who would be described in section 1902(l)(1)(D) of the Act (poverty-level-related children’s groups) if –
(i) They had been born on or after that date; and
(ii) They would not qualify for medical assistance under the State plan in effect on March 31, 1997.
(b) Enhanced FMAP is not available if –
(1) A State adopts income and resource standards and methodologies for purposes of determining a child’s eligibility under the Medicaid State plan that are more restrictive than those applied under policies of the State plan (as described in the definition of optional targeted low-income children at § 435.4 of this chapter) in effect on June 1, 1997; or
(2) No funds are available in the State’s title XXI allotment, as determined under part 457, subpart F of this chapter for the quarter enhanced FMAP is claimed; or
(3) The State fails to maintain a valid method of identifying services provided on behalf of children listed in paragraph (a) of this section.
§ 433.15 Rates of FFP for administration.
(a) Basis. Section 1903(a) (2) through (5) and (7) of the Act provide for payments to States, on the basis of specified percentages, for part of their expenditures for administration of an approved State plan.
(b) Activities and rates. (1) [Reserved]
(2) Administration of family planning services: 90 percent. (Section 1903 (a)(5); 42 CFR 432.50(b)(5).)
(3) Design, development, or installation of mechanized claims processing and information retrieval systems: 90 percent. (Section 1903(a)(3)(A)(i); 42 CFR part 433, subpart C, and § 432.50 (b)(3).)
(4) Operation of mechanized claims processing and information retrieval systems: 75 percent. (Section 1903(a) (3)(B); 42 CFR part 433, subpart C and § 432.50(b)(2).)
(5) Compensation and training of skilled professional medical personnel and staff directly supporting those personnel if the criteria specified in § 432.50 (c) and (d) are met: 75 percent. (Section 1903(a)(2); 42 CFR 432.50(b)(1).)
(6)(i) Funds expended for the performance of medical and utilization review by a QIO under a contract entered into under section 1902(d) of the Act: 75 percent (section 1903(a)(3)(C) of the Act).
(ii) If a State contracts for medical and utilization review with any individual or organization not designated under Part B of Title XI of the Act, funds expended for such review will be reimbursed as provided in paragraph (b)(7) of this section.
(7) All other activities the Secretary finds necessary for proper and efficient administration of the State plan: 50 percent. (Section 1903(a)(7).) (See also § 455.300 of this subchapter for FFP at 90 percent for State Medicaid fraud control units under section 1903(a)(6).)
(8) Nurse aide training and competency evaluation programs and competency evaluation programs described in 1919(e)(1) of the Act: for calendar quarters beginning on or after July 1, 1988 and before July 1, 1990: The lesser of 90% or the Federal medical assistance percentage plus 25 percentage points; for calendar quarters beginning on or after October 1, 1990: 50%. (Section 1903(a)(2)(B) of the Act.)
(9) Preadmission screening and annual resident review (PASARR) activities conducted by the State: 75 percent. (Sections 1903(a)(2)(C) and 1919(e)(7); 42 CFR part 483, subparts C and E.)
(10) Funds expended for the performance of external quality review or the related activities described in § 438.358 of this chapter consistent with § 438.370(a) of this chapter: 75 percent; consistent with § 438.370(b): 50 percent.
§ 433.32 Fiscal policies and accountability.
A State plan must provide that the Medicaid agency and, where applicable, local agencies administering the plan will –
(a) Maintain an accounting system and supporting fiscal records to assure that claims for Federal funds are in accord with applicable Federal requirements;
(b) Retain records for 3 years from date of submission of a final expenditure report;
(c) Retain records beyond the 3-year period if audit findings have not been resolved; and
(d) Retain records for nonexpendable property acquired under a Federal grant for 3 years from the date of final disposition of that property.
§ 433.34 Cost allocation.
A State plan under Title XIX of the Social Security Act must provide that the single or appropriate Agency will have an approved cost allocation plan on file with the Department in accordance with the requirements contained in subpart E of 45 CFR part 95. Subpart E also sets forth the effect on FFP if the requirements contained in that subpart are not met.
§ 433.35 Equipment – Federal financial participation.
Claims for Federal financial participation in the cost of equipment under the Medicaid Program are determined in accordance with subpart G of 45 CFR part 95. Requirements concerning the management and disposition of equipment under the Medicaid Program are also prescribed in subpart G of 45 CFR part 95.
§ 433.36 Liens and recoveries.
(a) Basis and purpose. This section implements sections 1902(a)(18) and 1917(a) and (b) of the Act, which describe the conditions under which an agency may impose a lien against a beneficiary’s property, and when an agency may make an adjustment or recover funds in satisfaction of the claim against the individual’s estate or real property.
(b) Definition of property. For purposes of this section, “property” includes the homestead and all other personal and real property in which the beneficiary has a legal interest.
(c) State plan requirement. If a State chooses to impose a lien against an individual’s real property (or as provided in paragraph (g)(1) of this section, personal property), the State plan must provide that the provisions of paragraphs (d) through (i) of this section are met.
(d) Procedures. The State plan must specify the process by which the State will determine that an institutionalized individual cannot reasonably be expected to be discharged from the medical institution and return home as provided in paragraph (g)(2)(ii) of this section. The description of the process must include the type of notice to be given the individual, the process by which the individual will be given the opportunity for a hearing, the hearing procedures, and by whom and on what basis the determination that the individual cannot reasonably be expected to be discharged from the institution will be made. The notice to the individual must explain what is meant by the term lien, and that imposing a lien does not mean that the individual will lose ownership of the home.
(e) Definitions. The State plan must define the following terms used in this section:
(1) Individual’s home.
(2) Equity interest in home.
(3) Residing in the home for at least 1 (or 2) year(s).
(4) On a continuing basis.
(5) Discharge from the medical institution and return home.
(6) Lawfully residing.
(f) Exception. The State plan must specify the criteria by which a son or daughter can establish to the agency’s satisfaction that he or she has been providing care which permitted the individual to reside at home rather than in an institution, as provided in paragraph (h)(2)(iii)(B) of this section.
(g) Lien provisions – (1) Incorrect payments. The agency may place a lien against an individual’s property, both personal and real, before his or her death because of Medicaid claims paid or to be paid on behalf of that individual following a court judgement which determined that benefits were incorrectly paid for that individual.
(2) Correct payments. Except as provided in paragraph (g)(3) of this section, the agency may place a lien against the real property of an individual at any age before his or her death because of Medicaid claims paid or to be paid for that individual when –
(i) An individual is an inpatient of a medical institution and must, as a condition of receiving services in the institution under the State plan, apply his or her income to the cost of care as provided in §§ 435.725, 435.832 and 436.832; and
(ii) The agency determines that he or she cannot reasonably be expected to be discharged and return home. The agency must notify the individual of its intention to make that determination and provide an opportunity for a hearing in accordance with State established procedures before the determination is made. The notice to an individual must include an explanation of liens and the effect on an individual’s ownership of property.
(3) Restrictions on placing liens. The agency may not place a lien on an individual’s home under paragraph (g)(2) of this section if any of the following individuals is lawfully residing in the home:
(i) The spouse;
(ii) The individual’s child who is under age 21 or blind or disabled as defined in the State plan; or
(iii) The individual’s sibling (who has an equity interest in the home, and who was residing in the individual’s home for at least one year immediately before the date the individual was admitted to the medical institution).
(4) Termination of lien. Any lien imposed on an individual’s real property under paragraph (g)(2) of this section will dissolve when that individual is discharged from the medical institution and returns home.
(h) Adjustments and recoveries. (1) The agency may make an adjustment or recover funds for Medicaid claims correctly paid for an individual as follows:
(i) From the estate of any individual who was 65 years of age or older when he or she received Medicaid; and
(ii) From the estate or upon sale of the property subject to a lien when the individual is institutionalized as described in paragraph (g)(2) of this section.
(2) The agency may make an adjustment or recovery under paragraph (h)(1) of this section only:
(i) After the death of the individual’s surviving spouse; and
(ii) When the individual has no surviving child under age 21 or blind or disabled as defined in the State plan; and
(iii) In the case of liens placed on an individual’s home under paragraph (g)(2) of this section, when there is no –
(A) Sibling of the individual residing in the home, who has resided there for at least one year immediately before the date of the individual’s admission to the institution, and has resided there on a continuous basis since that time; or
(B) Son or daughter of the individual residing in the home, who has resided there for at least two years immediately before the date of the individual’s admission to the institution, has resided there on a continuous basis since that time, and can establish to the agency’s satisfaction that he or she has been providing care which permitted the individual to reside at home rather than in an institution.
(i) Prohibition of reduction of money payments. No money payment under another program may be reduced as a means of recovering Medicaid claims incorrectly paid.
§ 433.37 Reporting provider payments to Internal Revenue Service.
(a) Basis and purpose. This section, based on section 1902(a)(4) of the Act, prescribes requirements concerning –
(1) Identification of providers; and
(2) Compliance with the information reporting requirements of the Internal Revenue Code.
(b) Identification of providers. A State plan must provide for the identification of providers by –
(1) Social security number if –
(i) The provider is in solo practice; or
(ii) The provider is not in solo practice but billing is by the individual practitioner; or
(2) Employer identification number for all other providers.
(c) Compliance with section 6041 of the Internal Revenue Code. The plan must provide that the Medicaid agency complies with the information reporting requirements of section 6041 of the Internal Revenue Code (26 U.S.C. 6041). Section 6041 requires the filing of annual information returns showing amounts paid to providers, who are identified by name, address, and social security number or employer identification number.
§ 433.38 Interest charge on disallowed claims for FFP.
(a) Basis and scope. This section is based on section 1903(d)(5) of the Act, which requires that the Secretary charge a State interest on the Federal share of claims that have been disallowed but have been retained by the State during the administrative appeals process under section 1116(e) of the Act and the Secretary later recovers after the administrative appeals process has been completed. This section does not apply to –
(1) Claims that have been deferred by the Secretary and disallowed within the time limits of § 430.40 of this chapter. Deferral of claims for FFP; or
(2) Claims for expenditures that have never been paid on a grant award; or
(3) Disallowances of any claims for services furnished before October 1, 1980, regardless of the date of the claim submitted to CMS.
(b) General principles. (1) CMS will charge the State interest on FFP when –
(i) CMS has notified the Medicaid agency under § 430.42 of this subpart that a State’s claim for FFP is not allowable;
(ii) The agency has requested a reconsideration of the disallowance to the Administrator under § 430.42 of this chapter and has chosen to retain the FFP during the administrative reconsideration process in accordance with paragraph (c)(2) of this section;
(iii)(A) CMS has made a final determination upholding part or all of the disallowance;
(B) The agency has withdrawn its request for administrative reconsideration on all or part of the disallowance; or
(C) The agency has reversed its decision to retain the funds without withdrawing its request for administrative reconsideration and CMS upholds all or part of the disallowance.
(iv) The agency has appealed the disallowance to the Departmental Appeals Board under 45 CFR part 16 and has chosen to retain the FFP during the administrative appeals process in accordance with paragraph (c)(2) of this section.
(v)(A)The Board has made a final determination upholding part or all of the disallowance;
(B) The agency has withdrawn its appeal on all or part of the disallowance; or
(C) The agency has reversed its decision to retain the funds without withdrawing its appeal and the Board upholds all or part of the disallowance.
(2) If the courts overturn, in whole or in part, a Board decision that has sustained a disallowance, CMS will return the principal and the interest collected on the funds that were disallowed, upon the completion of all judicial appeals.
(3) Unless an agency decides to withdraw its request for administrative reconsideration or appeal on part of the disallowance and therefore returns only that part of the funds on which it has withdrawn its request for administrative reconsideration or appeal, any decision to retain or return disallowed funds must apply to the entire amount in dispute.
(4) If the agency elects to have CMS recover the disputed amount, it may not reverse that election.
(c) State procedures. (1) If the Medicaid agency has requested administrative reconsideration to CMS or appeal of a disallowance to the Board and wishes to retain the disallowed funds until CMS or the Board issues a final determination, the agency must notify the CMS Regional Office in writing of its decision to do so.
(2) The agency must mail its notice to the CMS Regional Office within 60 days of the date of receipt of the notice of the disallowance, as established by the certified mail receipt accompanying the notice.
(3) If the agency withdraws its decision to retain the FFP or its request for administrative reconsideration or appeal on all or part of the FFP, the agency must notify CMS in writing.
(d) Amount of interest charged. (1) If the agency retains funds that later become subject to an interest charge under paragraph (b) of this section, CMS will offset from the next Medicaid grant award to the State the amount of the funds subject to the interest charge, plus interest on that amount.
(2) The interest charge is at the rate CMS determines to be the average of the bond equivalent of the weekly 90-day Treasury bill auction rates during the period for which interest will be charged.
(e) Duration of interest. (1) The interest charge on the amount of disallowed FFP retained by the agency will begin on the date of the disallowance notice and end –
(i) On the date of the final determination by CMS of the administrative reconsideration if the State elects not to appeal to the Board, or final determination by the Board;
(ii) On the date CMS receives written notice from the State that it is withdrawing its request for administrative reconsideration and elects not to appeal to the Board, or withdraws its appeal to the Board on all of the disallowed funds; or
(iii) If the agency withdraws its request for administrative reconsideration on part of the funds on –
(A) The date CMS receives written notice from the agency that it is withdrawing its request for administrative reconsideration on a specified part of the disallowed funds for the part on which the agency withdraws its request for administrative reconsideration; and
(B) The date of the final determination by CMS on the part for which the agency pursues its administrative reconsideration; or
(iv) If the agency withdraws its appeal on part of the funds, on –
(A) The date CMS receives written notice from the agency that it is withdrawing its appeal on a specified part of the disallowed funds for the part on which the agency withdraws its appeal; and
(B) The date of the final determination by the Board on the part for which the agency pursues its appeal; or
(v) If the agency has given CMS written notice of its intent to repay by installment, in the quarter in which the final installment is paid. Interest during the repayment of Federal funds by installments will be at the Current Value of Funds Rate (CVFR); or
(vi) The date CMS receives written notice from the agency that it no longer chooses to retain the funds.
(2) CMS will not charge interest on FFP retained by an agency for more than 12 months for disallowances of FFP made between October 1, 1980 and August 13, 1981.
§ 433.40 Treatment of uncashed or cancelled (voided) Medicaid checks.
(a) Purpose. This section provides the rules to ensure that States refund the Federal portion of uncashed or cancelled (voided) checks under title XIX.
(b) Definitions. As used in this section –
Cancelled (voided) check means a Medicaid check issued by a State or fiscal agent which prior to its being cashed is cancelled (voided) by the State or fiscal agent, thus preventing disbursement of funds.
Check means a check or warrant that a State or local agency uses to make a payment.
Fiscal agent means an entity that processes or pays vendor claims for the Medicaid State agency.
Uncashed check means a Medicaid check issued by a State or fiscal agent which has not been cashed by the payee.
Warrant means an order by which the State agency or local agency without the authority to issue checks recognizes a claim. Presentation of a warrant by the payee to a State officer with authority to issue checks will result in release of funds due.
(c) Refund of Federal financial participation (FFP) for uncashed checks – (1) General provisions. If a check remains uncashed beyond a period of 180 days from the date it was issued; i.e., the date of the check, it will no longer be regarded as an allowable program expenditure. If the State has claimed and received FFP for the amount of the uncashed check, it must refund the amount of FFP received.
(2) Report of refund. At the end of each calendar quarter, the State must identify those checks which remain uncashed beyond a period of 180 days after issuance. The State agency must refund all FFP that it received for uncashed checks by adjusting the Quarterly Statement of Expenditures for that quarter. If an uncashed check is cashed after the refund is made, the State may file a claim. The claim will be considered to be an adjustment to the costs for the quarter in which the check was originally claimed. This claim will be paid if otherwise allowed by the Act and the regulations issued pursuant to the Act.
(3) If the State does not refund the appropriate amount as specified in paragraph (c)(2) of this section, the amount will be disallowed.
(d) Refund of FFP for cancelled (voided) checks – (1) General provision. If the State has claimed and received FFP for the amount of a cancelled (voided) check, it must refund the amount of FFP received.
(2) Report of refund. At the end of each calendar quarter, the State agency must identify those checks which were cancelled (voided). The State must refund all FFP that it received for cancelled (voided) checks by adjusting the Quarterly Statement of Expenditures for that quarter.
(3) If the State does not refund the appropriate amount as specified in paragraph (d)(2) of this section, the amount will be disallowed.
Subpart B – General Administrative Requirements State Financial Participation
§ 433.50 Basis, scope, and applicability.
(a) Basis. This subpart interprets and implements – (1) Section 1902(a)(2) of the Act which requires States to share in the cost of medical assistance expenditures and permit both State and local governments to participate in the financing of the non-Federal portion of medical assistance expenditures.
(2) Section 1903(a) of the Act, which requires the Secretary to pay each State an amount equal to the Federal medical assistance percentage of the total amount expended as medical assistance under the State’s plan.
(3) Section 1903(w) of the Act, which specifies the treatment of revenues from provider-related donations and health care-related taxes in determining a State’s medical assistance expenditures for which Federal financial participation (FFP) is available under the Medicaid program.
(b) Scope. This subpart –
(1) Specifies State plan requirements for State financial participation in expenditures for medical assistance.
(2) Defines provider-related donations and health care-related taxes that may be received without a reduction in FFP.
(3) Specifies rules for revenues received from provider-related donations and health care-related taxes during a transition period.
(4) Establishes limitations on FFP when States receive funds from provider-related donations and revenues generated by health care-related taxes.
(c) Applicability. The provisions of this subpart apply to the 50 States and the District of Columbia, but not to any State whose entire Medicaid program is operated under a waiver granted under section 1115 of the Act.
(a) Public Funds may be considered as the State’s share in claiming FFP if they meet the conditions specified in paragraphs (b) and (c) of this section.
(b) The public funds are appropriated directly to the State or local Medicaid agency, or are transferred from other public agencies (including Indian tribes) to the State or local agency and under its administrative control, or certified by the contributing public agency as representing expenditures eligible for FFP under this section.
(c) The public funds are not Federal funds, or are Federal funds authorized by Federal law to be used to match other Federal funds.
§ 433.52 General definitions.
As used in this subpart –
Entity related to a health care provider means –
(1) An organization, association, corporation, or partnership formed by or on behalf of a health care provider;
(2) An individual with an ownership or control interest in the provider, as defined in section 1124(a)(3) of the Act;
(3) An employee, spouse, parent, child, or sibling of the provider, or of a person with an ownership or control interest in the provider, as defined in section 1124(a)(3) of the Act; or
(4) A supplier of health care items or services or a supplier to providers of health care items or services.
Health care provider means the individual or entity that receives any payment or payments for health care items or services provided.
Provider-related donation means a donation or other voluntary payment (in cash or in kind) made directly or indirectly to a State or unit of local government by or on behalf of a health care provider, an entity related to such a health care provider, or an entity providing goods or services to the State for administration of the State’s Medicaid plan.
(1) Donations made by a health care provider to an organization, which in turn donates money to the State, may be considered to be a donation made indirectly to the State by a health care provider.
(2) When an organization receives less than 25 percent of its revenues from providers and/or provider-related entities, its donations will not generally be presumed to be provider-related donations. Under these circumstances, a provider-related donation to an organization will not be considered a donation made indirectly to the State. However, if the donations from providers to an organization are subsequently determined to be indirect donations to the State or unit of local government for administration of the State’s Medicaid program, then such donations will be considered to be health care related.
(3) When the organization receives more than 25 percent of its revenue from donations from providers or provider-related entities, the organization always will be considered as acting on behalf of health care providers if it makes a donation to the State. The amount of the organization’s donation to the State, in a State fiscal year, that will be considered health care related, will be based on the percentage of donations the organization received from the providers during that period.
§ 433.53 State plan requirements.
A State plan must provide that –
(a) State (as distinguished from local) funds will be used both for medical assistance and administration;
(b) State funds will be used to pay at least 40 percent of the non-Federal share of total expenditures under the plan; and
(c) State and Federal funds will be apportioned among the political subdivisions of the State on a basis that assures that –
(1) Individuals in similar circumstances will be treated similarly throughout the State; and
(2) If there is local financial participation, lack of funds from local sources will not result in lowering the amount, duration, scope, or quality of services or level of administration under the plan in any part of the State.
§ 433.54 Bona fide donations.
(a) A bona fide donation means a provider-related donation, as defined in § 433.52, made to the State or unit of local government, that has no direct or indirect relationship, as described in paragraph (b) of this section, to Medicaid payments made to –
(1) The health care provider;
(2) Any related entity providing health care items and services; or
(3) Other providers furnishing the same class of items or services as the provider or entity.
(b) Provider-related donations will be determined to have no direct or indirect relationship to Medicaid payments if those donations are not returned to the individual provider, the provider class, or related entity under a hold harmless provision or practice, as described in paragraph (c) of this section.
(c) A hold harmless practice exists if any of the following applies:
(1) The State (or other unit of government) provides for a direct or indirect non-Medicaid payment to those providers or others making, or responsible for, the donation, and the payment amount is positively correlated to the donation. A positive correlation includes any positive relationship between these variables, even if not consistent over time.
(2) All or any portion of the Medicaid payment to the donor, provider class, or related entity, varies based only on the amount of the donation, including where Medicaid payment is conditional on receipt of the donation.
(3) The State (or other unit of government) receiving the donation provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to return any portion of the donation to the provider (or other parties responsible for the donation).
(d) CMS will presume provider-related donations to be bona fide if the voluntary payments, including, but not limited to, gifts, contributions, presentations or awards, made by or on behalf of individual health care providers to the State, county, or any other unit of local government does not exceed –
(1) $5,000 per year in the case of an individual provider donation; or
(2) $50,000 per year in the case of a donation from any health care organizational entity.
(e) To the extent that a donation presumed to be bona fide contains a hold harmless provision, as described in paragraph (c) of this section, it will not be considered a bona fide donation. When provider-related donations are not bona fide, CMS will deduct this amount from the State’s medical assistance expenditures before calculating FFP. This offset will apply to all years the State received such donations and any subsequent fiscal year in which a similar donation is received.
(a) A health care-related tax is a licensing fee, assessment, or other mandatory payment that is related to –
(1) Health care items or services;
(2) The provision of, or the authority to provide, the health care items or services; or
(3) The payment for the health care items or services.
(b) A tax will be considered to be related to health care items or services under paragraph (a)(1) of this section if at least 85 percent of the burden of the tax revenue falls on health care providers.
(c) A tax is considered to be health care related if the tax is not limited to health care items or services, but the treatment of individuals or entities providing or paying for those health care items or services is different than the tax treatment provided to other individuals or entities.
(d) A health care-related tax does not include payment of a criminal or civil fine or penalty, unless the fine or penalty was imposed instead of a tax.
(e) Health care insurance premiums and health maintenance organization premiums paid by an individual or group to ensure coverage or enrollment are not considered to be payments for health care items and services for purposes of determining whether a health care-related tax exists.
§ 433.56 Classes of health care services and providers defined.
(a) For purposes of this subpart, each of the following will be considered as a separate class of health care items or services:
(1) Inpatient hospital services;
(2) Outpatient hospital services;
(3) Nursing facility services (other than services of intermediate care facilities for individuals with intellectual disabilities);
(4) Intermediate care facility services for individuals with intellectual disabilities, and similar services furnished by community-based residences for individuals with intellectual disabilities, under a waiver under section 1915(c) of the Act, in a State in which, as of December 24, 1992, at least 85 percent of such facilities were classified as ICF/IIDs prior to the grant of the waiver;
(5) Physician services;
(6) Home health care services;
(7) Outpatient prescription drugs;
(8) Services of managed care organizations (including health maintenance organizations, preferred provider organizations);
(9) Ambulatory surgical center services, as described for purposes of the Medicare program in section 1832(a)(2)(F)(i) of the Social Security Act. These services are defined to include facility services only and do not include surgical procedures;
(10) Dental services;
(11) Podiatric services;
(12) Chiropractic services;
(13) Optometric/optician services;
(14) Psychological services;
(15) Therapist services, defined to include physical therapy, speech therapy, occupational therapy, respiratory therapy, audiological services, and rehabilitative specialist services;
(16) Nursing services, defined to include all nursing services, including services of nurse midwives, nurse practitioners, and private duty nurses;
(17) Laboratory and x-ray services, defined as services provided in a licensed, free-standing laboratory or x-ray facility. This definition does not include laboratory or x-ray services provided in a physician’s office, hospital inpatient department, or hospital outpatient department;
(18) Emergency ambulance services; and
(19) Other health care items or services not listed above on which the State has enacted a licensing or certification fee, subject to the following:
(i) The fee must be broad based and uniform or the State must receive a waiver of these requirements;
(ii) The payer of the fee cannot be held harmless; and
(iii) The aggregate amount of the fee cannot exceed the State’s estimated cost of operating the licensing or certification program.
(b) Taxes that pertain to each class must apply to all items and services within the class, regardless of whether the items and services are furnished by or through a Medicaid-certified or licensed provider.
Effective January 1, 1992, CMS will deduct from a State’s expenditures for medical assistance, before calculating FFP, funds from provider-related donations and revenues generated by health care-related taxes received by a State or unit of local government, in accordance with the requirements, conditions, and limitations of this subpart, if the donations and taxes are not –
(a) Permissible provider-related donations, as specified in § 433.66(b); or
(b) Health care-related taxes, as specified in § 433.68(b).
§§ 433.58-433.60 [Reserved]
(a) General rule. (1) Except as specified in paragraph (a)(2) of this section, a State may receive revenues from provider-related donations without a reduction in FFP, only in accordance with the requirements of this section.
(2) The provisions of this section relating to provider-related donations for outstationed eligibility workers are effective on October 1, 1992.
(b) Permissible donations. Subject to the limitations specified in § 433.67, a State may receive, without a reduction in FFP, provider-related donations that meet at least one of the following requirements:
(1) The donations must be bona fide donations, as defined in § 433.54; or
(2) The donations are made by a hospital, clinic, or similar entity (such as a Federally-qualified health center) for the direct costs of State or local agency personnel who are stationed at the facility to determine the eligibility (including eligibility redeterminations) of individuals for Medicaid or to provide outreach services to eligible (or potentially eligible) Medicaid individuals. Direct costs of outstationed eligibility workers refers to the costs of training, salaries and fringe benefits associated with each outstationed worker and similar allocated costs of State or local agency support staff, and a prorated cost of outreach activities applicable to the outstationed workers at these sites. The prorated costs of outreach activities will be calculated taking the percent of State outstationed eligibility workers at a facility to total outstationed eligibility workers in the State, and multiplying the percent by the total cost of outreach activities in the State. Costs for such items as State agency overhead and provider office space are not allowable for this purpose.
(a)(1) Limitations on bona fide donations. There are no limitations on the amount of bona fide provider-related donations that a State may receive without a reduction in FFP, as long as the bona fide donations meet the requirements of § 433.66(b)(1).
(2) Limitations on donations for outstationed eligibility workers. Effective October 1, 1992, the maximum amount of provider-related donations for outstationed eligibility workers, as described in § 433.66(b)(2), that a State may receive without a reduction in FFP may not exceed 10 percent of a State’s medical assistance administrative costs (both the Federal and State share), excluding the costs of family planning activities. The 10 percent limit for provider-related donations for outstationed eligibility workers is not included in the limit in effect through September 30, 1995, for health care-related taxes as described in § 433.70.
(b) Calculation of FFP. CMS will deduct from a State’s quarterly medical assistance expenditures, before calculating FFP, any provider-related donations received in that quarter that do not meet the requirements of § 433.66(b)(1) and provider donations for outstationed eligibility workers in excess of the limits specified under paragraph (a)(2) of this section.
(a) General rule. A State may receive health care-related taxes, without a reduction in FFP, only in accordance with the requirements of this section.
(b) Permissible health care-related taxes. Subject to the limitations specified in § 433.70, a State may receive, without a reduction in FFP, health care-related taxes if all of the following are met:
(1) The taxes are broad based, as specified in paragraph (c) of this section;
(2) The taxes are uniformly imposed throughout a jurisdiction, as specified in paragraph (d) of this section; and
(3) The tax program does not violate the hold harmless provisions specified in paragraph (f) of this section.
(c) Broad based health care-related taxes. (1) A health care-related tax will be considered to be broad based if the tax is imposed on at least all health care items or services in the class or providers of such items or services furnished by all non-Federal, non-public providers in the State, and is imposed uniformly, as specified in paragraph (d) of this section.
(2) If a health care-related tax is imposed by a unit of local government, the tax must extend to all items or services or providers (or to all providers in a class) in the area over which the unit of government has jurisdiction.
(3) A State may request a waiver from CMS of the requirement that a tax program be broad based, in accordance with the procedures specified in § 433.72. Waivers from the uniform and broad-based requirements will automatically be granted in cases of variations in licensing and certification fees for providers if the amount of such fees is not more than $1,000 annually per provider and the total amount raised by the State from the fees is used in the administration of the licensing or certification program.
(d) Uniformly imposed health care-related taxes. A health care-related tax will be considered to be imposed uniformly even if it excludes Medicaid or Medicare payments (in whole or in part), or both; or, in the case of a health care-related tax based on revenues or receipts with respect to a class of items or services (or providers of items or services), if it excludes either Medicaid or Medicare revenues with respect to a class of items or services, or both. The exclusion of Medicaid revenues must be applied uniformly to all providers being taxed.
(1) A health care-related tax will be considered to be imposed uniformly if it meets any one of the following criteria:
(i) If the tax is a licensing fee or similar tax imposed on a class of health care services (or providers of those health care items or services), the tax is the same amount for every provider furnishing those items or services within the class.
(ii) If the tax is a licensing fee or similar tax imposed on a class of health care items or services (or providers of those items or services) on the basis of the number of beds (licensed or otherwise) of the provider, the amount of the tax is the same for each bed of each provider of those items or services in the class.
(iii) If the tax is imposed on provider revenue or receipts with respect to a class of items or services (or providers of those health care items or services), the tax is imposed at a uniform rate for all services (or providers of those items or services) in the class on all the gross revenues or receipts, or on net operating revenues relating to the provision of all items or services in the State, unit, or jurisdiction. Net operating revenue means gross charges of facilities less any deducted amounts for bad debts, charity care, and payer discounts.
(iv) The tax is imposed on items or services on a basis other than those specified in paragraphs (d)(1) (i) through (iii) of this section, e.g., an admission tax, and the State establishes to the satisfaction of the Secretary that the amount of the tax is the same for each provider of such items or services in the class.
(2) A tax imposed with respect to a class of health care items or services will not be considered to be imposed uniformly if it meets either one of the following two criteria:
(i) The tax provides for credits, exclusions, or deductions which have as its purpose, or results in, the return to providers of all, or a portion, of the tax paid, and it results, directly or indirectly, in a tax program in which –
(A) The net impact of the tax and payments is not generally redistributive, as specified in paragraph (e) of this section; and
(B) The amount of the tax is directly correlated to payments under the Medicaid program.
(ii) The tax holds taxpayers harmless for the cost of the tax, as described in paragraph (f) of this section.
(3) If a tax does not meet the criteria specified in paragraphs (d)(1)(i) through (iv) of this section, but the State establishes that the tax is imposed uniformly in accordance with the procedures for a waiver specified in § 433.72, the tax will be treated as a uniform tax.
(e) Generally redistributive. A tax will be considered to be generally redistributive if it meets the requirements of this paragraph. If the State desires waiver of only the broad-based tax requirement, it must demonstrate compliance with paragraph (e)(1) of this section. If the State desires waiver of the uniform tax requirement, whether or not the tax is broad-based, it must demonstrate compliance with paragraph (e)(2) of this section.
(1) Waiver of broad-based requirement only. This test is applied on a per class basis to a tax that is imposed on all revenues but excludes certain providers. For example, a tax that is imposed on all revenues (including Medicare and Medicaid) but excludes teaching hospitals would have to meet this test. This test cannot be used when a State excludes any or all Medicaid revenue from its tax in addition to the exclusion of providers, since the test compares the proportion of Medicaid revenue being taxed under the proposed tax with the proportion of Medicaid revenue being taxed under a broad-based tax.
(i) A State seeking waiver of the broad-based tax requirement only must demonstrate that its proposed tax plan meets the requirement that its plan is generally redistributive by:
(A) Calculating the proportion of the tax revenue applicable to Medicaid if the tax were broad based and applied to all providers or activities within the class (called P1);
(B) Calculating the proportion of the tax revenue applicable to Medicaid under the tax program for which the State seeks a waiver (called P2); and
(C) Calculating the value of P1/P2.
(ii) If the State demonstrates to the Secretary’s satisfaction that the value of P1/P2 is at least 1, CMS will automatically approve the waiver request.
(iii) If a tax is enacted and in effect prior to August 13, 1993, and the State demonstrates to the Secretary’s satisfaction that the value of P1/P2 is at least 0.90, CMS will review the waiver request. Such a waiver will be approved only if the following two criteria are met:
(A) The value of P1/P2 is at least 0.90; and
(B) The tax excludes or provides credits or deductions only to one or more of the following providers of items and services within the class to be taxed:
(1) Providers that furnish no services within the class in the State;
(2) Providers that do not charge for services within the class;
(3) Rural hospitals (defined as any hospital located outside of an urban area as defined in § 412.62(f)(1)(ii) of this chapter);
(4) Sole community hospitals as defined in § 412.92(a) of this chapter;
(5) Physicians practicing primarily in medically underserved areas as defined in section 1302(7) of the Public Health Service Act;
(6) Financially distressed hospitals if:
(i) A financially distressed hospital is defined by the State law;
(ii) The State law specifies reasonable standards for determining financially distressed hospitals, and these standards are applied uniformly to all hospitals in the State; and
(iii) No more than 10 percent of nonpublic hospitals in the State are exempt from the tax;
(7) Psychiatric hospitals; or
(8) Hospitals owned and operated by HMOs.
(iv) If a tax is enacted and in effect after August 13, 1993, and the State demonstrates to the Secretary’s satisfaction that the value of P1/P2 is at least 0.95, CMS will review the waiver request. Such a waiver request will be approved only if the following two criteria are met:
(A) The value of P1/P2 is at least 0.95; and
(B) The tax complies with the provisions of § 433.68(e)(1)(iii)(B).
(2) Waiver of uniform tax requirement. This test is applied on a per class basis to all taxes that are not uniform. This includes those taxes that are neither broad based (as specified in § 433.68(c)) nor uniform (as specified in § 433.68(d)).
(i) A State seeking waiver of the uniform tax requirement (whether or not the tax is broad based) must demonstrate that its proposed tax plan meets the requirement that its plan is generally redistributive by:
(A) Calculating, using ordinary least squares, the slope (designated as (B) (that is. the value of the x coefficient) of two linear regressions, in which the dependent variable is each provider’s percentage share of the total tax paid by all taxpayers during a 12-month period, and the independent variable is the taxpayer’s “Medicaid Statistic”. The term “Medicaid Statistic” means the number of the provider’s taxable units applicable to the Medicaid program during a 12-month period. If, for example, the State imposed a tax based on provider charges, the amount of a provider’s Medicaid charges paid during a 12-month period would be its “Medicaid Statistic”. If the tax were based on provider inpatient days, the number of the provider’s Medicaid days during a 12-month period would be its “Medicaid Statistic”. For the purpose of this test, it is not relevant that a tax program exempts Medicaid from the tax.
(B) Calculating the slope (designated as B1) of the linear regression, as described in paragraph (e)(2)(i) of this section, for the State’s tax program, if it were broad based and uniform.
(C) Calculating the slope (designated as B2) of the linear regression, as described in paragraph (e)(2)(i) of this section, for the State’s tax program, as proposed.
(ii) If the State demonstrates to the Secretary’s satisfaction that the value of B1/B2 is at least 1, CMS will automatically approve the waiver request.
(iii) If the State demonstrates to the Secretary’s satisfaction that the value of B1/B2 is at least 0.95, CMS will review the waiver request. Such a waiver will be approved only if the following two criteria are met:
(A) The value of B1/B2 is at least 0.95; and
(B) The tax excludes or provides credits or deductions only to one or more of the following providers of items and services within the class to be taxes:
(1) Providers that furnish no services within the class in the State;
(2) Providers that do not charge for services within the class;
(3) Rural hospitals (defined as any hospital located outside of an urban area as defined in § 412.62(f)(1)(ii) of this chapter;
(4) Sole community hospitals as defined in § 412.92(a) of this chapter;
(5) Physicians practicing primarily in medically underserved areas as defined in section 1302(7) of the Public Health Service Act;
(6) Financially distressed hospitals if:
(i) A financially distressed hospital is defined by the State law;
(ii) The State law specifies reasonable standards for determining financially distressed hospitals, and these standards are applied uniformly to all hospitals in the State; and
(iii) No more than 10 percent of nonpublic hospitals in the State are exempt from the tax;
(7) Psychiatric hospitals; or
(8) Providers or payers with tax rates that vary based exclusively on regions, but only if the regional variations are coterminous with preexisting political (and not special purpose) boundaries. Taxes within each regional boundary must meet the broad-based and uniformity requirements as specified in paragraphs (c) and (d) of this section.
(iv) A B1/B2 value of 0.70 will be applied to taxes that vary based exclusively on regional variations, and enacted and in effect prior to November 24, 1992, to permit such variations.
(f) Hold harmless. A taxpayer will be considered to be held harmless under a tax program if any of the following conditions applies:
(1) The State (or other unit of government) imposing the tax provides for a direct or indirect non-Medicaid payment to those providers or others paying the tax and the payment amount is positively correlated to either the tax amount or to the difference between the Medicaid payment and the tax amount. A positive correlation includes any positive relationship between these variables, even if not consistent over time.
(2) All or any portion of the Medicaid payment to the taxpayer varies based only on the tax amount, including where Medicaid payment is conditional on receipt of the tax amount.
(3) The State (or other unit of government) imposing the tax provides for any direct or indirect payment, offset, or waiver such that the provision of that payment, offset, or waiver directly or indirectly guarantees to hold taxpayers harmless for all or any portion of the tax amount.
(i)(A) An indirect guarantee will be determined to exist under a two prong “guarantee” test. If the health care-related tax or taxes on each health care class are applied at a rate that produces revenues less than or equal to 6 percent of the revenues received by the taxpayer, the tax or taxes are permissible under this test. The phrase “revenues received by the taxpayer” refers to the net patient revenue attributable to the assessed permissible class of health care items or services. However, for the period of January 1, 2008 through September 30, 2011, the applicable percentage of net patient service revenue is 5.5 percent. Compliance in State fiscal year 2008 will be evaluated from January 1, 2008 through the last day of State fiscal year 2008. Beginning with State fiscal year 2009 the 5.5 percent tax collection will be measured on an annual State fiscal year basis.
(B) When the tax or taxes produce revenues in excess of the applicable percentage of the revenue received by the taxpayer, CMS will consider an indirect hold harmless provision to exist if 75 percent or more of the taxpayers in the class receive 75 percent or more of their total tax costs back in enhanced Medicaid payments or other State payments. The second prong of the indirect hold harmless test is applied in the aggregate to all health care taxes applied to each class. If this standard is violated, the amount of tax revenue to be offset from medical assistance expenditures is the total amount of the taxpayers’ revenues received by the State.
(ii) [Reserved]
(a) Limitations. Beginning October 1, 1995, there is no limitation on the amount of health care-related taxes that a State may receive without a reduction in FFP, as long as the health care-related taxes meet the requirements specified in § 433.68.
(b) Calculation of FFP. CMS will deduct from a State’s medical assistance expenditures, before calculating FFP, revenues from health care-related taxes that do not meet the requirements of § 433.68 and any health care-related taxes in excess of the limits specified in paragraph (a)(1) of this section.
(a) Bases for requesting waiver. (1) A State may submit to CMS a request for a waiver if a health care-related tax does not meet any or all of the following:
(i) The tax does not meet the broad based criteria specified in § 433.68c); and/or
(ii) The tax is not imposed uniformly but meets the criteria specified in § 433.68(d)(2) or (d)(3).
(2) When a tax that meets the criteria specified in paragraph (a)(1) of this section is imposed on more than one class of health care items or services, a separate waiver must be obtained for each class of health care items and services subject to the tax.
(b) Waiver conditions. In order for CMS to approve a waiver request that would permit a State to receive tax revenue (within specified limitations) without a reduction in FFP, the State must demonstrate, to CMS’s satisfaction, that its tax program meets all of the following requirements:
(1) The net impact of the tax and any payments made to the provider by the State under the Medicaid program is generally redistributive, as described in § 433.68(e);
(2) The amount of the tax is not directly correlated to Medicaid payments; and
(3) The tax program does not fall within the hold harmless provisions specified in § 433.68(f).
(c) Effective date. A waiver will be effective:
(1) The date of enactment of the tax for programs in existence prior to August 13, 1993 or;
(2) For tax programs commencing on or after August 13, 1993, on the first day in the quarter in which the waiver is received by CMS.
§ 433.74 Reporting requirements.
(a) Beginning with the first quarter of Federal fiscal year 1993, each State must submit to CMS quarterly summary information on the source and use of all provider-related donations (including all bona fide and presumed-to-be bona fide donations) received by the State or unit of local government, and health care-related taxes collected. Each State must also provide any additional information requested by the Secretary related to any other donations made by, or any taxes imposed on, health care providers. States’ reports must present a complete, accurate, and full disclosure of all of their donation and tax programs and expenditures.
(b) Each State must provide the summary information specified in paragraph (a) of this section on a quarterly basis in accordance with procedures established by CMS.
(c) Each State must maintain, in readily reviewable form, supporting documentation that provides a detailed description and legal basis for each donation and tax program being reported, as well as the source and use of all donations received and taxes collected. This information must be made available to Federal reviewers upon request.
(d) If a State fails to comply with the reporting requirements contained in this section, future grant awards will be reduced by the amount of FFP CMS estimates is attributable to the sums raised by tax and donation programs as to which the State has not reported properly, until such time as the State complies with the reporting requirements. Deferrals and/or disallowances of equivalent amounts may also be imposed with respect to quarters for which the State has failed to report properly. Unless otherwise prohibited by law, FFP for those expenditures will be released when the State complies with all reporting requirements.
Subpart C – Mechanized Claims Processing and Information Retrieval Systems
§ 433.110 Basis, purpose, and applicability.
(a) This subpart implements the following sections of the Act:
(1) Section 1903(a)(3) of the Act, which provides for FFP in State expenditures for the design, development, or installation of mechanized claims processing and information retrieval systems and for the operation of certain systems. Additional HHS regulations and CMS procedures for implementing these regulations are in 45 CFR part 75, 45 CFR part 95, subpart F, and part 11, State Medicaid Manual; and
(2) Section 1903(r) of the Act, which imposes certain standards and conditions on mechanized claims processing and information retrieval systems (including eligibility determination systems) in order for these systems to be eligible for Federal funding under section 1903(a) of the Act.
(b) [Reserved]
§ 433.111 Definitions.
For purposes of this section:
(a) The following terms are defined at 45 CFR part 95, subpart F § 95.605:
(b) “Mechanized claims processing and information retrieval system” means:
(1) “Mechanized claims processing and information retrieval system” means the system of software and/or hardware used to process claims for medical assistance and to retrieve and produce service utilization and management information required by the Medicaid single state agency and Federal government for program administration and audit purposes. It may include modules of hardware, software, and other technical capabilities that are used by the Medicaid Single State Agency to manage, monitor, and administer the Medicaid enterprise, including transaction processing, information management, and reporting and data analytics.
(2) “Mechanized claims processing and information retrieval system” includes a “System of Systems.” Under this definition all modules or systems developed to support a Medicaid Management Information System (MMIS) and Eligibility and Enrollment (E&E) may be implemented as discrete, independent, interoperable elements. Use of a System of Systems requires interoperability between the systems.
(i) The system consists of –
(A) Required modules specified by the Secretary.
(B) Required changes to the system or required module that are specified by the Secretary.
(C) Approved enhancements to the system or module.
(ii) A “Mechanized claims processing and information retrieval system” include – s –
(A) An Eligibility and Enrollment (E&E) System which is used to process applications from Medicaid or CHIP applicants and beneficiaries to determine eligibility for enrollment in the Medicaid or CHIP programs, as well as change in circumstance updates and renewals; and
(B) A Medicaid Management Information System (MMIS) which is used to process claims for Medicaid payment from providers of medical care and services furnished to beneficiaries under the medical assistance program and to perform other functions necessary for economic and efficient operations, management, monitoring, and administration of the Medicaid program. The pertinent business areas are those included in the MMIS Certification Toolkit, and they may be applicable to Fee-For-Service, Managed Care, or an Administrative Services Organization (ASO) model.
(c) “Medicaid Information Technology Architecture (MITA)” is defined at § 495.302 of this chapter.
(d) “Open source” means software that can be used freely, changed, and shared (in modified or unmodified form) by anyone. Open source software is distributed under Open Source Initiative-approved licenses that comply with an open source framework that allows for free redistribution, provision of the source code, allowance for modifications and derived works, free and open distribution of licenses without restrictions and licenses that are technology-neutral.
(e) “Proprietary” means a closed source product licensed under exclusive legal right of the copyright holder with the intent that the licensee is given the right to use the software only under certain conditions, and restricted from other uses, such as modification, sharing, studying, redistribution, or reverse engineering.
(f) “Service” means a self-contained unit of functionality that is a discretely invokable operation. Services can be combined to provide the functionality of a large software application.
(g) “Shared Service” means the use of a service, including SaaS, by one part of an organization or group, including states, where that service is also made available to other entities of the organization, group or states. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider.
(h) “Module” means a packaged, functional business process or set of processes implemented through software, data, and interoperable interfaces that are enabled through design principles in which functions of a complex system are partitioned into discrete, scalable, reusable components.
(i) “Commercial Off the Shelf” (COTS) software means specialized software (which could be a system, subsystem or module) designed for specific applications that is available for sale or lease to other users in the commercial marketplace, and that can be used with little or no modification.
(j) “Software-as-a-Service” (SaaS) means a software delivery model in which software is managed and licensed by its vendor-owner on a pay-for-use or subscription basis, centrally hosted, on-demand, and common to all users.
§ 433.112 FFP for design, development, installation or enhancement of mechanized processing and information retrieval systems.
(a) Subject to paragraph (c) of this section, FFP is available at the 90 percent rate in State expenditures for the design, development, installation, or enhancement of a mechanized claims processing and information retrieval system only if the APD is approved by CMS prior to the State’s expenditure of funds for these purposes.
(b) CMS will approve the E&E or claims system described in an APD if certain conditions are met. The conditions that a system must meet are:
(1) CMS determines the system is likely to provide more efficient, economical, and effective administration of the State plan.
(2) The system meets the system requirements, standards and conditions, and performance standards in Part 11 of the State Medicaid Manual, as periodically amended.
(3) The system is compatible with the claims processing and information retrieval systems used in the administration of Medicare for prompt eligibility verification and for processing claims for persons eligible for both programs.
(4) The system supports the data requirements of quality improvement organizations established under Part B of title XI of the Act.
(5) The State owns any software that is designed, developed, installed or improved with 90 percent FFP.
(6) The Department has a royalty free, non-exclusive, and irrevocable license to reproduce, publish, or otherwise use and authorize others to use, for Federal Government purposes, software, modifications to software, and documentation that is designed, developed, installed or enhanced with 90 percent FFP.
(7) The costs of the system are determined in accordance with 45 CFR 75, subpart E.
(8) The Medicaid agency agrees in writing to use the system for the period of time specified in the advance planning document approved by CMS or for any shorter period of time that CMS determines justifies the Federal funds invested.
(9) The agency agrees in writing that the information in the system will be safeguarded in accordance with subpart F, part 431 of this subchapter.
(10) Use a modular, flexible approach to systems development, including the use of open interfaces and exposed application programming interfaces; the separation of business rules from core programming, available in both human and machine readable formats.
(11) Align to, and advance increasingly, in MITA maturity for business, architecture, and data.
(12) The agency ensures alignment with, and incorporation of, industry standards adopted by the Office of the National Coordinator for Health IT in accordance with 45 CFR part 170, subpart B: The HIPAA privacy, security and transaction standards; accessibility standards established under section 508 of the Rehabilitation Act, or standards that provide greater accessibility for individuals with disabilities, and compliance with Federal civil rights laws; standards adopted by the Secretary under section 1104 of the Affordable Care Act; and standards and protocols adopted by the Secretary under section 1561 of the Affordable Care Act.
(13) Promote sharing, leverage, and reuse of Medicaid technologies and systems within and among States.
(14) Support accurate and timely processing and adjudications/eligibility determinations and effective communications with providers, beneficiaries, and the public.
(15) Produce transaction data, reports, and performance information that would contribute to program evaluation, continuous improvement in business operations, and transparency and accountability.
(16) The system supports seamless coordination and integration with the Marketplace, the Federal Data Services Hub, and allows interoperability with health information exchanges, public health agencies, human services programs, and community organizations providing outreach and enrollment assistance services as applicable.
(17) For E&E systems, the State must have delivered acceptable MAGI-based system functionality, demonstrated by performance testing and results based on critical success factors, with limited mitigations and workarounds.
(18) The State must submit plans that contain strategies for reducing the operational consequences of failure to meet applicable requirements for all major milestones and functionality.
(19) The agency, in writing through the APD, must identify key state personnel by name, type and time commitment assigned to each project.
(20) Systems and modules developed, installed or improved with 90 percent match must include documentation of components and procedures such that the systems could be operated by a variety of contractors or other users.
(21) For software systems and modules developed, installed or improved with 90 percent match, the State must consider strategies to minimize the costs and difficulty of operating the software on alternate hardware or operating systems.
(22) Other conditions for compliance with existing statutory and regulatory requirements, issued through formal guidance procedures, determined by the Secretary to be necessary to update and ensure proper implementation of those existing requirements.
(c)(1) FFP is available at 90 percent of a State’s expenditures for the design, development, installation or enhancement of an E&E system that meets the requirements of this subpart and only for costs incurred for goods and services provided on or after April 19, 2011.
(2) Design, development, installation, or enhancement costs include costs for initial licensing of commercial off the shelf (COTS) software, and the minimum necessary costs to analyze the suitability of COTS software, install, configure and integrate the COTS software, and modify non-COTS software to ensure coordination of operations. The nature and extent of such costs must be expressly described in the approved APD.
§ 433.114 Procedures for obtaining initial approval; notice of decision.
(a) To obtain initial approval, the Medicaid agency must inform CMS in writing that the system meets the conditions specified in § 433.116(c) through (i).
(b) If CMS disapproves the system, the notice will include all of the following information:
(1) The findings of fact upon which the determination was made.
(2) The procedures for appeal of the determination in the context of a reconsideration of the resulting disallowance to the Departmental Appeals Board.
§ 433.116 FFP for operation of mechanized claims processing and information retrieval systems.
(a) Subject to paragraph (j) of this section, FFP is available at 75 percent of expenditures for operation of a mechanized claims processing and information retrieval system approved by CMS, from the first day of the calendar quarter after the date the system met the conditions of initial approval, as established by CMS (including a retroactive adjustment of FFP if necessary to provide the 75 percent rate beginning on the first day of that calendar quarter). Subject to 45 CFR 95.611(a), the State shall obtain prior written approval from CMS when it plans to acquire ADP equipment or services, when it anticipates the total acquisition costs will exceed thresholds, and meets other conditions of the subpart.
(b) CMS will approve enhanced FFP for system operations if the conditions specified in paragraphs (c) through (i) of this section are met.
(c) The conditions of § 433.112(b)(1) through (22) must be met at the time of approval.
(d) The system must have been operating continuously during the period for which FFP is claimed.
(e) The system must provide individual notices, within 45 days of the payment of claims, to all or a sample group of the persons who received services under the plan.
(f) The notice required by paragraph (e) of this section –
(1) Must specify –
(i) The service furnished;
(ii) The name of the provider furnishing the service;
(iii) The date on which the service was furnished; and
(iv) The amount of the payment made under the plan for the service; and
(2) Must not specify confidential services (as defined by the State) and must not be sent if the only service furnished was confidential.
(g) The system must provide both patient and provider profiles for program management and utilization review purposes.
(h) If the State has a Medicaid fraud control unit certified under section 1903(q) of the Act and § 455.300 of this chapter, the Medicaid agency must have procedures to assure that information on probable fraud or abuse that is obtained from, or developed by, the system is made available to that unit. (See § 455.21 of this chapter for State plan requirements.)
(i) The standards and conditions of § 433.112(b)(10) through (b)(16) of this subpart must be met.
(j) Beginning, and no earlier than, April 19, 2011, FFP is available at 75 percent of a State’s expenditures for the operation of an E&E system that meets the requirements of this subpart. FFP is not available for E&E systems that do not meet the standards and conditions.
§ 433.117 Initial approval of replacement systems.
(a) A replacement system must meet all standards and conditions of initial approval of a mechanized claims processing and information retrieval system.
(b) The agency must submit a APD that includes –
(1) The date the replacement system will be in operation; and
(2) A plan for orderly transition from the system being replaced to the replacement system.
(c) FFP is available at –
(1) 90 percent in expenditures for design, development, and installation in accordance with the provisions of § 433.112; and
(2) 75 percent in expenditures for operation of an approved replacement system in accordance with the provisions of § 433.116(b) through (j), from the date that the system met the conditions of initial approval, as established by CMS.
(d) FFP is available at 75 percent in expenditures for the operation of an approved system that is being replaced (or at a reduced rate determined under § 433.120 of this subpart for a system that has been disapproved) until the replacement system is in operation and approved.
§ 433.119 Conditions for reapproval; notice of decision.
(a) CMS periodically reviews each system operation initially approved under § 433.114 of this subpart and reapproves it for FFP at 75 percent of expenditures if the following standards and conditions are met:
(1) The system meets the requirements of § 433.112(b)(1), (3), (4), and (7) through (22).
(2) The system meets the conditions of § 433.116 (d) through (j).
(3) The system meets the standards, conditions, and performance standards for reapproval and the system requirements in part 11 of the State Medicaid Manual as periodically amended.
(4) A State system must meet all of the requirements of this subpart within the appropriate period CMS determines should apply as required by § 433.123(b) of this subpart.
(b) CMS may review an entire system operation or focus its review on parts of the operation. However, at a minimum, CMS will review standards, system requirements and other conditions of reapproval that have demonstrated weakness in a previous review or reviews.
(c) After performing the review under paragraph (a) of this section, CMS will issue to the Medicaid agency a written notice informing the agency whether the system is reapproved or disapproved. If the system is disapproved, the notice will include the following information:
(1) CMS’s decision to reduce FFP for system operations from 75 percent to 50 percent of expenditures, beginning with the first day of the first calendar quarter after CMS issues the written notice to the State.
(2) The findings of fact upon which the determination was made.
(3) A statement that State claims in excess of the reduced FFP rate will be disallowed and that any such disallowance will be appealable to the Departmental Appeals Board.
§ 433.120 Procedures for reduction of FFP after reapproval review.
(a) If CMS determines after the reapproval review that the system no longer meets the conditions for reapproval in § 433.119, CMS may reduce FFP for certain expenditures for system operations.
(b) CMS may reduce FFP from 75 percent to 50 percent for expenditures related to the operations of non-compliant functionality or system components.
§ 433.121 Reconsideration of the decision to reduce FFP after reapproval review.
(a) The State Medicaid agency may appeal (to the Departmental Appeals Board under 45 CFR part 16) a disallowance concerning a reduction in FFP claimed for system operations caused by a disapproval of the State’s system.
(b) The decisions concerning whether to restore any FFP retroactively and the actual number of quarters for which FFP will be restored under § 433.122 of this subpart are not subject to administrative appeal to the Departmental Appeals Board under 45 CFR part 16.
(c) An agency’s request for a reconsideration before the Board under paragraph (a) of this section does not delay implementation of the reduction in FFP. However, any reduction is subject to retroactive adjustment if required by the Board’s determination on reconsideration.
§ 433.122 Reapproval of a disapproved system.
When FFP has been reduced under § 433.120(a), and CMS determines upon subsequent review that the system meets all current performance standards, system requirements and other conditions of reapproval, the following provisions apply:
(a) CMS will resume FFP in expenditures for system operations at the 75 percent level beginning with the quarter following the review determination that the system again meets conditions of reapproval.
(b) CMS may retroactively waive a reduction of FFP in expenditures for system operations if CMS determines that the waiver could improve the administration of the State Medicaid plan. However, CMS cannot waive this reduction for any quarter before the fourth quarter immediately preceding the quarter in which CMS issues the determination (as part of the review process) stating that the system is reapproved.
§ 433.123 Notification of changes in system requirements, performance standards or other conditions for approval or reapproval.
(a) Whenever CMS modifies system requirements or other conditions for approval under § 433.112 or § 433.116, CMS will –
(1) Publish a notice in the
(2) Respond in a subsequent
(3) Issue the new or modified requirements or conditions in the State Medicaid Manual.
(b) For changes in system requirements or other conditions for approval, CMS will allow an appropriate period for Medicaid agencies to meet the requirement determining this period on the basis of the requirement’s complexity and other relevant factors.
(c) Whenever CMS modifies performance standards and other conditions for reapproval under § 433.119, CMS will notify Medicaid agencies at least one calendar quarter before the review period to which the new or modified standards or conditions apply.
§ 433.127 Termination of FFP for failure to provide access to claims processing and information retrieval systems.
CMS will terminate FFP at any time if the Medicaid agency fails to provide State and Federal representatives with full access to the system, including on-site inspection. CMS may request such access at any time to determine whether the conditions in this subpart are being met.
§ 433.131 Waiver for noncompliance with conditions of approval and reapproval.
If a State is unable to comply with the conditions of approval or of reapproval and the noncompliance will cause a percentum reduction in FFP, CMS will waive the FFP reduction in the following circumstances:
(a) Good cause. If CMS determines that good cause existed, CMS will waive the FFP reduction attributable to those items for which the good cause existed. A waiver of FFP consequences of the failure to meet the conditions of approval or reapproval based upon good cause will not extend beyond two consecutive quarters.
(b) Circumstances beyond the control of a State. The State must satisfactorily explain the circumstances that are beyond its control. When CMS grants the waiver, CMS will also defer all other system deadlines for the same length of time that the waiver applies.
(c) Waiver of deadline. In no case will CMS waive the December 31, 2015 deadlines referenced in § 433.112(c) and § 433.116(j).
Subpart D – Third Party Liability
§ 433.135 Basis and purpose.
This subpart implements sections 1902(a)(25), 1902(a)(45), 1903(d)(2), 1903(o), 1903(p), and 1912 of the Act by setting forth State plan requirements concerning –
(a) The legal liability of third parties to pay for services provided under the plan;
(b) Assignment to the State of an individual’s rights to third party payments; and
(c) Cooperative agreements between the Medicaid agency and other entities for obtaining third party payments.
§ 433.136 Definitions.
For purposes of this subpart –
Private insurer means:
(1) Any commercial insurance company offering health or casualty insurance to individuals or groups (including both experience-rated insurance contracts and indemnity contracts);
(2) Any profit or nonprofit prepaid plan offering either medical services or full or partial payment for services included in the State plan; and
(3) Any organization administering health or casualty insurance plans for professional associations, unions, fraternal groups, employer-employee benefit plans, and any similar organization offering these payments or services, including self-insured and self-funded plans.
Third party means any individual, entity or program that is or may be liable to pay all or part of the expenditures for medical assistance furnished under a State plan.
Title IV-D agency means the organizational unit in the State that has the responsibility for administering or supervising the administration of a State plan for child support enforcement under title IV-D of the Act.
§ 433.137 State plan requirements.
(a) A State plan must provide that the requirements of §§ 433.138 and 433.139 are met for identifying third parties liable for payment of services under the plan and for payment of claims involving third parties.
(b) A State plan must provide that –
(1) The requirements of §§ 433.145 through 433.148 are met for assignment of rights to benefits, cooperation with the agency in obtaining medical support or payments, and cooperation in identifying and providing information to assist the State in pursuing any liable third parties; and
(2) The requirements of §§ 433.151 through 433.154 are met for cooperative agreements and incentive payments for third party collections.
(c) The requirements of paragraph (b)(1) of this section relating to assignment of rights to benefits and cooperation in obtaining medical support or payments and paragraph (b)(2) of this section are effective for medical assistance furnished on or after October 1, 1984. The requirements of paragraph (b)(1) of this section relating to cooperation in identifying and providing information to assist the State in pursuing liable third parties are effective for medical assistance furnished on or after July 1, 1986.
§ 433.138 Identifying liable third parties.
(a) Basic provisions. The agency must take reasonable measures to determine the legal liability of the third parties who are liable to pay for services furnished under the plan. At a minimum, such measures must include the requirements specified in paragraphs (b) through (k) of this section, unless waived under paragraph (l) of this section.
(b) Obtaining health insurance information: Initial application and redetermination processes for Medicaid eligibility. (1) If the Medicaid agency determines eligibility for Medicaid, it must, during the initial application and each redetermination process, obtain from the applicant or beneficiary such health insurance information as would be useful in identifying legally liable third party resources so that the agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f). Health insurance information may include, but is not limited to, the name of the policy holder, his or her relationship to the applicant or beneficiary, the social security number (SSN) of the policy holder, and the name and address of insurance company and policy number.
(2) If Medicaid eligibility is determined by the Federal agency administering the supplemental security income program under title XVI in accordance with a written agreement under section 1634 of the Act, the Medicaid agency must take the following action. It must enter into an agreement with CMS or must have, prior to February 1, 1985, executed a modified section 1634 agreement that is still in effect to provide for –
(i) Collection, from the applicant or beneficiary during the initial application and each redetermination process, of health insurance information in the form and manner specified by the Secretary; and
(ii) Transmittal of the information to the Medicaid agency.
(3) If Medicaid eligibility is determined by any other agency in accordance with a written agreement, the Medicaid agency must modify the agreement to provide for –
(i) Collection, from the applicant or beneficiary during the initial application and each redetermination process, of such health insurance information as would be useful in identifying legally liable third party resources so that the Medicaid agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f). Health insurance information may include, but is not limited to, those elements described in paragraph (b)(1) of this section; and
(ii) Transmittal of the information to the Medicaid agency.
(c) Obtaining other information. Except as provided in paragraph (l) of this section, the agency must, for the purpose of implementing the requirements in paragraphs (d)(1)(ii) and (d)(4)(i) of this section, incorporate into the eligibility case file the names and SSNs of absent or custodial parents of Medicaid beneficiaries to the extent such information is available.
(d) Exchange of data. Except as provided in paragraph (l) of this section, to obtain and use information for the purpose of determining the legal liability of the third parties so that the agency may process claims under the third party liability payment procedures specified in § 433.139(b) through (f), the agency must take the following actions:
(1) Except as specified in paragraph (d)(2) of this section, as part of the data exchange requirements under § 435.945 of this chapter, from the State wage information collection agency (SWICA) defined in § 435.4 of this chapter and from the SSA wage and earnings files data as specified in § 435.948(a)(1) of this chapter, the agency must –
(i) Use the information that identifies Medicaid beneficiaries that are employed and their employer(s); and
(ii) Obtain and use, if their names and SSNs are available to the agency under paragraph (c) of this section, information that identifies employed absent or custodial parents of beneficiaries and their employer(s).
(2) If the agency can demonstrate to CMS that it has an alternate source of information that furnishes information as timely, complete and useful as the SWICA and SSA wage and earnings files in determining the legal liability of third parties, the requirements of paragraph (d)(1) of this section are deemed to be met.
(3) The agency must request, as required under § 435.948(a)(2) of this chapter, from the State title IV-A agency, information not previously reported that identifies those Medicaid beneficiaries who are employed and their employer(s).
(4) Except as specified in paragraph (d)(5) of this section, the agency must attempt to secure agreements (to the extent permitted by State law) to provide for obtaining –
(i) From State Workers’ Compensation or Industrial Accident Commission files, information that identifies Medicaid beneficiaries and, (if their names and SSNs were available to the agency under paragraph (c) of this section) absent or custodial parents of Medicaid beneficiaries with employment-related injuries or illnesses; and
(ii) From State Motor Vehicle accident report files, information that identifies those Medicaid beneficiaries injured in motor vehicle accidents, whether injured as pedestrians, drivers, passengers, or bicyclists.
(5) If unable to secure agreements as specified in paragraph (d)(4) of this section, the agency must submit documentation to the regional office that demonstrates the agency made a reasonable attempt to secure these agreements. If CMS determines that a reasonable attempt was made, the requirements of paragraph (d)(4) of this section are deemed to be met.
(e) Diagnosis and trauma code edits. Except as specified under paragraph (l) of this section, the agency must take action to identify those paid claims for Medicaid beneficiaries that contain diagnosis codes that are indicative of trauma, or injury, poisoning, and other consequences of external causes, for the purpose of determining the legal liability of third parties so that the agency may process claims under the third party liability payment procedures specified in § 433.139(b) through (f).
(f) Data exchanges and trauma code edits: Frequency. Except as provided in paragraph (l) of this section, the agency must conduct the data exchanges required in paragraphs (d)(1) and (3) of this section, and diagnosis and trauma edits required in paragraphs (d)(4) and (e) of this section on a routine and timely basis. The State plan must specify the frequency of these activities.
(g) Followup procedures for identifying legally liable third party resources. Except as provided in paragraph (l) of this section, the State must meet the requirements of this paragraph.
(1) SWICA, SSA wage and earnings files, and title IV-A data exchanges. With respect to information obtained under paragraphs (d)(1) through (d)(3) of this section –
(i) Within 45 days, the agency must follow up (if appropriate) on such information to identify legally liable third party resources and incorporate such information into the eligibility case file and into its third party data base and third party recovery unit so the agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f); and
(ii) The State plan must describe the methods the agency uses for meeting the requirements of paragraph (g)(1)(i) of this section.
(2) Health insurance information and workers’ compensation data exchanges. With respect to information obtained under paragraphs (b) and (d)(4)(i) of this section –
(i) Within 60 days, the agency must followup on such information (if appropriate) in order to identify legally liable third party resources and incorporate such information into the eligibility case file and into its third party data base and third party recovery unit so the agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f); and
(ii) The State plan must describe the methods the agency uses for meeting the requirements of paragraph (g)(2)(i) of this section.
(3) State motor vehicle accident report file data exchanges. With respect to information obtained under paragraph (d)(4)(ii) of this section –
(i) The State plan must describe the methods the agency uses for following up on such information in order to identify legally liable third party resources so the agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f);
(ii) After followup, the agency must incorporate all information that identifies legally liable third party resources into the eligibility case file and into its third party data base and third party recovery unit; and
(iii) The State plan must specify timeframes for incorporation of the information.
(4) Diagnosis and trauma code edits. With respect to the paid claims identified under paragraph (e) of this section –
(i) The State plan must describe the methods the agency uses to follow up on such claims in order to identify legally liable third party resources so the agency may process claims under the third party liability payment procedures specified in § 433.139 (b) through (f) (Methods must include a procedure for periodically identifying those trauma codes that yield the highest third party collections and giving priority to following up on those codes.);
(ii) After followup, the agency must incorporate all information that identifies legally liable third party resources into the eligibility case file and into its third party data base and third party recovery unit; and
(iii) The State plan must specify the timeframes for incorporation of the information.
(h) Obtaining other information and data exchanges: Safeguarding information. (1) The agency must safeguard information obtained from and exchanged under this section with other agencies in accordance with the requirements set forth in part 431, subpart F of this chapter.
(2) Before requesting information from, or releasing information to other agencies to identify legally liable third party resources under paragraph (d) of this section the agency must execute data exchange agreements with those agencies. The agreements, at a minimum, must specify –
(i) The information to be exchanged;
(ii) The titles of all agency officials with the authority to request third party information;
(iii) The methods, including the formats to be used, and the timing for requesting and providing the information;
(iv) The safeguards limiting the use and disclosure of the information as required by Federal or State law or regulations; and
(v) The method the agency will use to reimburse reasonable costs of furnishing the information if payment is requested.
(i) Reimbursement. The agency must, upon request, reimburse an agency for the reasonable costs incurred in furnishing information under this section to the Medicaid agency.
(j) Reports. The agency must provide such reports with respect to the data exchanges and trauma code edits set forth in paragraphs (d)(1) through (d)(4) and paragraph (e) of this section, respectively, as the Secretary prescribes for the purpose of determining compliance under § 433.138 and evaluating the effectiveness of the third party liability identification system. However, if the State is not meeting the provisions of paragraph (e) of this section because it has been granted a waiver of those provisions under paragraph (l) of this section, it is not required to provide the reports required in this paragraph.
(k) Integration with the State mechanized claims processing and information retrieval system. Basic requirement – Development of an action plan. (1) If a State has a mechanized claims processing and information retrieval system approved by CMS under subpart C of this part, the agency must have an action plan for pursuing third party liability claims and the action plan must be integrated with the mechanized claims processing and information retrieval system.
(2) The action plan must describe the actions and methodologies the State will follow to –
(i) Identify third parties;
(ii) Determine the liability of third parties;
(iii) Avoid payment of third party claims as required in § 433.139;
(iv) Recover reimbursement from third parties after Medicaid claims payment as required in § 433.139; and,
(v) Record information and actions relating to the action plan.
(3) The action plan must be consistent with the conditions for reapproval set forth in § 433.119. The portion of the plan which is integrated with MMIS is monitored in accordance with those conditions and if the conditions are not met; it is subject to FFP reduction in accordance with procedures set forth in § 433.120. The State is not subject to any other penalty as a result of other monitoring, quality control, or auditing requirements for those items in the action plan.
(4) The agency must submit its action plan to the CMS Regional Office within 120 days from the date CMS issues implementing instructions for the State Medicaid Manual. If a State does not have an approved MMIS on the date of issuance of the State Medicaid Manual but subsequently implements an MMIS, the State must submit its action plan within 90 days from the date the system is operational. The CMS Regional Office approves or disapproves the action plan.
(l) Waiver of requirements. (1) The agency may request initial and continuing waiver of the requirements to determine third party liability found in paragraphs (c), (d)(4), (d)(5), (e), (f), (g)(1), (g)(2), (g)(3), and (g)(4) of this section if the State determines the activity to be not cost-effective. An activity would not be cost-effective if the cost of the required activity exceeds the third party liability recoupment and the required activity accomplishes, at the same or at a higher cost, the same objective as another activity that is being performed by the State.
(i) The agency must submit a request for waiver of the requirement in writing to the CMS regional office.
(ii) The request must contain adequate documentation to establish that to meet a requirement specified by the agency is not cost-effective. Examples of documentation are claims recovery data and a State analysis documenting a cost-effective alternative that accomplished the same task.
(iii) The agency must agree, if a waiver is granted, to notify CMS of any event that occurs that changes the conditions upon which the waiver was approved.
(2) CMS will review a State’s request to have a requirement specified under paragraph (l)(1) of this section waived and will request additional information from the State, if necessary. CMS will notify the State of its approval or disapproval determination within 30 days of receipt of a properly documented request.
(3) CMS may rescind a waiver at any time that it determines that the agency no longer meets the criteria for approving the waiver. If the waiver is rescinded, the agency has 6 months from the date of the rescission notice to meet the requirement that had been waived.
§ 433.139 Payment of claims.
(a) Basic provisions. (1) For claims involving third party liability that are processed on or after May 12, 1986, the agency must use the procedures specified in paragraphs (b) through (f) of this section.
(2) The agency must submit documentation of the methods (e.g., cost avoidance, pay and recover later) it uses for payment of claims involving third party liability to the CMS Regional Office.
(b) Probable liability is established at the time claim is filed. Except as provided in paragraph (e) of this section –
(1) If the agency has established the probable existence of third party liability at the time the claim is filed, the agency must reject the claim and return it to the provider for a determination of the amount of liability. The establishment of third party liability takes place when the agency receives confirmation from the provider or a third party resource indicating the extent of third party liability. When the amount of liability is determined, the agency must then pay the claim to the extent that payment allowed under the agency’s payment schedule exceeds the amount of the third party’s payment.
(2) [Reserved]
(3) The agency must pay the full amount allowed under the agency’s payment schedule for the claim and seek reimbursement from any liable third party to the limit of legal liability (and for purposes of paragraph (b)(3)(ii) of this section, from a third party, if the third party liability is derived from an absent parent whose obligation to pay support is being enforced by the State title IV-D agency), consistent with paragraph (f) of this section if –
(i) The claim is for preventive pediatric services, including early and periodic screening, diagnosis and treatment services provided for under part 441, subpart B, of this chapter, that are covered under the State plan; or
(ii) The claim is for a service covered under the State plan that is provided to an individual on whose behalf child support enforcement is being carried out by the State title IV-D agency. The agency prior to making any payment under this section must assure that the following requirements are met:
(A) The State plan specifies whether or not providers are required to bill the third party.
(B) For child support enforcement services beginning February 9, 2018, the provider certifies that before billing Medicaid, if the provider has billed a third party, the provider has waited 100 days from the date of the service and has not received payment from the third party.
(C) The State plan specifies the method used in determining the provider’s compliance with the billing requirements.
(c) Probable liability is not established or benefits are not available at the time claim is filed. If the probable existence of third party liability cannot be established or third party benefits are not available to pay the beneficiary’s medical expenses at the time the claim is filed, the agency must pay the full amount allowed under the agency’s payment schedule.
(d) Recovery of reimbursement. (1) If the agency has an approved waiver under paragraph (e) of this section to pay a claim in which the probable existence of third party liability has been established and then seek reimbursement, the agency must seek recovery of reimbursement from the third party to the limit of legal liability within 60 days after the end of the month in which payment is made unless the agency has a waiver of the 60-day requirement under paragraph (e) of this section.
(2) Except as provided in paragraph (e) of this section, if the agency learns of the existence of a liable third party after a claim is paid, or benefits become available from a third party after a claim is paid, the agency must seek recovery of reimbursement within 60 days after the end of the month it learns of the existence of the liable third party or benefits become available.
(3) Reimbursement must be sought unless the agency determines that recovery would not be cost effective in accordance with paragraph (f) of this section.
(e) Waiver of requirements. (1) The agency may request initial and continuing waiver of the requirements in paragraphs (b)(1), (d)(1), and (d)(2) of this section, if it determines that the requirement is not cost-effective. An activity would not be cost-effective if the cost of the required activity exceeds the third party liability recoupment and the required activity accomplishes, at the same or at a higher cost, the same objective as another activity that is being performed by the State.
(i) The agency must submit a request for waiver of the requirement in writing to the CMS regional office.
(ii) The request must contain adequate documentation to establish that to meet a requirement specified by the agency is not cost-effective. Examples of documentation are costs associated with billing, claims recovery data, and a State analysis documenting a cost-effective alternative that accomplishes the same task.
(iii) The agency must agree, if a waiver is granted, to notify CMS of any event that occurs that changes the conditions upon which the waiver was approved.
(2) CMS will review a State’s request to have a requirement specified under paragraph (e)(1) of this section waived and will request additional information from the State, if necessary. CMS will notify the State of its approval or disapproval determination within 30 days of receipt of a properly documented request.
(3) CMS may rescind the waiver at any time that it determines that the State no longer meets the criteria for approving the waiver. If the waiver is rescinded, the agency has 6 months from the date of the rescission notice to meet the requirement that had been waived.
(4) An agency requesting a waiver of the requirements specifically concerning either the 60-day limit in paragraph (d)(1) or (d)(2) of this section must submit documentation of written agreement between the agency and the third party, including Medicare fiscal intermediaries and carriers, that extension of the billing requirement is agreeable to all parties.
(f) Suspension or termination of recovery of reimbursement. (1) An agency must seek reimbursement from a liable third party on all claims for which it determines that the amount it reasonably expects to recover will be greater than the cost of recovery. Recovery efforts may be suspended or terminated only if they are not cost effective.
(2) The State plan must specify the threshold amount or other guideline that the agency uses in determining whether to seek recovery of reimbursement from a liable third party, or describe the process by which the agency determines that seeking recovery of reimbursement would not be cost effective.
(3) The State plan must also specify the dollar amount or period of time for which it will accumulate billings with respect to a particular liable third party in making the decision whether to seek recovery of reimbursement.
(a) FFP is not available in Medicaid payments if –
(1) The agency failed to fulfill the requirements of §§ 433.138 and 433.139 with regard to establishing liability and seeking reimbursement from a third party;
(2) The agency received reimbursement from a liable third party; or
(3) A private insurer would have been obligated to pay for the service except that its insurance contract limits or excludes payments if the individual is eligible for Medicaid.
(b) FFP is available at the 50 percent rate for the agency’s expenditures in carrying out the requirements of this subpart.
(c) If the State receives FFP in Medicaid payments for which it receives third party reimbursement, the State must pay the Federal government a portion of the reimbursement determined in accordance with the FMAP for the State. This payment may be reduced by the total amount needed to meet the incentive payment in § 433.153.
Assignment of Rights to Benefits
§ 433.145 Assignment of rights to benefits – State plan requirements.
(a) A State plan must provide that, as a condition of eligibility, each legally able applicant or beneficiary is required to:
(1) Assign to the Medicaid agency his or her rights, or the rights of any other individual eligible under the plan for whom he or she can legally make an assignment, to medical support and to payment for medical care from any third party;
(2) Cooperate with the agency in establishing the identity of a child’s parents and in obtaining medical support and payments, unless the individual establishes good cause for not cooperating, and except for individuals described in § 435.116 of this chapter (pregnant women), who are exempt from cooperating in establishing the identity of a child’s parents and obtaining medical support and payments from, or derived from, the non-custodial parent of a child; and
(3) Cooperate in identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan, unless the individual establishes good cause for not cooperating.
(b) A State plan must provide that the requirements for assignments, cooperation in establishing paternity and obtaining support, and cooperation in identifying and providing information to assist the State in pursuing any liable third party under §§ 433.146 through 433.148 are met.
(c) A State plan must provide that the assignment of rights to benefits obtained from an applicant or beneficiary is effective only for services that are reimbursed by Medicaid.
§ 433.146 Rights assigned; assignment method.
(a) Except as specified in paragraph (b) of this section, the agency must require the individual to assign to the State –
(1) His own rights to any medical care support available under an order of a court or an administrative agency, and any third party payments for medical care; and
(2) The rights of any other individual eligible under the plan, for whom he can legally make an assignment.
(b) Assignment of rights to benefits may not include assignment of rights to Medicare benefits.
(c) If assignment of rights to benefits is automatic because of State law, the agency may substitute such an assignment for an individual executed assignment, as long as the agency informs the individual of the terms and consequences of the State law.
§ 433.147 Cooperation in establishing the identity of a child’s parents and in obtaining medical support and payments and in identifying and providing information to assist in pursuing third parties who may be liable to pay.
(a) Scope of requirement. The agency must require the individual who assigns his or her rights to cooperate in –
(1) Except as exempt under § 433.145(a)(2), establishing the identity of a child’s parents and obtaining medical support and payments for himself or herself and any other person for whom the individual can legally assign rights; and
(2) Identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan.
(b) Essentials of cooperation. As part of a cooperation, the agency may require an individual to –
(1) Appear at a State or local office designated by the agency to provide information or evidence relevant to the case;
(2) Appear as a witness at a court or other proceeding;
(3) Provide information, or attest to lack of information, under penalty of perjury;
(4) Pay to the agency any support or medical care funds received that are covered by the assignment of rights; and
(5) Take any other reasonable steps to assist in establishing paternity and securing medical support and payments, and in identifying and providing information to assist the State in pursuing any liable third party.
(c) Waiver of cooperation for good cause. The agency must waive the requirements in paragraphs (a) and (b) of this section if it determines that the individual has good cause for refusing to cooperate.
(1) For establishing the identity of a child’s parents or obtaining medical care support and payments, or identifying or providing information to assist the State in pursuing any liable third party for a child for whom the individual can legally assign rights, the agency must find that cooperation is against the best interests of the child.
(2) With respect to obtaining medical care support and payments for an individual and identifying and providing information to assist in pursuing liable third parties in any case not covered by paragraph (c)(1) of this section, the agency must find that cooperation is against the best interests of the individual or the person to whom Medicaid is being furnished because it is anticipated that cooperation will result in reprisal against, and cause physical or emotional harm to, the individual or other person.
§ 433.148 Denial or termination of eligibility.
In administering the assignment of rights provision, the agency must:
(a) Deny or terminate eligibility for any applicant or beneficiary who –
(1) Refuses to assign his own rights or those of any other individual for whom he can legally make an assignment; or
(2) In the case of an applicant, does not attest to willingness to cooperate, and in the case of a beneficiary, refuses to cooperate in establishing the identity of a child’s parents, obtaining medical child support and pursuing liable third parties, as required under § 433.147(a) unless cooperation has been waived;
(b) Provide Medicaid to any individual who –
(1) Cannot legally assign his own rights; and
(2) Would otherwise be eligible for Medicaid but for the refusal, by a person legally able to assign his rights, to assign his rights or to cooperate as required by this subpart; and
(c) In denying or terminating eligibility, comply with the notice and hearing requirements of part 431, subpart E of this subchapter.
Cooperative Agreements and Incentive Payments
§ 433.151 Cooperative agreements and incentive payments – State plan requirements.
For medical assistance furnished on or after October 1, 1984 –
(a) A State plan must provide for entering into written cooperative agreements for enforcement of rights to and collection of third party benefits with at least one of the following entities: The State title IV-D agency, any appropriate agency of any State, and appropriate courts and law enforcement officials. The agreements must be in accordance with the provisions of § 433.152.
(b) A State plan must provide that the requirements for making incentive payments and for distributing third party collections specified in §§ 433.153 and 433.154 are met.
§ 433.152 Requirements for cooperative agreements for third party collections.
(a) Except as specified in paragraph (b) of this section, the State agency may develop the specific terms of cooperative agreements with other agencies as it determines appropriate for individual circumstances.
(b) Agreements with title IV-D agencies must specify that:
(1) The Medicaid agency may not refer a case for medical support enforcement when the following criteria have been met:
(i) The Medicaid referral is based solely upon health care services provided through an Indian Health Program (as defined at 25 U.S.C. 1603(12)), including through the Purchased/Referred Care program, to a child who is eligible for health care services from the Indian Health Service (IHS).
(ii) [Reserved]
(2) The Medicaid agency will provide reimbursement to the IV-D agency only for those child support services performed that are not reimbursable by the Office of Child Support Enforcement under title IV-D of the Act and that are necessary for the collection of amounts for the Medicaid program.
§ 433.153 Incentive payments to States and political subdivisions.
(a) When payments are required. The agency must make an incentive payment to a political subdivision, a legal entity of the subdivision such as a prosecuting or district attorney or a friend of the court, or another State that enforces and collects medical support and payments for the agency.
(b) Amount and source of payment. The incentive payment must equal 15 percent of the amount collected, and must be made from the Federal share of that amount.
(c) Payment to two or more jurisdictions. If more than one State or political subdivision is involved in enforcing and collecting support and payments:
(1) The agency must pay all of the incentive payment to the political subdivision, legal entity of the subdivision, or another State that collected medical support and payments at the request of the agency.
(2) The political subdivision, legal entity or other State that receives the incentive payment must then divide the incentive payment equally with any other political subdivisions, legal entities, or other States that assisted in the collection, unless an alternative allocation is agreed upon by all jurisdictions involved.
§ 433.154 Distribution of collections.
The agency must distribute collections as follows –
(a) To itself, an amount equal to State Medicaid expenditures for the individual on whose right the collection was based.
(b) To the Federal Government, the Federal share of the State Medicaid expenditures, minus any incentive payment made in accordance with § 433.153.
(c) To the beneficiary, any remaining amount. This amount must be treated as income or resources under part 435 or part 436 of this subchapter, as appropriate.
§ 433.202 Scope.
This subpart sets forth the requirements and procedures that are applicable to support State claims for the increased FMAP specified at § 433.10(c)(6) for the medical assistance expenditures for individuals determined eligible as specified in § 435.119 of this chapter who meet the definition of newly eligible individual specified in § 433.204(a)(1). These procedures will also identify individuals determined eligible as specified in § 435.119 of this chapter for whom the State may claim the regular FMAP rate specified at § 433.10(b) or the increased FMAP rate specified at § 433.10(c)(7) or (8), as applicable.
§ 433.204 Definitions.
(a)(1) Newly eligible individual means an individual determined eligible for Medicaid in accordance with the requirements of the adult group described in § 435.119 of this chapter, and who, as determined by the State in accordance with the requirements of § 433.206, would not have been eligible for Medicaid under the State’s eligibility standards and methodologies for the Medicaid State plan, waiver or demonstration programs in effect in the State as of December 1, 2009, for full benefits or for benchmark coverage described in § 440.330(a), (b), or (c) of this chapter or benchmark equivalent coverage described in § 440.335 of this chapter that has an aggregate actuarial value that is at least actuarially equivalent to benchmark coverage described in § 440.330(a), (b), or (c) of this chapter, or would have been eligible but not enrolled (or placed on a waiting list) for such benefits or coverage through a waiver under the plan that had a capped or limited enrollment that was full.
(2) Full benefits means, for purposes of paragraph (a)(1) of this section, with respect to an adult individual, medical assistance for all services covered under the State plan under Title XIX of the Act that is not less in amount, duration, or scope, or is determined by the Secretary to be substantially equivalent, to the medical assistance available for an individual described in section 1902(a)(10)(A)(i) of the Act.
(3) For purposes of establishing under paragraphs (a)(1) and (2) of this section whether an individual would not have been eligible for full benefits, benchmark coverage, or benchmark equivalent coverage under a waiver or demonstration program in effect on December 1, 2009, the State must provide CMS with its analysis, in accordance with guidance issued by CMS, about whether the benefits available under such waiver or demonstration constituted full benefits, benchmark coverage, or benchmark equivalent coverage. CMS will review such analysis and confirm the applicable FMAP. Individuals for whom such benefits or coverage would have been available under such waiver or demonstration are not newly eligible individuals.
(b)(1) Expansion State means a State that, as of March 23, 2010, offered health benefits coverage statewide to parents and nonpregnant, childless adults whose income is at least 100 percent of the Federal Poverty Level. A State that offers health benefits coverage to only parents or only nonpregnant childless adults described in the preceding sentence will not be considered to be an expansion State. Such health benefits coverage must:
(i) Have included inpatient hospital services;
(ii) Not have been dependent on access to employer coverage, employer contribution, or employment; and
(iii) Not have been limited to premium assistance, hospital-only benefits, a high deductible health plan, or benefits under a demonstration program authorized under section 1938 of the Act.
(2) For purposes of paragraph (b)(1) of this section and for § 433.10(c)(8), a nonpregnant childless adult means an individual who is not eligible based on pregnancy and does not meet the definition of a caretaker relative in § 435.4 of this chapter.
§ 433.206 Threshold methodology.
(a) Overview. Effective January 1, 2014, States must apply the threshold methodology described in this paragraph for purposes of determining the appropriate claiming for the Federal share of expenditures at the applicable FMAP rates described in § 433.10(b) and (c) for medical assistance provided with respect to individuals who have been determined eligible for the Medicaid program under § 435.119 of this chapter. Subject to the provisions of this paragraph, States must apply the CMS-approved State specific threshold methodology to determine and distinguish such individuals as newly or not newly eligible individuals in accordance with the definition in § 433.204(a)(1), and in accordance with States’ Medicaid eligibility criteria as in effect on December 1, 2009 and to attribute their associated medical expenditures with the appropriate FMAP. The threshold methodology must not be applied by States for the purpose of determining the applicable FMAP for individuals under any other eligibility category other than § 435.119 of this chapter.
(b) General principles. The threshold methodology should:
(1) Not impact the timing or approval of an individual’s eligibility for Medicaid.
(2) Not be biased in such a manner as to inappropriately establish the numbers of, or medical assistance expenditures for, individuals determined to be newly or not newly eligible.
(3) Provide a valid and accurate accounting of individuals who would have been eligible in accordance with the December 1, 2009 eligibility standards and applicable eligibility categories for the benefits described in § 433.204(a)(1), and subject to paragraphs (d), (e), and (g) of this section, by incorporating simplified assessments of resources, enrollment cap requirements in place at that time, and other special circumstances as approved by CMS, respectively.
(4) Operate efficiently, without further review once an individual has been determined not to be newly eligible based on the December 1, 2009 standards for any eligibility category.
(c) Components of the threshold methodology. Subject to the submission of a threshold methodology State plan amendment as specified in paragraph (h) of this section, the provisions of the threshold methodology consist of two components, the individual income-based determination and population-based non-income adjustments to reflect resource criteria, enrollment caps in effect on December 1, 2009, and other factors in accordance with paragraph (g) of this section.
(1) Scope. The threshold methodology shall apply with respect to the population, and the associated expenditures for such population, which has been determined eligible for Medicaid under section 1902(a)(10)(A)(i)(VIII) of the Act and in accordance with § 435.119 of this chapter. This population and associated expenditures must not include individuals who have been determined eligible for Medicaid under any other mandatory or optional eligibility category.
(2) Benefit criteria for newly eligible. An individual eligible for and enrolled under § 435.119 of this chapter is considered newly eligible if, with respect to the applicable eligibility category in effect on December 1, 2009, the benefits did not meet the criteria described in the newly eligible definition at § 433.204(a)(1).
(3) Individual income-based determination. The individual income-based determination shall be a comparison of the individual’s MAGI-based income to the income standard in effect on December 1, 2009, as converted to an equivalent MAGI-based income standard for each applicable eligibility category as in effect on that date, as follows.
(i) The amount of an individual’s income under the threshold methodology is the MAGI-based income determined in accordance with § 435.603 of this chapter.
(ii) For each individual, the equivalent MAGI-based income eligibility standard is the applicable income eligibility standard for the applicable category of eligibility as in effect on December 1, 2009 that is converted to an equivalent MAGI-based income standard. For example, as applicable, a separate MAGI-based income standard will be applied for individuals determined to be disabled who would have been eligible under an optional eligibility category in effect on December 1, 2009 that was based on disability. For these purposes, the applicable equivalent MAGI-based standard is the standard as submitted by the State and approved by CMS in accordance with CMS guidance.
(iii) With respect to income eligibility criteria, if the individual’s MAGI-based income is at or below the applicable converted MAGI-based income standard for the relevant eligibility category or group, then the individual is included in the population that is not newly eligible;
(iv) With respect to income eligibility criteria, if the individual’s MAGI-based income is greater than the applicable converted MAGI-based income standard for the relevant eligibility category or group, then the individual is included in the population that is newly eligible;
(v) Treatment of spend-down programs. Treatment of medically needy or spend-down programs under the threshold methodology is described in paragraph (f) of this section.
(vi) For purposes of comparing the individual’s MAGI-based income to the applicable converted MAGI-based income standard in effect on December 1, 2009, an individual will not be considered disabled absent an actual disability determination for the individual that is in accordance with the disability definition applicable for the State under Title XIX of the Act.
(4) Treatment of disability. For purposes of applying the appropriate FMAP under § 433.10(b) or (c) for the medical assistance expenditures of an individual in applying the definition of newly eligible under § 433.204(a)(1), for eligibility categories or groups as in effect on December 1, 2009 for which disability was an eligibility criteria:
(i) During the period of a disability determination. During the period for which a disability determination is pending, including during the period of any appeal process, and absent an actual disability determination for the individual that is in accordance with the disability definition applicable for the State under Title XIX of the Act, the individual is not considered to be disabled.
(ii) Following a disability determination. With respect to an individual for which a disability determination was pending, following the actual determination of disability, the individual will be considered disabled effective with the date of the disability determination, or, if later, the disability onset date, as determined.
(5) Population-based adjustments to the populations of newly eligible and not newly eligible. (i) The State may elect a resource criteria proxy adjustment described in paragraph (d) of this section.
(ii) States that had a waiver or demonstration program with an enrollment cap in effect as of December 1, 2009 must apply an adjustment based on enrollment caps, subject to the definition of newly eligible individual in § 433.204(a)(1) and paragraph (e) of this section.
(iii) States that have special circumstances may need to submit associated proxy methodologies to CMS for approval by CMS as described in paragraph (g) of this section.
(6) Application of FMAP rates to adult group expenditures. Subject to population adjustments under paragraphs (d), (e), or (g) of this section, federal funding for a State’s expenditures for medical assistance provided to individuals determined eligible under § 435.119 of this chapter, including individuals determined eligible under that eligibility group during the evaluation for another eligibility category, must be claimed using the applicable FMAP as follows:
(i) The newly eligible FMAP under § 433.10(c)(6) is applicable for the medical assistance expenditures for individuals determined to be newly eligible, as defined in § 433.204(a)(1).
(ii) The applicable FMAP under § 433.10(b) or § 433.10(c)(7) or (8) is applicable for the medical assistance expenditures for individuals determined not to be newly eligible.
(7) Status as newly or not newly eligible. Under the threshold methodology States must provide that once individuals are determined under the threshold methodology to be either newly or not newly eligible individuals in accordance with the applicable December 1, 2009 eligibility criteria, the State would apply that determination until a new determination of MAGI-based income has been made in accordance with § 435.916 of this chapter, or the individual has been otherwise determined not to be covered under the adult group set forth at § 435.119 of this chapter.
(d) Optional resource criteria proxy adjustment – (1) General. Under an election under this paragraph (d), the State may use a resource proxy methodology for purposes of adjusting the claims for the expenditures of the population enrolled under § 435.119 of this chapter to account for individuals who would not have been eligible for Medicaid because of the application of resource criteria as in effect for such population as of December 1, 2009, and therefore would meet the newly eligible individual definition at § 433.204(a)(1). Under this paragraph (d), a State may elect to apply a resource proxy methodology with respect to the resource criteria as in effect on December 1, 2009 and applied to the expenditures for a specific eligibility category or categories of individuals as in effect on December 1, 2009, or applied to the expenditures of the entire population enrolled under § 435.119 of this chapter. As provided in paragraph (d)(4) of this section, the State must indicate any resource proxy election in the threshold methodology State plan amendment submitted under paragraph (h) of this section. The use of a resource proxy methodology must not delay or interfere with the eligibility determination for an individual.
(2) A State’s resource proxy methodology must:
(i) Describe each eligibility group or groups for which an individual eligible under § 435.119 would have been eligible on December 1, 2009, subject to resource criteria, and a methodology to apply those resource criteria as an adjustment to the total expenditures to adjust determinations of the newly eligible population under paragraph (c) of this section.
(ii) Be auditable.
(iii) Be based on statistically valid data, which is either:
(A) Existing State data from and for periods before January 1, 2014 on the resources of individuals who had applied and received a determination with respect to Medicaid eligibility, including resource eligibility under the State’s applicable December 1, 2009 eligibility criteria. The existing State data must be specifically related to resource eligibility determinations, indicate the number and types of individuals for whom resource determinations were made, and establish the denial rates specifically identified as due to excess resources; or
(B) Post-eligibility State data on the resources of individuals described in paragraph (d)(2)(iii)(B)(1) and (2) of this section, based on and obtained through a post-eligibility statistically valid sample of such individuals with respect to the applicable Medicaid eligibility categories and resource eligibility criteria under the State’s applicable December 1, 2009 eligibility criteria:
(1) State data from and for periods before January 1, 2014 must be for individuals in eligibility categories relevant to § 435.119 of this chapter who apply and receive a determination with respect to Medicaid eligibility, including both approvals and denials, to establish denial rates specifically due to excess resources and identify numbers and types of individuals.
(2) State data from and for periods on or after January 1, 2014 must only be for individuals determined eligible and enrolled under § 435.119 of this chapter, must compare individuals’ resources to the applicable December 1, 2009 resource criteria to establish denial rates specifically due to excess resources, and identify numbers and types of individuals.
(iv) Describe the State data on individuals’ resources used and the application of such data. Whether such State data is based on data described in paragraph (d)(2)(iii)(A) or (B) of this section, such State data must represent sampling results for a period of sufficient length to be statistically valid.
(v) Provide that the resource proxy methodology will account for the treatment of resources in a statistically valid manner when there is a lack of sufficient information to make a resource determination for a particular individual in a sampled population.
(vi) Describe the application of the resource proxy methodology in establishing the amount and submission of claims for Federal funding by the State for the medical assistance expenditures of the applicable eligibility group(s). Such claims submitted under the resource proxy methodology must reflect the appropriate FMAP for the medical assistance expenditures of the affected eligibility group(s).
(vii) As appropriate, describe and demonstrate the statistical validity of the resource proxy methodology and the use of data under such methodology.
(3) Effective date for application of resource proxy. The resource proxy shall not be effective prior to the beginning of the quarter in which such resource proxy is submitted to CMS under the threshold methodology State plan in paragraph (h) of this section.
(4) One time election for resource proxy. The election, application, and description of a resource proxy methodology under this paragraph for individuals determined eligible under § 435.119 must be included in a one-time submission of a State plan amendment submitted under paragraph (h) of this section no later than one year from the first day of the quarter in which eligibility for individuals under § 435.119 of this chapter is initially effective for the State.
(e) Enrollment caps adjustment – (1) Scope. Certain States may have applied enrollment caps, limits, or waiting lists in their Medicaid programs as in effect on December 1, 2009. Under the definition of newly eligible individual in § 433.204(a)(1), such States must consider as newly eligible those individuals eligible under § 435.119 of this chapter who would otherwise be eligible for full benefits, benchmark coverage, or benchmark equivalent coverage provided through a demonstration under the State plan effective December 1, 2009, but would not have been enrolled (or would have been on a waiting list) based on the application of an enrollment cap or limit determined in accordance with the approved demonstration as in effect on that date. Such States must only apply such enrollment cap, limit or waiting list provisions with respect to eligibility category or categories for which such provisions were applicable (for example, nonpregnant childless adults or parents/caretaker relatives) and in effect under the State’s Medicaid program on December 1, 2009. For this purpose, individuals who would have been on a waiting list are considered as not enrolled under the demonstration.
(2) A State for which multiple enrollment caps or limits were in effect under its December 1, 2009 Medicaid program may elect to combine such enrollment caps or limits, unless such treatment would preclude claiming of Federal funding at the applicable FMAP rate required under § 433.10(b) or (c) (for example, to distinguish claims for childless adults and parents in an expansion State) for the medical assistance expenditures of individuals determined eligible and enrolled under § 435.119 of this chapter; a State with enrollment cap or limit provisions that would preclude combining enrollment caps or limit provisions must use separate caps; or, the State, at its option, may elect to use separate caps.
(3) For purposes of claiming Federal funding, with respect to each claiming period for which the State claims Federal funding for an eligibility category for which an enrollment cap or limit is applicable and in effect on December 1, 2009, the State must account for:
(i) The total unduplicated number of individuals eligible and enrolled under § 435.119 of this chapter for the applicable claiming period.
(ii) The total State medical assistance expenditures for individuals eligible and enrolled under § 435.119 of this chapter for the applicable claiming period.
(iii) The enrollment cap or limit in effect on December 1, 2009 for the eligibility category, determined in accordance with the approved demonstration as in effect on December 1, 2009.
(A) For States that elect under paragraph (e)(2) of this section to combine the enrollment caps, the enrollment cap is the sum of the enrollment caps for each eligibility group which is being combined.
(B) For States that elect to treat the enrollment caps separately under paragraph (e)(2) of this section, each enrollment cap will be accounted for separately.
(C) The level of the enrollment cap will be as authorized under the demonstration in effect on December 1, 2009; or, if the State had affirmatively set the cap at a lower level consistent with flexibility provided by the demonstration terms and conditions, the State may elect to apply the lower cap as in effect in the State on December 1, 2009. If a State elects to use such an alternate State-specified enrollment cap, the State will provide CMS with evidence, in its State plan amendment submitted to CMS under paragraph (h) of this section, that it had affirmatively implemented such a cap. Whether the State uses the authorized cap or a lower, verifiable cap as in effect in the State consistent with the demonstration special terms and conditions, the amount of expenditures up to the proportion of the 2009 enrollment cap to the total number of currently enrolled people in the group would not be claimed at the newly eligible FMAP.
(4) States for which an enrollment cap, limit, or waiting list was applicable under their Medicaid programs as in effect on December 1, 2009, must describe the treatment of such provision or provisions in the submission to CMS for approval by CMS in accordance with the State plan requirements outlined in § 433.206(h).
(f) Application of spend-down income eligibility criteria – (1) General. Certain States’ Medicaid programs as in effect on December 1, 2009 may have included eligibility categories for which deduction of incurred medical expenses from income (referred to as spend-down) under the provisions of sections 1902(a)(10)(C) or 1902(f) of the Act was applied in determining individuals’ Medicaid eligibility. Paragraphs (f)(2) and (3) of this section apply, for purposes of determining whether an individual enrolled under § 435.119 of this chapter meets the definition of newly eligible under § 433.204(a)(1), and for purposes of applying the appropriate FMAP under § 433.10(b) or (c) for the medical assistance expenditures of the individual for which a spend-down eligibility category of a State effective on December 1, 2009 is applicable.
(2) Not newly eligible individual. For purposes of a State’s spend-down provision, an individual enrolled under § 435.119 of this chapter whose income before the deduction of incurred medical expenses is less than or equal to the applicable December 1, 2009 State spend-down eligibility income level that would have resulted in full benefits is considered not newly eligible. The FMAP applicable for the medical assistance expenditures of such an individual is the appropriate FMAP under § 433.10(b) and (c) as applicable for an individual who is not newly eligible.
(3) Newly eligible individual. For purposes of a State’s spend-down provision, an individual enrolled under § 435.119 of this chapter whose income before the deduction of incurred medical expenses is greater than the applicable State spend-down eligibility income level is considered newly eligible. The FMAP applicable for the medical assistance expenditures of such an individual is the appropriate FMAP under § 433.10(b) and (c) as applicable for an individual who is newly eligible.
(g) Special circumstances. States may submit additional proxy methodologies to CMS for approval by CMS in accordance with the State plan requirements outlined in § 433.206(h).
(h) Threshold methodology State plan requirements. To claim expenditures at the increased FMAPs described in § 433.210(c)(6) or (c)(8), the State must amend its State plan under the provisions of subpart B of part 430 to reflect the threshold methodology the State implements in accordance with the provisions of this section. The threshold methodology will be included as an attachment to the State plan and, explicitly and by reference, must:
(1) Specify that the threshold methodology the State implements is in accordance with this section;
(2) Specify that the threshold methodology the State implements accounts for the individuals determined eligible under the adult group in § 435.119 of this chapter as a newly eligible individual or not newly eligible individual; and, on that basis, the State implements appropriate tracking for purpose of claiming Federal Medicaid funding for the associated medical assistance expenditures.
(3) Reference the converted MAGI-based December 1, 2009 income eligibility standards and the associated eligibility groups, describe how the State will apply such standards and methodologies, and include other relevant criteria in the assignment of FMAP.
(4) Indicate any required provisions, or options and alternatives the State elects, with respect to:
(i) Treatment of resources, in accordance with paragraph (d) of this section;
(ii) Treatment of enrollment caps or waiting lists, in accordance with paragraph (e) of this section; and
(iii) Special circumstances as approved by CMS in accordance with paragraph (g) of this section.
§ 433.300 Basis.
This subpart implements –
(a) Section 1903(d)(2)(A) of the Act, which directs that quarterly Federal payments to the States under title XIX (Medicaid) of the Act are to be reduced or increased to make adjustment for prior overpayments or underpayments that the Secretary determines have been made.
(b) Section 1903(d)(2)(C) and (D) of the Act, which provides that a State has 1 year from discovery of an overpayment for Medicaid services to recover or attempt to recover the overpayment from the provider before adjustment in the Federal Medicaid payment to the State is made; and that adjustment will be made at the end of the 1-year period, whether or not recovery is made, unless the State is unable to recover from a provider because the overpayment is a debt that has been discharged in bankruptcy or is otherwise uncollectable.
(c) Section 1903(d)(3) of the Act, which provides that the Secretary will consider the pro rata Federal share of the net amount recovered by a State during any quarter to be an overpayment.
§ 433.302 Scope of subpart.
This subpart sets forth the requirements and procedures under which States have 1 year following discovery of overpayments made to providers for Medicaid services to recover or attempt to recover that amount before the States must refund the Federal share of these overpayments to CMS, with certain exceptions.
§ 433.304 Definitions.
As used in this subpart –
Discovery (or discovered) means identification by any State Medicaid agency official or other State official, the Federal Government, or the provider of an overpayment, and the communication of that overpayment finding or the initiation of a formal recoupment action without notice as described in § 433.316.
Final written notice means that written communication, immediately preceding the first level of formal administrative or judicial proceedings, from a Medicaid agency official or other State official that notifies the provider of the State’s overpayment determination and allows the provider to contest that determination, or that notifies the State Medicaid agency of the filing of a civil or criminal action.
Fraud (in accordance with § 455.2) means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable Federal or State law.
Overpayment means the amount paid by a Medicaid agency to a provider which is in excess of the amount that is allowable for services furnished under section 1902 of the Act and which is required to be refunded under section 1903 of the Act.
Provider (in accordance with § 400.203) means any individual or entity furnishing Medicaid services under a provider agreement with the Medicaid agency.
Recoupment means any formal action by the State or its fiscal agent to initiate recovery of an overpayment without advance official notice by reducing future payments to a provider.
Third party (in accordance with § 433.136) means an individual, entity, or program that is or may be liable to pay for all or part of the expenditures for medical assistance furnished under a State plan.
§ 433.310 Applicability of requirements.
(a) General rule. Except as provided in paragraphs (b) and (c) of this section, the provisions of this subpart apply to –
(1) Overpayments made to providers that are discovered by the State;
(2) Overpayments made to providers that are initially discovered by the provider and made known to the State agency; and
(3) Overpayments that are discovered through Federal reviews.
(b) Third party payments and probate collections. The requirements of this subpart do not apply to –
(1) Cases involving third party liability because, in these situations, recovery is sought for a Medicaid payment that would have been made had another party not been legally responsible for payment; and
(2) Probate collections from the estates of deceased Medicaid beneficiaries, as they represent the recovery of payments properly made from resources later determined to be available to the State.
(c) Unallowable costs paid under rate-setting systems. (1) Unallowable costs for a prior year paid to an institutional provider under a rate-setting system that a State recovers through an adjustment to the per diem rate for a subsequent period do not constitute overpayments that are subject to the requirements of this subpart.
In such cases, the State is not required to refund the Federal share explicitly related to the original overpayment in accordance with the regulations in this subpart. Refund of the Federal share occurs when the State claims future expenditures made to the provider at a reduced rate.
(2) Unallowable costs for a prior year paid to an institutional provider under a rate-setting system that a State seeks to recover in a lump sum, by an installment repayment plan, or through reduction of future payments to which the provider would otherwise be entitled constitute overpayments that are subject to the requirements of this subpart.
(d) Recapture of depreciation upon gain on the sale of assets. Depreciation payments are considered overpayments for purposes of this subpart if a State requires their recapture in a discrete amount(s) upon gain on the sale of assets.
§ 433.312 Basic requirements for refunds.
(a) Basic rules. (1) Except as provided in paragraph (b) of this section, the State Medicaid agency has 1 year from the date of discovery of an overpayment to a provider to recover or seek to recover the overpayment before the Federal share must be refunded to CMS.
(2) The State Medicaid agency must refund the Federal share of overpayments at the end of the 1-year period following discovery in accordance with the requirements of this subpart, whether or not the State has recovered the overpayment from the provider.
(b) Exception. The agency is not required to refund the Federal share of an overpayment made to a provider when the State is unable to recover the overpayment amount because the provider has been determined bankrupt or out of business in accordance with § 433.318.
(c) Applicability. (1) The requirements of this subpart apply to overpayments made to Medicaid providers that occur and are discovered in any quarter that begins on or after October 1, 1985.
(2) The date upon which an overpayment occurs is the date upon which a State, using its normal method of reimbursement for a particular class of provider (e.g., check, interfund transfer), makes the payment involving unallowable costs to a provider.
§ 433.316 When discovery of overpayment occurs and its significance.
(a) General rule. The date on which an overpayment is discovered is the beginning date of the 1-year period allowed for a State to recover or seek to recover an overpayment before a refund of the Federal share of an overpayment must be made to CMS.
(b) Requirements for notification. Unless a State official or fiscal agent of the State chooses to initiate a formal recoupment action against a provider without first giving written notification of its intent, a State Medicaid agency official or other State official must notify the provider in writing of any overpayment it discovers in accordance with State agency policies and procedures and must take reasonable actions to attempt to recover the overpayment in accordance with State law and procedures.
(c) Overpayments resulting from situations other than fraud. An overpayment resulting from a situation other than fraud is discovered on the earliest of – –
(1) The date on which any Medicaid agency official or other State official first notifies a provider in writing of an overpayment and specifies a dollar amount that is subject to recovery;
(2) The date on which a provider initially acknowledges a specific overpaid amount in writing to the medicaid agency; or
(3) The date on which any State official or fiscal agent of the State initiates a formal action to recoup a specific overpaid amount from a provider without having first notified the provider in writing.
(d) Overpayments resulting from fraud. (1) An overpayment that results from fraud is discovered on the date of the final written notice (as defined in § 433.304 of this subchapter) of the State’s overpayment determination.
(2) When the State is unable to recover a debt which represents an overpayment (or any portion thereof) resulting from fraud within 1 year of discovery because no final determination of the amount of the overpayment has been made under an administrative or judicial process (as applicable), including as a result of a judgment being under appeal, no adjustment shall be made in the Federal payment to such State on account of such overpayment (or any portion thereof) until 30 days after the date on which a final judgment (including, if applicable, a final determination on an appeal) is made.
(3) The Medicaid agency may treat an overpayment made to a Medicaid provider as resulting from fraud under subsection (d) of this section only if it has referred a provider’s case to the Medicaid fraud control unit, or appropriate law enforcement agency in States with no certified Medicaid fraud control unit, as required by § 455.15, § 455.21, or § 455.23 of this chapter, and the Medicaid fraud control unit or appropriate law enforcement agency has provided the Medicaid agency with written notification of acceptance of the case; or if the Medicaid fraud control unit or appropriate law enforcement agency has filed a civil or criminal action against a provider and has notified the State Medicaid agency.
(e) Overpayments identified through Federal reviews. If a Federal review at any time indicates that a State has failed to identify an overpayment or a State has identified an overpayment but has failed to either send written notice of the overpayment to the provider that specified a dollar amount subject to recovery or initiate a formal recoupment from the provider without having first notified the provider in writing, CMS will consider the overpayment as discovered on the date that the Federal official first notifies the State in writing of the overpayment and specifies a dollar amount subject to recovery.
(f) Effect of changes in overpayment amount. Any adjustment in the amount of an overpayment during the 1-year period following discovery (made in accordance with the approved State plan, Federal law and regulations governing Medicaid, and the appeals resolution process specified in State administrative policies and procedures) has the following effect on the 1-year recovery period:
(1) A downward adjustment in the amount of an overpayment subject to recovery that occurs after discovery does not change the original 1-year recovery period for the outstanding balance.
(2) An upward adjustment in the amount of an overpayment subject to recovery that occurs during the 1-year period following discovery does not change the 1-year recovery period for the original overpayment amount. A new 1-year period begins for the incremental amount only, beginning with the date of the State’s written notification to the provider regarding the upward adjustment.
(g) Effect of partial collection by State. A partial collection of an overpayment amount by the State from a provider during the 1-year period following discovery does not change the 1-year recovery period for the balance of the original overpayment amount due to CMS.
(h) Effect of administrative or judicial appeals. Any appeal rights extended to a provider do not extend the date of discovery.
§ 433.318 Overpayments involving providers who are bankrupt or out of business.
(a) Basic rules. (1) The agency is not required to refund the Federal share of an overpayment made to a provider as required by § 433.312(a) to the extent that the State is unable to recover the overpayment because the provider has been determined bankrupt or out of business in accordance with the provisions of this section.
(2) The agency must notify the provider that an overpayment exists in any case involving a bankrupt or out-of-business provider and, if the debt has not been determined uncollectable, take reasonable actions to recover the overpayment during the 1-year recovery period in accordance with policies prescribed by applicable State law and administrative procedures.
(b) Overpayment debts that the State need not refund. Overpayments are considered debts that the State is unable to recover within the 1-year period following discovery if the following criteria are met:
(1) The provider has filed for bankruptcy, as specified in paragraph (c) of this section; or
(2) The provider has gone out of business and the State is unable to locate the provider and its assets, as specified in paragraph (d) of this section.
(c) Bankruptcy. The agency is not required to refund to CMS the Federal share of an overpayment at the end of the 1-year period following discovery, if –
(1) The provider has filed for bankruptcy in Federal court at the time of discovery of the overpayment or the provider files a bankruptcy petition in Federal court before the end of the 1-year period following discovery; and
(2) The State is on record with the court as a creditor of the petitioner in the amount of the Medicaid overpayment.
(d) Out of business. (1) The agency is not required to refund to CMS the Federal share of an overpayment at the end of the 1-year period following discovery if the provider is out of business on the date of discovery of the overpayment or if the provider goes out of business before the end of the 1-year period following discovery.
(2) A provider is considered to be out of business on the effective date of a determination to that effect under State law. The agency must –
(i) Document its efforts to locate the party and its assets. These efforts must be consistent with applicable State policies and procedures; and
(ii) Make available an affidavit or certification from the appropriate State legal authority establishing that the provider is out of business and that the overpayment cannot be collected under State law and procedures and citing the effective date of that determination under State law.
(3) A provider is not out of business when ownershp is transferred within the State unless State law and procedures deem a provider that has transferred ownership to be out of business and preclude collection of the overpayment from the provider.
(e) Circumstances requiring refunds. If the 1-year recovery period has expired before an overpayment is found to be uncollectable under the provisions of this section, if the State recovers an overpayment amount under a court-approved discharge of bankruptcy, or if a bankruptcy petition is denied, the agency must refund the Federal share of the overpayment in accordance with the procedures specified in § 433.320 of this subpart.
§ 433.320 Procedures for refunds to CMS.
(a) Basic requirements. (1) The agency must refund the Federal share of overpayments that are subject to recovery to CMS through a credit on its Quarterly Statement of Expenditures (Form CMS-64).
(2) The agency must credit CMS with the Federal share of overpayments subject to recovery on the earlier of –
(i) The Form CMS-64 submission due to CMS for the quarter in which the State recovers the overpayment from the provider; or
(ii) The Form CMS-64 due to CMS for the quarter in which the 1-year period following discovery, established in accordance with § 433.316, ends.
(3) A credit on the Form CMS-64 must be made whether or not the overpayment has been recovered by the State from the provider.
(4) If the State does not refund the Federal share of such overpayment as indicated in paragraph (a)(2) of this section, the State will be liable for interest on the amount equal to the Federal share of the non-recovered, non-refunded overpayment amount. Interest during this period will be at the Current Value of Funds Rate (CVFR), and will accrue beginning on the day after the end of the 1-year period following discovery until the last day of the quarter for which the State submits a CMS-64 report refunding the Federal share of the overpayment.
(b) Effect of reporting collections and submitting reduced expenditure claims. (1) The State is not required to refund the Federal share of an overpayment at the end of the 1-year period if the State has already reported a collection or submitted an expenditure claim reduced by a discrete amount to recover the overpayment prior to the end of the 1-year period following discovery.
(2) The State is not required to report on the Form CMS-64 any collections made on overpayment amounts for which the Federal share has been refunded previously.
(3) If a State has refunded the Federal share of an overpayment as required under this subpart and the State subsequently makes recovery by reducing future provider payments by a discrete amount, the State need not reflect that reduction in its claim for Federal financial participation.
(c) Reclaiming overpayment amounts previously refunded to CMS. If the amount of an overpayment is adjusted downward after the agency has credited CMS with the Federal share, the agency may reclaim the amount of the downward adjustment on the Form CMS-64. Under this provision –
(1) Downward adjustment to an overpayment amount previously credited to CMS is allowed only if it is properly based on the approved State plan, Federal law and regulations governing Medicaid, and the appeals resolution processes specified in State administrative policies and procedures.
(2) The 2-year filing limit for retroactive claims for Medicaid expenditures does not apply. A downward adjustment is not considered a retroactive claim but rather a reclaiming of costs previously claimed.
(d) Expiration of 1-year recovery period. If an overpayment has not been determined uncollectable in accordance with the requirements of § 433.318 of this subpart at the end of the 1-year period following discovery of the overpayment, the agency must refund the Federal share of the overpayment to CMS in accordance with the procedures specified in paragraph (a) of this section.
(e) Court-approved discharge of bankruptcy. If the State recovers any portion of an overpayment under a court-approved discharge of bankruptcy, the agency must refund to CMS the Federal share of the overpayment amount collected on the next quarterly expenditure report that is due to CMS for the period that includes the date on which the collection occurs.
(f) Bankruptcy petition denied. If a provider’s petition for bankruptcy is denied in Federal court, the agency must credit CMS with the Federal share of the overpayment on the later of –
(1) The Form CMS-64 submission due to CMS immediately following the date of the decision of the court; or
(2) The Form CMS-64 submission for the quarter in which the 1-year period following discovery of the overpayment ends.
(g) Reclaim of refunds. (1) If a provider is determined bankrupt or out of business under this section after the 1-year period following discovery of the overpayment ends and the State has not been able to make complete recovery, the agency may reclaim the amount of the Federal share of any unrecovered overpayment amount previously refunded to CMS. CMS allows the reclaim of a refund by the agency if the agency submits to CMS documentation that it has made reasonable efforts to obtain recovery.
(2) If the agency reclaims a refund of the Federal share of an overpayment –
(i) In bankruptcy cases, the agency must submit to CMS a statement of its efforts to recover the overpayment during the period before the petition for bankruptcy was filed; and
(ii) In out-of-business cases, the agency must submit to CMS a statement of its efforts to locate the provider and its assets and to recover the overpayment during any period before the provider is found to be out of business in accordance with § 433.318.
(h) Supporting reports. The agency must report the following information to support each Quarterly Statement of Expenditures Form CMS-64:
(1) Amounts of overpayments not collected during the quarter but refunded because of the expiration of the 1-year period following discovery;
(2) Upward and downward adjustments to amounts credited in previous quarters;
(3) Amounts of overpayments collected under court-approved discharges of bankruptcy;
(4) Amounts of previously reported overpayments to providers certified as bankrupt or out of business during the quarter; and
(5) Amounts of overpayments previously credited and reclaimed by the State.
§ 433.322 Maintenance of Records.
The Medicaid agency must maintain a separate record of all overpayment activities for each provider in a manner that satisfies the retention and access requirements of 45 CFR 75.361 through 75.370.
Subpart G – Temporary FMAP Increase During the Public Health Emergency for COVID-19
§ 433.400 Continued enrollment for temporary FMAP increase.
(a) Statutory basis. This subpart interprets and implements section 6008(b)(3) of the Families First Coronavirus Response Act (FFCRA) and section 1902(a)(4) and (a)(19) of the Social Security Act.
(b) Definitions. For purposes of this subpart –
COVID-19 means Coronavirus Disease 2019.
Medicare Savings Program means the coverage of Medicare premiums and cost sharing furnished to individuals described in, and determined by the state to be eligible under, section 1902(a)(10)(E)(i), 1902(a)(10)(E)(iii), or 1902(a)(10)(E)(iv) of the Act.
Minimum essential coverage (MEC) has the meaning provided under section 5000A(f)(1) of the Internal Revenue Code and implementing regulations at 26 CFR 1.5000A-2 and includes minimum essential coverage determined by the Secretary under 26 CFR 1.5000A-2(f).
Public Health Emergency for COVID-19 has the same definition provided in § 400.200 of this chapter.
Temporary FMAP increase means the 6.2 percentage point increase in the State’s Federal medical assistance percentage (FMAP) that is authorized under section 6008(a) of the FFCRA through the end of the fiscal quarter in which the Public Health Emergency for COVID-19 ends.
Validly enrolled means that the beneficiary was enrolled in Medicaid based on a determination of eligibility. A beneficiary is not validly enrolled if the agency determines the eligibility was erroneously granted at the most recent determination, redetermination, or renewal of eligibility (if such last redetermination or renewal was completed prior to March 18, 2020) because of agency error or fraud (as evidenced by a fraud conviction) or abuse (as determined following the completion of an investigation pursuant to §§ 455.15 and 455.16 of this chapter) attributed to the beneficiary or the beneficiary’s representative, which was material to the determination of eligibility. Individuals receiving medical assistance during a presumptive eligibility period in accordance with part 435, subpart L, of this chapter have not received a determination of eligibility by the state under the state plan and are not considered validly enrolled beneficiaries for purposes of this section.
(c) General requirements. (1) In order to claim the temporary FMAP increase for:
(i) The quarter in which November 2, 2020, falls, a state must meet the requirements described in paragraph (c)(2) of this section from November 2, 2020, through the end of the quarter.
(ii) Any quarter beginning after November 2, 2020, through the quarter in which the public health emergency for COVID-19, including any extensions, ends, a state must meet the requirements described in paragraphs (c)(2) of this section.
(2) Except as provided in paragraph (d) of this section, for all beneficiaries validly enrolled for benefits under the state plan, a waiver of such plan, or a demonstration project under section 1115(a) of the Act as of or after March 18, 2020, the state must maintain the beneficiary’s enrollment as follows, through the end of the month in which the public health emergency for COVID-19 ends:
(i)(A) For beneficiaries whose Medicaid coverage meets the definition of MEC in paragraph (b) of this section as of or after March 18, 2020, the state must continue to provide Medicaid coverage that meets the definition of MEC, except as provided in paragraph (c)(2)(i)(B) of this section.
(B) For beneficiaries described in paragraph (c)(2)(i)(A) whom the state subsequently determines are eligible for coverage under a Medicare Savings Program eligibility group, the state satisfies the requirement described in paragraph (c)(2) of this section if it furnishes the medical assistance available through the Medicare Savings Program.
(ii) For beneficiaries whose Medicaid coverage as of or after March 18, 2020 does not meet the definition of MEC in paragraph (b) of this section but does include coverage for testing services and treatments for COVID-19, including vaccines, specialized equipment, and therapies, the state must continue to provide Medicaid coverage that includes such testing services and treatments.
(iii) For beneficiaries not described in paragraph (c)(2)(i) or (ii) of this section, the state must continue to provide at least the same level of medical assistance as was provided as of or after March 18, 2020.
(iv) If a state determines that a validly enrolled beneficiary is no longer eligible for Medicaid, including on a procedural basis, the state meets the requirements described in paragraph (c)(2)(i), (ii), or (iii) of this section by continuing to provide the same Medicaid coverage that the beneficiary would have received absent the determination of ineligibility.
(3) Otherwise permissible changes to beneficiary coverage, cost sharing, and post-eligibility treatment of income, including both changes affecting an individual beneficiary and approved changes to the state plan, a section 1115 demonstration and/or a waiver authorized under section 1915 of the Act impacting multiple beneficiaries, will not impact a state’s ability to claim the temporary FMAP increase provided that any such changes do not violate the requirement to maintain beneficiary enrollment described at paragraph (c)(2) of this section or the requirement in section 6008(b)(4) of the FFCRA.
(d) Exceptions. (1) Consistent with the condition to claim the temporary FMAP increase described in paragraph (c)(2) of this section, a state may terminate a beneficiary’s Medicaid enrollment prior to the first day of the month after the public health emergency for COVID-19 ends in the following circumstances:
(i) The beneficiary or the beneficiary’s representative requests a voluntary termination of eligibility;
(ii) The beneficiary ceases to be a resident of the state; or
(iii) The beneficiary dies.
(2) States which have elected the option under section 1903(v)(4) of the Act to provide full benefits to lawfully residing children or pregnant women must limit coverage for such beneficiaries if they no longer meet the definition of a lawfully residing child or pregnant woman under such section to services necessary for treatment of an emergency medical condition, as defined in section 1903(v)(3) of the Act.
(3)(i) For purposes of paragraph (d)(1)(i) of this section, a beneficiary may request a voluntary termination of eligibility from the Medicaid coverage in which the beneficiary is enrolled to transition to other Medicaid coverage for which the beneficiary is eligible, even if the transition to the new Medicaid coverage would not be consistent with paragraph (c)(2) of this section.
(ii) For purposes of paragraph (d)(1)(ii) of this section, beneficiaries who were identified through a data match with the Public Assistance Reporting Information System in accordance with § 435.945(d) of this chapter indicating simultaneous enrollment in two or more states, and who fail to respond to a request for information to verify their residency, may be treated as not being a state resident for purposes of paragraph (d)(1)(ii) of this section, provided that the state takes all reasonably available measures to attempt to verify the beneficiary’s state residency. If a beneficiary’s enrollment is terminated under the exception at paragraph (d)(1)(ii) of this section based on a PARIS data match and the state subsequently obtains information verifying residency, the state must reinstate the beneficiary’s Medicaid enrollment retroactive to the date of termination.
PART 434 – CONTRACTS
Subpart A – General Provisions
§ 434.1 Basis and scope.
(a) Statutory basis. This part is based on section 1902(a)(4) of the Act, which requires that the State plan provide for methods of administration that the Secretary finds necessary for the proper and efficient operation of the plan.
(b) Scope. This part sets forth the requirements for contracts with certain organizations for furnishing Medicaid services or processing or paying Medicaid claims, or enchancing the agency’s capability for effective administration of the program.
§ 434.2 Definitions.
As used in this part, unless the context indicates otherwise –
Fiscal agent means an entity that processes or pays vendor claims for the agency.
Health care projects grant center means an entity that –
(a) Is supported in whole or in part by Federal project grant financial assistance; and
(b) Provides or arranges for medical services to beneficiaries.
Private nonmedical institution means an institution (such as a child-care facility or a maternity home) that –
(a) Is not, as a matter of regular business, a health insuring organization or a community health care center;
(b) Provides medical care to its residents through contracts or other arrangements with medical providers; and
(c) Receives capitation payments from the Medicaid agency, under a nonrisk contract, for its residents who are eligible for Medicaid.
Professional management service or consultant firm means a firm that performs management services such as auditing or staff training, or carries out studies or provides consultation aimed at improving State Medicaid operations, for example, with respect to reimbursement formulas or accounting systems.
§ 434.4 State plan requirement.
If the State plan provides for contracts of the types covered by this part, the plan must also provide for meeting the applicable requirements of this part.
§ 434.6 General requirements for all contracts and subcontracts.
(a) Contracts. All contracts under this part must include all of the following:
(1) Include provisions that define a sound and complete procurement contract, as required by 45 CFR part 75.
(2) Identify the population covered by the contract.
(3) Specify any procedures for enrollment or reenrollment of the covered population.
(4) Specify the amount, duration, and scope of medical services to be provided or paid for.
(5) Provide that the agency and HHS may evaluate through inspection or other means, the quality, appropriateness and timeliness of services performed under the contract.
(6) Specify procedures and criteria for terminating the contract, including a requirement that the contractor promptly supply all information necessary for the reimbursement of any outstanding Medicaid claims.
(7) Provide that the contractor maintains an appropriate record system for services to enrolled beneficiaries.
(8) Provide that the contractor safeguards information about beneficiaries as required by part 431, subpart F of this chapter.
(9) Specify any activities to be performed by the contractor that are related to third party liability requirements in part 433, subpart D of this chapter.
(10) Specify which functions may be subcontracted.
(11) Provide that any subcontracts meet the requirements of paragraph (b) of this section.
(12) Specify the following:
(i) No payment will be made by the contractor to a provider for provider-preventable conditions, as identified in the State plan.
(ii) The contractor will require that all providers agree to comply with the reporting requirements in § 447.26(d) of this subchapter as a condition of payment from the contractor.
(iii) The contractor will comply with such reporting requirements to the extent the contractor directly furnishes services.
(b) Subcontracts. All subcontracts must be in writing and fulfill the requirements of this part that are appropriate to the service or activity delegated under the subcontract.
(c) Continued responsibility of contractor. No subcontract terminates the legal responsibility of the contractor to the agency to assure that all activities under the contract are carried out.
Subpart B – Contracts with Fiscal Agents and Private Nonmedical Institutions
§ 434.10 Contracts with fiscal agents.
Contracts with fiscal agents must –
(a) Meet the requirements of § 434.6;
(b) Include termination procedures that require the contractors to supply promptly all material necessary for continued operation of payment and related systems. This material includes –
(1) Computer programs;
(2) Data files;
(3) User and operation manuals, and other documentation;
(4) System and program documentation; and
(5) Training programs for Medicaid agency staff, their agents or designated representatives in the operation and maintenance of the system;
(c) Offer to the State one or both of the following options, if the fiscal agent or the fiscal agent’s subcontractor has a proprietary right to material specified in paragraph (b) of this section:
(1) Purchasing the material; or
(2) Purchasing the use of the material through leasing or other means; and
(d) State that payment to providers will be made in accordance with part 447 of this chapter.
§ 434.12 Contracts with private nonmedical institutions.
Contracts with private nonmedical institutions must –
(a) Meet the requirements of § 434.6;
(b) Specify a capitation fee based on the cost of the services provided, in accordance with the reimbursement requirements prescribed in part 447 of this chapter; and
(c) Specify when the capitation fee must be paid.
§ 434.14 [Reserved]
Subpart C [Reserved]
Subpart D – Contracts With Health Insuring Organizations
§ 434.40 Contract requirements.
(a) Contracts with health insuring organizations that are not subject to the requirements in section 1903(m)(2)(A) must:
(1) Meet the general requirements for all contracts and subcontracts specified in § 434.6;
(2) Specify that the contractor assumes at least part of the underwriting risk and;
(i) If the contractor assumes the full underwriting risk, specify that payment of the capitation fees to the contractor during the contract period constitutes full payment by the agency for the cost of medical services provided under the contract;
(ii) If the contractor assumes less than the full underwriting risk, specify how the risk is apportioned between the agency and the contractor;
(3) Specify whether the contractor returns to the agency part of any savings remaining after the allowable costs are deducted from the capitations fees, and if savings are returned, the apportionment between agency and the contractor; and
(4) Specify the extent, if any, to which the contractor may obtain reinsurance of a portion of the underwriting risk.
(b) The contract must –
(1) Specify that the capitation fee will not exceed the limits set forth under part 447 of this chapter.
(2) Specify that, except as permitted under paragraph (b) of this section, the capitation fee paid on behalf of each beneficiary may not be renegotiated –
(i) During the contract period if the contract period is 1 year or less; or
(ii) More often than annually if the contract period is for more than 1 year.
(3) Specify that the capitation fee will not include any amount for recoupment of any specific losses suffered by the contractor for risks assumed under the same contract or a prior contract with the agency; and
(4) Specify the actuarial basis for computation of the capitation fee.
(c) The capitation fee may be renegotiated more frequently than annually for beneficiaries who are not enrolled at the time of renegotiation or if the renegotiation is required by changes in Federal or State law.
Subpart E [Reserved]
Subpart F – Federal Financial Participation
§ 434.70 Conditions for Federal Financial Participation (FFP).
(a) Basic requirements. FFP is available only for periods during which the contract –
(1) Meets the requirements of this part;
(2) Meets the applicable requirements of 45 CFR part 75; and
(3) Is in effect.
(b) Basis for withholding. CMS may withhold FFP for any period during which the State fails to meet the State plan requirements of this part.
§ 434.76 Costs under fiscal agent contracts.
Under each contract with a fiscal agent –
(a) The amount paid to the provider of medical services is a medical assistance cost; and
(b) The amount paid to the contractor for performing the agreed-upon functions is an administrative cost.
§ 434.78 Right to reconsideration of disallowance.
A Medicaid agency dissatisfied with a disallowance of FFP under this subpart may request and will be granted reconsideration in accordance with 45 CFR part 16.
PART 435 – ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA
Subpart A – General Provisions and Definitions
§ 435.2 Purpose and applicability.
This part sets forth, for the 50 States, the District of Columbia, the Northern Mariana Islands, and American Samoa –
(a) The eligibility provisions that a State plan must contain;
(b) The mandatory and optional groups of individuals to whom Medicaid is provided under a State plan;
(c) The eligibility requirements and procedures that the Medicaid agency must use in determining and redetermining eligibility, and requirements it may not use;
(d) The availability of FFP for providing Medicaid and for administering the eligibility provisions of the plan; and
(e) Other requirements concerning eligibility determinations, such as use of an institutionalized individual’s income for the cost of care.
§ 435.3 Basis.
(a) This part implements the following sections of the Act and public laws that mandate eligibility requirements and standards:
State residence requirements excluding individuals who reside in the state; and
Citizenship requirement excluding United States citizens.
(b) This part implements the following other provisions of the Act or public laws that establish additional State plan requirements:
§ 435.4 Definitions and use of terms.
As used in this part –
AABD means aid to the aged, blind, and disabled under title XVI of the Act;
AB means aid to the blind under title X of the Act;
Advance payments of the premium tax credit (APTC) has the meaning given the term in 45 CFR 155.20.
AFDC means aid to families with dependent children under title IV-A of the Act;
Affordable Care Act means the Patient Protection and Affordable Care Act of 2010 (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), as amended by the Three Percent Withholding Repeal and Job Creation Act (Pub. L. 112-56).
Affordable Insurance Exchanges (Exchanges) has the meaning given the term “Exchanges” in 45 CFR 155.20.
Agency means a single State agency designated or established by a State in accordance with § 431.10(b) of this subchapter.
Applicable modified adjusted gross income (MAGI) standard has the meaning provided in § 435.911(b)(1) of this part.
Applicant means an individual who is seeking an eligibility determination for himself or herself through an application submission or a transfer from another agency or insurance affordability program.
Application means the single streamlined application described at § 435.907(b) of this part or an application described in § 435.907(c)(2) of this part submitted by or on behalf of an individual.
APTD means aid to the permanently and totally disabled under title XIV of the Act;
Beneficiary means an individual who has been determined eligible and is currently receiving Medicaid.
Caretaker relative means a relative of a dependent child by blood, adoption, or marriage with whom the child is living, who assumes primary responsibility for the child’s care (as may, but is not required to, be indicated by claiming the child as a tax dependent for Federal income tax purposes), and who is one of the following –
(1) The child’s father, mother, grandfather, grandmother, brother, sister, stepfather, stepmother, stepbrother, stepsister, uncle, aunt, first cousin, nephew, or niece.
(2) The spouse of such parent or relative, even after the marriage is terminated by death or divorce.
(3) At State option, another relative of the child based on blood (including those of half-blood), adoption, or marriage; the domestic partner of the parent or other caretaker relative; or an adult with whom the child is living and who assumes primary responsibility for the dependent child’s care.
Categorically needy refers to families and children, aged, blind, or disabled individuals, and pregnant women, described under subparts B and C of this part who are eligible for Medicaid. Subpart B of this part describes the mandatory eligibility groups who, generally, are receiving or deemed to be receiving cash assistance under the Act. These mandatory groups are specified in sections 1902(a)(10)(A)(i), 1902(e), 1902(f), and 1928 of the Act. Subpart C of this part describes the optional eligibility groups of individuals who, generally, meet the categorical requirements or income or resource requirements that are the same as or less restrictive than those of the cash assistance programs and who are not receiving cash payments. These optional groups are specified in sections 1902(a)(10)(A)(ii), 1902(e), and 1902(f) of the Act.
Citizenship includes status as a “national of the United States,” and includes both citizens of the United States and non-citizen nationals of the United States described in 8 U.S.C. 1101(a)(22).
Combined eligibility notice means an eligibility notice that informs an individual or multiple family members of a household of eligibility for each of the insurance affordability programs and enrollment in a qualified health plan through the Exchange, 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 requirements of § 435.917(a) and contain the content described in § 435.917(b) and (c), except that information described in § 435.917(b)(1)(iii) and (iv) may be included 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) consummated by the agency in accordance with § 435.1200(b)(3).
Coordinated content means information included in an eligibility notice regarding, if applicable –
(1) The transfer of an individual’s or household’s electronic account to another insurance affordability program;
(2) Any notice sent by the agency to another insurance affordability program regarding an individual’s eligibility for Medicaid;
(3) The potential impact, if any, of –
(i) The agency’s determination of eligibility or ineligibility for Medicaid on eligibility for another insurance affordability program; or
(ii) A determination of eligibility for, or enrollment in, another insurance affordability program on an individual’s eligibility for Medicaid; and
(4) The status of household members on the same application or renewal form whose eligibility is not yet determined.
Dependent child means a child who meets both of the following criteria:
(1) Is under the age of 18, or, at State option, is age 18 and a full-time student in secondary school (or equivalent vocational or technical training), if before attaining age 19 the child may reasonably be expected to complete such school or training.
(2) Is deprived of parental support by reason of the death, absence from the home, physical or mental incapacity, or unemployment of at least one parent, unless the State has elected in its State plan to eliminate such deprivation requirement. A parent is considered to be unemployed if he or she is working less than 100 hours per month, or such higher number of hours as the State may elect in its State plan.
Effective income level means the income standard applicable under the State plan for an eligibility group, after taking into consideration any disregard of a block of income applied in determining financial eligibility for such group.
Electronic account means an electronic file that includes all information collected and generated by the agency regarding each individual’s Medicaid eligibility and enrollment, including all documentation required under § 435.914 and including any information collected or generated as part of a fair hearing process conducted under subpart E of this part, the Exchange appeals process conducted under 45 CFR part 155, subpart F or other insurance affordability program appeals process.
Eligibility determination means an approval or denial of eligibility in accordance with § 435.911 as well as a renewal or termination of eligibility in accordance with § 435.916 of this part.
Family size has the meaning provided in § 435.603(b) of this part.
Federal poverty level (FPL) means the Federal poverty level updated periodically in the
Household income has the meaning provided in § 435.603(d) of this part.
Insurance affordability program means a program that is one of the following:
(1) A State Medicaid program under title XIX of the Act.
(2) A State children’s health insurance program (CHIP) under title XXI of the Act.
(3) A State basic health program established under section 1331 of the Affordable Care Act.
(4) A program that makes coverage in a qualified health plan through the Exchange with advance payments of the premium tax credit established under section 36B of the Internal Revenue Code available to qualified individuals.
(5) A program that makes available coverage in a qualified health plan through the Exchange with cost-sharing reductions established under section 1402 of the Affordable Care Act.
MAGI-based income has the meaning provided in § 435.603(e) of this part.
Mandatory State supplement means a cash payment a State is required to make under section 212, Pub. L. 93-66 (July 9, 1973) to an aged, blind, or disabled individual. Its purpose is to provide an individual with the same amount of cash assistance he was receiving under OAA, AB, APTD, or AABD if his SSI payment is less than that amount;
Medically needy refers to families, children, aged, blind, or disabled individuals, and pregnant women listed under subpart D of this part who are not listed in subparts B and C of this part as categorically needy but who may be eligible for Medicaid under this part because their income and resources are within limits set by the State under its Medicaid plan (including persons whose income and resources fall within these limits after their incurred expenses for medical or remedial care are deducted) (Specific financial requirements for determining eligibility of the medically needy appear in subpart I of this part.);
Medicare Savings Programs means four Medicaid eligibility groups authorized under section 1902(a)(10)(E) and 1905(p) and (s) of the Act that serve certain low-income Medicare beneficiaries. These groups include the Qualified Medicare Beneficiary, Specified Low-Income Medicare Beneficiary, Qualifying Individual, and Qualified Disabled and Working Individual eligibility groups, each separately codified in §§ 435.123 through 435.126.
Minimum essential coverage means coverage defined in section 5000A(f) of subtitle D of the Internal Revenue Code, as added by section 1401 of the Affordable Care Act, and implementing regulations of such section issued by the Secretary of the Treasury.
Modified adjusted gross income (MAGI) has the meaning provided at 26 CFR 1.36B-1(e)(2).
Non-applicant means an individual who is not seeking an eligibility determination for himself or herself and is included in an applicant’s or beneficiary’s household to determine eligibility for such applicant or beneficiary.
Non-citizen has the same meaning as the term “alien,” as defined at 8 U.S.C. 1101(a)(3) and includes any individual who is not a citizen or national of the United States, defined at 8 U.S.C. 1101(a)(22).
OAA means old age assistance under title I of the Act;
OASDI means old age, survivors, and disability insurance under title II of the Act;
Optional State supplement means a cash payment made by a State, under section 1616 of the Act, to an aged, blind, or disabled individual;
Optional targeted low-income child means a child under age 19 who meets the financial and categorical standards described below.
(1) Financial need. An optional targeted low-income child:
(i) Has a household income at or below 200 percent of the Federal poverty line for a family of the size involved; and
(ii) Resides in a State with no Medicaid applicable income level (as defined at § 457.10 of this chapter); or
(iii) Resides in a State that has a Medicaid applicable income level (as defined at § 457.10 of this chapter) and has household income that either:
(A) Exceeds the Medicaid applicable income level for the age of such child, but not by more than 50 percentage points; or
(B) Does not exceed the income level specified for such child to be eligible for medical assistance under the policies of the State plan under title XIX on June 1, 1997.
(2) No other coverage and State maintenance of effort. An optional targeted low-income child is not covered under a group health plan or health insurance coverage, or would not be eligible for Medicaid under the policies of the State plan in effect on March 31, 1997; except that, for purposes of this standard –
(i) A child shall not be considered to be covered by health insurance coverage based on coverage offered by the State under a program in operation prior to July 1, 1997 if that program received no Federal financial participation;
(ii) A child shall not be considered to be covered under a group health plan or health insurance coverage if the child did not have reasonable geographic access to care under that coverage.
(3) For purposes of this section, policies of the State plan a under title XIX plan include policies under a Statewide demonstration project under section 1115(a) of the Act other than a demonstration project that covered an expanded group of eligible children but that either –
(i) Did not provide inpatient hospital coverage; or
(ii) Limited eligibility to children previously enrolled in Medicaid, imposed premiums as a condition of initial or continued enrollment, and did not impose a general time limit on eligibility.
Pregnant woman means a woman during pregnancy and the post partum period, which begins on the date the pregnancy ends, extends 60 days, and then ends on the last day of the month in which the 60-day period ends.
Qualified non-citizen includes the term “qualified alien” as defined at 8 U.S.C. 1641(b) and (c).
Secure electronic interface means an interface which allows for the exchange of data between Medicaid and other insurance affordability programs and adheres to the requirements in part 433, subpart C of this chapter.
Shared eligibility service means a common or shared eligibility system or service used by a State to determine individuals’ eligibility for insurance affordability programs.
SSI means supplemental security income under title XVI of the Act.
SWICA means the State Wage Information Collection Agency under section 1137(a) of the Act. It is the State agency administering the State unemployment compensation law; a separate agency administering a quarterly wage reporting system; or a State agency administering an alternative system which has been determined by the Secretary of Labor, in consultation with the Secretary of Agriculture and the Secretary of Health and Human Services, to be as effective and timely in providing employment related income and eligibility data.
Tax dependent has the same meaning as the term “dependent” under section 152 of the Internal Revenue Code, as an individual for whom another individual claims a deduction for a personal exemption under section 151 of the Internal Revenue Code for a taxable year.
§ 435.10 State plan requirements.
A State plan must –
(a) Provide that the requirements of this part are met; and
(b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups.
Subpart B – Mandatory Coverage
§ 435.100 Scope.
This subpart prescribes requirements for coverage of categorically needy individuals.
Mandatory Coverage of Families and Children
§ 435.110 Parents and other caretaker relatives.
(a) Basis. This section implements sections 1931(b) and (d) of the Act.
(b) Scope. The agency must provide Medicaid to parents and other caretaker relatives, as defined in § 435.4, and, if living with such parent or other caretaker relative, his or her spouse, whose household income is at or below the income standard established by the agency in the State plan, in accordance with paragraph (c) of this section.
(c) Income standard. The agency must establish in its State plan the income standard as follows:
(1) The minimum income standard is a State’s AFDC income standard in effect as of May 1, 1988 for the applicable family size converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
(2) The maximum income standard is the higher of –
(i) The effective income level in effect for section 1931 low-income families under the Medicaid State plan or waiver of the State plan as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act; or
(ii) A State’s AFDC income standard in effect as of July 16, 1996 for the applicable family size, increased by no more than the percentage increase in the Consumer Price Index for all urban consumers between July 16, 1996 and the effective date of such increase.
§ 435.112 Families terminated from AFDC because of increased earnings or hours of employment.
(a) If a family loses AFDC solely because of increased income from employment or increased hours of employment, the agency must continue to provide Medicaid for 4 months to all members of the family if –
(1) The family received AFDC in any 3 or more months during the 6-month period immediately before the month in which it became ineligible for AFDC; and
(2) At least one member of the family is employed throughout the 4-month period, although this need not be the same member for the whole period.
(b) The 4 calendar month period begins on the date AFDC is terminated. If AFDC benefits are terminated retroactively, the 4 calendar month period also begins retroactively with the first month in which AFDC was erroneously paid.
§ 435.115 Families with Medicaid eligibility extended because of increased collection of spousal support.
(a) Basis. This section implements sections 408(a)(11)(B) and 1931(c)(1) of the Act.
(b) Eligibility. (1) The extended eligibility period is for 4 months.
(2) The agency must provide coverage during an extended eligibility period to a parent or other caretaker relative who was eligible and enrolled for Medicaid under § 435.110, and any dependent child of such parent or other caretaker relative who was eligible and enrolled under § 435.118, in at least 3 out of the 6 months immediately preceding the month that eligibility for the parent or other caretaker relative under § 435.110 is lost due to increased collection of spousal support under title IV-D of the Act.
Mandatory Coverage of Pregnant Women, Children Under 19, and Newborn Children
§ 435.116 Pregnant women.
(a) Basis. This section implements sections 1902(a)(10)(A)(i)(III) and (IV); 1902(a)(10)(A)(ii)(I), (IV), and (IX); and 1931(b) and (d) of the Act.
(b) Scope. The agency must provide Medicaid to pregnant women whose household income is at or below the income standard established by the agency in its State plan, in accordance with paragraph (c) of this section.
(c) Income standard. The agency must establish in its State plan the income standard as follows:
(1) The minimum income standard is the higher of:
(i) 133 percent FPL for the applicable family size; or
(ii) Such higher income standard up to 185 percent FPL, if any, as the State had established as of December 19, 1989 for determining eligibility for pregnant women, or, as of July 1, 1989, had authorizing legislation to do so.
(2) The maximum income standard is the higher of –
(i) The highest effective income level in effect under the Medicaid State plan for coverage under the sections specified at paragraph (a) of this section, or waiver of the State plan covering pregnant women, as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act; or
(ii) 185 percent FPL.
(d) Covered services. (1) Pregnant women are covered under this section for the full Medicaid coverage described in paragraph (d)(2) of this section, except that the agency may provide only pregnancy-related services described in paragraph (d)(3) of this section for pregnant women whose income exceeds the applicable income limit established by the agency in its State plan, in accordance with paragraph (d)(4) of this section.
(2) Full Medicaid coverage consists of all services which the State is required to cover under § 440.210(a)(1) of this subchapter and all services which it has opted to cover under § 440.225 and § 440.250(p) of this subchapter.
(3) Pregnancy-related services consists of services covered under the State plan consistent with § 440.210(a)(2) and § 440.250(p) of this subchapter.
(4) Applicable income limit for full Medicaid coverage of pregnant women. For purposes of paragraph (d)(1) of this section –
(i) The minimum applicable income limit is the State’s AFDC income standard in effect as of May 1, 1988 for the applicable family size converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
(ii) The maximum applicable income limit is the highest effective income level for coverage under section 1902(a)(10)(A)(i)(III) of the Act or under section 1931(b) and (d) of the Act in effect under the Medicaid State plan or waiver of the State plan as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard.
§ 435.117 Deemed newborn children.
(a) Basis. This section implements sections 1902(e)(4) and 2112(e) of the Act.
(b) Eligibility. (1) The agency must provide Medicaid to children from birth until the child’s first birthday without application if, for the date of the child’s birth, the child’s mother was eligible for and received covered services under –
(i) The Medicaid State plan (including during a period of retroactive eligibility under § 435.915) regardless of whether payment for services for the mother is limited to services necessary to treat an emergency medical condition, as defined in section 1903(v)(3) of the Act; or
(ii) The CHIP State plan as a targeted low-income pregnant woman in accordance with section 2112 of the Act, with household income at or below the income standard established by the agency under § 435.118 for infants under age 1.
(2) The agency may provide coverage under this section to children from birth until the child’s first birthday without application who are not described in (b)(1) of this section if, for the date of the child’s birth, the child’s mother was eligible for and received covered services under –
(i) The Medicaid State plan of any State (including during a period of retroactive eligibility under § 435.915); or
(ii) Any of the following, provided that household income of the child’s mother at the time of the child’s birth is at or below the income standard established by the agency under § 435.118 for infants under age 1:
(A) The State’s separate CHIP State plan as a targeted low-income child;
(B) The CHIP State plan of any State as a targeted low-income pregnant woman or child; or
(C) A Medicaid or CHIP demonstration project authorized under section 1115 of the Act.
(3) The child is deemed to have applied and been determined eligible under the Medicaid State plan effective as of the date of birth, and remains eligible regardless of changes in circumstances until the child’s first birthday, unless the child dies or ceases to be a resident of the State or the child’s representative requests a voluntary termination of eligibility.
(c) Medicaid identification number. (1) The Medicaid identification number of the mother serves as the child’s identification number, and all claims for covered services provided to the child may be submitted and paid under such number, unless and until the State issues the child a separate identification number.
(2) The State must issue a separate Medicaid identification number for the child prior to the effective date of any termination of the mother’s eligibility or prior to the date of the child’s first birthday, whichever is sooner, except that the State must issue a separate Medicaid identification number in the case of a child born to a mother:
(i) Whose coverage is limited to services necessary for the treatment of an emergency medical condition, consistent with § 435.139 or § 435.350;
(ii) Covered under the State’s separate CHIP; or
(iii) Who received Medicaid in another State on the date of birth.
(d) Renewal of eligibility. A redetermination of eligibility must be completed on behalf of the children described in this provision in accordance with the procedures at § 435.916. At that time, the State must collect documentary evidence of citizenship and identity as required under § 435.406.
Mandatory Coverage of Qualified Family Members
§ 435.118 Infants and children under age 19.
(a) Basis. This section implements sections 1902(a)(10)(A)(i)(III), (IV), (VI), and (VII); 1902(a)(10)(A)(ii)(IV) and (IX); and 1931(b) and (d) of the Act.
(b) Scope. The agency must provide Medicaid to children under age 19 whose household income is at or below the income standard established by the agency in its State plan, in accordance with paragraph (c) of this section.
(c) Income standard. (1) The minimum income standard is the higher of –
(i) 133 percent FPL for the applicable family size; or
(ii) For infants under age 1, such higher income standard up to 185 percent FPL, if any, as the State had established as of December 19, 1989 for determining eligibility for infants, or, as of July 1, 1989 had authorizing legislation to do so.
(2) The maximum income standard for each of the age groups of infants under age 1, children age 1 through age 5, and children age 6 through age 18 is the higher of –
(i) 133 percent FPL;
(ii) The highest effective income level for each age group in effect under the Medicaid State plan for coverage under the applicable sections of the Act listed at paragraph (a) of this section or waiver of the State plan covering such age group as of March 23, 2010 or December 31, 2013, if higher, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act; or
(iii) For infants under age 1, 185 percent FPL.
Mandatory Coverage for Individuals Age 19 Through 64
§ 435.119 Coverage for individuals age 19 or older and under age 65 at or below 133 percent FPL.
(a) Basis. This section implements section 1902(a)(10)(A)(i)(VIII) of the Act.
(b) Eligibility. Effective January 1, 2014, the agency must provide Medicaid to individuals who:
(1) Are age 19 or older and under age 65;
(2) Are not pregnant;
(3) Are not entitled to or enrolled for Medicare benefits under part A or B of title XVIII of the Act;
(4) Are not otherwise eligible for and enrolled for mandatory coverage under a State’s Medicaid State plan in accordance with subpart B of this part; and
(5) Have household income that is at or below 133 percent FPL for the applicable family size.
(c) Coverage for dependent children. (1) A State may not provide Medicaid under this section to a parent or other caretaker relative living with a dependent child if the child is under the age specified in paragraph (c)(2) of this section, unless such child is receiving benefits under Medicaid, the Children’s Health Insurance Program under subchapter D of this chapter, or otherwise is enrolled in minimum essential coverage as defined in § 435.4 of this part.
(2) For the purpose of paragraph (c)(1) of this section, the age specified is under age 19, unless the State had elected as of March 23, 2010 to provide Medicaid to individuals under age 20 or 21 under § 435.222 of this part, in which case the age specified is such higher age.
Mandatory Coverage of the Aged, Blind, and Disabled
§ 435.120 Individuals receiving SSI.
Except as allowed under § 435.121, the agency must provide Medicaid to aged, blind, and disabled individuals or couples who are receiving or are deemed to be receiving SSI. This includes individuals who are –
(a) Receiving SSI pending a final determination of blindness or disability;
(b) Receiving SSI under an agreement with the Social Security Administration to dispose of resources that exceed the SSI dollar limits on resources; or
(c) Receiving benefits under section 1619(a) of the Act or in section 1619(b) status (blind individuals or those with disabling impairments whose income equals or exceeds a specific Supplemental Security Income limit). (Regulations at 20 CFR 416.260 through 416.269 contain requirements governing determinations of eligibility under this provision.) For purposes of this paragraph (c), this mandatory categorically needy group of individuals includes those qualified severely impaired individuals defined in section 1905(q) of the Act.
§ 435.121 Individuals in States using more restrictive requirements for Medicaid than the SSI requirements.
(a) Basic eligibility group requirements. (1) If the agency does not provide Medicaid under § 435.120 to aged, blind, and disabled individuals who are SSI beneficiaries, the agency must provide Medicaid to aged, blind, and disabled individuals who meet eligibility requirements that are specified in this section.
(2) Except to the extent provided in paragraph (a)(3) of this section, the agency may elect to apply more restrictive eligibility requirements to the aged, blind, and disabled that are more restrictive than those of the SSI program. The more restrictive requirements may be no more restrictive than those requirements contained in the State’s Medicaid plan in effect on January 1, 1972. If any of the State’s 1972 Medicaid plan requirements were more liberal than of the SSI program, the State must use the SSI requirement instead of the more liberal requirements, except to the extent the State elects to use more liberal criteria under § 435.601.
(3) The agency must not apply a more restrictive requirement under the provisions of paragraph (a)(2) of this section if:
(i) The requirement conflicts with the requirements of section 1924 of the Act, which governs the eligibility and post-eligibility treatment of income and resources of institutionalized individuals with community spouses;
(ii) The requirement conflicts with a more liberal requirement which the agency has elected to use under § 435.601; or
(iii) The more restrictive requirement conflicts with a more liberal requirement the State has elected to use under § 435.234(c) in determining eligibility for State supplementary payments.
(b) Mandatory coverage. If the agency chooses to apply more restrictive requirements than SSI to aged, blind, or disabled individuals, it must provide Medicaid to:
(1) Individuals who meet the requirements of section 1619(b)(3) of the Act even though they may not continue to meet the requirements of this section; and
(2) Qualified Medicare beneficiaries described in section 1905(p) of the Act and qualified working disabled individuals described in section 1905(s) of the Act without consideration of the more restrictive eligibility requirements specified in this section.
(3) Individuals who:
(i) Qualify for benefits under section 1619(a) or are in eligibility status under section 1619(b)(1) of the Act as determined by SSA; and
(ii) Were eligible for Medicaid under the more restrictive criteria in the State’s approved Medicaid plan in the reference month – the month immediately preceding the first month in which they became eligible under section 1619(a) or (b)(1) of the Act. “Were eligible for Medicaid” means that individuals were issued Medicaid cards by the State for the reference month. Under this provision, the reference month for determining Medicaid eligibility for all individuals under section 1619 of the Act is the month immediately preceding the first month of the most recent period of eligibility under section 1619 of the Act.
(c) Group composition. The agency may apply more restrictive requirements only to the aged, to the blind, to the disabled, or to any combination of these groups. For example, the agency may apply more restrictive requirements to the aged and disabled under this provision and provide Medicaid to all blind individuals who are SSI beneficiaries.
(d) Nonfinancial conditions. The agency may apply more restrictive requirements that are nonfinancial conditions of eligibility. For example, the agency may use a more restrictive definition of disability or may limit eligibility of the disabled to individuals age 18 and older, or both. If the agency limits eligibility of disabled individuals to individuals age 18 or older, it must provide Medicaid to individuals under age 18 who receive SSI benefits and who would be eligible to receive AFDC under the State’s approved plan if they did not receive SSI. If the agency imposed an age limit for disabled individuals under its 1972 approved State plan but does not use that limit, it must apply the same nonfinancial requirement to individuals under age 18 that it applies to disabled individuals age 18 and older.
(e) Financial conditions. (1) The agency may apply more restrictive requirements that are financial conditions of eligibility.
(2) Any income eligibility standards that the agency applies must:
(i) Equal the income standard (or Federal Benefit Rate (FBR)) that would be used under SSI based on an individual’s living arrangement; or
(ii) Be a more restrictive standard which is no more restrictive than that under the approved State’s January 1, 1972 Medicaid plan.
(3) If the categorically needy income standard established under paragraph (e)(2) of this section is less than the optional categorically needy standard established under § 435.230, the agency must provide Medicaid to all aged, blind, and disabled individuals who have income equal to or below the higher standard.
(4) In a State that does not have a medically needy program that covers aged, blind, and disabled individuals, the agency must allow individuals to deduct from income incurred medical and remedial expenses (that is, spend down) to become eligible under this section. However, individuals with income above the categorically needy standards may only spend down to the standard selected by the State under paragraph (e)(2) of this section which applies to the individual’s living arrangement.
(5) In a State that elects to provide medically needy coverage to aged, blind, and disabled individuals, the agency must allow individuals to deduct from income incurred medical and remedial care expenses (spend down) to become categorically needy when they are SSI beneficiaries (including individuals deemed to be SSI beneficiaries under §§ 435.135, 435.137, and 435.138), eligible spouses of SSI beneficiaries, State supplement beneficiaries, and individuals who are eligible for a supplement but who do not receive supplementary payments. Such persons may only spend down to the standard selected by the State under paragraph (e)(2) of this section. Individuals who are not SSI beneficiaries, eligible spouses of SSI beneficiaries, State supplement beneficiaries, or individuals who are eligible for a supplement must spend down to the State’s medically needy income standards for aged, blind, and disabled individuals in order to become Medicaid eligible.
(f) Deductions from income. (1) In addition to any income disregards specified in the approved State plan in accordance with § 435.601(b), the agency must deduct from income:
(i) SSI payments;
(ii) State supplementary payments that meet the conditions specified in §§ 435.232 and 435.234; and
(iii) Expenses incurred by the individual or financially responsible relatives for necessary medical and remedial services that are recognized under State law and are not subject to payment by a third party, unless the third party is a public program of a State or political subdivision of a State. These expenses include Medicare and other health insurance premiums, deductions and coinsurance charges, and copayments or deductibles imposed under § 447.52, § 447.53, or § 447.54 of this chapter. The agency may set reasonable limits on the amounts of incurred medical expenses that are deducted.
(2) For purposes of counting income with respect to individuals who are receiving benefits under section 1619(a) f the Act or are in section 1619(b)(1) of the Act status but who do not meet the requirements of paragraph (b)(3)(ii) of this section, the agency may disregard some or all of the amount of the individual’s income that is in excess of the SSI Federal benefit rate under section 1611(b) of the Act.
§ 435.122 Individuals who are ineligible for SSI or optional State supplements because of requirements that do not apply under title XIX of the Act.
If an agency provides Medicaid to aged, blind, or disabled individuals receiving SSI or optional State supplements, it must provide Medicaid to individuals who would be eligible for SSI or optional State supplements except for an eligibility requirement used in those programs that is specifically prohibited under title XIX.
§ 435.123 Individuals eligible as qualified Medicare beneficiaries.
(a) Basis. This section implements sections 1902(a)(10)(E)(i) and 1905(p)(1) of the Act.
(b) Eligibility. The agency must provide medical assistance to individuals who meet all of the following:
(1) Are entitled to Medicare Part A based on the eligibility requirements set forth in § 406.5(a) or § 406.20(b) of this chapter or who are enrolled in Medicare Part B for coverage of immunosuppressive drugs based on eligibility requirements described in § 407.55 of this chapter.
(2) Have an income, subject to paragraphs (b)(2)(i) and (ii) of this section, that does not exceed 100 percent of the Federal poverty level.
(i) During a transition month (as defined in paragraph (b)(2)(ii) of this section), any income attributable to a cost of living adjustment in Social Security retirement, survivors, or disability benefits does not count in determining an individual’s income.
(ii) A transition month is any month of the year beginning when the cost of living adjustment takes effect, through the month following the month of publication of the revised official poverty level.
(3) Have resources, determined using financial methodologies no more restrictive than SSI, that do not exceed three times the maximum resource level allowed under the SSI program, annually adjusted by increases in the Consumer Price Index for inflation as defined in section 1905(p)(1)(C) of the Act.
(c) Scope. Medical assistance included in paragraph (b) of this section includes all of the following:
(1) For individuals entitled to Medicare Part A as described in paragraph (b)(1) of this section, coverage for Parts A and B premiums and cost sharing, including deductibles and coinsurance, and copays.
(2) For individuals enrolled in Medicare Part B for coverage of immunosuppressive drugs as described in paragraph (b)(1) of this section, only coverage of premiums and cost sharing related to enrollment in Medicare Part B for coverage of immunosuppressive drugs.
§ 435.124 Individuals eligible as specified low-income Medicare beneficiaries.
(a) Basis. This section implements sections 1902(a)(10)(E)(iii) and 1905(p)(3)(A)(ii) of the Act.
(b) Eligibility. The agency must provide medical assistance to individuals who meet the eligibility requirements in § 435.123(b), except that income exceeds 100 percent, but is less than 120 percent of the poverty level.
(c) Scope. Medical assistance included in paragraph (b) of this section includes the following:
(1) For individuals entitled to Medicare Part A as described in paragraph (b)(1) of this section, coverage for the Part B premium.
(2) For individuals enrolled under Medicare Part B for coverage of immunosuppressive drugs as described in paragraph (b)(1) of this section, only coverage of the Part B premium related to enrollment in Medicare Part B for coverage of immunosuppressive drugs.
§ 435.125 Individuals eligible as qualifying individuals.
(a) Basis. This section implements sections 1902(a)(10)(E)(iv) and 1905(p)(3)(A)(ii) of the Act.
(b) Eligibility. The agency must provide medical assistance to individuals who meet the eligibility requirements in § 435.123(b), except that income is at least 120 percent, but is less than 135 percent of the Federal poverty level.
(c) Scope. Medical assistance included in paragraph (b) of this section includes the following:
(1) For individuals entitled to Medicare Part A as described in paragraph (b)(1) of this section, coverage for the Part B premium.
(2) For individuals enrolled under Medicare Part B for coverage of immunosuppressive drugs as described in paragraph (b)(1) of this section, only payment of the Part B premium related to enrollment in Medicare Part B for coverage of immunosuppressive drugs.
§ 435.126 Individuals eligible as qualified disabled and working individuals.
(a) Basis. This section implements sections 1902(a)(10)(E)(ii) and 1905(s) of the Act.
(b) Eligibility. The agency must provide medical assistance to individuals who meet all of the following:
(1) Are entitled to Medicare Part A based on the eligibility requirements set forth in § 406.20(c) of this chapter.
(2) Have income, subject to paragraphs (b)(2)(1)(i) and (ii) of this section, that is less than or equal to 200 percent of the federal poverty level.
(i) During a transition month (as defined in paragraph (b)(2)(ii) of this section), any income attributable to a cost of living adjustment in Social Security retirement, survivors, or disability benefits does not count in determining an individual’s income.
(ii) A transition month is any month of the year beginning when the cost of living adjustment takes effect, through the month following the month of publication of the revised official poverty level.
(3) Have resources that do not exceed twice the SSI resource standard described in section 1613 of the Act.
(c) Scope. Medical assistance included in paragraph (b) of this section is coverage of the Part A premium.
§ 435.130 Individuals receiving mandatory State supplements.
The agency must provide Medicaid to individuals receiving mandatory State supplements.
§ 435.131 Individuals eligible as essential spouses in December 1973.
(a) The agency must provide Medicaid to any person who was eligible for Medicaid in December 1973 as an essential spouse of an aged, blind, or disabled individual who was receiving cash assistance, if the conditions in paragraph (b) of this section are met. An “essential spouse” is defined in section 1905(a) of the Act as one who is living with the individual; whose needs were included in determining the amount of cash payment to the individual under OAA, AB, APTD, or AABD; and who is determined essential to the individual’s well-being.
(b) The agency must continue Medicaid if –
(1) The aged, blind, or disabled individual continues to meet the December 1973 eligibility requirements of the applicable State cash assistance plan; and
(2) The essential spouse continues to meet the conditions that were in effect in December 1973 under the applicable cash assistance plan for having his needs included in computing the payment to the aged, blind, or disabled individual.
§ 435.132 Institutionalized individuals who were eligible in December 1973.
The agency must provide Medicaid to individuals who were eligible for Medicaid in December 1973, or any part of that month, as inpatients of medical institutions or residents of intermediate care facilities that were participating in the Medicaid program and who –
(a) For each consecutive month after December 1973 –
(1) Continue to meet the requirements for Medicaid eligibility that were in effect under the State’s plan in December 1973 for institutionalized individuals; and
(2) Remain institutionalized; and
(b) Are determined by the State or a professional standards review organization to continue to need institutional care.
§ 435.133 Blind and disabled individuals eligible in December 1973.
The agency must provide Medicaid to individuals who –
(a) Meet all current requirements for Medicaid eligibility except the criteria for blindness or disability;
(b) Were eligible for Medicaid in December 1973 as blind or disabled individuals, whether or not they were receiving cash assistance in December 1973; and
(c) For each consecutive month after December 1973, continue to meet the criteria for blindness or disability and the other conditions of eligibility used under the Medicaid plan in December 1973.
§ 435.134 Individuals who would be eligible except for the increase in OASDI benefits under Pub. L. 92-336 (July 1, 1972).
The agency must provide Medicaid to individuals who meet the following conditions:
(a) In August 1972, the individual was entitled to OASDI and –
(1) He was receiving OAA, AB, APTD, or AABD; or
(2) He would have been eligible for one of those programs except that he had not applied, and the Medicaid plan covered this optional group; or
(3) He would have been eligible for one of those programs if he were not in a medical institution or intermediate care facility, and the Medicaid plan covered this optional group.
(b) The individual would currently be eligible for SSI or a State supplement except that the increase in OASDI under Pub. L. 92-336 raised his income over the limit allowed under SSI. This includes an individual who –
(1) Meets all current SSI requirements except for the requirement to file an application; or
(2) Would meet all current SSI requirements if he were not in a medical institution or intermediate care facility, and the State’s Medicaid plan covers this optional group.
§ 435.135 Individuals who become ineligible for cash assistance as a result of OASDI cost-of-living increases received after April 1977.
(a) If an agency provides Medicaid to aged, blind, or disabled individuals receiving SSI or State supplements, it must provide Medicaid to individuals who –
(1) Are receiving OASDI;
(2) Were eligible for and receiving SSI or State supplements but became ineligible for those payments after April 1977; and
(3) Would still be eligible for SSI or State supplements if the amount of OASDI cost-of-living increases paid under section 215(i) of the Act, after the last month after April 1977 for which those individuals were both eligible for and received SSI or a State supplement and were entitled to OASDI, were deducted from current OASDI benefits.
(b) Cost-of-living increases include the increases received by the individual or his or her financially responsible spouse or other family member (e.g., a parent).
(c) If the agency adopts more restrictive eligibility requirements than those under SSI, it must provide Medicaid to individuals specified in paragraph (a) of this section on the same basis as Medicaid is provided to individuals continuing to receive SSI or State supplements. If the individual incurs enough medical expenses to reduce his or her income to the financial eligibility standard for the categorically needy, the agency must cover that individual as categorically needy. In determining the amount of his or her income, the agency may deduct the cost-of-living increases paid under section 215(i) after the last month after April 1977 for which that individual was both eligible for and received SSI or a State supplement and was entitled to OASDI, up to the amount that made him or her ineligible for SSI.
§ 435.136 State agency implementation requirements for one-time notice and annual review system.
An agency must –
(a) Provide a one-time notice of potential Medicaid eligibility under § 435.135 to all individuals who meet the requirements of § 435.135 (a) or (c) who were not receiving Medicaid as of March 9, 1984; and
(b) Establish an annual review system to identify individuals who meet the requirements of § 435.135 (a) or (c) and who lose categorically needy eligibility for Medicaid because of a loss of SSI. States without medically needy programs must send notices of potential eligibility for Medicaid to these individuals for 3 consecutive years following their identification through the annual review system.
§ 435.137 Disabled widows and widowers who would be eligible for SSI except for the increase in disability benefits resulting from elimination of the reduction factor under Pub. L. 98-21.
(a) If the agency provides Medicaid to aged, blind, or disabled individuals receiving SSI or State supplements, the agency much provide Medicaid to disabled widows and widowers who –
(1) Became ineligible for SSI or a mandatory or optional State supplement as a result of the elimination of the additional reduction factor for disabled widows and widowers under age 60 required by section 134 of Pub. L. 98-21, and for purposes of title XIX, are deemed to be title XVI payment beneficiaries under section 1634(b) of the Social Security Act; and
(2) Meet the conditions of paragraphs (b) and (e) of this section.
(b) The individuals must meet the following conditions:
(1) They were entitled to monthly OASDI benefits under title II of the Act for December 1983:
(2) They were entitled to and received widow’s or widower’s disability benefits under section 202(e) or (f) of the Act for January 1984;
(3) They became ineligible for SSI or a mandatory or optional State supplement in the first month in which the increase under Pub. L. 98-21 was paid (and in which a retroactive payment for that increase for prior months was not made);
(4) They have been continously entitled to widow’s or widower’s disability benefits under section 202(e) or (f) from the first month that the increase under Pub. L. 98-21 was received; and
(5) They would be eligible for SSI benefits or a mandatory or optional State supplement if the amount of the increase under Pub. L. 98-21 and subsequent cost-of-living adjustments in widow’s or widower’s benefits under section 215(i) of the Act were deducted from their income.
(c) If the agency adopts more restrictive requirements than those under SSI, it must provide Medicaid to individuals specified in paragraph (a) of this section on the same basis as Medicaid is provided to individuals continuing to receive SSI or a mandatory or optional State supplement. The State must consider the individuals specified in paragraph (a) of this section to have no more income than the SSI Federal benefit rate if the individual was eligible for SSI in the month prior to the first month in which the increase under Public Law 98-21 was paid (and in which retroactive payments for that increase for prior months was not being made), and the individual would be eligible for SSI except for the amount of the increase under Public Law 98-21 and subsequent cost-of-living adjustments in his or her widow’s or widower’s benefits under section 215(i) of the Act. The State must consider individuals who qualify under paragraph (a) of this section on the basis of loss of a mandatory or optional State supplementary payment, rather than the loss of SSI, to have no more income than the relevant SSP rate. If the State’s income eligibility level is lower than the SSP or SSI Federal benefit rates, individuals qualifying under paragraph (a) of this section who are deemed to have income at either the SSP rate or the SSI Federal benefit rate may further reduce their countable income by incurring medical expenses in the amount by which their income exceeds the State’s income eligibility standard. When the individual has reduced his or her income by this amount, he or she will be eligible for Medicaid as categorically needy.
(d) The agency must notify each individual who may be eligible for Medicaid under this section of his or her potential eligibility, in accordance with instructions issued by the Secretary.
(e)(1) Except as provided in paragraph (e)(2) of this section, the provisions of this section apply only to those individuals who filed a written application for Medicaid on or before June 30, 1988, to obtain protected Medicaid coverage.
(2) Individuals who may be eligible under this section residing in States that use a more restrictive income standard than that of the SSI program, under section 1902(f) of the Act, have up to six months after the State sends notice pursuant to the District Court’s order in Darling v. Bowen (685 F. Supp. 1125 (W.D.Mo. 1988) to file a written application to obtain protected Medicaid coverage.
(a) If the agency provides Medicaid to aged, blind, or disabled individuals receiving SSI or State supplements, the agency must provide Medicaid to disabled widows and widowers who –
(1) Are at least age 60;
(2) Are not entitled to hospital insurance benefits under Medicare Part A; and
(3) Become ineligible for SSI or a State supplement because of mandatory application (under section 1611(e)(2)) for and receipt of widow’s or widower’s social security disability benefits under section 202(e) or (f) (or any other provision of section 202 if they are also eligible for benefits under subsections (e) or (f)) of the Act.
For purposes of title XIX, individuals who meet these requirements are deemed to be title XVI payment beneficiaries under section 1634(d) of the Act.
(b) If the agency adopts more restrictive eligibility requirements than those under SSI, it must provide Medicaid to individuals specified in paragraph (a) of this section on the same basis as Medicaid is provided to individuals continuing to receive SSI or a mandatory or optional State supplement. If the individual incurs enough medical expenses to reduce his or her income to the financial eligibility standard for the categorically needy under the State’s more restrictive eligibility criteria, the agency must cover the individual as categorically needy. In determining the amount of his or her income, the agency may deduct all, part, or none of the amount of the social security disability benefits that made him or her ineligible for SSI or a State supplement, up to the amount that made him or her ineligible for SSI.
(c) Individuals who may be eligible under this section must file a written application for Medicaid. Medicaid coverage may begin no earlier than July 1, 1988.
(d) The agency must determine whether individuals may be eligible for Medicaid under this section.
Mandatory Coverage of Certain Aliens
§ 435.139 Coverage for certain aliens.
The agency must provide services necessary for the treatment of an emergency medical condition, as defined in § 440.255(c) of this chapter, to those aliens described in § 435.406(c) of this subpart.
Mandatory Coverage of Adoption Assistance and Foster Care Children
§ 435.145 Children with adoption assistance, foster care, or guardianship care under title IV-E.
(a) Basis. This section implements sections 1902(a)(10)(A)(i)(I) and 473(b)(3) of the Act.
(b) Eligibility. The agency must provide Medicaid to individuals for whom –
(1) An adoption assistance agreement is in effect with a State or Tribe under title IV-E of the Act, regardless of whether adoption assistance is being provided or an interlocutory or other judicial decree of adoption has been issued; or
(2) Foster care or kinship guardianship assistance maintenance payments are being made by a State or Tribe under title IV-E of the Act.
§ 435.150 Former foster care children.
(a) Basis. This section implements section 1902(a)(10)(A)(i)(IX) of the Act.
(b) Eligibility. The agency must provide Medicaid to individuals who:
(1) Are under age 26;
(2) Are not eligible and enrolled for mandatory coverage under §§ 435.110 through 435.118 or §§ 435.120 through 435.145; and
(3) Were in foster care under the responsibility of the State or a Tribe within the State and enrolled in Medicaid under the State’s Medicaid State plan or under a section 1115 demonstration project upon attaining:
(i) Age 18; or
(ii) A higher age at which the State’s or such Tribe’s foster care assistance ends under title IV-E of the Act.
(c) Options. At the State option, the agency may provide Medicaid to individuals who meet the requirements at paragraphs (b)(1) and (2) of this section, were in foster care under the responsibility of the State or Tribe within the State upon attaining either age described in paragraph (b)(3)(i) or (ii) of this section, and were:
(1) Enrolled in Medicaid under the State’s Medicaid State plan or under a section 1115 demonstration project at some time during the period in foster care during which the individual attained such age; or
(2) Placed by the State or Tribe in another State and, while in such placement, were enrolled in the other State’s Medicaid State plan or under a section 1115 demonstration project:
(i) Upon attaining either age described in paragraph (b)(3)(i) or (ii) of this section; or
(ii) At state option, at some time during the period in foster care during which the individual attained such age.
Mandatory Coverage of Special Groups
§ 435.170 Pregnant women eligible for extended or continuous eligibility.
(a) Basis. This section implements sections 1902(e)(5) and 1902(e)(6) of the Act.
(b) Extended eligibility for pregnant women. For a pregnant woman who was eligible and enrolled under subpart B, C, or D of this part on the date her pregnancy ends, the agency must provide coverage described in paragraph (d) of this section through the last day of the month in which the 60-day postpartum period ends.
(c) Continuous eligibility for pregnant women. For a pregnant woman who was eligible and enrolled under subpart B, C, or D of this part and who, because of a change in household income, will not otherwise remain eligible, the agency must provide coverage described in paragraph (d) of this section through the last day of the month in which the 60-day post-partum period ends.
(d) Covered Services. The coverage described in this paragraph (d) consists of –
(1) Full Medicaid coverage, as described in § 435.116(d)(2); or
(2) Pregnancy-related services described in § 435.116(d)(3), if the agency has elected to establish an income limit under § 435.116(d)(4), above which pregnant women enrolled for coverage under § 435.116 receive pregnancy-related services described in § 435.116(d)(3).
(e) Presumptive Eligibility. This section does not apply to pregnant women covered during a presumptive eligibility period under section 1920 of the Act.
§ 435.172 Continuous eligibility for hospitalized children.
(a) Basis. This section implements section 1902(e)(7) of the Act.
(b) Requirement. The agency must provide Medicaid to an individual eligible and enrolled under § 435.118 until the end of an inpatient stay for which inpatient services are furnished, if the individual:
(1) Was receiving inpatient services covered by Medicaid on the date the individual is no longer eligible under § 435.118 based on the child’s age; and
(2) Would remain eligible but for attaining such age.
Subpart C – Options for Coverage
§ 435.200 Scope.
This subpart specifies options for coverage of individuals as categorically needy.
§ 435.201 Individuals included in optional groups.
(a) The agency may choose to cover as optional categorically needy any group or groups of the following individuals who are not receiving cash assistance and who meet the appropriate eligibility criteria for groups specified in the separate sections of this subpart:
(1) Aged individuals (65 years of age of older);
(2) Blind individuals (as defined in § 435.530);
(3) Disabled individuals (as defined in § 435.541);
(4) Individuals under age 21 (or, at State option, under age 20, 19, or 18) or reasonable classifications of these individuals; and
(5) Parents and other caretaker relatives (as defined in § 435.4).
(b) If the agency provides Medicaid to any individual in an optional group specified in paragraph (a) of this section, the agency must provide Medicaid to all individuals who apply and are found eligible to be members of that group.
(c) States that elect to use more restrictive eligibility requirements for Medicaid than the SSI requirements for any group or groups of aged, blind, and disabled individuals under § 435.121 must apply the specific requirements of § 435.230 in establishing eligibility of these groups of individuals as optional categorically needy.
Options for Coverage of Families and Children and the Aged, Blind, and Disabled
§ 435.210 Optional eligibility for individuals who meet the income and resource requirements of the cash assistance programs.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(I) of the Act.
(b) Eligibility. The agency may provide Medicaid to any group or groups of individuals specified in § 435.201(a)(1) through (3) who meet the income and resource requirements of SSI or an optional State supplement program in States that provide Medicaid to optional State supplement recipients.
§ 435.211 Optional eligibility for individuals who would be eligible for cash assistance if they were not in medical institutions.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(IV) of the Act.
(b) Eligibility. The agency may provide Medicaid to any group or groups of individuals specified in § 435.201(a)(1) through (3) who are institutionalized in a title XIX reimbursable medical institution and who:
(1) Are ineligible for the SSI or an optional State supplement program in States that provide Medicaid to optional State supplement recipients, because of lower income standards used under the program to determine eligibility for institutionalized individuals; but
(2) Would be eligible for aid or assistance under SSI or an optional State supplement program (as specified in § 435.232 or § 435.234) if they were not institutionalized.
§ 435.212 Individuals who would be ineligible if they were not enrolled in an MCO or PCCM.
The State agency may provide that a beneficiary who is enrolled in an MCO or PCCM and who becomes ineligible for Medicaid is considered to continue to be eligible –
(a) For a period specified by the agency, ending no later than 6 months from the date of enrollment; and
(b) Except for family planning services (which the beneficiary may obtain from any qualified provider) only for services furnished to him or her as an MCO enrollee.
§ 435.213 Optional eligibility for individuals needing treatment for breast or cervical cancer.
(a) Basis. This section implements sections 1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act.
(b) Eligibility. The agency may provide Medicaid to individuals who –
(1) Are under age 65;
(2) Are not eligible and enrolled for mandatory coverage under the State’s Medicaid State plan in accordance with subpart B of this part;
(3) Have been screened under the Centers for Disease Control and Prevention (CDC) breast and cervical cancer early detection program (BCCEDP), established in accordance with the requirements of section 1504 of the Public Health Service Act, and found to need treatment for breast or cervical cancer; and
(4) Do not otherwise have creditable coverage, as defined in section 2704(c) of the Public Health Service Act, for treatment of the individual’s breast or cervical cancer. An individual is not considered to have creditable coverage just because the individual may:
(i) Receive medical services provided by the Indian Health Service, a tribal organization, or an Urban Indian organization; or
(ii) Obtain health insurance coverage after a waiting period of uninsurance.
(c) Need for treatment. An individual is considered to need treatment for breast or cervical cancer if the initial screen under BCCEDP or, subsequent to the initial period of eligibility, the individual’s treating health professional determines that:
(1) Definitive treatment for breast or cervical cancer is needed, including treatment of a precancerous condition or early stage cancer, and including diagnostic services as necessary to determine the extent and proper course of treatment; and
(2) More than routine diagnostic services or monitoring services for a precancerous breast or cervical condition are needed.
(a) Basis. This section implements sections 1902(a)(10)(A)(ii)(XXI) and 1902(ii) and clause (XVI) in the matter following section 1902(a)(10)(G) of the Act.
(b) Eligibility. (1) The agency may provide Medicaid limited to the services described in paragraph (d) of this section to individuals (of any gender) who –
(i) Are not pregnant; and
(ii) Meet the income eligibility requirements at paragraph (c) of this section.
(2) [Reserved]
(c) Income standard. (1) The income standard established in the State plan may not exceed the higher of the income standard for pregnant women in effect under –
(i) The Medicaid State plan in accordance with § 435.116.
(ii) A Medicaid demonstration under section 1115 of the Act.
(iii) The CHIP State plan under section 2112 of the Act.
(iv) A CHIP demonstration under section 1115 of the Act.
(2) The individual’s household income is determined in accordance with § 435.603. The agency must indicate in its State plan the options selected by it under § 435.603(k).
(d) Covered services. Individuals eligible under this section are covered for family planning and family planning-related benefits as described in clause (XVI) of the matter following section 1902(a)(10)(G) of the Act.
§ 435.215 Individuals infected with tuberculosis.
(a) Basis. This section implements sections 1902(a)(10)(A)(ii)(XII) and 1902(z)(1) of the Act.
(b) Eligibility. The agency may provide Medicaid to individuals who –
(1) Are infected with tuberculosis;
(2) Are not eligible for full coverage under the State’s Medicaid State plan (that is, all services which the State is required to cover under § 440.210(a)(1) of this chapter and all services which it has opted to cover under § 440.225 of this chapter, or which the State covers under an approved alternative benefits plan under § 440.325 of this chapter), including coverage for tuberculosis treatment as elected by the State for this group; and
(3) Have household income that does not exceed the income standard established by the State in its State plan, which standard must not exceed the higher of –
(i) The maximum income standard applicable to disabled individuals for mandatory coverage under subpart B of this part; or
(ii) The effective income level for coverage of individuals infected with tuberculosis under the State plan in effect as of March 23, 2010, or December 31, 2013, if higher, converted, at State option, to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
(c) Covered Services. Individuals eligible under this section are covered for the following services related to the treatment of infection with tuberculosis:
(1) Prescribed drugs, described in § 440.120 of this chapter;
(2) Physician’s services, described in § 440.50 of this chapter;
(3) Outpatient hospital and rural health clinic described in § 440.20 of this chapter, and Federally-qualified health center services;
(4) Laboratory and x-ray services (including services to confirm the presence of the infection), described in § 440.30 of this chapter;
(5) Clinic services, described in § 440.90 of this chapter;
(6) Case management services defined in § 440.169 of this chapter; and
(7) Services other than room and board designated to encourage completion of regimens of prescribed drugs by outpatients including services to observe directly the intake of prescription drugs.
§ 435.217 Individuals receiving home and community-based services.
The agency may provide Medicaid to any group or groups of individuals in the community who meet the following requirements:
(a) The group would be eligible for Medicaid if institutionalized.
(b) In the absence of home and community-based services under a waiver granted under part 441 –
(1) Subpart G of this subchapter, the group would otherwise require the level of care furnished in a hospital, NF, or an ICF/IID; or
(2) Subpart H of this subchapter, the group would otherwise require the level of care furnished in an NF and are age 65 or older.
(c) The group receives the waivered services.
§ 435.218 Individuals with MAGI-based income above 133 percent FPL.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(XX) of the Act.
(b) Eligibility – (1) Criteria. The agency may provide Medicaid to individuals who:
(i) Are under age 65;
(ii) Are not eligible for and enrolled for mandatory coverage under a State’s Medicaid State plan in accordance with subpart B of this part;
(iii) Are not otherwise eligible for and enrolled for optional coverage under a State’s Medicaid State plan in accordance with section 1902(a)(10)(A)(ii)(I) through (XIX) of the Act and subpart C of this part, based on information available to the State from the application filed by or on behalf of the individual; and
(iv) Have household income that exceeds 133 percent FPL but is at or below the income standard elected by the agency and approved in its Medicaid State plan, for the applicable family size.
(2) Limitations. (i) A State may not, except as permitted under an approved phase-in plan adopted in accordance with paragraph (b)(3) of this section, provide Medicaid to higher income individuals described in paragraph (b)(1) of this section without providing Medicaid to lower income individuals described in such paragraph.
(ii) The limitation on eligibility of parents and other caretaker relatives specified in § 435.119(c) of this section also applies to eligibility under this section.
(3) Phase-in plan. A State may phase in coverage to all individuals described in paragraph (b)(1) of this section under a phase-in plan submitted in a State plan amendment to and approved by the Secretary.
§ 435.219 Individuals receiving State plan home and community-based services.
If the agency provides State plan home and community-based services to individuals described in section 1915(i)(1), the agency, under its State plan, may, in addition, provide Medicaid to individuals in the community who are described in one or both of paragraphs (a) or (b) of this section.
(a) Individuals who –
(1) Are not otherwise eligible for Medicaid;
(2) Have income that does not exceed 150 percent of the Federal poverty line (FPL);
(3) Meet the needs-based criteria under § 441.715 of this chapter; and
(4) Will receive State plan home and community-based services as defined in § 440.182 of this chapter.
(b) Individuals who –
(1) Would be determined eligible by the agency under an existing waiver or demonstration project under sections 1915(c), 1915(d), 1915(e) or 1115 of the Act, but are not required to receive services under such waivers or demonstration projects;
(2) Have income that does not exceed 300 percent of the Supplemental Security Income Federal Benefit Rate (SSI/FBR); and
(3) Will receive State plan home and community-based services as defined in § 440.182 of this chapter.
(c) For purposes of determining eligibility under paragraph (a) of this section, the agency may not take into account an individual’s resources and must use income standards that are reasonable, consistent with the objectives of the Medicaid program, simple to administer, and in the best interests of the beneficiary. Income methodologies may include use of existing income methodologies, such as the SSI program rules. However, subject to the Secretary’s approval, the agency may use other income methodologies that meet the requirements of this paragraph.
Options for Coverage of Families and Children
§ 435.220 Optional eligibility for parents and other caretaker relatives.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(I) of the Act for optional eligibility of parents and other caretaker relatives as defined at § 435.4.
(b) Eligibility. The agency may provide Medicaid to parents and other caretaker relatives defined in § 435.4 and, if living with such parent or other caretaker relative, his or her spouse, whose household income is at or below the income standard established by the agency in its State plan, in accordance with paragraph (c) of this section.
(c) Income standard. The income standard under this section –
(1) Must exceed the income standard established by the agency under § 435.110(c); and
(2) May not exceed the higher of the State’s AFDC payment standard in effect as of July 16, 1996, or the State’s highest effective income level for eligibility of parents and other caretaker relatives in effect under the Medicaid State plan or demonstration program under section 1115 of the Act as of March 23, 2010, or December 31, 2013, if higher, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
§ 435.221 [Reserved]
§ 435.222 Optional eligibility for reasonable classifications of individuals under age 21.
(a) Basis. This section implements sections 1902(a)(10)(A)(ii)(I) and (IV) of the Act for optional eligibility of individuals under age 21.
(b) Eligibility. The agency may provide Medicaid to all – or to one or more reasonable classifications, as defined in the State plan, of – individuals under age 21 (or, at State option, under age 20, 19 or 18) who have household income at or below the income standard established by the agency in its State plan in accordance with paragraph (c) of this section.
(c) Income standard. The income standard established under this section may not exceed the higher of the State’s AFDC payment standard in effect as of July 16, 1996, or the State’s highest effective income level, if any, for such individuals under the Medicaid State plan or a demonstration program under section 1115 of the Act as of March 23, 2010, or December 31, 2013, if higher, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
§ 435.225 Individuals under age 19 who would be eligible for Medicaid if they were in a medical institution.
(a) The agency may provide Medicaid to children 18 years of age or younger who qualify under section 1614(a) of the Act, who would be eligible for Medicaid if they were in a medical institution, and who are receiving, while living at home, medical care that would be provided in a medical institution.
(b) If the agency elects the option provided by paragraph (a) of this section, it must determine, in each case, that the following conditions are met:
(1) The child requires the level of care provided in a hospital, SNF, or ICF.
(2) It is appropriate to provide that level of care outside such an institution.
(3) The estimated Medicaid cost of care outside an institution is no higher than the estimated Medicaid cost of appropriate institutional care.
(c) The agency must specify in its State plan the method by which it determines the cost-effectiveness of caring for disabled children at home.
§ 435.226 Optional eligibility for independent foster care adolescents.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(XVII) of the Act.
(b) Eligibility. The agency may provide Medicaid to individuals under age 21 (or, at State option, under age 20 or 19) who were in foster care under the responsibility of a State or Tribe (or, at State or Tribe option, only to such individuals for whom Federal foster care assistance under title IV-E of the Act was being provided) on the individual’s 18th birthday and have household income at or below the income standard, if any, established by the agency in its State plan in accordance with paragraph (c) of this section.
(c) Income standard. (1) The income standard established under this section may not be lower than the State’s income standard established under § 435.110.
(2) The State may elect to have no income standard for eligibility under this section.
§ 435.227 Optional eligibility for individuals under age 21 who are under State adoption assistance agreements.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(VIII) 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):
(1) For whom an adoption assistance agreement (other than an agreement under title IV-E of the Act) between a State and the adoptive parent(s) is in effect;
(2) Who the State agency which entered into the adoption agreement determined could not be placed for adoption without Medicaid coverage because the child has special needs for medical or rehabilitative care; and
(3) Who, prior to the adoption agreement being entered into –
(i) Were eligible under the Medicaid State plan of the State with the adoption assistance agreement; or
(ii) Had household income at or below the income standard established by the agency in its State plan in accordance with paragraph (c) of this section.
(c) Income standard. The income standard established under this section may not exceed the effective income level (converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act) under the State plan or under a demonstration program under section 1115 of the Act as of March 23, 2010 or December 31, 2013, whichever is higher, that was applied by the State to the household income of a child prior to the execution of an adoption assistance agreement for purposes of determining eligibility of children described in paragraphs (b)(1) and (2) of this section.
(d) Limit Eligibility The agency may limit eligibility under this section to children for whom the State, or another State identified in the State plan, has entered into an adoption assistance agreement.
§ 435.229 Optional targeted low-income children.
(a) Basis. This section implements section 1902(a)(10)(A)(ii)(XIV) of the Act.
(b) Eligibility. The agency may provide Medicaid to individuals under age 19, or at State option within a range of ages under age 19 established in the State plan, who meet the definition of an optional targeted low-income child in § 435.4 and have household income at or below the income standard established by the agency in its State plan in accordance with paragraph (c) of this section.
(c) Income standard. The income standard established under this section may not exceed the higher of –
(1) 200 percent of the Federal poverty level (FPL);
(2) A percentage of the FPL which exceeds the State’s Medicaid applicable income level, defined at § 457.10 of this chapter, by no more than 50 percentage points (converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act); and
(3) The highest effective income level for coverage of such individuals under the Medicaid State plan or demonstration program under section 1115 of the Act or for coverage of targeted low-income children, defined in § 457.10 of this chapter, under the CHIP State plan or demonstration program under section 1115 of the Act, as of March 23, 2010, or December 31, 2013, converted to a MAGI-equivalent standard in accordance with guidance issued by the Secretary under section 1902(e)(14)(A) and (E) of the Act.
Options for Coverage of the Aged, Blind, and Disabled
§ 435.230 Aged, blind, and disabled individuals in States that use more restrictive requirements for Medicaid than SSI requirements: Optional coverage.
(a) Basic optional coverage rule. If the agency elects the option under § 435.121 to provide mandatory eligibility for aged, blind, and disabled SSI beneficiaries using more restrictive requirements than those used under SSI, the agency may provide eligibility as optional categorically needy to additional individuals who meet the requirements of this section.
(b) Group composition. Subject to the conditions specified in paragraphs (d) and (e) of this section, the agency may provide Medicaid to individuals who:
(1) Meet the nonfinancial criteria that the State has elected to apply under § 435.121;
(2) Meet the resource requirements that the State has elected to apply under § 435.121; and
(3) Meet the income eligibility standards specified in paragraph (c) of this section.
(c) Criteria for income standards. The agency may provide Medicaid to the following individuals who meet the requirements of paragraphs (b)(1) and (b)(2) of this section:
(1) Individuals who are financially eligible for but not receiving SSI benefits and who, before deduction of incurred medical and remedial expenses, meet the State’s more restrictive eligibility requirements described in § 435.121;
(2) Individuals who meet the income standards of the following eligibility groups:
(i) Individuals who would be eligible for cash assistance except for institutional status described in § 435.211;
(ii) Individuals who are enrolled in an HMO or other entity and who are deemed to continue to be Medicaid eligible for a period specified by the agency up to 6 months from the date of enrollment and who became ineligible during the specified enrollment period, as described in § 435.212;
(iii) Individuals receiving home and community-based waiver services described in § 435.217;
(iv) Individuals receiving only optional State supplements described in § 435.234;
(v) Institutionalized individuals with income below a special income level described in § 435.236;
(vi) Aged and disabled individuals who have income below 100 percent of the Federal poverty level described in section 1905(m) of the Act.
(3) Individuals who qualify for special status under §§ 435.135 and 435.138, and with respect to whom the State elects to disregard some or the maximum amount of title II payments permitted to be disregarded under those sections.
(d) Use of more liberal methods. The agency may elect to apply more liberal methods of counting income and resources that are approved for this eligibility group under the provisions of § 435.601.
§ 435.232 Individuals receiving only optional State supplements.
(a) If the agency provides Medicaid to individuals receiving SSI under § 435.120, it may provide Medicaid, in one or more of the following classifications, to individuals who receive only an optional State supplement that meets the conditions specified in paragraph (b) of this section and who would be eligible for SSI except for the level of their income.
(1) All aged individuals.
(2) All blind individuals.
(3) All disabled individuals.
(4) Only aged individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(5) Only blind individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(6) Only disabled individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(7) Individuals receiving a federally administered optional State supplement that meets the conditions specified in this section.
(8) Individuals in additional classifications specified by the Secretary for federally administered supplementary payments under 20 CFR 416.2020(d).
(9) Reasonable groups of individuals, as specified by the State, receiving State-administered supplementary payments.
(b) Payments under the optional supplement program must be –
(1) Based on need and paid in cash on a regular basis;
(2) Equal to the difference between the individual’s countable income and the income standard used to determine eligibility for supplement. Countable income is income remaining after deductions required under SSI or, at State option, more liberal deductions are made (see § 435.1006 for limitations on FFP in Medicaid expenditures for individuals receiving optional State supplements); and
(3) Available to all individuals in each classification in paragraph (a) of this section and available on a statewide basis. However, the plan may provide for variations in the income standard by political subdivision according to cost-of-living differences.
§ 435.234 Individuals receiving only optional State supplements in States using more restrictive eligibility requirements than SSI and certain States using SSI criteria.
(a) In States using more restrictive eligibility requirements than SSI or in States that use SSI criteria but do not have section 1616 or 1634 agreements with the Social Security Administration for eligibility determinations, the agency may provide Medicaid to individuals specified in paragraph (b) of this section who receive only a State supplement if the State supplement meets the conditions specified in paragraph (c) of this section.
(b) The agency may provide Medicaid to all individuals receiving only State supplements if, except for their income, the individuals meet the more restrictive eligibility requirements under § 435.121 or SSI criteria, or to one or more of the following classifications of individuals who meet these criteria:
(1) All aged individuals.
(2) All blind individuals.
(3) All disabled individuals.
(4) Only aged individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(5) Only blind individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(6) Only disabled individuals in domiciliary facilities or other group living arrangements as defined under SSI.
(7) Individuals receiving a Federally-administered optional State supplement that meets the conditions specified in this section.
(8) Individuals in additional classifications specified by the Secretary.
(9) Reasonable groups of individuals, as specified by the State, receiving State-administered supplementary payments.
(c) Payments under the optional supplement program must be:
(1) Based on need and paid in cash on a regular basis;
(2) Equal to the difference between the individual’s countable income and the income standard used to determine eligibility for supplements. Countable income is income remaining after deductions are applied. The income deductions may be more restrictive than required under SSI (see § 435.1006 for limitations on FFP in Medicaid expenditures for individuals receiving optional State supplements); and
(3) Available to all individuals in each classification in paragraph (b) of this section and available on a statewide basis. However, the plan may provide for variations in the income standard by political subdivision according to cost-of-living differences.
§ 435.236 Individuals in institutions who are eligible under a special income level.
(a) If the agency provides Medicaid under § 435.211 to individuals in institutions who would be eligible for AFDC, SSI, or State supplements except for their institutional status, it may also cover aged, blind, and disabled individuals in institutions who –
(1) Because of their income, would not be eligible for SSI or State supplements if they were not institutionalized; but
(2) Have income below a level specified in the plan under § 435.722. (See § 435.1005 for limitations on FFP in Medicaid expenditures for individuals specified in this section.)
(b) The agency may cover individuals under this section whether or not the State pays optional supplements.
Subpart D – Optional Coverage of the Medically Needy
§ 435.300 Scope.
This subpart specifies the option for coverage of medically needy individuals.
§ 435.301 General rules.
(a) An agency may provide Medicaid to individuals specified in this subpart who:
(1) Either:
(i) Have income that meets the applicable standards in §§ 435.811 and 435.814; or
(ii) If their income is more than allowed under the standard, have incurred medical expenses at least equal to the difference between their income and the applicable income standard; and
(2) Have resources that meet the applicable standards in §§ 435.840 and 435.843.
(b) If the agency chooses this option, the following provisions apply:
(1) The agency must provide Medicaid to the following individuals who meet the requirements of paragraph (a) of this section:
(i) All pregnant women during the course of their pregnancy who, except for income and resources, would be eligible for Medicaid as mandatory or optional categorically needy under subparts B or C of this part;
(ii) All individuals under 18 years of age who, except for income and resources, would be eligible for Medicaid as mandatory categorically needy under subpart B of this part;
(iii) Women who, while pregnant, applied for, were eligible for, and received Medicaid services as medically needy on the day that their pregnancy ends. The agency must provide medically needy eligibility to these women for an extended period following termination of pregnancy. This period extends from the last day of the pregnancy through the end of the month in which a 60-day period, beginning on the last day of pregnancy, ends. Eligibility must be provided, regardless of changes in the woman’s financial circumstances that may occur within this extended period. These women are eligible for the extended period for all services under the plan that are pregnancy-related (as defined in § 440.210(c)(1) of this subchapter).
(2) The agency may provide Medicaid to any of the following groups of individuals;
(i) Individuals under age 21 (§ 435.308).
(ii) Parents and other caretaker relatives (§ 435.310).
(iii) Aged (§§ 435.320 and 435.330).
(iv) Blind (§§ 435.322, 435.330 and 435.340).
(v) Disabled (§§ 435.324, 435.330, and 435.340).
(3) If the agency provides Medicaid to any individual in a group specified in paragraph (b)(2) of this section, the agency must provide Medicaid to all individuals eligible to be members of that group.
§ 435.308 Medically needy coverage of individuals under age 21.
(a) If the agency provides Medicaid to the medically needy, it may provide Medicaid to individuals under age 21 (or, at State option, under age 20, 19, or 18), as specified in paragraph (b) of this section:
(1) Who would not be covered under the mandatory medically needy group of individuals under 18 under § 435.301(b)(1)(ii); and
(2) Who meet the income and resource requirements of subpart I of this part.
(b) The agency may cover all individuals described in paragraph (a) of this section or reasonable classifications of those individuals. Examples of reasonable classifications are as follows:
(1) Individuals in foster homes or private institutions for whom a public agency is assuming a full or partial financial responsibility. If the agency covers these individuals, it may also provide Medicaid to individuals placed in foster homes or private institutions by private nonprofit agencies.
(2) Individuals in adoptions subsidized in full or in part by a public agency.
(3) Individuals in nursing facilities when nursing facility services are provided under the plan to individuals within the age group selected under this provision. When the agency covers such individuals, it may also provide Medicaid to individuals in intermediate care facilities for individuals with intellectual disabilities.
(4) Individuals receiving active treatment as inpatients in psychiatric facilities or programs, if inpatient psychiatric services for individuals under 21 are provided under the plan.
§ 435.310 Medically needy coverage of parents and other caretaker relatives.
If the agency provides Medicaid for the medically needy, it may provide Medicaid to parents and other caretaker relatives who meet:
(a) The definition of “caretaker relative” at § 435.4, or are the spouse of a parent or caretaker relative; and
(b) The medically needy income and resource requirements at subpart I of this part.
§ 435.320 Medically needy coverage of the aged in States that cover individuals receiving SSI.
If the agency provides Medicaid to individuals receiving SSI and elects to cover the medically needy, it may provide Medicaid to individuals who –
(a) Are 65 years of age and older, as specified in § 435.520; and
(b) Meet the income and resource requirements of subpart I of this part.
§ 435.322 Medically needy coverage of the blind in States that cover individuals receiving SSI.
If the agency provides Medicaid to individuals receiving SSI and elects to cover the medically needy, it may provide Medicaid to blind individuals who meet –
(a) The requirements for blindness, as specified in §§ 435.530 and 435.531; and
(b) The income and resource requirements of subpart I of this part.
§ 435.324 Medically needy coverage of the disabled in States that cover individuals receiving SSI.
If the agency provides Medicaid to individuals receiving SSI and elects to cover the medically needy, it may provide Medicaid to disabled individuals who meet –
(a) The requirements for disability, as specified in §§ 435.540 and 435.541; and
(b) The income and resource requirements of subpart I of this part.
§ 435.326 Individuals who would be ineligible if they were not enrolled in an MCO or PCCM.
If the agency provides Medicaid to the categorically needy under § 435.212, it may provide it under the same rules to medically needy beneficiaries who are enrolled in MCOs or PCCMs.
§ 435.330 Medically needy coverage of the aged, blind, and disabled in States using more restrictive eligibility requirements for Medicaid than those used under SSI.
(a) If an agency provides Medicaid as categorically needy only to those aged, blind, or disabled individuals who meet more restrictive requirements than used under SSI and elects to cover the medically needy, it may provide Medicaid as medically needy to those aged, blind, or disabled individuals who:
(1) Do not qualify for Medicaid as categorically needy under § 435.121 or § 435.230; and
(2) If applying as blind or disabled, meet the definition of blindness or disability established under § 435.121.
(b) Except as specified in paragraph (c) of this section, the agency must apply to individuals covered under the option of this section the same financial and nonfinancial requirements that are applied to individuals covered as categorically needy under §§ 435.121 and 435.230.
(c) In determining the financial eligibility of individuals who are considered as medically needy under this section, the agency must apply the financial eligibility requirements of subparts G and I of this part.
§ 435.340 Protected medically needy coverage for blind and disabled individuals eligible in December 1973.
If an agency provides Medicaid to the medically needy, it must cover individuals who –
(a) Where eligible as medically needy under the Medicaid plan in December 1973 on the basis of the blindness or disability criteria of the AB, APTD, or AABD plan;
(b) For each consecutive month after December 1973, continue to meet –
(1) Those blindness or disability criteria; and
(2) The eligibility requirements for the medically needy under the December 1973 Medicaid plan; and
(c) Meet the current requirements for eligibility as medically needy under the Medicaid plan except for blindness or disability criteria.
§ 435.350 Coverage for certain aliens.
If an agency provides Medicaid to the medically needy, it must provide the services necessary for the treatment of an emergency medical condition, as defined in § 440.255(c) of this chapter, to those aliens described in § 435.406(c) of this subpart.
Subpart E – General Eligibility Requirements
§ 435.400 Scope.
This subpart prescribes general requirements for determining the eligibility of both categorically and medically needy individuals specified in subparts B, C, and D of this part.
§ 435.401 General rules.
(a) A Medicaid agency may not impose any eligibility requirement that is prohibited under Title XIX of the Act.
(b) The agency must base any optional group covered under subparts B and C of this part on reasonable classifications that do not result in arbitrary or inequitable treatment of individuals and groups and that are consistent with the objectives of Title XIX.
(c) The agency must not use requirements for determining eligibility for optional coverage groups that are –
(1) [Reserved]
(2) For aged, blind, and disabled individuals, more restrictive than those used under SSI, except for individuals receiving an optional State supplement as specified in § 435.230 or individuals in categories specified by the agency under § 435.121.
§ 435.402 [Reserved]
§ 435.403 State residence.
(a) Requirement. The agency must provide Medicaid to eligible residents of the State, including residents who are absent from the State. The conditions under which payment for services is provided to out-of-State residents are set forth in § 431.52 of this chapter.
(b) Definition. For purposes of this section – Institution has the same meaning as Institution and Medical institution, as defined in § 435.1010. For purposes of State placement, the term also includes foster care homes, licensed as set forth in 45 CFR 1355.20, and providing food, shelter and supportive services to one or more persons unrelated to the proprietor.
(c) Incapability of indicating intent. For purposes of this section, an individual is considered incapable of indicating intent if the individual –
(1) Has an I.Q. of 49 or less or has a mental age of 7 or less, based on tests acceptable to the Intellectual Disability agency in the State:
(2) Is judged legally incompetent; or
(3) Is found incapable of indicating intent based on medical documentation obtained from a physician, psychologist, or other person licensed by the State in the field of intellectual disability.
(d) Who is a State resident. A resident of a State is any individual who:
(1) Meets the conditions in paragraphs (e) through (i) of this section; or
(2) Meets the criteria specified in an interstate agreement under paragraph (k) of this section.
(e) Placement by a State in an out-of-State institution – (1) General rule. Any agency of the State, including an entity recognized under State law as being under contract with the State for such purposes, that arranges for an individual to be placed in an institution located in another State, is recognized as acting on behalf of the State in making a placement. The State arranging or actually making the placement is considered as the individual’s State of residence.
(2) Any action beyond providing information to the individual and the individual’s family would constitute arranging or making a State placement. However, the following actions do not constitute State placement:
(i) Providing basic information to individuals about another State’s Medicaid program, and information about the availability of health care services and facilities in another State.
(ii) Assisting an individual in locating an institution in another State, provided the individual is capable of indicating intent and independently decides to move.
(3) When a competent individual leaves the facility in which the individual is placed by a State, that individual’s State of residence for Medicaid purposes is the State where the individual is physically located.
(4) Where a placement is initiated by a State because the State lacks a sufficient number of appropriate facilities to provide services to its residents, the State making the placement is the individual’s State of residence for Medicaid purposes.
(f) Individuals receiving a State supplementary payment (SSP). For individuals of any age who are receiving an SSP, the State of residence is the State paying the SSP.
(g) Individuals receiving Title IV-E payments. For individuals of any age who are receiving Federal payments for foster care and adoption assistance under title IV-E of the Social Security Act, the State of residence is the State where the child lives.
(h) Individuals age 21 and over. Except as provided in paragraph (f) of this section, with respect to individuals age 21 and over –
(1) For an individual not residing in an institution as defined in paragraph (b) of this section, the State of residence is the State where the individual is living and –
(i) Intends to reside, including without a fixed address; or
(ii) Has entered the State with a job commitment or seeking employment (whether or not currently employed).
(2) For an individual not residing in an institution as defined in paragraph (b) of this section who is not capable of stating intent, the State of residency is the State where the individual is living.
(3) For any institutionalized individual who became incapable of indicating intent before age 21, the State of residence is –
(i) That of the parent applying for Medicaid on the individual’s behalf, if the parents reside in separate States (if a legal guardian has been appointed and parental rights are terminated, the State of residence of the guardian is used instead of the parent’s);
(ii) The parent’s or legal guardian’s State of residence at the time of placement (if a legal guardian has been appointed and parental rights are terminated, the State of residence of the guardian is used instead of the parent’s); or
(iii) The current State of residence of the parent or legal guardian who files the application if the individual is institutionalized in that State (if a legal guardian has been appointed and parental rights are terminated, the State of residence of the guardian is used instead of the parent’s).
(iv) The State of residence of the individual or party who files an application is used if the individual has been abandoned by his or her parent(s), does not have a legal guardian and is institutionalized in that State.
(4) For any institutionalized individual who became incapable of indicating intent at or after age 21, the State of residence is the State in which the individual is physically present, except where another State makes a placement.
(5) For any other institutionalized individual, the State of residence is the State where the individual is living and intends to reside.
(i) Individuals under age 21. For an individual under age 21 who is not eligible for Medicaid based on receipt of assistance under title IV-E of the Act, as addressed in paragraph (g) of this section, and is not receiving a State supplementary payment, as addressed in paragraph (f) of this section, the State of residence is as follows:
(1) For an individual who is capable of indicating intent and who is emancipated from his or her parent or who is married, the State of residence is determined in accordance with paragraph (h)(1) of this section.
(2) For an individual not described in paragraph (i)(1) of this section, not living in an institution as defined in paragraph (b) of this section and not eligible for Medicaid based on receipt of assistance under title IV-E of the Act, as addressed in paragraph (g) of this section, and is not receiving a State supplementary payment, as addressed in paragraph (f) of this section, the State of residence is:
(i) The State where the individual resides, including without a fixed address; or
(ii) The State of residency of the parent or caretaker, in accordance with paragraph (h)(1) of this section, with whom the individual resides.
(3) For any institutionalized individual who is neither married nor emancipated, the State of residence is –
(i) The parent’s or legal guardian’s State of residence at the time of placement (if a legal guardian has been appointed and parental rights are terminated, the State of residence of the guardian is used instead of the parent’s); or
(ii) The current State of residence of the parent or legal guardian who files the application if the individual is institutionalized in that State (if a legal guardian has been appointed and parental rights are terminated, the State or residence of the guardian is used instead of the parent’s).
(iii) The State of residence of the individual or party who files an application is used if the individual has been abandoned by his or her parent(s), does not have a legal guardian and is institutionalized in that State.
(j) Specific prohibitions. (1) The agency may not deny Medicaid eligibility because an individual has not resided in the State for a specified period.
(2) The agency may not deny Medicaid eligibility to an individual in an institution, who satisfies the residency rules set forth in this section, on the grounds that the individual did not establish residence in the State before entering the institution.
(3) The agency may not deny or terminate a resident’s Medicaid eligibility because of that person’s temporary absence from the State if the person intends to return when the purpose of the absence has been accomplished, unless another State has determined that the person is a resident there for purposes of Medicaid.
(k) Interstate agreements. A State may have a written agreement with another State setting forth rules and procedures resolving cases of disputed residency. These agreements may establish criteria other than those specified in paragraphs (c) through (i) of this section, but must not include criteria that result in loss of residency in both States or that are prohibited by paragraph (j) of this section. The agreements must contain a procedure for providing Medicaid to individuals pending resolution of the case. States may use interstate agreements for purposes other than cases of disputed residency to facilitate administration of the program, and to facilitate the placement and adoption of title IV-E individuals when the child and his or her adoptive parent(s) move into another State.
(l) Continued Medicaid for institutionalized beneficiaries. If an agency is providing Medicaid to an institutionalized beneficiary who, as a result of this section, would be considered a resident of a different State –
(1) The agency must continue to provide Medicaid to that beneficiary from June 24, 1983 until July 5, 1984, unless it makes arrangements with another State of residence to provide Medicaid at an earlier date: and
(2) Those arrangements must not include provisions prohibited by paragraph (i) of this section.
(m) Cases of disputed residency. Where two or more States cannot resolve which State is the State of residence, the State where the individual is physically located is the State of residence.
§ 435.404 Applicant’s choice of category.
The agency must allow an individual who would be eligible under more than one category to have his eligibility determined for the category he selects.
§ 435.406 Citizenship and non-citizen eligibility.
(a) The agency must provide Medicaid to otherwise eligible individuals who are –
(1) Citizens and nationals of the United States, provided that –
(i) The individual has made a declaration of United States citizenship, as defined in § 435.4, or an individual described in paragraph (a)(3) of this section has made such declaration on the individual’s behalf, and such status is verified in accordance with paragraph (c) of this section; and
(ii) For purposes of the declaration and citizenship verification requirements discussed in paragraphs (a)(1)(i) of this section, an individual includes applicants under a section 1115 demonstration (including a family planning demonstration project) for which a State receives Federal financial participation in its expenditures.
(iii) The following groups of individuals are exempt from the requirement to provide documentation to verify citizenship in paragraph (c) of this section:
(A) Individuals receiving SSI benefits under title XVI of the Act.
(B) Individuals entitled to or enrolled in any part of Medicare.
(C) Individuals receiving disability insurance benefits under section 223 of the Act or monthly benefits under section 202 of the Act, based on the individual’s disability (as defined in section 223(d) of the Act).
(D) Individuals who are in foster care and who are assisted under Title IV-B of the Act, and individuals who are beneficiaries of foster care maintenance or adoption assistance payments under Title IV-E of the Act.
(E)(1) Individuals who are or were deemed eligible for Medicaid in the State under § 435.117 or § 457.360 of this chapter on or after July 1, 2006, based on being born to a pregnant woman eligible under the State’s Medicaid or CHIP state plan or waiver of such plan;
(2) At State option, individuals who were deemed eligible for coverage under § 435.117 or § 457.360 of this chapter in another State on or after July 1, 2006, provided that the agency verifies such deemed eligibility.
(2)(i) Except as specified in 8 U.S.C. 1612(b)(1) (permitting States an option with respect to coverage of certain qualified non-citizens), qualified non-citizens as described in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1641) (including qualified non-citizens subject to the 5-year bar) who have provided satisfactory documentary evidence of Qualified Non-Citizen status, which status has been verified with the Department of Homeland Security (DHS) under a declaration required by section 1137(d) of the Act that the applicant or beneficiary is an non-citizen in a satisfactory immigration status.
(ii) The eligibility of qualified non-citizens who are subject to the 5-year bar in 8 U.S.C. 1613 is limited to the benefits described in paragraph (b) of this section.
(3) For purposes of paragraphs (a)(1) and (2), of this section, a declaration of citizenship or satisfactory immigration status may be provided, in writing and under penalty of perjury, by an adult member of the individual’s household, an authorized representative, as defined in § 435.923, or if the applicant is a minor or incapacitated, someone acting responsibly for the applicant provided that such individual attests to having knowledge of the individual’s status.
(b) The agency must provide payment for the services described in § 440.255(c) of this chapter to residents of the State who otherwise meet the eligibility requirements of the State plan (except for receipt of AFDC, SSI, or State Supplementary payments) who are qualified non-citizens subject to the 5-year bar or who are non-qualified non-citizens who meet all Medicaid eligibility criteria, except non-qualified non-citizens need not present a social security number or document immigration status.
(c) The agency must verify the declaration of citizenship or satisfactory immigration status under paragraph (a)(1) or (2) of this section in accordance with § 435.956.
§ 435.407 Types of acceptable documentary evidence of citizenship.
(a) Stand-alone evidence of citizenship. The following must be accepted as sufficient documentary evidence of citizenship:
(1) A U.S. passport, including a U.S. Passport Card issued by the Department of State, without regard to any expiration date as long as such passport or Card was issued without limitation.
(2) A Certificate of Naturalization.
(3) A Certificate of U.S. Citizenship.
(4) A valid State-issued driver’s license if the State issuing the license requires proof of U.S. citizenship, or obtains and verifies a SSN from the applicant who is a citizen before issuing such license.
(5)(i) Documentary evidence issued by a Federally recognized Indian Tribe identified in the
(A) Identifies the Federally recognized Indian Tribe that issued the document;
(B) Identifies the individual by name; and
(C) Confirms the individual’s membership, enrollment, or affiliation with the Tribe.
(ii) Documents described in paragraph (a)(5)(i) of this section include, but are not limited to:
(A) A Tribal enrollment card;
(B) A Certificate of Degree of Indian Blood;
(C) A Tribal census document;
(D) Documents on Tribal letterhead, issued under the signature of the appropriate Tribal official, that meet the requirements of paragraph (a)(5)(i) of this section.
(6) A data match with the Social Security Administration.
(b) Evidence of citizenship. If an applicant does not provide documentary evidence from the list in paragraph (a) of this section, the following must be accepted as satisfactory evidence to establish citizenship if also accompanied by an identity document listed in paragraph (c) of this section –
(1) A U.S. public birth certificate showing birth in one of the 50 States, the District of Columbia, Guam, American Samoa, Swain’s Island, Puerto Rico (if born on or after January 13, 1941), the Virgin Islands of the U.S. or the CNMI (if born after November 4, 1986, (CNMI local time)). The birth record document may be issued by a State, Commonwealth, Territory, or local jurisdiction. If the document shows the individual was born in Puerto Rico or the Northern Mariana Islands before the applicable date referenced in this paragraph, the individual may be a collectively naturalized citizen. The following will establish U.S. citizenship for collectively naturalized individuals:
(i) Puerto Rico: Evidence of birth in Puerto Rico and the applicant’s statement that he or she was residing in the U.S., a U.S. possession, or Puerto Rico on January 13, 1941.
(ii) Northern Mariana Islands (NMI) (formerly part of the Trust Territory of the Pacific Islands (TTPI)):
(A) Evidence of birth in the NMI, TTPI citizenship and residence in the NMI, the U.S., or a U.S. Territory or possession on November 3, 1986, (NMI local time) and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time);
(B) Evidence of TTPI citizenship, continuous residence in the NMI since before November 3, 1981 (NMI local time), voter registration before January 1, 1975, and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time);
(C) Evidence of continuous domicile in the NMI since before January 1, 1974, and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time). Note: If a person entered the NMI as a nonimmigrant and lived in the NMI since January 1, 1974, this does not constitute continuous domicile and the individual is not a U.S. citizen.
(2) At State option, a cross match with a State vital statistics agency documenting a record of birth.
(3) A Certification of Report of Birth, issued to U.S. citizens who were born outside the U.S.
(4) A Report of Birth Abroad of a U.S. Citizen.
(5) A Certification of birth in the United States.
(6) A U.S. Citizen I.D. card.
(7) A Northern Marianas Identification Card issued by the U.S. Department of Homeland Security (or predecessor agency).
(8) A final adoption decree showing the child’s name and U.S. place of birth, or if an adoption is not final, a Statement from a State-approved adoption agency that shows the child’s name and U.S. place of birth.
(9) Evidence of U.S. Civil Service employment before June 1, 1976.
(10) U.S. Military Record showing a U.S. place of birth.
(11) A data match with the SAVE Program or any other process established by DHS to verify that an individual is a citizen.
(12) Documentation that a child meets the requirements of section 101 of the Child Citizenship Act of 2000 as amended (8 U.S.C. 1431).
(13) Medical records, including, but not limited to, hospital, clinic, or doctor records or admission papers from a nursing facility, skilled care facility, or other institution that indicate a U.S. place of birth.
(14) Life, health, or other insurance record that indicates a U.S. place of birth.
(15) Official religious record recorded in the U.S. showing that the birth occurred in the U.S.
(16) School records, including pre-school, Head Start and daycare, showing the child’s name and U.S. place of birth.
(17) Federal or State census record showing U.S. citizenship or a U.S. place of birth.
(18) If the applicant does not have one of the documents listed in paragraphs (a) or (b)(1) through (17) of this section, he or she may submit an affidavit signed by another individual under penalty of perjury who can reasonably attest to the applicant’s citizenship, and that contains the applicant’s name, date of birth, and place of U.S. birth. The affidavit does not have to be notarized.
(c) Evidence of identity. (1) The agency must accept the following as proof of identity, provided such document has a photograph or other identifying information sufficient to establish identity, including, but not limited to, name, age, sex, race, height, weight, eye color, or address:
(i) Identity documents listed at 8 CFR 274a.2 (b)(1)(v)(B)(1), except a driver’s license issued by a Canadian government authority.
(ii) Driver’s license issued by a State or Territory.
(iii) School identification card.
(iv) U.S. military card or draft record.
(v) Identification card issued by the Federal, State, or local government.
(vi) Military dependent’s identification card.
(vii) U.S. Coast Guard Merchant Mariner card.
(viii) For children under age 19, a clinic, doctor, hospital, or school record, including preschool or day care records.
(ix) A finding of identity from an Express Lane agency, as defined in section 1902(e)(13)(F) of the Act.
(x) Two other documents containing consistent information that corroborates an applicant’s identity. Such documents include, but are not limited to, employer identification cards; high school, high school equivalency and college diplomas; marriage certificates; divorce decrees; and property deeds or titles.
(2) Finding of identity from a Federal or State governmental agency. The agency may accept as proof of identity a finding of identity from a Federal agency or another State agency (not described in paragraph (c)(1)(ix) of this section), including but not limited to a public assistance, law enforcement, internal revenue or tax bureau, or corrections agency, if the agency has verified and certified the identity of the individual.
(3) If the applicant does not have any document specified in paragraph (c)(1) of this section and identity is not verified under paragraph (c)(2) of this section, the agency must accept an affidavit signed, under penalty of perjury, by a person other than the applicant who can reasonably attest to the applicant’s identity. Such affidavit must contain the applicant’s name and other identifying information establishing identity, as described in paragraph (c)(1) of this section. The affidavit does not have to be notarized.
(d) Verification of citizenship by a Federal agency or another State. The agency may rely, without further documentation of citizenship or identity, on a verification of citizenship made by a Federal agency or another State agency, if such verification was done on or after July 1, 2006.
(e) Assistance with obtaining documentation. States must provide assistance to individuals who need assistance in securing satisfactory documentary evidence of citizenship in a timely manner.
(f) Documentary evidence. A photocopy, facsimile, scanned or other copy of a document must be accepted to the same extent as an original document under this section, unless information on the copy submitted is inconsistent with other information available to the agency or the agency otherwise has reason to question the validity of, or the information in, the document.
Subpart F – Categorical Requirements for Eligibility
§ 435.500 Scope.
This subpart prescribes categorical requirements for determining the eligibility of both categorically and medically needy individuals specified in subparts B, C, and D of this part.
Age
§ 435.520 Age requirements for the aged.
The agency must not impose an age requirement of more than 65 years.
Blindness
§ 435.530 Definition of blindness.
(a) Definition. The agency must use the same definition of blindness as used under SSI, except that –
(1) In determining the eligibility of individuals whose Medicaid eligibility is protected under §§ 435.130 through 435.134, the agency must use the definition of blindness that was used under the Medicaid plan in December 1973; and
(2) The agency may use a more restrictive definition to determine eligibility under § 435.121, if the definition is no more restrictive than that used under the Medicaid plan on January 1, 1972.
(b) State plan requirement. The State plan must contain the definition of blindness, expressed in ophthalmic measurements.
§ 435.531 Determinations of blindness.
(a) Except as specified in paragraph (b) of this section, in determining blindness –
(1) A physician skilled in the diseases of the eye or an optometrist, whichever the individual selects, must examine him, unless both of the applicant’s eyes are missing;
(2) The examiner must submit a report of examination to the Medicaid agency; and
(3) A physician skilled in the diseases of the eye (for example, an ophthalmologist or an eye, ear, nose, and throat specialist) must review the report and determine on behalf of the agency –
(i) Whether the individual meets the definition of blindness; and
(ii) Whether and when re-examinations are necessary for periodic redeterminations of eligibility, as required under § 435.916 of this part.
(b) If an agency provides Medicaid to individuals receiving SSI on the basis of blindness, this section does not apply for those individuals.
Disability
§ 435.540 Definition of disability.
(a) Definition. The agency must use the same definition of disability as used under SSI, except that –
(1) In determining the eligibility of individuals whose Medicaid eligibility is protected under §§ 435.130 through 435.134, the agency must use the definition of disability that was used under the Medicaid plan in December 1973; and
(2) The agency may use a more restrictive definition to determine eligibility under § 435.121, if the definition is no more restrictive than that used under the Medicaid plan on January 1, 1972.
(b) State plan requirements. The State plan must contain the definition of disability.
§ 435.541 Determinations of disability.
(a) Determinations made by SSA. The following rules and those under paragraph (b) of this section apply where an individual has applied for Medicaid on the basis of disability.
(1) If the agency has an agreement with the Social Security Administration (SSA) under section 1634 of the Act, the agency may not make a determination of disability when the only application is filed with SSA.
(2) The agency may not make an independent determination of disability if SSA has made a disability determination within the time limits set forth in § 435.912 on the same issues presented in the Medicaid application. A determination of eligibility for SSI payments based on disability that is made by SSA automatically confers Medicaid eligibility, as provided for under § 435.909.
(b) Effect of SSA determinations. (1) Except in the circumstances specified in paragraph (c)(3) of this section –
(i) An SSA disability determination is binding on an agency until the determination is changed by SSA.
(ii) If the SSA determination is changed, the new determination is also binding on the agency.
(2) The agency must refer to SSA all applicants who allege new information or evidence affecting previous SSA determinations of ineligibility based upon disability for reconsideration or reopening of the determination, except in cases specified in paragraph (c)(4) of this section.
(c) Determinations made by the Medicaid agency. The agency must make a determination of disability in accordance with the requirements of this section if any of the following circumstances exist:
(1) The individual applies for Medicaid as a non-cash beneficiary and has not applied to SSA for SSI cash benefits, whether or not a State has a section 1634 agreement with SSA; or an individual applies for Medicaid and has applied to SSA for SSI benefits and is found ineligible for SSI for a reason other than disability.
(2) The individual applies both to SSA for SSI and to the State Medicaid agency for Medicaid, the State agency has a section 1634 agreement with SSA, and SSA has not made an SSI disability determination within 90 days from the date of the individual’s application for Medicaid.
(3) The individual applies to SSA for SSI and to the State Medicaid agency for Medicaid, the State does not have a section 1634 agreement with SSA, and either the State uses more restrictive criteria than SSI for determining Medicaid eligibility under its section 1902(f) option or, in the case of a State that uses SSI criteria, SSA has not made an SSI disability determination in time for the State to comply with the Medicaid time limit for making a prompt determination on an individual’s application for Medicaid.
(4) The individual applies for Medicaid as a non-cash beneficiary, whether or not the State has a section 1634 agreement with SSA, and –
(i) Alleges a disabling condition different from, or in addition to, that considered by SSA in making its determination; or
(ii) Alleges more than 12 months after the most recent SSA determination denying disability that his or her condition has changed or deteriorated since that SSA determination and alleges a new period of disability which meets the durational requirements of the Act, and has not applied to SSA for a determination with respect to these allegations.
(iii) Alleges less than 12 months after the most recent SSA determination denying disability that his or her condition has changed or deteriorated since that SSA determination, alleges a new period of disability which meets the durational requirements of the Act, and –
(A) Has applied to SSA for reconsideration or reopening of its disability decision and SSA refused to consider the new allegations; and/or
(B) He or she no longer meets the nondisability requirements for SSI but may meet the State’s nondisability requirements for Medicaid eligibility.
(d) Basis for determinations. The agency must make a determination of disability as provided in paragraph (c) of this section –
(1) On the basis of the evidence required under paragraph (e) of this section; and
(2) In accordance with the requirements for evaluating that evidence under the SSI program specified in 20 CFR 416.901 through 416.998.
(e) Medical and nonmedical evidence. The agency must obtain a medical report and other nonmedical evidence for individuals applying for Medicaid on the basis of disability. The medical report and nonmedical evidence must include diagnosis and other information in accordance with the requirements for evidence applicable to disability determinations under the SSI program specified in 20 CFR part 416, subpart I.
(f) Disability review teams – (1) Function. A review team must review the medical report and other evidence required under paragraph (e) of this section and determine on behalf of the agency whether the individual’s condition meets the definition of disability.
(2) Composition. The review team must be composed of a medical or psychological consultant and another individual who is qualified to interpret and evaluate medical reports and other evidence relating to the individual’s physical or mental impairments and, as necessary, to determine the capacities of the individual to perform substantial gainful activity, as specified in 20 CFR part 416, subpart J.
(3) Periodic reexaminations. The review team must determine whether and when reexaminations will be necessary for periodic redeterminations of eligibility as required under § 435.916 of this part, using the principles set forth in 20 CFR 416.989 and 416.990. If a State uses the same definition of disability as SSA, as provided for under § 435.540, and a beneficiary is Medicaid eligible because he or she receives SSI, this paragraph (f)(3) does not apply. The reexamination will be conducted by SSA.
Subpart G – General Financial Eligibility Requirements and Options
§ 435.600 Scope.
This subpart prescribes:
(a) General financial requirements and options for determining the eligibility of both categorically and medically needy individuals specified in subparts B, C, and D of this part. Subparts H and I of this part prescribe additional financial requirements.
(b) [Reserved]
§ 435.601 Application of financial eligibility methodologies.
(a) Definitions. For purposes of this section, cash assistance financial methodologies refers to the income and resources methodologies of the AFDC, SSI, or State supplement programs, or, for aged, blind, and disabled individuals in States that use more restrictive criteria than SSI, the methodologies established in accordance with the requirements of §§ 435.121 and 435.230.
(b) Basic rule for use of non-MAGI financial methodologies. (1) This section only applies to individuals excepted from application of MAGI-based methods in accordance with § 435.603(j).
(2) Except as specified in paragraphs (c) and (d) of this section or in § 435.121 or as permitted under § 435.831(b)(1), in determining financial eligibility of individuals as categorically or medically needy, the agency must apply the financial methodologies and requirements of the cash assistance program that is most closely categorically related to the individual’s status.
(c) Financial responsibility of relatives. The agency must use the requirements for financial responsibility of relatives specified in § 435.602.
(d) Use of less restrictive methodologies than those under cash assistance programs. (1) At State option, and subject to the conditions of paragraphs (d)(2) through (5) of this section, the agency may apply income and resource methodologies that are less restrictive than the cash assistance methodologies or methodologies permitted under § 435.831(b)(1) in determining eligibility for the following groups:
(i) Qualified Medicare beneficiaries specified in sections 1902(a)(10)(E) and 1905(p) of the Act;
(ii) Optional categorically needy individuals under groups established under subpart C of this part and section 1902(a)(10)(A)(ii) of the Act;
(iii) Medically needy individuals under groups established under subpart D of this part and section 1902(a)(10)(C)(i)(III) of the Act; and
(iv) Aged, blind, and disabled individuals in States using more restrictive eligibility requirements than SSI under groups established under §§ 435.121 and 435.230.
(2) The income and resource methodologies that an agency elects to apply to groups of individuals described in paragraph (d)(1) of this section may be less restrictive, but no more restrictive (except in States using more restrictive requirements than SSI), than:
(i) For groups of aged, blind, and disabled individuals, the SSI methodologies; or
(ii) For all other groups, the methodologies under the State plan most closely categorically related to the individual’s status.
(3) A financial methodology is considered to be no more restrictive if, by using the methodology, additional individuals may be eligible for Medicaid and no individuals who are otherwise eligible are by use of that methodology made ineligible for Medicaid.
(4) The less restrictive methodology applied under this section must be comparable for all persons within each category of assistance (aged, or blind, or disabled, or AFDC related) within an eligibility group. For example, if the agency chooses to apply less restrictive income or resource methodology to an eligibility group of aged individuals, it must apply that methodology to all aged individuals within the selected group.
(5) The application of the less restrictive income and resource methodologies permitted under this section must be consistent with the limitations and conditions on FFP specified in subpart K of this part.
(e) [Reserved]
(f) State plan requirements. (1) The State plan must specify that, except to the extent precluded in § 435.602, in determining financial eligibility of individuals, the agency will apply the cash assistance financial methodologies and requirements, unless the agency chooses to apply less restrictive income and resource methodologies in accordance with paragraph (d) of this section.
(2) If the agency chooses to apply less restrictive income and resource methodologies, the State plan must specify:
(i) The less restrictive methodologies that will be used; and
(ii) The eligibility group or groups to which the less restrictive methodologies will be applied.
§ 435.602 Financial responsibility of relatives and other individuals.
(a)(1) This section only applies to individuals excepted from application of MAGI-based methods in accordance with § 435.603(j).
(2) Basic requirements. Subject to the provisions of paragraphs (b) and (c) of this section, in determining financial responsibility of relatives and other persons for individuals under Medicaid, the agency must apply the following requirements and methodologies:
(i) Except for a spouse of an individual or a parent for a child who is under age 21 or blind or disabled, the agency must not consider income and resources of any relative as available to an individual.
(ii) In relation to individuals under age 21 (as described in section 1905(a)(i) of the Act), the financial responsibility requirements and methodologies that apply include considering the income and resources of parents or spouses whose income and resources will be considered if the individual under age 21 were dependent under the State’s approved State plan under title IV-A of the Act in effect as of July 16, 1996, whether or not they are actually contributed, except as specified under paragraph (c) of this section. These requirements and methodologies must be applied in accordance with the provisions of the State’s approved title IV-A State plan as of July 16, 1996.
(iii) When a couple ceases to live together, the agency must count only the income of the individual spouse in determining his or her eligibility, beginning the first month following the month the couple ceases to live together.
(iv) In the case of eligible institutionalized spouses who are aged, blind, and disabled and who have shared the same room in a title XIX Medicaid institution, the agency has the option of considering these couples as eligible couples for purposes of counting income and resources or as eligible individuals, whichever is more advantageous to the couple.
(b) Requirements for States using more restrictive requirements. Subject to the provisions of paragraph (c) of this section, in determining financial eligibility of aged, blind, or disabled individuals in States that apply eligibility requirements more restrictive than those used under SSI, the agency must apply:
(1) The requirements and methodologies for financial responsibility of relatives used under the SSI program; or
(2) More extensive requirements for relative responsibility than specified in § 435.602(a) but no more extensive than the requirements under the Medicaid plan in effect on January 1, 1972.
(c) Use of less restrictive methodologies. The agency may apply income and resources methodologies that are less restrictive than those used under the cash assistance programs as specified in the State Medicaid plan in accordance with § 435.601(d).
(d) [Reserved]
§ 435.603 Application of modified adjusted gross income (MAGI).
(a) Basis, scope, and implementation. (1) This section implements section 1902(e)(14) of the Act.
(2) Effective January 1, 2014, the agency must apply the financial methodologies set forth in this section in determining the financial eligibility of all individuals for Medicaid, except for individuals identified in paragraph (j) of this section and as provided in paragraph (a)(3) of this section.
(3) In the case of determining ongoing eligibility for beneficiaries determined eligible for Medicaid coverage to begin on or before December 31, 2013, application of the financial methodologies set forth in this section will not be applied until March 31, 2014 or the next regularly-scheduled renewal of eligibility for such individual under § 435.916 of this part, whichever is later.
(b) Definitions. For purposes of this section –
Child means a natural or biological, adopted or step child.
Code means the Internal Revenue Code.
Family size means the number of persons counted as members of an individual’s household. In the case of determining the family size of a pregnant woman, the pregnant woman is counted as herself plus the number of children she is expected to deliver. In the case of determining the family size of other individuals who have a pregnant woman in their household, the pregnant woman is counted, at State option, as either 1 or 2 person(s) or as herself plus the number of children she is expected to deliver.
Parent means a natural or biological, adopted or step parent.
Sibling means natural or biological, adopted, half, or step sibling.
Tax dependent has the meaning provided in § 435.4 of this part.
(c) Basic rule. Except as specified in paragraph (i), (j), and (k) of this section, the agency must determine financial eligibility for Medicaid based on “household income” as defined in paragraph (d) of this section.
(d) Household income – (1) General rule. Except as provided in paragraphs (d)(2) through (d)(4) of this section, household income is the sum of the MAGI-based income, as defined in paragraph (e) of this section, of every individual included in the individual’s household.
(2) Income of children and tax dependents. (i) The MAGI-based income of an individual who is included in the household of his or her natural, adopted or step parent and is not expected to be required to file a tax return under section 6012(a)(1) of the Code for the taxable year in which eligibility for Medicaid is being determined, is not included in household income whether or not the individual files a tax return.
(ii) The MAGI-based income of a tax dependent described in paragraph (f)(2)(i) of this section who is not expected to be required to file a tax return under section 6012(a)(1) of the Code for the taxable year in which eligibility for Medicaid is being determined is not included in the household income of the taxpayer whether or not such tax dependent files a tax return.
(3) In the case of individuals described in paragraph (f)(2)(i) of this section, household income may, at State option, also include actually available cash support, exceeding nominal amounts, provided by the person claiming such individual as a tax dependent.
(4) Effective January 1, 2014, in determining the eligibility of an individual using MAGI-based income, a state must subtract an amount equivalent to 5 percentage points of the Federal poverty level for the applicable family size only to determine the eligibility of an individual for medical assistance under the eligibility group with the highest income standard using MAGI-based methodologies in the applicable Title of the Act, but not to determine eligibility for a particular eligibility group.
(e) MAGI-based income. For the purposes of this section, MAGI-based income means income calculated using the same financial methodologies used to determine modified adjusted gross income as defined in section 36B(d)(2)(B) of the Code, with the following exceptions –
(1) An amount received as a lump sum is counted as income only in the month received.
(2) Scholarships, awards, or fellowship grants used for education purposes and not for living expenses are excluded from income.
(3) American Indian/Alaska Native exceptions. The following are excluded from income:
(i) Distributions from Alaska Native Corporations and Settlement Trusts;
(ii) Distributions from any property held in trust, subject to Federal restrictions, located within the most recent boundaries of a prior Federal reservation, or otherwise under the supervision of the Secretary of the Interior;
(iii) Distributions and payments from rents, leases, rights of way, royalties, usage rights, or natural resource extraction and harvest from –
(A) Rights of ownership or possession in any lands described in paragraph (e)(3)(ii) of this section; or
(B) Federally protected rights regarding off-reservation hunting, fishing, gathering, or usage of natural resources;
(iv) Distributions resulting from real property ownership interests related to natural resources and improvements –
(A) Located on or near a reservation or within the most recent boundaries of a prior Federal reservation; or
(B) Resulting from the exercise of federally-protected rights relating to such real property ownership interests;
(v) Payments resulting from ownership interests in or usage rights to items that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable Tribal Law or custom;
(vi) Student financial assistance provided under the Bureau of Indian Affairs education programs.
(f) Household – (1) Basic rule for taxpayers not claimed as a tax dependent. In the case of an individual who expects to file a tax return for the taxable year in which an initial determination or renewal of eligibility is being made, and who does not expect to be claimed as a tax dependent by another taxpayer, the household consists of the taxpayer and, subject to paragraph (f)(5) of this section, all persons whom such individual expects to claim as a tax dependent.
(2) Basic rule for individuals claimed as a tax dependent. In the case of an individual who expects to be claimed as a tax dependent by another taxpayer for the taxable year in which an initial determination or renewal of eligibility is being made, the household is the household of the taxpayer claiming such individual as a tax dependent, except that the household must be determined in accordance with paragraph (f)(3) of this section in the case of –
(i) Individuals other than a spouse or child who expect to be claimed as a tax dependent by another taxpayer; and
(ii) Individuals under the age specified by the State under paragraph (f)(3)(iv) of this section who expect to be claimed by one parent as a tax dependent and are living with both parents but whose parents do not expect to file a joint tax return; and
(iii) Individuals under the age specified by the State under paragraph (f)(3)(iv) of this section who expect to be claimed as a tax dependent by a non-custodial parent. For purposes of this section –
(A) A court order or binding separation, divorce, or custody agreement establishing physical custody controls; or
(B) If there is no such order or agreement or in the event of a shared custody agreement, the custodial parent is the parent with whom the child spends most nights.
(3) Rules for individuals who neither file a tax return nor are claimed as a tax dependent. In the case of individuals who do not expect to file a Federal tax return and do not expect to be claimed as a tax dependent for the taxable year in which an initial determination or renewal of eligibility is being made, or who are described in paragraph (f)(2)(i), (f)(2)(ii), or (f)(2)(iii) of this section, the household consists of the individual and, if living with the individual –
(i) The individual’s spouse;
(ii) The individual’s children under the age specified in paragraph (f)(3)(iv) of this section; and
(iii) In the case of individuals under the age specified in paragraph (f)(3)(iv) of this section, the individual’s parents and siblings under the age specified in paragraph (f)(3)(iv) of this section.
(iv) The age specified in this paragraph is either of the following, as elected by the agency in the State plan –
(A) Age 19; or
(B) Age 19 or, in the case of full-time students, age 21.
(4) Married couples. In the case of a married couple living together, each spouse will be included in the household of the other spouse, regardless of whether they expect to file a joint tax return under section 6013 of the Code or whether one spouse expects to be claimed as a tax dependent by the other spouse.
(5) For purposes of paragraph (f)(1) of this section, if, consistent with the procedures adopted by the State in accordance with § 435.956(f) of this part, a taxpayer cannot reasonably establish that another individual is a tax dependent of the taxpayer for the tax year in which Medicaid is sought, the inclusion of such individual in the household of the taxpayer is determined in accordance with paragraph (f)(3) of this section.
(g) No resource test or income disregards. In the case of individuals whose financial eligibility for Medicaid is determined in accordance with this section, the agency must not –
(1) Apply any assets or resources test; or
(2) Apply any income or expense disregards under sections 1902(r)(2) or 1931(b)(2)(C), or otherwise under title XIX of the Act, except as provided in paragraph (d)(1) of this section.
(h) Budget period – (1) Applicants and new enrollees. Financial eligibility for Medicaid for applicants, and other individuals not receiving Medicaid benefits at the point at which eligibility for Medicaid is being determined, must be based on current monthly household income and family size.
(2) Current beneficiaries. For individuals who have been determined financially-eligible for Medicaid using the MAGI-based methods set forth in this section, a State may elect in its State plan to base financial eligibility either on current monthly household income and family size or income based on projected annual household income and family size for the remainder of the current calendar year.
(3) In determining current monthly or projected annual household income and family size under paragraphs (h)(1) or (h)(2) of this section, the agency may adopt a reasonable method to include a prorated portion of reasonably predictable future income, to account for a reasonably predictable increase or decrease in future income, or both, as evidenced by a signed contract for employment, a clear history of predictable fluctuations in income, or other clear indicia of such future changes in income. Such future increase or decrease in income or family size must be verified in the same manner as other income and eligibility factors, in accordance with the income and eligibility verification requirements at § 435.940 through § 435.965, including by self-attestation if reasonably compatible with other electronic data obtained by the agency in accordance with such sections.
(i) If the household income of an individual determined in accordance with this section results in financial ineligibility for Medicaid and the household income of such individual determined in accordance with 26 CFR 1.36B-1(e) is below 100 percent FPL, Medicaid financial eligibility will be determined in accordance with 26 CFR 1.36B-1(e).
(j) Eligibility Groups for which MAGI-based methods do not apply. The financial methodologies described in this section are not applied in determining the Medicaid eligibility of individuals described in this paragraph. The agency must use the financial methods described in § 435.601 and § 435.602 of this subpart.
(1) Individuals whose eligibility for Medicaid does not require a determination of income by the agency, including, but not limited to, individuals receiving Supplemental Security Income (SSI) eligible for Medicaid under § 435.120 of this part, individuals deemed to be receiving SSI and eligible for Medicaid under § 435.135, § 435.137 or § 435.138 of this part and individuals for whom the State relies on a finding of income made by an Express Lane agency, in accordance with section 1902(e)(13) of the Act.
(2) Individuals who are age 65 or older when age is a condition of eligibility.
(3) Individuals whose eligibility is being determined on the basis of being blind or disabled, or on the basis of being treated as being blind or disabled, including, but not limited to, individuals eligible under § 435.121, § 435.232 or § 435.234 of this part or under section 1902(e)(3) of the Act, but only for the purpose of determining eligibility on such basis.
(4) Individuals who request coverage for long-term care services and supports for the purpose of being evaluated for an eligibility group under which long-term care services and supports not covered for individuals determined eligible using MAGI-based financial methods are covered, or for individuals being evaluated for an eligibility group for which being institutionalized, meeting an institutional level of care or satisfying needs-based criteria for home and community based services is a condition of eligibility. For purposes of this paragraph, “long-term care services and supports” include nursing facility services, a level of care in any institution equivalent to nursing facility services; and home and community-based services furnished under a waiver or State plan under sections 1915 or 1115 of the Act; home health services as described in sections 1905(a)(7) of the Act and personal care services described in sections 1905(a)(24) of the Act.
(5) Individuals who are being evaluated for eligibility for Medicare cost sharing assistance under section 1902(a)(10)(E) of the Act, but only for purposes of determining eligibility for such assistance.
(6) Individuals who are being evaluated for coverage as medically needy under subparts D and I of this part, but only for the purpose of determining eligibility on such basis.
(k) Eligibility. In the case of an individual whose eligibility is being determined under § 435.214, the agency may –
(1) Consider the household to consist of only the individual for purposes of paragraph (f) of this section;
(2) Count only the MAGI-based income of the individual for purposes of paragraph (d) of this section.
(3) Increase the family size of the individual, as defined in paragraph (b) of the section, by one.
§ 435.604 [Reserved]
§ 435.606 [Reserved]
§ 435.608 Applications for other benefits.
(a) As a condition of eligibility, the agency must require applicants and beneficiaries to take all necessary steps to obtain any annuities, pensions, retirement, and disability benefits to which they are entitled, unless they can show good cause for not doing so.
(b) Annuities, pensions, retirement and disability benefits include, but are not limited to, veterans’ compensation and pensions, OASDI benefits, railroad retirement benefits, and unemployment compensation.
§ 435.610 Assignment of rights to benefits.
(a) Consistent with §§ 433.145 through 433.148 of this chapter, as a condition of eligibility, the agency must require legally able applicants and beneficiaries to:
(1) Assign rights to the Medicaid agency to medical support and to payment for medical care from any third party;
(2) In the case of applicants, attest that they will cooperate, and, in the case of beneficiaries, cooperate with the agency in –
(i) Establishing the identity of a child’s parents and in obtaining medical support and payments, unless the individual establishes good cause for not cooperating or is a pregnant woman described in § 435.116; and
(ii) Identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan, unless the individual establishes good cause for not cooperating.
(3) Cooperate in identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan, unless the individual establishes good cause for not cooperating.
(b) The requirements for assignment of rights must be applied uniformly for all groups covered under the plan.
§ 435.622 Individuals in institutions who are eligible under a special income level.
(a) If an agency, under § 435.231, provides Medicaid to individuals in medical institutions, nursing facilities, and intermediate care facilities for Individuals with Intellectual Disabilities who would not be eligible for SSI or State supplements if they were not institutionalized, the agency must use income standards based on the greater need for financial assistance that the individuals would have if they were not in the institution. The standards may vary by the level of institutional care needed by the individual (hospital, nursing facility, or intermediate level care for individuals with intellectual disabilities), or by other factors related to individual needs. (See § 435.1005 for FFP limits on income standards established under this section.)
(b) In determining the eligibility of individuals under the income standards established under this section, the agency must not take into account income that would be disregarded in determining eligibility for SSI or for an optional State supplement.
(c) The agency must apply the income standards established under this section effective with the first day of a period of not less than 30 consecutive days of institutionalization.
§ 435.631 General requirements for determining income eligibility in States using more restrictive requirements for Medicaid than SSI.
(a) Income eligibility methods. In determining income eligibility of aged, blind, and disabled individuals in a State using more restrictive eligibility requirements than SSI, the agency must use the methods for treating income elected under §§ 435.121 and 435.230, under § 435.601. The methods used must be comparable for all individuals within each category of individuals under § 435.121 and each category of individuals within each optional categorically needy group included under § 435.230 and for each category of individuals under the medically needy option described under § 435.800.
(b) Categorically needy versus medically needy eligibility. (1) Individuals who have income equal to, or below, the categorically needy income standards described in §§ 435.121 and 435.230 are categorically needy in States that include the medically needy under their plans.
(2) Categorically needy eligibility in States that do not include the medically needy is determined in accordance with the provisions of § 435.121 (e)(4) and (e)(5).
§ 435.640 Protected Medicaid eligibility for individuals eligible in December 1973.
In determining whether individuals continue to meet the income requirements used in December 1973, for purposes of determining eligibility under §§ 435.131, 435.132, and 435.133, the agency must deduct increased OASDI payments to the same extent that these deductions were in effect in December 1973. These deductions are required by section 306 of the Social Security Amendments of 1972 (Pub. L. 92-603) and section 1007 of Pub. L. 91-172 (enacted Dec. 30, 1969), modified by section 304 of Pub. L. 92-603.
Subpart H – Specific Post-Eligibility Financial Requirements for the Categorically Needy
§ 435.700 Scope.
This subpart prescribes specific financial requirements for determining the post-eligibility treatment of income of categorically needy individuals, including requirements for applying patient income to the cost of care.
§ 435.725 Post-eligibility treatment of income of institutionalized individuals in SSI States: Application of patient income to the cost of care.
(a) Basic rules. (1) The agency must reduce its payment to an institution, for services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraphs (c) and (d) of this section, from the individual’s total income,
(2) The individual’s income must be determined in accordance with paragraph (e) of this section.
(3) Medical expenses must be determined in accordance with paragraph (f) of this section.
(b) Applicability. This section applies to the following individuals in medical institutions and intermediate care facilities.
(1) Individuals receiving cash assistance under SSI or AFDC who are eligible for Medicaid under § 435.110 or § 435.120.
(2) Individuals who would be eligible for AFDC, SSI, or an optional State supplement except for their institutional status and who are eligible for Medicaid under § 435.211.
(3) Aged, blind, and disabled individuals who are eligible for Medicaid, under § 435.231, under a higher income standard than the standard used in determining eligibility for SSI or optional State supplements.
(c) Required deductions. In reducing its payment to the institution, the agency must deduct the following amounts, in the following order, from the individual’s total income, as determined under paragraph (e) of this section. Income that was disregarded in determining eligibility must be considered in this process.
(1) Personal needs allowance. A personal needs allowance that is reasonable in amount for clothing and other personal needs of the individual while in the institution. This protected personal needs allowance must be at least –
(i) $30 a month for an aged, blind, or disabled individual, including a child applying for Medicaid on the basis of blindness or disability;
(ii) $60 a month for an institutionalized couple if both spouses are aged, blind, or disabled and their income is considered available to each other in determining eligibility; and
(iii) For other individuals, a reasonable amount set by the agency, based on a reasonable difference in their personal needs from those of the aged, blind, and disabled.
(2) Maintenance needs of spouse. For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the highest of –
(i) The amount of the income standard used to determine eligibility for SSI for an individual living in his own home, if the agency provides Medicaid only to individuals receiving SSI;
(ii) The amount of the highest income standard, in the appropriate category of age, blindness, or disability, used to determine eligibility for an optional State supplement for an individual in his own home, if the agency provides Medicaid to optional State supplement beneficiaries under § 435.230; or
(iii) The amount of the medically needy income standard for one person established under § 435.811, if the agency provides Medicaid under the medically needy coverage option.
(3) Maintenance needs of family. For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the higher of the need standard for a family of the same size used to determine eligibility under the State’s approved AFDC plan or the medically needy income standard established under § 435.811, if the agency provides Medicaid under the medically needy coverage option for a family of the same size.
(4) Expenses not subject to third party payment. Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including –
(i) Medicare and other health insurance premiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
(5) Continued SSI and SSP benefits. The full amount of SSI and SSP benefits that the individual continues to receive under sections 1611(e)(1) (E) and (G) of the Act.
(d) Optional deduction: Allowance for home maintenance. For single individuals and couples, an amount (in addition to the personal needs allowance) for maintenance of the individual’s or couple’s home if –
(1) The amount is deducted for not more than a 6-month period; and
(2) A physician has certified that either of the individuals is likely to return to the home within that period.
(3) For single individuals and couples, an amount (in addition to the personal needs allowance) for maintenance of the individual’s or couple’s home if –
(i) The amount is deducted for not more than a 6-month period; and
(ii) A physician has certified that either of the individuals is likely to return to the home within that period.
(e) Determination of income – (1) Option. In determining the amount of an individual’s income to be used to reduce the agency’s payment to the institution, the agency may use total income received, or it may project monthly income for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the projection on income received in the preceding period, not to exceed 6 months, and on income expected to be received.
(3) Adjustments. At the end of the prospective period specified in paragraph (e)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with income received.
(f) Determination of medical expenses – (1) Option. In determining the amount of medical expenses to be deducted from an individual’s income, the agency may deduct incurred medical expenses, or it may project medical expenses for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the estimate on medical expenses incurred in the preceding period, not to exceed 6 months, and on medical expenses expected to be incurred.
(3) Adjustments. At the end of the prospective period specified in paragraph (f)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with incurred medical expenses.
§ 435.726 Post-eligibility treatment of income of individuals receiving home and community-based services furnished under a waiver: Application of patient income to the cost of care.
(a) The agency must reduce its payment for home and community-based services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraph (c) of this section from the individual’s income.
(b) This section applies to individuals who are eligible for Medicaid under § 435.217 and are receiving home and community-based services furnished under a waiver of Medicaid requirements specified in part 441, subpart G or H of this subchapter.
(c) In reducing its payment for home and community-based services, the agency must deduct the following amounts, in the following order, from the individual’s total income (including amounts disregarded in determining eligibility):
(1) An amount for the maintenance needs of the individual that the State may set at any level, as long as the following conditions are met:
(i) The deduction amount is based on a reasonable assessment of need.
(ii) The State establishes a maximum deduction amount that will not be exceeded for any individual under the waiver.
(2) For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the highest of –
(i) The amount of the income standard used to determine eligibility for SSI for an individual living in his own home, if the agency provides Medicaid only to individuals receiving SSI;
(ii) The amount of the highest income standard, in the appropriate category of age, blindness, or disability, used to determine eligibility for an optional State supplement for an individual in his own home, if the agency provides Medicaid to optional State supplement beneficiaries under § 435.230; or
(iii) The amount of the medically needy income standard for one person established under §§ 435.811 and 435.814, if the agency provides Medicaid under the medically needy coverage option.
(3) For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the higher of the need standard for a family of the same size used to determine eligibility under the State’s AFDC plan or the medically needy income standard established under § 435.811 for a family of the same size.
(4) Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party including –
(i) Medicare and other health insurance premiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
§ 435.733 Post-eligibility treatment of income of institutionalized individuals in States using more restrictive requirements than SSI: Application of patient income to the cost of care.
(a) Basic rules. (1) The agency must reduce its payment to an institution, for services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraphs (c) and (d) of this section, from the individual’s total income.
(2) The individual’s income must be determined in accordance with paragraph (e) of this section.
(3) Medical expenses must be determined in accordance with paragraph (f) of this section.
(b) Applicability. This section applies to the following individuals in medical institutions and intermediate care facilities:
(1) Individuals receiving cash assistance under AFDC who are eligible for Medicaid under § 435.110 and individuals eligible under § 435.121.
(2) Individuals who would be eligible for AFDC, SSI, or an optional State supplement except for their institutional status and who are eligible for Medicaid under § 435.211.
(3) Aged, blind, and disabled individuals who are eligible for Medicaid, under § 435.231, under a higher income standard than the standard used in determining eligibility for SSI or optional State supplements.
(c) Required deductions. The agency must deduct the following amounts, in the following order, from the individual’s total income, as determined under paragraph (e) of this section. Income that was disregarded in determining eligibility must be considered in this process.
(1) Personal needs allowance. A personal needs allowance that is reasonable in amount for clothing and other personal needs of the individual while in the institution. This protected personal needs allowance must be at least –
(i) $30 a month for an aged, blind, or disabled individual, including a child applying for Medicaid on the basis of blindness or disability;
(ii) $60 a month for an institutionalized couple if both spouses are aged, blind, or disabled and their income is considered available to each other in determining eligibility; and
(iii) For other individuals, a reasonable amount set by the agency, based on a reasonable difference in their personal needs from those of the aged, blind, and disabled.
(2) Maintenance needs of spouse. For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the higher of –
(i) The more restrictive income standard established under § 435.121; or
(ii) The amount of the medically needy income standard for one person established under § 435.811, if the agency provides Medicaid under the medically needy coverage option.
(3) Maintenance needs of family. For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the higher of the need standard for a family of the same size used to determine eligibility under the State’s approved AFDC plan or the medically needy income standard established under § 435.811, if the agency provides Medicaid under the medically needy coverage option for a family of the same size.
(4) Expenses not subject to third party payment. Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including –
(i) Medicare and other health insurance permiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
(5) Continued SSI and SSP benefits. The full amount of SSI and SSP benefits that the individual continues to receive under sections 1611(e)(1) (E) and (G) of the Act.
(d) Optional deduction: Allowance for home maintenance. For single individuals and couples, an amount (in addition to the personal needs allowance) for maintenance of the individual’s or couple’s home if –
(1) The amount is deducted for not more than a 6-month period; and
(2) A physician has certified that either of the individuals is likely to return to the home within that period.
(e) Determination of income – (1) Option. In determining the amount of an individual’s income to be used to reduce the agency’s payment to the institution, the agency may use total income received, or it may project total monthly income for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the projection on income received in the preceding period, not to exceed 6 months, and on income expected to be received.
(3) Adjustments. At the end of the prospective period specified in paragraph (e)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with income received.
(f) Determination of medical expenses – (1) Option. In determining the amount of medical expenses that may be deducted from an individual’s income, the agency may deduct incurred medical expenses, or it may project medical expenses for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the estimate on medical expenses incurred in the preceding period, not to exceed 6 months, and medical expenses expected to be incurred.
(3) Adjustments. At the end of the prospective period specified in paragraph (f)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with incurred medical expenses.
§ 435.735 Post-eligibility treatment of income and resources of individuals receiving home and community-based services furnished under a waiver: Application of patient income to the cost of care.
(a) The agency must reduce its payment for home and community-based services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraph (c) of this section from the individual’s income.
(b) This section applies to individuals who are eligible for Medicaid under § 435.217, and are eligible for home and community-based services furnished under a waiver of State plan requirements specified in part 441, subpart G or H of this subchapter.
(c) In reducing its payment for home and community-based services, the agency must deduct the following amounts, in the following order, from the individual’s total income (including amounts disregarded in determining eligibility):
(1) An amount for the maintenance needs of the individual that the State may set at any level, as long as the following conditions are met:
(i) The deduction amount is based on a reasonable assessment of need.
(ii) The State establishes a maximum deduction amount that will not be exceeded for any individual under the waiver.
(2) For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the higher of –
(i) The more restrictive income standard established under § 435.121; or
(ii) The medically needy standard for an individual.
(3) For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the higher of the need standard for a family of the same size used to determine eligibility under the State’s approved AFDC plan or the medically needy income standard established under § 435.811 for a family of the same size.
(4) Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including –
(i) Medicare and other health insurance premiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
Subpart I – Specific Eligibility and Post-Eligibility Financial Requirements for the Medically Needy
§ 435.800 Scope.
This subpart prescribes specific financial requirements for determining the eligibility of medically needy individuals under subpart D of this part.
Medically Needy Income Standard
§ 435.811 Medically needy income standard: General requirements.
(a) Except as provided in paragraph (d)(2) of this section, to determine eligibility of medically needy individuals, a Medicaid agency must use a single income standard under this subpart that meets the requirements of this section.
(b) The income standard must take into account the number of persons in the assistance unit. Subject to the limitations specified in paragraph (e) of this section. The standard may not diminish by an increase in the number of persons in the assistance unit. For example, if the income level in the standard for an assistance unit of two is set at $400, the income level in the standard for an assistance unit of three may not be less than $400.
(c) In States that do not use more restrictive requirements than SSI, the income standard must be set at an amount that is no lower than the lowest income standards used under the cash assistance programs that are related to the State’s covered medically needy eligibility group or groups of individuals under § 435.301. The amount of the income standard is subject to the limitations specified in paragraph (e) of this section.
(d) In States that use more restrictive requirements for aged, blind, and disabled individuals than SSI:
(1) For all individuals except aged, blind, and disabled individuals, the income standard must be set in accordance with paragraph (c) of this section; and
(2) For all aged, blind, and disabled individuals or any combination of these groups of individuals, the agency may establish a separate single medically needy income standard that is more restrictive than the single income standard set under paragraph (c) of this section. However, the amount of the more restrictive separate standard for aged, blind, or disabled individuals must be no lower than the higher of the lowest categorically needy income standard currently applied under the State’s more restrictive criteria under § 435.121 or the medically needy income standard in effect under the State’s Medicaid plan on January 1, 1972. The amount of the income standard is subject to the limitations specified in paragraph (e) of this section.
(e) The income standards specified in paragraphs (c) and (d) of this section must not exceed the maximum dollar amount of income allowed for purposes of FFP under § 435.1007.
(f) The income standard may vary based on the variations between shelter costs in urban areas and rural areas.
§ 435.814 Medically needy income standard: State plan requirements.
The State plan must specify the income standard for the covered medically needy groups.
Medically Needy Income Eligibility
§ 435.831 Income eligibility.
The agency must determine income eligibility of medically needy individuals in accordance with this section.
(a) Budget periods. (1) The agency must use budget periods of not more than 6 months to compute income. The agency may use more than one budget period.
(2) The agency may include in the budget period in which income is computed all or part of the 3-month retroactive period specified in § 435.915. The budget period can begin no earlier than the first month in the retroactive period in which the individual received covered services. This provision applies to all medically needy individuals except in groups for whom criteria more restrictive than that used in the SSI program apply.
(3) If the agency elects to begin the first budget period for the medically needy in any month of the 3-month period prior to the date of the application in which the applicant received covered services, this election applies to all medically needy groups.
(b) Determining countable income. For purposes of determining medically needy eligibility under this part, the agency must determine an individual’s countable income as follows:
(1) For individuals under age 21, pregnant women, and parents and other caretaker relatives, the agency may apply –
(i) The AFDC methodologies in effect in the State as of August 16, 1996, consistent with § 435.601 (relating to financial methodologies for non-MAGI eligibility determinations) and § 435.602 (relating to financial responsibility of relatives and other individuals for non-MAGI eligibility determinations); or
(ii) The MAGI-based methodologies defined in § 435.603(b) through (f). If the agency applies the MAGI-based methodologies defined in § 435.603(b) through (f), the agency must comply with the terms of § 435.602, except that in applying § 435.602(a)(2)(ii) to individuals under age 21, the agency may, at State option, include all parents as defined in § 435.603(b) (including stepparents) who are living with the individual in the individual’s household for purposes of determining household income and family size, without regard to whether the parent’s income and resources would be counted under the State’s approved State plan under title IV-A of the Act in effect as of July 16, 1996, if the individual were a dependent child under such State plan.
(2) For aged, blind, or disabled individuals in States covering all SSI beneficiaries, the agency must deduct amounts that would be deducted in determining eligibility under SSI. However, the agency must also deduct the highest amounts from income that would be deducted in determining eligibility for optional State supplements if these supplements are paid to all individuals who are receiving SSI or would be eligible for SSI except for their income.
(3) For aged, blind, or disabled individuals in States using income requirements more restrictive than SSI, the agency must deduct amounts that are no more restrictive than those used under the Medicaid plan on January 1, 1972 and no more liberal than those used in determining eligibility under SSI or an optional State supplement. However, the amounts must be at least the same as those that would be deducted in determining eligibility, under § 435.121, of the categorically needy.
(c) Eligibility based on countable income. If countable income determined under paragraph (b) of this section is equal to or less than that applicable income standard under § 435.814, the individual is eligible for Medicaid.
(d) Deduction of incurred medical expenses. If countable income exceeds the income standard, the agency must deduct from income medical expenses incurred by the individual or family or financially responsible relatives that are not subject to payment by a third party. An expense is incurred on the date liability for the expense arises. The agency must determine deductible incurred expenses in accordance with paragraphs (e), (f), and (g) of this section and deduct those expenses in accordance with paragraph (h) of this section.
(e) Determination of deductible incurred expenses: Required deductions based on kinds of services. Subject to the provisions of paragraph (g), in determining incurred medical expenses to be deducted from income, the agency must include the following:
(1) Expenses for Medicare and other health insurance premiums, and deductibles or coinsurance charges, including enrollment fees, copayments, or deductibles imposed under § 447.51 or § 447.53 of this subchapter;
(2) Expenses incurred by the individual or family or financially responsible relatives for necessary medical and remedial services that are recognized under State law but not included in the plan;
(3) Expenses incurred by the individual or family or by financially responsible relatives for necessary medical and remedial services that are included in the plan, including those that exceed agency limitations on amount, duration, or scope of services.
(f) Determination of deductible incurred expenses: Required deductions based on the age of bills. Subject to the provisions of paragraph (g), in determining incurred medical expenses to be deducted from income, the agency must include the following:
(1) For the first budget period or periods that include only months before the month of application for medical assistance, expenses incurred during such period or periods, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(2) For the first prospective budget period that also includes any of the 3 months before the month of application for medical assistance, expenses incurred during such budget period, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(3) For the first prospective budget period that includes none of the months preceding the month of application, expenses incurred during such budget period and any of the 3 preceding months, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(4) For any of the 3 months preceding the month of application that are not includable under paragraph (f)(2) of this section, expenses incurred in the 3-month period that were a current liability of the individual in any such month for which a spenddown calculation is made and that had not been previously deducted from income in establishing eligibility for medical assistance;
(5) Current payments (that is, payments made in the current budget period) on other expenses incurred before the current budget period and not previously deducted from income in any budget period in establishing eligibility for such period; and
(6) If the individual’s eligibility for medical assistance was established in each such preceding period, expenses incurred before the current budget period but not previously deducted from income in establishing eligibility, to the extent that such expenses are unpaid and are:
(i) Described in paragraphs (e)(1) through (e)(3) of this section; and
(ii) Carried over from the preceding budget period or periods because the individual had a spenddown liability in each such preceding period that was met without deducting all such incurred, unpaid expenses.
(g) Determination of deductible incurred medical expenses: Optional deductions. In determining incurred medical expenses to be deducted from income, the agency –
(1) May include medical institutional expenses (other than expenses in acute care facilities) projected to the end of the budget period at the Medicaid reimbursement rate;
(2) May, to the extent determined by the State and specified in its approved plan, include expenses incurred earlier than the third month before the month of application (except States using more restrictive eligibility criteria under the option in section 1902(f) of the Act must deduct incurred expenses regardless of when the expenses were incurred); and
(3) May set reasonable limits on the amount to be deducted for expenses specified in paragraphs (e)(1), (e)(2), and (g)(2) of this section.
(h) Order of deduction. The agency must deduct incurred medical expenses that are deductible under paragraphs (e), (f), and (g) of this section in the order prescribed under one of the following three options:
(1) Type of service. Under this option, the agency deducts expenses in the following order based on type of expense or service:
(i) Cost-sharing expenses as specified in paragraph (e)(1) of this section.
(ii) Services not included in the State plan as specified in paragraph (e)(2) of this section.
(iii) Services included in the State plan as specified in paragraph (e)(3) of this section but that exceed limitations on amounts, duration, or scope of services.
(iv) Services included in the State plan as specified in paragraph (e)(3) of this section but that are within agency limitations on amount, duration, or scope of services.
(2) Chronological order by service date. Under this option, the agency deducts expenses in chronological order by the date each service is furnished, or in the case of insurance premiums, coinsurance or deductible charges, the date such amounts are due. Expenses for services furnished on the same day may be deducted in any reasonable order established by the State.
(3) Chronological order by bill submission date. Under this option, the agency deducts expenses in chronological order by the date each bill is submitted to the agency by the individual. If more than one bill is submitted at one time, the agency must deduct the bills from income in the order prescribed in either paragraph (h)(1) or (h)(2) of this section.
(i) Eligibility based on incurred medical expenses. (1) Whether a State elects partial or full month coverage, an individual who is expected to contribute a portion of his or her income toward the costs of institutional care or home and community-based services under § 435.725, § 435.726, § 435.733, § 435.735 or § 435.832 is eligible on the first day of the applicable budget (spenddown) period –
(i) If his or her spenddown liability is met after the first day of the budget period; and
(ii) If beginning eligibility after the first day of the budget period makes the individual’s share of health care expenses under § 435.725, § 435.726, § 435.733, § 435.735 or § 435.832 greater than the individual’s contributable income determined under these sections.
(2) At the end of the prospective period specified in paragraphs (f)(2) and (f)(3) of this section, and any subsequent prospective period or, if earlier, when any significant change occurs, the agency must reconcile the projected amounts with the actual amounts incurred, or with changes in circumstances, to determine if the adjusted deduction of incurred expenses reduces income to the income standard.
(3) Except as provided in paragraph (i)(1) of this section, in States that elect partial month coverage, an individual is eligible for Medicaid on the day that the deduction of incurred health care expenses (and of projected institutional expenses if the agency elects the option under paragraph (g)(1) of this section) reduces income to the income standard.
(4) Except as provided in paragraph (i)(1) of this section, in States that elect full month coverage, an individual is eligible on the first day of the month in which spenddown liability is met.
(5) Expenses used to meet spenddown liability are not reimbursable under Medicaid. To the extent necessary to prevent the transfer of an individual’s spenddown liability to the Medicaid program, States must reduce the amount of provider charges that would otherwise be reimbursable under Medicaid.
§ 435.832 Post-eligibility treatment of income of institutionalized individuals: Application of patient income to the cost of care.
(a) Basic rules. (1) The agency must reduce its payment to an institution, for services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraphs (c) and (d) of this section, from the individual’s total income.
(2) The individual’s income must be determined in accordance with paragraph (e) of this section.
(3) Medical expenses must be determined in accordance with paragraph (f) of this section.
(b) Applicability. This section applies to medically needy individuals in medical institutions and intermediate care facilities.
(c) Required deductions. The agency must deduct the following amounts, in the following order, from the individual’s total income, as determined under paragraph (e) of this section. Income that was disregarded in determining eligibility must be considered in this process.
(1) Personal needs allowance. A personal needs allowance that is reasonable in amount for clothing and other personal needs of the individual while in the institution. This protected personal needs allowance must be at least –
(i) $30 a month for an aged, blind, or disabled individual, including a child applying for Medicaid on the basis of blindness or diability.
(ii) $60 a month for an institutionalized couple if both spouses are aged, blind, or disabled and their income is considered available to each other in determining eligibility; and
(iii) For other individuals, a reasonable amount set by the agency, based on a reasonable difference in their personal needs from those of the aged, blind, and disabled.
(2) Maintenance needs of spouse. For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the highest of –
(i) The amount of the income standard used to determine eligibility for SSI for an individual living in his own home;
(ii) The amount of the highest income standard, in the appropriate category of age, blindness, or disability, used to determine eligibility for an optional State supplement for an individual in his own home, if the agency provides Medicaid to optional State supplement beneficiaries under § 435.230; or
(iii) The amount of the medically needy income standard for one person established under § 435.811.
(3) Maintenance needs of family. For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the highest of the following need standards for a family of the same size:
(A) The standard used to determine eligibility under the State’s approved AFDC plan.
(B) The medically needy income standard established under § 435.811.
(4) Expenses not subject to third party payment. Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including –
(i) Medicare and other health insurance permiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
(d) Optional deduction: Allowance for home maintenance. For single individuals and couples, an amount (in addition to the personal needs allowance) for maintenance of the individual’s or couple’s home if –
(1) The amount is deducted for not more than a 6-month period; and
(2) A physician has certified that either of the individuals is likely to return to the home within that period.
(e) Determination of income – (1) Option. In determining the amount of an individual’s income to be used to reduce the agency’s payment to the institution, the agency may use total income received or it may project total monthly income for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the projection on income received in the preceding period, not to exceed 6 months, and on income expected to be received.
(3) Adjustments. At the end of the prospective period specified in paragraph (e)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with income received.
(f) Determination of medical expenses – (1) Option. In determining the amount of medical expenses to be deducted from an individual’s income, the agency may deduct incurred medical expenses, or it may project medical expenses for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the estimate on medical expenses incurred in the preceding period, not to exceed 6 months, and medical expenses expected to be incurred.
(3) Adjustments. At the end of the prospective period specified in paragraph (f)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with incurred medical expenses.
Medically Needy Resource Standard
§ 435.840 Medically needy resource standard: General requirements.
(a) To determine eligibility of medically needy individuals, a Medicaid agency must use a single resource standard that meets the requirements of this section.
(b) In States that do not use more restrictive criteria than SSI for aged, blind, and disabled individuals, the resource standard must be established at an amount that is no lower than the lowest resource standard used under the cash assistance programs that relate to the State’s covered medically needy eligibility group or groups of individuals under § 435.301.
(c) In States using more restrictive requirements than SSI:
(1) For all individuals except aged, blind, and disabled individuals, the resource standard must be set in accordance with paragraph (b) of this section; and
(2) For all aged, blind, and disabled individuals or any combination of these groups of individuals, the agency may establish a separate single medically needy resource standard that is more restrictive than the single resource standard set under paragraph (b) of this section. However, the amount of the more restrictive separate standard for aged, blind, or disabled individuals must be no lower than the higher of the lowest categorically needy resource standard currently applied under the State’s more restrictive criteria under § 435.121 or the medically needy resource standard in effect under the State’s Medicaid plan on January 1, 1972.
(d) The resource standard established under paragraph (a) of this section may not diminish by an increase in the number of persons in the assistance unit. For example, the resource standard for an assistance unit of three may not be less than that set for a unit of two.
§ 435.843 Medically needy resource standard: State plan requirements.
The State plan must specify the resource standard for the covered medically needy groups.
Determining Eligibility on the Basis of Resources
§ 435.845 Medically needy resource eligibility.
To determine eligibility on the basis of resources for medically needy individuals, the agency must:
(a) Consider only the individual’s resources and those that are considered available to him under the financial responsibility requirements for relatives in § 435.602.
(b) Deduct the amounts that would be deducted in determining resource eligibility for the medically needy group as provided for in § 435.601 or under the criteria of States using more restrictive criteria than SSI as provided for in § 435.121. In determining the amount of an individual’s resources for Medicaid eligibility, States must count amounts of resources that otherwise would not be counted under the conditional eligibility provisions of the SSI or AFDC programs.
(c) Apply the resource standard specified under § 435.840.
§§ 435.850-435.852 [Reserved]
Subpart J – Eligibility in the States and District of Columbia
§ 435.900 Scope.
This subpart sets forth requirements for processing applications, determining eligibility, and furnishing Medicaid.
General Methods of Administration
§ 435.901 Consistency with objectives and statutes.
The Medicaid agency’s standards and methods for providing information to applicants and beneficiaries and for determining eligibility must be consistent with the objectives of the program and with the rights of individuals under the United States Constitution, the Social Security Act, title VI of the Civil Rights Act of 1964, section 504 of the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Age Discrimination Act of 1975, section 1557 of the Affordable Care Act, and all other relevant provisions of Federal and State laws and their respective implementing regulations.
§ 435.902 Simplicity of administration.
The agency’s policies and procedures must ensure that eligibility is determined in a manner consistent with simplicity of administration and the best interests of the applicant or beneficiary.
§ 435.903 Adherence of local agencies to State plan requirements.
The agency must –
(a) Have methods to keep itself currently informed of the adherence of local agencies to the State plan provisions and the agency’s procedures for determining eligibility; and
(b) Take corrective action to ensure their adherence.
§ 435.904 Establishment of outstation locations to process applications for certain low-income eligibility groups.
(a) State plan requirements. The Medicaid State plan must specify that the requirements of this section are met.
(b) Opportunity to apply. The agency must provide an opportunity for the following groups of low-income pregnant women, infants, and children under age 19 to apply for Medicaid at outstation locations other than AFDC offices:
(1) The groups of pregnant women or infants with incomes up to 133 percent of the Federal poverty level as specified under section 1902(a)(10)(A)(i)(IV) of the Act;
(2) The group of children age 1 up to age 6 with incomes at 133 percent of the Federal poverty level as specified under section 1902(a)(10)(A)(i)(VI) of the Act;
(3) The group of children age 6 up to age 19 born after September 30, 1983, with incomes up to 100 percent of the Federal poverty level as specified under section 1902(a)(10)(A)(i)(VII) of the Act; and
(4) The groups of pregnant women or infants, children age 1 up to age 6, and children age 6 up to age 19, who are not eligible as a mandatory group, with incomes up to 185 percent of the Federal poverty level as specified under section 1902(a)(10)(A)(ii)(IX) of the Act.
(c) Outstation locations: general requirements. (1) The agency must establish either –
(i) Outstation locations at each disproportionate share hospital, as defined in section 1923(a)(1)(A) of the Act, and each Federally-qualified health center, as defined in section 1905(1)(2)(B) of the Act, participating in the Medicaid program and providing services to Medicaid-eligible pregnant women and children; or
(ii) Other outstation locations, which include at least some, disproportionate share hospitals and federally-qualified health centers, as specified under an alternative State plan that is submitted to and approved by CMS if the following conditions are met:
(A) The State must demonstrate that the alternative plan for outstationing is equally effective as, or more effective than, a plan that would meet the requirements of paragraph (c)(1)(i) of this section in enabling the individuals described in paragraph (b) of this section to apply for and receive Medicaid; and
(B) The State must provide assurances that the level of staffing and funding committed by the State under the alternative plan equals or exceeds the level of staffing and funding under a plan that would meet the requirements of establishing the outstation locations at the sites specified in paragraph (c)(1)(i) of this section.
(2) The agency must establish outstation locations at Indian health clinics operated by a tribe or tribal organization as these clinics are specifically included in the definition of Federally-qualified health centers under section 1905(l)(2)(B) of the Act and are also included in the definition of rural health clinics under part 491, subpart A of this chapter.
(3) The agency may establish additional outstation locations at any other site where potentially eligible pregnant women or children receive services – for example, at school-linked service centers and family support centers. These additional sites may also include sites other than the main outstation location of those Federally-qualified health centers or disproportionate share hospitals providing services to Medicaid-eligible pregnant women and to children and that operate more than one site.
(4) The agency may, at its option, enter into reciprocal agreements with neighboring States to ensure that the groups described in paragraph (b) of this section who customarily receive services in a neighboring State have the opportunity to apply at outstation locations specified in paragraphs (c)(l) and (2) of this section.
(d) Outstation functions. (1) The agency must provide for the receipt and initial processing of Medicaid applications from the designated eligibility groups at each outstation location.
(2) “Initial processing” means taking applications, assisting applicants in completing the application, providing information and referrals, obtaining required documentation to complete processing of the application, assuring that the information contained on the application form is complete, and conducting any necessary interviews. It does not include evaluating the information contained on the application and the supporting documentation nor making a determination of eligibility or ineligibility.
(3) The agency may, at its option, allow appropriate State eligibility workers assigned to outstation locations to evaluate the information contained on the application and the supporting documentation and make a determination of eligibility if the workers are authorized to determine eligibility for the agency which determines Medicaid eligibility under § 431.10 of this subchapter.
(e) Staffing. (1) Except for outstation locations that are infrequently used by the low-income eligibility groups, the State agency must have staff available at each outstation location during the regular office operating hours of the State Medicaid agency to accept applications and to assist applicants with the application process.
(2) The agency may station staff at one outstation location or rotate staff among several locations as workload and staffing availability dictate.
(3) The agency may use State employees, provider or contractor employees, or volunteers who have been properly trained to staff outstation locations under the following conditions:
(i) State outstation intake staff may perform all eligibility processing functions, including the eligibility determination, if the staff is authorized to do so at the regular Medicaid intake office.
(ii) Provider or contractor employees and volunteers may perform only initial processing functions as defined in paragraph (d)(2) of this section.
(4) Provider and contractor employees and volunteers are subject to the confidentiality of information rules specified in part 431, subpart F, of this subchapter, to the prohibition against reassignment of provider claims specified in § 447.10 of this subchapter, and to all other State or Federal laws concerning conflicts of interest.
(5) At locations that are infrequently used by the designated low-income eligibility groups, the State agency may use volunteers, provider or contractor employees, or its own eligibility staff, or telephone assistance.
(i) The agency must display a notice in a prominent place at the outstation location advising potential applicants of when outstation intake workers will be available.
(ii) The notice must include a telephone number that applicants may call for assistance.
(iii) The agency must comply with Federal and State laws and regulations governing the provision of adequate notice to persons who are blind or deaf or who are unable to read or understand the English language.
Applications
§ 435.905 Availability and accessibility of program information.
(a) The agency must furnish the following information in electronic and paper formats (including through the Internet Web site described in § 435.1200(f) of this part), and orally as appropriate, to all applicants and other individuals who request it:
(1) The eligibility requirements;
(2) Available Medicaid services; and
(3) The rights and responsibilities of applicants and beneficiaries.
(b) Such information must be provided to applicants and beneficiaries in plain language and in a manner that is accessible and timely to –
(1) Individuals who are limited English proficient through the provision of language services at no cost to the individual including, oral interpretation and written translations;
(2) Individuals living with disabilities through the provision of auxiliary aids and services at no cost to the individual in accordance with the Americans with Disabilities Act and section 504 of the Rehabilitation Act; and
(3) Individuals must be informed of the availability of the accessible information and language services described in this paragraph and how to access such information and services, at a minimum through providing taglines in non-English languages indicating the availability of language services.
§ 435.906 Opportunity to apply.
The agency must afford an individual wishing to do so the opportunity to apply for Medicaid without delay.
§ 435.907 Application.
(a) Basis and implementation. In accordance with section 1413(b)(1)(A) of the Affordable Care Act, the agency must accept an application from the applicant, an adult who is in the applicant’s household, as defined in § 435.603(f), or family, as defined in section 36B(d)(1) of the Code, an authorized representative, or if the applicant is a minor or incapacitated, someone acting responsibly for the applicant, and any documentation required to establish eligibility –
(1) Via the internet Web site described in § 435.1200(f) of this part;
(2) By telephone;
(3) Via mail;
(4) In person; and
(5) Through other commonly available electronic means.
(b) The application must be –
(1) The single, streamlined application for all insurance affordability programs developed by the Secretary; or
(2) An alternative single, streamlined application for all insurance affordability programs, which may be no more burdensome on the applicant than the application described in paragraph (b)(1) of this section, approved by the Secretary.
(c) For individuals applying, or who may be eligible, for assistance on a basis other than the applicable MAGI standard in accordance with § 435.911(c)(2) of this part, the agency may use either –
(1) An application described in paragraph (b) of this section and supplemental forms to collect additional information needed to determine eligibility on such other basis; or
(2) An application designed specifically to determine eligibility on a basis other than the applicable MAGI standard. Such application must minimize burden on applicants.
(3) Any MAGI-exempt applications and supplemental forms in use by the agency must be submitted to the Secretary.
(d) The agency may not require an in-person interview as part of the application process for a determination of eligibility using MAGI-based income.
(e) Limits on information. (1) The agency may only require an applicant to provide the information necessary to make an eligibility determination or for a purpose directly connected to the administration of the State plan.
(2) The agency may request information necessary to determine eligibility for other insurance affordability or benefit programs.
(3) The agency may request a non-applicant’s SSN provided that –
(i) Provision of such SSN is voluntary;
(ii) Such SSN is used only to determine an applicant’s or beneficiary’s eligibility for Medicaid or other insurance affordability program or for a purpose directly connected to the administration of the State plan; and
(iii) At the time such SSN is requested, the agency provides clear notice to the individual seeking assistance, or person acting on such individual’s behalf, that provision of the non-applicant’s SSN is voluntary and information regarding how the SSN will be used.
(f) The agency must require that all initial applications are signed under penalty of perjury. Electronic, including telephonically recorded, signatures and handwritten signatures transmitted via any other electronic transmission must be accepted.
(g) Any application or supplemental form must be accessible to persons who are limited English proficient and persons who have disabilities, consistent with § 435.905(b) of this subpart.
(h) Reinstatement of withdrawn applications. (1) In the case of individuals described in paragraph (h)(2) of this section, the agency must reinstate the application submitted by the individual, effective as of the date the application was first received by the Exchange.
(2) Individuals described in this paragraph are individuals who –
(i) Submitted an application described in paragraph (b) of this section to the Exchange;
(ii) Withdrew their application for Medicaid in accordance with 45 CFR 155.302(b)(4)(A);
(iii) Are assessed as potentially eligible for Medicaid by the Exchange appeals entity.
§ 435.908 Assistance with application and renewal.
(a) The agency must provide assistance to any individual seeking help with the application or renewal process in person, over the telephone, and online, and in a manner that is accessible to individuals with disabilities and those who are limited English proficient, consistent with § 435.905(b) of this subpart.
(b) The agency must allow individual(s) of the applicant or beneficiary’s choice to assist in the application process or during a renewal of eligibility.
(c) Certified Application Counselors. (1) At State option, the agency may certify staff and volunteers of State-designated organizations to act as application assisters, authorized to provide assistance to applicants and beneficiaries with the application process and during renewal of eligibility. To be certified, application assisters must be –
(i) Authorized and registered by the agency to provide assistance at application and renewal;
(ii) Effectively trained in the eligibility and benefits rules and regulations governing enrollment in a QHP through the Exchange and all insurance affordability programs operated in the State, as implemented in the State; and
(iii) Trained in and adhere to all rules regulations relating to the safeguarding and confidentiality of information and prohibiting conflict of interest, including regulations set forth at part 431, subpart F of this chapter, and at 45 CFR 155.260(f), regulations relating to the prohibition against reassignment of provider claims specified in § 447.10 of this chapter, and all other State and Federal laws concerning conflicts of interest and confidentiality of information.
(2) For purposes of this section, assistance includes providing information on insurance affordability programs and coverage options, helping individuals complete an application or renewal, working with the individual to provide required documentation, submitting applications and renewals to the agency, interacting with the agency on the status of such applications and renewals, assisting individuals with responding to any requests from the agency, and managing their case between the eligibility determination and regularly scheduled renewals. Application assisters may be certified by the agency to act on behalf of applicants and beneficiaries for one, some or all of the permitted assistance activities.
(3) If the agency elects to certify application assisters, it must establish procedures to ensure that –
(i) Applicants and beneficiaries are informed of the functions and responsibilities of certified application assisters;
(ii) Individuals are able to authorize application assisters to receive confidential information about the individual related to the individual’s application for or renewal of Medicaid; and
(iii) The agency does not disclose confidential applicant or beneficiary information to an application assister unless the applicant or beneficiary has authorized the application assister to receive such information.
(4) Application assisters may not impose, accept or receive payment or compensation in any form from applicants or beneficiaries for application assistance.
§ 435.909 Automatic entitlement to Medicaid following a determination of eligibility under other programs.
The agency must not require a separate application for Medicaid from an individual, if –
(a) [Reserved]
(b) 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 § 435.230.
(a) Except as provided in paragraph (h) of this section, the agency must require, as a condition of eligibility, that each individual (including children) seeking Medicaid furnish each of his or her Social Security numbers (SSN).
(b) The agency must advise the applicant of –
(1) [Reserved]
(2) The statute or other authority under which the agency is requesting the applicant’s SSN; and
(3) The uses the agency will make of each SSN, including its use for verifying income, eligibility, and amount of medical assistance payments under §§ 435.940 through 435.960.
(c)-(d) [Reserved]
(e) If an applicant cannot recall his SSN or SSNs or has not been issued a SSN the agency must –
(1) Assist the applicant in completing an application for an SSN;
(2) Obtain evidence required under SSA regulations to establish the age, the citizenship or alien status, and the true identity of the applicant; and
(3) Either send the application to SSA or, if there is evidence that the applicant has previously been issued a SSN, request SSA to furnish the number.
(f) The agency must not deny or delay services to an otherwise eligible individual pending issuance or verification of the individual’s SSN by SSA or if the individual meets one of the exceptions in paragraph (h) of this section.
(g) The agency must verify the SSN furnished by an applicant or beneficiary with SSA to ensure the SSN was issued to that individual, and to determine whether any other SSNs were issued to that individual.
(h) Exception. (1) The requirement of paragraph (a) of this section does not apply and a State may give a Medicaid identification number to an individual who –
(i) Is not eligible to receive an SSN;
(ii) Does not have an SSN and may only be issued an SSN for a valid non-work reason in accordance with 20 CFR 422.104; or
(iii) Refuses to obtain an SSN because of well-established religious objections.
(2) The identification number may be either an SSN obtained by the State on the applicant’s behalf or another unique identifier.
(3) The term well established religious objections means that the applicant –
(i) Is a member of a recognized religious sect or division of the sect; and
(ii) Adheres to the tenets or teachings of the sect or division of the sect and for that reason is conscientiously opposed to applying for or using a national identification number.
(4) A State may use the Medicaid identification number established by the State to the same extent as an SSN is used for purposes described in paragraph (b)(3) of this section.
Determination of Medicaid Eligibility
§ 435.911 Determination of eligibility.
(a) Statutory basis. This section implements sections 1902(a)(4), (a)(8), (a)(10)(A), (a)(19), and (e)(14) and section 1943 of the Act.
(b)(1) Except as provided in paragraph (b)(2) of this section, applicable modified adjusted gross income standard means 133 percent of the Federal poverty level or, if higher –
(i) In the case of parents and other caretaker relatives described in § 435.110(b), the income standard established in accordance with § 435.110(c) or § 435.220(c);
(ii) In the case of pregnant women, the income standard established in accordance with § 435.116(c) of this part;
(iii) In the case of individuals under age 19, the income standard established in accordance with § 435.118(c) of this part;
(iv) The income standard established under § 435.218(b)(1)(iv) of this part, if the State has elected to provide coverage under such section and, if applicable, coverage under the State’s phase-in plan has been implemented for the individual whose eligibility is being determined.
(2) In the case of individuals who have attained at least age 65 and individuals who have attained at least age 19 and who are entitled to or enrolled for Medicare benefits under part A or B or title XVIII of the Act, there is no applicable modified adjusted gross income standard, except that in the case of such individuals –
(i) Who are also pregnant, the applicable modified adjusted gross income standard is the standard established under paragraph (b)(1) of this section; or
(ii) Who are also a parent or caretaker relative, as described in § 435.4, the applicable modified adjusted gross income standard is the higher of the income standard established in accordance with § 435.110(c) or § 435.220(c).
(c) For each individual who has submitted an application described in § 435.907 or whose eligibility is being renewed in accordance with § 435.916 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 § 435.956(b)) of this chapter, the State Medicaid agency must comply with the following –
(1) The agency must, promptly and without undue delay consistent with timeliness standards established under § 435.912, furnish Medicaid to each such individual whose household income is at or below the applicable modified adjusted gross income standard.
(2) For each individual described in paragraph (d) of this section, the agency must collect such additional information as may be needed consistent with § 435.907(c), to determine whether such individual is eligible for Medicaid on any basis other than the applicable modified adjusted gross income standard, and furnish Medicaid on such basis.
(3) For individuals not eligible on the basis of the applicable modified adjusted gross income standard, the agency must comply with the requirements set forth in § 435.1200(e) of this part.
(d) For purposes of paragraph (c)(2) of this section, individuals described in this paragraph include:
(1) Individuals whom the agency identifies, on the basis of information contained in an application described in § 435.907(b) of this part, or renewal form described in § 435.916(a)(3) of this part, or on the basis of other information available to the State, as potentially eligible on a basis other than the applicable MAGI standard;
(2) Individuals who submit an alternative application described in § 435.907(c) of this part; and
(3) Individuals who otherwise request a determination of eligibility on a basis other than the applicable MAGI standard as described in § 435.603(j) of this part.
§ 435.912 Timely determination of eligibility.
(a) For purposes of this section –
(1) “Timeliness standards” refer to the maximum period of time in which every applicant is entitled to a determination of eligibility, subject to the exceptions in paragraph (e) of this section.
(2) “Performance standards” are overall standards for determining eligibility in an efficient and timely manner across a pool of applicants, and include standards for accuracy and consumer satisfaction, but do not include standards for an individual applicant’s determination of eligibility.
(b) 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.
(2) Determining potential eligibility for, and transferring individuals’ electronic accounts to, other insurance affordability programs pursuant to § 435.1200(e) of this part.
(3) 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.
(c)(1) The timeliness and performance standards adopted by the agency under paragraph (b) of this section 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 in accordance with § 435.1200(e) of this part, and must comply with the requirements of paragraph (c)(2) of this section, subject to additional guidance issued by the Secretary to promote accountability and consistency of high quality consumer experience among States and between insurance affordability programs.
(2) Timeliness and performance standards included in the State plan must account for –
(i) The capabilities and cost of generally available systems and technologies;
(ii) The general availability of electronic data matching and ease of connections to electronic sources of authoritative information to determine and verify eligibility;
(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; and
(iv) The needs of applicants, including applicant preferences for mode of application (such as through an internet Web site, telephone, mail, in-person, or other commonly available electronic means), as well as the relative complexity of adjudicating the eligibility determination based on household, income or other relevant information.
(3) Except as provided in paragraph (e) of this section, the determination of eligibility for any applicant may not exceed –
(i) Ninety days for applicants who apply for Medicaid on the basis of disability; and
(ii) Forty-five days for all other applicants.
(d) The agency must inform applicants of the timeliness standards adopted in accordance with this section.
(e) The agency must determine eligibility within the standards except in unusual circumstances, for example –
(1) When the agency cannot reach a decision because the applicant 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) The agency must document the reasons for delay in the applicant’s case record.
(g) The agency must not use the time standards –
(1) As a waiting period before determining eligibility; or
(2) As a reason for denying eligibility (because it has not determined eligibility within the time standards).
§ 435.914 Case documentation.
(a) The agency must include in each applicant’s case record facts to support the agency’s decision on his application.
(b) The agency must dispose of each application by a finding of eligibility or ineligibility, unless –
(1) There is an entry in the case record that the applicant voluntarily withdrew the application, and that the agency sent a notice confirming his decision;
(2) There is a supporting entry in the case record that the applicant has died; or
(3) There is a supporting entry in the case record that the applicant cannot be located.
§ 435.915 Effective date.
(a) The agency must make eligibility for Medicaid effective no later than the third month before the month of application if the individual –
(1) Received Medicaid services, at any time during that period, of a type covered under the plan; and
(2) Would have been eligible for Medicaid at the time he received the services if he had applied (or someone had applied for him), regardless of whether the individual is alive when application for Medicaid is made.
(b) The agency may make eligiblity for Medicaid effective on the first day of a month if an individual was eligible at any time during that month.
(c) The State plan must specify the date on which eligibility will be made effective.
Redeterminations of Medicaid Eligibility
§ 435.916 Periodic renewal of Medicaid eligibility.
(a) Renewal of individuals whose Medicaid eligibility is based on modified adjusted gross income methods (MAGI). (1) Except as provided in paragraph (d) of this section, the eligibility of Medicaid beneficiaries whose financial eligibility is determined using MAGI-based income must be renewed once every 12 months, and no more frequently than once every 12 months.
(2) Renewal on basis of information available to agency. The agency must make a redetermination of eligibility 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 accessed through any data bases accessed by the agency under §§ 435.948, 435.949 and 435.956 of this part. 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 chapter, 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 § 435.907(a) of this subpart, 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.
(3) Use of a pre-populated renewal form. If the agency cannot renew eligibility in accordance with paragraph (a)(2) of this section, the agency must –
(i) Provide the individual with –
(A) A renewal form containing information, as specified by the Secretary, available to the agency that is needed to renew eligibility.
(B) At least 30 days from the date of the renewal form to respond and provide any necessary information through any of the modes of submission specified in § 435.907(a) of this part, and to sign the renewal form in a manner consistent with § 435.907(f) of the part;
(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) Verify any information provided by the beneficiary in accordance with §§ 435.945 through 435.956 of this part;
(iii) Reconsider in a timely manner the eligibility of an individual who is terminated for failure to submit the renewal form or necessary information, if the individual subsequently submits the renewal form within 90 days after the date of termination, or a longer period elected by the State, without requiring a new application;
(iv) Not require an individual to complete an in-person interview as part of the renewal process.
(b) Redetermination of individuals whose Medicaid eligibility is determined on a basis other than modified adjusted gross income. The agency must redetermine the eligibility of Medicaid beneficiaries excepted from modified adjusted gross income under § 435.603(j) of this part, for circumstances that may change, at least every 12 months. The agency must make a redetermination of eligibility in accordance with the provisions of paragraph (a)(2) of this section, if sufficient information is available to do so. The agency may adopt the procedures described at § 435.916(a)(3) for individuals whose eligibility cannot be renewed in accordance with paragraph (a)(2) of this section.
(1) The agency may consider blindness as continuing until the reviewing physician under § 435.531 of this part determines that a beneficiary’s vision has improved beyond the definition of blindness contained in the plan; and
(2) The agency may consider disability as continuing until the review team, under § 435.541 of this part, determines that a beneficiary’s disability no longer meets the definition of disability contained in the plan.
(c) Procedures for reporting changes. The agency must have procedures designed to ensure that beneficiaries make timely and accurate reports of any change 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 § 435.907(a) of this part.
(d) Agency action on information about changes. (1) Consistent with the requirements of § 435.952 of this part, the agency must promptly redetermine eligibility between regular renewals of eligibility described in paragraphs (b) and (c) of this section whenever it receives information about a change in a beneficiary’s circumstances that may affect eligibility.
(i) For renewals of Medicaid beneficiaries whose financial eligibility is determined using MAGI-based income, the agency must limit any requests for additional information from the individual to information relating to such change in circumstance.
(ii) If the agency has enough information available to it to renew eligibility with respect to all eligibility criteria, the agency may begin a new 12-month renewal period under paragraphs (a) or (b) of this section.
(2) If the agency has information about anticipated changes in a beneficiary’s circumstances that may affect his or her eligibility, it must redetermine eligibility at the appropriate time based on such changes.
(e) The agency may request from beneficiaries only the information needed to renew eligibility. Requests for non-applicant information must be conducted in accordance with § 435.907(e) of this part.
(f) 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 § 435.911 of this part.
(2) For individuals determined ineligible for Medicaid, the agency must determine potential eligibility for other insurance affordability programs and comply with the procedures set forth in § 435.1200(e) of this part.
(g) Any renewal form or notice must be accessible to persons who are limited English proficient and persons with disabilities, consistent with § 435.905(b) of this subpart.
§ 435.917 Notice of agency’s decision concerning eligibility, benefits, or services.
(a) Notice of eligibility determinations. Consistent with §§ 431.206 through 431.214 of this chapter, the agency must provide all applicants and beneficiaries with timely and adequate written notice of any decision affecting their eligibility, including an approval, denial, termination or suspension of eligibility, or a denial or change in benefits and services. Such notice must –
(1) Be written in plain language;
(2) Be accessible to persons who are limited English proficient and individuals with disabilities, consistent with § 435.905(b), and
(3) If provided in electronic format, comply with § 435.918(b).
(b) Content of eligibility notice – (1) Notice of approved eligibility. Any notice of an approval of Medicaid eligibility must include, but is not limited to, clear statements containing the following information –
(i) The basis and effective date of eligibility;
(ii) The circumstances under which the individual must report, and procedures for reporting, any changes that may affect the individual’s eligibility;
(iii) If applicable, the amount of medical expenses which must be incurred to establish eligibility in accordance with § 435.121 or § 435.831.
(iv) Basic information on the level of benefits and services available based on the individual’s eligibility, including, if applicable –
(A) The differences in coverage available to individuals enrolled in benchmark or benchmark-equivalent coverage or in an Alternative Benefits Plan and coverage available to individuals described in § 440.315 of this chapter (relating to exemptions from mandatory enrollment in benchmark or benchmark-equivalent coverage);
(B) A description of any premiums and cost sharing required under Part 447 Subpart A of this chapter;
(C) An explanation of how to receive additional detailed information on benefits and financial responsibilities; and
(D) An explanation of any right to appeal the eligibility status or level of benefits and services approved.
(2) Notice of adverse action including denial, termination or suspension of eligibility or change in benefits or services. Any notice of denial, termination or suspension of Medicaid eligibility or change in benefits or services must be consistent with § 431.210 of this chapter.
(c) Eligibility. Whenever an approval, denial, or termination of eligibility is based on an applicant’s or beneficiary’s having household income at or below the applicable modified adjusted gross income standard in accordance with § 435.911, the eligibility notice must contain –
(1) Information regarding bases of eligibility other than the applicable modified adjusted gross income standard and the benefits and services afforded to individuals eligible on such other bases, sufficient to enable the individual to make an informed choice as to whether to request a determination on such other bases; and
(2) Information on how to request a determination on such other bases;
(d) Combined Eligibility Notice. The agency’s responsibility to provide notice under this section is satisfied by a combined eligibility notice, as defined in § 435.4, provided by the Exchange or other insurance affordability program in accordance with an agreement between the agency and such program consummated in accordance with § 435.1200(b)(3), except that, if the information described in paragraph (b)(1)(iii) and (iv) of this section is not included in such combined eligibility notice, the agency must provide the individual with a supplemental notice of such information, consistent with this section.
§ 435.918 Use of electronic notices.
(a) Effective no earlier than October 1, 2013 and no later than January 1, 2015, the agency must provide individuals with a choice to receive notices and information required under this part or subpart E of part 431 of this chapter in electronic format or by regular mail and must be permitted to change such election.
(b) If the individual elects to receive communications from the agency electronically, the agency must –
(1) Ensure that the individual’s election to receive notices electronically is confirmed by regular mail.
(2) Ensure that the individual is informed of his or her right to change such election to receive notices through regular mail.
(3) Post notices to the individual’s electronic account within 1 business day of notice generation.
(4) Send an email or other electronic communication alerting the individual that a notice has been posted to his or her account. The agency may not include confidential information in the email or electronic alert.
(5) Send a notice by regular mail within three business days of the date of a failed electronic communication if an electronic communication is undeliverable.
(6) At the individual’s request, provide through regular mail any notice posted to the individual’s electronic account.
§ 435.920 Verification of SSNs.
(a) In redetermining eligibility, the agency must review case records to determine whether they contain the beneficiary’s SSN or, in the case of families, each family member’s SSN.
(b) If the case record does not contain the required SSNs, the agency must require the beneficiary to furnish them and meet other requirements of § 435.910.
(c) For any beneficiary whose SSN was established as part of the case record without evidence required under the SSA regulations as to age, citizenship, alien status, or true identity, the agency must obtain verification of these factors in accordance with § 435.910.
§ 435.923 Authorized representatives.
(a)(1) The agency must permit applicants and beneficiaries to designate an individual or organization to act responsibly on their behalf in assisting with the individual’s application and renewal of eligibility and other ongoing communications with the agency. Such a designation must be in accordance with paragraph (f) of this section, including the applicant’s signature, and must be permitted at the time of application and at other times.
(2) Authority for an individual or entity to act on behalf of an applicant or beneficiary accorded under state law, including but not limited to, a court order establishing legal guardianship or a power of attorney, must be treated as a written designation by the applicant or beneficiary of authorized representation.
(b) Applicants and beneficiaries may authorize their representatives to –
(1) Sign an application on the applicant’s behalf;
(2) Complete and submit a renewal form;
(3) Receive copies of the applicant or beneficiary’s notices and other communications from the agency;
(4) Act on behalf of the applicant or beneficiary in all other matters with the agency.
(c) The power to act as an authorized representative is valid until the applicant or beneficiary modifies the authorization or notifies the agency that the representative is no longer authorized to act on his or her behalf, or the authorized representative informs the agency that he or she no longer is acting in such capacity, or there is a change in the legal authority upon which the individual or organization’s authority was based. Such notice must be in accordance with paragraph (f) of this section and should include the applicant or authorized representative’s signature as appropriate.
(d) The authorized representative –
(1) Is responsible for fulfilling all responsibilities encompassed within the scope of the authorized representation, as described in paragraph (b)(2) of this section, to the same extent as the individual he or she represents;
(2) Must agree to maintain, or be legally bound to maintain, the confidentiality of any information regarding the applicant or beneficiary provided by the agency.
(e) The agency must require that, as a condition of serving as an authorized representative, a provider or staff member or volunteer of an organization must affirm that he or she will adhere to the regulations in part 431, subpart F of this chapter and at 45 CFR 155.260(f) (relating to confidentiality of information), § 447.10 of this chapter (relating to the prohibition against reassignment of provider claims as appropriate for a facility or an organization acting on the facility’s behalf), as well as other relevant State and Federal laws concerning conflicts of interest and confidentiality of information.
(f) For purposes of this section, the agency must accept electronic, including telephonically recorded, signatures and handwritten signatures transmitted by facsimile or other electronic transmission. Designations of authorized representatives must be accepted through all of the modalities described in § 435.907(a).
§ 435.926 Continuous eligibility for children.
(a) Basis. This section implements section 1902(e)(12) of the Act.
(b) Eligibility. The agency may provide continuous eligibility for the period specified in paragraph (c) of this section for an individual who is:
(1) Under age 19 or under a younger age specified by the agency in its State plan; and
(2) Eligible and enrolled for mandatory or optional coverage under the State plan in accordance with subpart B or C of this part.
(c) Continuous eligibility period. (1) The agency must specify in the State plan the length of the continuous eligibility period, not to exceed 12 months.
(2) A continuous eligibility period begins on the effective date of the individual’s eligibility under § 435.915 or most recent redetermination or renewal of eligibility under § 435.916 and ends after the period specified by the agency under paragraph (c)(1) of this section.
(d) Applicability. A child’s eligibility may not be terminated during a continuous eligibility period, regardless of any changes in circumstances, unless:
(1) The child attains the maximum age specified in accordance with paragraph (b)(1) of this section;
(2) The child or child’s representative requests a voluntary termination of eligibility;
(3) The child ceases to be a resident of the State;
(4) The agency determines that eligibility was erroneously granted at the most recent determination, redetermination or renewal of eligibility because of agency error or fraud, abuse, or perjury attributed to the child or the child’s representative; or
(5) The child dies.
Furnishing Medicaid
§ 435.930 Furnishing Medicaid.
The agency must –
(a) Furnish Medicaid promptly to beneficiaries without any delay caused by the agency’s administrative procedures;
(b) Continue to furnish Medicaid regularly to all eligible individuals until they are found to be ineligible; and
(c) Make arrangements to assist applicants and beneficiaries to get emergency medical care whenever needed, 24 hours a day and 7 days a week.
Income and Eligibility Verification Requirements
§ 435.940 Basis and scope.
The income and eligibility verification requirements set forth at §§ 435.940 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), 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 § 431.15 of this subchapter and section 1902(a)(19) of the Act.
§ 435.945 General requirements.
(a) Except where the law requires other procedures (such as for citizenship and immigration status information), the agency may accept attestation of information needed to determine the eligibility of an individual for Medicaid (either self-attestation by the individual or attestation by an adult who is in the applicant’s household, as defined in § 435.603(f) of this part, 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) without requiring further information (including documentation) from the individual.
(b) The agency must request and use information relevant to verifying an individual’s eligibility for Medicaid in accordance with §§ 435.948 through 435.956 of this subpart.
(c) The agency must furnish, in a timely manner, income and eligibility information, subject to regulations at part 431 subpart F of this chapter, needed for verifying eligibility to the following programs:
(1) To other agencies in the State and other States and to the Federal programs both listed in § 435.948(a) of this subpart and identified in section 1137(b) of the Act;
(2) Other insurance affordability programs;
(3) The child support enforcement program under part D of title IV of the Act; and
(4) SSA for OASDI under title II and for SSI benefits under title XVI of the Act.
(d) All State eligibility determination systems must conduct data matching through the Public Assistance Reporting Information System (PARIS).
(e) The agency must, as required under section 1137(a)(7) of the Act, and upon request, reimburse another agency listed in § 435.948(a) of this subpart or paragraph (c) of this section for reasonable costs incurred in furnishing information, including new developmental costs.
(f) Prior to requesting information for an applicant or beneficiary from another agency or program under this subpart, the agency must inform the individual that the agency will obtain and use information available to it under this subpart to verify income and eligibility or for other purposes directly connected to the administration of the State plan.
(g) Consistent with § 431.16 of this subchapter, the agency must report information as prescribed by the Secretary for purposes of determining compliance with § 431.305 of this subchapter, subpart P of part 431, §§ 435.910 and 435.940 through 435.965 and of evaluating the effectiveness of the income and eligibility verification system.
(h) Information exchanged electronically between the State Medicaid agency and any other agency or program must be sent and received via secure electronic interfaces as defined in § 435.4 of this part.
(i) The agency must execute written agreements with other agencies before releasing data to, or requesting data from, those agencies. Such agreements must provide for appropriate safeguards limiting the use and disclosure of information as required by Federal or State law or regulations.
(j) Verification plan. The agency must develop, and update as modified, and submit to the Secretary, upon request, a verification plan describing the verification policies and procedures adopted by the State agency to implement the provisions set forth in §§ 435.940 through 435.956 of this subpart in a format and manner prescribed by the Secretary.
(k) Flexibility in information collection and verification. Subject to approval by the Secretary, the agency may request and use information from a source or sources alternative to those listed in § 435.948(a) of this subpart, or through a mechanism other than the electronic service described in § 435.949(a) of this subpart, provided that such alternative source or mechanism will reduce the administrative costs and burdens on individuals and States while maximizing accuracy, minimizing delay, meeting applicable requirements relating to the confidentiality, disclosure, maintenance, or use of information, and promoting coordination with other insurance affordability programs.
§ 435.948 Verifying financial information.
(a) The agency must in accordance with this section request the following information relating to financial eligibility from other agencies in the State and other States and Federal programs to the extent the agency determines such information is useful to verifying the financial eligibility of an individual:
(1) Information related to wages, net earnings from self-employment, unearned income and resources from the State Wage Information Collection Agency (SWICA), the Internal Revenue Service (IRS), the Social Security Administration (SSA), the agencies administering the State unemployment compensation laws, the State-administered supplementary payment programs under section 1616(a) of the Act, and any State program administered under a plan approved under Titles I, X, XIV, or XVI of the Act; and
(2) Information related to eligibility or enrollment from the Supplemental Nutrition Assistance Program, the State program funded under part A of title IV of the Act, and other insurance affordability programs.
(b) To the extent that the information identified in paragraph (a) of this section is available through the electronic service established in accordance with § 435.949 of this subpart, the agency must obtain the information through such service.
(c) The agency must request the information by SSN, or if an SSN is not available, using other personally identifying information in the individual’s account, if possible.
§ 435.949 Verification of information through an electronic service.
(a) The Secretary will establish an electronic service through which States may verify certain information with, or obtain such information from, Federal agencies and other data sources, including SSA, the Department of Treasury, and the Department of Homeland Security.
(b) To the extent that information related to eligibility for Medicaid is available through the electronic service established by the Secretary, States must obtain the information through such service, subject to the requirements in subpart C of part 433 of this chapter, except as provided for in § 435.945(k) of this subpart.
§ 435.952 Use of information and requests of additional information from individuals.
(a) The agency must promptly evaluate information received or obtained by it in accordance with regulations under § 435.940 through § 435.960 of this subpart to determine whether such information may affect the eligibility of an individual or the benefits to which he or she is entitled.
(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 in accordance with § 435.948, § 435.949 or § 435.956 of this subpart, 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 § 435.948, § 435.949 or § 435.956 of this subpart cannot be obtained electronically or the information obtained electronically is not reasonably compatible, as provided in the verification plan described in § 435.945(j) with information provided by or on behalf of the individual.
(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.
(2) If information provided by or on behalf of an individual is not reasonably compatible with information obtained through an electronic data match, the agency must seek additional information from the individual, including –
(i) A statement which reasonably explains the discrepancy; or
(ii) Other information (which may include documentation), provided that documentation from the individual is permitted only to the extent electronic data are not available and establishing a data match would not be effective, considering 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;
(iii) The agency must provide the individual a reasonable period to furnish any additional information required under paragraph (c) of this section.
(3) Exception for special circumstances. The agency must establish an exception to permit, on a case-by-case basis, self-attestation of individuals for all eligibility criteria when documentation does not exist at the time of application or renewal, or is not reasonably available, such as in the case of individuals who are homeless or have experienced domestic violence or a natural disaster. This exception does not apply if documentation is specifically required under title XI or XIX, such as requirements for verifying citizenship and immigration status, as implemented at § 435.956(a).
(d) The agency may not deny or terminate eligibility or reduce benefits for any individual on the basis of information received in accordance with regulations under § 435.940 through § 435.960 of this subpart unless the agency has sought additional information from the individual in accordance with paragraph (c) of this section, and provided proper notice and hearing rights to the individual in accordance with this subpart and subpart E of part 431.
§ 435.956 Verification of other non-financial information.
(a) Citizenship and immigration status. (1)(i) The agency must –
(A) Verify citizenship status through the electronic service established in accordance with § 435.949 or alternative mechanism authorized in accordance with § 435.945(k), if available; and
(B) Promptly attempt to resolve any inconsistencies, including typographical or other clerical errors, between information provided by the individual and information from an electronic data source, and resubmit corrected information through such electronic service or alternative mechanism.
(ii) If the agency is unable to verify citizenship status in accordance with paragraph (a)(1)(i) of this section, the agency must verify citizenship either –
(A) Through a data match with the Social Security Administration; or
(B) In accordance with § 435.407.
(2) The agency must –
(i) Verify immigration status through the electronic service established in accordance with § 435.949, or alternative mechanism authorized in accordance with § 435.945(k);
(ii) Promptly attempt to resolve any inconsistencies, including typographical or other clerical errors, between information provided by the individual and information from an electronic data source, and resubmit corrected information through such electronic service or alternative mechanism.
(3) For purposes of the exemption from the five-year waiting period described in 8 U.S.C. 1613, the agency must verify that an individual is an honorably discharged veteran or in active military duty status, or the spouse or unmarried dependent child of such person, as described in 8 U.S.C. 1612(b)(2) through the electronic service described in § 435.949 or alternative mechanism authorized in accordance with § 435.945(k). If the agency is unable to verify such status through such service the agency may accept self-attestation of such status.
(4)(i) The agency must maintain a record of having verified citizenship or immigration status for each individual, in a case record or electronic database in accordance with the State’s record retention policies in accordance with § 431.17(c) of this chapter.
(ii) Unless the individual reports a change in citizenship or the agency has received information indicating a potential change in the individual’s citizenship, the agency may not re-verify or require an individual to re-verify citizenship at a renewal of eligibility under § 435.916 of this subpart, or upon a subsequent application following a break in coverage.
(5) If the agency cannot promptly verify the citizenship or satisfactory immigration status of an individual in accordance with paragraph (a)(1) or (2) of this section, the agency –
(i) Must provide a reasonable opportunity in accordance with paragraph (b) of this section; and
(ii) May not delay, deny, reduce or terminate benefits for an individual whom the agency determines to be otherwise eligible for Medicaid during such reasonable opportunity period, in accordance with § 435.911(c).
(iii) If a reasonable opportunity period is provided, the agency may begin to furnish benefits to otherwise eligible individuals, effective the date of application, or the first day of the month of application, consistent with the agency’s election under § 435.915(b).
(b) Reasonable opportunity period. (1) The agency must provide a reasonable opportunity period to individuals who have made a declaration of citizenship or satisfactory immigration status in accordance with § 435.406(a), and for whom the agency is unable to verify citizenship or satisfactory immigration status in accordance with paragraph (a) of this section. During the reasonable opportunity period, the agency must continue efforts to complete verification of the individual’s citizenship or satisfactory immigration status, or request documentation if necessary. The agency must provide notice of such opportunity that is accessible to persons who have limited English proficiency and individuals with disabilities, consistent with § 435.905(b). During such reasonable opportunity period, the agency must, if relevant to verification of the individual’s citizenship or satisfactory immigration status –
(i) In the case of individuals declaring citizenship who do not have an SSN at the time of such declaration, assist the individual in obtaining an SSN in accordance with § 435.910, and attempt to verify the individual’s citizenship in accordance with paragraph (a)(1) of this section once an SSN has been obtained and verified;
(ii) Promptly provide the individual with information on how to contact the electronic data source described in paragraph (a) of this section so that he or she can attempt to resolve any inconsistencies defeating electronic verification directly with such source, and pursue verification of the individual’s citizenship or satisfactory immigration status if the individual or source informs the agency that the inconsistencies have been resolved; and
(iii) Provide the individual with an opportunity to provide other documentation of citizenship or satisfactory immigration status, in accordance with section 1137(d) of the Act and § 435.406 or § 435.407.
(2) The reasonable opportunity period –
(i) Begins on the date on which the notice described in paragraph (b)(1) of this section is received by the individual. The date on which the notice is received is considered to be 5 days after the date on the notice, unless the individual shows that he or she did not receive the notice within the 5-day period.
(ii)(A) Ends on the earlier of the date the agency verifies the individual’s citizenship or satisfactory immigration status or determines that the individual did not verify his or her citizenship or satisfactory immigration status in accordance with paragraph (a)(2) of this section, or 90 days after the date described in paragraph (b)(2)(i) of this section, except that,
(B) The agency may extend the reasonable opportunity period beyond 90 days for individuals declaring to be in a satisfactory immigration status if the agency determines that the individual is making a good faith effort to obtain any necessary documentation or the agency needs more time to verify the individual’s status through other available electronic data sources or to assist the individual in obtaining documents needed to verify his or her status.
(3) If, by the end of the reasonable opportunity period, the individual’s citizenship or satisfactory immigration status has not been verified in accordance with paragraph (a) of this section, the agency must take action within 30 days to terminate eligibility in accordance with part 431 subpart E (relating to notice and appeal rights) of this chapter, except that §§ 431.230 and 431.231 of this chapter (relating to maintaining and reinstating services) may be applied at State option.
(4)(i) The agency may establish in its State plan reasonable limits on the number of reasonable opportunity periods during which medical assistance is furnished which a given individual may receive once denied eligibility for Medicaid due to failure to verify citizenship or satisfactory immigration status, provided that the conditions in paragraph (b)(4)(ii) of this section are met.
(ii) Prior to implementing any limits under paragraph (b)(4)(i) of this section, the agency must –
(A) Demonstrate that the lack of limits jeopardizes program integrity; and
(B) Receive approval of a State plan amendment prior to implementing limits.
(c) State residency. (1) The agency may verify State residency in accordance with § 435.945(a) of this subpart or through other reasonable verification procedures consistent with the requirements in § 435.952 of this subpart.
(2) Evidence of immigration status may not be used to determine that an individual is not a State resident.
(d) Social Security numbers. The agency must verify Social Security numbers (SSNs) in accordance with § 435.910 of this subpart.
(e) Pregnancy. The agency must accept self-attestation of pregnancy unless the State has information that is not reasonably compatible with such attestation, subject to the requirements of § 435.952 of this subpart.
(f) Age, date of birth and household size. The agency may verify date of birth and the individuals that comprise an individual’s household, as defined in § 435.603(f) of this part, in accordance with § 435.945(a) of this subpart or through other reasonable verification procedures consistent with the requirements in § 435.952 of this subpart.
§ 435.960 Standardized formats for furnishing and obtaining information to verifying income and eligibility.
(a) The agency must maintain for all applicants and beneficiaries within an agency file the SSN, surname and other data elements in a format that at a minimum allows the agency to furnish and to obtain eligibility and income information from the agencies or programs referenced in § 435.945(b) and § 435.948(a).
(b) The format to be used will be prescribed by –
(1) CMS when the agency furnishes information to, or requests information from, any Federal or State agency, except SSA and the Internal Revenue Service as specified in paragraphs (b) (2) and (3), respectively;
(2) The Commissioner of Social Security when the agency requests information from SSA; and
(3) The Commissioner of Internal Revenue when the agency requests information from the Internal Revenue Service.
§ 435.965 Delay of effective date.
(a) If the agency submits, by May 29, 1986, a plan describing a good faith effort to come into compliance with the requirements of section 1137 of the Act and of §§ 435.910 and 435.940 through 435.960 of this subpart, the Secretary may, after consultation with the Secretary of Agriculture and the Secretary of Labor, grant a delay in the effective date of §§ 435.910 and 435.940 through 435.960, but not beyond September 30, 1986.
(b) The Secretary may not grant a delay of the effective date of section 1137(c) of the Act, which is implemented by § 435.955 (a) and (c). (The provisions of these statutory and regulation sections require the agency to follow certain procedures before taking any adverse actions based on information from the Internal Revenue Service concerning unearned income.)
Subpart K – Federal Financial Participation
§ 435.1000 Scope.
This subpart specifies when, and the extent to which, FFP is available in expenditures for determining eligibility and for Medicaid services to individuals determined eligible under this part, and prescribes limitations and conditions on FFP for those expenditures.
FFP in Expenditures for Determining Eligibility and Providing Services
§ 435.1001 FFP for administration.
(a) FFP is available in the necessary administrative costs the State incurs in –
(1) Determining and redetermining Medicaid eligibility and in providing Medicaid to eligible individuals; and
(2) Administering presumptive eligibility.
(b) Administrative costs include any costs incident to an eye examination or medical examination to determine whether an individual is blind or disabled.
§ 435.1002 FFP for services.
(a) Except for the limitations and conditions specified in §§ 435.1007, 35.1008, 435.1009, and 438.814 of this chapter, FFP is available in expenditures for Medicaid services for all beneficiaries whose coverage is required or allowed under this part.
(b) FFP is available in expenditures for services provided to beneficiaries who were eligible for Medicaid in the month in which the medical care or services were provided except that, for beneficiaries who establish eligibility for Medicaid by deducting incurred medical expenses from income, FFP is not available for expenses that are the beneficiary’s liability. (See §§ 435.915 and 436.901 of this subchapter for regulations on retroactive eligibility for Medicaid.)
(c) FFP is available in expenditures for services covered under the plan that are furnished –
(1) During a presumptive eligibility period to individuals who are determined to be presumptively eligible for Medicaid in accordance with subpart L of this part;
(2) During a period of presumptive eligibility;
(3) By a provider that is eligible for payment under the plan; and
(4) Regardless of whether such individuals file an application for a full eligibility determination or are determined eligible for Medicaid following the period of presumptive eligibility.
§ 435.1003 FFP for redeterminations.
(a) If the Social Security Administration (SSA) notifies an agency that a beneficiary has been determined ineligible for SSI, FFP is available in Medicaid expenditures for services to the beneficiary as follows:
(1) If the agency receives the SSA notice by the 10th day of the month, FFP is available under this section only through the end of the month unless the beneficiary requests a hearing under subpart E, part 431 of this subchapter.
(2) If the agency receives the SSA notice after the 10th day of the month, FFP is available only through the end of the following month, unless the beneficiary requests a hearing under subpart E, part 431 of this subchapter.
(3) If a beneficiary requests a hearing, FFP is available as specified in subpart E, part 431 of this subchapter.
(b) The agency must take prompt action to determine eligibility after receiving the SSA notice.
(c) When a change in Federal law affects the eligibility of substantial numbers of Medicaid beneficiaries, the Secretary may waive the otherwise applicable FFP requirements and redetermination time limits of this section, in order to provide a reasonable time to complete such redeterminations. The Secretary will designate an additional amount of time beyond that allowed under paragraphs (a) and (b) of this section, within which FFP will be available, to perform large numbers of redeterminations arising from a change in Federal law.
§ 435.1004 Beneficiaries overcoming certain conditions of eligibility.
(a) FFP is available, as specified in paragraph (b) of this section, in expenditures for services provided to beneficiaries who are overcoming certain eligibility conditions, including blindness, disability, continued absence or incapacity of a parent, or unemployment of a parent.
(b) FFP is available for a period not to exceed –
(1) The period during which a recipient of SSI or an optional State supplement continues to receive cash payments while these conditions are being overcome; or
(2) For beneficiaries, eligible for Medicaid only and recipients of SSI or an optional State supplement who do not continue to receive cash payments, the second month following the month in which the beneficiary’s Medicaid coverage will have been terminated.
Limitations on FFP
§ 435.1005 Beneficiaries in institutions eligible under a special income standard.
For beneficiaries in institutions whose Medicaid eligibility is based on a special income standard established under § 435.236, FFP is available in expenditures for services provided to those individuals only if their income before deductions, as determined by SSI budget methodology, does not exceed 300 percent of the SSI benefit amount payable under section 1611(b)(1) of the Act to an individual in his own home who has no income or resources.
§ 435.1006 Beneficiaries of optional State supplements only.
FFP is available in expenditures for services provided to individuals receiving optional State supplements but not receiving SSI, if their income before deductions, as determined by SSI budget methodology, does not exceed 300 percent of the SSI benefit amount payable under section 1611(b)(1) of the Act to an individual who has no income and resources.
§ 435.1007 Categorically needy, medically needy, and qualified Medicare beneficiaries.
(a) FFP is available in expenditures for covered services provided to categorically needy beneficiaries, medically needy beneficiaries, and qualified Medicare beneficiaries, subject to the restrictions contained in subpart K of this part and as provided in paragraphs (b) and (e) of this section. However, the restrictions listed in paragraphs (b) and (e) of this section do not apply to expenditures for medical assistance made on behalf of qualified Medicare beneficiaries under section 1905(p) of the Act; individuals receiving Medicaid as categorically needy under section 1902(a)(10)(A)(i) (I), (II), (III), (IV), (V), (VI), or (VII) and section 1902(a)(10)(A)(ii) (I), (IX), or (X) and section 1905(u) of the Act; individuals who are eligible to receive benefits (or would be eligible for those benefits if they were not in a medical institution); and any individuals deemed to be members of the groups identified in this sentence.
(b) Except as provided in paragraphs (c) and (d) of this section, FFP is not available in State expenditures for individuals (including the medically needy) whose annual income after deductions specified in § 435.831(a) and (c) exceeds the following amounts, rounded to the next higher multiple of $100.
(c) In the case of a family consisting only of two individuals, both of whom are adults and at least one of whom is aged, blind, or disabled, the State of California may use the amount of the AFDC payment most frequently made to a family of one adult and two children for purposes of computing the 133
(d) For purposes of paragraph (b)(1) of this section, a State that as of June 1, 1989, has in its State plan (as defined in section 2373(c)(5) of Public Law 98-369 as amended by section 9 of Public Law 100-93) an amount for individuals that was reasonably related to 133
(e) FFP is not available in expenditures for services provided to categorically needy and medically needy beneficiaries subject to the FFP limits if their annual income, after the cash assistance income deductions and any income disregards in the State plan authorized under section 1902(r)(2) of the Act are applied, exceeds the 133
(f) A State may use the less restrictive income methodologies included under its State plan as authorized under § 435.601 in determining whether a family’s income exceeds the limitation described in paragraph (b) of this section.
§ 435.1008 FFP in expenditures for medical assistance for individuals who have declared citizenship or nationality or satisfactory immigration status.
(a) This section implements sections 1137 and 1902(a)(46)(B) of the Act.
(b) Except as provided in paragraph (c) of this section, FFP is not available to a State for expenditures for medical assistance furnished to individuals unless the State has verified citizenship or immigration status in accordance with § 435.956.
(c) FFP is available to States for otherwise eligible individuals whose declaration of U.S. citizenship or satisfactory immigration status in accordance with section 1137(d) of the Act and § 435.406(c) has been verified in accordance with § 435.956, who are exempt from the requirements to verify citizenship under § 435.406(a)(1)(iii), or for whom benefits are provided during a reasonable opportunity period to verify citizenship, nationality, or satisfactory immigration status in accordance with section § 435.956(b), including the time period during which an appeal is pending if the State has elected the option under § 435.956(b)(3).
§ 435.1009 Institutionalized individuals.
(a) FFP is not available in expenditures for services provided to –
(1) Individuals who are inmates of public institutions as defined in § 435.1010; or
(2) Individuals under age 65 who are patients in an institution for mental diseases unless they are under age 22 and are receiving inpatient psychiatric services under § 440.160 of this subchapter.
(b) The exclusion of FFP described in paragraph (a) of this section does not apply during that part of the month in which the individual is not an inmate of a public institution or a patient in an institution for tuberculosis or mental diseases.
(c) An individual on conditional release or convalescent leave from an institution for mental diseases is not considered to be a patient in that institution. However, such an individual who is under age 22 and has been receiving inpatient psychiatric services under § 440.160 of this subchapter is considered to be a patient in the institution until he is unconditionally released or, if earlier, the date he reaches age 22.
§ 435.1010 Definitions relating to institutional status.
For purposes of FFP, the following definitions apply:
Active treatment in intermediate care facilities for individuals with intellectual disabilities means treatment that meets the requirements specified in the standard concerning active treatment for intermediate care facilities for persons with Intellectual Disability under § 483.440(a) of this subchapter.
Child-care institution means a nonprofit private child-care institution, or a public child-care institution that accommodates no more than twenty-five children, which is licensed by the State in which it is situated, or has been approved by the agency of the State responsible for licensing or approval of institutions of this type, as meeting the standards established for licensing. The term does not include detention facilities, forestry camps, training schools or any other facility operated primarily for the detention of children who are determined to be delinquent.
In an institution refers to an individual who is admitted to live there and receive treatment or services provided there that are appropriate to his requirements.
Inmate of a public institution means a person who is living in a public institution. An individual is not considered an inmate if –
(a) He is in a public educational or vocational training institution for purposes of securing education or vocational training; or
(b) He is in a public institution for a temporary period pending other arrangements appropriate to his needs.
Inpatient means a patient who has been admitted to a medical institution as an inpatient on recommendation of a physician or dentist and who –
(1) Receives room, board and professional services in the institution for a 24 hour period or longer, or
(2) Is expected by the institution to receive room, board and professional services in the institution for a 24 hour period or longer even though it later develops that the patient dies, is discharged or is transferred to another facility and does not actually stay in the institution for 24 hours.
Institution means an establishment that furnishes (in single or multiple facilities) food, shelter, and some treatment or services to four or more persons unrelated to the proprietor.
Institution for mental diseases means a hospital, nursing facility, or other institution of more than 16 beds that is primarily engaged in providing diagnosis, treatment or care of persons with mental diseases, including medical attention, nursing care and related services. Whether an institution is an institution for mental diseases is determined by its overall character as that of a facility established and maintained primarily for the care and treatment of individuals with mental diseases, whether or not it is licensed as such. An institution for Individuals with Intellectual Disabilities is not an institution for mental diseases.
Institution for Individuals with Intellectual Disabilities or persons with related conditions means an institution (or distinct part of an institution) that –
(a) Is primarily for the diagnosis, treatment, or rehabilitation of Individuals with Intellectual Disabilities or persons with related conditions; and
(b) Provides, in a protected residential setting, ongoing evaluation, planning, 24-hour supervision, coordination, and integration of health or rehabilitative services to help each individual function at his greatest ability.
Institution for tuberculosis means an institution that is primarily engaged in providing diagnosis, treatment, or care of persons with tuberculosis, including medical attention, nursing care, and related services. Whether an institution is an institution for tuberculosis is determined by its overall character as that of a facility established and maintained primarily for the care and treatment of tuberculosis, whether or not it is licensed as such.
Medical institution means an institution that –
(a) Is organized to provide medical care, including nursing and convalescent care;
(b) Has the necessary professional personnel, equipment, and facilities to manage the medical, nursing, and other health needs of patients on a continuing basis in accordance with accepted standards;
(c) Is authorized under State law to provide medical care; and
(d) Is staffed by professional personnel who are responsible to the institution for professional medical and nursing services. The services must include adequate and continual medical care and supervision by a physician; registered nurse or licensed practical nurse supervision and services and nurses’ aid services, sufficient to meet nursing care needs; and a physician’s guidance on the professional aspects of operating the institution.
Outpatient means a patient of an organized medical facility or distinct part of that facility who is expected by the facility to receive, and who does receive, professional services for less than a 24-hour period regardless of the hour of admission, whether or not a bed is used or whether or not the patient remains in the facility past midnight.
Patient means an individual who is receiving needed professional services that are directed by a licensed practitioner of the healing arts toward maintenance, improvement, or protection of health, or lessening of illness, disability, or pain.
Persons with related conditions means individuals who have a severe, chronic disability that meets all of the following conditions:
(a) It is attributable to –
(1) Cerebral palsy or epilepsy; or
(2) Any other condition, other than mental illness, found to be closely related to Intellectual Disability because this condition results in impairment of general intellectual functioning or adaptive behavior similar to that of mentally retarded persons, and requires treatment or services similar to those required for these persons.
(b) It is manifested before the person reaches age 22.
(c) It is likely to continue indefinitely.
(d) It results in substantial functional limitations in three or more of the following areas of major life activity:
(1) Self-care.
(2) Understanding and use of language.
(3) Learning.
(4) Mobility.
(5) Self-direction.
(6) Capacity for independent living.
Public institution means an institution that is the responsibility of a governmental unit or over which a governmental unit exercises administrative control. The term “public institution” does not include –
(a) A medical institution as defined in this section;
(b) An intermediate care facility as defined in §§ 440.140 and 440.150 of this chapter;
(c) A publicly operated community residence that serves no more than 16 residents, as defined in this section; or
(d) A child-care institution as defined in this section with respect to –
(1) Children for whom foster care maintenance payments are made under title IV-E of the Act; and
(2) Children receiving AFDC – foster care under title IV-A of the Act.
Publicly operated community residence that serves no more than 16 residents is defined in 20 CFR 416.231(b)(6)(i). A summary of that definition is repeated here for the information of readers.
(a) In general, a publicly operated community residence means –
(1) It is publicly operated as defined in 20 CFR 416.231(b)(2).
(2) It is designed or has been changed to serve no more than 16 residents and it is serving no more than 16; and
(3) It provides some services beyond food and shelter such as social services, help with personal living activities, or training in socialization and life skills. Occasional medical or remedial care may also be provided as defined in 45 CFR 228.1; and
(b) A publicly operated community residence does not include the following facilities, even though they accommodate 16 or fewer residents:
(1) Residential facilities located on the grounds of, or immediately adjacent to, any large institution or multiple purpose complex.
(2) Educational or vocational training institutions that primarily provide an approved, accredited, or recognized program to individuals residing there.
(3) Correctional or holding facilities for individuals who are prisoners, have been arrested or detained pending disposition of charges, or are held under court order as material witnesses or juveniles.
(4) Hospitals, nursing facilities, and intermediate care facilities for individuals with intellectual disabilities.
Requirements for State Supplements
§ 435.1011 Requirement for mandatory State supplements.
(a) Except as specified in paragraph (b) of this section, FFP is not available in Medicaid expenditures in any quarter in which the State does not have in effect an agreement with the Secretary under section 212 of Pub. L. 93-66 (July 9, 1973) for minimum mandatory State supplements of the basic SSI benefit.
(b) This section does not apply to any State that meets the conditions of section 212(f) of Pub. L. 93-66.
§ 435.1012 Requirement for maintenance of optional State supplement expenditures.
(a) This section applies to States that make optional State supplement payments under section 1616(a) of the Act and mandatory supplement payments under section 212(a) of Pub. L. 93-66.
(b) FFP in Medicaid expenditures is not available during any period in which the State does not have in effect an agreement with the Secretary under section 1618 of the Act to maintain its supplementary payments.
FFP for Premium Assistance
(a) FFP is available for payment of the costs of insurance premiums on behalf of an eligible individual for a health plan offered in the individual market that provides the individual with benefits for which the individual is covered under the State plan, subject to the following conditions:
(1) The insurer is obligated to pay primary to Medicaid for all health care items and services for which the insurer is legally and contractually responsible under the individual health plan, as required under part 433 subpart D of this chapter;
(2) The agency furnishes all benefits for which the individual is covered under the State plan that are not available through the individual health plan;
(3) The individual does not incur any cost sharing charges in excess of any amounts imposed by the agency under subpart A of part 447; and
(4) The total cost of purchasing such coverage, including administrative expenditures, the costs of paying all cost sharing charges in excess of the amounts imposed by the agency under subpart A of part 447, and the costs of providing benefits as required by (a)(2) of this section, must be comparable to the cost of providing direct coverage under the State plan.
(b) A State may not require an individual to receive benefits through premium assistance under this section, and a State must inform an individual that it is the individual’s choice to receive either direct coverage under the Medicaid State plan or coverage through premium assistance for an individual health plan. A State must require that an individual who elects premium assistance obtain through the insurance coverage all benefits for which the insurer is responsible and must provide the individual with information on how to access any additional benefits and cost sharing assistance not provided by the insurer.
Subpart L – Options for Coverage of Special Groups under Presumptive Eligibility
§ 435.1100 Basis for presumptive eligibility.
This subpart implements sections 1920, 1920A, 1920B, 1920C, and 1902(a)(47)(B) of the Act.
For the purposes of this subpart, the following definitions apply:
Application means, consistent with the definition at § 435.4, the single streamlined application adopted by the agency under § 435.907(a); and
Period of presumptive eligibility means a period that begins on the date on which a qualified entity determines that a child is presumptively eligible and ends with the earlier of –
(1) In the case of a child on whose behalf a Medicaid application has been filed, the day on which a decision is made on that application; or
(2) In the case of a child on whose behalf a Medicaid application has not been filed, the last day of the month following the month in which the determination of presumptive eligibility was made.
Presumptive income standard means the highest income eligibility standard established under the plan that is most likely to be used to establish the regular Medicaid eligibility of a child of the age involved.
Qualified entity means an entity that is determined by the State to be capable of making determinations of presumptive eligibility for children, and that –
(1) Furnishes health care items and services covered under the approved plan and is eligible to receive payments under the approved plan;
(2) Is authorized to determine eligibility of a child to participate in a Head Start program under the Head Start Act;
(3) Is authorized to determine eligibility of a child to receive child care services for which financial assistance is provided under the Child Care and Development Block Grant Act of 1990;
(4) Is authorized to determine eligibility of an infant or child to receive assistance under the special nutrition program for women, infants, and children (WIC) under section 17 of the Child Nutrition Act of 1966;
(5) Is authorized to determine eligibility of a child for medical assistance under the Medicaid State plan, or eligibility of a child for child health assistance under the State Children’s Health Insurance Program;
(6) Is an elementary or secondary school, as defined in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801);
(7) Is an elementary or secondary school operated or supported by the Bureau of Indian Affairs;
(8) Is a State or Tribal child support enforcement agency;
(9) Is an organization that –
(i) Provides emergency food and shelter under a grant under the Stewart B. McKinney Homeless Assistance Act;
(ii) Is a State or Tribal office or entity involved in enrollment in the program under title XIX, Part A of title IV, or title XXI; or
(iii) Determines eligibility for any assistance or benefits provided under any program of public or assisted housing that receives Federal funds, including the program under section 8 or any other section of the United States Housing Act of 1937 (42 U.S.C. 1437) or under the Native American Housing Assistance and Self Determination Act of 1996 (25 U.S.C. 4101 et seq.);
(10) Is a health facility operated by the Indian Health Service, a Tribe or Tribal organization under the Indian Self Determination and Education Assistance Act (25 U.S.C. 450 et seq.), or an Urban Indian Organization under title V of the Indian Health Care Improvement Act (25 U.S.C. 1651 et seq.).
(11) Any other entity the State so deems, as approved by the Secretary.
Services means all services covered under the plan including EPSDT (see part 440 of this chapter).
§ 435.1102 Children covered under presumptive eligibility.
(a) The agency may elect to provide Medicaid services for children under age 19 or a younger age specified by the State during a presumptive eligibility period following a determination by a qualified entity, on the basis of preliminary information, that the individual has gross income (or, at state option, a reasonable estimate of household income, as defined in § 435.603 of this part, determined using simplified methods prescribed by the agency) at or below the income standard established by the State for the age of the child under § 435.118(c) or under § 435.229 if applicable and higher.
(b) If the agency elects to provide services to children during a period of presumptive eligibility, the agency must –
(1) Provide qualified entities with application forms for Medicaid and information on how to assist parents, caretakers and other persons in completing and filing such forms;
(2) Establish procedures to ensure that qualified entities –
(i) Notify the parent or caretaker of the child at the time a determination regarding presumptive eligibility is made, in writing and orally if appropriate, of such determination;
(ii) Provide the parent or caretaker of the child with a regular Medicaid application form;
(iii) Within five working days after the date that the determination is made, notify the agency that a child is presumptively eligible;
(iv) For children determined to be presumptively eligible, notify the child’s parent or caretaker at the time the determination is made, in writing and orally if appropriate, that –
(A) If a Medicaid application on behalf of the child is not filed by the last day of the following month, the child’s presumptive eligibility will end on that last day; and
(B) If a Medicaid application on behalf of the child is filed by the last day of the following month, the child’s presumptive eligibility will end on the day that a decision is made on the Medicaid application.
(v) For children determined not to be presumptively eligible, notify the child’s parent or caretaker at the time the determination is made, in writing and orally if appropriate –
(A) Of the reason for the determination; and
(B) That he or she may file an application for Medicaid on the child’s behalf with the Medicaid agency; and
(vi) Do not delegate the authority to determine presumptive eligibility to another entity.
(3) Establish oversight mechanisms to ensure that presumptive eligibility determinations are being made consistent with the statute and regulations.
(c) The agency must adopt reasonable standards regarding the number of periods of presumptive eligibility that will be authorized for a child in a given time frame.
(d) The agency –
(1) May require, for purposes of making a presumptive eligibility determination under this section, that the individual has attested to being, or another person who attests to having reasonable knowledge of the individual’s status has attested to the individual being, a –
(i) Citizen or national of the United States or in satisfactory immigration status; or
(ii) Resident of the State; and
(2) May not –
(i) Impose other conditions for presumptive eligibility not specified in this section; or
(ii) Require verification of the conditions for presumptive eligibility.
(e) Notice and fair hearing regulations in subpart E of part 431 of this chapter do not apply to determinations of presumptive eligibility under this section.
§ 435.1103 Presumptive eligibility for other individuals.
(a) The terms of §§ 435.1101 and 435.1102 apply to pregnant women such that the agency may provide Medicaid to pregnant women during a presumptive eligibility period following a determination by a qualified entity that the pregnant woman has income at or below the income standard established by the State under § 435.116(c), except that coverage of services provided to such women is limited to ambulatory prenatal care and the number of presumptive eligibility periods that may be authorized for pregnant women is one per pregnancy.
(b) If the agency provides Medicaid during a presumptive eligibility period to children under § 435.1102 or to pregnant women under paragraph (a) of this section, the agency may also apply the terms of §§ 435.1101 and 435.1102 to the individuals described in one or more of the following sections of this part, based on the income standard established by the state for such individuals and providing the benefits covered under that section: §§ 435.110 (parents and caretaker relatives), 435.119 (individuals aged 19 or older and under age 65), 435.150 (former foster care children), and 435.218 (individuals under age 65 with income above 133 percent FPL).
(c)(1) The terms of §§ 435.1101 and 435.1102 apply to individuals who may be eligible under § 435.213 of this part (relating to individuals with breast or cervical cancer) or § 435.214 of this part (relating to eligibility for limited family planning benefits) such that the agency may provide Medicaid during a presumptive eligibility period following a determination by a qualified entity described in paragraph (c)(2) of this section that –
(i) The individual meets the eligibility requirements of § 435.213; or
(ii) The individual meets the eligibility requirements of § 435.214, except that coverage provided during a presumptive eligibility period to such individuals is limited to the services described in § 435.214(d).
(2) Qualified entities described in this paragraph include qualified entities which participate as providers under the State plan and which the agency determines are capable of making presumptive eligibility determinations.
§ 435.1110 Presumptive eligibility determined by hospitals.
(a) Basic rule. The agency must provide Medicaid during a presumptive eligibility period to individuals who are determined by a qualified hospital, on the basis of preliminary information, to be presumptively eligible subject to the same requirements as apply to the State options under §§ 435.1102 and 435.1103, but regardless of whether the agency provides Medicaid during a presumptive eligibility period under such sections.
(b) Qualified hospitals. A qualified hospital is a hospital that –
(1) Participates as a provider under the State plan or a demonstration under section 1115 of the Act, notifies the agency of its election to make presumptive eligibility determinations under this section, and agrees to make presumptive eligibility determinations consistent with State policies and procedures;
(2) At State option, assists individuals in completing and submitting the full application and understanding any documentation requirements; and
(3) Has not been disqualified by the agency in accordance with paragraph (d) of this section.
(c) State options for bases of presumptive eligibility. The agency may –
(1) Limit the determinations of presumptive eligibility which hospitals may elect to make under this section to determinations based on income for all of the populations described in §§ 435.1102 and 435.1103; or
(2) Permit hospitals to elect to make presumptive eligibility determinations on additional bases approved under the State plan or an 1115 demonstration.
(d) Disqualification of hospitals. (1) The agency may establish standards for qualified hospitals related to the proportion of individuals determined presumptively eligible for Medicaid by the hospital who:
(i) Submit a regular application, as described in § 435.907, before the end of the presumptive eligibility period; or
(ii) Are determined eligible for Medicaid by the agency based on such application.
(2) The agency must take action, including, but not limited to, disqualification of a hospital as a qualified hospital under this section, if the agency determines that the hospital is not –
(i) Making, or is not capable of making, presumptive eligibility determinations in accordance with applicable state policies and procedures; or
(ii) Meeting the standard or standards established by the agency under paragraph (d)(1) of this section.
(3) The agency may disqualify a hospital as a qualified hospital under this paragraph only after it has provided the hospital with additional training or taken other reasonable corrective action measures to address the issue.
Subpart M – Coordination of Eligibility and Enrollment Between Medicaid, CHIP, Exchanges and Other Insurance Affordability Programs
§ 435.1200 Medicaid agency responsibilities for a coordinated eligibility and enrollment process with other insurance affordability programs.
(a) Statutory basis, purpose, and definitions.
(1) Statutory basis and purpose. This section implements section 1943(b)(3) of the Act as added by section 2201 of the Affordable Care Act to ensure coordinated eligibility and enrollment among insurance affordability programs.
(2) Definitions. (i) Combined eligibility notice has the meaning as provided in § 435.4.
(ii) Coordinated content has the meaning as provided in § 435.4.
(iii) Joint fair hearing request has the meaning provided in § 431.201 of this chapter.
(b) General requirements and definitions. The State Medicaid agency must –
(1) Fulfill the responsibilities set forth in paragraphs (d) through (h) of this section and, if applicable, paragraph (c) of this section.
(2) Certify for the Exchange and other insurance affordability programs the criteria applied in determining Medicaid eligibility.
(3) Enter into and, upon request, provide to the Secretary one or more agreements with the Exchange, Exchange appeals entity and the agencies administering other insurance affordability programs as are necessary to fulfill the requirements of this section, including a clear delineation of the responsibilities of each program to –
(i) Minimize burden on individuals seeking to obtain or renew eligibility or to appeal a determination of eligibility for enrollment in a QHP or for one or more insurance affordability program;
(ii) Ensure compliance with paragraphs (d) through (h) of this section and, if applicable, paragraph (c) of this section;
(iii) Ensure prompt determinations of eligibility and enrollment in the appropriate program without undue delay, consistent with timeliness standards established under § 435.912, based on the date the application is submitted to any insurance affordability program;
(iv) Provide for a combined eligibility notice and opportunity to submit a joint fair hearing request, consistent with paragraphs (g) and (h) of this section; and
(v) If the agency has delegated authority to conduct fair hearings to the Exchange or Exchange appeals entity under § 431.10(c)(1)(ii) of this chapter, provide for a combined appeals decision by the Exchange or Exchange appeals entity for individuals who requested an appeal of an Exchange-related determination in accordance with 45 CFR part155 subpart F and a fair hearing of a denial of Medicaid eligibility which is conducted by the Exchange or Exchange appeals entity.
(c) Provision of Medicaid for individuals found eligible for Medicaid by another insurance affordability program. If the agency has entered into an agreement in accordance with § 431.10(d) of this chapter under which the Exchange or other insurance affordability program makes final determinations of Medicaid eligibility, for each individual determined so eligible by the Exchange (including as a result of a decision made by the Exchange or Exchange appeals entity in accordance with paragraph (g)(6) or (7)(i)(A) of this section) or other program, the agency must –
(1) Establish procedures to receive, via secure electronic interface, the electronic account containing the determination of Medicaid eligibility;
(2) Comply with the provisions of § 435.911 of this part to the same extent as if the application had been submitted to the Medicaid agency; and
(3) Comply with the provisions of § 431.10 of this subchapter to ensure it maintains oversight for the Medicaid program.
(d) Transfer from other insurance affordability programs to the State Medicaid agency. For individuals for whom another insurance affordability program has not made a determination of Medicaid eligibility, but who have been assessed by such program (including as a result of a decision made by the Exchange appeals entity) as potentially Medicaid eligible, and for individuals not so assessed, but who otherwise request a full determination by the Medicaid agency, the agency must –
(1) Accept, via secure electronic interface, the electronic account for the individual and notify such program of the receipt of the electronic account;
(2) Not request information or documentation from the individual in the individual’s electronic account, or provided to the agency by another insurance affordability program or appeals entity;
(3) Promptly and without undue delay, consistent with timeliness standards established under § 435.912, determine the Medicaid eligibility of the individual, in accordance with § 435.911, without requiring submission of another application and, for individuals determined not eligible for Medicaid, comply with paragraph (e) of this section as if the individual had submitted an application to the agency;
(4) Accept any finding relating to a criterion of eligibility made by such program or appeals entity, without further verification, if such finding was made in accordance with policies and procedures which are the same as those applied by the agency or approved by it in the agreement described in paragraph (b)(3) of this section; and
(5) Notify such program of the final determination of the individual’s eligibility or ineligibility for Medicaid.
(e) Evaluation of eligibility for other insurance affordability programs – (1) Individuals determined not eligible for Medicaid. For each individual who submits an application or renewal to the agency which includes sufficient information to determine Medicaid eligibility, or whose eligibility is being renewed in accordance to a change in circumstance in accordance with § 435.916(d), and whom the agency determines is not eligible 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 § 435.912, determine potential eligibility for, and, as appropriate, transfer via a secure electronic interface the individual’s electronic account to, other insurance affordability programs.
(2) Individuals undergoing a Medicaid eligibility determination on a basis other than MAGI. In the case of an individual with household income greater than the applicable MAGI standard and for whom the agency is determining eligibility in accordance with § 435.911(c)(2) of this part, the agency must promptly and without undue delay, consistent with timeliness standards established under § 435.912 of this part, determine potential eligibility for, and as appropriate transfer via secure electronic interface the individual’s electronic account to, other insurance affordability programs and provide timely notice to such other program –
(i) That the individual is not Medicaid eligible on the basis of the applicable MAGI standard, but that a final determination of Medicaid eligibility is still pending; and
(ii) Of the agency’s final determination of eligibility or ineligibility for Medicaid.
(3) The agency may enter into an agreement with the Exchange to make determinations of eligibility for enrollment in a QHP through the Exchange, advance payments of the premium tax credit and cost-sharing reductions, consistent with 45 CFR 155.110(a)(2).
(f) Internet Web site. (1) The State Medicaid agency must make available to current and prospective Medicaid applicants and beneficiaries a Web site that –
(i) Operates in conjunction with or is linked to the Web site described in § 457.340(a) of this subchapter and to the Web site established by the Exchange under 45 CFR 155.205; and
(ii) Supports applicant and beneficiary activities, including accessing information on the insurance affordability programs available in the State, applying for and renewing coverage, and other activities as appropriate.
(2) Such Web site, any interactive kiosks and other information systems established by the State to support Medicaid information and enrollment activities must be in plain language and be accessible to individuals with disabilities and persons who are limited English proficient, consistent with § 435.905(b) of this subpart.
(g) Coordination involving appeals entities. The agency must –
(1) Include in the agreement into which the agency has entered under paragraph (b)(3) of this section that, if the Exchange or other insurance affordability program provides an applicant or beneficiary with a combined eligibility notice including a determination that the individual is not eligible for Medicaid, the Exchange or Exchange appeals entity (or other insurance affordability program or other program’s appeals entity) will –
(i) Provide the applicant or beneficiary with an opportunity to submit a joint fair hearing request, including an opportunity to a request expedited review of his or her fair hearing request consistent with § 431.221(a)(1)(ii) of this chapter; and
(ii) Notify the Medicaid agency of any joint fair hearing request and transmit to the agency the electronic account of the individual who made such request, unless the fair hearing will be conducted by the Exchange or Exchange appeals entity in accordance to a delegation of authority under § 431.10(c)(1)(ii) of this chapter; and
(2) Beginning on the applicability date described in paragraph (i) of this section, establish a secure electronic interface the through which –
(i) The Exchange or Exchange appeals entity (or other insurance affordability program or appeals entity) can notify the agency that an individual has submitted a joint fair hearing request in accordance with paragraph (g)(1)(ii) of this section;
(ii) The individual’s electronic account, including any information provided by the individual as part of an appeal to either the agency or Exchange appeals entity (or other insurance affordability program or appeals entity), can be transferred from one program or appeals entity to the other; and
(iii) The agency can notify the Exchange, Exchange appeals entity (or other insurance affordability program or appeals entity) of the information described in paragraphs (g)(5)(i)(A), (B) and (C) of this section.
(3) Accept and act on a joint fair hearing request submitted to the Exchange or Exchange appeals entity and transferred to the agency as if the request for fair hearing had been submitted directly to the agency in accordance with § 431.221 of this chapter;
(4) In conducting a fair hearing in accordance with subpart E or part 431 of this chapter, minimize to the maximum extent possible, consistent with guidance issued by the Secretary, any requests for information or documentation from the individual included in the individual’s electronic account or provided to the agency by the Exchange or Exchange appeals entity.
(5)(i) In the case of individuals described in paragraph (g)(5)(ii) of this section who submit a request a fair hearing under subpart E of part 431 of this chapter to the agency or who submit a joint fair hearing request to the Exchange or Exchange appeals entity (or other insurance affordability program or appeals entity), if the fair hearing is conducted by the Medicaid agency, transmit, through the electronic interface established under paragraph (g)(1) of this section, to the Exchange, Exchange appeals entity (or other insurance affordability program or appeals entity), as appropriate and necessary to enable such other entity to fulfill its responsibilities under 45 CFR part 155, 42 CFR part 457 or 42 CFR part 600 –
(A) Notice that the individual has requested a fair hearing;
(B) Whether Medicaid benefits will be furnished pending final administrative action on such fair hearing request in accordance with § 431.230 or § 431.231 of this chapter; and
(C) The hearing decision made by the agency.
(ii) Individuals described in this paragraph include individuals determined ineligible for Medicaid –
(A) By the Exchange; or
(B) By the agency and transferred to the Exchange or other insurance affordability program in accordance with paragraph (e)(1) or (2) of this section.
(6)(i) In the case of individuals described in paragraph (g)(6)(ii) of this section, if the agency has delegated authority under § 431.10(c)(1)(i) to the Exchange to make Medicaid eligibility determinations, the agency must accept a determination of Medicaid eligibility made by the Exchange appeals entity and comply with paragraph (c) of this section in the same manner as if the determination of Medicaid eligibility had been made by the Exchange.
(ii) Individuals described in this paragraph are individuals who were determined ineligible for Medicaid by the Exchange in accordance with 45 CFR 155.305(c), who did not request a fair hearing of such determination, and whom the Exchange appeals entity determines are eligible for Medicaid in deciding an appeal requested by the individual in accordance with 45 CFR part 155 subpart F.
(7)(i) In the case of individuals described in paragraph (g)(7)(ii) of this section, the agency must either –
(A) Accept a determination of Medicaid eligibility made by the Exchange appeals entity and comply with paragraph (c) of this section in the same manner as if the determination of Medicaid eligibility had been made by the Exchange; or
(B) Accept a determination of Medicaid eligibility made by the Exchange appeals entity as an assessment of Medicaid eligibility made by the Exchange and make a determination of eligibility in accordance with paragraph (d) of this section, taking into account any additional information provided to or obtained by the Exchange appeals entity in conducting the Exchange-related appeal.
(ii) Individuals described in this paragraph are individuals who were determined ineligible for Medicaid by the Medicaid agency in accordance with paragraph (e) of the section, who did not request a fair hearing of such determination of Medicaid ineligibility, and whom the Exchange appeals entity determines are eligible for Medicaid in deciding an appeal requested by the individual in accordance with 45 CFR part 155 subpart F.
(h) Coordination of eligibility notices. The agency must –
(1) Include in the agreement into which the agency has entered under paragraph (b)(3) of this section that, to the maximum extent feasible, the agency, Exchange or other insurance affordability program will provide a combined eligibility notice, as defined in § 435.4, to individuals, as well as to multiple members of the same household included on the same application or renewal form.
(2) For individuals and other household members who will not receive a combined eligibility notice, include appropriate coordinated content, as defined in § 435.4, in any notice provided by the agency in accordance with § 435.917.
(3) For individuals determined ineligible for Medicaid based on having household income above the applicable MAGI standard, but who are undergoing a Medicaid eligibility determination on a basis other than MAGI in accordance with (e)(2) of this section, the agency must –
(i) Provide notice to the individual, consistent with § 435.917 –
(A) That the agency –
(1) Has determined the individual ineligible for Medicaid due to household income over the applicable MAGI standard; and
(2) Is continuing to evaluate Medicaid eligibility on other bases, including a plain language explanation of the other bases being considered.
(B) Include in such notice coordinated content that the agency has transferred the individual’s electronic account to the other insurance affordability program (as required under paragraph (e)(2) of this section) and an explanation that eligibility for or enrollment in such other program will not affect the determination of Medicaid eligibility on a non-MAGI basis; and
(i) Provide the individual with notice, consistent with § 435.917, of the final determination of eligibility on all bases, including coordinated content regarding, as applicable –
(A) The notice being provided to the Exchange or other program in accordance with paragraph (e)(2)(ii) of this section;
(B) Any impact that approval of Medicaid eligibility may have on the individual’s eligibility for such other program; and
(C) The transfer of the individual’s electronic account to the Exchange in accordance with paragraph (e)(1) of this section.
(i) Notice of applicability date. The date described in this paragraph is 6 months from the date of a published
§ 435.1205 Alignment with exchange initial open enrollment period.
(a) Definitions. For purposes of this section –
Eligibility based on MAGI means Medicaid eligibility based on the eligibility requirements which will be effective under the State plan, or waiver of such plan, as of January 1, 2014, consistent with §§ 435.110 through 435.119, 435.218 and 435.603.
(b) Medicaid agency responsibilities to achieve coordinated open enrollment. For the period beginning October 1, 2013 through December 31, 2013, the agency must
(1) Accept all of the following:
(i) The single streamlined application described in § 435.907.
(ii) Via secure electronic interface, an electronic account transferred from another insurance affordability program.
(2) For eligibility based on MAGI, comply with the terms of § 435.1200 of this part, such that –
(i) For each electronic account transferred to the agency under paragraph (c)(1)(ii) of this section, the agency consistent with either of the following:
(A) Section 435.1200(c), accepts a determination of Medicaid eligibility based on MAGI, made by another insurance affordability program.
(B) Section 435.1200(d), determines eligibility for Medicaid based on MAGI.
(ii) Consistent with § 435.1200(e), for each single streamlined application submitted directly to the agency under paragraph (b)(1)(i) of this section –
(A) Determine eligibility based on MAGI; and
(B) For each individual determined not Medicaid eligible based on MAGI, determine potential eligibility for other insurance affordability programs, based on the requirements which will be effective for each program, and transfer the individual’s electronic account to such program via secure electronic interface.
(iii) Provide notice and fair hearing rights, in accordance with § 435.917 of this part, part 431 subpart E of this chapter, and § 435.1200 for those determined ineligible for Medicaid.
(3) For each individual determined eligible based on MAGI in accordance with paragraph (c)(2) of this section –
(i) Provide notice, including the effective date of eligibility, to such individual, consistent with § 435.917 of this part, and furnish Medicaid.
(ii) Apply the terms of § 435.916 (relating to beneficiary responsibility to inform the agency of any changes in circumstances that may affect eligibility) and § 435.952 (regarding use of information received by the agency). The first renewal under § 435.916 of this part may, at State option, be scheduled to occur anytime between 12 months from the date of application and 12 months from January 1, 2014.
(4) For eligibility effective in 2013, for all applicants –
(i) Consistent with the requirements of subpart J of this part, and applying the eligibility requirements in effect under the State plan, or waiver of such plan, as of the date the individual submits an application to any insurance affordability program –
(A) Determine the individual’s eligibility based on the information provided on the application or in the electronic account; or
(B) Request additional information from the individual needed by the agency to determine eligibility based on the eligibility requirements in effect on such date, including on a basis excepted from application of MAGI-based methods, as described in § 435.603, and determine such eligibility if such information is provided; and
(C) Furnish Medicaid to individuals determined eligible under this clause or provide notice and fair hearing rights in accordance with part 431 subpart E of this part if eligibility effective in 2013 is denied; or
(ii) Notify the individual of the opportunity to submit a separate application for coverage effective in 2013 and information on how to obtain and submit such application.
PART 436 – ELIGIBILITY IN GUAM, PUERTO RICO, AND THE VIRGIN ISLANDS
Subpart A – General Provisions and Definitions
§ 436.1 Purpose and applicability.
This part sets forth, for Guam, Puerto Rico, and the Virgin Islands –
(a) The eligibility provisions that a State plan must contain;
(b) The mandatory and optional groups of individuals to whom Medicaid is provided under a State plan;
(c) The eligibility requirements and procedures that a Medicaid agency must use in determining and redetermining eligibility, and requirements it may not use; and
(d) The availability of FFP for providing Medicaid and for administering the eligibility provisions of the plan.
§ 436.2 Basis.
This part implements the following sections of the Act and public laws that state requirements and standards for eligibility:
Age requirements of more than 65 years;
State residence requirements excluding individuals who reside in the State; and
Citizenship requirement excluding United States citizens.
§ 436.3 Definitions and use of terms.
As used in this part –
AABD means aid to the aged, blind, and disabled under title XVI of the Act;
AB means aid to the blind under title X of the Act;
AFDC means aid to families with dependent children under title IV-A of the Act;
APTD means aid to the permanently and totally disabled under title XIV of the Act;
Categorically needy refers to families and children, aged, blind or disabled individuals, and pregnant women listed under subparts B and C of this part who are eligible for Medicaid. Subpart B of this part describes the mandatory eligibility groups who, generally, are receiving or deemed to be receiving cash assistance under the Act. These mandatory groups are specified in sections 1902(a)(10)(A)(i) and 1902(e) of the Act. Subpart C of this part describes the optional eligibility groups of individuals who, generally, meet the categorical requirements that are the same as or less restrictive than those of the cash assistance programs but are not receiving cash payments. These optional groups are specified in sections 1902(a)(10)(A)(ii) and 1902(e) of the Act.
Families and children refers to eligible members of families with children who are financially eligible under AFDC or medically needy rules and who are deprived of parental support or care as defined under the AFDC program (see 45 CFR 233.90; 233.100). In addition, this group includes individuals under age 21 who are not deprived of parental support or care but who are financially eligible under AFDC or medically needy rules (see optional coverage group, § 436.222);
Medically needy means families, children, aged, blind, or disabled individuals, and pregnant women listed in subpart D of this part who are not listed in subparts B and C of this part as categorically needy but who may be eligible for Medicaid under this part because their income and resources are within limits set by the State under its Medicaid plan (including persons whose income and resources fall within these limits after their incurred expenses for medical or remedial care are deducted). (Specific financial requirements for determining eligibility of the medically needy appear in subpart I of this part.)
OAA means old age assistance under title I of the Act;
OASDI means old age, survivors, and disability insurance under Title II of the Act.
Optional targeted low-income child means a child under age 19 who meets the financial and categorical standards described below.
(1) Financial need. An optional targeted low-income child:
(i) Has a family income at or below 200 percent of the Federal poverty line for a family of the size involved;
(ii) Resides in a State with no Medicaid applicable income level (as defined in § 457.10 of this chapter); or,
(iii) Resides in a State that has a Medicaid applicable income level (as defined in § 457.10) and has family income that either:
(A) Exceeds the Medicaid applicable income level for the age of such child, but not by more than 50 percentage points (expressed as a percentage of the Federal poverty line); or
(B) Does not exceed the income level specified for such child to be eligible for medical assistance under the policies of the State plan under title XIX on June 1, 1997.
(2) No other coverage and State maintenance of effort. An optional targeted low-income child is not covered under a group health plan or health insurance coverage, or would not be eligible for Medicaid under the policies of the State plan in effect on March 31, 1997; except that, for purposes of this standard –
(i) A child shall not be considered to be covered by health insurance coverage based on coverage offered by the State under a program in operation prior to July 1, 1997 if that program received no Federal financial participation;
(ii) A child shall not be considered to be covered under a group health plan or health insurance coverage if the child did not have reasonable geographic access to care under that coverage.
(3) For purposes of this section, policies of the State plan under title XIX plan include policies under a Statewide demonstration project under section 1115(a) of the Act other than a demonstration project that covered an expanded group of eligible children but that either –
(i) Did not provide inpatient hospital coverage; or
(ii) Limited eligibility to children previously enrolled in Medicaid, imposed premiums as a condition of initial or continued enrollment, and did not impose a general time limit on eligibility.
§ 436.10 State plan requirements.
A State plan must –
(a) Provide that the requirements of this part are met; and
(b) Specify the groups to whom Medicaid is provided, as specified in subparts B, C, and D of this part, and the conditions of eligibility for individuals in those groups.
Subpart B – Mandatory Coverage of the Categorically Needy
§ 436.100 Scope.
This subpart prescribes requirements for coverage of categorically needy individuals.
§ 436.110 Individuals receiving cash assistance.
(a) A Medicaid agency must provide Medicaid to individuals receiving cash assistance under OAA, AFDC, AB, APTD, or AABD.
(b) For purposes of this section, an individual is receiving cash assistance if his needs are considered in determining the amount of the payment. This includes an individual whose presence in the home is considered essential to the well-being of a beneficiary under the State’s plan for OAA, AFDC, AB, APTD, or AABD if that plan were as broad as allowed under the Act for FFP.
§ 436.111 Individuals who are not eligible for cash assistance because of a requirement not applicable under Medicaid.
(a) The agency must provide Medicaid to individuals who would be eligible for OAA, AB, APTD, or AABD except for an eligibility requirement used in those programs that is specifically prohibited under title XIX of the Act.
(b) The agency also must provide Medicaid to:
(1) Individuals denied AFDC solely because of policies requiring the deeming of income and resources of the following individuals who are not included as financially responsible relatives under section 1902(a)(17)(D) of the Act:
(i) Stepparents who are not legally liable for support of stepchildren under a State law of general applicability;
(ii) Grandparents
(iii) Legal guardians;
(iv) Aliens sponsors who are not organizations; and
(v) Siblings.
(2) [Reserved]
§ 436.112 Individuals who would be eligible for cash assistance except for increased OASDI under Pub. L. 92-336 (July 1, 1972).
The agency must provide Medicaid to individuals who meet the following conditions:
(a) In August 1972, the individual was entitled to OASDI and –
(1) He was receiving cash assistance; or
(2) He would have been eligible for cash assistance if he had applied, and the Medicaid plan covered this optional group; or
(3) He would have been eligible for cash assistance if he were not in a medical institution or intermediate care facility, and the Medicaid plan covered this optional group.
(b) The individual would currently be eligible for cash assistance except that the increase in OASDI under Pub. L. 92-336 raised his income over the limit allowed under the cash assistance program. This includes an individual who –
(1) Meets all current requirements for cash assistance except for the requirement to file an application; or
(2) Would meet all current requirements for cash assistance if he were not in a medical institution or intermediate care facility, and the Medicaid plan covers this optional group.
§ 436.114 Individuals deemed to be receiving AFDC.
(a) The Medicaid agency must provide Medicaid to individuals deemed to be receiving AFDC, as specified in this section.
(b) The State must deem individuals to be receiving AFDC who are denied a cash payment from the title IV-A State agency solely because the amount of the AFDC payment would be less than $10.
(c) The State may deem participants in a work supplementation program to be receiving AFDC under section 414(g) of the Act. This section permits States, for purposes of title XIX, to deem an individual and any child or relative of the individual (or other individual living in the same household) to be receiving AFDC, if the individual –
(1) Participates in a State-operated work supplementation program under section 414 of the Act; and
(2) Would be eligible for an AFDC cash payment if the individual were not participating in the work supplementation program.
(d) The State must deem to be receiving AFDC those individuals who are denied AFDC payments from the title IV-A State agency solely because that agency is recovering an overpayment.
(e) The State must deem to be receiving AFDC individuals described in section 473(a)(1) of the Act –
(1) For whom an adoption assistance agreement is in effect under title IV-E of the Act, whether or not adoption assistance is being provided or an interlocutory or other judicial decree of adoption has been issued; or
(2) For whom foster care maintenance payments are made under title IV-E of the Act.
(f) The State must deem an individual to be receiving AFDC if a new collection or increased collection of child or spousal support under title IV-D of the Social Security Act results in the termination of AFDC eligibility in accordance with section 406(h) of the Social Security Act. States must continue to provide Medicaid for four consecutive calendar months, beginning with the first month of AFDC ineligibility, to each dependent child and each relative with whom such a child is living (including the eligible spouse of such relative as described in section 406(b) of the Social Security Act) who:
(1) Becomes ineligible for AFDC on or after August 16, 1984; and
(2) Has received AFDC for at least three of the six months immediately preceding the month in which the individual becomes ineligible for AFDC; and
(3) Becomes ineligible for AFDC wholly or partly as a result of the initiation of or an increase in the amount of a child or spousal support collection under title IV-D.
(g)(1) Except as provided in paragraph (g)(2) of this section, individuals who are eligible for extended Medicaid lose this coverage if they move to another State during the 4-month period. However, if they move back to and reestablish residence in the State in which they have extended coverage, they are eligible for any of the months remaining in the 4-month period in which they are residents of the State.
(2) If a State has chosen in its State plan to provide Medicaid to non-residents, the State may continue to provide the 4-month extended benefits to individuals who have moved to another State.
(h) For purposes of paragraph (f) of this section:
(1) The new collection or increased collection of child or spousal support results in the termination of AFDC eligibility when it actively causes or contributes to the termination. This occurs when:
(i) The change in support collection in and of itself is sufficient to cause ineligibility. This rule applies even if the support collection must be added to other, stable income. It also applies even if other independent factors, alone or in combination with each other, might simultaneously cause ineligibility; or
(ii) The change in support contributes to ineligibility but does not by itself cause ineligibility. Ineligibility must result when the change in support is combined with other changes in income or changes in other circumstances and the other changes in income or circumstances cannot alone or in combination result in termination without the change in support.
(2) In cases of increases in the amounts of both the support collections and earned income, eligibility under this section does not preclude eligibility under 45 CFR 233.20(a)(14) or section 1925 of the Social Security Act (which was added by section 303(a) of the Family Support Act of 1988 (42 U.S.C. 1396r-6)). Extended periods resulting from both an increase in the amount of the support collection and from an increase in earned income must run concurrently.
§ 436.116 Families terminated from AFDC because of increased earnings or hours of employment.
(a) If a family loses AFDC solely because of increased income from employment or increased hours of employment, the agency must continue to provide Medicaid for 4 months to all members of the family if –
(1) The family received AFDC in any 3 or more months during the 6-month period immediately before the month in which it became ineligible for AFDC; and
(2) At least one member of the family is employed throughout the 4-month period, although this need not be the same member for the whole period.
(b) The 4 calendar month period begins on the date AFDC is terminated. If AFDC benefits are terminated retroactively, the 4 calendar month period also begins retroactively with the first month in which AFDC was erroneously paid.
§ 436.118 Children for whom adoption assistance or foster care maintenance payments are made.
The agency must provide Medicaid to children for whom adoption assistance or foster care maintenance payments are made under title IV-E of the Act.
§ 436.120 Qualified pregnant women and children who are not qualified family members.
(a) The Medicaid agency must provide Medicaid to a pregnant woman whose pregnancy has been medically verified and who –
(1) Would be eligible for an AFDC cash payment (or would be eligible for an AFDC cash payment if coverage under the State’s AFDC plan included the AFDC-unemployed parents program) if her child had been born and was living with her in the month of payment;
(2) Is a member of a family that would be eligible for an AFDC cash payment if the State’s AFDC plan included an AFDC-unemployed parents program; or
(3) Meets the income and resource requirements of the State’s approved AFDC plan. In determining whether the woman meets the AFDC income and resource requirements, the unborn child or children are considered members of the household, and the woman’s family is treated as though deprivation exists.
(b) The provisions of paragraphs (a) (1) and (2) of this section are effective October 1, 1984. The provisions of paragraph (a)(3) of this section are effective July 1, 1986.
(c) The agency must provide Medicaid to children who meet all of the following criteria:
(1) They are born after September 30, 1983;
(2) Effective October 1, 1988, they are under age 6 (or if designated by the State, any age that exceeds age 6 but does not exceed age 8), and effective October 1, 1989 they are under age 7 (or if designated by the State, any age that exceeds age 7 but does not exceed age 8); and
(3) They meet the income and resource requirements of the State’s approved AFDC plan.
§ 436.121 Qualified family members.
(a) Definition. A qualified family member is any member of a family, including pregnant women and children eligible for Medicaid under § 436.120 of this subpart, who would be receiving AFDC cash benefits on the basis of the unemployment of the principal wage earner under section 407 of the Act had the State not chosen to place time limits on those benefits as permitted under section 407(b)(2)(B)(i) of the Act.
(b) State plan requirement. The State plan must provide that the State makes Medicaid available to any individual who meets the definition of “qualified family member” as specified in paragraph (a) of this section.
(c) Applicability. The provisions in this section are applicable from October 1, 1992, through September 30, 1998.
§ 436.122 Pregnant women eligible for extended coverage.
(a) The Medicaid agency must provide categorically needy Medicaid eligibility for an extended period following termination of pregnancy to women who, while pregnant, applied for, were eligible for, and received Medicaid services on the day that their pregnancy ends. This period extends from the last day of pregnancy through the end of the month in which a 60-day period, beginning on the last day of the pregnancy, ends. Eligibility must be provided, regardless of changes in the woman’s financial circumstances that may occur within this extended period. These pregnant women are eligible for the extended period for all services under the plan that are pregnancy-related (as defined in § 440.210(c)(1) of this subchapter).
(b) The provisions of paragraph (a) of this section apply to Medicaid furnished on or after April 7, 1986.
§ 436.124 Newborn children.
(a) The agency must provide Medicaid eligibility to a child born to a woman who has applied for, has been determined eligible and is receiving Medicaid on the date of the child’s birth. The child is deemed to have applied and been found eligible for Medicaid on the date of birth and remains eligible for one year so long as the woman remains (or would remain if pregnant) eligible and the child is a member of the woman’s household. This provision applies in instances where the labor and delivery services were furnished prior to the date of application and covered by Medicaid based on retroactive eligibility.
(b) The agency must provide Medicaid eligibility in the same manner described in paragraph (a) of this section to a child born to an otherwise-eligible qualified alien woman subject to the 5-year bar so long as the woman has filed a complete Medicaid application, including but not limited to meeting residency, income and resource requirements, has been determined eligible, is receiving Medicaid on the date of the child’s birth, and remains (or would remain if pregnant) Medicaid eligible. All standard Medicaid application procedures apply, including timely determination of eligibility and adequate notice of the agency’s decision concerning eligibility. A 5-year bar qualified alien receiving emergency medical services only under § 435.139 of this chapter is considered to be Medicaid-eligible and receiving Medicaid for purposes of this provision. With respect to whether the mother remains (or would remain if pregnant) eligible for Medicaid after the birth of the child, the State must determine whether a 5-year bar qualified alien would remain eligible for emergency services under § 435.139 of this chapter. In determining whether the woman would remain eligible for these services, the State must consider whether the woman would remain eligible if pregnant. This provision applies in instances where the labor and delivery services were furnished prior to the date of application and covered by Medicaid based on retroactive eligibility.
(c) The agency must provide Medicaid eligibility in the same manner described in paragraph (a) of this section to a child born to an otherwise-eligible non-qualified alien woman so long as the woman has filed a complete Medicaid application (other than providing a social security number or demonstrating immigration status), including but not limited to meeting residency, income and resource requirements, has been determined eligible, is receiving Medicaid on the date of the child’s birth, and remains (or would remain if pregnant) Medicaid eligible. All standard Medicaid application procedures apply, including timely determination of eligibility and adequate notice of the agency’s decision concerning eligibility. A non-qualified alien receiving emergency medical services only under § 435.139 of this chapter is considered to be Medicaid-eligible and receiving Medicaid for purposes of this provision. With respect to whether the mother remains (or would remain if pregnant) eligible for Medicaid after the birth of the child, the State must determine whether a non-qualified alien would remain eligible for emergency services under § 435.139 of this chapter. In determining whether the woman would remain eligible for these services, the State must consider whether the woman would remain eligible if pregnant. This provision applies in instances where the labor and delivery services were furnished prior to the date of application and covered by Medicaid based on retroactive eligibility.
(d) A redetermination of eligibility must be completed on behalf of the children described in this provision in accordance with the procedures at § 435.916. At that time, the State must collect documentary evidence of citizenship and identity as required under § 436.406.
§ 436.128 Coverage for certain qualified aliens.
The agency must provide the services necessary for the treatment of an emergency medical condition as defined in § 440.255(c) of this chapter to those aliens described in § 436.406(c) of this subpart.
Subpart C – Options for Coverage as Categorically Needy
§ 436.200 Scope.
This subpart specifies options for coverage of individuals as categorically needy.
§ 436.201 Individuals included in optional groups.
(a) The agency may choose to cover as optional categorically needy any group or groups of the following individuals who are not receiving cash assistance and who meet the appropriate eligibility criteria for groups specified in the separate sections of this subpart:
(1) Aged individuals (65 years of age or older);
(2) Blind individuals (as defined in § 436.530);
(3) Disabled individuals (as defined in § 436.541);
(4) Individuals under age 21 (or, at State option), under age 20, 19, or 18) or reasonable classifications of these individuals;
(5) Specified relatives under section 406(b)(1) of the Act who have in their care an individual who is determined to be dependent) as specified in § 436.510;
(6) Pregnant women; and
(7) Essential spouses specified under § 436.230.
(b) If the agency provides Medicaid to any individual in an optional group specified in paragraph (a) of this section, the agency must provide Medicaid to all individuals who apply and are found eligible to be members of that group.
Options for Coverage of Families and Children and Aged, Blind, and Disabled Individuals, Including Pregnant Women
§ 436.210 Individuals who meet the income and resource requirements of the cash assistance programs.
The agency may provide Medicaid to any group or groups of individuals specified under § 436.201(a)(1), (a)(2), (a)(3), (a)(5), and (a)(6) who are not mandatory categorically needy and who meet the income and resource requirements of the appropriate cash assistance program for their status (that is, OAA, AFDC, AB, APTD, or AABD).
§ 436.211 Individuals who would be eligible for cash assistance if they were not in medical institutions.
The agency may provide Medicaid to any group or groups of individuals specified in § 436.201(a) who are in title XIX reimbursable medical institutions and who:
(a) Are ineligible for the cash assistance program appropriate for their status (that is, OAA, AFDC, AB, APTD, or AABD) because of lower income standards used under the program to determine eligibility for institutionalized individuals; but
(b) Would be eligible for aid or assistance under the State’s approved plan under OAA, AFDC, AB, APTD, or AABD if they were not institutionalized.
§ 436.212 Individuals who would be eligible for cash assistance if the State plan for OAA, AFDC, AB, APTD, or AABD were as broad as allowed under the Act.
(a) The agency may provide Medicaid to any group or groups of individuals specified under § 436.201(a) who:
(1) Would be eligible for OAA, AFDC, AB, APTD, or AABD if the State’s plan under those programs included individuals whose coverage under title I, IV-A, X, XIV, or XVI of the Act is optional (for example, the agency may provide Medicaid to individuals who are 18 years of age and who are attending secondary school full-time and are expected to complete their education before age 19, even though the State’s AFDC plan does not include them); or
(2) Would qualify for OAA, AFDC, AB, APTD, or AABD if the State’s plan under those programs did not contain eligibility requirements more restrictive than, or in addition to, those required under the appropriate title of the Act. (For example, the agency may provide Medicaid to individuals who would meet the Federal definition of disability, 45 CFR 233.80, but who do not meet the State’s more restrictive definitions.)
(b) The agency may cover one or more optional groups under any of the titles of the Act without covering all such groups.
§ 436.217 Individuals receiving home and community-based services.
The agency may provide Medicaid to any group or groups of individuals in the community who meet the following requirements:
(a) The group would be eligible for Medicaid if institutionalized.
(b) In the absence of home and community-based services under a waiver granted under part 441 –
(1) Subpart G of this subchapter, the group would otherwise require the level of care furnished in a hospital, NF, or an ICF/IID; or
(2) Subpart H of this subchapter, the group would otherwise require the level of care furnished in a NF and are age 65 or older.
(c) The group receives the waivered services.
§ 436.219 Individuals receiving State plan home and community-based services.
If the agency provides State plan home and community-based services to individuals described in section 1915(i)(1) of the Act, the agency, under its State plan, may, in addition, provide Medicaid to of individuals in the community who are described in one or both of paragraphs (a) or (b) of this section.
(a) Individuals who –
(1) Are not otherwise eligible for Medicaid;
(2) Have income that does not exceed 150 percent of the Federal poverty line (FPL);
(3) Meet the needs-based criteria under § 441.715 of this chapter; and
(4) Will receive State plan home and community-based services as defined in § 440.182 of this chapter.
(b) Individuals who –
(1) Would be determined eligible by the agency under an existing waiver or demonstration project under sections 1915(c), 1915(d), 1915(e) or 1115 of the Act, but are not required to receive services under such waivers or demonstration projects;
(2) Have income that does not exceed 300 percent of the Supplemental Security Income Federal Benefit Rate (SSI/FBR); and
(3) Will receive State plan home and community-based services as defined in § 440.182 of this chapter.
(c) For purposes of determining eligibility under paragraph (a) of this section, the agency may not take into account an individual’s resources and must use income standards that are reasonable, consistent with the objectives of the Medicaid program, simple to administer, and in the best interests of the beneficiary. Income methodologies may include use of existing income methodologies, such as the rules of the OAA, AB, APTD or AABD programs. However, subject to the Secretary’s approval, the agency may use other income methodologies that meet the requirements of this paragraph.
§ 436.220 Individuals who would meet the income and resource requirements under AFDC if child care costs were paid from earnings.
(a) The agency may provide Medicaid to any group or groups of individuals specified under § 436.201(a)(4), (a)(5), and (a)(6) who would meet the income and resource requirements under the State’s AFDC plan if their work-related child care costs were paid from their earnings rather than by a State agency as a service expenditure.
(b) The agency may use this option only if the State’s AFDC plan deducts work-related child care costs from income to determine the amount of AFDC.
§ 436.222 Individuals under age 21 who meet the income and resource requirements of AFDC.
(a) The agency may provide Medicaid to individuals under age 21 (or at State option, under age 20, 19, or 18) or reasonable categories of these individuals as specified in paragraph (b) of this section, who are not receiving cash assistance but who meet the income and resource requirements of the State’s approved AFDC plan.
(b) The agency may cover all individuals described in paragraph (a) of this section or reasonable classifications of those individuals. Examples of reasonable classifications are as follows:
(1) Individuals in foster homes or private institutions for whom a public agency is assuming a full or partial financial responsibility. If the agency covers these individuals, it may also provide Medicaid to individuals of the same age in foster homes or private institutions by private nonprofit agencies.
(2) Individuals in adoptions subsidized in full or in part by a public agency.
(3) Individuals in nursing facilities when nursing facility services are provided under the plan to individuals within the age group selected under this provision. If the agency covers these individuals, it may also provide Medicaid to individuals in intermediate care facilities for individuals with intellectual disabilities.
(4) Individuals receiving active treatment as inpatients in psychiatric facilities or programs, if inpatient psychiatric services for individuals under 21 are provided under the plan.
§ 436.224 Individuals under age 21 who are under State adoption assistance agreements.
(a) The agency may provide Medicaid to individuals under the age of 21 (or, at State option, age 20, 19, or 18) –
(1) For whom an adoption agreement (other than an agreement under title IV-E) between the State and adoptive parent(s) is in effect;
(2) Who, the State agency responsible for adoption assistance has determined, cannot be placed with adoptive parents without Medicaid because the child has special needs for medical or rehabilitative care; and
(3) Who meet either of the following:
(i) Were eligible for Medicaid under the State plan before the adoption agreement was entered into; or
(ii) Would have been eligible for Medicaid before the adoption agreement was entered into, if the eligibility standards and methodologies of the foster care program were used without employing the threshold title IV-A eligibility determination.
(b) For adoption assistance agreements entered into before April 7, 1986 –
(1) The agency must deem the requirements of paragraph (a)(1) and (2) of this section to be met if the State adoption assistance agency determines that –
(i) At the time of the adoption placement, the child had special needs for medical or rehabilitative care that made the child difficult to place; and
(ii) There is in effect an adoption assistance agreement between the State and the adoptive parent(s).
(2) The agency must deem the requirements of paragraph (a)(3) of this section to be met if the child was found by the State to be eligible for Medicaid before the adoption assistance agreement was entered into.
§ 436.229 Optional targeted low-income children.
The agency may provide Medicaid to –
(a) All individuals under age 19 who are optional targeted low-income children as defined in § 436.3; or
(b) Reasonable categories of these individuals.
Options for Coverage of the Aged, Blind, and Disabled
§ 436.230 Essential spouses of aged, blind, or disabled individuals receiving cash assistance.
The agency may provide Medicaid to the spouse of an individual receiving OAA, AB, APTD, or AABD, if –
(a) The spouse is living with the individual receiving cash assistance;
(b) The cash assistance agency has determined that the spouse is essential to the well-being of the individual and has considered the spouse’s needs in determining the amount of cash assistance provided to the individual.
Subpart D – Optional Coverage of the Medically Needy
§ 436.300 Scope.
This subpart specifies the option for coverage of medically needy individuals.
§ 436.301 General rules.
(a) A Medicaid agency may provide Medicaid to individuals specified in this subpart who:
(1) Either:
(i) Have income that meets the standard in § 436.811; or
(ii) If their income is more than allowed under the standard, have incurred medical expenses at least equal to the difference between their income and the applicable income standards; and
(2) Have resources that meet the standard in §§ 436.840 and 436.843.
(b) If the agency chooses this option, the following provisions apply:
(1) The agency must provide Medicaid to the following individuals who meet the requirements of paragraph (a) of this section:
(i) All pregnant women during the course of their pregnancy who, except for income and resources, would be eligible for Medicaid as mandatory or optional categorically needy under subparts B and C of this part;
(ii) All individuals under 18 years of age who, except for income and resources, would be eligible for Medicaid as mandatory categorically needy under subpart B of this part;
(iii) All newborn children born on or after October 1, 1984, to a woman who is eligible as medically needy and receiving Medicaid on the date of the child’s birth. The child is deemed to have applied and been found eligible for Medicaid on the date of birth and remains eligible as medically needy for ne year so long as the woman remains eligible and the child is a member of the woman’s household. If the woman’s basis of eligibility changes to categorically needy, the child is eligible as categorically needy under § 436.124. The woman is considered to remain eligible if she meets the spend-down requirements in any consecutive budget period following the birth of the child.
(iv) Women who, while pregnant, applied for, were eligible for, and received Medicaid services as medically needed on the day that their pregnancy ends. The agency must provide medically needy eligibility to these women for an extended period following termination of pregnancy. This period begins on the last day of the pregnancy and extends through the end of the month in which a 60-day period following termination of pregnancy ends. Eligibility must be provided, regardless of changes in the women’s financial circumstances that may occur within this extended period. These women are eligible for the extended period for all services under the plan that are pregnancy-related (as defined in § 440.210(c)(1) of this subchapter).
(2) The agency may provide Medicaid to any or all of the following groups of individuals:
(i) Individuals under age 21 (§ 436.308).
(ii) Specified relatives (§ 436.310).
(iii) Aged (§ 436.320).
(iv) Blind (§ 436.321).
(v) Disabled (§ 436.322).
(3) If the agency provides Medicaid to any individual in a group specified in paragraph (b)(2) of this section, the agency must provide Medicaid to all individuals eligible to be members of that group.
§ 436.308 Medically needy coverage of individuals under age 21.
(a) If the agency provides Medicaid to the medically needy, it may provide Medicaid to individuals under age 21 (or at State option, under age 20, 19, or 18) as specified in paragraph (b) of this section:
(1) Who would not be covered under the mandatory medically needy group of individuals under 18 under § 436.301(b)(1)(ii); and
(2) Who meet the income and resource requirements of subpart I of this part.
(b) The agency may cover all individuals in paragraph (a) of this section or individuals in reasonable classifications. Examples of reasonable classifications are as follows:
(1) Individuals in foster homes or private institutions for whom a public agency is assuming a full or partial financial responsibility. If the agency covers these individuals, it may also provide Medicaid to individuals placed in foster homes or private institutions by private nonprofit agencies.
(2) Individuals in adoptions subsidized in full or in part by a public agency.
(3) Individuals in nursing facilities when nursing facility services are provided under the plan to individuals within the age group selected under this provision. When the agency covers such individuals, it may also provide Medicaid to individuals in intermediate care facilities for individuals with intellectual disabilities.
(4) Individuals receiving active treatment as inpatients in psychiatric facilities or programs, if inpatient psychiatric services for individuals under 21 are provided under the plan.
§ 436.310 Medically needy coverage of specified relatives.
(a) If the agency provides for the medically needy, it may provide Medicaid to specified relatives, defined in paragraph (b) of this section, who meet the income and resource requirements of subpart I of this part.
(b) Specified relatives means individuals who:
(1) Are listed under section 406(b)(1) of the Act and in 45 CFR 233.90(c)(1)(v)(A); and
(2) Have in their care an individual who is determined to be (or would, if needy, be) dependent, as specified in § 436.510.
§ 436.320 Medically needy coverage of the aged.
If the agency provides Medicaid to the medically needy, it may provide Medicaid to individuals who –
(a) Are 65 years of age and older, as provided for in § 436.520; and
(b) Meet the income and resource requirements of subpart I of this part.
§ 436.321 Medically needy coverage of the blind.
If the agency provides Medicaid to the medically needy, it may provide Medicaid to blind individuals who meet –
(a) The requirements for blindness, as specified in §§ 436.530 and 436.531; and
(b) The income and resource requirements of subpart I of this part.
§ 436.322 Medically needy coverage of the disabled.
If the agency provides Medicaid to the medically needy, it may provide Medicaid to disabled individuals who meet –
(a) The requirements for disability, as specified in §§ 436.540 and 436.541; and
(b) The income and resource requirements of subpart I of this part.
§ 436.330 Coverage for certain aliens.
If an agency provides Medicaid to the medically needy, it must provide the services necessary for the treatment of an emergency medical condition, as defined in § 440.255(c) of this chapter to those aliens described in § 436.406(c) of this subpart.
Subpart E – General Eligibility Requirements
§ 436.400 Scope.
This subpart prescribes general requirements for determining the eligibility of both categorically needy and medically needy individuals specified in subparts B, C, and D of the part.
§ 436.401 General rules.
(a) The agency may not impose any eligibility requirement that is prohibited under title XIX.
(b) The agency must base any optional group covered under subparts B and C of this part on reasonable classifications that do not result in arbitrary or inequitable treatment of individuals and groups and are consistent with the objectives of title XIX.
(c) The agency must not use requirements for determining eligibility for optional coverage groups that are more restrictive than those used under the State plans for OAA, AFDC, AB, APTD, or AABD.
§ 436.402 [Reserved]
§ 436.403 State residence.
(a) Requirement. The agency must provide Medicaid to eligible residents of the State, including residents who are absent from the State. The conditions under which payment for service is provided to out-of-State residents are set forth in § 431.52 of this chapter.
(b) Definition. For purposes of this section – Institution has the same meaning as Institution and Medical institution, as defined in § 435.1010 of this chapter. For purposes of State placement, the term also includes “foster care homes”, licensed as set forth in 45 CFR 1355.20, and providing food, shelter and supportive services to one or more persons unrelated to the proprietor.
(c) Incapability of indicating intent. For purposes of this section, an individual is considered incapable of indicating intent if the individual –
(1) Has an I.Q. of 49 or less or has a mental age of 7 or less, based on tests acceptable to the Intellectual Disability agency in the State;
(2) Is judged legally incompetent; or
(3) Is found incapable of indicating intent based on medical documentation obtained from a physician, psychologist, or other person licensed by the State in the field of intellectual disability.
(d) Who is a State resident. A resident of a State is any individual who:
(1) Meets the conditions in paragraphs (e) through (h) of this section; or
(2) Meets the criteria specified in an interstate agreement under paragraph (j) of this section.
(e) Placement by a State in an out-of-state institution – (1) General rule. Any agency of the State, including an entity recognized under State law as being under contract with the State for such purposes, that arranges for an individual to be placed in an institution located in another State, is recognized as acting on behalf of the State in making a placement. The State arranging or actually making the placement is considered as the individual’s State of residence.
(2) Any action beyond providing information to the individual and the individual’s family would constitute arranging or making a State placement. However, the following actions do not constitute State placement:
(i) Providing basic information to individuals about another State’s Medicaid program, and information about the availability of health care services and facilities in another State.
(ii) Assisting an individual in locating an institution in another State provided the individual is capable of indicating intent and independently decides to move.
(3) When a competent individual leaves the facility in which the individual is placed by a State, that individual’s State of residency for Medicaid purposes is the State where the individual is physically located.
(4) Where placement is initiated by a State because the State lacks a sufficient number of appropriate facilities to provide services to its residents, the State making the placement is the individual’s State of residence for Medicaid purposes.
(f) Individuals receiving title IV-E payments. For individuals of any age who are receiving Federal payment for foster care and adoption assistance under title IV-E of the Social Security Act, the State of residence is the State where the child lives.
(g) Individuals under age 21. (1) For any individual who is emancipated from his or her parents or who is married and capable of indicating intent, the State of residence is the State where the individual is living with the intention to remain there permanently or for an indefinite period.
(2) For any individual not residing in an institution as defined in paragraph (b) whose Medicaid eligibility is based on blindness or disability, the State of residence is the State in which the individual is living.
(3) For any other non-institutionalized individual not subject to paragraph (h)(1) or (h)(2) of this section, the State of residence is determined in accordance with 45 CFR 233.40, the rules governing residence under the AFDC program.
(4) For any institutionalized individual who is neither married nor emancipated, the State of residence is –
(i) The parents’ or legal guardian’s current State of residence at the time of placement; or
(ii) The current State of residence of the parent or legal guardian who files the application, if the individual is institutionalized in that State. If a legal guardian has been appointed and the parental rights are terminated, the State of residence of the guardian is used instead of the parent’s.
(iii) The State of residence of the individual or party who files an application is used if the individual has been abandoned by his or her parent(s), does not have a legal guardian and is institutionalized in that State.
(h) Individuals age 21 and over. (1) For any individual not residing in an institution as defined in paragraph (b), the State of residence is the State where the individual is –
(i) Living with the intention to remain there permanently or for an indefinite period (or if incapable of stating intent, where the individual is living); or
(ii) Living and which the individual entered with a job commitment or seeking employment (whether or not currently employed).
(2) For any institutionalized individual who became incapable of indicating intent before age 21, the State of residence is –
(i) That of the parents applying for Medicaid on the individual’s behalf, if the parents reside in separate States;
(ii) The parent’s or legal guardian’s State of residence at the time of placement; or
(iii) The current State of residence of the parent or legal guardian who files the application, if the individual is institutionalized in that State. If a legal guardian has been appointed and parental rights are terminated, the State of residence of the guardian is used instead of the legal parent’s.
(iv) The State of residence of the individual or party who files an application is used if the individual has been abandoned by his or her parent(s), does not have a legal guardian and is institutionalized in that State.
(3) For any institutionalized individual who became incapable of indicating intent at or after age 21, the State of residence is the State in which the individual is physically present, except where another State makes a placement.
(4) For any other institutionalized individual, the State of residence is the State where the individual is living with the intention to remain there permanently or for an indefinite period.
(i) Specific prohibitions. (1) The agency may not deny Medicaid eligibility because an individual has not resided in the State for a specified period.
(2) The agency may not deny Medicaid eligibility to an individual in an institution, who satisfies the residency rules set forth in this section, on the grounds that the individual did not establish residence in the State before entering the institution.
(3) The agency may not deny or terminate a resident’s Medicaid eligibility because of that person’s temporary absence from the State if the person intends to return when the purpose of the absence has been accomplished, unless another State has determined that the person is a resident there for purposes of Medicaid.
(j) Interstate agreements. A State may have a written agreement with another State setting forth rules and procedures resolving cases of disputed residency. These agreements may establish criteria other than those specified in paragraphs (c) through (h) of this section, but must not include criteria that result in loss of residency in both States or that are prohibited by paragraph (i) of this section. The agreements must contain a procedure for providing Medicaid to individuals pending resolution of the case.
(k) Continued Medicaid for institutionalized beneficiaries. An agency is providing Medicaid to an institutionalized beneficiary who, as a result of this section, would be considered a resident of a different State –
(1) The agency must continue to provide Medicaid to that beneficiary from June 24, 1983 until July 5, 1984 unless it makes arrangements with another State of residence to provide Medicaid at an earlier date; and
(2) Those arrangements must not include provisions prohibited by paragraph (g) of this section.
(l) Cases of disputed residency. Where two or more States cannot resolve which State is the State of residence, the State where the individual is physically located is the State of residence.
§ 436.404 Applicant’s choice of category.
The agency must allow an individual who would be eligible under more than one category to have his eligibility determined for the category he selects.
§ 436.406 Citizenship and alienage.
(a) The agency must provide Medicaid to otherwise eligible residents of the United States who are –
(1) Citizens: (i) Under a declaration required by section 1137(d) of the Act that the individual is a citizen or national of the United States; and
(ii) The individual has provided satisfactory documentary evidence of citizenship or national status, as described in § 435.407.
(iii) An individual for purposes of the declaration and citizenship documentation requirements discussed in paragraphs (a)(1)(i) and (a)(1)(ii) of this section includes both applicants and beneficiaries under a section 1115 demonstration (including a family planning demonstration project) for which a State receives Federal financial participation in their expenditures, as though the expenditures were for medical assistance.
(iv) Individuals must declare their citizenship and the State must document an individual’s eligibility file on initial applications and initial redeterminations effective July 1, 2006.
(v) The following groups of individuals are exempt from the requirements in paragraph (a)(1)(ii) of this section:
(A) Individuals receiving SSI benefits under title XVI of the Act;
(B) Individuals entitled to or enrolled in any part of Medicare;
(C) Individuals receiving disability insurance benefits under section 223 of the Act or monthly benefits under section 202 of the Act, based on the individual’s disability (as defined in section 223(d) of the Act); and
(D) Individuals who are in foster care and who are assisted under Title IV-B of the Act, and individuals who are beneficiaries of foster care maintenance or adoption assistance payments under Title IV-E of the Act.
(2)(i) Except as specified in 8 U.S.C. 1612(b)(1) (permitting States an option with respect to coverage of certain qualified aliens), qualified aliens as described in section 431 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (8 U.S.C. 1641) (including qualified aliens subject to the 5-year bar) who have provided satisfactory documentary evidence of Qualified Alien status, which status has been verified with the Department of Homeland Security (DHS) under a declaration required by section 1137(d) of the Act that the applicant or beneficiary is an alien in a satisfactory immigration status.
(ii) The eligibility of qualified aliens who are subject to the 5-year bar in 8 U.S.C. 1613 is limited to the benefits described in paragraph (b) of this section.
(b) The agency must provide payment for the services described in § 440.255(c) of this chapter to residents of the State who otherwise meet the eligibility requirements of the State plan (except for receipt of AFDC, SSI, or State Supplementary payments) who are qualified aliens subject to the 5-year bar or who are non-qualified aliens who meet all Medicaid eligibility criteria, except non-qualified aliens need not present a social security number or document immigration status.
§ 436.407 Types of acceptable documentary evidence of citizenship.
For purposes of this section, the term “citizenship” includes status as a “national of the United States” as defined by section 101(a)(22) of the Immigration and Nationality Act (8 U.S.C. § 1101(a)(22)) to include both citizens of the United States and non-citizen nationals of the United States.
(a) Primary evidence of citizenship and identity. The following evidence must be accepted as satisfactory documentary evidence of both identity and citizenship:
(1) A U.S. passport. The Department of State issues this. A U.S. passport does not have to be currently valid to be accepted as evidence of U.S. citizenship, as long as it was originally issued without limitation.
Spouses and children were sometimes included on one passport through 1980. U.S. passports issued after 1980 show only one person. Consequently, the citizenship and identity of the included person can be established when one of these passports is presented. Exception: Do not accept any passport as evidence of U.S. citizenship when it was issued with a limitation. However, such a passport may be used as proof of identity.
(2) A Certificate of Naturalization (DHS Forms N-550 or N-570.) Department of Homeland Security issues for naturalization.
(3) A Certificate of U.S. Citizenship (DHS Forms N-560 or N-561.) Department of Homeland Security issues certificates of citizenship to individuals who derive citizenship through a parent.
(4) A valid State-issued driver’s license, but only if the State issuing the license requires proof of U.S. citizenship before issuance of such license or obtains a social security number from the applicant and verifies before certification that such number is valid and assigned to the applicant who is a citizen. (This provision is not effective until such time as a State makes providing evidence of citizenship a condition of issuing a driver’s license and evidence that the license holder is a citizen is included on the license or in a system of records available to the Medicaid agency. States must ensure that the process complies with this statutory provision in section 6036 of the Deficit Reduction Act of 2005. CMS will monitor compliance of States implementing this provision.)
(b) Secondary evidence of citizenship. If primary evidence from the list in paragraph (a) of this section is unavailable, an applicant or beneficiary should provide satisfactory documentary evidence of citizenship from the list specified in this section to establish citizenship and satisfactory documentary evidence from paragraph (e) of this section to establish identity, in accordance with the rules specified in this section.
(1) A U.S. public birth certificate showing birth in one of the 50 States, the District of Columbia, Puerto Rico (if born on or after January 13, 1941), Guam (on or after April 10, 1899), the Virgin Islands of the U.S. (on or after January 17, 1917), American Samoa, Swain’s Island, or the Northern Mariana Islands (after November 4, 1986 (NMI local time)). A State, at its option, may use a cross match with a State vital statistics agency to document a birth record. The birth record document may be issued by the State, Commonwealth, Territory, or local jurisdiction. It must have been recorded before the person was 5 years of age. A delayed birth record document that is recorded at or after 5 years of age is considered fourth level evidence of citizenship. (
(i) Puerto Rico:
(A) Evidence of birth in Puerto Rico on or after April 11, 1899 and the applicant’s statement that he or she was residing in the U.S., a U.S. possession, or Puerto Rico on January 13, 1941; or
(B) Evidence that the applicant was a Puerto Rican citizen and the applicant’s statement that he or she was residing in Puerto Rico on March 1, 1917 and that he or she did not take an oath of allegiance to Spain.
(ii) U.S. Virgin Islands:
(A) Evidence of birth in the U.S. Virgin Islands, and the applicant’s statement of residence in the U.S., a U.S. possession, or the U.S. Virgin Islands on February 25, 1927; or
(B) The applicant’s statement indicating residence in the U.S. Virgin Islands as a Danish citizen on January 17, 1917 and residence in the U.S., a U.S. possession, or the U.S. Virgin Islands on February 25, 1927, and that he or she did not make a declaration to maintain Danish citizenship; or
(C) Evidence of birth in the U.S. Virgin Islands and the applicant’s statement indicating residence in the U.S., a U.S. possession, or Territory or the Canal Zone on June 28, 1932.
(iii) Northern Mariana Islands (NMI) (formerly part of the Trust Territory of the Pacific Islands (TTPI)):
(A) Evidence of birth in the NMI, TTPI citizenship and residence in the NMI, the U.S., or a U.S. Territory or possession on November 3, 1986 (NMI local time) and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time); or
(B) Evidence of TTPI citizenship, continuous residence in the NMI since before November 3, 1981 (NMI local time), voter registration before January 1, 1975 and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time); or
(C) Evidence of continuous domicile in the NMI since before January 1, 1974 and the applicant’s statement that he or she did not owe allegiance to a foreign State on November 4, 1986 (NMI local time).
(D)
(2) A Certification of Report of Birth (DS-1350). The Department of State issues a DS-1350 to U.S. citizens in the U.S. who were born outside the U.S. and acquired U.S. citizenship at birth, based on the information shown on the FS-240. When the birth was recorded as a Consular Report of Birth (FS-240), certified copies of the Certification of Report of Birth Abroad (DS-1350) can be issued by the Department of State in Washington, DC. The DS-1350 contains the same information as that on the current version of Consular Report of Birth FS-240. The DS-1350 is not issued outside the U.S.
(3) A Report of Birth Abroad of a U.S. Citizen (Form FS-240). The Department of State consular office prepares and issues this. A Consular Report of Birth can be prepared only at an American consular office overseas while the child is under the age of 18. Children born outside the U.S. to U.S. military personnel usually have one of these.
(4) A Certification of birth issued by the Department of State (Form FS-545 or DS-1350). Before November 1, 1990, Department of State consulates also issued Form FS-545 along with the prior version of the FS-240. In 1990, U.S. consulates ceased to issue Form FS-545. Treat an FS-545 the same as the DS-1350.
(5) A U.S. Citizen I.D. card. (This form was issued until the 1980s by INS. Although no longer issued, holders of this document may still use it consistent with the provisions of section 1903(x) of the Act.) INS issued the I-179 from 1960 until 1973. It revised the form and renumbered it as Form I-197. INS issued the I-197 from 1973 until April 7, 1983. INS issued Form I-179 and I-197 to naturalized U.S. citizens living near the Canadian or Mexican border who needed it for frequent border crossings. Although neither form is currently issued, either form that was previously issued is still valid.
(6) A Northern Mariana Identification Card (I-873). (Issued by the DHS to a collectively naturalized citizen of the United States who was born in the Northern Mariana Islands before November 4, 1986.) The former Immigration and Naturalization Service (INS) issued the I-873 to a collectively naturalized citizen of the U.S. who was born in the NMI before November 4, 1986. The card is no longer issued, but those previously issued are still valid.
(7) An American Indian Card (I-872) issued by the Department of Homeland Security with the classification code “KIC.” (Issued by DHS to identify U.S. citizen members of the Texas Band of Kickapoos living near the United States/Mexican border.) DHS issues this card to identify a member of the Texas Band of Kickapoos living near the U.S./Mexican border. A classification code “KIC” and a statement on the back denote U.S. citizenship
(8) A final adoption decree showing the child’s name and U.S. place of birth. The adoption decree must show the child’s name and U.S. place of birth. In situations where an adoption is not finalized and the State in which the child was born will not release a birth certificate prior to final adoption, a statement from a State approved adoption agency that shows the child’s name and U.S. place of birth is acceptable. The adoption agency must state in the certification that the source of the place of birth information is an original birth certificate.
(9) Evidence of U.S. Civil Service employment before June 1, 1976. The document must show employment by the U.S. government before June 1, 1976. Individuals employed by the U.S. Civil Service prior to June 1, 1976 had to be U.S. citizens.
(10) U.S. Military Record showing a U.S. place of birth. T he document must show a U.S. place of birth (for example a DD-214 or similar official document showing a U.S. place of birth.)
(11) A data verification with the Systematic Alien Verification for Entitlements (SAVE) Program for naturalized citizens. A State may conduct a verification with SAVE to determine if an individual is a naturalized citizen, provided that such verification is conducted consistent with the terms of a Memorandum of Understanding or other agreement with the Department of Homeland Security (DHS) authorizing verification of claims to U.S. citizenship through SAVE, including but not limited to provision of the individual’s alien registration number if required by DHS.
(12) Child Citizenship Act. Adopted or biological children born outside the United States may establish citizenship obtained automatically under section 320 of the Immigration and Nationality Act (8 U.S.C. 1431), as amended by the Child Citizenship Act of 2000 (Pub. L. 106-395, enacted on October 30, 2000). The State must obtain documentary evidence that verifies that at any time on or after February 27, 2001, the following conditions have been met:
(i) At least one parent of the child is a United States citizen by either birth or naturalization (as verified under the requirements of this part);
(ii) The child is under the age of 18;
(iii) The child is residing in the United States in the legal and physical custody of the U.S. citizen parent;
(iv) The child was admitted to the United States for lawful permanent residence (as verified under the requirements of 8 U.S.C. 1641 pertaining to verification of qualified alien status); and
(v) If adopted, the child satisfies the requirements of section 101(b)(1) of the Immigration and Nationality Act (8 U.S.C. 1101(b)(1) pertaining to international adoptions (admission for lawful permanent residence as IR-3 (child adopted outside the United States)), or as IR-4 (child coming to the United States to be adopted) with final adoption having subsequently occurred).
(c) Third level evidence of citizenship. Third level evidence of U.S. citizenship is documentary evidence of satisfactory reliability that is used when both primary and secondary evidence is unavailable. Third level evidence may be used only when the applicant or beneficiary alleges birth in the U.S. A second document from paragraph (e) of this section to establish identity must also be presented:
(1) Extract of a hospital record on hospital letterhead established at the time of the person’s birth that was created 5 years before the initial application date and that indicates a U.S. place of birth. (For children under 16 the document must have been created near the time of birth or 5 years before the date of application.) Do not accept a souvenir “birth certificate” issued by the hospital.
(2) Life, health, or other insurance record showing a U.S. place of birth that was created at least 5 years before the initial application date that indicates a U.S. place of birth. (For children under 16 the document must have been created near the time of birth or 5 years before the date of application.) Life or health insurance records may show biographical information for the person including place of birth; the record can be used to establish U.S. citizenship when it shows a U.S. place of birth.
(3) Religious record recorded in the U.S. within 3 months of birth showing the birth occurred in the U.S. and showing either the date of the birth or the individual’s age at the time the record was made. The record must be an official record recorded with the religious organization. Caution: In questionable cases (for example, where the child’s religious record was recorded near a U.S. international border and the child may have been born outside the U.S.), the State must consider verifying the religious record and/or documenting that the mother was in the U.S. at the time of the birth.
(4) Early school record showing a U.S. place of birth. The school record must show the name of the child, the date of admission to the school, the date of birth (or age at the time the record was made), a U.S. place of birth, and the name(s) and place(s) of birth of the applicant’s parents.
(d) Fourth level evidence of citizenship. Fourth level evidence of citizenship is documentary evidence of the lowest reliability. Fourth level evidence should only be used in the rarest of circumstances. This level of evidence is used only when primary, secondary and third level evidence is unavailable. With the exception of the affidavit process described in paragraph (d)(5) of this section, the applicant may only use fourth level evidence of citizenship if alleging a U.S. place of birth. In addition, a second document establishing identity must be presented as described in paragraph (e) of this section
(1) Federal or State census record showing U.S. citizenship or a U.S. place of birth. (Generally for persons born 1900 through 1950.) The census record must also show the applicant’s age.
Census records from 1900 through 1950 contain certain citizenship information. To secure this information the applicant, beneficiary or State should complete a Form BC-600, Application for Search of Census Records for Proof of Age. Add in the remarks portion “U.S. citizenship data requested.” Also add that the purpose is for Medicaid eligibility. This form requires a fee.
(2) One of the following documents that show a U.S. place of birth and was created at least 5 years before the application for Medicaid. (For children under 16 the document must have been created near the time of birth or 5 years before the date of application.) This document must be one of the following and show a U.S. place of birth:
(i) Seneca Indian tribal census.
(ii) Bureau of Indian Affairs tribal census records of the Navajo Indians.
(iii) U.S. State Vital Statistics official notification of birth registration.
(iv) A delayed U.S. public birth record that is recorded more than 5 years after the person’s birth.
(v) Statement signed by the physician or midwife who was in attendance at the time of birth.
(vi) The Roll of Alaska Natives maintained by the Bureau of Indian Affairs.
(3) Institutional admission papers from a nursing facility, skilled care facility or other institution created at least 5 years before the initial application date that indicates a U.S. place of birth. Admission papers generally show biographical information for the person including place of birth; the record can be used to establish U.S. citizenship when it shows a U.S. place of birth.
(4) Medical (clinic, doctor, or hospital) record created at least 5 years before the initial application date that indicates a U.S. place of birth. (For children under 16 the document must have been created near the time of birth or 5 years before the date of application.) Medical records generally show biographical information for the person including place of birth; the record can be used to establish U.S. citizenship when it shows a U.S. place of birth. (
(5) Written affidavit. Affidavits should ONLY be used in rare circumstances. If the documentation requirement needs to be met through affidavits, the following rules apply:
(i) There must be at least two affidavits by two individuals who have personal knowledge of the event(s) establishing the applicant’s or beneficiary’s claim of citizenship (the two affidavits could be combined in a joint affidavit).
(ii) At least one of the individuals making the affidavit cannot be related to the applicant or beneficiary. Neither of the two individuals can be the applicant or beneficiary.
(iii) In order for the affidavit to be acceptable the persons making them must be able to provide proof of their own citizenship and identity.
(iv) If the individual(s) making the affidavit has (have) information which explains why documentary evidence establishing the applicant’s claim or citizenship does not exist or cannot be readily obtained, the affidavit should contain this information as well.
(v) The State must obtain a separate affidavit from the applicant/beneficiary or other knowledgeable individual (guardian or representative) explaining why the evidence does not exist or cannot be obtained.
(vi) The affidavits must be signed under penalty of perjury and need not be notarized.
(e) Evidence of identity. The following documents may be accepted as proof of identity and must accompany a document establishing citizenship from the groups of documentary evidence of citizenship in the groups in paragraphs (b) through (d) of this section.
(1) Identity documents described in 8 CFR 274a.2(b)(1)(v)(B)(1).
(i) Driver’s license issued by State or Territory either with a photograph of the individual or other identifying information of the individual such as name, age, sex, race, height, weight, or eye color.
(ii) School identification card with a photograph of the individual.
(iii) U.S. military card or draft record.
(iv) Identification card issued by the Federal, State, or local government with the same information included on driver’s licenses.
(v) Military dependent’s identification card.
(vi) Certificate of Degree of Indian Blood, or other American Indian/Alaska Native Tribal document with a photograph or other personal identifying information relating to the individual. Acceptable if the document carries a photograph of the applicant or beneficiary, or has other personal identifying information relating to the individual such as age, weight, height, race, sex, and eye color.
(vii) U.S. Coast Guard Merchant Mariner card.
Exception: Do not accept a voter’s registration card or Canadian driver’s license as listed in 8 CFR 274a.2(b)(1)(v)(B)(1). CMS does not view these as reliable for identity.
(2) At State option, a State may use a cross match with a Federal or State governmental, public assistance, law enforcement or corrections agency’s data system to establish identity if the agency establishes and certifies true identity of individuals. Such agencies may include food stamps, child support, corrections, including juvenile detention, motor vehicle, or child protective services. The State Medicaid Agency is still responsible for assuring the accuracy of the identity determination.
(3) At State option, a State may accept three or more documents that together reasonably corroborate the identity of an individual provided such documents have not been used to establish the individual’s citizenship and the individual submitted second or third tier evidence of citizenship. The State must first ensure that no other evidence of identity is available to the individual prior to accepting such documents. Such documents must at a minimum contain the individual’s name, plus any additional information establishing the individual’s identity. All documents used must contain consistent identifying information. These documents include employer identification cards, high school and college diplomas from accredited institutions (including general education and high school equivalency diplomas), marriage certificates, divorce decrees, and property deeds/titles.
(f) Special identity rules for children. For children under 16, a clinic, doctor, hospital or school record may be accepted for purposes of establishing identity. School records may include nursery or daycare records and report cards. If the State accepts such records, it must verify them with the issuing school. If none of the above documents in the preceding groups are available, an affidavit may be used. An affidavit is only acceptable if it is signed under penalty of perjury by a parent, guardian or caretaker relative (as defined in the regulations at 45 CFR 233.90(c)(v)) stating the date and place of the birth of the child and cannot be used if an affidavit for citizenship was provided. The affidavit is not required to be notarized. A State may accept an identity affidavit on behalf of a child under the age of 18 in instances when school ID cards and drivers’ licenses are not available to the individual in that area until that age.
(g) Special identity rules for disabled individuals in institutional care facilities. A State may accept an identity affidavit signed under penalty of perjury by a residential care facility director or administrator on behalf of an institutionalized individual in the facility. States should first pursue all other means of verifying identity prior to accepting an affidavit. The affidavit is not required to be notarized.
(h) Special populations needing assistance. States must assist individuals to secure satisfactory documentary evidence of citizenship when because of incapacity of mind or body the individual would be unable to comply with the requirement to present satisfactory documentary evidence of citizenship in a timely manner and the individual lacks a representative to assist him or her.
(i) Documentary evidence. (1) All documents must be either originals or copies certified by the issuing agency. Uncertified copies, including notarized copies, shall not be accepted.
(2) States must maintain copies of citizenship and identification documents in the case record or electronic data base and make these copies available for compliance audits.
(3) States may permit applicants and beneficiaries to submit such documentary evidence without appearing in person at a Medicaid office. States may accept original documents in person, by mail, or by a guardian or authorized representative.
(4) If documents are determined to be inconsistent with pre-existing information, are counterfeit, or altered, States should investigate for potential fraud and abuse, including but not limited to, referral to the appropriate State and Federal law enforcement agencies.
(5) Presentation of documentary evidence of citizenship is a one time activity; once a person’s citizenship is documented and recorded in a State database subsequent changes in eligibility should not require repeating the documentation of citizenship unless later evidence raises a question of the person’s citizenship. The State need only check its databases to verify that the individual already established citizenship.
(6) CMS requires that as a check against fraud, using currently available automated capabilities, States will conduct a match of the applicant’s name against the corresponding Social Security number that was provided. In addition, in cooperation with other agencies of the Federal government, CMS encourages States to use automated capabilities to verify citizenship and identity of Medicaid applicants. Automated capabilities may fall within the computer matching provisions of the Privacy Act of 1974, and CMS will explore any implementation issues that may arise with respect to those requirements. When these capabilities become available, States will be required to match files for individuals who used third or fourth tier documents to verify citizenship and documents to verify identity, and CMS will make available to States necessary information in this regard. States must ensure that all case records within this category will be so identified and made available to conduct these automated matches. CMS may also require States to match files for individuals who used first or second level documents to verify citizenship as well. CMS may provide further guidance to States with respect to actions required in a case of a negative match.
(j) Record retention. The State must retain documents in accordance with 45 CFR 75.361.
(k) Reasonable opportunity to present satisfactory documentary evidence of citizenship. States must give an applicant or beneficiary a reasonable opportunity to submit satisfactory documentary evidence of citizenship before taking action affecting the individual’s eligibility for Medicaid. The time States give for submitting documentation of citizenship should be consistent with the time allowed to submit documentation to establish other facets of eligibility for which documentation is requested. (See § 435.930 and § 435.911 of this chapter.)
§ 436.408 [Reserved]
Subpart F – Categorical Requirements for Medicaid Eligibility
§ 436.500 Scope.
This subpart prescribes categorical requirements for determining the eligibility of both categorically needy and medically needy individuals specified in subparts B, C, and D of this part.
Dependency
§ 436.510 Determination of dependency.
For families with dependent children who are not receiving AFDC, the agency must use the definitions and procedures used under the State’s AFDC plan to determine whether –
(a) An individual is a dependent child because he is deprived of parental support or care; and
(b) An individual is an eligible member of a family with dependent children.
Age
§ 436.520 Age requirements for the aged.
The agency must not impose an age requirement of more than 65 years.
§ 436.522 Determination of age.
(a) In determining age, the agency must use the common law method (under which an age is reached the day before the anniversary of birth) or the popular usage method (under which a specific age is reached on the anniversary of birth), whichever is used under the corresponding State plan for OAA, AFDC, AB, APTD, or AABD.
(b) The agency may use an arbitrary date, such as July 1, for determining an individual’s age if the year, but not the month, of his birth is known.
Blindness
§ 436.530 Definition of blindness.
(a) Definition. The agency must use the definition of blindness that is used in the State plan for AB or AABD.
(b) State plan requirement. The State plan must contain the definition of blindness, expressed in ophthalmic measurements.
§ 436.531 Determination of blindness.
In determining blindness –
(a) A physician skilled in the diseases of the eye or an optometrist, whichever the individual selects, must examine him, unless both of the applicant’s eyes are missing;
(b) The examiner must submit a report of examination to the Medicaid agency; and
(c) A physician skilled in the diseases of the eye (for example, an ophthalmologist or an eye, ear, nose, and throat specialist) must review the report and determine on behalf of the agency –
(1) Whether the individual meets the definition of blindness; and
(2) Whether and when reexaminations are necessary for periodic redeterminations of eligibility, as required under § 435.916 of this subchapter. Blindness is considered to continue until the reviewing physician determines that the beneficiary’s vision no longer meets the definition.
Disability
§ 436.540 Definition of disability.
(a) Definition. The agency must use the definition of permanent and total disability that is used in the State plan for APTD or AABD. (See 45 CFR 233.80(a)(1) for the Federal recommended definition of permanent and total disability.)
(b) State plan requirement. The State plan must contain the definition of permanent and total disability.
§ 436.541 Determination of disability.
(a) Basic requirements. (1) At a minimum, the agency must use the review team, information, and evidence requirements specified in paragraph (b) through (d) of this section in making a determination of disability.
(2) If the requirements or determining disability under the State’s APTD or AABD program are more restrictive than the minimum requirements specified in this section, the agency must use the requirements applied under the APTD or AABD program.
(b) The agency must obtain a medical report and a social history for individuals applying for Medicaid on the basis of disability. The medical report must include a diagnosis based on medical evidence. The social history must contain enough information to enable the agency to determine disability.
(c) A physician and social worker, qualified by professional training and experience, must review the medical report and social history and determine on behalf of the agency whether the individual meets the definition of disability. The physician must determine whether and when reexaminations will be necessary for periodic redeterminations of eligibility as required under § 435.916 of this subchapter.
(d) In subsequently determining disability, the physician and social worker must review reexamination reports and the social history and determine whether the individual continues to meet the definition. Disability is considered to continue until this determination is made.
Subpart G – General Financial Eligibility Requirements and Options
§ 436.600 Scope.
This subpart prescribes:
(a) General financial requirements and options for determining the eligibility of both categorically needy and medically needy individuals specified in subparts B, C, and D of this part. Subparts H and I of this part prescribe additional financial requirements.
(b) [Reserved]
§ 436.601 Application of financial eligibility methodologies.
(a) Definitions. For purposes of this section, cash assistance financial methodologies refers to the income and resources methodologies of the OAA, AFDC, AB, APTD, and AABD programs.
(b) Basic rule for use of cash assistance methodologies. Except as specified in paragraphs (c) and (d) of this section, in determining financial eligibility of individuals as categorically and medically needy, the agency must apply the cash assistance financial methodologies and requirements of the cash assistance program that is most closely categorically related to the individual’s status.
(c) Financial responsibility of relatives. The agency must use the requirements for financial responsibility of relatives specified in § 436.602.
(d) Use of less restrictive methodologies than under cash assistance program. (1) At State option, and subject to the conditions of paragraphs (d)(2) through (d)(5) of this section, the agency may apply income and resource methodologies that are less restrictive than the cash assistance methodologies in determining financial eligibility of the following groups:
(i) Qualified pregnant women and children under the mandatory categorically needy group under § 436.120;
(ii) Low-income pregnant women, infants, and children specified in section 1902(a)(10)(i) (IV), (VI), and (VII) of the Act;
(iii) Qualified Medicare beneficiaries specified in sections 1902(a)(10)(E) and 1905(p) of the Act;
(iv) Optional categorically needy individuals under groups established under subpart C of this part and section 1902(a)(10)(A)(ii) of the Act; and
(v) Medically needy individuals under groups established under subpart D of this part and section 1902(a)(10)(C)(i)(III) of the Act.
(2) The income and resource methodologies that an agency elects to apply to groups of individuals under paragraph (c)(1) of this section may be less restrictive, but no more restrictive, than:
(i) For groups of aged, blind, and disabled individuals, the SSI methodologies; or
(ii) For all other groups, the methodologies under the State plan most closely categorically related to the individual’s status.
(3) A financial methodology is considered to be no more restrictive if, by using the methodology, additional individuals may be eligible for Medicaid and no individuals who are otherwise eligible are by use of that methodology made ineligible for Medicaid.
(4) The less restrictive methodology applied under this section must be comparable for all persons within each category of assistance (aged, or blind, or disabled, or AFDC-related) within each eligibility group. For example, if the agency chooses to apply a less restrictive income or resource methodology to aged individuals, it must apply that methodology to an eligibility group of all aged individuals within the selected group.
(5) The application of the less restrictive income and resource methodologies permitted under this section must be consistent with the limitations and conditions on FFP specified in subpart K of this part.
(e) [Reserved]
(f) State plan requirements. (1) The State plan must specify that, except to the extent precluded by § 436.602 in determining financial eligibility of individuals, the agency will apply the cash assistance financial methodologies and requirements, unless the agency chooses to apply less restrictive income and resource methodologies, in accordance with paragraph (d) of this section.
(2) If the agency chooses to apply less restrictive income and resource methodologies, the State plan must specify:
(i) The less restrictive methodologies that will used; and
(ii) The eligibility groups or groups to which the less restrictive methodologies will be applied.
§ 436.602 Financial responsibility of relatives and other individuals.
(a) Subject to the provisions of paragraphs (b) and (c) of this section, in determining financial responsibility of relatives and other persons for individuals under Medicaid, the agency must use the following financial eligibility requirements and methodologies.
(1) Except for a spouse of an individual or a parent for a child who is under age 21 or blind or disabled, the agency must not consider income and resources of any relative as available to an individual.
(2) In relation to individuals under 21 (as described in section 1905(a)(i) of the Act), the financial responsibility requirements and methodologies include considering the income and resources of parents or spouses whose income and resources would be considered if the individual under age 21 were dependent under the State’s approved AFDC plan, whether or not they are actually contributed. These requirements and methodologies must be applied in accordance with provisions of the State’s approved AFDC plan.
(3) When a couple ceases to live together, the agency must count only the income and resources of the individual in determining his or her eligibility, beginning the first month following the month the couple ceases to live together.
(b) The agency may apply income and resource methodologies that are less restrictive than the cash assistance methodologies as specified in the State plan in accordance with § 436.601(d).
(c) [Reserved]
§ 436.604 [Reserved]
§ 436.606 [Reserved]
§ 436.608 Applications for other benefits.
(a) As a condition of eligibility, the agency must require applicants and beneficiaries to take all necessary steps to obtain any annuities, pensions, and retirement and disability benefits to which they are entitled, unless they can show good cause for not doing so.
(b) Annuities, pensions, and retirement and disability benefits include, but are not limited to, veterans’ compensation and pensions, OASDI benefits, railroad retirement benefits, and unemployment compensation.
§ 436.610 Assignment of rights to benefits.
(a) As a condition of eligibility, the agency must require legally able applicants and beneficiaries to:
(1) Assign rights to the Medicaid agency to medical support and to payment for medical care from any third party;
(2) Cooperate with the agency in establishing paternity and in obtaining medical support and payments, unless the individual establishes good cause for not cooperating, and except for individuals described in section 1902(l)(1)(A) of the Act (poverty level pregnant women), who are exempt from cooperating in establishing paternity and obtaining medical support and payments from, or derived from, the father of the child born out of wedlock; and
(3) Cooperate in identifying and providing information to assist the Medicaid agency in pursuing third parties who may be liable to pay for care and services under the plan, unless the individual establishes good cause for not cooperating.
(b) The requirements for assignment of rights must be applied uniformly for all groups covered under the plan.
(c) The requirements of paragraph (a) of this section for assignment of rights to medical support and other payments and cooperation in obtaining medical support and payments are effective for medical assistance furnished on or after October 1, 1984. The requirement for cooperation in identifying and providing information for pursuing liable third parties is effective for medical assistance furnished on or after July 1, 1986.
Subpart H [Reserved]
Subpart I – Financial Requirements for the Medically Needy
§ 436.800 Scope.
This subpart prescribes financial requirements for determining the eligibility of medically needy individuals under subpart D of this part.
Medically Needy Income Standard
§ 436.811 Medically needy income standard: General requirements.
(a) To determine eligibility of medically needy individuals, the agency must use a single income standard for all covered medically needy groups that meets the requirements of this section.
(b) The income standard must take into account the number of persons in the assistance unit. The standard may not diminish by the number of persons in the unit (for example, if the income level in the standard for an assistance unit of two is set at $400, the income level in the standard for an assistance unit of three may not be less than $400).
(c) The income standard must be set at an amount that is no lower than the lowest income standard used on or after January 1, 1966, to determine eligibility under the cash assistance programs that are related to the State’s covered medically needy group or groups of individuals under § 436.301.
(d) The income standard may vary based on the variations between shelter costs in urban areas and rural areas.
§ 436.814 Medically needy income standard: State plan requirements.
The State plan must specify the income standard for the covered medically needy groups.
Medically Needy Income Eligibility and Liability for Payment of Medical Expenses
§ 436.831 Income eligibility.
The agency must determine income eligibility of medically needy individuals in accordance with this section.
(a) Budget periods. (1) The agency must use budget periods of not more than 6 months to compute income. The agency may use more than one budget period.
(2) The agency must include in the budget period in which income is computed all or part of the 3-month retroactive period specified in § 435.914. The budget period can begin no earlier then the first month in the retroactive period in which the individual received covered services.
(3) If the agency elects to begin the first budget period for the medically needy in any month of the 3-month period prior to the date of application in which the applicant received covered services, this election applies to all medically needy groups.
(b) Determining countable income. The agency must, to determine countable income, deduct amounts that would be deducted in determining eligibility under the State’s approved plan for OAA, AFDC, AB, APTD, or AABD.
(c) Eligibility based on countable income. If countable income determined under paragraph (b) of this section is equal to or less than the applicable income standard under § 436.814, the individual is eligible for Medicaid.
(d) Deduction of incurred medical expenses. If countable income exceeds the income standard, the agency must deduct from income medical expenses incurred by the individual or family or financially responsible relatives that are not subject to payment by a third party. An expense is incurred on the date liability for the expense arises. The agency must determine deductible incurred expenses in accordance with paragraphs (e), (f) and (g) of this section and deduct those expenses in accordance with paragraph (h) of this section.
(e) Determination of deductible incurred expenses: Required deductions based on kinds of services. Subject to the provisions of paragraph (g) of this section, in determining incurred medical expenses to be deducted from income, the agency must include the following:
(1) Expenses for Medicare and other health insurance premiums, and deductibles or coinsurance charges, including enrollment fees, copayments, or deductibles imposed under § 447.52, § 447.53, or § 447.54 of this chapter;
(2) Expenses incurred by the individual or family or financially responsible relatives for necessary medical and remedial services that are recognized under State law but not included in the plan;
(3) Expenses incurred by the individual or family or by financially responsible relatives for necessary medical and remedial services that are included in the plan, including those that exceed agency limitations on amount, duration or scope of services;
(f) Determination of deductible incurred expenses: Required deductions based on the age of bills. Subject to the provisions of paragraph (g) of this section, in determining incurred medical expenses to be deducted from income, the agency must include the following:
(1) For the first budget period or periods that include only months before the month of application for medical assistance, expenses incurred during such period or periods, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(2) For the first prospective budget period that also includes any of the 3 months before the month of application for medical assistance, expenses incurred during such budget period, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(3) For the first prospective budget period that includes none of the months preceding the month of application, expenses incurred during such budget period and any of the 3 preceding months, whether paid or unpaid, to the extent that the expenses have not been deducted previously in establishing eligibility;
(4) For any of the 3 months preceding the month of application that are not includable under paragraph (f)(2) of this section, expenses incurred in the 3-month period that were a current liability of the individual in any such month for which a spenddown calculation is made and that had not been previously deducted from income in establishing eligibility for medical assistance;
(5) Current payments (that is, payments made in the current budget period) on other expenses incurred before the current budget period and not previously deducted from income in any budget period in establishing eligibility for such period; and
(6) If the individual’s eligibility for medical assistance was established in each such preceding period, expenses incurred before the current budget period but not previously deducted from income, to the extent that such expenses are unpaid and are:
(i) Described in paragraphs (e)(1) through (e)(3) of this section; and
(ii) Are carried over from the preceding budget period or periods because the individual had a spenddown liability in each such preceding period that was met without deducting all such incurred, unpaid expenses.
(g) Determination of deductible incurred medical expenses: Optional deductions. In determining incurred medical expenses to be deducted from income, the agency –
(1) May include medical institutional expenses (other than expenses in acute care facilities) projected to the end of the budget period at the Medicaid reimbursement rate;
(2) May, to the extent determined by the agency and specified in its approved plan, include expenses incurred earlier than the third month before the month of application; and
(3) May set reasonable limits on the amount to be deducted for expenses specified in paragraphs (e)(1), (e)(2), and (g)(2) of this section.
(h) Order of deduction. The agency must deduct incurred medical expenses that are deductible under paragraphs (e), (f), and (g) of this section, in the order prescribed under one of the following three options:
(1) Type of service. Under this option, the agency deducts expenses in the following order based on type of service:
(i) Cost-sharing expenses as specified in paragraph (e)(1) of this section.
(ii) Services not included in the State plan as specified in paragraph (e)(2) of this section.
(iii) Services included in the State plan as specified in paragraph (e)(3) of this section but that exceed agency limitations on amount, duration, or scope of services.
(iv) Services included in the State plan as specified in paragraph (e)(3) of this section but that are within agency limitations on amount, duration, or scope of services.
(2) Chronological order by service date. Under this option, the agency deducts expenses in chronological order by the date each service is furnished, or in the case of insurance premiums, coinsurance, or deductibles charges the date such amounts are due. Expenses for services furnished on the same day may be deducted in any reasonable order established by the State.
(3) Chronological order by bill submission date. Under this option, the agency deducts expenses in chronological order by the date each bill is submitted to the agency by the individual. If more than one bill is submitted at one time, the agency must deduct the bills from income in the order prescribed in either paragraph (h)(1) or (h)(2) of this section.
(i) Eligibility based on incurred medical expenses. (1) Whether a State elects partial or full month coverage, an individual who is expected to contribute a portion of his or her income toward the costs of institutional care or home and community-based services under § 436.832 is eligible on the first day of the applicable budget (spenddown) period –
(i) If his or her spenddown liability is met after the first day of the budget period; and
(ii) If beginning eligibility after the first day of the budget period makes the individual’s share of health care expenses under § 436.832 greater than the individual’s contributable income determined under this section.
(2) At the end of the prospective period specified in paragraph (f)(2) or (f)(3) of this section and any subsequent prospective period or, if earlier, when any significant change occurs, the agency must reconcile the projected amounts with the actual amounts incurred, or with changes in circumstances, to determine if the adjusted deduction of incurred expenses reduces income to the income standard.
(3) Except as provided in paragraph (i)(1) of this section, if agencies elect partial month coverage, an individual is eligible for Medicaid on the day that the deduction of incurred health care expenses (and of projected institutional expenses if the agency elects the option under paragraph (g)(1) of this section) reduces income to the income standard.
(4) Except as provided in paragraph (i)(1) of this section, if agencies elect full month coverage, an individual is eligible on the first day of the month in which spenddown liability is met.
(5) Expenses used to meet spenddown liability are not reimbursable under Medicaid. Therefore, to the extent necessary to prevent the transfer of an individual’s spenddown liability to the Medicaid program, States must reduce the amount of provider charges that would otherwise be reimbursable under Medicaid.
§ 436.832 Post-eligibility treatment of income of institutionalized individuals: Application of patient income to the cost of care.
(a) Basic rules. (1) The agency must reduce its payment to an institution, for services provided to an individual specified in paragraph (b) of this section, by the amount that remains after deducting the amounts specified in paragraphs (c) and (d) of this section from the individual’s total income.
(2) The individual’s income must be determined in accordance with paragraph (e) of this section.
(3) Medical expenses must be determined in accordance with paragraph (f) of this section.
(b) Applicability. This section applies to medically needy individuals in medical institutions and intermediate care facilities.
(c) Required deductions. The agency must deduct the following amounts, in the following order, from the individual’s total income as determined under paragraph (e) of this section. Income that was disregarded in determining eligibility must be considered in this process.
(1) Personal needs allowance. A personal needs allowance that is reasonable in amount for clothing and other personal needs of the individual while in the institution. This protected personal needs allowance must be at least –
(i) $30 a month for an aged, blind, or disabled individual, including a child applying for Medicaid on the basis of blindness or disability;
(ii) $60 a month for an institutionalized couple if both spouses are aged, blind, or disabled and their income is considered available to each other in determining eligibility; and
(iii) For other individuals, a reasonable amount set by the agency, based on a reasonable difference in their personal needs from those of the aged, blind, or disabled.
(2) Maintenance needs of spouse. For an individual with only a spouse at home, an additional amount for the maintenance needs of the spouse. This amount must be based on a reasonable assessment of need but must not exceed the higher of –
(i) The amount of the highest need standard for an individual without income and resources under the State’s approved plan for OAA, AFDC, AB, APTD, or AABD; or
(ii) The amount of the highest medically needy income standard for one person established under § 436.811.
(3) Maintenance needs of family. For an individual with a family at home, an additional amount for the maintenance needs of the family. This amount must –
(i) Be based on a reasonable assessment of their financial need;
(ii) Be adjusted for the number of family members living in the home; and
(iii) Not exceed the highest of the following need standards for a family of the same size:
(A) The standard used to determine eligibility under the State’s Medicaid plan, as provided for in § 436.811.
(B) The standard used to determine eligibility under the State’s approved AFDC plan.
(4) Expenses not subject to third party payment. Amounts for incurred expenses for medical or remedial care that are not subject to payment by a third party, including –
(i) Medicare and other health insurance premiums, deductibles, or coinsurance charges; and
(ii) Necessary medical or remedial care recognized under State law but not covered under the State’s Medicaid plan, subject to reasonable limits the agency may establish on amounts of these expenses.
(d) Optional deduction: Allowance for home maintenance. For single individuals and couples, an amount (in addition to the personal needs allowance) for maintenance of the individual’s or couple’s home if –
(1) The amount is deducted for not more than a 6-month period; and
(2) A physician has certified that either of the individuals is likely to return to the home within that period.
(e) Determination of income – (1) Option. In determining the amount of an individual’s income to be used to reduce the agency’s payment to the institution, the agency may use total income received or it may project total monthly income for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the projection on income received in the preceding period, not to exceed 6 months, and on income expected to be received.
(3) Adjustments. At the end of the prospective period specified in paragraph (e)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with income received.
(f) Determination of medical expenses – (1) Option. In determining the amount of medical expenses to be deducted from an individual’s income, the agency may deduct incurred medical expenses, or it may project medical expenses for a prospective period not to exceed 6 months.
(2) Basis for projection. The agency must base the estimate on medical expenses incurred in the preceding period, not to exceed 6 months, and medical expenses expected to be incurred.
(3) Adjustments. At the end of the prospective period specified in paragraph (f)(1) of this section, or when any significant change occurs, the agency must reconcile estimates with incurred medical expenses.
Medically Needy Resource Standard
§ 436.840 Medically needy resource standard: General requirements.
(a) To determine eligibility of medically needy individuals, the Medicaid agency must use a single resource standard that is set at an amount that is no lower than the lowest resource standard used on or after January 1, 1966, to determine eligibility under the cash assistance programs that are related to the State’s covered medically needy group or groups of individuals under § 436.301.
(b) The resource standard established under paragraph (a) of this section may not diminish by an increase in the number of persons in the assistance unit. For example, the resource level in the standard for an assistance unit of three may not be less than that set for an assistance unit of two.
§ 436.843 Medically needy resource standard: State plan requirements.
The State plan must specify the resource standard for the covered medically needy groups.
Determining Eligibility on the Basis of Resources
§ 436.845 Medically needy resource eligibility.
To determine eligibility on the basis of resources for medically needy individuals, the agency must –
(a) Consider only the individual’s resources and those that are considered available to him under the financial responsibility requirements for relatives under § 436.602;
(b) Consider only resources available during the period for which income is computed under § 436.831(a);
(c) Deduct the value of resources that would be deducted in determining eligibility under the State’s plan for OAA, AFDC, AB, APTD, or AABD or under the State’s less restrictive financial methodology specified in the State Medicaid plan in accordance with § 436.601. In determining the amount of an individual’s resources for Medicaid eligibility, States must count amounts of resources that otherwise would not be counted under the conditional eligibility provisions of the AFDC program.
(d) Apply the resource standards established under § 436.840.
Subpart J – Eligibility in Guam, Puerto Rico, and the Virgin Islands
§ 436.900 Scope.
This subpart sets forth requirements for processing applications, determining eligibility, and furnishing Medicaid.
§ 436.901 General requirements.
The Medicaid agency must comply with all the requirements of part 435, subpart J, of this subchapter, except those specified in § 435.909.
§ 436.909 Automatic entitlement to Medicaid following a determination of eligibility under other programs.
The agency may not require a separate application for Medicaid from an individual if the individual receives cash assistance under a State plan for OAA, AFDC, AB, APTD, or AABD.
Subpart K – Federal Financial Participation (FFP)
§ 436.1000 Scope.
This subpart specifies when, and the extent to which, FFP is available in expenditures for determining eligibility and for Medicaid services to individuals determined eligible under this part, and prescribes limitations and conditions on FFP for those expenditures.
FFP for Expenditures for Determining Eligibility and Providing Services
§ 436.1001 FFP for administration.
(a) FFP is available in the necessary administrative costs the State incurs in –
(1) Determining and redetermining Medicaid eligibility and in providing Medicaid to eligible individuals; and
(2) Determining presumptive eligibility for children and providing services to presumptively eligible children.
(b) Administrative costs include any costs incident to an eye examination or medical examination to determine whether an individual is blind or disabled.
§ 436.1002 FFP for services.
(a) FFP is available in expenditures for Medicaid services for all beneficiaries whose coverage is required or allowed under this part.
(b) FFP is available in expenditures for services provided to beneficiaries who were eligible for Medicaid in the month in which the medical care or services were provided, except that, for beneficiaries who establish eligibility for Medicaid by deducting incurred medical expenses from income, FFP is not available for expenses that are the beneficiary’s liability.
(c) FFP is available in expenditures for services covered under the plan that are furnished –
(1) To children who are determined by a qualified entity to be presumptively eligible;
(2) During a period of presumptive eligibility;
(3) By a provider that is eligible for payment under the plan; and
(4) Regardless of whether the children are determined eligible for Medicaid following the period of presumptive eligibility.
§ 436.1003 beneficiaries overcoming certain conditions of eligibility.
FFP is available for a temporary period specified in the State plan in expenditures for services provided to beneficiaries who are overcoming certain eligibility conditions, including blindness, disability, continued absence or incapacity of a parent, or unemployment of a parent.
§ 436.1004 FFP in expenditures for medical assistance for individuals who have declared United States citizenship or nationality under section 1137(d) of the Act and with respect to whom the State has not documented citizenship and identity.
Except for individuals described in § 436.406(a)(1)(v), FFP will not be available to a State with respect to expenditures for medical assistance furnished to individuals unless the State has obtained satisfactory documentary evidence of citizenship or national status, as described in § 436.407 of this chapter that complies with the requirements of section 1903(x) of the Act.
§ 436.1005 Institutionalized individuals.
(a) FFP is not available in expenditures for services provided to –
(1) Individuals who are inmates of public institutions as defined in § 435.1010 of this chapter; or
(2) Individuals under age 65 who are patients in an institution for mental diseases unless they are under age 22 and are receiving inpatient psychiatric services under § 440.160 of this subchapter.
(b) The exclusion of FFP described in paragraph (a) of this section does not apply during that part of the month in which the individual is not an inmate of a public institution or a patient in an institution for mental diseases.
(c) An individual on conditional release or convalescent leave from an institution for mental diseases is not considered to be a patient in that institution. However, such an individual who is under age 22 and has been receiving inpatient pyschiatric services under § 440.160 of this subchapter is considered to be a patient in the institution until he is unconditionally released or, if earlier, the date he reaches age 22.
§ 436.1006 Definitions relating to institutional status.
For purposes of FFP, the definitions in § 435.1010 of this chapter apply to this part.
Subpart L – Option for Coverage of Special Groups
§ 436.1100 Basis and scope.
(a) Statutory basis. Section 1920A of the Act allows States to provide Medicaid services to children under age 19 during a period of presumptive eligibility, prior to a formal determination of Medicaid eligibility.
(b) Scope. This subpart prescribes the requirements for providing medical assistance to special groups who are not eligible for Medicaid as categorically or medically needy.
Presumptive Eligibility for Children
Application form means at a minimum the form used to apply for Medicaid under the poverty-level-related eligibility groups described in section 1902(l) of the Act or a joint form for children to apply for the State Children’s Health Insurance Program and Medicaid.
Period of presumptive eligibility means a period that begins on the date on which a qualified entity determines that a child is presumptively eligible and ends with the earlier of –
(1) In the case of a child on whose behalf a Medicaid application has been filed, the day on which a decision is made on that application; or
(2) In the case of a child on whose behalf a Medicaid application has not been filed, the last day of the month following the month in which the determination of presumptive eligibility was made.
Presumptive income standard means the highest income eligibility standard established under the plan that is most likely to be used to establish the regular Medicaid eligibility of a child of the age involved.
Qualified entity means an entity that is determined by the State to be capable of making determinations of presumptive eligibility for children, and that –
(1) Furnishes health care items and services covered under the approved plan and is eligible to receive payments under the approved plan;
(2) Is authorized to determine eligibility of a child to participate in a Head Start program under the Head Start Act;
(3) Is authorized to determine eligibility of a child to receive child care services for which financial assistance is provided under the Child Care and Development Block Grant Act of 1990;
(4) Is authorized to determine eligibility of an infant or child to receive assistance under the special nutrition program for women, infants, and children (WIC) under section 17 of the Child Nutrition Act of 1966;
(5) Is authorized to determine eligibility of a child for medical assistance under the Medicaid State plan, or eligibility of a child for child health assistance under the State Children’s Health Insurance Program;
(6) Is an elementary or secondary school, as defined in section 14101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 8801);
(7) Is an elementary or secondary school operated or supported by the Bureau of Indian Affairs;
(8) Is a State or Tribal child support enforcement agency;
(9) Is an organization that –
(i) Provides emergency food and shelter under a grant under the Stewart B. McKinney Homeless Assistance Act;
(ii) Is a State or Tribal office or entity involved in enrollment in the program under this title, Part A of title IV, or title XXI; or
(iii) Determines eligibility for any assistance or benefits provided under any program of public or assisted housing that receives Federal funds, including the program under section 8 or any other section of the United States Housing Act of 1937 (42 U.S.C. 1437) or under the Native American Housing Assistance and Self Determination Act of 1996 (25 U.S.C. 4101 et seq.); and
(10) Any other entity the State so deems, as approved by the Secretary.
Services means all services covered under the plan including EPSDT (see part 440 of this chapter.)
§ 436.1102 General rules.
(a) The agency may provide services to children under age 19 during one or more periods of presumptive eligibility following a determination made by a qualified entity that the child’s estimated gross family income or, at the State’s option, the child’s estimated family income after applying simple disregards, does not exceed the applicable income standard.
(b) If the agency elects to provide services to children during a period of presumptive eligibility, the agency must –
(1) Provide qualified entities with application forms for Medicaid and information on how to assist parents, caretakers and other persons in completing and filing such forms;
(2) Establish procedures to ensure that qualified entities –
(i) Notify the parent or caretaker of the child at the time a determination regarding presumptive eligibility is made, in writing and orally if appropriate, of such determination;
(ii) Provide the parent or caretaker of the child with a Medicaid application form;
(iii) Within 5 working days after the date that the determination is made, notify the agency that a child is presumptively eligible;
(iv) For children determined to be presumptively eligible, notify the child’s parent or caretaker at the time the determination is made, in writing and orally if appropriate, that –
(A) If a Medicaid application on behalf of the child is not filed by the last day of the following month, the child’s presumptive eligibility will end on that last day; and
(B) If a Medicaid application on behalf of the child is filed by the last day of the following month, the child’s presumptive eligibility will end on the day that a decision is made on the Medicaid application; and
(v) For children determined not to be presumptively eligible, notify the child’s parent or caretaker at the time the determination is made, in writing and orally if appropriate –
(A) Of the reason for the determination; and
(B) That he or she may file an application for Medicaid on the child’s behalf with the Medicaid agency; and
(3) Provide all services covered under the plan, including EPSDT.
(4) Allow determinations of presumptive eligibility to be made by qualified entities on a Statewide basis.
(c) The agency must adopt reasonable standards regarding the number of periods of presumptive eligibility that will be authorized for a child in a given time frame.
PART 438 – MANAGED CARE
Subpart A – General Provisions
§ 438.1 Basis and scope.
(a) Statutory basis. This part is based on the following statutory sections:
(1) Section 1902(a)(4) of the Act requires that States provide for methods of administration that the Secretary finds necessary for proper and efficient operation of the State plan. The application of the requirements of this part to PIHPs and PAHPs that do not meet the statutory definition of an MCO or a PCCM is under the authority in section 1902(a)(4) of the Act.
(2) Section 1903(i)(25) of the Act prohibits payment to a State unless a State provides enrollee encounter data required by CMS.
(3) Section 1903(m) of the Act contains requirements that apply to comprehensive risk contracts.
(4) Section 1903(m)(2)(H) of the Act provides that an enrollee who loses Medicaid eligibility for not more than 2 months may be enrolled in the succeeding month in the same MCO or PCCM if that MCO or PCCM still has a contract with the State.
(5) Section 1905(t) of the Act contains requirements that apply to PCCMs.
(6) Section 1932 of the Act –
(i) Provides that, with specified exceptions, a State may require Medicaid beneficiaries to enroll in MCOs or PCCMs.
(ii) Establishes the rules that MCOs, PCCMs, the State, and the contracts between the State and those entities must meet, including compliance with requirements in sections 1903(m) and 1905(t) of the Act that are implemented in this part.
(iii) Establishes protections for enrollees of MCOs and PCCMs.
(iv) Requires States to develop a quality assessment and performance improvement strategy.
(v) Specifies certain prohibitions aimed at the prevention of fraud and abuse.
(vi) Provides that a State may not enter into contracts with MCOs unless it has established intermediate sanctions that it may impose on an MCO that fails to comply with specified requirements.
(vii) Specifies rules for Indian enrollees, Indian health care providers, and Indian managed care entities.
(viii) Makes other minor changes in the Medicaid program.
(b) Scope. This part sets forth requirements, prohibitions, and procedures for the provision of Medicaid services through MCOs, PIHPs, PAHPs, PCCMs and PCCM entities. Requirements vary depending on the type of entity and on the authority under which the State contracts with the entity. Provisions that apply only when the contract is under a mandatory managed care program authorized by section 1932(a)(1)(A) of the Act are identified as such.
§ 438.2 Definitions.
As used in this part –
Abuse means as the term is defined in § 455.2 of this chapter.
Actuary means an individual who meets the qualification standards established by the American Academy of Actuaries for an actuary and follows the practice standards established by the Actuarial Standards Board. In this part, Actuary refers to an individual who is acting on behalf of the State when used in reference to the development and certification of capitation rates.
Capitation payment means a payment the State makes periodically to a contractor on behalf of each beneficiary enrolled under a contract and based on the actuarially sound capitation rate for the provision of services under the State plan. The State makes the payment regardless of whether the particular beneficiary receives services during the period covered by the payment.
Choice counseling means the provision of information and services designed to assist beneficiaries in making enrollment decisions; it includes answering questions and identifying factors to consider when choosing among managed care plans and primary care providers. Choice counseling does not include making recommendations for or against enrollment into a specific MCO, PIHP, or PAHP.
Comprehensive risk contract means a risk contract between the State and an MCO that covers comprehensive services, that is, inpatient hospital services and any of the following services, or any three or more of the following services:
(1) Outpatient hospital services.
(2) Rural health clinic services.
(3) Federally Qualified Health Center (FQHC) services.
(4) Other laboratory and X-ray services.
(5) Nursing facility (NF) services.
(6) Early and periodic screening, diagnostic, and treatment (EPSDT) services.
(7) Family planning services.
(8) Physician services.
(9) Home health services.
Enrollee means a Medicaid beneficiary who is currently enrolled in an MCO, PIHP, PAHP, PCCM, or PCCM entity in a given managed care program.
Enrollee encounter data means the information relating to the receipt of any item(s) or service(s) by an enrollee under a contract between a State and a MCO, PIHP, or PAHP that is subject to the requirements of §§ 438.242 and 438.818.
Federally qualified HMO means an HMO that CMS has determined is a qualified HMO under section 1310(d) of the PHS Act.
Fraud means as the term is defined in § 455.2 of this chapter.
Health insuring organization (HIO) means a county operated entity, that in exchange for capitation payments, covers services for beneficiaries –
(1) Through payments to, or arrangements with, providers;
(2) Under a comprehensive risk contract with the State; and
(3) Meets the following criteria –
(i) First became operational prior to January 1, 1986; or
(ii) Is described in section 9517(c)(3) of the Omnibus Budget Reconciliation Act of 1985 (as amended by section 4734 of the Omnibus Budget Reconciliation Act of 1990 and section 205 of the Medicare Improvements for Patients and Providers Act of 2008).
Long-term services and supports (LTSS) means services and supports provided to beneficiaries of all ages who have functional limitations and/or chronic illnesses that have the primary purpose of supporting the ability of the beneficiary to live or work in the setting of their choice, which may include the individual’s home, a worksite, a provider-owned or controlled residential setting, a nursing facility, or other institutional setting.
Managed care organization (MCO) means an entity that has, or is seeking to qualify for, a comprehensive risk contract under this part, and that is –
(1) A Federally qualified HMO that meets the advance directives requirements of subpart I of part 489 of this chapter; or
(2) Any public or private entity that meets the advance directives requirements and is determined by the Secretary to also meet the following conditions:
(i) Makes the services it provides to its Medicaid enrollees as accessible (in terms of timeliness, amount, duration, and scope) as those services are to other Medicaid beneficiaries within the area served by the entity.
(ii) Meets the solvency standards of § 438.116.
Managed care program means a managed care delivery system operated by a State as authorized under sections 1915(a), 1915(b), 1932(a), or 1115(a) of the Act.
Material adjustment means an adjustment that, using reasonable actuarial judgment, has a significant impact on the development of the capitation payment such that its omission or misstatement could impact a determination whether the development of the capitation rate is consistent with generally accepted actuarial principles and practices.
Network provider means any provider, group of providers, or entity that has a network provider agreement with a MCO, PIHP, or PAHP, or a subcontractor, and receives Medicaid funding directly or indirectly to order, refer or render covered services as a result of the state’s contract with an MCO, PIHP, or PAHP. A network provider is not a subcontractor by virtue of the network provider agreement.
Nonrisk contract means a contract between the State and a PIHP or PAHP under which the contractor –
(1) Is not at financial risk for changes in utilization or for costs incurred under the contract that do not exceed the upper payment limits specified in § 447.362 of this chapter; and
(2) May be reimbursed by the State at the end of the contract period on the basis of the incurred costs, subject to the specified limits.
Overpayment means
Potential enrollee means a Medicaid beneficiary who is subject to mandatory enrollment or may voluntarily elect to enroll in a given MCO, PIHP, PAHP, PCCM or PCCM entity, but is not yet an enrollee of a specific MCO, PIHP, PAHP, PCCM, or PCCM entity.
Prepaid ambulatory health plan (PAHP) means an entity that –
(1) Provides services to enrollees under contract with the State, and on the basis of capitation payments, or other payment arrangements that do not use State plan payment rates.
(2) Does not provide or arrange for, and is not otherwise responsible for the provision of any inpatient hospital or institutional services for its enrollees; and
(3) Does not have a comprehensive risk contract.
Prepaid inpatient health plan (PIHP) means an entity that –
(1) Provides services to enrollees under contract with the State, and on the basis of capitation payments, or other payment arrangements that do not use State plan payment rates.
(2) Provides, arranges for, or otherwise has responsibility for the provision of any inpatient hospital or institutional services for its enrollees; and
(3) Does not have a comprehensive risk contract.
Primary care means all health care services and laboratory services customarily furnished by or through a general practitioner, family physician, internal medicine physician, obstetrician/gynecologist, pediatrician, or other licensed practitioner as authorized by the State Medicaid program, to the extent the furnishing of those services is legally authorized in the State in which the practitioner furnishes them.
Primary care case management means a system under which:
(1) A primary care case manager (PCCM) contracts with the State to furnish case management services (which include the location, coordination and monitoring of primary health care services) to Medicaid beneficiaries; or
(2) A PCCM entity contracts with the State to provide a defined set of functions.
Primary care case management entity (PCCM entity) means an organization that provides any of the following functions, in addition to primary care case management services, for the State:
(1) Provision of intensive telephonic or face-to-face case management, including operation of a nurse triage advice line.
(2) Development of enrollee care plans.
(3) Execution of contracts with and/or oversight responsibilities for the activities of FFS providers in the FFS program.
(4) Provision of payments to FFS providers on behalf of the State.
(5) Provision of enrollee outreach and education activities.
(6) Operation of a customer service call center.
(7) Review of provider claims, utilization and practice patterns to conduct provider profiling and/or practice improvement.
(8) Implementation of quality improvement activities including administering enrollee satisfaction surveys or collecting data necessary for performance measurement of providers.
(9) Coordination with behavioral health systems/providers.
(10) Coordination with long-term services and supports systems/providers.
Primary care case manager (PCCM) means a physician, a physician group practice or, at State option, any of the following:
(1) A physician assistant.
(2) A nurse practitioner.
(3) A certified nurse-midwife.
Provider means any individual or entity that is engaged in the delivery of services, or ordering or referring for those services, and is legally authorized to do so by the State in which it delivers the services.
Rate cell means a set of mutually exclusive categories of enrollees that is defined by one or more characteristics for the purpose of determining the capitation rate and making a capitation payment; such characteristics may include age, gender, eligibility category, and region or geographic area. Each enrollee should be categorized in one of the rate cells for each unique set of mutually exclusive benefits under the contract.
Rating period means a period of 12 months selected by the State for which the actuarially sound capitation rates are developed and documented in the rate certification submitted to CMS as required by § 438.7(a).
Risk contract means a contract between the State an MCO, PIHP or PAHP under which the contractor –
(1) Assumes risk for the cost of the services covered under the contract; and
(2) Incurs loss if the cost of furnishing the services exceeds the payments under the contract.
State means the Single State agency as specified in § 431.10 of this chapter.
Subcontractor means an individual or entity that has a contract with an MCO, PIHP, PAHP, or PCCM entity that relates directly or indirectly to the performance of the MCO’s, PIHP’s, PAHP’s, or PCCM entity’s obligations under its contract with the State. A network provider is not a subcontractor by virtue of the network provider agreement with the MCO, PIHP, or PAHP.
§ 438.3 Standard contract requirements.
(a) CMS review. The CMS must review and approve all MCO, PIHP, and PAHP contracts, including those risk and nonrisk contracts that, on the basis of their value, are not subject to the prior approval requirement in § 438.806. Proposed final contracts must be submitted in the form and manner established by CMS. For States seeking approval of contracts prior to a specific effective date, proposed final contracts must be submitted to CMS for review no later than 90 days prior to the effective date of the contract.
(b) Entities eligible for comprehensive risk contracts. A State may enter into a comprehensive risk contract only with the following:
(1) An MCO.
(2) The entities identified in section 1903(m)(2)(B)(i), (ii), and (iii) of the Act.
(3) Community, Migrant, and Appalachian Health Centers identified in section 1903(m)(2)(G) of the Act. Unless they qualify for a total exemption under section 1903(m)(2)(B) of the Act, these entities are subject to the regulations governing MCOs under this part.
(4) An HIO that arranges for services and became operational before January 1986.
(5) An HIO described in section 9517(c)(3) of the Omnibus Budget Reconciliation Act of 1985 (as amended by section 4734(2) of the Omnibus Budget Reconciliation Act of 1990).
(c) Payment. The following requirements apply to the final capitation rate and the receipt of capitation payments under the contract:
(1) The final capitation rate for each MCO, PIHP or PAHP must be:
(i) Specifically identified in the applicable contract submitted for CMS review and approval.
(ii) The final capitation rates must be based only upon services covered under the State plan and additional services deemed by the State to be necessary to comply with the requirements of subpart K of this part (applying parity standards from the Mental Health Parity and Addiction Equity Act), and represent a payment amount that is adequate to allow the MCO, PIHP or PAHP to efficiently deliver covered services to Medicaid-eligible individuals in a manner compliant with contractual requirements.
(2) Capitation payments may only be made by the State and retained by the MCO, PIHP or PAHP for Medicaid-eligible enrollees.
(d) Enrollment discrimination prohibited. Contracts with MCOs, PIHPs, PAHPs, PCCMs and PCCM entities must provide as follows:
(1) The MCO, PIHP, PAHP, PCCM or PCCM entity accepts individuals eligible for enrollment in the order in which they apply without restriction (unless authorized by CMS), up to the limits set under the contract.
(2) Enrollment is voluntary, except in the case of mandatory enrollment programs that meet the conditions set forth in § 438.50(a).
(3) The MCO, PIHP, PAHP, PCCM or PCCM entity will not, on the basis of health status or need for health care services, discriminate against individuals eligible to enroll.
(4) The MCO, PIHP, PAHP, PCCM or PCCM entity will not discriminate against individuals eligible to enroll on the basis of race, color, national origin, sex, or disability and will not use any policy or practice that has the effect of discriminating on the basis of race, color, or national origin, sex, or disability.
(e) Services that may be covered by an MCO, PIHP, or PAHP. (1) An MCO, PIHP, or PAHP may cover, for enrollees, services that are in addition to those covered under the State plan as follows:
(i) Any services that the MCO, PIHP or PAHP voluntarily agree to provide, although the cost of these services cannot be included when determining the payment rates under paragraph (c) of this section.
(ii) Any services necessary for compliance by the MCO, PIHP, or PAHP with the requirements of subpart K of this part and only to the extent such services are necessary for the MCO, PIHP, or PAHP to comply with § 438.910.
(2) An MCO, PIHP, or PAHP may cover, for enrollees, services or settings that are in lieu of services or settings covered under the State plan as follows:
(i) The State determines that the alternative service or setting is a medically appropriate and cost effective substitute for the covered service or setting under the State plan;
(ii) The enrollee is not required by the MCO, PIHP, or PAHP to use the alternative service or setting;
(iii) The approved in lieu of services are authorized and identified in the MCO, PIHP, or PAHP contract, and will be offered to enrollees at the option of the MCO, PIHP, or PAHP; and
(iv) The utilization and actual cost of in lieu of services is taken into account in developing the component of the capitation rates that represents the covered State plan services, unless a statute or regulation explicitly requires otherwise.
(f) Compliance with applicable laws and conflict of interest safeguards. All contracts with MCOs, PIHPs, PAHPs, PCCMs and PCCM entities must:
(1) Comply with all applicable Federal and State laws and regulations including Title VI of the Civil Rights Act of 1964; Title IX of the Education Amendments of 1972 (regarding education programs and activities); the Age Discrimination Act of 1975; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990 as amended; and section 1557 of the Patient Protection and Affordable Care Act.
(2) Comply with the conflict of interest safeguards described in § 438.58 and with the prohibitions described in section 1902(a)(4)(C) of the Act applicable to contracting officers, employees, or independent contractors.
(g) Provider-preventable condition requirements. All contracts with MCOs, PIHPs and PAHPs must comply with the requirements mandating provider identification of provider-preventable conditions as a condition of payment, as well as the prohibition against payment for provider-preventable conditions as set forth in § 434.6(a)(12) and § 447.26 of this chapter. MCOs, PIHPs, and PAHPs, must report all identified provider-preventable conditions in a form and frequency as specified by the State.
(h) Inspection and audit of records and access to facilities. All contracts must provide that the State, CMS, the Office of the Inspector General, the Comptroller General, and their designees may, at any time, inspect and audit any records or documents of the MCO, PIHP, PAHP, PCCM or PCCM entity, or its subcontractors, and may, at any time, inspect the premises, physical facilities, and equipment where Medicaid-related activities or work is conducted. The right to audit under this section exists for 10 years from the final date of the contract period or from the date of completion of any audit, whichever is later.
(i) Physician incentive plans. (1) MCO, PIHP, and PAHP contracts must provide for compliance with the requirements set forth in §§ 422.208 and 422.210 of this chapter.
(2) In applying the provisions of §§ 422.208 and 422.210 of this chapter, references to “MA organization,” “CMS,” and “Medicare beneficiaries” must be read as references to “MCO, PIHP, or PAHP,” “State,” and “Medicaid beneficiaries,” respectively.
(j) Advance directives. (1) All MCO and PIHP contracts must provide for compliance with the requirements of § 422.128 of this chapter for maintaining written policies and procedures for advance directives, as if such regulation applied directly to MCOs and PIHPs.
(2) All PAHP contracts must provide for compliance with the requirements of § 422.128 of this chapter for maintaining written policies and procedures for advance directives as if such regulation applied directly to PAHPs if the PAHP includes, in its network, any of those providers listed in § 489.102(a) of this chapter.
(3) The MCO, PIHP, or PAHP subject to the requirements of this paragraph (j) must provide adult enrollees with written information on advance directives policies, and include a description of applicable State law.
(4) The information must reflect changes in State law as soon as possible, but no later than 90 days after the effective date of the change.
(k) Subcontracts. All subcontracts must fulfill the requirements of this part for the service or activity delegated under the subcontract in accordance with § 438.230.
(l) Choice of network provider. The contract must allow each enrollee to choose his or her network provider to the extent possible and appropriate.
(m) Audited financial reports. The contract must require MCOs, PIHPs, and PAHPs to submit audited financial reports specific to the Medicaid contract on an annual basis. The audit must be conducted in accordance with generally accepted accounting principles and generally accepted auditing standards.
(n) Parity in mental health and substance use disorder benefits. (1) All MCO contracts, and any PIHP and PAHP contracts providing services to MCO enrollees, must provide for services to be delivered in compliance with the requirements of subpart K of this part insofar as those requirements are applicable.
(2) Any State providing any services to MCO enrollees using a delivery system other than the MCO delivery system must provide documentation of how the requirements of subpart K of this part are met with the submission of the MCO contract for review and approval under paragraph (a) of this section.
(o) LTSS contract requirements. Any contract with an MCO, PIHP or PAHP that includes LTSS as a covered benefit must require that any services covered under the contract that could be authorized through a waiver under section 1915(c) of the Act or a State plan amendment authorized through sections 1915(i) or 1915(k) of the Act be delivered in settings consistent with § 441.301(c)(4) of this chapter.
(p) Special rules for certain HIOs. Contracts with HIOs that began operating on or after January 1, 1986, and that the statute does not explicitly exempt from requirements in section 1903(m) of the Act, are subject to all the requirements of this part that apply to MCOs and contracts with MCOs. These HIOs may enter into comprehensive risk contracts only if they meet the criteria of paragraph (b) of this section.
(q) Additional rules for contracts with PCCMs. A PCCM contract must meet the following requirements:
(1) Provide for reasonable and adequate hours of operation, including 24-hour availability of information, referral, and treatment for emergency medical conditions.
(2) Restrict enrollment to beneficiaries who reside sufficiently near one of the PCCM’s delivery sites to reach that site within a reasonable time using available and affordable modes of transportation.
(3) Provide for arrangements with, or referrals to, sufficient numbers of physicians and other practitioners to ensure that services under the contract can be furnished to enrollees promptly and without compromise to quality of care.
(4) Prohibit discrimination in enrollment, disenrollment, and re-enrollment, based on the beneficiary’s health status or need for health care services.
(5) Provide that enrollees have the right to disenroll in accordance with § 438.56(c).
(r) Additional rules for contracts with PCCM entities. In addition to the requirements in paragraph (q) of this section, States must submit PCCM entity contracts to CMS for review and approval to ensure compliance with the provisions of this paragraph (r); § 438.10; and § 438.310(c)(2).
(s) Requirements for MCOs, PCCMs, PIHPs, or PAHPs that provide covered outpatient drugs. Contracts that obligate MCOs, PCCMs, PIHPs, or PAHPs to provide coverage of covered outpatient drugs must include the following requirements:
(1) The MCO, PIHP or PAHP provides coverage of covered outpatient drugs as defined in section 1927(k)(2) of the Act, that meets the standards for such coverage imposed by section 1927 of the Act as if such standards applied directly to the MCO, PIHP, or PAHP.
(2) The MCO, PIHP, or PAHP reports drug utilization data that is necessary for States to bill manufacturers for rebates in accordance with section 1927(b)(1)(A) of the Act no later than 45 calendar days after the end of each quarterly rebate period. Such utilization information must include, at a minimum, information on the total number of units of each dosage form, strength, and package size by National Drug Code of each covered outpatient drug dispensed or covered by the MCO, PIHP, or PAHP.
(3) The MCO, PIHP or PAHP establishes procedures to exclude utilization data for covered outpatient drugs that are subject to discounts under the 340B drug pricing program from the reports required under paragraph (s)(2) of this section when states do not require submission of managed care drug claims data from covered entities directly.
(4) The MCO, PCCM, PIHP, or PAHP must operate a drug utilization review program that complies with the requirements described in section 1927(g) of the Act and part 456, subpart K, of this chapter, as if such requirement applied to the MCO, PCCM, PIHP, or PAHP instead of the State.
(5) The MCO, PCCM, PIHP, or PAHP must provide a detailed description of its drug utilization review program activities to the State on an annual basis.
(6) The MCO, PIHP or PAHP must conduct a prior authorization program that complies with the requirements of section 1927(d)(5) of the Act, as if such requirements applied to the MCO, PIHP, or PAHP instead of the State.
(t) Requirements for MCOs, PIHPs, or PAHPs responsible for coordinating benefits for dually eligible individuals. In a State that enters into a Coordination of Benefits Agreement (COBA) with Medicare for Medicaid, an MCO, PIHP, or PAHP contract that includes responsibility for coordination of benefits for individuals dually eligible for Medicaid and Medicare must specify the methodology by which the State ensures that the appropriate MCO, PIHP, or PAHP receives all applicable crossover claims for which the MCO, PIHP, or PAHP is responsible. If the State elects to use a methodology other than requiring the MCO, PIHP, or PAHP to enter into a COBA with Medicare, that methodology must ensure that the submitting provider is promptly informed on the State’s remittance advice that the State has not denied payment and that the claim has been sent to the MCO, PIHP, or PAHP for payment consideration.
(u) Recordkeeping requirements. MCOs, PIHPs, and PAHPs must retain, and require subcontractors to retain, as applicable, the following information: enrollee grievance and appeal records in § 438.416, base data in § 438.5(c), MLR reports in § 438.8(k), and the data, information, and documentation specified in §§ 438.604, 438.606, 438.608, and 438.610 for a period of no less than 10 years.
(v) Applicability date. Sections 438.3(h) and (q) apply to the rating period for contracts with MCOs, PIHPs, PAHPs, PCCMs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.6(g) and (k) contained in the 42 CFR, parts 430 to 481, edition revised as of October 1, 2015.
§ 438.4 Actuarial soundness.
(a) Actuarially sound capitation rates defined. Actuarially sound capitation rates are projected to provide for all reasonable, appropriate, and attainable costs that are required under the terms of the contract and for the operation of the MCO, PIHP, or PAHP for the time period and the population covered under the terms of the contract, and such capitation rates are developed in accordance with the requirements in paragraph (b) of this section.
(b) CMS review and approval of actuarially sound capitation rates. Capitation rates for MCOs, PIHPs, and PAHPs must be reviewed and approved by CMS as actuarially sound. To be approved by CMS, capitation rates must:
(1) Have been developed in accordance with the standards specified in § 438.5 and generally accepted actuarial principles and practices. Any differences in the assumptions, methodologies, or factors used to develop capitation rates for covered populations must be based on valid rate development standards that represent actual cost differences in providing covered services to the covered populations. Any differences in the assumptions, methodologies, or factors used to develop capitation rates must not vary with the rate of Federal financial participation (FFP) associated with the covered populations in a manner that increases Federal costs. The determination that differences in the assumptions, methodologies, or factors used to develop capitation rates for MCOs, PIHPs, and PAHPs increase Federal costs and vary with the rate of FFP associated with the covered populations must be evaluated for the entire managed care program and include all managed care contracts for all covered populations. CMS may require a State to provide written documentation and justification that any differences in the assumptions, methodologies, or factors used to develop capitation rates for covered populations or contracts represent actual cost differences based on the characteristics and mix of the covered services or the covered populations.
(2) Be appropriate for the populations to be covered and the services to be furnished under the contract.
(3) Be adequate to meet the requirements on MCOs, PIHPs, and PAHPs in §§ 438.206, 438.207, and 438.208.
(4) Be specific to payments for each rate cell under the contract.
(5) Payments from any rate cell must not cross-subsidize or be cross-subsidized by payments for any other rate cell.
(6) Be certified by an actuary as meeting the applicable requirements of this part, including that the rates have been developed in accordance with the requirements specified in § 438.3(c)(1)(ii) and (e).
(7) Meet any applicable special contract provisions as specified in § 438.6.
(8) Be provided to CMS in a format and within a timeframe that meets requirements in § 438.7.
(9) Be developed in such a way that the MCO, PIHP, or PAHP would reasonably achieve a medical loss ratio standard, as calculated under § 438.8, of at least 85 percent for the rate year. The capitation rates may be developed in such a way that the MCO, PIHP, or PAHP would reasonably achieve a medical loss ratio standard greater than 85 percent, as calculated under § 438.8, as long as the capitation rates are adequate for reasonable, appropriate, and attainable non-benefit costs.
(c) Option to develop and certify a rate range. (1) Notwithstanding the provision at paragraph (b)(4) of this section, the State may develop and certify a range of capitation rates per rate cell as actuarially sound, when all of the following conditions are met:
(i) The rate certification identifies and justifies the assumptions, data, and methodologies specific to both the upper and lower bounds of the rate range.
(ii) Both the upper and lower bounds of the rate range must be certified as actuarially sound consistent with the requirements of this part.
(iii) The upper bound of the rate range does not exceed the lower bound of the rate range multiplied by 1.05.
(iv) The rate certification documents the State’s criteria for paying MCOs, PIHPs, and PAHPs at different points within the rate range.
(v) The State does not use as a criterion for paying MCOs, PIHPs, and PAHPs at different points within the rate range any of the following:
(A) The willingness or agreement of the MCOs, PIHPs, or PAHPs or their network providers to enter into, or adhere to, intergovernmental transfer (IGT) agreements; or
(B) The amount of funding the MCOs, PIHPs, or PAHPs or their network providers provide through IGT agreements.
(2) When a State develops and certifies a range of capitation rates per rate cell as actuarially sound consistent with the requirements of this paragraph (c), the State must:
(i) Document the capitation rates, prior to the start of the rating period, for the MCOs, PIHPs, and PAHPs at points within the rate range, consistent with the criteria in paragraph (c)(1)(iv) of this section.
(ii) Not modify the capitation rates under § 438.7(c)(3).
(iii) Not modify the capitation rates within the rate range, unless the State is increasing or decreasing the capitation rate per rate cell within the rate range up to 1 percent during the rating period. However, any changes of the capitation rate within the permissible 1 percent range must be consistent with a modification of the contract as required in § 438.3(c) and are subject to the requirements at paragraph (b)(1) of this section. Any modification to the capitation rates within the rate range greater than the permissible 1 percent range will require the State to provide a revised rate certification for CMS approval, which demonstrates that –
(A) The criteria in paragraph (c)(1)(iv) of this section, as described in the initial rate certification, were not applied accurately;
(B) There was a material error in the data, assumptions, or methodologies used to develop the initial rate certification and that the modifications are necessary to correct the error; or
(C) Other adjustments are appropriate and reasonable to account for programmatic changes.
(iv) Post on the website required in § 438.10(c)(3) the following information prior to executing a managed care contract or contract amendment that includes or modifies a rate range:
(A) The upper and lower bounds of each rate cell;
(B) A description of all assumptions that vary between the upper and lower bounds of each rate cell, including for the assumptions that vary, the specific assumptions used for the upper and lower bounds of each rate cell; and
(C) A description of the data and methodologies that vary between the upper and lower bounds of each rate cell, including for the data and methodologies that vary, the specific data and methodologies used for the upper and lower bounds of each rate cell.
§ 438.5 Rate development standards.
(a) Definitions. As used in this section and § 438.7(b), the following terms have the indicated meanings:
Budget neutral means a standard for any risk sharing mechanism that recognizes both higher and lower expected costs among contracted MCOs, PIHPs, or PAHPs under a managed care program and does not create a net aggregate gain or loss across all payments under that managed care program.
Prospective risk adjustment means a methodology to account for anticipated variation in risk levels among contracted MCOs, PIHPs, or PAHPs that is derived from historical experience of the contracted MCOs, PIHPs, or PAHPs and applied to rates for the rating period for which the certification is submitted.
Retrospective risk adjustment means a methodology to account for variation in risk levels among contracted MCOs, PIHPs, or PAHPs that is derived from experience concurrent with the rating period of the contracted MCOs, PIHPs, or PAHPs subject to the adjustment and calculated at the expiration of the rating period.
Risk adjustment is a methodology to account for the health status of enrollees via relative risk factors when predicting or explaining costs of services covered under the contract for defined populations or for evaluating retrospectively the experience of MCOs, PIHPs, or PAHPs contracted with the State.
(b) Process and requirements for setting actuarially sound capitation rates. In setting actuarially sound capitation rates, the State must follow the steps below, in an appropriate order, in accordance with this section, or explain why they are not applicable:
(1) Consistent with paragraph (c) of this section, identify and develop the base utilization and price data.
(2) Consistent with paragraph (d) of this section, develop and apply trend factors, including cost and utilization, to base data that are developed from actual experience of the Medicaid population or a similar population in accordance with generally accepted actuarial practices and principles.
(3) Consistent with paragraph (e) of this section, develop the non-benefit component of the rate to account for reasonable expenses related to MCO, PIHP, or PAHP administration; taxes; licensing and regulatory fees; contribution to reserves; risk margin; cost of capital; and other operational costs associated with the MCO’s, PIHP’s, or PAHP’s provision of State plan services to Medicaid enrollees.
(4) Consistent with paragraph (f) of this section, make appropriate and reasonable adjustments to account for changes to the base data, programmatic changes, non-benefit components, and any other adjustment necessary to establish actuarially sound rates.
(5) Take into account the MCO’s, PIHP’s, or PAHP’s past medical loss ratio, as calculated and reported under § 438.8, in the development of the capitation rates, and consider the projected medical loss ratio in accordance with § 438.4(b)(9).
(6) Consistent with paragraph (g) of this section, if risk adjustment is applied, select a risk adjustment methodology that uses generally accepted models and apply it in a budget neutral manner across all MCOs, PIHPs, or PAHPs in the program to calculate adjustments to the payments as necessary.
(c) Base data. (1) States must provide all the validated encounter data, FFS data (as appropriate), and audited financial reports (as defined in § 438.3(m)) that demonstrate experience for the populations to be served by the MCO, PIHP, or PAHP to the actuary developing the capitation rates for at least the three most recent and complete years prior to the rating period.
(2) States and their actuaries must use the most appropriate data, with the basis of the data being no older than from the 3 most recent and complete years prior to the rating period, for setting capitation rates. Such base data must be derived from the Medicaid population, or, if data on the Medicaid population is not available, derived from a similar population and adjusted to make the utilization and price data comparable to data from the Medicaid population. Data must be in accordance with actuarial standards for data quality and an explanation of why that specific data is used must be provided in the rate certification.
(3) Exception. (i) States that are unable to base their rates on data meeting the qualifications in paragraph (c)(2) of this section that the basis of the data be no older than from the 3 most recent and complete years prior to the rating period may request approval for an exception; the request must describe why an exception is necessary and describe the actions the state intends to take to come into compliance with those requirements.
(ii) States that request an exception from the base data standards established in this section must set forth a corrective action plan to come into compliance with the base data standards no later than 2 years after the last day of the rating period for which the deficiency was identified.
(d) Trend. Each trend must be reasonable and developed in accordance with generally accepted actuarial principles and practices. Trend must be developed primarily from actual experience of the Medicaid population or from a similar population.
(e) Non-benefit component of the rate. The development of the non-benefit component of the rate must include reasonable, appropriate, and attainable expenses related to MCO, PIHP, or PAHP administration, taxes, licensing and regulatory fees, contribution to reserves, risk margin, cost of capital, and other operational costs associated with the provision of services identified in § 438.3(c)(1)(ii) to the populations covered under the contract.
(f) Adjustments. Each adjustment must reasonably support the development of an accurate base data set for purposes of rate setting, address appropriate programmatic changes, reflect the health status of the enrolled population, or reflect non-benefit costs, and be developed in accordance with generally accepted actuarial principles and practices.
(g) Risk adjustment. Prospective or retrospective risk adjustment methodologies must be developed in a budget neutral manner consistent with generally accepted actuarial principles and practices.
(a) Definitions. As used in this part, the following terms have the indicated meanings:
Base amount is the starting amount, calculated according to paragraph (d)(2) of this section, available for pass-through payments to hospitals in a given contract year subject to the schedule in paragraph (d)(3) of this section.
Incentive arrangement means any payment mechanism under which a MCO, PIHP, or PAHP may receive additional funds over and above the capitation rates it was paid for meeting targets specified in the contract.
Pass-through payment is any amount required by the State to be added to the contracted payment rates, and considered in calculating the actuarially sound capitation rate, between the MCO, PIHP, or PAHP and hospitals, physicians, or nursing facilities that is not for the following purposes: A specific service or benefit provided to a specific enrollee covered under the contract; a provider payment methodology permitted under paragraphs (c)(1)(i) through (iii) of this section for services and enrollees covered under the contract; a subcapitated payment arrangement for a specific set of services and enrollees covered under the contract; GME payments; or FQHC or RHC wrap around payments.
Risk corridor means a risk sharing mechanism in which States and MCOs, PIHPs, or PAHPs may share in profits and losses under the contract outside of a predetermined threshold amount.
State plan approved rates means amounts calculated for specific services identifiable as having been provided to an individual beneficiary described under CMS approved rate methodologies in the Medicaid State plan. Supplemental payments contained in a State plan are not, and do not constitute, State plan approved rates.
Supplemental payments means amounts paid by the State in its FFS Medicaid delivery system to providers that are described and approved in the State plan or under a demonstration or waiver thereof and are in addition to State plan approved rates. Disproportionate share hospital (DSH) and graduate medical education (GME) payments are not, and do not constitute, supplemental payments.
Withhold arrangement means any payment mechanism under which a portion of a capitation rate is withheld from an MCO, PIHP, or PAHP and a portion of or all of the withheld amount will be paid to the MCO, PIHP, or PAHP for meeting targets specified in the contract. The targets for a withhold arrangement are distinct from general operational requirements under the contract. Arrangements that withhold a portion of a capitation rate for noncompliance with general operational requirements are a penalty and not a withhold arrangement.
(b) Basic requirements. (1) If used in the payment arrangement between the State and the MCO, PIHP, or PAHP, all applicable risk-sharing mechanisms, such as reinsurance, risk corridors, or stop-loss limits, must be documented in the contract and rate certification documents for the rating period prior to the start of the rating period, and must be developed in accordance with § 438.4, the rate development standards in § 438.5, and generally accepted actuarial principles and practices. Risk-sharing mechanisms may not be added or modified after the start of the rating period.
(2) Contracts with incentive arrangements may not provide for payment in excess of 105 percent of the approved capitation payments attributable to the enrollees or services covered by the incentive arrangement, since such total payments will not be considered to be actuarially sound. For all incentive arrangements, the contract must provide that the arrangement is –
(i) For a fixed period of time and performance is measured during the rating period under the contract in which the incentive arrangement is applied.
(ii) Not to be renewed automatically.
(iii) Made available to both public and private contractors under the same terms of performance.
(iv) Does not condition MCO, PIHP, or PAHP participation in the incentive arrangement on the MCO, PIHP, or PAHP entering into or adhering to intergovernmental transfer agreements.
(v) Necessary for the specified activities, targets, performance measures, or quality-based outcomes that support program initiatives as specified in the State’s quality strategy at § 438.340.
(3) Contracts that provide for a withhold arrangement must ensure that the capitation payment minus any portion of the withhold that is not reasonably achievable is actuarially sound as determined by an actuary. The total amount of the withhold, achievable or not, must be reasonable and take into consideration the MCO’s, PIHP’s or PAHP’s financial operating needs accounting for the size and characteristics of the populations covered under the contract, as well as the MCO’s, PIHP’s or PAHP’s capital reserves as measured by the risk-based capital level, months of claims reserve, or other appropriate measure of reserves. The data, assumptions, and methodologies used to determine the portion of the withhold that is reasonably achievable must be submitted as part of the documentation required under § 438.7(b)(6). For all withhold arrangements, the contract must provide that the arrangement is –
(i) For a fixed period of time and performance is measured during the rating period under the contract in which the withhold arrangement is applied.
(ii) Not to be renewed automatically.
(iii) Made available to both public and private contractors under the same terms of performance.
(iv) Does not condition MCO, PIHP, or PAHP participation in the withhold arrangement on the MCO, PIHP, or PAHP entering into or adhering to intergovernmental transfer agreements.
(v) Necessary for the specified activities, targets, performance measures, or quality-based outcomes that support program initiatives as specified in the State’s quality strategy under § 438.340.
(c) Delivery system and provider payment initiatives under MCO, PIHP, or PAHP contracts – (1) General rule. Except as specified in this paragraph (c), in paragraph (d) of this section, in a specific provision of Title XIX, or in another regulation implementing a Title XIX provision related to payments to providers, that is applicable to managed care programs, the State may not direct the MCO’s, PIHP’s or PAHP’s expenditures under the contract.
(i) The State may require the MCO, PIHP or PAHP to implement value-based purchasing models for provider reimbursement, such as pay for performance arrangements, bundled payments, or other service payment models intended to recognize value or outcomes over volume of services.
(ii) The State may require MCOs, PIHPs, or PAHPs to participate in a multi-payer or Medicaid-specific delivery system reform or performance improvement initiative.
(iii) The State may require the MCO, PIHP, or PAHP to:
(A) Adopt a minimum fee schedule for network providers that provide a particular service under the contract using State plan approved rates as defined in paragraph (a) of this section.
(B) Adopt a minimum fee schedule for network providers that provide a particular service under the contract using rates other than the State plan approved rates defined in paragraph (a) of this section.
(C) Provide a uniform dollar or percentage increase for network providers that provide a particular service under the contract.
(D) Adopt a maximum fee schedule for network providers that provide a particular service under the contract, so long as the MCO, PIHP, or PAHP retains the ability to reasonably manage risk and has discretion in accomplishing the goals of the contract.
(2) Process for approval. (i) All contract arrangements that direct the MCO’s, PIHP’s, or PAHP’s expenditures under paragraphs (c)(1)(i) through (iii) of this section must be developed in accordance with § 438.4, the standards specified in § 438.5, and generally accepted actuarial principles and practices.
(ii) Contract arrangements that direct the MCO’s, PIHP’s, or PAHP’s expenditures under paragraphs (c)(1)(i) and (ii) and (c)(1)(iii)(B) through (D) of this section must have written approval prior to implementation. Contract arrangements that direct the MCO’s, PIHP’s, or PAHP’s expenditures under paragraph (c)(1)(iii)(A) of this section do not require written approval prior to implementation but are required to meet the criteria in paragraphs (c)(2)(ii)(A) through (F) of this section. To obtain written approval, a State must demonstrate, in writing, that the arrangement –
(A) Is based on the utilization and delivery of services;
(B) Directs expenditures equally, and using the same terms of performance, for a class of providers providing the service under the contract;
(C) Expects to advance at least one of the goals and objectives in the quality strategy in § 438.340;
(D) Has an evaluation plan that measures the degree to which the arrangement advances at least one of the goals and objectives in the quality strategy in § 438.340;
(E) Does not condition provider participation in contract arrangements under paragraphs (c)(1)(i) through (iii) of this section on the provider entering into or adhering to intergovernmental transfer agreements; and
(F) May not be renewed automatically.
(iii) Any contract arrangements that direct the MCO’s, PIHP’s, or PAHP’s expenditures under paragraph (c)(1)(i) or (ii) of this section must also demonstrate, in writing, that the arrangement –
(A) Must make participation in the value-based purchasing initiative, delivery system reform or performance improvement initiative available, using the same terms of performance, to a class of providers providing services under the contract related to the reform or improvement initiative;
(B) Must use a common set of performance measures across all of the payers and providers;
(C) May not set the amount or frequency of the expenditures; and
(D) Does not allow the State to recoup any unspent funds allocated for these arrangements from the MCO, PIHP, or PAHP.
(3) Approval timeframes. (i) Approval of a payment arrangement under paragraphs (c)(1)(i) and (ii) of this section is for one rating period unless a multi-year approval is requested and meets all of the following criteria:
(A) The State has explicitly identified and described the payment arrangement in the contract as a multi-year payment arrangement, including a description of the payment arrangement by year, if the payment arrangement varies by year.
(B) The State has developed and described its plan for implementing a multi-year payment arrangement, including the State’s plan for multi-year evaluation, and the impact of a multi-year payment arrangement on the State’s goals and objectives in the State’s quality strategy in § 438.340.
(C) The State has affirmed that it will not make any changes to the payment methodology, or magnitude of the payment, described in the contract for all years of the multi-year payment arrangement without CMS prior approval. If the State determines that changes to the payment methodology, or magnitude of the payment, are necessary, the State must obtain prior approval of such changes under paragraph (c)(2) of this section.
(ii) Approval of a payment arrangement under paragraph (c)(1)(iii) of this section is for one rating period.
(d) Pass-through payments under MCO, PIHP, and PAHP contracts – (1) General rule. States may continue to require MCOs, PIHPs, and PAHPs to make pass-through payments (as defined in paragraph (a) of this section) to network providers that are hospitals, physicians, or nursing facilities under the contract, provided the requirements of this paragraph (d) are met. States may not require MCOs, PIHPs, and PAHPs to make pass-through payments other than those permitted under this paragraph (d).
(i) In order to use a transition period described in this paragraph (d), a State must demonstrate that it had pass-through payments for hospitals, physicians, or nursing facilities in:
(A) Managed care contract(s) and rate certification(s) for the rating period that includes July 5, 2016, and were submitted for CMS review and approval on or before July 5, 2016; or
(B) If the managed care contract(s) and rate certification(s) for the rating period that includes July 5, 2016 had not been submitted to CMS on or before July 5, 2016, the managed care contract(s) and rate certification(s) for a rating period before July 5, 2016 that had been most recently submitted for CMS review and approval as of July 5, 2016.
(ii) CMS will not approve a retroactive adjustment or amendment, notwithstanding the adjustments to the base amount permitted in paragraph (d)(2) of this section, to managed care contract(s) and rate certification(s) to add new pass-through payments or increase existing pass-through payments defined in paragraph (a) of this section.
(2) Calculation of the base amount. The base amount of pass-through payments is the sum of the results of paragraphs (d)(2)(i) and (ii) of this section.
(i) For inpatient and outpatient hospital services that will be provided to eligible populations through the MCO, PIHP, or PAHP contracts for the rating period that includes pass-through payments and that were provided to the eligible populations under MCO, PIHP, or PAHP contracts two years prior to the rating period, the State must determine reasonable estimates of the aggregate difference between:
(A) The amount Medicare FFS would have paid for those inpatient and outpatient hospital services utilized by the eligible populations under the MCO, PIHP, or PAHP contracts for the 12-month period immediately two years prior to the rating period that will include pass-through payments; and
(B) The amount the MCOs, PIHPs, or PAHPs paid (not including pass through payments) for those inpatient and outpatient hospital services utilized by the eligible populations under MCO, PIHP, or PAHP contracts for the 12-month period immediately 2 years prior to the rating period that will include pass-through payments.
(ii) For inpatient and outpatient hospital services that will be provided to eligible populations through the MCO, PIHP, or PAHP contracts for the rating period that includes pass-through payments and that were provided to the eligible populations under Medicaid FFS for the 12-month period immediately 2 years prior to the rating period, the State must determine reasonable estimates of the aggregate difference between:
(A) The amount Medicare FFS would have paid for those inpatient and outpatient hospital services utilized by the eligible populations under Medicaid FFS for the 12-month period immediately 2 years prior to the rating period that will include pass-through payments; and
(B) The amount the State paid under Medicaid FFS (not including pass through payments) for those inpatient and outpatient hospital services utilized by the eligible populations for the 12-month period immediately 2 years prior to the rating period that will include pass-through payments.
(iii) The base amount must be calculated on an annual basis and is recalculated annually.
(iv) States may calculate reasonable estimates of the aggregate differences in paragraphs (d)(2)(i) and (ii) of this section in accordance with the upper payment limit requirements in 42 CFR part 447.
(3) Schedule for the reduction of the base amount of pass-through payments for hospitals under the MCO, PIHP, or PAHP contract and maximum amount of permitted pass-through payments for each year of the transition period. For States that meet the requirement in paragraph (d)(1)(i) of this section, pass-through payments for hospitals may continue to be required under the contract but must be phased out no longer than on the 10-year schedule, beginning with rating periods for contract(s) that start on or after July 1, 2017. For rating periods for contract(s) beginning on or after July 1, 2027, the State cannot require pass-through payments for hospitals under a MCO, PIHP, or PAHP contract. Until July 1, 2027, the total dollar amount of pass-through payments to hospitals may not exceed the lesser of:
(i) A percentage of the base amount, beginning with 100 percent for rating periods for contract(s) beginning on or after July 1, 2017, and decreasing by 10 percentage points each successive year; or
(ii) The total dollar amount of pass-through payments to hospitals identified in the managed care contract(s) and rate certification(s) used to meet the requirement of paragraph (d)(1)(i) of this section.
(4) Documentation of the base amount for pass-through payments to hospitals. All contract arrangements that direct pass-through payments under the MCO’s, PIHP’s or PAHP’s contract for hospitals must document the calculation of the base amount in the rate certification required in § 438.7. The documentation must include the following:
(i) The data, methodologies, and assumptions used to calculate the base amount;
(ii) The aggregate amounts calculated for paragraphs (d)(2)(i)(A), (d)(2)(i)(B), (d)(2)(ii)(A), (d)(2)(ii)(B) of this section; and
(iii) The calculation of the applicable percentage of the base amount available for pass-through payments under the schedule in paragraph (d)(3) of this section.
(5) Pass-through payments to physicians or nursing facilities. For States that meet the requirement in paragraph (d)(1)(i) of this section, rating periods for contract(s) beginning on or after July 1, 2017 through rating periods for contract(s) beginning on or after July 1, 2021, may continue to require pass-through payments to physicians or nursing facilities under the MCO, PIHP, or PAHP contract of no more than the total dollar amount of pass-through payments to physicians or nursing facilities, respectively, identified in the managed care contract(s) and rate certification(s) used to meet the requirement of paragraph (d)(1)(i) of this section. For rating periods for contract(s) beginning on or after July 1, 2022, the State cannot require pass-through payments for physicians or nursing facilities under a MCO, PIHP, or PAHP contract.
(6) Pass-through payments for States transitioning services and populations from a fee-for-service delivery system to a managed care delivery system. Notwithstanding the restrictions on pass-through payments in paragraphs (d)(1), (3), and (5) of this section, a State may require the MCO, PIHP, or PAHP to make pass-through payments to network providers that are hospitals, nursing facilities, or physicians under the contract, for each rating period of the transition period for up to 3 years, when Medicaid populations or services are initially transitioning from a fee-for-service (FFS) delivery system to a managed care delivery system, provided the following requirements are met:
(i) The services will be covered for the first time under a managed care contract and were previously provided in a FFS delivery system prior to the first rating period of the transition period.
(ii) The State made supplemental payments, as defined in paragraph (a) of this section, to hospitals, nursing facilities, or physicians during the 12-month period immediately 2 years prior to the first year of the transition period.
(iii) The aggregate amount of the pass-through payments that the State requires the MCO, PIHP, or PAHP to make is less than or equal to the amounts calculated in paragraph (d)(6)(iii)(A), (B), or (C) of this section for the relevant provider type for each rating period of the transition period. In determining the amount of each component for the calculations contained in paragraphs (d)(6)(iii)(A) through (C), the State must use the amounts paid for services during the 12-month period immediately 2 years prior to the first rating period of the transition period.
(A) Hospitals. For inpatient and outpatient hospital services, calculate the product of the actual supplemental payments paid and the ratio achieved by dividing the amount paid through payment rates for hospital services that are being transitioned from payment in a FFS delivery system to the managed care contract by the total amount paid through state plan approved rates for hospital services made in the State’s FFS delivery system. Both the numerator and denominator of the ratio should exclude any supplemental payments made to the applicable providers.
(B) Nursing facilities. For nursing facility services, calculate the product of the actual supplemental payments paid and the ratio achieved by dividing the amount paid through state plan approved rates for nursing facility services that are being transitioned from payment in a FFS delivery system to the managed care contract by the total amount paid through payment rates for nursing facility services made in the State’s FFS delivery system. Both the numerator and denominator of the ratio should exclude any supplemental payments made to the applicable providers.
(C) Physicians. For physician services, calculate the product of the actual supplemental payments paid and the ratio achieved by dividing the amount paid through state plan approved rates for physician services that are being transitioned from payment in a FFS delivery system to the managed care contract by the total amount paid through payment rates for physician services made in the State’s FFS delivery system. Both the numerator and denominator of the ratio should exclude any supplemental payments made to the applicable providers.
(iv) The State may require the MCO, PIHP, or PAHP to make pass-through payments for Medicaid populations or services that are initially transitioning from a FFS delivery system to a managed care delivery system for up to 3 years from the beginning of the first rating period in which the services were transitioned from payment in a FFS delivery system to a managed care contract, provided that during the 3 years, the services continue to be provided under a managed care contract with an MCO, PIHP, or PAHP.
(e) Payments to MCOs and PIHPs for enrollees that are a patient in an institution for mental disease. The State may make a monthly capitation payment to an MCO or PIHP for an enrollee aged 21-64 receiving inpatient treatment in an Institution for Mental Diseases, as defined in § 435.1010 of this chapter, so long as the facility is a hospital providing psychiatric or substance use disorder inpatient care or a sub-acute facility providing psychiatric or substance use disorder crisis residential services, and length of stay in the IMD is for a short term stay of no more than 15 days during the period of the monthly capitation payment. The provision of inpatient psychiatric or substance use disorder treatment in an IMD must meet the requirements for in lieu of services at § 438.3(e)(2)(i) through (iii). For purposes of rate setting, the state may use the utilization of services provided to an enrollee under this section when developing the inpatient psychiatric or substance use disorder component of the capitation rate, but must price utilization at the cost of the same services through providers included under the State plan.
§ 438.7 Rate certification submission.
(a) CMS review and approval of the rate certification. States must submit to CMS for review and approval, all MCO, PIHP, and PAHP rate certifications concurrent with the review and approval process for contracts as specified in § 438.3(a).
(b) Documentation. The rate certification must contain the following information:
(1) Base data. A description of the base data used in the rate setting process (including the base data requested by the actuary, the base data that was provided by the State, and an explanation of why any base data requested was not provided by the State) and of how the actuary determined which base data set was appropriate to use for the rating period.
(2) Trend. Each trend factor, including trend factors for changes in the utilization and price of services, applied to develop the capitation rates must be adequately described with enough detail so CMS or an actuary applying generally accepted actuarial principles and practices can understand and evaluate the following:
(i) The calculation of each trend used for the rating period and the reasonableness of the trend for the enrolled population.
(ii) Any meaningful difference in how a trend differs between the rate cells, service categories, or eligibility categories.
(3) Non-benefit component of the rate. The development of the non-benefit component of the rate must be adequately described with enough detail so CMS or an actuary applying generally accepted actuarial principles and practices can identify each type of non-benefit expense that is included in the rate and evaluate the reasonableness of the cost assumptions underlying each expense. The actuary may document the non-benefit costs according to the types of non-benefit costs under § 438.5(e).
(4) Adjustments. All adjustments used to develop the capitation rates must be adequately described with enough detail so that CMS, or an actuary applying generally accepted actuarial principles and practices, can understand and evaluate all of the following:
(i) How each material adjustment was developed and the reasonableness of the material adjustment for the enrolled population.
(ii) The cost impact of each material adjustment and the aggregate cost impact of non-material adjustments.
(iii) Where in the rate setting process the adjustment was applied.
(iv) A list of all non-material adjustments used in the rate development process.
(5) Risk adjustment. (i) All prospective risk adjustment methodologies must be adequately described with enough detail so that CMS or an actuary applying generally accepted actuarial principles and practices can understand and evaluate the following:
(A) The data, and any adjustments to that data, to be used to calculate the adjustment.
(B) The model, and any adjustments to that model, to be used to calculate the adjustment.
(C) The method for calculating the relative risk factors and the reasonableness and appropriateness of the method in measuring the risk factors of the respective populations.
(D) The magnitude of the adjustment on the capitation rate per MCO, PIHP, or PAHP.
(E) An assessment of the predictive value of the methodology compared to prior rating periods.
(F) Any concerns the actuary has with the risk adjustment process.
(ii) All retrospective risk adjustment methodologies must be adequately described with enough detail so that CMS or an actuary applying generally accepted actuarial principles and practices can understand and evaluate the following:
(A) The party calculating the risk adjustment.
(B) The data, and any adjustments to that data, to be used to calculate the adjustment.
(C) The model, and any adjustments to that model, to be used to calculate the adjustment.
(D) The timing and frequency of the application of the risk adjustment.
(E) Any concerns the actuary has with the risk adjustment process.
(iii) Application of an approved risk adjustment methodology to capitation rates does not require a revised rate certification because payment of capitation rates as modified by the approved risk adjustment methodology must be within the scope of the original rate certification. The State must provide to CMS the payment terms updated by the application of the risk adjustment methodology consistent with § 438.3(c).
(6) Special contract provisions. A description of any of the special contract provisions related to payment in § 438.6 that are applied in the contract.
(c) Rates paid under risk contracts. The State, through its actuary, must certify the final capitation rate paid per rate cell under each risk contract and document the underlying data, assumptions and methodologies supporting that specific capitation rate.
(1) The State may pay each MCO, PIHP or PAHP a capitation rate under the contract that is different than the capitation rate paid to another MCO, PIHP or PAHP, so long as each capitation rate per rate cell that is paid is independently developed and set in accordance with this part.
(2) If the State determines that a retroactive adjustment to the capitation rate is necessary, the retroactive adjustment must be supported by a rationale for the adjustment and the data, assumptions and methodologies used to develop the magnitude of the adjustment must be adequately described with enough detail to allow CMS or an actuary to determine the reasonableness of the adjustment. These retroactive adjustments must be certified by an actuary in a revised rate certification and submitted as a contract amendment to be approved by CMS. All such adjustments are also subject to Federal timely claim filing requirements.
(3) The State may increase or decrease the capitation rate per rate cell, as required in paragraph (c) of this section and § 438.4(b)(4), up to 1.5 percent during the rating period without submitting a revised rate certification, as required under paragraph (a) of this section. However, any changes of the capitation rate within the permissible range must be consistent with a modification of the contract as required in § 438.3(c) and are subject to the requirements at § 438.4(b)(1). Notwithstanding the provisions in paragraph (c) of this section, CMS may require a State to provide documentation that modifications to the capitation rate comply with the requirements in §§ 438.3(c) and (e) and 438.4(b)(1).
(d) Provision of additional information. The State must, upon CMS’ request, provide additional information, whether part of the rate certification or additional supplemental materials, if CMS determines that information is pertinent to the approval of the certification under this part. The State must identify whether the information provided in addition to the rate certification is proffered by the State, the actuary, or another party.
(e) Provision of additional guidance. CMS will issue guidance, at least annually, which includes all of the following:
(1) The Federal standards for capitation rate development.
(2) The documentation required to determine that the capitation rates are projected to provide for all reasonable, appropriate, and attainable costs that are required under the terms.
(3) The documentation required to determine that the capitation rates have been developed in accordance with the requirements of this part.
(4) Any updates or developments in the rate review process to reduce State burden and facilitate prompt actuarial reviews.
(5) The documentation necessary to demonstrate that capitation rates competitively bid through a procurement process have been established consistent with the requirements of §§ 438.4 through 438.8.
§ 438.8 Medical loss ratio (MLR) standards.
(a) Basic rule. The State must ensure, through its contracts starting on or after July 1, 2017, that each MCO, PIHP, and PAHP calculate and report a MLR in accordance with this section. For multi-year contracts that do not start in 2017, the State must require the MCO, PIHP, or PAHP to calculate and report a MLR for the rating period that begins in 2017.
(b) Definitions. As used in this section, the following terms have the indicated meanings:
Credibility adjustment means an adjustment to the MLR for a partially credible MCO, PIHP, or PAHP to account for a difference between the actual and target MLRs that may be due to random statistical variation.
Full credibility means a standard for which the experience of an MCO, PIHP, or PAHP is determined to be sufficient for the calculation of a MLR with a minimal chance that the difference between the actual and target medical loss ratio is not statistically significant. An MCO, PIHP, or PAHP that is assigned full credibility (or is fully credible) will not receive a credibility adjustment to its MLR.
Member months mean the number of months an enrollee or a group of enrollees is covered by an MCO, PIHP, or PAHP over a specified time period, such as a year.
MLR reporting year means a period of 12 months consistent with the rating period selected by the State.
No credibility means a standard for which the experience of an MCO, PIHP, or PAHP is determined to be insufficient for the calculation of a MLR. An MCO, PIHP, or PAHP that is assigned no credibility (or is non-credible) will not be measured against any MLR requirements.
Non-claims costs means those expenses for administrative services that are not: Incurred claims (as defined in paragraph (e)(2) of this section); expenditures on activities that improve health care quality (as defined in paragraph (e)(3) of this section); or licensing and regulatory fees, or Federal and State taxes (as defined in paragraph (f)(2) of this section).
Partial credibility means a standard for which the experience of an MCO, PIHP, or PAHP is determined to be sufficient for the calculation of a MLR but with a non-negligible chance that the difference between the actual and target medical loss ratios is statistically significant. An MCO, PIHP, or PAHP that is assigned partial credibility (or is partially credible) will receive a credibility adjustment to its MLR.
(c) MLR requirement. If a State elects to mandate a minimum MLR for its MCOs, PIHPs, or PAHPs, that minimum MLR must be equal to or higher than 85 percent (the standard used for projecting actuarial soundness under § 438.4(b)) and the MLR must be calculated and reported for each MLR reporting year by the MCO, PIHP, or PAHP, consistent with this section.
(d) Calculation of the MLR. The MLR experienced for each MCO, PIHP, or PAHP in a MLR reporting year is the ratio of the numerator (as defined in paragraph (e) of this section) to the denominator (as defined in paragraph (f) of this section). A MLR may be increased by a credibility adjustment, in accordance with paragraph (h) of this section.
(e) Numerator – (1) Required elements. The numerator of an MCO’s, PIHP’s, or PAHP’s MLR for a MLR reporting year is the sum of the MCO’s, PIHP’s, or PAHP’s incurred claims (as defined in (e)(2) of this section); the MCO’s, PIHP’s, or PAHP’s expenditures for activities that improve health care quality (as defined in paragraph (e)(3) of this section); and fraud prevention activities (as defined in paragraph (e)(4) of this section).
(2) Incurred claims. (i) Incurred claims must include the following:
(A) Direct claims that the MCO, PIHP, or PAHP paid to providers (including under capitated contracts with network providers) for services or supplies covered under the contract and services meeting the requirements of § 438.3(e) provided to enrollees.
(B) Unpaid claims liabilities for the MLR reporting year, including claims reported that are in the process of being adjusted or claims incurred but not reported.
(C) Withholds from payments made to network providers.
(D) Claims that are recoverable for anticipated coordination of benefits.
(E) Claims payments recoveries received as a result of subrogation.
(F) Incurred but not reported claims based on past experience, and modified to reflect current conditions, such as changes in exposure or claim frequency or severity.
(G) Changes in other claims-related reserves.
(H) Reserves for contingent benefits and the medical claim portion of lawsuits.
(ii) Amounts that must be deducted from incurred claims include the following:
(A) Overpayment recoveries received from network providers.
(B) Prescription drug rebates received and accrued.
(iii) Expenditures that must be included in incurred claims include the following:
(A) The amount of incentive and bonus payments made, or expected to be made, to network providers.
(B) The amount of claims payments recovered through fraud reduction efforts, not to exceed the amount of fraud reduction expenses. The amount of fraud reduction expenses must not include activities specified in paragraph (e)(4) of this section.
(iv) Amounts that must either be included in or deducted from incurred claims include, respectively, net payments or receipts related to State mandated solvency funds.
(v) Amounts that must be excluded from incurred claims:
(A) Non-claims costs, as defined in paragraph (b) of this section, which include the following:
(1) Amounts paid to third party vendors for secondary network savings.
(2) Amounts paid to third party vendors for network development, administrative fees, claims processing, and utilization management.
(3) Amounts paid, including amounts paid to a provider, for professional or administrative services that do not represent compensation or reimbursement for State plan services or services meeting the definition in § 438.3(e) and provided to an enrollee.
(4) Fines and penalties assessed by regulatory authorities.
(B) Amounts paid to the State as remittance under paragraph (j) of this section.
(C) Amounts paid to network providers under to § 438.6(d).
(vi) Incurred claims paid by one MCO, PIHP, or PAHP that is later assumed by another entity must be reported by the assuming MCO, PIHP, or PAHP for the entire MLR reporting year and no incurred claims for that MLR reporting year may be reported by the ceding MCO, PIHP, or PAHP.
(3) Activities that improve health care quality. Activities that improve health care quality must be in one of the following categories:
(i) An MCO, PIHP, or PAHP activity that meets the requirements of 45 CFR 158.150(b) and is not excluded under 45 CFR 158.150(c).
(ii) An MCO, PIHP, or PAHP activity related to any EQR-related activity as described in § 438.358(b) and (c).
(iii) Any MCO, PIHP, or PAHP expenditure that is related to Health Information Technology and meaningful use, meets the requirements placed on issuers found in 45 CFR 158.151, and is not considered incurred claims, as defined in paragraph (e)(2) of this section.
(4) Fraud prevention activities. MCO, PIHP, or PAHP expenditures on activities related to fraud prevention consistent with regulations adopted for the private market at 45 CFR part 158. Expenditures under this paragraph must not include expenses for fraud reduction efforts in paragraph (e)(2)(iii)(B) of this section.
(f) Denominator – (1) Required elements. The denominator of an MCO’s, PIHP’s, or PAHP’s MLR for a MLR reporting year must equal the adjusted premium revenue. The adjusted premium revenue is the MCO’s, PIHP’s, or PAHP’s premium revenue (as defined in paragraph (f)(2) of this section) minus the MCO’s, PIHP’s, or PAHP’s Federal, State, and local taxes and licensing and regulatory fees (as defined in paragraph (f)(3) of this section) and is aggregated in accordance with paragraph (i) of this section.
(2) Premium revenue. Premium revenue includes the following for the MLR reporting year:
(i) State capitation payments, developed in accordance with § 438.4, to the MCO, PIHP, or PAHP for all enrollees under a risk contract approved under § 438.3(a), excluding payments made under § 438.6(d).
(ii) State-developed one time payments, for specific life events of enrollees.
(iii) Other payments to the MCO, PIHP, or PAHP approved under § 438.6(b)(3).
(iv) Unpaid cost-sharing amounts that the MCO, PIHP, or PAHP could have collected from enrollees under the contract, except those amounts the MCO, PIHP, or PAHP can show it made a reasonable, but unsuccessful, effort to collect.
(v) All changes to unearned premium reserves.
(vi) Net payments or receipts related to risk sharing mechanisms developed in accordance with § 438.5 or § 438.6.
(3) Federal, State, and local taxes and licensing and regulatory fees. Taxes, licensing and regulatory fees for the MLR reporting year include:
(i) Statutory assessments to defray the operating expenses of any State or Federal department.
(ii) Examination fees in lieu of premium taxes as specified by State law.
(iii) Federal taxes and assessments allocated to MCOs, PIHPs, and PAHPs, excluding Federal income taxes on investment income and capital gains and Federal employment taxes.
(iv) State and local taxes and assessments including:
(A) Any industry-wide (or subset) assessments (other than surcharges on specific claims) paid to the State or locality directly.
(B) Guaranty fund assessments.
(C) Assessments of State or locality industrial boards or other boards for operating expenses or for benefits to sick employed persons in connection with disability benefit laws or similar taxes levied by States.
(D) State or locality income, excise, and business taxes other than premium taxes and State employment and similar taxes and assessments.
(E) State or locality premium taxes plus State or locality taxes based on reserves, if in lieu of premium taxes.
(v) Payments made by an MCO, PIHP, or PAHP that are otherwise exempt from Federal income taxes, for community benefit expenditures as defined in 45 CFR 158.162(c), limited to the highest of either:
(A) Three percent of earned premium; or
(B) The highest premium tax rate in the State for which the report is being submitted, multiplied by the MCO’s, PIHP’s, or PAHP’s earned premium in the State.
(4) Denominator when MCO, PIHP, or PAHP is assumed. The total amount of the denominator for a MCO, PIHP, or PAHP which is later assumed by another entity must be reported by the assuming MCO, PIHP, or PAHP for the entire MLR reporting year and no amount under this paragraph for that year may be reported by the ceding MCO, PIHP, or PAHP.
(g) Allocation of expense – (1) General requirements. (i) Each expense must be included under only one type of expense, unless a portion of the expense fits under the definition of, or criteria for, one type of expense and the remainder fits into a different type of expense, in which case the expense must be pro-rated between types of expenses.
(ii) Expenditures that benefit multiple contracts or populations, or contracts other than those being reported, must be reported on a pro rata basis.
(2) Methods used to allocate expenses. (i) Allocation to each category must be based on a generally accepted accounting method that is expected to yield the most accurate results.
(ii) Shared expenses, including expenses under the terms of a management contract, must be apportioned pro rata to the contract incurring the expense.
(iii) Expenses that relate solely to the operation of a reporting entity, such as personnel costs associated with the adjusting and paying of claims, must be borne solely by the reporting entity and are not to be apportioned to the other entities.
(h) Credibility adjustment. (1) A MCO, PIHP, or PAHP may add a credibility adjustment to a calculated MLR if the MLR reporting year experience is partially credible. The credibility adjustment is added to the reported MLR calculation before calculating any remittances, if required by the State as described in paragraph (j) of this section.
(2) A MCO, PIHP, or PAHP may not add a credibility adjustment to a calculated MLR if the MLR reporting year experience is fully credible.
(3) If a MCO’s, PIHP’s, or PAHP’s experience is non-credible, it is presumed to meet or exceed the MLR calculation standards in this section.
(4) On an annual basis, CMS will publish base credibility factors for MCOs, PIHPs, and PAHPs that are developed according to the following methodology:
(i) CMS will use the most recently available and complete managed care encounter data or FFS claims data, and enrollment data, reported by the states to CMS. This data may cover more than 1 year of experience.
(ii) CMS will calculate the credibility adjustment so that a MCO, PIHP, or PAHP receiving a capitation payment that is estimated to have a medical loss ratio of 85 percent would be expected to experience a loss ratio less than 85 percent 1 out of every 4 years, or 25 percent of the time.
(iii) The minimum number of member months necessary for a MCO’s, PIHP’s, or PAHP’s medical loss ratio to be determined at least partially credible will be set so that the credibility adjustment would not exceed 10 percent for any partially credible MCO, PIHP, or PAHP. Any MCO, PIHP, or PAHP with enrollment less than this number of member months will be determined non-credible.
(iv) The minimum number of member months necessary for an MCO’s, PIHP’s, or PAHP’s medical loss ratio to be determined fully credible will be set so that the minimum credibility adjustment for any partially credible MCO, PIHP, or PAHP would be greater than 1 percent. Any MCO, PIHP, or PAHP with enrollment greater than this number of member months will be determined to be fully credible.
(v) A MCO, PIHP, or PAHP with a number of enrollee member months between the levels established for non-credible and fully credible plans will be deemed partially credible, and CMS will develop adjustments, using linear interpolation, based on the number of enrollee member months.
(vi) CMS may adjust the number of enrollee member months necessary for a MCO’s, PIHP’s, or PAHP’s experience to be non-credible, partially credible, or fully credible so that the standards are rounded for the purposes of administrative simplification. The number of member months will be rounded to 1,000 or a different degree of rounding as appropriate to ensure that the credibility thresholds are consistent with the objectives of this regulation.
(i) Aggregation of data. MCOs, PIHPs, or PAHPs will aggregate data for all Medicaid eligibility groups covered under the contract with the State unless the State requires separate reporting and a separate MLR calculation for specific populations.
(j) Remittance to the State if specific MLR is not met. If required by the State, a MCO, PIHP, or PAHP must provide a remittance for an MLR reporting year if the MLR for that MLR reporting year does not meet the minimum MLR standard of 85 percent or higher if set by the State as described in paragraph (c) of this section.
(k) Reporting requirements. (1) The State, through its contracts, must require each MCO, PIHP, or PAHP to submit a report to the State that includes at least the following information for each MLR reporting year:
(i) Total incurred claims.
(ii) Expenditures on quality improving activities.
(iii) Fraud prevention activities as defined in paragraph (e)(4) of this section.
(iv) Non-claims costs.
(v) Premium revenue.
(vi) Taxes, licensing and regulatory fees.
(vii) Methodology(ies) for allocation of expenditures.
(viii) Any credibility adjustment applied.
(ix) The calculated MLR.
(x) Any remittance owed to the State, if applicable.
(xi) A comparison of the information reported in this paragraph with the audited financial report required under § 438.3(m).
(xii) A description of the aggregation method used under paragraph (i) of this section.
(xiii) The number of member months.
(2) A MCO, PIHP, or PAHP must submit the report required in paragraph (k)(1) of this section in a timeframe and manner determined by the State, which must be within 12 months of the end of the MLR reporting year.
(3) MCOs, PIHPs, or PAHPs must require any third party vendor providing claims adjudication activities to provide all underlying data associated with MLR reporting to that MCO, PIHP, or PAHP within 180 days of the end of the MLR reporting year or within 30 days of being requested by the MCO, PIHP, or PAHP, whichever comes sooner, regardless of current contractual limitations, to calculate and validate the accuracy of MLR reporting.
(l) Newer experience. A State, in its discretion, may exclude a MCO, PIHP, or PAHP that is newly contracted with the State from the requirements in this section for the first year of the MCO’s, PIHP’s, or PAHP’s operation. Such MCOs, PIHPs, or PAHPs must be required to comply with the requirements in this section during the next MLR reporting year in which the MCO, PIHP, or PAHP is in business with the State, even if the first year was not a full 12 months.
(m) Recalculation of MLR. In any instance where a State makes a retroactive change to the capitation payments for a MLR reporting year where the report has already been submitted to the State, the MCO, PIHP, or PAHP must re-calculate the MLR for all MLR reporting years affected by the change and submit a new report meeting the requirements in paragraph (k) of this section.
(n) Attestation. MCOs, PIHPs, and PAHPs must attest to the accuracy of the calculation of the MLR in accordance with requirements of this section when submitting the report required under paragraph (k) of this section.
§ 438.9 Provisions that apply to non-emergency medical transportation PAHPs.
(a) For purposes of this section, Non-Emergency Medical Transportation (NEMT) PAHP means an entity that provides only NEMT services to enrollees under contract with the State, and on the basis of prepaid capitation payments, or other payment arrangements that do not use State plan payment rates.
(b) Unless listed in this paragraph (b), a requirement of this part does not apply to NEMT PAHPs, NEMT PAHP contracts, or States in connection with a NEMT PAHP. The following requirements and options apply to NEMT PAHPs, NEMT PAHP contracts, and States in connection with NEMT PAHPs, to the same extent that they apply to PAHPs, PAHP contracts, and States in connection with PAHPs.
(1) All contract provisions in § 438.3 except requirements for:
(i) Physician incentive plans at § 438.3(i).
(ii) Advance directives at § 438.3(j).
(iii) LTSS requirements at § 438.3(o).
(iv) MHPAEA at § 438.3(n).
(2) The actuarial soundness requirements in § 438.4, except § 438.4(b)(9).
(3) The information requirements in § 438.10.
(4) The provision against provider discrimination in § 438.12.
(5) The State responsibility provisions in §§ 438.56, 438.58, 438.60, 438.62(a), and 438.818.
(6) The provisions on enrollee rights and protections in subpart C of this part except for §§ 438.110 and 438.114.
(7) The PAHP standards in §§ 438.206(b)(1), 438.210, 438.214, 438.224, 438.230, and 438.242.
(8) An enrollee’s right to a State fair hearing under subpart E of part 431 of this chapter.
(9) Prohibitions against affiliations with individuals debarred or excluded by Federal agencies in § 438.610.
(10) Requirements relating to contracts involving Indians, Indian Health Care Providers, and Indian managed care entities in § 438.14.
§ 438.10 Information requirements.
(a) Definitions. As used in this section, the following terms have the indicated meanings:
Limited English proficient (LEP) means potential enrollees and enrollees who do not speak English as their primary language and who have a limited ability to read, write, speak, or understand English may be LEP and may be eligible to receive language assistance for a particular type of service, benefit, or encounter.
Prevalent means a non-English language determined to be spoken by a significant number or percentage of potential enrollees and enrollees that are limited English proficient.
Readily accessible means electronic information and services which comply with modern accessibility standards such as section 508 guidelines, section 504 of the Rehabilitation Act, and W3C’s Web Content Accessibility Guidelines (WCAG) 2.0 AA and successor versions.
(b) Applicability. The provisions of this section apply to all managed care programs which operate under any authority in the Act.
(c) Basic rules. (1) Each State, enrollment broker, MCO, PIHP, PAHP, PCCM, and PCCM entity must provide all required information in this section to enrollees and potential enrollees in a manner and format that may be easily understood and is readily accessible by such enrollees and potential enrollees.
(2) The State must utilize its beneficiary support system required in § 438.71.
(3) The State must operate a Web site that provides the content, either directly or by linking to individual MCO, PIHP, PAHP, or PCCM entity Web sites, specified in paragraphs (g), (h), and (i) of this section.
(4) For consistency in the information provided to enrollees, the State must develop and require each MCO, PIHP, PAHP and PCCM entity to use:
(i) Definitions for managed care terminology, including appeal, co-payment, durable medical equipment, emergency medical condition, emergency medical transportation, emergency room care, emergency services, excluded services, grievance, habilitation services and devices, health insurance, home health care, hospice services, hospitalization, hospital outpatient care, medically necessary, network, non-participating provider, physician services, plan, preauthorization, participating provider, premium, prescription drug coverage, prescription drugs, primary care physician, primary care provider, provider, rehabilitation services and devices, skilled nursing care, specialist, and urgent care; and
(ii) Model enrollee handbooks and enrollee notices.
(5) The State must ensure, through its contracts, that each MCO, PIHP, PAHP and PCCM entity provides the required information in this section to each enrollee.
(6) Enrollee information required in this section may not be provided electronically by the State, MCO, PIHP, PAHP, PCCM, or PCCM entity unless all of the following are met:
(i) The format is readily accessible;
(ii) The information is placed in a location on the State, MCO’s, PIHP’s, PAHP’s, or PCCM’s, or PCCM entity’s Web site that is prominent and readily accessible;
(iii) The information is provided in an electronic form which can be electronically retained and printed;
(iv) The information is consistent with the content and language requirements of this section; and
(v) The enrollee is informed that the information is available in paper form without charge upon request and provides it upon request within 5 business days.
(7) Each MCO, PIHP, PAHP, and PCCM entity must have in place mechanisms to help enrollees and potential enrollees understand the requirements and benefits of the plan.
(d) Language and format. The State must:
(1) Establish a methodology for identifying the prevalent non-English languages spoken by enrollees and potential enrollees throughout the State, and in each MCO, PIHP, PAHP, or PCCM entity service area.
(2) Make oral interpretation available in all languages and written translation available in each prevalent non-English language. Written materials that are critical to obtaining services for potential enrollees must include taglines in the prevalent non-English languages in the State, explaining the availability of written translations or oral interpretation to understand the information provided, information on how to request auxiliary aids and services, and the toll-free telephone number of the entity providing choice counseling services as required by § 438.71(a). Taglines for written materials critical to obtaining services must be printed in a conspicuously-visible font size.
(3) Require each MCO, PIHP, PAHP, and PCCM entity to make its written materials that are critical to obtaining services, including, at a minimum, provider directories, enrollee handbooks, appeal and grievance notices, and denial and termination notices, available in the prevalent non-English languages in its particular service area. Written materials that are critical to obtaining services must also be made available in alternative formats upon request of the potential enrollee or enrollee at no cost, include taglines in the prevalent non-English languages in the State and in a conspicuously visible font size explaining the availability of written translation or oral interpretation to understand the information provided, information on how to request auxiliary aids and services, and include the toll-free and TTY/TDY telephone number of the MCO’s, PIHP’s, PAHP’s, or PCCM entity’s member/customer service unit. Auxiliary aids and services must also be made available upon request of the potential enrollee or enrollee at no cost.
(4) Make interpretation services available to each potential enrollee and require each MCO, PIHP, PAHP, and PCCM entity to make those services available free of charge to each enrollee. This includes oral interpretation and the use of auxiliary aids such as TTY/TDY and American Sign Language. Oral interpretation requirements apply to all non-English languages, not just those that the State identifies as prevalent.
(5) Notify potential enrollees, and require each MCO, PIHP, PAHP, and PCCM entity to notify its enrollees –
(i) That oral interpretation is available for any language and written translation is available in prevalent languages;
(ii) That auxiliary aids and services are available upon request and at no cost for enrollees with disabilities; and
(iii) How to access the services in paragraphs (d)(5)(i) and (ii) of this section.
(6) Provide, and require MCOs, PIHPs, PAHPs, PCCMs, and PCCM entities to provide, all written materials for potential enrollees and enrollees consistent with the following:
(i) Use easily understood language and format.
(ii) Use a font size no smaller than 12 point.
(iii) Be available in alternative formats and through the provision of auxiliary aids and services in an appropriate manner that takes into consideration the special needs of enrollees or potential enrollees with disabilities or limited English proficiency.
(e) Information for potential enrollees. (1) The State or its contracted representative must provide the information specified in paragraph (e)(2) of this section to each potential enrollee, either in paper or electronic form as follows:
(i) At the time the potential enrollee first becomes eligible to enroll in a voluntary managed care program, or is first required to enroll in a mandatory managed care program; and
(ii) Within a timeframe that enables the potential enrollee to use the information in choosing among available MCOs, PIHPs, PAHPs, PCCMs, or PCCM entities.
(2) The information for potential enrollees must include, at a minimum, all of the following:
(i) Information about the potential enrollee’s right to disenroll consistent with the requirements of § 438.56 and which explains clearly the process for exercising this disenrollment right, as well as the alternatives available to the potential enrollee based on their specific circumstance;
(ii) The basic features of managed care;
(iii) Which populations are excluded from enrollment, subject to mandatory enrollment, or free to enroll voluntarily in the program. For mandatory and voluntary populations, the length of the enrollment period and all disenrollment opportunities available to the enrollee must also be specified;
(iv) The service area covered by each MCO, PIHP, PAHP, PCCM, or PCCM entity;
(v) Covered benefits including:
(A) Which benefits are provided by the MCO, PIHP, or PAHP; and
(B) Which, if any, benefits are provided directly by the State.
(C) For a counseling or referral service that the MCO, PIHP, or PAHP does not cover because of moral or religious objections, the State must provide information about where and how to obtain the service;
(vi) The provider directory and formulary information required in paragraphs (h) and (i) of this section;
(vii) Any cost-sharing that will be imposed by the MCO, PIHP, PAHP, PCCM, or PCCM entity consistent with those set forth in the State plan;
(viii) The requirements for each MCO, PIHP or PAHP to provide adequate access to covered services, including the network adequacy standards established in § 438.68;
(ix) The MCO, PIHP, PAHP, PCCM and PCCM entity’s responsibilities for coordination of enrollee care; and
(x) To the extent available, quality and performance indicators for each MCO, PIHP, PAHP and PCCM entity, including enrollee satisfaction.
(f) Information for all enrollees of MCOs, PIHPs, PAHPs, and PCCM entities: General requirements. (1) The MCO, PIHP, PAHP, and, when appropriate, the PCCM entity, must make a good faith effort to give written notice of termination of a contracted provider to each enrollee who received his or her primary care from, or was seen on a regular basis by, the terminated provider. Notice to the enrollee must be provided by the later of 30 calendar days prior to the effective date of the termination, or 15 calendar days after receipt or issuance of the termination notice.
(2) The State must notify all enrollees of their right to disenroll consistent with the requirements of § 438.56 at least annually. Such notification must clearly explain the process for exercising this disenrollment right, as well as the alternatives available to the enrollee based on their specific circumstance. For States that choose to restrict disenrollment for periods of 90 days or more, States must send the notice no less than 60 calendar days before the start of each enrollment period.
(3) The MCO, PIHP, PAHP and, when appropriate, the PCCM entity must make available, upon request, any physician incentive plans in place as set forth in § 438.3(i).
(g) Information for enrollees of MCOs, PIHPs, PAHPs and PCCM entities – Enrollee handbook. (1) Each MCO, PIHP, PAHP and PCCM entity must provide each enrollee an enrollee handbook, within a reasonable time after receiving notice of the beneficiary’s enrollment, which serves a similar function as the summary of benefits and coverage described in 45 CFR 147.200(a).
(2) The content of the enrollee handbook must include information that enables the enrollee to understand how to effectively use the managed care program. This information must include at a minimum:
(i) Benefits provided by the MCO, PIHP, PAHP or PCCM entity.
(ii) How and where to access any benefits provided by the State, including any cost sharing, and how transportation is provided.
(A) In the case of a counseling or referral service that the MCO, PIHP, PAHP, or PCCM entity does not cover because of moral or religious objections, the MCO, PIHP, PAHP, or PCCM entity must inform enrollees that the service is not covered by the MCO, PIHP, PAHP, or PCCM entity.
(B) The MCO, PIHP, PAHP, or PCCM entity must inform enrollees how they can obtain information from the State about how to access the services described in paragraph (g)(2)(ii)(A) of this section.
(iii) The amount, duration, and scope of benefits available under the contract in sufficient detail to ensure that enrollees understand the benefits to which they are entitled.
(iv) Procedures for obtaining benefits, including any requirements for service authorizations and/or referrals for specialty care and for other benefits not furnished by the enrollee’s primary care provider.
(v) The extent to which, and how, after-hours and emergency coverage are provided, including:
(A) What constitutes an emergency medical condition and emergency services.
(B) The fact that prior authorization is not required for emergency services.
(C) The fact that, subject to the provisions of this section, the enrollee has a right to use any hospital or other setting for emergency care.
(vi) Any restrictions on the enrollee’s freedom of choice among network providers.
(vii) The extent to which, and how, enrollees may obtain benefits, including family planning services and supplies from out-of-network providers. This includes an explanation that the MCO, PIHP, or PAHP cannot require an enrollee to obtain a referral before choosing a family planning provider.
(viii) Cost sharing, if any is imposed under the State plan.
(ix) Enrollee rights and responsibilities, including the elements specified in § 438.100.
(x) The process of selecting and changing the enrollee’s primary care provider.
(xi) Grievance, appeal, and fair hearing procedures and timeframes, consistent with subpart F of this part, in a State-developed or State-approved description. Such information must include:
(A) The right to file grievances and appeals.
(B) The requirements and timeframes for filing a grievance or appeal.
(C) The availability of assistance in the filing process.
(D) The right to request a State fair hearing after the MCO, PIHP or PAHP has made a determination on an enrollee’s appeal which is adverse to the enrollee.
(E) The fact that, when requested by the enrollee, benefits that the MCO, PIHP, or PAHP seeks to reduce or terminate will continue if the enrollee files an appeal or a request for State fair hearing within the timeframes specified for filing, and that the enrollee may, consistent with state policy, be required to pay the cost of services furnished while the appeal or state fair hearing is pending if the final decision is adverse to the enrollee.
(xii) How to exercise an advance directive, as set forth in § 438.3(j). For PAHPs, information must be provided only to the extent that the PAHP includes any of the providers described in § 489.102(a) of this chapter.
(xiii) How to access auxiliary aids and services, including additional information in alternative formats or languages.
(xiv) The toll-free telephone number for member services, medical management, and any other unit providing services directly to enrollees.
(xv) Information on how to report suspected fraud or abuse;
(xvi) Any other content required by the State.
(3) Information required by this paragraph to be provided by a MCO, PIHP, PAHP or PCCM entity will be considered to be provided if the MCO, PIHP, PAHP or PCCM entity:
(i) Mails a printed copy of the information to the enrollee’s mailing address;
(ii) Provides the information by email after obtaining the enrollee’s agreement to receive the information by email;
(iii) Posts the information on the Web site of the MCO, PIHP, PAHP or PCCM entity and advises the enrollee in paper or electronic form that the information is available on the Internet and includes the applicable Internet address, provided that enrollees with disabilities who cannot access this information online are provided auxiliary aids and services upon request at no cost; or
(iv) Provides the information by any other method that can reasonably be expected to result in the enrollee receiving that information.
(4) The MCO, PIHP, PAHP, or PCCM entity must give each enrollee notice of any change that the State defines as significant in the information specified in this paragraph (g), at least 30 days before the intended effective date of the change.
(h) Information for all enrollees of MCOs, PIHPs, PAHPs, and PCCM entities – Provider Directory. (1) Each MCO, PIHP, PAHP, and when appropriate, the PCCM entity, must make available in paper form upon request and electronic form, the following information about its network providers:
(i) The provider’s name as well as any group affiliation.
(ii) Street address(es).
(iii) Telephone number(s).
(iv) Web site URL, as appropriate.
(v) Specialty, as appropriate.
(vi) Whether the provider will accept new enrollees.
(vii) The provider’s cultural and linguistic capabilities, including languages (including American Sign Language) offered by the provider or a skilled medical interpreter at the provider’s office.
(viii) Whether the provider’s office/facility has accommodations for people with physical disabilities, including offices, exam room(s) and equipment.
(2) The provider directory must include the information in paragraph (h)(1) of this section for each of the following provider types covered under the contract:
(i) Physicians, including specialists;
(ii) Hospitals;
(iii) Pharmacies;
(iv) Behavioral health providers; and
(v) LTSS providers, as appropriate.
(3) Information included in –
(i) A paper provider directory must be updated at least –
(A) Monthly, if the MCO, PIHP, PAHP, or PCCM entity does not have a mobile-enabled, electronic directory; or
(B) Quarterly, if the MCO, PIHP, PAHP, or PCCM entity has a mobile-enabled, electronic provider directory.
(ii) An electronic provider directory must be updated no later than 30 calendar days after the MCO, PIHP, PAHP, or PCCM entity receives updated provider information.
(4) Provider directories must be made available on the MCO’s, PIHP’s, PAHP’s, or, if applicable, PCCM entity’s Web site in a machine readable file and format as specified by the Secretary.
(i) Information for all enrollees of MCOs, PIHPs, PAHPs, and PCCM entities: Formulary. Each MCO, PIHP, PAHP, and when appropriate, PCCM entity, must make available in electronic or paper form, the following information about its formulary:
(1) Which medications are covered (both generic and name brand).
(2) What tier each medication is on.
(3) Formulary drug lists must be made available on the MCO’s, PIHP’s, PAHP’s, or, if applicable, PCCM entity’s Web site in a machine readable file and format as specified by the Secretary.
(j) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, PCCMs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.10 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.12 Provider discrimination prohibited.
(a) General rules. (1) An MCO, PIHP, or PAHP may not discriminate in the participation, reimbursement, or indemnification of any provider who is acting within the scope of his or her license or certification under applicable State law, solely on the basis of that license or certification. If an MCO, PIHP, or PAHP declines to include individual or groups of providers in its provider network, it must give the affected providers written notice of the reason for its decision.
(2) In all contracts with network providers, an MCO, PIHP, or PAHP must comply with the requirements specified in § 438.214.
(b) Construction. Paragraph (a) of this section may not be construed to –
(1) Require the MCO, PIHP, or PAHP to contract with providers beyond the number necessary to meet the needs of its enrollees;
(2) Preclude the MCO, PIHP, or PAHP from using different reimbursement amounts for different specialties or for different practitioners in the same specialty; or
(3) Preclude the MCO, PIHP, or PAHP from establishing measures that are designed to maintain quality of services and control costs and are consistent with its responsibilities to enrollees.
§ 438.14 Requirements that apply to MCO, PIHP, PAHP, PCCM, and PCCM entity contracts involving Indians, Indian health care providers (IHCPs), and Indian managed care entities (IMCEs).
(a) Definitions. As used in this section, the following terms have the indicated meanings:
Indian means any individual defined at 25 U.S.C. 1603(13), 1603(28), or 1679(a), or who has been determined eligible as an Indian, under 42 CFR 136.12. This means the individual:
(i) Is a member of a Federally recognized Indian tribe;
(ii) Resides in an urban center and meets one or more of the four criteria:
(A) Is a member of a tribe, band, or other organized group of Indians, including those tribes, bands, or groups terminated since 1940 and those recognized now or in the future by the State in which they reside, or who is a descendant, in the first or second degree, of any such member;
(B) Is an Eskimo or Aleut or other Alaska Native;
(C) Is considered by the Secretary of the Interior to be an Indian for any purpose; or
(D) Is determined to be an Indian under regulations issued by the Secretary;
(iii) Is considered by the Secretary of the Interior to be an Indian for any purpose; or
(iv) Is considered by the Secretary of Health and Human Services to be an Indian for purposes of eligibility for Indian health care services, including as a California Indian, Eskimo, Aleut, or other Alaska Native.
Indian health care provider (IHCP) means a health care program operated by the Indian Health Service (IHS) or by an Indian Tribe, Tribal Organization, or Urban Indian Organization (otherwise known as an I/T/U) as those terms are defined in section 4 of the Indian Health Care Improvement Act (25 U.S.C. 1603).
Indian managed care entity (IMCE) means a MCO, PIHP, PAHP, PCCM, or PCCM entity that is controlled (within the meaning of the last sentence of section 1903(m)(1)(C) of the Act) by the Indian Health Service, a Tribe, Tribal Organization, or Urban Indian Organization, or a consortium, which may be composed of one or more Tribes, Tribal Organizations, or Urban Indian Organizations, and which also may include the Service.
(b) Network and coverage requirements. All contracts between a State and a MCO, PIHP, PAHP, and PCCM entity, to the extent that the PCCM entity has a provider network, which enroll Indians must:
(1) Require the MCO, PIHP, PAHP, or PCCM entity to demonstrate that there are sufficient IHCPs participating in the provider network of the MCO, PIHP, PAHP, or PCCM entity to ensure timely access to services available under the contract from such providers for Indian enrollees who are eligible to receive services.
(2) Require that IHCPs, whether participating or not, be paid for covered services provided to Indian enrollees who are eligible to receive services from such providers as follows:
(i) At a rate negotiated between the MCO, PIHP, PAHP, or PCCM entity, and the IHCP, or
(ii) In the absence of a negotiated rate, at a rate not less than the level and amount of payment that the MCO, PIHP, PAHP, or PCCM entity would make for the services to a participating provider which is not an IHCP; and
(iii) Make payment to all IHCPs in its network in a timely manner as required for payments to practitioners in individual or group practices under 42 CFR 447.45 and 447.46.
(3) Permit any Indian who is enrolled in a MCO, PIHP, PAHP, PCCM or PCCM entity that is not an IMCE and eligible to receive services from a IHCP primary care provider participating as a network provider, to choose that IHCP as his or her primary care provider, as long as that provider has capacity to provide the services.
(4) Permit Indian enrollees to obtain services covered under the contract between the State and the MCO, PIHP, PAHP, or PCCM entity from out-of-network IHCPs from whom the enrollee is otherwise eligible to receive such services.
(5) In a State where timely access to covered services cannot be ensured due to few or no IHCPs, an MCO, PIHP, PAHP and PCCM entity will be considered to have met the requirement in paragraph (b)(1) of this section if –
(i) Indian enrollees are permitted by the MCO, PIHP, PAHP, or PCCM entity to access out-of-State IHCPs; or
(ii) If this circumstance is deemed to be good cause for disenrollment from both the MCO, PIHP, PAHP, or PCCM entity and the State’s managed care program in accordance with § 438.56(c).
(6) MCOs, PIHPs, PAHPs, and PCCM entities, to the extent the PCCM entity has a provider network, must permit an out-of-network IHCP to refer an Indian enrollee to a network provider.
(c) Payment requirements. (1) When an IHCP is enrolled in Medicaid as a FQHC but not a participating provider of the MCO, PIHP, PAHP or PCCM entity, it must be paid an amount equal to the amount the MCO, PIHP, PAHP, or PCCM entity would pay a FQHC that is a network provider but is not an IHCP, including any supplemental payment from the State to make up the difference between the amount the MCO, PIHP, PAHP or PCCM entity pays and what the IHCP FQHC would have received under FFS.
(2) When an IHCP is not enrolled in Medicaid as a FQHC, regardless of whether it participates in the network of an MCO, PIHP, PAHP and PCCM entity or not, it has the right to receive its applicable encounter rate published annually in the
(3) When the amount a IHCP receives from a MCO, PIHP, PAHP, or PCCM entity is less than the amount required by paragraph (c)(2) of this section, the State must make a supplemental payment to the IHCP to make up the difference between the amount the MCO, PIHP, PAHP, or PCCM entity pays and the amount the IHCP would have received under FFS or the applicable encounter rate.
(d) Enrollment in IMCEs. An IMCE may restrict its enrollment to Indians in the same manner as Indian Health Programs, as defined in 25 U.S.C. 1603(12), may restrict the delivery of services to Indians, without being in violation of the requirements in § 438.3(d).
Subpart B – State Responsibilities
§ 438.50 State Plan requirements.
(a) General rule. A State plan that requires Medicaid beneficiaries to enroll in MCOs, PCCMs, or PCCM entities must comply with the provisions of this section, except when the State imposes the requirement –
(1) As part of a demonstration project under section 1115(a) of the Act; or
(2) Under a waiver granted under section 1915(b) of the Act.
(b) State plan information. The plan must specify –
(1) The types of entities with which the State contracts.
(2) The payment method it uses (for example, whether FFS or capitation).
(3) Whether it contracts on a comprehensive risk basis.
(4) The process the State uses to involve the public in both design and initial implementation of the managed care program and the methods it uses to ensure ongoing public involvement once the State plan has been implemented.
(c) State plan assurances. The plan must provide assurances that the State meets applicable requirements of the following statute and regulations:
(1) Section 1903(m) of the Act, for MCOs and MCO contracts.
(2) Section 1905(t) of the Act, for PCCMs and PCCM or PCCM entity contracts.
(3) Section 1932(a)(1)(A) of the Act, for the State’s option to limit freedom of choice by requiring beneficiaries to receive their benefits through managed care entities.
(4) This part, for MCOs, PCCMs, and PCCM entities.
(5) Part 434 of this chapter, for all contracts.
(6) Section 438.4, for payments under any risk contracts, and § 447.362 of this chapter for payments under any nonrisk contracts.
(d) Limitations on enrollment. The State must provide assurances that, in implementing the State plan managed care option, it will not require the following groups to enroll in an MCO, PCCM or PCCM entity:
(1) Beneficiaries who are also eligible for Medicare.
(2) Indians as defined in § 438.14(a), except as permitted under § 438.14(d).
(3) Children under 19 years of age who are:
(i) Eligible for SSI under Title XVI;
(ii) Eligible under section 1902(e)(3) of the Act;
(iii) In foster care or other out-of-home placement;
(iv) Receiving foster care or adoption assistance; or
(v) Receiving services through a family-centered, community-based, coordinated care system that receives grant funds under section 501(a)(1)(D) of Title V, and is defined by the State in terms of either program participation or special health care needs.
§ 438.52 Choice of MCOs, PIHPs, PAHPs, PCCMs, and PCCM entities.
(a) General rule. Except as specified in paragraphs (b) and (c) of this section, a State that requires Medicaid beneficiaries to:
(1) Enroll in an MCO, PIHP, or PAHP, must give those beneficiaries a choice of at least two MCOs, PIHPs, or PAHPs.
(2) Enroll in a primary care case management system, must give those beneficiaries a choice from at least two primary care case managers employed or contracted with the State.
(3) Enroll in a PCCM entity, may limit a beneficiary to a single PCCM entity. Beneficiaries must be permitted to choose from at least two primary care case managers employed by or contracted with the PCCM entity.
(b) Exception for rural area residents. (1) Under any managed care program authorized by any of the following, and subject to the requirements of paragraph (b)(2) of this section, a State may limit a rural area resident to a single MCO, PIHP, or PAHP:
(i) A State plan amendment under section 1932(a) of the Act.
(ii) A waiver under section 1115(a) of the Act.
(iii) A waiver under section 1915(b) of the Act.
(2) To comply with this paragraph (b), a State, must permit the beneficiary –
(i) To choose from at least two primary care providers; and
(ii) To obtain services from any other provider under any of the following circumstances:
(A) The service or type of provider (in terms of training, experience, and specialization) is not available within the MCO, PIHP, or PAHP network.
(B) The provider is not part of the network, but is the main source of a service to the beneficiary, provided that –
(1) The provider is given the opportunity to become a participating provider under the same requirements for participation in the MCO, PIHP, or PAHP network as other network providers of that type.
(2) If the provider chooses not to join the network, or does not meet the necessary qualification requirements to join, the enrollee will be transitioned to a participating provider within 60 calendar days (after being given an opportunity to select a provider who participates).
(C) The only plan or provider available to the beneficiary does not, because of moral or religious objections, provide the service the enrollee seeks.
(D) The beneficiary’s primary care provider or other provider determines that the beneficiary needs related services that would subject the beneficiary to unnecessary risk if received separately (for example, a cesarean section and a tubal ligation) and not all of the related services are available within the network.
(E) The State determines that other circumstances warrant out-of-network treatment.
(3) As used in this paragraph (b), “rural area” is any county designated as “micro,” “rural,” or “County with Extreme Access Considerations (CEAC)” in the Medicare Advantage Health Services Delivery (HSD) Reference file for the applicable calendar year.
(c) Exception for certain health insuring organizations (HIOs). The State may limit beneficiaries to a single HIO if –
(1) The HIO is one of those described in section 1932(a)(3)(C) of the Act; and
(2) The beneficiary who enrolls in the HIO has a choice of at least two primary care providers within the entity.
(d) Limitations on changes between primary care providers. For an enrollee of a single MCO, PIHP, PAHP, or HIO under paragraph (b) or (c) of this section, any limitation the State imposes on his or her freedom to change between primary care providers may be no more restrictive than the limitations on disenrollment under § 438.56(c).
§ 438.54 Managed care enrollment.
(a) Applicability. The provisions of this section apply to all Medicaid managed care programs which operate under any authority in the Act.
(b) General rule. The State must have an enrollment system for its managed care programs, voluntary and mandatory, as appropriate.
(1) Voluntary managed care programs are those where one or more groups of beneficiaries as enumerated in section of 1905(a) of the Act have the option to either enroll in a MCO, PIHP, PAHP, PCCM or PCCM entity, or remain enrolled in FFS to receive Medicaid covered benefits.
(2) Mandatory managed care programs are those where one or more groups of beneficiaries as enumerated in section 1905(a) of the Act must enroll in a MCO, PIHP, PAHP, PCCM or PCCM entity to receive covered Medicaid benefits.
(3) States must provide the demographic information listed in § 438.340(b)(6) for each Medicaid enrollee to the individual’s MCO, PIHP, PAHP, or PCCM entity at the time of enrollment.
(c) Voluntary managed care programs. (1) States that have a voluntary managed care program must have an enrollment system that:
(i) Provides an enrollment choice period during which potential enrollees may make an active choice of delivery system and, if needed, choice of an MCO, PIHP, PAHP, PCCM or PCCM entity before enrollment is effectuated; or
(ii) Employs a passive enrollment process in which the State enrolls the potential enrollee into a MCO, PIHP, PAHP, PCCM or PCCM entity and simultaneously provides a period of time for the enrollee to make an active choice of delivery system and, if needed, to maintain enrollment in the MCO, PIHP, PAHP, PCCM or PCCM entity passively assigned or to select a different MCO, PIHP, PAHP, PCCM or PCCM entity.
(2) A State must provide potential enrollees the opportunity to actively elect to receive covered services through the managed care or FFS delivery system. If the potential enrollee elects to receive covered services through the managed care delivery system, the potential enrollee must then also select a MCO, PIHP, PAHP, PCCM, or PCCM entity.
(i) If the State does not use a passive enrollment process and the potential enrollee does not make an active choice during the period allowed by the state, then the potential enrollee will continue to receive covered services through the FFS delivery system.
(ii) If the State uses a passive enrollment process, the potential enrollee must select either to accept the MCO, PIHP, PAHP, PCCM, or PCCM entity selected for them by the State’s passive enrollment process, select a different MCO, PIHP, PAHP, PCCM, or PCCM entity, or elect to receive covered services through the FFS delivery system. If the potential enrollee does not make an active choice during the time allowed by the state, the potential enrollee will remain enrolled with the MCO, PIHP, PAHP, PCCM, or PCCM entity selected by the passive enrollment process.
(3) The State must provide informational notices to each potential enrollee at the time the potential enrollee first becomes eligible to enroll in a managed care program and within a timeframe that enables the potential enrollee to use the information in choosing among available delivery system and/or managed care plan options. The notices must:
(i) Clearly explain (as relevant to the State’s managed care program) the implications to the potential enrollee of: not making an active choice between managed care and FFS; selecting a different MCO, PIHP, PAHP, PCCM or PCCM entity; and accepting the MCO, PIHP, PAHP, PCCM, or PCCM entity selected by the State;
(ii) Identify the MCOs, PIHPs, PAHPs, PCCMs or PCCM entities available to the potential enrollee should they elect the managed care delivery system;
(iii) Provide clear instructions for how to make known to the State the enrollee’s selection of the FFS delivery system or a MCO, PIHP, PAHP, PCCM or PCCM entity;
(iv) Provide a comprehensive explanation of the length of the enrollment period, the 90 day without cause disenrollment period, and all other disenrollment options as specified in § 438.56;
(v) Include the contact information for the beneficiary support system in § 438.71; and
(vi) Comply with the information requirements in § 438.10.
(4) The State’s enrollment system must provide that beneficiaries already enrolled in an MCO, PIHP, PAHP, PCCM or PCCM entity are given priority to continue that enrollment if the MCO, PIHP, PAHP, PCCM or PCCM entity does not have the capacity to accept all those seeking enrollment under the program.
(5) If a State elects to use a passive enrollment process, the process must assign beneficiaries to a qualified MCO, PIHP, PAHP, PCCM or PCCM entity. To be a qualified MCO, PIHP, PAHP, PCCM or PCCM entity, it must:
(i) Not be subject to the intermediate sanction described in § 438.702(a)(4); and
(ii) Have capacity to enroll beneficiaries.
(6) A passive enrollment process must seek to preserve existing provider-beneficiary relationships and relationships with providers that have traditionally served Medicaid beneficiaries.
(i) An “existing provider-beneficiary relationship” is one in which the provider was a main source of Medicaid services for the beneficiary during the previous year. This may be established through State records of previous managed care enrollment or FFS experience, encounter data, or through contact with the beneficiary.
(ii) A provider is considered to have “traditionally served” Medicaid beneficiaries if it has experience in serving the Medicaid population.
(7) If the approach in paragraph (c)(6) of this section is not possible, the State must distribute the beneficiaries equitably among the MCOs, PIHPs, PAHPs, PCCMs and PCCM entities.
(i) The State may not arbitrarily exclude any MCO, PIHP, PAHP, PCCM, or PCCM entity from being considered.
(ii) The State may consider additional criteria to conduct the passive enrollment process, including the enrollment preferences of family members, previous plan assignment of the beneficiary, quality assurance and improvement performance, procurement evaluation elements, accessibility of provider offices for people with disabilities (when appropriate), and other reasonable criteria that support the objectives of the managed care program.
(8) If a passive enrollment process is used and the enrollee does not elect to be enrolled into the FFS delivery system, the State must send a notice to the enrollee:
(i) Confirming that the enrollee’s time to elect to enroll in the FFS delivery system has ended and that the enrollee will remain enrolled in the managed care delivery system for the remainder of the enrollment period unless one of the disenrollment reasons specified in § 438.56 applies.
(ii) Clearly and fully explaining the enrollee’s right, and process to follow, to disenroll from the passively assigned MCO, PIHP, PAHP, PCCM or PCCM entity and select a different MCO, PIHP, PAHP, PCCM or PCCM entity within 90 days from the effective date of the enrollment or for any reason specified in § 438.56(d)(2).
(iii) Within 5 calendar days of the end of the time allowed for making the delivery system selection.
(d) Mandatory managed care programs. (1) States must have an enrollment system for a mandatory managed care program that includes the elements specified in paragraphs (d)(2) through (8) of this section.
(2) The State’s enrollment system must implement enrollment in a MCO, PIHP, PAHP, PCCM, or PCCM entity as follows:
(i) If the State does not use a passive enrollment process and the potential enrollee does not make an active choice of a MCO, PIHP, PAHP, PCCM, or PCCM entity during the period allowed by the State, the potential enrollee will be enrolled into a MCO, PIHP, PAHP, PCCM, or PCCM entity selected by the State’s default process.
(ii) If the State uses a passive enrollment process, the potential enrollee must either accept the MCO, PIHP, PAHP, PCCM, or PCCM entity selected by the State’s passive enrollment process or select a different MCO, PIHP, PAHP, PCCM, or PCCM entity. If the potential enrollee does not make an active choice during the time allowed by the State, the MCO, PIHP, PAHP, PCCM, or PCCM entity selected by the passive enrollment process will remain effective.
(3) A State must provide informational notices to each potential enrollee at the time the potential enrollee first becomes eligible to enroll in a managed care program and within a timeframe that enables the potential enrollee to use the information in choosing among available managed care plans. The notices must:
(i) Include the MCOs, PIHPs, PAHPs, PCCMs, or PCCM entities available to the potential enrollee;
(ii) Provide clear instructions for how to make known to the State the enrollee’s selection of a MCO, PIHP, PAHP, PCCM, or PCCM entity;
(iii) Clearly explain the implications to the potential enrollee of not making an active choice of an MCO, PIHP, PAHP, PCCM or PCCM entity as well as the implications of making an active choice of an MCO, PIHP, PAHP, PCCM or PCCM entity;
(iv) Provide a comprehensive explanation of the length of the enrollment period, the 90 day without cause disenrollment period, and all other disenrollment options as specified in § 438.56;
(v) Include the contact information for the beneficiary support system in § 438.71; and
(vi) Comply with the information requirements in § 438.10.
(4) Priority for enrollment. The State’s enrollment system must provide that beneficiaries already enrolled in an MCO, PIHP, PAHP, PCCM or PCCM entity are given priority to continue that enrollment if the MCO, PIHP, PAHP, PCCM or PCCM entity does not have the capacity to accept all those seeking enrollment under the program.
(5) Enrollment by default. For potential enrollees that do not select an MCO, PIHP, PAHP, PCCM or PCCM entities during the period allowed by the state, the State must have a default enrollment process for assigning those beneficiaries to qualified MCOs, PIHPs, PAHPs, PCCMs and PCCM entities. To be a qualified MCO, PIHP, PAHP, PCCM or PCCM entity, it must:
(i) Not be subject to the intermediate sanction described in § 438.702(a)(4); and
(ii) Have capacity to enroll beneficiaries.
(6) Passive enrollment. For States that use a passive enrollment process, the process must assign potential enrollees to qualified MCOs, PIHPs, PAHPs, PCCMs and PCCM entities. To be a qualified MCO, PIHP, PAHP, PCCM or PCCM entity, it must:
(i) Not be subject to the intermediate sanction described in § 438.702(a)(4); and
(ii) Have capacity to enroll beneficiaries.
(7) The passive and default enrollment processes must seek to preserve existing provider-beneficiary relationships and relationships with providers that have traditionally served Medicaid beneficiaries.
(i) An “existing provider-beneficiary relationship” is one in which the provider was a main source of Medicaid services for the beneficiary during the previous year. This may be established through State records of previous managed care enrollment or FFS experience, encounter data, or through contact with the beneficiary.
(ii) A provider is considered to have “traditionally served” Medicaid beneficiaries if it has experience in serving the Medicaid population.
(8) If the approach in paragraph (d)(7) of this section is not possible, the State must distribute the beneficiaries equitably among the MCOs, PIHPs, PAHPs, PCCMs and PCCM entities available to enroll them.
(i) The State may not arbitrarily exclude any MCO, PIHP, PAHP, PCCM or PCCM entity from being considered; and
(ii) The State may consider additional criteria to conduct the default enrollment process, including the enrollment preferences of family members, previous plan assignment of the beneficiary, quality assurance and improvement performance, procurement evaluation elements, accessibility of provider offices for people with disabilities (when appropriate), and other reasonable criteria related to a beneficiary’s experience with the Medicaid program.
§ 438.56 Disenrollment: Requirements and limitations.
(a) Applicability. The provisions of this section apply to all managed care programs whether enrollment is mandatory or voluntary and whether the contract is with an MCO, PIHP, PAHP, PCCM, or PCCM entity.
(b) Disenrollment requested by the MCO, PIHP, PAHP, PCCM, or PCCM entity. All MCO, PIHP, PAHP, PCCM and PCCM entity contracts must:
(1) Specify the reasons for which the MCO, PIHP, PAHP, PCCM, or PCCM entity may request disenrollment of an enrollee.
(2) Provide that the MCO, PIHP, PAHP, PCCM, or PCCM entity may not request disenrollment because of an adverse change in the enrollee’s health status, or because of the enrollee’s utilization of medical services, diminished mental capacity, or uncooperative or disruptive behavior resulting from his or her special needs (except when his or her continued enrollment in the MCO, PIHP, PAHP, PCCM or PCCM entity seriously impairs the entity’s ability to furnish services to either this particular enrollee or other enrollees).
(3) Specify the methods by which the MCO, PIHP, PAHP, PCCM, or PCCM entity assures the agency that it does not request disenrollment for reasons other than those permitted under the contract.
(c) Disenrollment requested by the enrollee. If the State chooses to limit disenrollment, its MCO, PIHP, PAHP, PCCM, and PCCM entity contracts must provide that a beneficiary may request disenrollment as follows:
(1) For cause, at any time.
(2) Without cause, at the following times:
(i) During the 90 days following the date of the beneficiary’s initial enrollment into the MCO, PIHP, PAHP, PCCM, or PCCM entity, or during the 90 days following the date the State sends the beneficiary notice of that enrollment, whichever is later.
(ii) At least once every 12 months thereafter.
(iii) Upon automatic reenrollment under paragraph (g) of this section, if the temporary loss of Medicaid eligibility has caused the beneficiary to miss the annual disenrollment opportunity.
(iv) When the State imposes the intermediate sanction specified in § 438.702(a)(4).
(d) Procedures for disenrollment – (1) Request for disenrollment. The beneficiary (or his or her representative) must submit an oral or written request, as required by the State –
(i) To the State (or its agent); or
(ii) To the MCO, PIHP, PAHP, PCCM, or PCCM entity, if the State permits MCOs, PIHP, PAHPs, PCCMs, and PCCM entities to process disenrollment requests.
(2) Cause for disenrollment. The following are cause for disenrollment:
(i) The enrollee moves out of the MCO’s, PIHP’s, PAHP’s, PCCM’s, or PCCM entity’s service area.
(ii) The plan does not, because of moral or religious objections, cover the service the enrollee seeks.
(iii) The enrollee needs related services (for example, a cesarean section and a tubal ligation) to be performed at the same time; not all related services are available within the provider network; and the enrollee’s primary care provider or another provider determines that receiving the services separately would subject the enrollee to unnecessary risk.
(iv) For enrollees that use MLTSS, the enrollee would have to change their residential, institutional, or employment supports provider based on that provider’s change in status from an in-network to an out-of-network provider with the MCO, PIHP, or PAHP and, as a result, would experience a disruption in their residence or employment.
(v) Other reasons, including poor quality of care, lack of access to services covered under the contract, or lack of access to providers experienced in dealing with the enrollee’s care needs.
(3) MCO, PIHP, PAHP, PCCM, or PCCM entity action on request. (i) When the MCO’s, PIHP’s, PAHP’s, PCCM’s, or PCCM entity’s contract with the State permits the MCO, PIHP, PAHP, PCCM, or PCCM entity to process disenrollment requests, the MCO, PIHP, PAHP, PCCM, or PCCM entity may either approve a request for disenrollment by or on behalf of an enrollee or the MCO, PIHP, PAHP, PCCM, or PCCM entity must refer the request to the State.
(ii) If the MCO, PIHP, PAHP, PCCM, PCCM entity, or State agency (whichever is responsible) fails to make a disenrollment determination so that the beneficiary can be disenrolled within the timeframes specified in paragraph (e)(1) of this section, the disenrollment is considered approved.
(4) State agency action on request. For a request received directly from the beneficiary, or one referred by the MCO, PIHP, PAHP, PCCM, or PCCM entity, the State agency must take action to approve or disapprove the request based on the following:
(i) Reasons cited in the request.
(ii) Information provided by the MCO, PIHP, PAHP, PCCM, or PCCM entity at the agency’s request.
(iii) Any of the reasons specified in paragraph (d)(2) of this section.
(5) Use of the MCO’s, PIHP’s, PAHP’s grievance procedures. (i) The State agency may require that the enrollee seek redress through the MCO’s, PHIP’s, or PAHP’s grievance system before making a determination on the enrollee’s request.
(ii) The grievance process, if used, must be completed in time to permit the disenrollment (if approved) to be effective in accordance with the timeframe specified in paragraph (e)(1) of this section.
(iii) If, as a result of the grievance process, the MCO, PIHP, or PAHP approves the disenrollment, the State agency is not required to make a determination in accordance with paragraph (d)(4) of this section.
(e) Timeframe for disenrollment determinations. (1) Regardless of the procedures followed, the effective date of an approved disenrollment must be no later than the first day of the second month following the month in which the enrollee requests disenrollment or the MCO, PIHP, PAHP, PCCM, or PCCM entity refers the request to the State.
(2) If the MCO, PIHP, PAHP, PCCM, PCCM entity, or the State agency (whichever is responsible) fails to make the determination within the timeframes specified in paragraph (e)(1) of this section, the disenrollment is considered approved for the effective date that would have been established had the State or MCO, PIHP, PAHP, PCCM, PCCM entity complied with paragraph (e)(1) of this section.
(f) Notice and appeals. A State that restricts disenrollment under this section must take the following actions:
(1) Provide that enrollees and their representatives are given written notice of disenrollment rights at least 60 days before the start of each enrollment period. The notice must include an explanation of all of the enrollee’s disenrollment rights as specified in this section.
(2) Ensure timely access to State fair hearing for any enrollee dissatisfied with a State agency determination that there is not good cause for disenrollment.
(g) Automatic reenrollment: Contract requirement. If the State plan so specifies, the contract must provide for automatic reenrollment of a beneficiary who is disenrolled solely because he or she loses Medicaid eligibility for a period of 2 months or less.
§ 438.58 Conflict of interest safeguards.
As a condition for contracting with MCOs, PIHPs, or PAHPs, a State must have in effect safeguards against conflict of interest on the part of State and local officers and employees and agents of the State who have responsibilities relating to the MCO, PIHP, or PAHP contracts or the enrollment processes specified in § 438.54(b). These safeguards must be at least as effective as the safeguards specified in section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423).
§ 438.60 Prohibition of additional payments for services covered under MCO, PIHP or PAHP contracts.
The State agency must ensure that no payment is made to a network provider other than by the MCO, PIHP, or PAHP for services covered under the contract between the State and the MCO, PIHP, or PAHP, except when these payments are specifically required to be made by the State in Title XIX of the Act, in 42 CFR chapter IV, or when the State agency makes direct payments to network providers for graduate medical education costs approved under the State plan.
§ 438.62 Continued services to enrollees.
(a) The State agency must arrange for Medicaid services to be provided without delay to any Medicaid enrollee of an MCO, PIHP, PAHP, PCCM, or PCCM entity the contract of which is terminated and for any Medicaid enrollee who is disenrolled from an MCO, PIHP, PAHP, PCCM, or PCCM entity for any reason other than ineligibility for Medicaid.
(b) The State must have in effect a transition of care policy to ensure continued access to services during a transition from FFS to a MCO, PIHP, PAHP, PCCM or PCCM entity or transition from one MCO, PIHP, PAHP, PCCM or PCCM entity to another when an enrollee, in the absence of continued services, would suffer serious detriment to their health or be at risk of hospitalization or institutionalization.
(1) The transition of care policy must include the following:
(i) The enrollee has access to services consistent with the access they previously had, and is permitted to retain their current provider for a period of time if that provider is not in the MCO, PIHP or PAHP network.
(ii) The enrollee is referred to appropriate providers of services that are in the network.
(iii) The State, in the case of FFS, PCCM, or PCCM entity, or the MCO, PIHP or PAHP that was previously serving the enrollee, fully and timely complies with requests for historical utilization data from the new MCO, PIHP, PAHP, PCCM, or PCCM entity in compliance with Federal and State law.
(iv) Consistent with Federal and State law, the enrollee’s new provider(s) are able to obtain copies of the enrollee’s medical records, as appropriate.
(v) Any other necessary procedures as specified by the Secretary to ensure continued access to services to prevent serious detriment to the enrollee’s health or reduce the risk of hospitalization or institutionalization.
(vi) A process for the electronic exchange of, at a minimum, the data classes and elements included in the content standard adopted at 45 CFR 170.213. Such information received by the MCO, PIHP, or PAHP must be incorporated into the MCO’s, PIHP’s, or PAHP’s records about the current enrollee. With the approval and at the direction of a current or former enrollee or the enrollee’s personal representative, the MCO, PIHP, or PAHP must:
(A) Receive all such data for a current enrollee from any other payer that has provided coverage to the enrollee within the preceding 5 years;
(B) At any time the enrollee is currently enrolled in the MCO, PIHP, or PAHP and up to 5 years after disenrollment, send all such data to any other payer that currently covers the enrollee or a payer the enrollee or the enrollee’s personal representative specifically requests receive the data; and
(C) Send data received from another payer under this paragraph in the electronic form and format it was received.
(vii) Applicability.
(A) The MCO, PIHP, or PAHP must comply with the requirements in paragraph (b)(1)(vi) of this section beginning January 1, 2022 with regard to data:
(1) With a date of service on or after January 1, 2016; and
(2) That are maintained by the MCO, PIHP, or PAHP.
(B) [Reserved]
(2) The State must require by contract that MCOs, PIHPs, and PAHPs implement a transition of care policy consistent with the requirements in paragraph (b)(1) of this section and at least meets the State defined transition of care policy.
(3) The State must make its transition of care policy publicly available and provide instructions to enrollees and potential enrollees on how to access continued services upon transition. At a minimum, the transition of care policy must be described in the quality strategy, under § 438.340, and explained to individuals in the materials to enrollees and potential enrollees, in accordance with § 438.10.
(c) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, PCCMs, and PCCM entities beginning on or after July 1, 2018. Until that applicability date, states are required to continue to comply with § 438.62 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.66 State monitoring requirements.
(a) General requirement. The State agency must have in effect a monitoring system for all managed care programs.
(b) The State’s system must address all aspects of the managed care program, including the performance of each MCO, PIHP, PAHP, and PCCM entity (if applicable) in at least the following areas:
(1) Administration and management.
(2) Appeal and grievance systems.
(3) Claims management.
(4) Enrollee materials and customer services, including the activities of the beneficiary support system.
(5) Finance, including medical loss ratio reporting.
(6) Information systems, including encounter data reporting.
(7) Marketing.
(8) Medical management, including utilization management and case management.
(9) Program integrity.
(10) Provider network management, including provider directory standards.
(11) Availability and accessibility of services, including network adequacy standards.
(12) Quality improvement.
(13) Areas related to the delivery of LTSS not otherwise included in paragraphs (b)(1) through (12) of this section as applicable to the managed care program.
(14) All other provisions of the contract, as appropriate.
(c) The State must use data collected from its monitoring activities to improve the performance of its managed care program, including at a minimum:
(1) Enrollment and disenrollment trends in each MCO, PIHP, or PAHP.
(2) Member grievance and appeal logs.
(3) Provider complaint and appeal logs.
(4) Findings from the State’s External Quality Review process.
(5) Results from any enrollee or provider satisfaction survey conducted by the State or MCO, PIHP, or PAHP.
(6) Performance on required quality measures.
(7) Medical management committee reports and minutes.
(8) The annual quality improvement plan for each MCO, PIHP, PAHP, or PCCM entity.
(9) Audited financial and encounter data submitted by each MCO, PIHP, or PAHP.
(10) The medical loss ratio summary reports required by § 438.8.
(11) Customer service performance data submitted by each MCO, PIHP, or PAHP and performance data submitted by the beneficiary support system.
(12) Any other data related to the provision of LTSS not otherwise included in paragraphs (c)(1) through (11) of this section as applicable to the managed care program.
(d)(1) The State must assess the readiness of each MCO, PIHP, PAHP or PCCM entity with which it contracts as follows:
(i) Prior to the State implementing a managed care program, whether the program is voluntary or mandatory.
(ii) When the specific MCO, PIHP, PAHP, or PCCM entity has not previously contracted with the State.
(iii) When any MCO, PIHP, PAHP, or PCCM entity currently contracting with the State will provide or arrange for the provision of covered benefits to new eligibility groups.
(2) The State must conduct a readiness review of each MCO, PIHP, PAHP, or PCCM entity with which it contracts as follows:
(i) Started at least 3 months prior to the effective date of the events described in paragraph (d)(1) of this section.
(ii) Completed in sufficient time to ensure smooth implementation of an event described in paragraph (d)(1) of this section.
(iii) Submitted to CMS for CMS to make a determination that the contract or contract amendment associated with an event described in paragraph (d)(1) of this section is approved under § 438.3(a).
(3) Readiness reviews described in paragraphs (d)(1)(i) and (ii) of this section must include both a desk review of documents and on-site reviews of each MCO, PIHP, PAHP, or PCCM entity. Readiness reviews described in paragraph (d)(1)(iii) of this section must include a desk review of documents and may, at the State’s option, include an on-site review. On-site reviews must include interviews with MCO, PIHP, PAHP, or PCCM entity staff and leadership that manage key operational areas.
(4) A State’s readiness review must assess the ability and capacity of the MCO, PIHP, PAHP, and PCCM entity (if applicable) to perform satisfactorily for the following areas:
(i) Operations/Administration, including –
(A) Administrative staffing and resources.
(B) Delegation and oversight of MCO, PIHP, PAHP or PCCM entity responsibilities.
(C) Enrollee and provider communications.
(D) Grievance and appeals.
(E) Member services and outreach.
(F) Provider Network Management.
(G) Program Integrity/Compliance.
(ii) Service delivery, including –
(A) Case management/care coordination/service planning.
(B) Quality improvement.
(C) Utilization review.
(iii) Financial management, including –
(A) Financial reporting and monitoring.
(B) Financial solvency.
(iv) Systems management, including –
(A) Claims management.
(B) Encounter data and enrollment information management.
(e)(1) The State must submit to CMS no later than 180 days after each contract year, a report on each managed care program administered by the State, regardless of the authority under which the program operates.
(i) The initial report will be due after the contract year following the release of CMS guidance on the content and form of the report.
(ii) For States that operate their managed care program under section 1115(a) of the Act authority, submission of an annual report that may be required by the Special Terms and Conditions of the section 1115(a) demonstration program will be deemed to satisfy the requirement of this paragraph (e)(1) provided that the report includes the information specified in paragraph (e)(2) of this section.
(2) The program report must provide information on and an assessment of the operation of the managed care program on, at a minimum, the following areas:
(i) Financial performance of each MCO, PIHP, and PAHP, including MLR experience.
(ii) Encounter data reporting by each MCO, PIHP, or PAHP.
(iii) Enrollment and service area expansion (if applicable) of each MCO, PIHP, PAHP, and PCCM entity.
(iv) Modifications to, and implementation of, MCO, PIHP, or PAHP benefits covered under the contract with the State.
(v) Grievance, appeals, and State fair hearings for the managed care program.
(vi) Availability and accessibility of covered services within the MCO, PIHP, or PAHP contracts, including network adequacy standards.
(vii) Evaluation of MCO, PIHP, or PAHP performance on quality measures, including as applicable, consumer report card, surveys, or other reasonable measures of performance.
(viii) Results of any sanctions or corrective action plans imposed by the State or other formal or informal intervention with a contracted MCO, PIHP, PAHP, or PCCM entity to improve performance.
(ix) Activities and performance of the beneficiary support system.
(x) Any other factors in the delivery of LTSS not otherwise addressed in (e)(2)(i)-(ix) of this section as applicable.
(3) The program report required in this section must be:
(i) Posted on the Web site required under § 438.10(c)(3).
(ii) Provided to the Medical Care Advisory Committee, required under § 431.12 of this chapter.
(iii) Provided to the stakeholder consultation group specified in § 438.70, to the extent that the managed care program includes LTSS.
(f) Applicability. States will not be held out of compliance with the requirements of paragraphs (a) through (d) of this section prior to the rating period for contracts starting on or after July 1, 2017, so long as they comply with the corresponding standard(s) codified in 42 CFR 438.66 contained in the 42 CFR, parts 430 to 481, edition revised as of October 1, 2015.
§ 438.68 Network adequacy standards.
(a) General rule. A State that contracts with an MCO, PIHP or PAHP to deliver Medicaid services must develop and enforce network adequacy standards consistent with this section.
(b) Provider-specific network adequacy standards.-(1) Provider types. At a minimum, a State must develop a quantitative network adequacy standard for the following provider types, if covered under the contract:
(i) Primary care, adult and pediatric.
(ii) OB/GYN.
(iii) Behavioral health (mental health and substance use disorder), adult and pediatric.
(iv) Specialist (as designated by the State), adult, and pediatric.
(v) Hospital.
(vi) Pharmacy.
(vii) Pediatric dental.
(2) LTSS. States with MCO, PIHP, or PAHP contracts which cover LTSS must develop a quantitative network adequacy standard for LTSS provider types.
(3) Scope of network adequacy standards. Network standards established in accordance with paragraphs (b)(1) and (2) of this section must include all geographic areas covered by the managed care program or, if applicable, the contract between the State and the MCO, PIHP or PAHP. States are permitted to have varying standards for the same provider type based on geographic areas.
(c) Development of network adequacy standards. (1) States developing network adequacy standards consistent with paragraph (b)(1) of this section must consider, at a minimum, the following elements:
(i) The anticipated Medicaid enrollment.
(ii) The expected utilization of services.
(iii) The characteristics and health care needs of specific Medicaid populations covered in the MCO, PIHP, and PAHP contract.
(iv) The numbers and types (in terms of training, experience, and specialization) of network providers required to furnish the contracted Medicaid services.
(v) The numbers of network providers who are not accepting new Medicaid patients.
(vi) The geographic location of network providers and Medicaid enrollees, considering distance, travel time, the means of transportation ordinarily used by Medicaid enrollees.
(vii) The ability of network providers to communicate with limited English proficient enrollees in their preferred language.
(viii) The ability of network providers to ensure physical access, reasonable accommodations, culturally competent communications, and accessible equipment for Medicaid enrollees with physical or mental disabilities.
(ix) The availability of triage lines or screening systems, as well as the use of telemedicine, e-visits, and/or other evolving and innovative technological solutions.
(2) States developing standards consistent with paragraph (b)(2) of this section must consider the following:
(i) All elements in paragraphs (c)(1)(i) through (ix) of this section.
(ii) Elements that would support an enrollee’s choice of provider.
(iii) Strategies that would ensure the health and welfare of the enrollee and support community integration of the enrollee.
(iv) Other considerations that are in the best interest of the enrollees that need LTSS.
(d) Exceptions process. (1) To the extent the State permits an exception to any of the provider-specific network standards developed under this section, the standard by which the exception will be evaluated and approved must be:
(i) Specified in the MCO, PIHP or PAHP contract.
(ii) Based, at a minimum, on the number of providers in that specialty practicing in the MCO, PIHP, or PAHP service area.
(2) States that grant an exception in accordance with paragraph (d)(1) of this section to a MCO, PIHP or PAHP must monitor enrollee access to that provider type on an ongoing basis and include the findings to CMS in the managed care program assessment report required under § 438.66.
(e) Publication of network adequacy standards. States must publish the standards developed in accordance with paragraphs (b)(1) and (2) of this section on the Web site required by § 438.10. Upon request, network adequacy standards must also be made available at no cost to enrollees with disabilities in alternate formats or through the provision of auxiliary aids and services.
§ 438.70 Stakeholder engagement when LTSS is delivered through a managed care program.
The State must ensure the views of beneficiaries, individuals representing beneficiaries, providers, and other stakeholders are solicited and addressed during the design, implementation, and oversight of a State’s managed LTSS program. The composition of the stakeholder group and frequency of meetings must be sufficient to ensure meaningful stakeholder engagement.
§ 438.71 Beneficiary support system.
(a) General requirement. The State must develop and implement a beneficiary support system that provides support to beneficiaries both prior to and after enrollment in a MCO, PIHP, PAHP, PCCM or PCCM entity.
(b) Elements of the support system. (1) A State beneficiary support system must include at a minimum:
(i) Choice counseling for all beneficiaries.
(ii) Assistance for enrollees in understanding managed care.
(iii) Assistance as specified for enrollees who use, or express a desire to receive, LTSS in paragraph (d) of this section.
(2) The beneficiary support system must perform outreach to beneficiaries and/or authorized representatives and be accessible in multiple ways including phone, Internet, in-person, and via auxiliary aids and services when requested.
(c) Choice counseling. (1) Choice counseling, as defined in § 438.2, must be provided to all potential enrollees and enrollees who disenroll from a MCO, PIHP, PAHP, PCCM or PCCM entity for reasons specified in § 438.56(b) and (c).
(2) If an individual or entity provides choice counseling on the State’s behalf under a memorandum of agreement or contract, it is considered an enrollment broker as defined in § 438.810(a) and must meet the independence and freedom from conflict of interest standards in § 438.810(b)(1) and (2).
(3) An entity that receives non-Medicaid funding to represent beneficiaries at hearings may provide choice counseling on behalf of the State so long as the State requires firewalls to ensure that the requirements for the provision of choice counseling are met.
(d) Functions specific to LTSS activities. At a minimum, the beneficiary support system must provide the following support to enrollees who use, or express a desire to receive, LTSS:
(1) An access point for complaints and concerns about MCO, PIHP, PAHP, PCCM, and PCCM entity enrollment, access to covered services, and other related matters.
(2) Education on enrollees’ grievance and appeal rights within the MCO, PIHP or PAHP; the State fair hearing process; enrollee rights and responsibilities; and additional resources outside of the MCO, PIHP or PAHP.
(3) Assistance, upon request, in navigating the grievance and appeal process within the MCO, PIHP or PAHP, as well as appealing adverse benefit determinations by the MCO, PIHP, or PAHP to a State fair hearing. The system may not provide representation to the enrollee at a State fair hearing but may refer enrollees to sources of legal representation.
(4) Review and oversight of LTSS program data to provide guidance to the State Medicaid Agency on identification, remediation and resolution of systemic issues.
§ 438.74 State oversight of the minimum MLR requirement.
(a) State reporting requirement. (1) The State must annually submit to CMS a summary description of the report(s) received from the MCO(s), PIHP(s), and PAHP(s) under contract with the State, according to § 438.8(k), with the rate certification required in § 438.7.
(2) The summary description must include, at a minimum, the amount of the numerator, the amount of the denominator, the MLR percentage achieved, the number of member months, and any remittances owed by each MCO, PIHP, or PAHP for that MLR reporting year.
(b) Repayment of Federal share of remittances. (1) If a State requires a MCO, PIHP, or PAHP to pay remittances through the contract for not meeting the minimum MLR required by the State, the State must reimburse CMS for an amount equal to the Federal share of the remittance, taking into account applicable differences in the Federal matching rate.
(2) If a remittance is owed according to paragraph (b)(1) of this section, the State must submit a separate report describing the methodology used to determine the State and Federal share of the remittance with the report required in paragraph (a) of this section.
Subpart C – Enrollee Rights and Protections
§ 438.100 Enrollee rights.
(a) General rule. The State must ensure that:
(1) Each MCO, PIHP, PAHP, PCCM and PCCM entity has written policies regarding the enrollee rights specified in this section; and
(2) Each MCO, PIHP, PAHP, PCCM and PCCM entity complies with any applicable Federal and State laws that pertain to enrollee rights, and ensures that its employees and contracted providers observe and protect those rights.
(b) Specific rights – (1) Basic requirement. The State must ensure that each managed care enrollee is guaranteed the rights as specified in paragraphs (b)(2) and (3) of this section.
(2) An enrollee of an MCO, PIHP, PAHP, PCCM, or PCCM entity has the following rights: The right to –
(i) Receive information in accordance with § 438.10.
(ii) Be treated with respect and with due consideration for his or her dignity and privacy.
(iii) Receive information on available treatment options and alternatives, presented in a manner appropriate to the enrollee’s condition and ability to understand. (The information requirements for services that are not covered under the contract because of moral or religious objections are set forth in § 438.10(g)(2)(ii)(A) and (B).)
(iv) Participate in decisions regarding his or her health care, including the right to refuse treatment.
(v) Be free from any form of restraint or seclusion used as a means of coercion, discipline, convenience or retaliation, as specified in other Federal regulations on the use of restraints and seclusion.
(vi) If the privacy rule, as set forth in 45 CFR parts 160 and 164 subparts A and E, applies, request and receive a copy of his or her medical records, and request that they be amended or corrected, as specified in 45 CFR 164.524 and 164.526.
(3) An enrollee of an MCO, PIHP, or PAHP (consistent with the scope of the PAHP’s contracted services) has the right to be furnished health care services in accordance with §§ 438.206 through 438.210.
(c) Free exercise of rights. The State must ensure that each enrollee is free to exercise his or her rights, and that the exercise of those rights does not adversely affect the way the MCO, PIHP, PAHP, PCCM or PCCM entity and its network providers or the State agency treat the enrollee.
(d) Compliance with other Federal and State laws. The State must ensure that each MCO, PIHP, PAHP, PCCM and PCCM entity complies with any other applicable Federal and State laws (including: Title VI of the Civil Rights Act of 1964 as implemented by regulations at 45 CFR part 80; the Age Discrimination Act of 1975 as implemented by regulations at 45 CFR part 91; the Rehabilitation Act of 1973; Title IX of the Education Amendments of 1972 (regarding education programs and activities); Titles II and III of the Americans with Disabilities Act; and section 1557 of the Patient Protection and Affordable Care Act.
§ 438.102 Provider-enrollee communications.
(a) General rules. (1) An MCO, PIHP, or PAHP may not prohibit, or otherwise restrict, a provider acting within the lawful scope of practice, from advising or advocating on behalf of an enrollee who is his or her patient, for the following:
(i) The enrollee’s health status, medical care, or treatment options, including any alternative treatment that may be self-administered.
(ii) Any information the enrollee needs to decide among all relevant treatment options.
(iii) The risks, benefits, and consequences of treatment or non-treatment.
(iv) The enrollee’s right to participate in decisions regarding his or her health care, including the right to refuse treatment, and to express preferences about future treatment decisions.
(2) Subject to the information requirements of paragraph (b) of this section, an MCO, PIHP, or PAHP that would otherwise be required to provide, reimburse for, or provide coverage of, a counseling or referral service because of the requirement in paragraph (a)(1) of this section is not required to do so if the MCO, PIHP, or PAHP objects to the service on moral or religious grounds.
(b) Information requirements: MCO, PIHP, and PAHP responsibility. (1)(i) An MCO, PIHP, or PAHP that elects the option provided in paragraph (a)(2) of this section must furnish information about the services it does not cover as follows:
(A) To the State –
(1) With its application for a Medicaid contract.
(2) Whenever it adopts the policy during the term of the contract.
(B) Consistent with the provisions of § 438.10, to enrollees, within 90 days after adopting the policy for any particular service.
(ii) Although this timeframe would be sufficient to entitle the MCO, PIHP, or PAHP to the option provided in paragraph (a)(2) of this section, the overriding rule in § 438.10(g)(4) requires the State, its contracted representative, or MCO, PIHP, or PAHP to furnish the information at least 30 days before the effective date of the policy.
(2) As specified in § 438.10(g)(2)(ii)(A) and (B), the MCOs, PIHPs, and PAHPs must inform enrollees how they can obtain information from the State about how to access the service excluded under paragraph (a)(2) of this section.
(c) Information requirements: State responsibility. For each service excluded by an MCO, PIHP, or PAHP under paragraph (a)(2) of this section, the State must provide information on how and where to obtain the service, as specified in § 438.10.
(d) Sanction. An MCO that violates the prohibition of paragraph (a)(1) of this section is subject to intermediate sanctions under subpart I of this part.
§ 438.104 Marketing activities.
(a) Definitions. As used in this section, the following terms have the indicated meanings:
Cold-call marketing means any unsolicited personal contact by the MCO, PIHP, PAHP, PCCM or PCCM entity with a potential enrollee for the purpose of marketing as defined in this paragraph (a).
Marketing means any communication, from an MCO, PIHP, PAHP, PCCM or PCCM entity to a Medicaid beneficiary who is not enrolled in that entity, that can reasonably be interpreted as intended to influence the beneficiary to enroll in that particular MCO’s, PIHP’s, PAHP’s, PCCM’s or PCCM entity’s Medicaid product, or either to not enroll in or to disenroll from another MCO’s, PIHP’s, PAHP’s, PCCM’s or PCCM entity’s Medicaid product. Marketing does not include communication to a Medicaid beneficiary from the issuer of a qualified health plan, as defined in 45 CFR 155.20, about the qualified health plan.
Marketing materials means materials that –
(i) Are produced in any medium, by or on behalf of an MCO, PIHP, PAHP, PCCM, or PCCM entity; and
(ii) Can reasonably be interpreted as intended to market the MCO, PIHP, PAHP, PCCM, or PCCM entity to potential enrollees.
MCO, PIHP, PAHP, PCCM or PCCM entity include any of the entity’s employees, network providers, agents, or contractors.
Private insurance does not include a qualified health plan, as defined in 45 CFR 155.20.
(b) Contract requirements. Each contract with an MCO, PIHP, PAHP, PCCM, or PCCM entity must comply with the following requirements:
(1) Provide that the entity –
(i) Does not distribute any marketing materials without first obtaining State approval.
(ii) Distributes the materials to its entire service area as indicated in the contract.
(iii) Complies with the information requirements of § 438.10 to ensure that, before enrolling, the beneficiary receives, from the entity or the State, the accurate oral and written information he or she needs to make an informed decision on whether to enroll.
(iv) Does not seek to influence enrollment in conjunction with the sale or offering of any private insurance.
(v) Does not, directly or indirectly, engage in door-to-door, telephone, email, texting, or other cold-call marketing activities.
(2) Specify the methods by which the entity ensures the State agency that marketing, including plans and materials, is accurate and does not mislead, confuse, or defraud the beneficiaries or the State agency. Statements that will be considered inaccurate, false, or misleading include, but are not limited to, any assertion or statement (whether written or oral) that –
(i) The beneficiary must enroll in the MCO, PIHP, PAHP, PCCM or PCCM entity to obtain benefits or to not lose benefits; or
(ii) The MCO, PIHP, PAHP, PCCM or PCCM entity is endorsed by CMS, the Federal or State government, or similar entity.
(c) State agency review. In reviewing the marketing materials submitted by the entity, the State must consult with the Medical Care Advisory Committee established under § 431.12 of this chapter or an advisory committee with similar membership.
§ 438.106 Liability for payment.
Each MCO, PIHP, and PAHP must provide that its Medicaid enrollees are not held liable for any of the following:
(a) The MCO’s, PIHP’s, or PAHP’s debts, in the event of the entity’s insolvency.
(b) Covered services provided to the enrollee, for which –
(1) The State does not pay the MCO, PIHP, or PAHP; or
(2) The State, or the MCO, PIHP, or PAHP does not pay the individual or health care provider that furnished the services under a contractual, referral, or other arrangement.
(c) Payments for covered services furnished under a contract, referral, or other arrangement, to the extent that those payments are in excess of the amount that the enrollee would owe if the MCO, PIHP, or PAHP covered the services directly.
§ 438.108 Cost sharing.
The contract must provide that any cost sharing imposed on Medicaid enrollees is in accordance with §§ 447.50 through 447.82 of this chapter.
§ 438.110 Member advisory committee.
(a) General rule. When LTSS are covered under a risk contract between a State and an MCO, PIHP, or PAHP, the contract must provide that each MCO, PIHP or PAHP establish and maintain a member advisory committee.
(b) Committee composition. The committee required in paragraph (a) of this section must include at least a reasonably representative sample of the LTSS populations, or other individuals representing those enrollees, covered under the contract with the MCO, PIHP, or PAHP.
§ 438.114 Emergency and poststabilization services.
(a) Definitions. As used in this section –
Emergency medical condition means a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in the following:
(i) Placing the health of the individual (or, for a pregnant woman, the health of the woman or her unborn child) in serious jeopardy.
(ii) Serious impairment to bodily functions.
(iii) Serious dysfunction of any bodily organ or part.
Emergency services means covered inpatient and outpatient services that are as follows:
(i) Furnished by a provider that is qualified to furnish these services under this Title.
(ii) Needed to evaluate or stabilize an emergency medical condition.
Poststabilization care services means covered services, related to an emergency medical condition that are provided after an enrollee is stabilized to maintain the stabilized condition, or, under the circumstances described in paragraph (e) of this section, to improve or resolve the enrollee’s condition.
(b) Coverage and payment: General rule. The following entities are responsible for coverage and payment of emergency services and poststabilization care services.
(1) The MCO, PIHP, or PAHP.
(2) The State, for managed care programs that contract with PCCMs or PCCM entities
(c) Coverage and payment: Emergency services. (1) The entities identified in paragraph (b) of this section –
(i) Must cover and pay for emergency services regardless of whether the provider that furnishes the services has a contract with the MCO, PIHP, PAHP, PCCM or PCCM entity; and
(ii) May not deny payment for treatment obtained under either of the following circumstances:
(A) An enrollee had an emergency medical condition, including cases in which the absence of immediate medical attention would not have had the outcomes specified in paragraphs (1), (2), and (3) of the definition of emergency medical condition in paragraph (a) of this section.
(B) A representative of the MCO, PIHP, PAHP, PCCM, or PCCM entity instructs the enrollee to seek emergency services.
(2) A PCCM or PCCM entity must allow enrollees to obtain emergency services outside the primary care case management system regardless of whether the case manager referred the enrollee to the provider that furnishes the services.
(d) Additional rules for emergency services. (1) The entities specified in paragraph (b) of this section may not –
(i) Limit what constitutes an emergency medical condition with reference to paragraph (a) of this section, on the basis of lists of diagnoses or symptoms; and
(ii) Refuse to cover emergency services based on the emergency room provider, hospital, or fiscal agent not notifying the enrollee’s primary care provider, MCO, PIHP, PAHP or applicable State entity of the enrollee’s screening and treatment within 10 calendar days of presentation for emergency services.
(2) An enrollee who has an emergency medical condition may not be held liable for payment of subsequent screening and treatment needed to diagnose the specific condition or stabilize the patient.
(3) The attending emergency physician, or the provider actually treating the enrollee, is responsible for determining when the enrollee is sufficiently stabilized for transfer or discharge, and that determination is binding on the entities identified in paragraph (b) of this section as responsible for coverage and payment.
(e) Coverage and payment: Poststabilization care services. Poststabilization care services are covered and paid for in accordance with provisions set forth at § 422.113(c) of this chapter. In applying those provisions, reference to “MA organization” and “financially responsible” must be read as reference to the entities responsible for Medicaid payment, as specified in paragraph (b) of this section, and payment rules governed by Title XIX of the Act and the States.
(f) Applicability to PIHPs and PAHPs. To the extent that services required to treat an emergency medical condition fall within the scope of the services for which the PIHP or PAHP is responsible, the rules under this section apply.
§ 438.116 Solvency standards.
(a) Requirement for assurances. (1) Each MCO, PIHP, and PAHP that is not a Federally qualified HMO (as defined in section 1310 of the Public Health Service Act) must provide assurances satisfactory to the State showing that its provision against the risk of insolvency is adequate to ensure that its Medicaid enrollees will not be liable for the MCO’s, PIHP’s, or PAHP’s debts if the entity becomes insolvent.
(2) Federally qualified HMOs, as defined in section 1310 of the Public Health Service Act, are exempt from this requirement.
(b) Other requirements – (1) General rule. Except as provided in paragraph (b)(2) of this section, an MCO or PIHP, must meet the solvency standards established by the State for private health maintenance organizations, or be licensed or certified by the State as a risk-bearing entity.
(2) Exception. Paragraph (b)(1) of this section does not apply to an MCO or PIHP that meets any of the following conditions:
(i) Does not provide both inpatient hospital services and physician services.
(ii) Is a public entity.
(iii) Is (or is controlled by) one or more Federally qualified health centers and meets the solvency standards established by the State for those centers.
(iv) Has its solvency guaranteed by the State.
Subpart D – MCO, PIHP and PAHP Standards
§ 438.206 Availability of services.
(a) Basic rule. Each State must ensure that all services covered under the State plan are available and accessible to enrollees of MCOs, PIHPs, and PAHPs in a timely manner. The State must also ensure that MCO, PIHP and PAHP provider networks for services covered under the contract meet the standards developed by the State in accordance with § 438.68.
(b) Delivery network. The State must ensure, through its contracts, that each MCO, PIHP and PAHP, consistent with the scope of its contracted services, meets the following requirements:
(1) Maintains and monitors a network of appropriate providers that is supported by written agreements and is sufficient to provide adequate access to all services covered under the contract for all enrollees, including those with limited English proficiency or physical or mental disabilities.
(2) Provides female enrollees with direct access to a women’s health specialist within the provider network for covered care necessary to provide women’s routine and preventive health care services. This is in addition to the enrollee’s designated source of primary care if that source is not a women’s health specialist.
(3) Provides for a second opinion from a network provider, or arranges for the enrollee to obtain one outside the network, at no cost to the enrollee.
(4) If the provider network is unable to provide necessary services, covered under the contract, to a particular enrollee, the MCO, PIHP, or PAHP must adequately and timely cover these services out of network for the enrollee, for as long as the MCO, PIHP, or PAHP’s provider network is unable to provide them.
(5) Requires out-of-network providers to coordinate with the MCO, PIHP, or PAHP for payment and ensures the cost to the enrollee is no greater than it would be if the services were furnished within the network.
(6) Demonstrates that its network providers are credentialed as required by § 438.214.
(7) Demonstrates that its network includes sufficient family planning providers to ensure timely access to covered services.
(c) Furnishing of services. The State must ensure that each contract with a MCO, PIHP, and PAHP complies with the following requirements.
(1) Timely access. Each MCO, PIHP, and PAHP must do the following:
(i) Meet and require its network providers to meet State standards for timely access to care and services, taking into account the urgency of the need for services.
(ii) Ensure that the network providers offer hours of operation that are no less than the hours of operation offered to commercial enrollees or comparable to Medicaid FFS, if the provider serves only Medicaid enrollees.
(iii) Make services included in the contract available 24 hours a day, 7 days a week, when medically necessary.
(iv) Establish mechanisms to ensure compliance by network providers.
(v) Monitor network providers regularly to determine compliance.
(vi) Take corrective action if there is a failure to comply by a network provider.
(2) Access and cultural considerations. Each MCO, PIHP, and PAHP participates in the State’s efforts to promote the delivery of services in a culturally competent manner to all enrollees, including those with limited English proficiency and diverse cultural and ethnic backgrounds, disabilities, and regardless of sex.
(3) Accessibility considerations. Each MCO, PIHP, and PAHP must ensure that network providers provide physical access, reasonable accommodations, and accessible equipment for Medicaid enrollees with physical or mental disabilities.
(d) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2018. Until that applicability date, states are required to continue to comply with § 438.206 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.207 Assurances of adequate capacity and services.
(a) Basic rule. The State must ensure, through its contracts, that each MCO, PIHP, and PAHP gives assurances to the State and provides supporting documentation that demonstrates that it has the capacity to serve the expected enrollment in its service area in accordance with the State’s standards for access to care under this part, including the standards at § 438.68 and § 438.206(c)(1).
(b) Nature of supporting documentation. Each MCO, PIHP, and PAHP must submit documentation to the State, in a format specified by the State, to demonstrate that it complies with the following requirements:
(1) Offers an appropriate range of preventive, primary care, specialty services, and LTSS that is adequate for the anticipated number of enrollees for the service area.
(2) Maintains a network of providers that is sufficient in number, mix, and geographic distribution to meet the needs of the anticipated number of enrollees in the service area.
(c) Timing of documentation. Each MCO, PIHP, and PAHP must submit the documentation described in paragraph (b) of this section as specified by the State, but no less frequently than the following:
(1) At the time it enters into a contract with the State.
(2) On an annual basis.
(3) At any time there has been a significant change (as defined by the State) in the MCO’s, PIHP’s, or PAHP’s operations that would affect the adequacy of capacity and services, including –
(i) Changes in MCO, PIHP, or PAHP services, benefits, geographic service area, composition of or payments to its provider network; or
(ii) Enrollment of a new population in the MCO, PIHP, or PAHP.
(d) State review and certification to CMS. After the State reviews the documentation submitted by the MCO, PIHP, or PAHP, the State must submit an assurance of compliance to CMS that the MCO, PIHP, or PAHP meets the State’s requirements for availability of services, as set forth in § 438.68 and § 438.206. The submission to CMS must include documentation of an analysis that supports the assurance of the adequacy of the network for each contracted MCO, PIHP or PAHP related to its provider network.
(e) CMS’ right to inspect documentation. The State must make available to CMS, upon request, all documentation collected by the State from the MCO, PIHP, or PAHP.
(f) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2018. Until that applicability date, states are required to continue to comply with § 438.207 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.208 Coordination and continuity of care.
(a) Basic requirement – (1) General rule. Except as specified in paragraphs (a)(2) and (3) of this section, the State must ensure through its contracts, that each MCO, PIHP, and PAHP complies with the requirements of this section.
(2) PIHP and PAHP exception. For PIHPs and PAHPs, the State determines, based on the scope of the entity’s services, and on the way the State has organized the delivery of managed care services, whether a particular PIHP or PAHP is required to implement mechanisms for identifying, assessing, and producing a treatment plan for an individual with special health care needs, as specified in paragraph (c) of this section.
(3) Exception for MCOs that serve dually eligible enrollees. (i) For each MCO that serves enrollees who are also enrolled in and receive Medicare benefits from a Medicare Advantage Organization (as defined in § 422.2 of this chapter), the State determines to what extent the MCO must meet the identification, assessment, and treatment planning provisions of paragraph (c) of this section for dually eligible individuals.
(ii) The State bases its determination on the needs of the population it requires the MCO to serve.
(b) Care and coordination of services for all MCO, PIHP, and PAHP enrollees. Each MCO, PIHP, and PAHP must implement procedures to deliver care to and coordinate services for all MCO, PIHP, and PAHP enrollees. These procedures must meet State requirements and must do the following:
(1) Ensure that each enrollee has an ongoing source of care appropriate to his or her needs and a person or entity formally designated as primarily responsible for coordinating the services accessed by the enrollee. The enrollee must be provided information on how to contact their designated person or entity;
(2) Coordinate the services the MCO, PIHP, or PAHP furnishes to the enrollee:
(i) Between settings of care, including appropriate discharge planning for short term and long-term hospital and institutional stays;
(ii) With the services the enrollee receives from any other MCO, PIHP, or PAHP;
(iii) With the services the enrollee receives in FFS Medicaid; and
(iv) With the services the enrollee receives from community and social support providers.
(3) Provide that the MCO, PIHP or PAHP makes a best effort to conduct an initial screening of each enrollee’s needs, within 90 days of the effective date of enrollment for all new enrollees, including subsequent attempts if the initial attempt to contact the enrollee is unsuccessful;
(4) Share with the State or other MCOs, PIHPs, and PAHPs serving the enrollee the results of any identification and assessment of that enrollee’s needs to prevent duplication of those activities;
(5) Ensure that each provider furnishing services to enrollees maintains and shares, as appropriate, an enrollee health record in accordance with professional standards; and
(6) Ensure that in the process of coordinating care, each enrollee’s privacy is protected in accordance with the privacy requirements in 45 CFR parts 160 and 164 subparts A and E, to the extent that they are applicable.
(c) Additional services for enrollees with special health care needs or who need LTSS – (1) Identification. The State must implement mechanisms to identify persons who need LTSS or persons with special health care needs to MCOs, PIHPs and PAHPs, as those persons are defined by the State. These identification mechanisms –
(i) Must be specified in the State’s quality strategy under § 438.340.
(ii) May use State staff, the State’s enrollment broker, or the State’s MCOs, PIHPs and PAHPs.
(2) Assessment. Each MCO, PIHP, and PAHP must implement mechanisms to comprehensively assess each Medicaid enrollee identified by the State (through the mechanism specified in paragraph (c)(1) of this section) and identified to the MCO, PIHP, and PAHP by the State as needing LTSS or having special health care needs to identify any ongoing special conditions of the enrollee that require a course of treatment or regular care monitoring. The assessment mechanisms must use appropriate providers or individuals meeting LTSS service coordination requirements of the State or the MCO, PIHP, or PAHP as appropriate.
(3) Treatment/service plans. MCOs, PIHPs, or PAHPs must produce a treatment or service plan meeting the criteria in paragraphs (c)(3)(i) through (v) of this section for enrollees who require LTSS and, if the State requires, must produce a treatment or service plan meeting the criteria in paragraphs (c)(3)(iii) through (v) of this section for enrollees with special health care needs that are determined through assessment to need a course of treatment or regular care monitoring. The treatment or service plan must be:
(i) Developed by an individual meeting LTSS service coordination requirements with enrollee participation, and in consultation with any providers caring for the enrollee;
(ii) Developed by a person trained in person-centered planning using a person-centered process and plan as defined in § 441.301(c)(1) and (2) of this chapter for LTSS treatment or service plans;
(iii) Approved by the MCO, PIHP, or PAHP in a timely manner, if this approval is required by the MCO, PIHP, or PAHP;
(iv) In accordance with any applicable State quality assurance and utilization review standards; and
(v) Reviewed and revised upon reassessment of functional need, at least every 12 months, or when the enrollee’s circumstances or needs change significantly, or at the request of the enrollee per § 441.301(c)(3) of this chapter.
(4) Direct access to specialists. For enrollees with special health care needs determined through an assessment (consistent with paragraph (c)(2) of this section) to need a course of treatment or regular care monitoring, each MCO, PIHP, and PAHP must have a mechanism in place to allow enrollees to directly access a specialist (for example, through a standing referral or an approved number of visits) as appropriate for the enrollee’s condition and identified needs.
(d) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.208 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
(a) Coverage. Each contract between a State and an MCO, PIHP, or PAHP must do the following:
(1) Identify, define, and specify the amount, duration, and scope of each service that the MCO, PIHP, or PAHP is required to offer.
(2) Require that the services identified in paragraph (a)(1) of this section be furnished in an amount, duration, and scope that is no less than the amount, duration, and scope for the same services furnished to beneficiaries under FFS Medicaid, as set forth in § 440.230 of this chapter, and for enrollees under the age of 21, as set forth in subpart B of part 441 of this chapter.
(3) Provide that the MCO, PIHP, or PAHP –
(i) Must ensure that the services are sufficient in amount, duration, or scope to reasonably achieve the purpose for which the services are furnished.
(ii) May not arbitrarily deny or reduce the amount, duration, or scope of a required service solely because of diagnosis, type of illness, or condition of the beneficiary.
(4) Permit an MCO, PIHP, or PAHP to place appropriate limits on a service –
(i) On the basis of criteria applied under the State plan, such as medical necessity; or
(ii) For the purpose of utilization control, provided that –
(A) The services furnished can reasonably achieve their purpose, as required in paragraph (a)(3)(i) of this section;
(B) The services supporting individuals with ongoing or chronic conditions or who require long-term services and supports are authorized in a manner that reflects the enrollee’s ongoing need for such services and supports; and
(C) Family planning services are provided in a manner that protects and enables the enrollee’s freedom to choose the method of family planning to be used consistent with § 441.20 of this chapter.
(5) Specify what constitutes “medically necessary services” in a manner that –
(i) Is no more restrictive than that used in the State Medicaid program, including quantitative and non-quantitative treatment limits, as indicated in State statutes and regulations, the State Plan, and other State policy and procedures; and
(ii) Addresses the extent to which the MCO, PIHP, or PAHP is responsible for covering services that address:
(A) The prevention, diagnosis, and treatment of an enrollee’s disease, condition, and/or disorder that results in health impairments and/or disability.
(B) The ability for an enrollee to achieve age-appropriate growth and development.
(C) The ability for an enrollee to attain, maintain, or regain functional capacity.
(D) The opportunity for an enrollee receiving long-term services and supports to have access to the benefits of community living, to achieve person-centered goals, and live and work in the setting of their choice.
(b) Authorization of services. For the processing of requests for initial and continuing authorizations of services, each contract must require –
(1) That the MCO, PIHP, or PAHP and its subcontractors have in place, and follow, written policies and procedures.
(2) That the MCO, PIHP, or PAHP –
(i) Have in effect mechanisms to ensure consistent application of review criteria for authorization decisions.
(ii) Consult with the requesting provider for medical services when appropriate.
(iii) Authorize LTSS based on an enrollee’s current needs assessment and consistent with the person-centered service plan.
(3) That any decision to deny a service authorization request or to authorize a service in an amount, duration, or scope that is less than requested, be made by an individual who has appropriate expertise in addressing the enrollee’s medical, behavioral health, or long-term services and supports needs.
(c) Notice of adverse benefit determination. Each contract must provide for the MCO, PIHP, or PAHP to notify the requesting provider, and give the enrollee written notice of any decision by the MCO, PIHP, or PAHP to deny a service authorization request, or to authorize a service in an amount, duration, or scope that is less than requested. For MCOs, PIHPs, and PAHPs, the enrollee’s notice must meet the requirements of § 438.404. For Medicaid contracts with an applicable integrated plan, as defined in § 422.561 of this chapter, in lieu of the provisions in this paragraph governing notices of adverse benefit determinations, the provisions set forth in §§ 422.629 through 422.634 of this chapter apply to determinations affecting dually eligible individuals who are also enrolled in a dual eligible special needs plan with exclusively aligned enrollment, as defined in § 422.2 of this chapter.
(d) Timeframe for decisions. Each MCO, PIHP, or PAHP contract must provide for the following decisions and notices:
(1) Standard authorization decisions. For standard authorization decisions, provide notice as expeditiously as the enrollee’s condition requires and within State-established timeframes that may not exceed 14 calendar days following receipt of the request for service, with a possible extension of up to 14 additional calendar days, if –
(i) The enrollee, or the provider, requests extension; or
(ii) The MCO, PIHP, or PAHP justifies (to the State agency upon request) a need for additional information and how the extension is in the enrollee’s interest.
(2) Expedited authorization decisions. (i) For cases in which a provider indicates, or the MCO, PIHP, or PAHP determines, that following the standard timeframe could seriously jeopardize the enrollee’s life or health or ability to attain, maintain, or regain maximum function, the MCO, PIHP, or PAHP must make an expedited authorization decision and provide notice as expeditiously as the enrollee’s health condition requires and no later than 72 hours after receipt of the request for service.
(ii) The MCO, PIHP, or PAHP may extend the 72 hour time period by up to 14 calendar days if the enrollee requests an extension, or if the MCO, PIHP, or PAHP justifies (to the State agency upon request) a need for additional information and how the extension is in the enrollee’s interest.
(3) Covered outpatient drug decisions. For all covered outpatient drug authorization decisions, provide notice as described in section 1927(d)(5)(A) of the Act.
(4) For Medicaid contracts with an applicable integrated plan, as defined in § 422.561 of this chapter, timelines for decisions and notices must be compliant with the provisions set forth in §§ 422.629 through 422.634 of this chapter in lieu of §§ 438.404 through 438.424.
(e) Compensation for utilization management activities. Each contract between a State and MCO, PIHP, or PAHP must provide that, consistent with §§ 438.3(i), and 422.208 of this chapter, compensation to individuals or entities that conduct utilization management activities is not structured so as to provide incentives for the individual or entity to deny, limit, or discontinue medically necessary services to any enrollee.
(f) Applicability date. (1) Subject to paragraph (f)(2) of this section, this section applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, States are required to continue to comply with § 438.210 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
(2) Provisions in this section affecting applicable integrated plans, as defined in § 422.561 of this chapter, are applicable no later than January 1, 2021.
§ 438.214 Provider selection.
(a) General rules. The State must ensure, through its contracts, that each MCO, PIHP, or PAHP implements written policies and procedures for selection and retention of network providers and that those policies and procedures, at a minimum, meet the requirements of this section.
(b) Credentialing and recredentialing requirements. (1) Each State must establish a uniform credentialing and recredentialing policy that addresses acute, primary, behavioral, substance use disorders, and LTSS providers, as appropriate, and requires each MCO, PIHP and PAHP to follow those policies.
(2) Each MCO, PIHP, and PAHP must follow a documented process for credentialing and recredentialing of network providers.
(c) Nondiscrimination. MCO, PIHP, and PAHP network provider selection policies and procedures, consistent with § 438.12, must not discriminate against particular providers that serve high-risk populations or specialize in conditions that require costly treatment.
(d) Excluded providers. (1) MCOs, PIHPs, and PAHPs may not employ or contract with providers excluded from participation in Federal health care programs under either section 1128 or section 1128A of the Act.
(2) [Reserved]
(e) State requirements. Each MCO, PIHP, and PAHP must comply with any additional requirements established by the State.
§ 438.224 Confidentiality.
The State must ensure, through its contracts, that (consistent with subpart F of part 431 of this chapter), for medical records and any other health and enrollment information that identifies a particular enrollee, each MCO, PIHP, and PAHP uses and discloses such individually identifiable health information in accordance with the privacy requirements in 45 CFR parts 160 and 164, subparts A and E, to the extent that these requirements are applicable.
§ 438.228 Grievance and appeal systems.
(a) The State must ensure, through its contracts, that each MCO, PIHP, and PAHP has in effect a grievance and appeal system that meets the requirements of subpart F of this part.
(b) If the State delegates to the MCO, PIHP, or PAHP responsibility for notice of action under subpart E of part 431 of this chapter, the State must conduct random reviews of each delegated MCO, PIHP, or PAHP and its providers and subcontractors to ensure that they are notifying enrollees in a timely manner.
§ 438.230 Subcontractual relationships and delegation.
(a) Applicability. The requirements of this section apply to any contract or written arrangement that an MCO, PIHP, PAHP, or PCCM entity has with any subcontractor.
(b) General rule. The State must ensure, through its contracts with MCOs, PIHPs, PAHPs, and PCCM entities that –
(1) Notwithstanding any relationship(s) that the MCO, PIHP, PAHP, or PCCM entity may have with any subcontractor, the MCO, PIHP, PAHP, or PCCM entity maintains ultimate responsibility for adhering to and otherwise fully complying with all terms and conditions of its contract with the State; and
(2) All contracts or written arrangements between the MCO, PIHP, PAHP, or PCCM entity and any subcontractor must meet the requirements of paragraph (c) of this section.
(c) Each contract or written arrangement described in paragraph (b)(2) of this section must specify that:
(1) If any of the MCO’s, PIHP’s, PAHP’s, or PCCM entity’s activities or obligations under its contract with the State are delegated to a subcontractor –
(i) The delegated activities or obligations, and related reporting responsibilities, are specified in the contract or written agreement.
(ii) The subcontractor agrees to perform the delegated activities and reporting responsibilities specified in compliance with the MCO’s, PIHP’s, PAHP’s, or PCCM entity’s contract obligations.
(iii) The contract or written arrangement must either provide for revocation of the delegation of activities or obligations, or specify other remedies in instances where the State or the MCO, PIHP, PAHP, or PCCM entity determine that the subcontractor has not performed satisfactorily.
(2) The subcontractor agrees to comply with all applicable Medicaid laws, regulations, including applicable subregulatory guidance and contract provisions;
(3) The subcontractor agrees that –
(i) The State, CMS, the HHS Inspector General, the Comptroller General, or their designees have the right to audit, evaluate, and inspect any books, records, contracts, computer or other electronic systems of the subcontractor, or of the subcontractor’s contractor, that pertain to any aspect of services and activities performed, or determination of amounts payable under the MCO’s, PIHP’s, or PAHP’s contract with the State.
(ii) The subcontractor will make available, for purposes of an audit, evaluation, or inspection under paragraph (c)(3)(i) of this section, its premises, physical facilities, equipment, books, records, contracts, computer or other electronic systems relating to its Medicaid enrollees.
(iii) The right to audit under paragraph (c)(3)(i) of this section will exist through 10 years from the final date of the contract period or from the date of completion of any audit, whichever is later.
(iv) If the State, CMS, or the HHS Inspector General determines that there is a reasonable possibility of fraud or similar risk, the State, CMS, or the HHS Inspector General may inspect, evaluate, and audit the subcontractor at any time.
(d) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.230 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
§ 438.236 Practice guidelines.
(a) Basic rule. The State must ensure, through its contracts, that each MCO, PIHP, and PAHP meets the requirements of this section.
(b) Adoption of practice guidelines. Each MCO and, when applicable, each PIHP and PAHP adopts practice guidelines that meet the following requirements:
(1) Are based on valid and reliable clinical evidence or a consensus of providers in the particular field.
(2) Consider the needs of the MCO’s, PIHP’s, or PAHP’s enrollees.
(3) Are adopted in consultation with network providers.
(4) Are reviewed and updated periodically as appropriate.
(c) Dissemination of guidelines. Each MCO, PIHP, and PAHP disseminates the guidelines to all affected providers and, upon request, to enrollees and potential enrollees.
(d) Application of guidelines. Decisions for utilization management, enrollee education, coverage of services, and other areas to which the guidelines apply are consistent with the guidelines.
§ 438.242 Health information systems.
(a) General rule. The State must ensure, through its contracts that each MCO, PIHP, and PAHP maintains a health information system that collects, analyzes, integrates, and reports data and can achieve the objectives of this part. The systems must provide information on areas including, but not limited to, utilization, claims, grievances and appeals, and disenrollments for other than loss of Medicaid eligibility.
(b) Basic elements of a health information system. The State must require, at a minimum, that each MCO, PIHP, and PAHP comply with the following:
(1) Section 6504(a) of the Affordable Care Act, which requires that State claims processing and retrieval systems are able to collect data elements necessary to enable the mechanized claims processing and information retrieval systems in operation by the State to meet the requirements of section 1903(r)(1)(F) of the Act.
(2) Collect data on enrollee and provider characteristics as specified by the State, and on all services furnished to enrollees through an encounter data system or other methods as may be specified by the State.
(3) Ensure that data received from providers is accurate and complete by –
(i) Verifying the accuracy and timeliness of reported data, including data from network providers the MCO, PIHP, or PAHP is compensating on the basis of capitation payments.
(ii) Screening the data for completeness, logic, and consistency.
(iii) Collecting data from providers in standardized formats to the extent feasible and appropriate, including secure information exchanges and technologies utilized for State Medicaid quality improvement and care coordination efforts.
(4) Make all collected data available to the State and upon request to CMS.
(5) Implement an Application Programming Interface (API) as specified in § 431.60 of this chapter as if such requirements applied directly to the MCO, PIHP, or PAHP and include –
(i) All encounter data, including encounter data from any network providers the MCO, PIHP, or PAHP is compensating on the basis of capitation payments and adjudicated claims and encounter data from any subcontractors.
(ii) [Reserved]
(6) Implement, by January 1, 2021, and maintain a publicly accessible standards-based API described in § 431.70, which must include all information specified in § 438.10(h)(1) and (2) of this chapter.
(c) Enrollee encounter data. Contracts between a State and a MCO, PIHP, or PAHP must provide for:
(1) Collection and maintenance of sufficient enrollee encounter data to identify the provider who delivers any item(s) or service(s) to enrollees.
(2) Submission of enrollee encounter data to the State at a frequency and level of detail to be specified by CMS and the State, based on program administration, oversight, and program integrity needs.
(3) Submission of all enrollee encounter data, including allowed amount and paid amount, that the State is required to report to CMS under § 438.818.
(4) Specifications for submitting encounter data to the State in standardized ASC X12N 837 and NCPDP formats, and the ASC X12N 835 format as appropriate.
(d) State review and validation of encounter data. The State must review and validate that the encounter data collected, maintained, and submitted to the State by the MCO, PIHP, or PAHP, meets the requirements of this section. The State must have procedures and quality assurance protocols to ensure that enrollee encounter data submitted under paragraph (c) of this section is a complete and accurate representation of the services provided to the enrollees under the contract between the State and the MCO, PIHP, or PAHP.
(e) Applicability date. This section applies to the rating period for contracts with MCOs, PIHPs, PAHPs, and PCCM entities beginning on or after July 1, 2017. Until that applicability date, states are required to continue to comply with § 438.242 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
Subpart E – Quality Measurement and Improvement; External Quality Review
§ 438.310 Basis, scope, and applicability.
(a) Statutory basis. This subpart is based on sections 1932(c), 1903(a)(3)(C)(ii), 1902(a)(4), and 1902(a)(19) of the Act.
(b) Scope. This subpart sets forth:
(1) Specifications for a quality assessment and performance improvement program that States must require each contracting MCO, PIHP, and PAHP to implement and maintain.
(2) Requirements for the State review of the accreditation status of all contracting MCOs, PIHPs, and PAHPs.
(3) Specifications for a Medicaid managed care quality rating system for all States contracting with MCOs, PIHPs, and PAHPs.
(4) Specifications for a Medicaid managed care quality strategy that States contracting with MCOs, PIHPs, PAHPs, and PCCM entities (described in paragraph (c)(2) of this section) must implement to ensure the delivery of quality health care.
(5) Requirements for annual external quality reviews of each contracting MCO, PIHP, PAHP and PCCM entity (described in paragraph (c)(2) of this section) including –
(i) Criteria that States must use in selecting entities to perform the reviews.
(ii) Specifications for the activities related to external quality review.
(iii) Circumstances under which external quality review may use the results of Medicare quality reviews or private accreditation reviews.
(iv) Requirements for making the results of the reviews publicly available.
(c) Applicability. (1) The provisions of this subpart apply to States contracting with MCOs, PIHPs, and PAHPs for the delivery of services covered under Medicaid.
(2) The provisions of § 438.330(b)(2), (b)(3), (c), and (e), § 438.340, and § 438.350 apply to States contracting with PCCM entities whose contracts with the State provide for shared savings, incentive payments or other financial reward for the PCCM entity for improved quality outcomes.
(d) Applicability dates. States will not be held out of compliance with the following requirements of this subpart prior to the dates noted below so long as they comply with the corresponding standard(s) in 42 CFR part 438 contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015:
(1) States must comply with § 438.330 and § 438.332 no later than the rating period for contracts beginning on or after July 1, 2017.
(2) States must comply with §§ 438.340, 438.350, 438.354, 438.356, 438.358, 438.360, 438.362, and 438.364 no later than July 1, 2018.
§ 438.320 Definitions.
As used in this subpart –
Access, as it pertains to external quality review, means the timely use of services to achieve optimal outcomes, as evidenced by managed care plans successfully demonstrating and reporting on outcome information for the availability and timeliness elements defined under § 438.68 (Network adequacy standards) and § 438.206 (Availability of services).
EQR stands for external quality review.
EQRO stands for external quality review organization.
External quality review means the analysis and evaluation by an EQRO, of aggregated information on quality, timeliness, and access to the health care services that an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), or their contractors furnish to Medicaid beneficiaries.
External quality review organization means an organization that meets the competence and independence requirements set forth in § 438.354, and performs external quality review, other EQR-related activities as set forth in § 438.358, or both.
Financial relationship means –
(1) A direct or indirect ownership or investment interest (including an option or nonvested interest) in any entity. This direct or indirect interest may be in the form of equity, debt, or other means, and includes any indirect ownership or investment interest no matter how many levels removed from a direct interest; or
(2) A compensation arrangement with an entity.
Health care services means all Medicaid services provided by an MCO, PIHP, or PAHP under contract with the State Medicaid agency in any setting, including but not limited to medical care, behavioral health care, and long-term services and supports.
Outcomes means changes in patient health, functional status, satisfaction or goal achievement that result from health care or supportive services.
Quality, as it pertains to external quality review, means the degree to which an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) increases the likelihood of desired outcomes of its enrollees through:
(1) Its structural and operational characteristics.
(2) The provision of services that are consistent with current professional, evidenced-based-knowledge.
(3) Interventions for performance improvement.
Validation means the review of information, data, and procedures to determine the extent to which they are accurate, reliable, free from bias, and in accord with standards for data collection and analysis.
§ 438.330 Quality assessment and performance improvement program.
(a) General rules. (1) The State must require, through its contracts, that each MCO, PIHP, and PAHP establish and implement an ongoing comprehensive quality assessment and performance improvement program for the services it furnishes to its enrollees that includes the elements identified in paragraph (b) of this section.
(2) After consulting with States and other stakeholders and providing public notice and opportunity to comment, CMS may specify performance measures and PIPs, which must be included in the standard measures identified and PIPs required by the State in accordance with paragraphs (c) and (d) of this section. A State may request an exemption from including the performance measures or PIPs established under paragraph (a)(2) of this section, by submitting a written request to CMS explaining the basis for such request.
(3) The State must require, through its contracts, that each PCCM entity described in § 438.310(c)(2) establish and implement an ongoing comprehensive quality assessment and performance improvement program for the services it furnishes to its enrollees which incorporates, at a minimum, paragraphs (b)(2) and (3) of this section and the performance measures identified by the State per paragraph (c) of this section.
(b) Basic elements of quality assessment and performance improvement programs. The comprehensive quality assessment and performance improvement program described in paragraph (a) of this section must include at least the following elements:
(1) Performance improvement projects in accordance with paragraph (d) of this section.
(2) Collection and submission of performance measurement data in accordance with paragraph (c) of this section.
(3) Mechanisms to detect both underutilization and overutilization of services.
(4) Mechanisms to assess the quality and appropriateness of care furnished to enrollees with special health care needs, as defined by the State in the quality strategy under § 438.340.
(5) For MCOs, PIHPs, or PAHPs providing long-term services and supports:
(i) Mechanisms to assess the quality and appropriateness of care furnished to enrollees using long-term services and supports, including assessment of care between care settings and a comparison of services and supports received with those set forth in the enrollee’s treatment/service plan, if applicable; and
(ii) Participate in efforts by the State to prevent, detect, and remediate critical incidents (consistent with assuring beneficiary health and welfare per §§ 441.302 and 441.730(a) of this chapter) that are based, at a minimum, on the requirements on the State for home and community-based waiver programs per § 441.302(h) of this chapter.
(c) Performance measurement. The State must –
(1)(i) Identify standard performance measures, including those performance measures that may be specified by CMS under paragraph (a)(2) of this section, relating to the performance of MCOs, PIHPs, and PAHPs; and
(ii) In addition to the measures specified in paragraph (c)(1)(i) of this section, in the case of an MCO, PIHP, or PAHP providing long-term services and supports, identify standard performance measures relating to quality of life, rebalancing, and community integration activities for individuals receiving long-term services and supports.
(2) Require that each MCO, PIHP, and PAHP annually –
(i) Measure and report to the State on its performance, using the standard measures required by the State in paragraph (c)(1) of this section;
(ii) Submit to the State data, specified by the State, which enables the State to calculate the MCO’s, PIHP’s, or PAHP’s performance using the standard measures identified by the State under paragraph (c)(1) of this section; or
(iii) Perform a combination of the activities described in paragraphs (c)(2)(i) and (ii) of this section.
(d) Performance improvement projects. (1) The State must require that MCOs, PIHPs, and PAHPs conduct performance improvement projects, including any performance improvement projects required by CMS in accordance with paragraph (a)(2) of this section, that focus on both clinical and nonclinical areas.
(2) Each performance improvement project must be designed to achieve significant improvement, sustained over time, in health outcomes and enrollee satisfaction, and must include the following elements:
(i) Measurement of performance using objective quality indicators.
(ii) Implementation of interventions to achieve improvement in the access to and quality of care.
(iii) Evaluation of the effectiveness of the interventions based on the performance measures in paragraph (d)(2)(i) of this section.
(iv) Planning and initiation of activities for increasing or sustaining improvement.
(3) The State must require each MCO, PIHP, and PAHP to report the status and results of each project conducted per paragraph (d)(1) of this section to the State as requested, but not less than once per year.
(4) The State may permit an MCO, PIHP, or PAHP exclusively serving dual eligibles to substitute an MA Organization quality improvement project conducted under § 422.152(d) of this chapter for one or more of the performance improvement projects otherwise required under this section.
(e) Program review by the State. (1) The State must review, at least annually, the impact and effectiveness of the quality assessment and performance improvement program of each MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2). The review must include –
(i) The MCO’s, PIHP’s, PAHP’s, and PCCM entity’s performance on the measures on which it is required to report.
(ii) The outcomes and trended results of each MCO’s, PIHP’s, and PAHP’s performance improvement projects.
(iii) The results of any efforts by the MCO, PIHP, or PAHP to support community integration for enrollees using long-term services and supports.
(2) The State may require that an MCO, PIHP, PAHP, or PCCM entity described in § 438.310(c)(2) develop a process to evaluate the impact and effectiveness of its own quality assessment and performance improvement program.
§ 438.332 State review of the accreditation status of MCOs, PIHPs, and PAHPs.
(a) The State must require, through its contracts, that each MCO, PIHP, and PAHP inform the State whether it has been accredited by a private independent accrediting entity.
(b) The State must require, through its contracts, that each MCO, PIHP, and PAHP that has received accreditation by a private independent accrediting entity must authorize the private independent accrediting entity to provide the State a copy of its most recent accreditation review, including:
(1) Accreditation status, survey type, and level (as applicable);
(2) Accreditation results, including recommended actions or improvements, corrective action plans, and summaries of findings; and
(3) Expiration date of the accreditation.
(c) The State must –
(1) Make the accreditation status for each contracted MCO, PIHP, and PAHP available on the Web site required under § 438.10(c)(3), including whether each MCO, PIHP, and PAHP has been accredited and, if applicable, the name of the accrediting entity, accreditation program, and accreditation level; and
(2) Update this information at least annually.
§ 438.334 Medicaid managed care quality rating system.
(a) General rule. Each State contracting with an MCO, PIHP or PAHP to furnish services to Medicaid beneficiaries must –
(1) Adopt the Medicaid managed care quality rating system developed by CMS in accordance with paragraph (b) of this section; or
(2) Adopt an alternative Medicaid managed care quality rating system in accordance with paragraph (c) of this section.
(3) Implement such Medicaid managed care quality rating system within 3 years of the date of a final notice published in the
(b) Quality rating system. (1) CMS, after consulting with States and other stakeholders and providing public notice and opportunity to comment, will develop a framework for a Medicaid managed care quality rating system (QRS), including the identification of the performance measures, a subset of mandatory performance measures, and a methodology, that aligns where appropriate with the qualified health plan quality rating system developed in accordance with 45 CFR 156.1120, the Medicare Advantage 5-Star Rating System described in subpart D of part 422 of this chapter, and other related CMS quality rating approaches.
(2) CMS, after consulting with States and other stakeholders and providing public notice and opportunity to comment, may periodically update the Medicaid managed care QRS framework developed in accordance with paragraph (b)(1) of this section.
(c) Alternative quality rating system.
(1) A state may implement an alternative Medicaid managed care quality rating system that utilizes different performance measures or applies a different methodology from that described in paragraph (b) of this section provided that –
(i) The alternative quality rating system includes the mandatory measures identified in the framework developed under paragraph (b) of this section;
(ii) The ratings generated by the alternative quality rating system yield information regarding MCO, PIHP, and PAHP performance which is substantially comparable to that yielded by the framework developed under paragraph (b) of this section to the extent feasible, taking into account such factors as differences in covered populations, benefits, and stage of delivery system transformation, to enable meaningful comparison of performance across States.
(iii) The State receives CMS approval prior to implementing an alternative quality rating system or modifications to an approved alternative Medicaid managed care quality rating system.
(2) Prior to submitting a request for, or modification of, an alternative Medicaid managed care quality rating system to CMS, the State must –
(i) Obtain input from the State’s Medical Care Advisory Committee established under § 431.12 of this chapter; and
(ii) Provide an opportunity for public comment of at least 30 days on the proposed alternative Medicaid managed care quality rating system or modification.
(3) In requesting CMS approval, the State must include the following:
(i) The alternative quality rating system framework, including the performance measures and methodology to be used in generating plan ratings; and,
(ii) Documentation of the public comment process specified in paragraphs (c)(2)(i) and (ii) of this section, including discussion of the issues raised by the Medical Care Advisory Committee and the public. The request must document any policy revisions or modifications made in response to the comments and rationale for comments not accepted; and,
(iii) Other information specified by CMS to demonstrate compliance with paragraph (c) of this section.
(4) The Secretary, after consulting with States and other stakeholders, shall issue guidance which describes the criteria and process for determining if an alternative QRS system is substantially comparable to the Medicaid managed care quality rating system in paragraph (b) of this section.
(d) Quality ratings. Each year, the State must collect data from each MCO, PIHP, and PAHP with which it contracts and issue an annual quality rating for each MCO, PIHP, and PAHP based on the data collected, using the Medicaid managed care quality rating system adopted under this section.
(e) Availability of information. The State must prominently display the quality rating given by the State to each MCO, PIHP, or PAHP under paragraph (d) of this section on the Web site required under § 438.10(c)(3) in a manner that complies with the standards in § 438.10(d).
§ 438.340 Managed care State quality strategy.
(a) General rule. Each State contracting with an MCO, PIHP, or PAHP as defined in § 438.2 or with a PCCM entity as described in § 438.310(c)(2) must draft and implement a written quality strategy for assessing and improving the quality of health care and services furnished by the MCO, PIHP, PAHP or PCCM entity.
(b) Elements of the State quality strategy. At a minimum, the State’s quality strategy must include the following:
(1) The State-defined network adequacy and availability of services standards for MCOs, PIHPs, and PAHPs required by §§ 438.68 and 438.206 and examples of evidence-based clinical practice guidelines the State requires in accordance with § 438.236.
(2) The State’s goals and objectives for continuous quality improvement which must be measurable and take into consideration the health status of all populations in the State served by the MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2).
(3) A description of –
(i) The quality metrics and performance targets to be used in measuring the performance and improvement of each MCO, PIHP, PAHP, and PCCM entity described in § 438.310(c)(2) with which the State contracts, including but not limited to, the performance measures reported in accordance with § 438.330(c). The State must identify which quality measures and performance outcomes the State will publish at least annually on the website required under § 438.10(c)(3); and,
(ii) The performance improvement projects to be implemented in accordance with § 438.330(d), including a description of any interventions the State proposes to improve access, quality, or timeliness of care for beneficiaries enrolled in an MCO, PIHP, or PAHP.
(4) Arrangements for annual, external independent reviews, in accordance with § 438.350, of the quality outcomes and timeliness of, and access to, the services covered under each MCO, PIHP, PAHP, and PCCM entity (described in § 438.310(c)(2)) contract.
(5) A description of the State’s transition of care policy required under § 438.62(b)(3).
(6) The State’s plan to identify, evaluate, and reduce, to the extent practicable, health disparities based on age, race, ethnicity, sex, primary language, and disability status. For purposes of this paragraph (b)(6), “disability status” means, at a minimum, whether the individual qualified for Medicaid on the basis of a disability. States must include in this plan the State’s definition of disability status and how the State will make the determination that a Medicaid enrollee meets the standard including the data source(s) that the State will use to identify disability status.
(7) For MCOs, appropriate use of intermediate sanctions that, at a minimum, meet the requirements of subpart I of this part.
(8) The mechanisms implemented by the State to comply with § 438.208(c)(1) (relating to the identification of persons who need long-term services and supports or persons with special health care needs).
(9) The information required under § 438.360(c) (relating to nonduplication of EQR activities).
(10) The State’s definition of a “significant change” for the purposes of paragraph (c)(3)(ii) of this section.
(c) Development, evaluation, and revision. In drafting or revising its quality strategy, the State must:
(1) Make the strategy available for public comment before submitting the strategy to CMS for review, including:
(i) Obtaining input from the Medical Care Advisory Committee (established by § 431.12 of this chapter), beneficiaries, and other stakeholders.
(ii) If the State enrolls Indians in the MCO, PIHP, PAHP, or PCCM entity described in § 438.310(c)(2), consulting with Tribes in accordance with the State’s Tribal consultation policy.
(2) Review and update the quality strategy as needed, but no less than once every 3 years.
(i) This review must include an evaluation of the effectiveness of the quality strategy conducted within the previous 3 years.
(ii) The State must make the results of the review available on the Web site required under § 438.10(c)(3).
(iii) Updates to the quality strategy must take into consideration the recommendations provided pursuant to § 438.364(a)(4).
(3) Submit to CMS the following:
(i) A copy of the initial strategy for CMS comment and feedback prior to adopting it in final.
(ii) A copy of the revised strategy whenever significant changes, as defined in the state’s quality strategy per paragraph (b)(11) of this section, are made to the document, or whenever significant changes occur within the State’s Medicaid program.
(d) Availability. The State must make the final quality strategy available on the Web site required under § 438.10(c)(3).
§ 438.350 External quality review.
Each State that contracts with MCOs, PIHPs, or PAHPs, or with PCCM entities (described in § 438.310(c)(2)) must ensure that –
(a) Except as provided in § 438.362, a qualified EQRO performs an annual EQR for each such contracting MCO, PIHP, PAHP or PCCM entity (described in § 438.310(c)(2)).
(b) The EQRO has sufficient information to use in performing the review.
(c) The information used to carry out the review must be obtained from the EQR-related activities described in § 438.358 or, if applicable, from a Medicare or private accreditation review as described in § 438.360.
(d) For each EQR-related activity, the information gathered for use in the EQR must include the elements described in § 438.364(a)(2)(i) through (iv).
(e) The information provided to the EQRO in accordance with paragraph (b) of this section is obtained through methods consistent with the protocols established by the Secretary in accordance with § 438.352.
(f) The results of the reviews are made available as specified in § 438.364.
§ 438.352 External quality review protocols.
The Secretary, in coordination with the National Governor’s Association, must develop protocols for the external quality reviews required under this subpart. Each protocol issued by the Secretary must specify –
(a) The data to be gathered;
(b) The sources of the data;
(c) The activities and steps to be followed in collecting the data to promote its accuracy, validity, and reliability;
(d) The proposed method or methods for validly analyzing and interpreting the data once obtained; and
(e) Instructions, guidelines, worksheets, and other documents or tools necessary for implementing the protocol.
§ 438.354 Qualifications of external quality review organizations.
(a) General rule. The State must ensure that an EQRO meets the requirements of this section.
(b) Competence. The EQRO must have at a minimum the following:
(1) Staff with demonstrated experience and knowledge of –
(i) Medicaid beneficiaries, policies, data systems, and processes;
(ii) Managed care delivery systems, organizations, and financing;
(iii) Quality assessment and improvement methods; and
(iv) Research design and methodology, including statistical analysis.
(2) Sufficient physical, technological, and financial resources to conduct EQR or EQR-related activities.
(3) Other clinical and nonclinical skills necessary to carry out EQR or EQR-related activities and to oversee the work of any subcontractors.
(c) Independence. The EQRO and its subcontractors must be independent from the State Medicaid agency and from the MCOs, PIHPs, PAHPs, or PCCM entities (described in § 438.310(c)(2)) that they review. To qualify as “independent” –
(1) If a State agency, department, university, or other State entity:
(i) May not have Medicaid purchasing or managed care licensing authority; and
(ii) Must be governed by a Board or similar body the majority of whose members are not government employees.
(2) An EQRO may not:
(i) Review any MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), or a competitor operating in the State, over which the EQRO exerts control or which exerts control over the EQRO (as used in this paragraph, “control” has the meaning given the term in 48 CFR 19.101) through –
(A) Stock ownership;
(B) Stock options and convertible debentures;
(C) Voting trusts;
(D) Common management, including interlocking management; and
(E) Contractual relationships.
(ii) Deliver any health care services to Medicaid beneficiaries;
(iii) Conduct, on the State’s behalf, ongoing Medicaid managed care program operations related to oversight of the quality of MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) services, except for the related activities specified in § 438.358;
(iv) Review any MCO, PIHP, PAHP or PCCM entity (described in § 438.310(c)(2)) for which it is conducting or has conducted an accreditation review within the previous 3 years; or
(v) Have a present, or known future, direct or indirect financial relationship with an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) that it will review as an EQRO.
§ 438.356 State contract options for external quality review.
(a) The State –
(1) Must contract with one EQRO to conduct either EQR alone or EQR and other EQR-related activities.
(2) May contract with additional EQROs or other entities to conduct EQR-related activities as set forth in § 438.358.
(b) Each EQRO must meet the competence requirements as specified in § 438.354(b).
(c) Each EQRO is permitted to use subcontractors. The EQRO is accountable for, and must oversee, all subcontractor functions.
(d) Each EQRO and its subcontractors performing EQR or EQR-related activities must meet the requirements for independence, as specified in § 438.354(c).
(e) For each contract with an EQRO described in paragraph (a) of this section, the State must follow an open, competitive procurement process that is in accordance with State law and regulations. In addition, the State must comply with 45 CFR part 75 as it applies to State procurement of Medicaid services.
(a) General rule. (1) The State, its agent that is not an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), or an EQRO may perform the mandatory and optional EQR-related activities in this section.
(2) The data obtained from the mandatory and optional EQR-related activities in this section must be used for the annual EQR in § 438.350 and must include, at a minimum, the elements in § 438.364(a)(2)(i) through (iv).
(b) Mandatory activities. (1) For each MCO, PIHP, or PAHP the following EQR-related activities must be performed:
(i) Validation of performance improvement projects required in accordance with § 438.330(b)(1) that were underway during the preceding 12 months.
(ii) Validation of MCO, PIHP, or PAHP performance measures required in accordance with § 438.330(b)(2) or MCO, PIHP, or PAHP performance measures calculated by the State during the preceding 12 months.
(iii) A review, conducted within the previous 3-year period, to determine the MCO’s, PIHP’s, or PAHP’s compliance with the standards set forth in subpart D of this part, the disenrollment requirements and limitations described in § 438.56, the enrollee rights requirements described in § 438.100, the emergency and post-stabilization services requirements described in § 438.114, and the quality assessment and performance improvement requirements described in § 438.330.
(iv) Validation of MCO, PIHP, or PAHP network adequacy during the preceding 12 months to comply with requirements set forth in § 438.68 and, if the State enrolls Indians in the MCO, PIHP, or PAHP, § 438.14(b)(1).
(2) For each PCCM entity (described in § 438.310(c)(2)), the EQR-related activities in paragraphs (b)(1)(ii) and (iii) of this section must be performed.
(c) Optional activities. For each MCO, PIHP, PAHP, and PCCM entity (described in § 438.310(c)(2)), the following activities may be performed by using information derived during the preceding 12 months:
(1) Validation of encounter data reported by an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)).
(2) Administration or validation of consumer or provider surveys of quality of care.
(3) Calculation of performance measures in addition to those reported by an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) and validated by an EQRO in accordance with paragraph (b)(1)(ii) of this section.
(4) Conduct of performance improvement projects in addition to those conducted by an MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) and validated by an EQRO in accordance with paragraph (b)(1)(i) of this section.
(5) Conduct of studies on quality that focus on a particular aspect of clinical or nonclinical services at a point in time.
(6) Assist with the quality rating of MCOs, PIHPs, and PAHPs consistent with § 438.334.
(d) Technical assistance. The EQRO may, at the State’s direction, provide technical guidance to groups of MCOs, PIHPs, PAHPs, or PCCM entities (described in § 438.310(c)(2)) to assist them in conducting activities related to the mandatory and optional activities described in this section that provide information for the EQR and the resulting EQR technical report.
§ 438.360 Nonduplication of mandatory activities with Medicare or accreditation review.
(a) General rule. Consistent with guidance issued by the Secretary under § 438.352, to avoid duplication the State may use information from a Medicare or private accreditation review of an MCO, PIHP, or PAHP to provide information for the annual EQR (described in § 438.350) instead of conducting one or more of the EQR activities described in § 438.358(b)(1)(i) through (iii) (relating to the validation of performance improvement projects, validation of performance measures, and compliance review) if the following conditions are met:
(1) The MCO, PIHP, or PAHP is in compliance with the applicable Medicare Advantage standards established by CMS, as determined by CMS or its contractor for Medicare, or has obtained accreditation from a private accrediting organization recognized by CMS as applying standards at least as stringent as Medicare under the procedures in § 422.158 of this chapter;
(2) The Medicare or private accreditation review standards are comparable to standards established through the EQR protocols (§ 438.352) for the EQR activities described in § 438.358(b)(1)(i) through (iii); and
(3) The MCO, PIHP, or PAHP provides to the State all the reports, findings, and other results of the Medicare or private accreditation review activities applicable to the standards for the EQR activities.
(b) External quality review report. If the State uses information from a Medicare or private accreditation review in accordance with paragraph (a) of this section, the State must ensure that all such information is furnished to the EQRO for analysis and inclusion in the report described in § 438.364(a).
(c) Quality strategy. The State must identify in its quality strategy under § 438.340 the EQR activities for which it has exercised the option described in this section, and explain the rationale for the State’s determination that the Medicare review or private accreditation activity is comparable to such EQR activities, consistent with paragraph (a)(2) of this section.
§ 438.362 Exemption from external quality review.
(a) Basis for exemption. The State may exempt an MCO from EQR if the following conditions are met:
(1) The MCO has a current Medicare contract under part C of Title XVIII or under section 1876 of the Act, and a current Medicaid contract under section 1903(m) of the Act.
(2) The two contracts cover all or part of the same geographic area within the State.
(3) The Medicaid contract has been in effect for at least 2 consecutive years before the effective date of the exemption and during those 2 years the MCO has been subject to EQR under this part, and found to be performing acceptably for the quality, timeliness, and access to health care services it provides to Medicaid beneficiaries.
(b) Information on exempted MCOs. When the State exercises this option, the State must obtain either of the following:
(1) Information on Medicare review findings. Each year, the State must obtain from each MCO that it exempts from EQR the most recent Medicare review findings reported on the MCO including –
(i) All data, correspondence, information, and findings pertaining to the MCO’s compliance with Medicare standards for access, quality assessment and performance improvement, health services, or delegation of these activities.
(ii) All measures of the MCO’s performance.
(iii) The findings and results of all performance improvement projects pertaining to Medicare enrollees.
(2) Medicare information from a private, national accrediting organization that CMS approves and recognizes for Medicare Advantage Organization deeming. (i) If an exempted MCO has been reviewed by a private accrediting organization, the State must require the MCO to provide the State with a copy of all findings pertaining to its most recent accreditation review if that review has been used for either of the following purposes:
(A) To fulfill certain requirements for Medicare external review under subpart D of part 422 of this chapter.
(B) To deem compliance with Medicare requirements, as provided in § 422.156 of this chapter.
(ii) These findings must include, but need not be limited to, accreditation review results of evaluation of compliance with individual accreditation standards, noted deficiencies, corrective action plans, and summaries of unmet accreditation requirements.
(c) Identification of exempted MCOs. The State must annually identify, on the website required under § 438.10(c)(3) and in the same location where the EQR technical reports are posted in accordance with § 438.364(c)(2)(i), the names of the MCOs exempt from external quality review by the State, including the beginning date of the current exemption period, or that no MCOs are exempt, as appropriate.
§ 438.364 External quality review results.
(a) Information that must be produced. The State must ensure that the EQR results in an annual detailed technical report that summarizes findings on access and quality of care, including:
(1) A description of the manner in which the data from all activities conducted in accordance with § 438.358 were aggregated and analyzed, and conclusions were drawn as to the quality, timeliness, and access to the care furnished by the MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)).
(2) For each EQR-related activity conducted in accordance with § 438.358:
(i) Objectives;
(ii) Technical methods of data collection and analysis;
(iii) Description of data obtained, including validated performance measurement data for each activity conducted in accordance with § 438.358(b)(1)(i) and (ii); and
(iv) Conclusions drawn from the data.
(3) An assessment of each MCO’s, PIHP’s, PAHP’s, or PCCM entity’s (described in § 438.310(c)(2)) strengths and weaknesses for the quality, timeliness, and access to health care services furnished to Medicaid beneficiaries.
(4) Recommendations for improving the quality of health care services furnished by each MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) including how the State can target goals and objectives in the quality strategy, under § 438.340, to better support improvement in the quality, timeliness, and access to health care services furnished to Medicaid beneficiaries.
(5) Methodologically appropriate, comparative information about all MCOs, PIHPs, PAHPs, and PCCM entities (described in § 438.310(c)(2)), consistent with guidance included in the EQR protocols issued in accordance with § 438.352(e).
(6) An assessment of the degree to which each MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)) has addressed effectively the recommendations for quality improvement made by the EQRO during the previous year’s EQR.
(7) The names of the MCOs exempt from external quality review by the State, including the beginning date of the current exemption period, or that no MCOs are exempt, as appropriate.
(b) Revision. States may not substantively revise the content of the final EQR technical report without evidence of error or omission.
(c) Availability of information. (1) The State must contract with a qualified EQRO to produce and submit to the State an annual EQR technical report in accordance with paragraph (a) of this section. The State must finalize the annual technical report by April 30th of each year.
(2) The State must –
(i) Post the most recent copy of the annual EQR technical report on the Web site required under § 438.10(c)(3) by April 30th of each year.
(ii) Provide printed or electronic copies of the information specified in paragraph (a) of this section, upon request, to interested parties such as participating health care providers, enrollees and potential enrollees of the MCO, PIHP, PAHP, or PCCM entity (described in § 438.310(c)(2)), beneficiary advocacy groups, and members of the general public.
(3) The State must make the information specified in paragraph (a) of this section available in alternative formats for persons with disabilities, when requested.
(d) Safeguarding patient identity. The information released under paragraph (c) of this section may not disclose the identity or other protected health information of any patient.
§ 438.370 Federal financial participation (FFP).
(a) FFP at the 75 percent rate is available in expenditures for EQR (including the production of EQR results) and the EQR-related activities set forth in § 438.358 performed on MCOs and conducted by EQROs and their subcontractors.
(b) FFP at the 50 percent rate is available in expenditures for EQR-related activities conducted by any entity that does not qualify as an EQRO, and for EQR (including the production of EQR results) and EQR-related activities performed by an EQRO on entities other than MCOs.
(c) Prior to claiming FFP at the 75 percent rate in accordance with paragraph (a) of this section, the State must submit each EQRO contract to CMS for review and approval.
Subpart F – Grievance and Appeal System
§ 438.400 Statutory basis, definitions, and applicability.
(a) Statutory basis. This subpart is based on the following statutory sections:
(1) Section 1902(a)(3) of the Act requires that a State plan provide an opportunity for a fair hearing to any person whose claim for assistance is denied or not acted upon promptly.
(2) Section 1902(a)(4) of the Act requires that the State plan provide for methods of administration that the Secretary finds necessary for the proper and efficient operation of the plan.
(3) Section 1932(b)(4) of the Act requires Medicaid managed care organizations to establish internal grievance procedures under which Medicaid enrollees, or providers acting on their behalf, may challenge the denial of coverage of, or payment for, medical assistance.
(4) Section 1859(f)(8)(B) of the Act requires that the Secretary, to the extent feasible, establish procedures unifying grievances and appeals procedures under sections 1852(f), 1852(g), 1902(a)(3), 1902(a)(5), and 1932(b)(4) of the Act for items and services provided, by specialized Medicare Advantage plans for special needs individuals described in section 1859(b)(6)(B)(ii), under Titles XVIII and XIX of the Act.
(b) Definitions. As used in this subpart, the following terms have the indicated meanings:
Adverse benefit determination means, in the case of an MCO, PIHP, or PAHP, any of the following:
(1) The denial or limited authorization of a requested service, including determinations based on the type or level of service, requirements for medical necessity, appropriateness, setting, or effectiveness of a covered benefit.
(2) The reduction, suspension, or termination of a previously authorized service.
(3) The denial, in whole or in part, of payment for a service. A denial, in whole or in part, of a payment for a service solely because the claim does not meet the definition of a “clean claim” at § 447.45(b) of this chapter is not an adverse benefit determination.
(4) The failure to provide services in a timely manner, as defined by the State.
(5) The failure of an MCO, PIHP, or PAHP to act within the timeframes provided in § 438.408(b)(1) and (2) regarding the standard resolution of grievances and appeals.
(6) For a resident of a rural area with only one MCO, the denial of an enrollee’s request to exercise his or her right, under § 438.52(b)(2)(ii), to obtain services outside the network.
(7) The denial of an enrollee’s request to dispute a financial liability, including cost sharing, copayments, premiums, deductibles, coinsurance, and other enrollee financial liabilities.
Appeal means a review by an MCO, PIHP, or PAHP of an adverse benefit determination.
Grievance means an expression of dissatisfaction about any matter other than an adverse benefit determination. Grievances may include, but are not limited to, the quality of care or services provided, and aspects of interpersonal relationships such as rudeness of a provider or employee, or failure to respect the enrollee’s rights regardless of whether remedial action is requested. Grievance includes an enrollee’s right to dispute an extension of time proposed by the MCO, PIHP or PAHP to make an authorization decision.
Grievance and appeal system means the processes the MCO, PIHP, or PAHP implements to handle appeals of an adverse benefit determination and grievances, as well as the processes to collect and track information about them.
State fair hearing means the process set forth in subpart E of part 431 of this chapter.
(c) Applicability. (1) Subject to paragraph (c)(2) of this section, this subpart applies to the rating period for contracts with MCOs, PIHPs, and PAHPs beginning on or after July 1, 2017. Until that applicability date, States, MCOs, PIHPs, and PAHPs are required to continue to comply with subpart F contained in the 42 CFR parts 430 to 481, edition revised as of October 1, 2015.
(2) Provisions in this part affecting applicable integrated plans, as defined in § 422.561 of this chapter, are applicable no later than January 1, 2021.
§ 438.402 General requirements.
(a) The grievance and appeal system. Each MCO, PIHP, and PAHP must have a grievance and appeal system in place for enrollees. Non-emergency medical transportation PAHPs, as defined in § 438.9, are not subject to this subpart F. For grievances and appeals at the plan level, an applicable integrated plan as defined in § 422.561 of this chapter is not subject to this subpart F, and is instead subject to the requirements of §§ 422.629 through 422.634 of this chapter. For appeals of integrated reconsiderations, applicable integrated plans are subject to § 438.408(f).
(b) Level of appeals. Each MCO, PIHP, and PAHP may have only one level of appeal for enrollees.
(c) Filing requirements – (1) Authority to file. (i) An enrollee may file a grievance and request an appeal with the MCO, PIHP, or PAHP. An enrollee may request a State fair hearing after receiving notice under § 438.408 that the adverse benefit determination is upheld.
(A) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in § 438.408, the enrollee is deemed to have exhausted the MCO’s, PIHP’s, or PAHP’s appeals process. The enrollee may initiate a State fair hearing.
(B) External medical review. The State may offer and arrange for an external medical review if the following conditions are met.
(1) The review must be at the enrollee’s option and must not be required before or used as a deterrent to proceeding to the State fair hearing.
(2) The review must be independent of both the State and MCO, PIHP, or PAHP.
(3) The review must be offered without any cost to the enrollee.
(4) The review must not extend any of the timeframes specified in § 438.408 and must not disrupt the continuation of benefits in § 438.420.
(ii) If State law permits and with the written consent of the enrollee, a provider or an authorized representative may request an appeal or file a grievance, or request a State fair hearing, on behalf of an enrollee. When the term “enrollee” is used throughout subpart F of this part, it includes providers and authorized representatives consistent with this paragraph, with the exception that providers cannot request continuation of benefits as specified in § 438.420(b)(5).
(2) Timing – (i) Grievance. An enrollee may file a grievance with the MCO, PIHP, or PAHP at any time.
(ii) Appeal. Following receipt of a notification of an adverse benefit determination by an MCO, PIHP, or PAHP, an enrollee has 60 calendar days from the date on the adverse benefit determination notice in which to file a request for an appeal to the managed care plan.
(3) Procedures – (i) Grievance. The enrollee may file a grievance either orally or in writing and, as determined by the State, either with the State or with the MCO, PIHP, or PAHP.
(ii) Appeal. The enrollee may request an appeal either orally or in writing.
§ 438.404 Timely and adequate notice of adverse benefit determination.
(a) Notice. The MCO, PIHP, or PAHP must give enrollees timely and adequate notice of an adverse benefit determination in writing consistent with the requirements below and in § 438.10.
(b) Content of notice. The notice must explain the following:
(1) The adverse benefit determination the MCO, PIHP, or PAHP has made or intends to make.
(2) The reasons for the adverse benefit determination, including the right of the enrollee to be provided upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the enrollee’s adverse benefit determination. Such information includes medical necessity criteria, and any processes, strategies, or evidentiary standards used in setting coverage limits.
(3) The enrollee’s right to request an appeal of the MCO’s, PIHP’s, or PAHP’s adverse benefit determination, including information on exhausting the MCO’s, PIHP’s, or PAHP’s one level of appeal described at § 438.402(b) and the right to request a State fair hearing consistent with § 438.402(c).
(4) The procedures for exercising the rights specified in this paragraph (b).
(5) The circumstances under which an appeal process can be expedited and how to request it.
(6) The enrollee’s right to have benefits continue pending resolution of the appeal, how to request that benefits be continued, and the circumstances, consistent with state policy, under which the enrollee may be required to pay the costs of these services.
(c) Timing of notice. The MCO, PIHP, or PAHP must mail the notice within the following timeframes:
(1) For termination, suspension, or reduction of previously authorized Medicaid-covered services, within the timeframes specified in §§ 431.211, 431.213, and 431.214 of this chapter.
(2) For denial of payment, at the time of any action affecting the claim.
(3) For standard service authorization decisions that deny or limit services, within the timeframe specified in § 438.210(d)(1).
(4) If the MCO, PIHP, or PAHP meets the criteria set forth for extending the timeframe for standard service authorization decisions consistent with § 438.210(d)(1)(ii), it must –
(i) Give the enrollee written notice of the reason for the decision to extend the timeframe and inform the enrollee of the right to file a grievance if he or she disagrees with that decision; and
(ii) Issue and carry out its determination as expeditiously as the enrollee’s health condition requires and no later than the date the extension expires.
(5) For service authorization decisions not reached within the timeframes specified in § 438.210(d) (which constitutes a denial and is thus an adverse benefit determination), on the date that the timeframes expire.
(6) For expedited service authorization decisions, within the timeframes specified in § 438.210(d)(2).
§ 438.406 Handling of grievances and appeals.
(a) General requirements. In handling grievances and appeals, each MCO, PIHP, and PAHP must give enrollees any reasonable assistance in completing forms and taking other procedural steps related to a grievance or appeal. This includes, but is not limited to, auxiliary aids and services upon request, such as providing interpreter services and toll-free numbers that have adequate TTY/TTD and interpreter capability.
(b) Special requirements. An MCO’s, PIHP’s or PAHP’s process for handling enrollee grievances and appeals of adverse benefit determinations must:
(1) Acknowledge receipt of each grievance and appeal.
(2) Ensure that the individuals who make decisions on grievances and appeals are individuals –
(i) Who were neither involved in any previous level of review or decision-making nor a subordinate of any such individual.
(ii) Who, if deciding any of the following, are individuals who have the appropriate clinical expertise, as determined by the State, in treating the enrollee’s condition or disease.
(A) An appeal of a denial that is based on lack of medical necessity.
(B) A grievance regarding denial of expedited resolution of an appeal.
(C) A grievance or appeal that involves clinical issues.
(iii) Who take into account all comments, documents, records, and other information submitted by the enrollee or their representative without regard to whether such information was submitted or considered in the initial adverse benefit determination.
(3) Provide that oral inquiries seeking to appeal an adverse benefit determination are treated as appeals.
(4) Provide the enrollee a reasonable opportunity, in person and in writing, to present evidence and testimony and make legal and factual arguments. The MCO, PIHP, or PAHP must inform the enrollee of the limited time available for this sufficiently in advance of the resolution timeframe for appeals as specified in § 438.408(b) and (c) in the case of expedited resolution.
(5) Provide the enrollee and his or her representative the enrollee’s case file, including medical records, other documents and records, and any new or additional evidence considered, relied upon, or generated by the MCO, PIHP or PAHP (or at the direction of the MCO, PIHP or PAHP) in connection with the appeal of the adverse benefit determination. This information must be provided free of charge and sufficiently in advance of the resolution timeframe for appeals as specified in § 438.408(b) and (c).
(6) Include, as parties to the appeal –
(i) The enrollee and his or her representative; or
(ii) The legal representative of a deceased enrollee’s estate.
§ 438.408 Resolution and notification: Grievances and appeals.
(a) Basic rule. Each MCO, PIHP, or PAHP must resolve each grievance and appeal, and provide notice, as expeditiously as the enrollee’s health condition requires, within State-established timeframes that may not exceed the timeframes specified in this section.
(b) Specific timeframes – (1) Standard resolution of grievances. For standard resolution of a grievance and notice to the affected parties, the timeframe is established by the State but may not exceed 90 calendar days from the day the MCO, PIHP, or PAHP receives the grievance.
(2) Standard resolution of appeals. For standard resolution of an appeal and notice to the affected parties, the State must establish a timeframe that is no longer than 30 calendar days from the day the MCO, PIHP, or PAHP receives the appeal. This timeframe may be extended under paragraph (c) of this section.
(3) Expedited resolution of appeals. For expedited resolution of an appeal and notice to affected parties, the State must establish a timeframe that is no longer than 72 hours after the MCO, PIHP, or PAHP receives the appeal. This timeframe may be extended under paragraph (c) of this section.
(c) Extension of timeframes. (1) The MCO, PIHP, or PAHP may extend the timeframes from paragraph (b) of this section by up to 14 calendar days if –
(i) The enrollee requests the extension; or
(ii) The MCO, PIHP, or PAHP shows (to the satisfaction of the State agency, upon its request) that there is need for additional information and how the delay is in the enrollee’s interest.
(2) Requirements following extension. If the MCO, PIHP, or PAHP extends the timeframes not at the request of the enrollee, it must complete all of the following:
(i) Make reasonable efforts to give the enrollee prompt oral notice of the delay.
(ii) Within 2 calendar days give the enrollee written notice of the reason for the decision to extend the timeframe and inform the enrollee of the right to file a grievance if he or she disagrees with that decision.
(iii) Resolve the appeal as expeditiously as the enrollee’s health condition requires and no later than the date the extension expires.
(3) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in this section, the enrollee is deemed to have exhausted the MCO’s, PIHP’s, or PAHP’s appeals process. The enrollee may initiate a State fair hearing.
(d) Format of notice – (1) Grievances. The State must establish the method that an MCO, PIHP, and PAHP will use to notify an enrollee of the resolution of a grievance and ensure that such methods meet, at a minimum, the standards described at § 438.10.
(2) Appeals. (i) For all appeals, the MCO, PIHP, or PAHP must provide written notice of resolution in a format and language that, at a minimum, meet the standards described at § 438.10.
(ii) For notice of an expedited resolution, the MCO, PIHP, or PAHP must also make reasonable efforts to provide oral notice.
(e) Content of notice of appeal resolution. The written notice of the resolution must include the following:
(1) The results of the resolution process and the date it was completed.
(2) For appeals not resolved wholly in favor of the enrollees –
(i) The right to request a State fair hearing, and how to do so.
(ii) The right to request and receive benefits while the hearing is pending, and how to make the request.
(iii) That the enrollee may, consistent with state policy, be held liable for the cost of those benefits if the hearing decision upholds the MCO’s, PIHP’s, or PAHP’s adverse benefit determination.
(f) Requirements for State fair hearings – (1) Availability. An enrollee may request a State fair hearing only after receiving notice that the MCO, PIHP, or PAHP is upholding the adverse benefit determination.
(i) Deemed exhaustion of appeals processes. In the case of an MCO, PIHP, or PAHP that fails to adhere to the notice and timing requirements in § 438.408, the enrollee is deemed to have exhausted the MCO’s, PIHP’s, or PAHP’s appeals process. The enrollee may initiate a State fair hearing.
(ii) External medical review. The State may offer and arrange for an external medical review if the following conditions are met.
(A) The review must be at the enrollee’s option and must not be required before or used as a deterrent to proceeding to the State fair hearing.
(B) The review must be independent of both the State and MCO, PIHP, or PAHP.
(C) The review must be offered without any cost to the enrollee.
(D) The review must not extend any of the timeframes specified in § 438.408 and must not disrupt the continuation of benefits in § 438.420.
(2) State fair hearing. The enrollee must have no less than 90 calendar days and no more than 120 calendar days from the date of the MCO’s, PIHP’s, or PAHP’s notice of resolution to request a State fair hearing.
(3) Parties. The parties to the State fair hearing include the MCO, PIHP, or PAHP, as well as the enrollee and his or her representative or the representative of a deceased enrollee’s estate.
§ 438.410 Expedited resolution of appeals.
(a) General rule. Each MCO, PIHP, and PAHP must establish and maintain an expedited review process for appeals, when the MCO, PIHP, or PAHP determines (for a request from the enrollee) or the provider indicates (in making the request on the enrollee’s behalf or supporting the enrollee’s request) that taking the time for a standard resolution could seriously jeopardize the enrollee’s life, physical or mental health, or ability to attain, maintain, or regain maximum function.
(b) Punitive action. The MCO, PIHP, or PAHP must ensure that punitive action is not taken against a provider who requests an expedited resolution or supports an enrollee’s appeal.
(c) Action following denial of a request for expedited resolution. If the MCO, PIHP, or PAHP denies a request for expedited resolution of an appeal, it must –
(1) Transfer the appeal to the timeframe for standard resolution in accordance with § 438.408(b)(2).
(2) Follow the requirements in § 438.408(c)(2).
§ 438.414 Information about the grievance and appeal system to providers and subcontractors.
The MCO, PIHP, or PAHP must provide information specified in § 438.10(g)(2)(xi) about the grievance and appeal system to all providers and subcontractors at the time they enter into a contract.
§ 438.416 Recordkeeping requirements.
(a) The State must require MCOs, PIHPs, and PAHPs to maintain records of grievances and appeals and must review the information as part of its ongoing monitoring procedures, as well as for updates and revisions to the State quality strategy.
(b) The record of each grievance or appeal must contain, at a minimum, all of the following information:
(1) A general description of the reason for the appeal or grievance.
(2) The date received.
(3) The date of each review or, if applicable, review meeting.
(4) Resolution at each level of the appeal or grievance, if applicable.
(5) Date of resolution at each level, if applicable.
(6) Name of the covered person for whom the appeal or grievance was filed.
(c) The record must be accurately maintained in a manner accessible to the state and available upon request to CMS.
§ 438.420 Continuation of benefits while the MCO, PIHP, or PAHP appeal and the State fair hearing are pending.
(a) Definition. As used in this section –
Timely files means files for continuation of benefits on or before the later of the following:
(i) Within 10 calendar days of the MCO, PIHP, or PAHP sending the notice of adverse benefit determination.
(ii) The intended effective date of the MCO’s, PIHP’s, or PAHP’s proposed adverse benefit determination.
(b) Continuation of benefits. The MCO, PIHP, or PAHP must continue the enrollee’s benefits if all of the following occur:
(1) The enrollee files the request for an appeal timely in accordance with § 438.402(c)(1)(ii) and (c)(2)(ii);
(2) The appeal involves the termination, suspension, or reduction of previously authorized services;
(3) The services were ordered by an authorized provider;
(4) The period covered by the original authorization has not expired; and
(5) The enrollee timely files for continuation of benefits.
(c) Duration of continued or reinstated benefits. If, at the enrollee’s request, the MCO, PIHP, or PAHP continues or reinstates the enrollee’s benefits while the appeal or state fair hearing is pending, the benefits must be continued until one of following occurs:
(1) The enrollee withdraws the appeal or request for state fair hearing.
(2) The enrollee fails to request a state fair hearing and continuation of benefits within 10 calendar days after the MCO, PIHP, or PAHP sends the notice of an adverse resolution to the enrollee’s appeal under § 438.408(d)(2).
(3) A State fair hearing office issues a hearing decision adverse to the enrollee.
(d) Enrollee responsibility for services furnished while the appeal or state fair hearing is pending. If the final resolution of the appeal or state fair hearing is adverse to the enrollee, that is, upholds the MCO’s, PIHP’s, or PAHP’s adverse benefit determination, the MCO, PIHP, or PAHP may, consistent with the state’s usual policy on recoveries under § 431.230(b) of this chapter and as specified in the MCO’s, PIHP’s, or PAHP’s contract, recover the cost of services furnished to the enrollee while the appeal and state fair hearing was pending, to the extent that they were furnished solely because of the requirements of this section.
§ 438.424 Effectuation of reversed appeal resolutions.
(a) Services not furnished while the appeal is pending. If the MCO, PIHP, or PAHP, or the State fair hearing officer reverses a decision to deny, limit, or delay services that were not furnished while the appeal was pending, the MCO, PIHP, or PAHP must authorize or provide the disputed services promptly and as expeditiously as the enrollee’s health condition requires but no later than 72 hours from the date it receives notice reversing the determination.
(b) Services furnished while the appeal is pending. If the MCO, PIHP, or PAHP, or the State fair hearing officer reverses a decision to deny authorization of services, and the enrollee received the disputed services while the appeal was pending, the MCO, PIHP, or PAHP, or the State must pay for those services, in accordance with State policy and regulations.
Subpart G [Reserved]
Subpart H – Additional Program Integrity Safeguards
§ 438.600 Statutory basis, basic rule, and applicability.
(a) Statutory basis. This subpart is based on the following statutory sections:
(1) Section 1128 of the Act provides for the exclusion of certain individuals and entities from participation in the Medicaid program.
(2) Section 1128J(d) of the Act requires that persons who have received an overpayment under Medicaid report and return the overpayment within 60 days after the date on which the overpayment was identified.
(3) Section 1902(a)(4) of the Act requires that the State plan provide for methods of administration that the Secretary finds necessary for the proper and efficient operation of the plan.
(4) Section 1902(a)(19) of the Act requires that the State plan provide the safeguards necessary to ensure that eligibility is determined and services are provided in a manner consistent with simplicity of administration and the best interests of the beneficiaries.
(5) Section 1902(a)(27) of the Act requires States to enroll persons or institutions that provide services under the State plan.
(6) Section 1902(a)(68) of the Act requires that any entity that receives or makes annual payments under the State plan of at least $5,000,000 must establish certain minimum written policies relating to the Federal False Claims Act.
(7) Section 1902(a)(77) of the Act requires that States comply with provider and supplier screening, oversight, and reporting requirements described in section 1902(kk)(1) of the Act.
(8) Section 1902(a)(80) of the Act prohibits payments for items or services provided under the State plan or under a waiver to any financial institution or entity located outside of the United States.
(9) Section 1902(kk)(7) of the Act requires States to enroll physicians or other professionals that order or refer services under the State plan.
(10) Section 1903(i) of the Act prohibits FFP for amounts expended by MCOs or PCCMs for providers excluded by Medicare, Medicaid, or CHIP, except for emergency services.
(11) Section 1903(m) of the Act establishes conditions for payments to the State for contracts with MCOs.
(12) Section 1932(d)(1) of the Act prohibits MCOs and PCCMs from knowingly having certain types of relationships with individuals and entities debarred under Federal regulations from participating in specified activities, or with affiliates of those individuals.
(b) Basic rule. As a condition for receiving payment under a Medicaid managed care program, an MCO, PIHP, PAHP, PCCM or PCCM entity must comply with the requirements in §§ 438.604, 438.606, 438.608 and 438.610, as applicable.
(c) Applicability. States will not be held out compliance with the following requirements of this subpart prior to the dates noted below so long as they comply with the corresponding standard(s) in 42 CFR part 438 contained in the CFR, parts 430 to 481, edition revised as of October 1, 2015:
(1) States must comply with §§ 438.602(a), 438.602(c) through (h), 438.604, 438.606, 438.608(a), and 438.608(c) and (d), no later than the rating period for contracts starting on or after July 1, 2017.
(2) States must comply with § 438.602(b) and § 438.608(b) no later than the rating period for contracts beginning on or after July 1, 2018.
§ 438.602 State responsibilities.
(a) Monitoring contractor compliance. Consistent with § 438.66, the State must monitor the MCO’s, PIHP’s, PAHP’s, PCCM’s or PCCM entity’s compliance, as applicable, with §§ 438.604, 438.606, 438.608, 438.610, 438.230, and 438.808.
(b) Screening and enrollment and revalidation of providers. (1) The State must screen and enroll, and periodically revalidate, all network providers of MCOs, PIHPs, and PAHPs, in accordance with the requirements of part 455, subparts B and E of this chapter. This requirement extends to PCCMs and PCCM entities to the extent the primary care case manager is not otherwise enrolled with the State to provide services to FFS beneficiaries. This provision does not require the network provider to render services to FFS beneficiaries.
(2) MCOs, PIHPs, and PAHPs may execute network provider agreements pending the outcome of the process in paragraph (b)(1) of this section of up to 120 days, but must terminate a network provider immediately upon notification from the State that the network provider cannot be enrolled, or the expiration of one 120 day period without enrollment of the provider, and notify affected enrollees.
(c) Ownership and control information. The State must review the ownership and control disclosures submitted by the MCO, PIHP, PAHP, PCCM or PCCM entity, and any subcontractors as required in § 438.608(c).
(d) Federal database checks. Consistent with the requirements at § 455.436 of this chapter, the State must confirm the identity and determine the exclusion status of the MCO, PIHP, PAHP, PCCM or PCCM entity, any subcontractor, as well as any person with an ownership or control interest, or who is an agent or managing employee of the MCO, PIHP, PAHP, PCCM or PCCM entity through routine checks of Federal databases. This includes the Social Security Administration’s Death Master File, the National Plan and Provider Enumeration System (NPPES), the List of Excluded Individuals/Entities (LEIE), the System for Award Management (SAM), and any other databases as the State or Secretary may prescribe. These databases must be consulted upon contracting and no less frequently than monthly thereafter. If the State finds a party that is excluded, it must promptly notify the MCO, PIHP, PAHP, PCCM, or PCCM entity and take action consistent with § 438.610(c).
(e) Periodic audits. The State must periodically, but no less frequently than once every 3 years, conduct, or contract for the conduct of, an independent audit of the accuracy, truthfulness, and completeness of the encounter and financial data submitted by, or on behalf of, each MCO, PIHP or PAHP.
(f) Whistleblowers. The State must receive and investigate information from whistleblowers relating to the integrity of the MCO, PIHP, PAHP, PCCM, or PCCM entity, subcontractors, or network providers receiving Federal funds under this part.
(g) Transparency. The State must post on its Web site, as required in § 438.10(c)(3), the following documents and reports:
(1) The MCO, PIHP, PAHP, or PCCM entity contract.
(2) The data at § 438.604(a)(5).
(3) The name and title of individuals included in § 438.604(a)(6).
(4) The results of any audits under paragraph (e) of this section.
(h) Contracting integrity. The State must have in place conflict of interest safeguards described in § 438.58 and must comply with the requirement described in section 1902(a)(4)(C) of the Act applicable to contracting officers, employees, or independent contractors.
(i) Entities located outside of the U.S. The State must ensure that the MCO, PIHP, PAHP, PCCM, or PCCM entity with which the State contracts under this part is not located outside of the United States and that no claims paid by an MCO, PIHP, or PAHP to a network provider, out-of-network provider, subcontractor or financial institution located outside of the U.S. are considered in the development of actuarially sound capitation rates.
§ 438.604 Data, information, and documentation that must be submitted.
(a) Specified data, information, and documentation. The State must require any MCO, PIHP, PAHP, PCCM or PCCM entity to submit to the State the following data:
(1) Encounter data in the form and manner described in § 438.818.
(2) Data on the basis of which the State certifies the actuarial soundness of capitation rates to an MCO, PIHP or PAHP under § 438.4, including base data described in § 438.5(c) that is generated by the MCO, PIHP or PAHP.
(3) Data on the basis of which the State determines the compliance of the MCO, PIHP, or PAHP with the medical loss ratio requirement described in § 438.8.
(4) Data on the basis of which the State determines that the MCO, PIHP or PAHP has made adequate provision against the risk of insolvency as required under § 438.116.
(5) Documentation described in § 438.207(b) on which the State bases its certification that the MCO, PIHP or PAHP has complied with the State’s requirements for availability and accessibility of services, including the adequacy of the provider network, as set forth in § 438.206.
(6) Information on ownership and control described in § 455.104 of this chapter from MCOs, PIHPs, PAHPs, PCCMs, PCCM entities, and subcontractors as governed by § 438.230.
(7) The annual report of overpayment recoveries as required in § 438.608(d)(3).
(b) Additional data, documentation, or information. In addition to the data, documentation, or information specified in paragraph (a) of this section, an MCO, PIHP, PAHP, PCCM or PCCM entity must submit any other data, documentation, or information relating to the performance of the entity’s obligations under this part required by the State or the Secretary.
§ 438.606 Source, content, and timing of certification.
(a) Source of certification. For the data, documentation, or information specified in § 438.604, the State must require that the data, documentation or information the MCO, PIHP, PAHP, PCCM or PCCM entity submits to the State be certified by either the MCO’s, PIHP’s, PAHP’s, PCCM’s, or PCCM entity’s Chief Executive Officer; Chief Financial Officer; or an individual who reports directly to the Chief Executive Officer or Chief Financial Officer with delegated authority to sign for the Chief Executive Officer or Chief Financial Officer so that the Chief Executive Officer or Chief Financial Officer is ultimately responsible for the certification.
(b) Content of certification. The certification provided by the individual in paragraph (a) of this section must attest that, based on best information, knowledge, and belief, the data, documentation, and information specified in § 438.604 is accurate, complete, and truthful.
(c) Timing of certification. The State must require the MCO, PIHP, PAHP, PCCM, or PCCM entity to submit the certification concurrently with the submission of the data, documentation, or information required in § 438.604(a) and (b).
§ 438.608 Program integrity requirements under the contract.
(a) Administrative and management arrangements or procedures to detect and prevent fraud, waste and abuse. The State, through its contract with the MCO, PIHP or PAHP, must require that the MCO, PIHP, or PAHP, or subcontractor to the extent that the subcontractor is delegated responsibility by the MCO, PIHP, or PAHP for coverage of services and payment of claims under the contract between the State and the MCO, PIHP, or PAHP, implement and maintain arrangements or procedures that are designed to detect and prevent fraud, waste, and abuse. The arrangements or procedures must include the following:
(1) A compliance program that includes, at a minimum, all of the following elements:
(i) Written policies, procedures, and standards of conduct that articulate the organization’s commitment to comply with all applicable requirements and standards under the contract, and all applicable Federal and State requirements.
(ii) The designation of a Compliance Officer who is responsible for developing and implementing policies, procedures, and practices designed to ensure compliance with the requirements of the contract and who reports directly to the Chief Executive Officer and the board of directors.
(iii) The establishment of a Regulatory Compliance Committee on the Board of Directors and at the senior management level charged with overseeing the organization’s compliance program and its compliance with the requirements under the contract.
(iv) A system for training and education for the Compliance Officer, the organization’s senior management, and the organization’s employees for the Federal and State standards and requirements under the contract.
(v) Effective lines of communication between the compliance officer and the organization’s employees.
(vi) Enforcement of standards through well-publicized disciplinary guidelines.
(vii) Establishment and implementation of procedures and a system with dedicated staff for routine internal monitoring and auditing of compliance risks, prompt response to compliance issues as they are raised, investigation of potential compliance problems as identified in the course of self-evaluation and audits, correction of such problems promptly and thoroughly (or coordination of suspected criminal acts with law enforcement agencies) to reduce the potential for recurrence, and ongoing compliance with the requirements under the contract.
(2) Provision for prompt reporting of all overpayments identified or recovered, specifying the overpayments due to potential fraud, to the State.
(3) Provision for prompt notification to the State when it receives information about changes in an enrollee’s circumstances that may affect the enrollee’s eligibility including all of the following:
(i) Changes in the enrollee’s residence;
(ii) The death of an enrollee.
(4) Provision for notification to the State when it receives information about a change in a network provider’s circumstances that may affect the network provider’s eligibility to participate in the managed care program, including the termination of the provider agreement with the MCO, PIHP or PAHP.
(5) Provision for a method to verify, by sampling or other methods, whether services that have been represented to have been delivered by network providers were received by enrollees and the application of such verification processes on a regular basis.
(6) In the case of MCOs, PIHPs, or PAHPs that make or receive annual payments under the contract of at least $5,000,000, provision for written policies for all employees of the entity, and of any contractor or agent, that provide detailed information about the False Claims Act and other Federal and State laws described in section 1902(a)(68) of the Act, including information about rights of employees to be protected as whistleblowers.
(7) Provision for the prompt referral of any potential fraud, waste, or abuse that the MCO, PIHP, or PAHP identifies to the State Medicaid program integrity unit or any potential fraud directly to the State Medicaid Fraud Control Unit.
(8) Provision for the MCO’s, PIHP’s, or PAHP’s suspension of payments to a network provider for which the State determines there is a credible allegation of fraud in accordance with § 455.23 of this chapter.
(b) Provider screening and enrollment requirements. The State, through its contracts with a MCO, PIHP, PAHP, PCCM, or PCCM entity must ensure that all network providers are enrolled with the State as Medicaid providers consistent with the provider disclosure, screening and enrollment requirements of part 455, subparts B and E of this chapter. This provision does not require the network provider to render services to FFS beneficiaries.
(c) Disclosures. The State must ensure, through its contracts, that each MCO, PIHP, PAHP, PCCM, PCCM entity, and any subcontractors:
(1) Provides written disclosure of any prohibited affiliation under § 438.610.
(2) Provides written disclosures of information on ownership and control required under § 455.104 of this chapter.
(3) Reports to the State within 60 calendar days when it has identified the capitation payments or other payments in excess of amounts specified in the contract.
(d) Treatment of recoveries made by the MCO, PIHP or PAHP of overpayments to providers. (1) Contracts with a MCO, PIHP, or PAHP must specify:
(i) The retention policies for the treatment of recoveries of all overpayments from the MCO, PIHP, or PAHP to a provider, including specifically the retention policies for the treatment of recoveries of overpayments due to fraud, waste, or abuse.
(ii) The process, timeframes, and documentation required for reporting the recovery of all overpayments.
(iii) The process, timeframes, and documentation required for payment of recoveries of overpayments to the State in situations where the MCO, PIHP, or PAHP is not permitted to retain some or all of the recoveries of overpayments.
(iv) This provision does not apply to any amount of a recovery to be retained under False Claims Act cases or through other investigations.
(2) Each MCO, PIHP, or PAHP requires and has a mechanism for a network provider to report to the MCO, PIHP or PAHP when it has received an overpayment, to return the overpayment to the MCO, PIHP or PAHP within 60 calendar days after the date on which the overpayment was identified, and to notify the MCO, PIHP or PAHP in writing of the reason for the overpayment.
(3) Each MCO, PIHP, or P
AHP must report annually to the State on their recoveries of overpayments.
(4) The State must use the results of the information and documentation collected in paragraph (d)(1) of this section and the report in paragraph (d)(3) of this section for setting actuarially sound capitation rates for each MCO, PIHP, or PAHP consistent with the requirements in § 438.4.
§ 438.610 Prohibited affiliations.
(a) An MCO, PIHP, PAHP, PCCM, or PCCM entity may not knowingly have a relationship of the type described in paragraph (c) of this section with the following:
(1) An individual or entity that is debarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in nonprocurement activities under regulations issued under Executive Order No. 12549 or under guidelines implementing Executive Order No. 12549.
(2) An individual or entity who is an affiliate, as defined in the Federal Acquisition Regulation at 48 CFR 2.101, of a person described in paragraph (a)(1) of this section.
(b) An MCO, PIHP, PAHP, PCCM, or PCCM entity may not have a relationship with an individual or entity that is excluded from participation in any Federal health care program under section 1128 or 1128A of the Act.
(c) The relationships described in paragraph (a) of this section, are as follows:
(1) A director, officer, or partner of the MCO, PIHP, PAHP, PCCM. or PCCM entity.
(2) A subcontractor of the MCO, PIHP, PAHP, PCCM, or PCCM entity, as governed by § 438.230.
(3) A person with beneficial ownership of 5 percent or more of the MCO’s, PIHP’s, PAHP’s, PCCM’s, or PCCM entity’s equity.
(4) A network provider or person with an employment, consulting or other arrangement with the MCO, PIHP, PAHP, PCCM, or PCCM entity for the provision of items and services that are significant and material to the MCO’s, PIHP’s, PAHP’s, PCCM’s, or PCCM entity’s obligations under its contract with the State.
(d) If a State finds that an MCO, PIHP, PAHP, PCCM, or PCCM entity is not in compliance with paragraphs (a) and (b) of this section, the State:
(1) Must notify the Secretary of the noncompliance.
(2) May continue an existing agreement with the MCO, PIHP, PAHP, PCCM, or PCCM entity unless the Secretary directs otherwise.
(3) May not renew or otherwise extend the duration of an existing agreement with the MCO, PIHP, PAHP, PCCM, or PCCM entity unless the Secretary provides to the State and to Congress a written statement describing compelling reasons that exist for renewing or extending the agreement despite the prohibited affiliations.
(4) Nothing in this section must be construed to limit or otherwise affect any remedies available to the U.S. under sections 1128, 1128A or 1128B of the Act.
(e) Consultation with the Inspector General. Any action by the Secretary described in paragraphs (d)(2) or (3) of this section is taken in consultation with the Inspector General.
Subpart I – Sanctions
§ 438.700 Basis for imposition of sanctions.
(a) Each State that contracts with an MCO must, and each State that contracts with a PCCM or PCCM entity may, establish intermediate sanctions (which may include those specified in § 438.702) that it may impose if it makes any of the determinations specified in paragraphs (b) through (d) of this section. The State may base its determinations on findings from onsite surveys, enrollee or other complaints, financial status, or any other source.
(b) A State determines that an MCO acts or fails to act as follows:
(1) Fails substantially to provide medically necessary services that the MCO is required to provide, under law or under its contract with the State, to an enrollee covered under the contract.
(2) Imposes on enrollees premiums or charges that are in excess of the premiums or charges permitted under the Medicaid program.
(3) Acts to discriminate among enrollees on the basis of their health status or need for health care services. This includes termination of enrollment or refusal to reenroll a beneficiary, except as permitted under the Medicaid program, or any practice that would reasonably be expected to discourage enrollment by beneficiaries whose medical condition or history indicates probable need for substantial future medical services.
(4) Misrepresents or falsifies information that it furnishes to CMS or to the State.
(5) Misrepresents or falsifies information that it furnishes to an enrollee, potential enrollee, or health care provider.
(6) Fails to comply with the requirements for physician incentive plans, as set forth (for Medicare) in §§ 422.208 and 422.210 of this chapter.
(c) A State determines that an MCO, PCCM or PCCM entity has distributed directly, or indirectly through any agent or independent contractor, marketing materials that have not been approved by the State or that contain false or materially misleading information.
(d) A State determines that –
(1) An MCO has violated any of the other requirements of sections 1903(m) or 1932 of the Act, or any implementing regulations.
(2) A PCCM or PCCM entity has violated any of the other applicable requirements of sections 1932 or 1905(t)(3) of the Act, or any implementing regulations.
(3) For any of the violations under paragraphs (d)(1) and (2) of this section, only the sanctions specified in § 438.702(a)(3), (4), and (5) may be imposed.
§ 438.702 Types of intermediate sanctions.
(a) The types of intermediate sanctions that a State may impose under this subpart include the following:
(1) Civil money penalties in the amounts specified in § 438.704.
(2) Appointment of temporary management for an MCO as provided in § 438.706.
(3) Granting enrollees the right to terminate enrollment without cause and notifying the affected enrollees of their right to disenroll.
(4) Suspension of all new enrollment, including default enrollment, after the date the Secretary or the State notifies the MCO of a determination of a violation of any requirement under sections 1903(m) or 1932 of the Act.
(5) Suspension of payment for beneficiaries enrolled after the effective date of the sanction and until CMS or the State is satisfied that the reason for imposition of the sanction no longer exists and is not likely to recur.
(b) State agencies retain authority to impose additional sanctions under State statutes or State regulations that address areas of noncompliance specified in § 438.700, as well as additional areas of noncompliance. Nothing in this subpart prevents State agencies from exercising that authority.
§ 438.704 Amounts of civil money penalties.
(a) General rule. If the State imposes civil monetary penalties as provided under § 438.702(a)(1), the maximum civil money penalty the State may impose varies depending on the nature of the MCO’s, PCCM or PCCM entity’s action or failure to act, as provided in this section.
(b) Specific limits. (1) The limit is $25,000 for each determination under § 438.700(b)(1), (5), (6), and (c).
(2) The limit is $100,000 for each determination under § 438.700(b)(3) or (4).
(3) The limit is $15,000 for each beneficiary the State determines was not enrolled because of a discriminatory practice under § 438.700(b)(3). (This is subject to the overall limit of $100,000 under paragraph (b)(2) of this section).
(c) Specific amount. For premiums or charges in excess of the amounts permitted under the Medicaid program, the maximum amount of the penalty is $25,000 or double the amount of the excess charges, whichever is greater. The State must deduct from the penalty the amount of overcharge and return it to the affected enrollees.
§ 438.706 Special rules for temporary management.
(a) Optional imposition of sanction. If the State imposes temporary management under § 438.702(a)(2), the State may do so only if it finds (through onsite surveys, enrollee or other complaints, financial status, or any other source) any of the following:
(1) There is continued egregious behavior by the MCO, including but not limited to behavior that is described in § 438.700, or that is contrary to any requirements of sections 1903(m) and 1932 of the Act.
(2) There is substantial risk to enrollees’ health.
(3) The sanction is necessary to ensure the health of the MCO’s enrollees –
(i) While improvements are made to remedy violations under § 438.700.
(ii) Until there is an orderly termination or reorganization of the MCO.
(b) Required imposition of sanction. The State must impose temporary management (regardless of any other sanction that may be imposed) if it finds that an MCO has repeatedly failed to meet substantive requirements in sections 1903(m) or 1932 of the Act, or this subpart. The State must also grant enrollees the right to terminate enrollment without cause, as described in § 438.702(a)(3), and must notify the affected enrollees of their right to terminate enrollment.
(c) Hearing. The State may not delay imposition of temporary management to provide a hearing before imposing this sanction.
(d) Duration of sanction. The State may not terminate temporary management until it determines that the MCO can ensure that the sanctioned behavior will not recur.
§ 438.708 Termination of an MCO, PCCM or PCCM entity contract.
A State has the authority to terminate an MCO, PCCM or PCCM entity contract and enroll that entity’s enrollees in other MCOs, PCCMs or PCCM entities, or provide their Medicaid benefits through other options included in the State plan, if the State determines that the MCO, PCCM or PCCM entity has failed to do either of the following:
(a) Carry out the substantive terms of its contract.
(b) Meet applicable requirements in sections 1932, 1903(m), and 1905(t) of the Act.
§ 438.710 Notice of sanction and pre-termination hearing.
(a) Notice of sanction. Except as provided in § 438.706(c), before imposing any of the intermediate sanctions specified in this subpart, the State must give the affected entity timely written notice that explains the following:
(1) The basis and nature of the sanction.
(2) Any other appeal rights that the State elects to provide.
(b) Pre-termination hearing – (1) General rule. Before terminating an MCO, PCCM or PCCM entity contract under § 438.708, the State must provide the entity a pre-termination hearing.
(2) Procedures. The State must do all of the following:
(i) Give the MCO, PCCM or PCCM entity written notice of its intent to terminate, the reason for termination, and the time and place of the hearing.
(ii) After the hearing, give the entity written notice of the decision affirming or reversing the proposed termination of the contract and, for an affirming decision, the effective date of termination.
(iii) For an affirming decision, give enrollees of the MCO, PCCM or PCCM entity notice of the termination and information, consistent with § 438.10, on their options for receiving Medicaid services following the effective date of termination.
§ 438.722 Disenrollment during termination hearing process.
After a State notifies an MCO, PCCM or PCCM entity that it intends to terminate the contract, the State may do the following:
(a) Give the entity’s enrollees written notice of the State’s intent to terminate the contract.
(b) Allow enrollees to disenroll immediately without cause.
§ 438.724 Notice to CMS.
(a) The State must give CMS written notice whenever it imposes or lifts a sanction for one of the violations listed in § 438.700.
(b) The notice must adhere to all of the following requirements:
(1) Be given no later than 30 days after the State imposes or lifts a sanction.
(2) Specify the affected MCO, the kind of sanction, and the reason for the State’s decision to impose or lift a sanction.
§ 438.726 State plan requirement.
(a) The State plan must include a plan to monitor for violations that involve the actions and failures to act specified in this part and to implement the provisions of this part.
(b) A contract with an MCO must provide that payments provided for under the contract will be denied for new enrollees when, and for so long as, payment for those enrollees is denied by CMS under § 438.730(e).
§ 438.730 Sanction by CMS: Special rules for MCOs.
(a) Basis for sanction. A State may recommend that CMS impose the denial of payment sanction specified in paragraph (e) of this section on an MCO with a contract under this part if the agency determines that the MCO acts or fails to act as specified in § 438.700(b)(1) through (6).
(b) Effect of an agency determination. (1) The State’s determination becomes CMS’ determination for purposes of section 1903(m)(5)(A) of the Act unless CMS reverses or modifies it within 15 days.
(2) When the State decides to recommend imposing the sanction described in paragraph (e) of this section, this recommendation becomes CMS’ decision, for purposes of section 1903(m)(5)(B)(ii) of the Act, unless CMS rejects this recommendation within 15 days.
(c) Notice of sanction. If the State’s determination becomes CMS’ determination under paragraph (b)(2) of this section, the State takes all of the following actions:
(1) Gives the MCO written notice of the nature and basis of the proposed sanction.
(2) Allows the MCO 15 days from the date it receives the notice to provide evidence that it has not acted or failed to act in the manner that is the basis for the recommended sanction.
(3) May extend the initial 15-day period for an additional 15 days if –
(i) The MCO submits a written request that includes a credible explanation of why it needs additional time.
(ii) The request is received by CMS before the end of the initial period.
(iii) CMS has not determined that the MCO’s conduct poses a threat to an enrollee’s health or safety.
(d) Informal reconsideration. (1) If the MCO submits a timely response to the notice of sanction, the State –
(i) Conducts an informal reconsideration that includes review of the evidence by a State agency official who did not participate in the original recommendation.
(ii) Gives the MCO a concise written decision setting forth the factual and legal basis for the decision.
(iii) Forwards the decision to CMS.
(2) The State’s decision under paragraph (d)(1)(ii) of this section becomes CMS’ decision unless CMS reverses or modifies the decision within 15 days from date of receipt by CMS.
(3) If CMS reverses or modifies the State decision, the agency sends the MCO a copy of CMS’ decision.
(e) Denial of payment. (1) CMS, based upon the recommendation of the agency, may deny payment to the State for new enrollees of the MCO under section 1903(m)(5)(B)(ii) of the Act in the following situations:
(i) If a CMS determination that an MCO has acted or failed to act, as described in paragraphs (b)(1) through (6) of § 438.700, is affirmed on review under paragraph (d) of this section.
(ii) If the CMS determination is not timely contested by the MCO under paragraph (c) of this section.
(2) Under § 438.726(b), CMS’ denial of payment for new enrollees automatically results in a denial of agency payments to the MCO for the same enrollees. (A new enrollee is an enrollee that applies for enrollment after the effective date in paragraph (f)(1) of this section.)
(f) Effective date of sanction. (1) If the MCO does not seek reconsideration, a sanction is effective 15 days after the date the MCO is notified under paragraph (c) of this section of the decision to impose the sanction.
(2) If the MCO seeks reconsideration, the following rules apply:
(i) Except as specified in paragraph (d)(2) of this section, the sanction is effective on the date specified in CMS’ reconsideration notice.
(ii) If CMS, in consultation with the State, determines that the MCO’s conduct poses a serious threat to an enrollee’s health or safety, the sanction may be made effective earlier than the date of the agency’s reconsideration decision under paragraph (d)(1)(ii) of this section.
(g) CMS’ role. (1) CMS retains the right to independently perform the functions assigned to the State under paragraphs (a) through (d) of this section.
(2) At the same time that the State sends notice to the MCO under paragraph (c)(1) of this section, CMS forwards a copy of the notice to the OIG.
(3) CMS conveys the determination described in paragraph (b) of this section to the OIG for consideration of possible imposition of civil money penalties under section 1903(m)(5)(A) of the Act and part 1003 of this title. In accordance with the provisions of part 1003, the OIG may impose civil money penalties on the MCO in addition to, or in place of, the sanctions that may be imposed under this section.
Subpart J – Conditions for Federal Financial Participation (FFP)
§ 438.802 Basic requirements.
FFP is available in expenditures for payments under an MCO contract only for the periods during which the contract –
(a) Meets the requirements of this part; and
(b) Is in effect.
§ 438.806 Prior approval.
(a) Comprehensive risk contracts. FFP is available under a comprehensive risk contract only if all of the following apply:
(1) CMS has confirmed that the contractor meets the definition of an MCO or is one of the entities described in paragraphs (b)(2) through (5) of § 438.3.
(2) The contract meets all the requirements of section 1903(m)(2)(A) of the Act, the applicable requirements of section 1932 of the Act, and the provisions of this part.
(b) MCO contracts. Prior approval by CMS is a condition for FFP under any MCO contract that extends for less than one full year or that has a value equal to, or greater than, the following threshold amounts:
(1) For 1998, the threshold is $1,000,000.
(2) For subsequent years, the amount is increased by the percentage increase in the consumer price index for all urban consumers.
(c) FFP is not available in an MCO contract that does not have prior approval from CMS under paragraph (b) of this section.
§ 438.808 Exclusion of entities.
(a) General rule. FFP is available in payments under MCO contracts or PIHP, PAHP, PCCM, or PCCM entity contracts under a section 1915(b)(1) of the Act waiver only if the State excludes from the contracts any entities described in paragraph (b) of this section.
(b) Entities that must be excluded. (1) An entity that could be excluded under section 1128(b)(8) of the Act as being controlled by a sanctioned individual.
(2) An entity that has a substantial contractual relationship as defined in § 431.55(h)(3) of this chapter, either directly or indirectly, with an individual convicted of certain crimes as described in section 1128(b)(8)(B) of the Act or an individual described in § 438.610(a) and (b).
(3) An entity that employs or contracts, directly or indirectly, for the furnishing of health care, utilization review, medical social work, or administrative services, with one of the following:
(i) Any individual or entity described in § 438.610(a) and (b).
(ii) Any individual or entity that would provide those services through an individual or entity described in § 438.610(a) and (b).
§ 438.810 Expenditures for enrollment broker services.
(a) Definitions. As used in this section –
Enrollment activities means activities such as distributing, collecting, and processing enrollment materials and taking enrollments by phone, in person, or through electronic methods of communication.
Enrollment broker means an individual or entity that performs choice counseling or enrollment activities, or both.
Enrollment services means choice counseling, or enrollment activities, or both.
(b) Conditions that enrollment brokers must meet. State expenditures for the use of enrollment brokers are considered necessary for the proper and efficient operation of the State plan and thus eligible for FFP only if the broker and its subcontractors meet the following conditions:
(1) Independence. The broker and its subcontractors are independent of any MCO, PIHP, PAHP, PCCM, PCCM entity or other health care provider in the State in which they provide enrollment services. A broker or subcontractor is not considered “independent” if it –
(i) Is an MCO, PIHP, PAHP, PCCM, PCCM entity or other health care provider in the State;
(ii) Is owned or controlled by an MCO, PIHP, PAHP, PCCM, PCCM entity or other health care provider in the State; or
(iii) Owns or controls an MCO, PIHP, PAHP, PCCM, PCCM entity, or other health care provider in the State.
(2) Freedom from conflict of interest. The broker and its subcontractor are free from conflict of interest. A broker or subcontractor is not considered free from conflict of interest if any person who is the owner, employee, or consultant of the broker or subcontractor or has any contract with them –
(i) Has any direct or indirect financial interest in any entity or health care provider that furnishes services in the State in which the broker or subcontractor provides enrollment services;
(ii) Has been excluded from participation under Title XVIII or XIX of the Act;
(iii) Has been debarred by any Federal agency; or
(iv) Has been, or is now, subject to civil money penalties under the Act.
(3) Approval. The initial contract or memorandum of agreement (MOA) for services performed by the broker has been reviewed and approved by CMS.
§ 438.812 Costs under risk and nonrisk contracts.
(a) Under a risk contract, the total amount the State agency pays for carrying out the contract provisions is a medical assistance cost.
(b) Under a nonrisk contract –
(1) The amount the State agency pays for the furnishing of medical services to eligible beneficiaries is a medical assistance cost; and
(2) The amount the State agency pays for the contractor’s performance of other functions is an administrative cost.
§ 438.816 Expenditures for the beneficiary support system for enrollees using LTSS.
State expenditures for the person or entity providing the services outlined in § 438.71(d) are considered necessary for the proper and efficient operation of the State plan and thus eligible for FFP only if all of the following conditions are met:
(a) Costs must be supported by an allocation methodology that appears in the State’s approved Public Assistance Cost Allocation Plan in § 433.34 of this chapter.
(b) The costs do not duplicate payment for activities that are already being offered or should be provided by other entities or paid by other programs.
(c) The person or entity providing the services must meet the requirements in § 438.810(b)(1) and (2).
(d) The initial contract or MOA for services performed has been reviewed and approved by CMS.
§ 438.818 Enrollee encounter data.
(a) FFP is available for expenditures under an MCO, PIHP, or PAHP contract only if the State meets the following conditions for providing enrollee encounter data to CMS:
(1) Enrollee encounter data reports must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) security and privacy standards and be submitted in the format required by the Medicaid Statistical Information System or format required by any successor system to the Medicaid Statistical Information System.
(2) States must ensure that enrollee encounter data is validated for accuracy and completeness as required under § 438.242 before submitting data to CMS. States must also validate that the data submitted to CMS is a complete and accurate representation of the information submitted to the State by the MCOs, PIHPs, and PAHPs.
(3) States must cooperate with CMS to fully comply with all encounter data reporting requirements of the Medicaid Statistical Information System or any successor system.
(b) CMS will assess a State’s submission to determine if it complies with current criteria for accuracy and completeness.
(c) If, after being notified of compliance issues under paragraph (b) of this section the State is unable to make a data submission compliant, CMS will take appropriate steps to defer and/or disallow FFP on all or part of an MCO, PIHP, or PAHP contract in a manner based on the enrollee and specific service type of the noncompliant data. Any deferral and/or disallowance of FFP will be effectuated utilizing the processes specified in §§ 430.40 and 430.42 of this chapter.
Subpart K – Parity in Mental Health and Substance Use Disorder Benefits
§ 438.900 Meaning of terms.
For purposes of this subpart, except where the context clearly indicates otherwise, the following terms have the meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the total amount of specified benefits that may be paid under a MCO, PIHP, or PAHP.
Annual dollar limit means a dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under a MCO, PIHP, or PAHP.
Cumulative financial requirements are financial requirements that determine whether or to what extent benefits are provided based on accumulated amounts and include deductibles and out-of-pocket maximums. (However, cumulative financial requirements do not include aggregate lifetime or annual dollar limits because these two terms are excluded from the meaning of financial requirements.)
Early and Periodic Screening, Diagnostic and Treatment (EPSDT) benefits are benefits defined in section 1905(r) of the Act.
Financial requirements include deductibles, copayments, coinsurance, or out-of-pocket maximums. Financial requirements do not include aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits for items or services for medical conditions or surgical procedures, as defined by the State and in accordance with applicable Federal and State law, but do not include mental health or substance use disorder benefits. Any condition defined by the State as being or as not being a medical/surgical condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the International Classification of Diseases (ICD) or State guidelines). Medical/surgical benefits include long term care services.
Mental health benefits means benefits for items or services for mental health conditions, as defined by the State and in accordance with applicable Federal and State law. Any condition defined by the State as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most current version of the ICD, or State guidelines). Mental health benefits include long term care services.
Substance use disorder benefits means benefits for items or services for substance use disorders, as defined by the State and in accordance with applicable Federal and State law. Any disorder defined by the State as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the DSM, the most current version of the ICD, or State guidelines). Substance use disorder benefits include long term care services.
Treatment limitations include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations, which otherwise limit the scope or duration of benefits for treatment under a plan or coverage. (See § 438.910(d)(2) for an illustrative list of nonquantitative treatment limitations.) A permanent exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.
§ 438.905 Parity requirements for aggregate lifetime and annual dollar limits.
(a) General parity requirement. Each MCO, PIHP, and PAHP providing services to MCO enrollees must comply with paragraphs (b), (c), or (e) of this section for all enrollees of a MCO in States that cover both medical/surgical benefits and mental health or substance use disorder benefits under the State plan. This section details the application of the parity requirements for aggregate lifetime and annual dollar limits.
(b) MCOs, PIHPs, or PAHPs with no limit or limits on less than one-third of all medical/surgical benefits. If a MCO, PIHP, or PAHP does not include an aggregate lifetime or annual dollar limit on any medical/surgical benefits or includes an aggregate lifetime or annual dollar limit that applies to less than one-third of all medical/surgical benefits provided to enrollees through a contract with the State, it may not impose an aggregate lifetime or annual dollar limit, respectively, on mental health or substance use disorder benefits.
(c) MCOs, PIHPs, or PAHPs with a limit on at least two-thirds of all medical/surgical benefits. If a MCO, PIHP, or PAHP includes an aggregate lifetime or annual dollar limit on at least two-thirds of all medical/surgical benefits provided to enrollees through a contract with the State, it must either –
(1) Apply the aggregate lifetime or annual dollar limit both to the medical/surgical benefits to which the limit would otherwise apply and to mental health or substance use disorder benefits in a manner that does not distinguish between the medical/surgical benefits and mental health or substance use disorder benefits; or
(2) Not include an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is more restrictive than the aggregate lifetime or annual dollar limit, respectively, on medical/surgical benefits.
(d) Determining one-third and two-thirds of all medical/surgical benefits. For purposes of this section, the determination of whether the portion of medical/surgical benefits subject to an aggregate lifetime or annual dollar limit represents one-third or two-thirds of all medical/surgical benefits is based on the total dollar amount of all combinations of MCO, PIHP, and PAHP payments for medical/surgical benefits expected to be paid under the MCO, PIHP, or PAHP for a contract year (or for the portion of a contract year after a change in benefits that affects the applicability of the aggregate lifetime or annual dollar limits). Any reasonable method may be used to determine whether the dollar amount expected to be paid under the MCOs, PIHPs, and PAHPs will constitute one-third or two-thirds of the dollar amount of all payments for medical/surgical benefits.
(e) MCO, PIHP, or PAHP not described in this section – (1) In general. A MCO, PIHP, or PAHP that is not described in paragraph (b) or (c) of this section for aggregate lifetime or annual dollar limits on medical/surgical benefits, must either –
(i) Impose no aggregate lifetime or annual dollar limit, on mental health or substance use disorder benefits; or
(ii) Impose an aggregate lifetime or annual dollar limit on mental health or substance use disorder benefits that is no more restrictive than an average limit calculated for medical/surgical benefits in the following manner. The average limit is calculated by taking into account the weighted average of the aggregate lifetime or annual dollar limits, as appropriate, that are applicable to the categories of medical/surgical benefits. Limits based on delivery mechanisms, such as inpatient/outpatient treatment or normal treatment of common, low-cost conditions (such as treatment of normal births), do not constitute categories for purposes of this paragraph (e)(1)(ii). In addition, for purposes of determining weighted averages, any benefits that are not within a category that is subject to a separately-designated dollar limit under the contract are taken into account as a single separate category by using an estimate of the upper limit on the dollar amount that a MCO, PIHP, or PAHP may reasonably be expected to incur for such benefits, taking into account any other applicable restrictions.
(2) Weighting. For purposes of this paragraph (e), the weighting applicable to any category of medical/surgical benefits is determined in the manner set forth in paragraph (d) of this section for determining one-third or two-thirds of all medical/surgical benefits.
§ 438.910 Parity requirements for financial requirements and treatment limitations.
(a) Clarification of terms – (1) Classification of benefits. When reference is made in this section to a classification of benefits, the term “classification” means a classification as described in paragraph (b)(2) of this section.
(2) Type of financial requirement or treatment limitation. When reference is made in this section to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits. See paragraph (d)(2) of this section for an illustrative list of nonquantitative treatment limitations.
(3) Level of a type of financial requirement or treatment limitation. When reference is made in this section to a level of a type of financial requirement or treatment limitation, level refers to the magnitude of the type of financial requirement or treatment limitation.
(b) General parity requirement – (1) General rule and scope. Each MCO, PIHP and PAHP providing services to MCO enrollees in a State that covers both medical/surgical benefits and mental health or substance use disorder benefits under the State plan, must not apply any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification furnished to enrollees (whether or not the benefits are furnished by the same MCO, PIHP, or PAHP). Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. The application of the rules of this paragraph (b) to financial requirements and quantitative treatment limitations is addressed in paragraph (c) of this section; the application of the rules of this paragraph (b) to nonquantitative treatment limitations is addressed in paragraph (d) of this section.
(2) Classifications of benefits used for applying rules. If an MCO enrollee is provided mental health or substance use disorder benefits in any classification of benefits described in this paragraph (b)(2), mental health or substance use disorder benefits must be provided to the enrollee in every classification in which medical/surgical benefits are provided. In determining the classification in which a particular benefit belongs, a MCO, PIHP, or PAHP must apply the same reasonable standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a MCO, PIHP, or PAHP provides benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, the rules of this section apply separately for that classification for all financial requirements or treatment limitations. The following classifications of benefits are the only classifications used in applying the rules of this section:
(i) Inpatient. Benefits furnished on an inpatient basis.
(ii) Outpatient. Benefits furnished on an outpatient basis. See special rules for office visits in paragraph (c)(2) of this section.
(iii) Emergency care. Benefits for emergency care.
(iv) Prescription drugs. Benefits for prescription drugs. See special rules for multi-tiered prescription drug benefits in paragraph (c)(2) of this section.
(c) Financial requirements and quantitative treatment limitations – (1) Determining “substantially all” and “predominant” – (i) Substantially all. For purposes of this section, a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.
(ii) Predominant. (A) If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical/surgical benefits in a classification as determined under paragraph (c)(1)(i) of this section, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical/surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.
(B) If, for a type of financial requirement or quantitative treatment limitation that applies to at least two-thirds of all medical/surgical benefits in a classification, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to the financial requirement or quantitative treatment limitation, the MCO, PIHP, or PAHP may combine levels until the combination of levels applies to more than one-half of medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominant level of that type in the classification. (For this purpose, a MCO, PIHP, or PAHP may combine the most restrictive levels first, with each less restrictive level added to the combination until the combination applies to more than one-half of the benefits subject to the financial requirement or treatment limitation.)
(iii) Portion based on MCO, PIHP or PAHP payments. For purposes of this section, the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation) is based on the total dollar amount of all combinations of MCO, PIHP, and PAHP payments for medical/surgical benefits in the classification expected to be paid under the MCOs, PIHPs, and PAHPs for a contract year (or for the portion of a contract year after a change in benefits that affects the applicability of the financial requirement or quantitative treatment limitation).
(iv) Clarifications for certain threshold requirements. For any deductible, the dollar amount of MCO, PIHP, or PAHP payments includes all payments for claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of MCO, PIHP, or PAHP payments includes all payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied. Similar rules apply for any other thresholds at which the rate of MCO, PIHP, or PAHP payment changes.
(v) Determining the dollar amount of MCO, PIHP, or PAHP payments. Subject to paragraph (c)(1)(iv) of this section, any reasonable method may be used to determine the dollar amount expected to be paid under a MCO, PIHP, or PAHP for medical/surgical benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation).
(2) Special rules – (i) Multi-tiered prescription drug benefits. If a MCO, PIHP, or PAHP applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the rules in paragraph (d)(1) of this section (relating to requirements for nonquantitative treatment limitations) and without regard to whether a drug is generally prescribed for medical/surgical benefits or for mental health or substance use disorder benefits, the MCO, PIHP, or PAHP satisfies the parity requirements of this section for prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up/delivery.
(ii) Sub-classifications permitted for office visits, separate from other outpatient services. For purposes of applying the financial requirement and treatment limitation rules of this section, a MCO, PIHP, or PAHP may divide its benefits furnished on an outpatient basis into the two sub-classifications described in this paragraph (c)(2)(ii). After the sub-classifications are established, the MCO, PIHP or PAHP may not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in paragraph (c)(1) of this section. Sub-classifications other than these special rules, such as separate sub-classifications for generalists and specialists, are not permitted. The two sub-classifications permitted under this paragraph (c)(2)(ii) are:
(A) Office visits (such as physician visits); and
(B) All other outpatient items and services (such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items).
(3) No separate cumulative financial requirements. A MCO, PIHP, or PAHP may not apply any cumulative financial requirement for mental health or substance use disorder benefits in a classification that accumulates separately from any established for medical/surgical benefits in the same classification.
(4) Compliance with other cost-sharing rules. Each MCO, PIHP, and PAHP must meet the cost-sharing requirements in § 438.108 when applying Medicaid cost-sharing.
(d) Nonquantitative treatment limitations – (1) General rule. A MCO, PIHP, or PAHP may not impose a nonquantitative treatment limitation for mental health or substance use disorder benefits in any classification unless, under the policies and procedures of the MCO, PIHP, or PAHP as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation for medical/surgical benefits in the classification.
(2) Illustrative list of nonquantitative treatment limitations. Nonquantitative treatment limitations include –
(i) Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
(ii) Formulary design for prescription drugs;
(iii) For MCOs, PIHPs, or PAHPs with multiple network tiers (such as preferred providers and participating providers), network tier design;
(iv) Standards for provider admission to participate in a network, including reimbursement rates;
(v) MCO, PIHP, or PAHP methods for determining usual, customary, and reasonable charges;
(vi) Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols);
(vii) Exclusions based on failure to complete a course of treatment;
(viii) Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the MCO, PIHP, or PAHP; and
(ix) Standards for providing access to out-of-network providers.
(3) Application to out-of-network providers. Any MCO, PIHP or PAHP providing access to out-of-network providers for medical/surgical benefits within a classification, must use processes, strategies, evidentiary standards, or other factors in determining access to out-of-network providers for mental health or substance use disorder benefits that are comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors in determining access to out-of-network providers for medical/surgical benefits.
§ 438.915 Availability of information.
(a) Criteria for medical necessity determinations. The criteria for medical necessity determinations, made by a MCO or by a PIHP or PAHP providing services to an MCO enrollee, for mental health or substance use disorder benefits must be made available by the MCO, PIHP, or PAHP administrator to any enrollee, potential enrollee, or contracting provider upon request. MCOs, PIHPs, and PAHPs operating in compliance with § 438.236(c) will be deemed compliant with the requirements in this paragraph (a).
(b) Reason for any denial. The reason for any denial by a MCO, PIHP, or PAHP of reimbursement or payment for services for mental health or substance use disorder benefits in the case of any enrollee must be made available by the MCO, PIHP, or PAHP administrator to the enrollee.
(c) Provisions of other law. Compliance with the disclosure requirements in paragraphs (a) and (b) of this section is not determinative of compliance with any other provision of applicable Federal or State law.
§ 438.920 Applicability.
(a) MCOs, PIHPs, and PAHPs. The requirements of this subpart apply to each MCO, PIHP, and PAHP offering services to enrollees of a MCO, in States covering medical/surgical and mental health or substance use disorder services under the State plan. These requirements regarding coverage for services that must be provided to enrollees of an MCO apply regardless of the delivery system of the medical/surgical, mental health, or substance use disorder services under the State plan.
(b) State responsibilities. (1) In any instance where the full scope of medical/surgical and mental health and substance use disorder services are not provided through the MCO, the State must review the mental health and substance use disorder and medical/surgical benefits provided through the MCO, PIHP, PAHP, and fee-for service (FFS) coverage to ensure the full scope of services available to all enrollees of the MCO complies with the requirements in this subpart. The State must provide documentation of compliance with requirements in this subpart to the general public and post this information on the State Medicaid Web site by October 2, 2017. Such documentation must be updated prior to any change in MCO, PIHP, PAHP or FFS State plan benefits.
(2) The State must ensure that all services are delivered to the enrollees of the MCO in compliance with this subpart.
(c) Scope. This subpart does not –
(1) Require a MCO, PIHP, or PAHP to provide any mental health benefits or substance use disorder benefits beyond what is specified in its contract, and the provision of benefits by a MCO, PIHP, or PAHP for one or more mental health conditions or substance use disorders does not require the MCO, PIHP or PAHP to provide benefits for any other mental health condition or substance use disorder;
(2) Require a MCO, PIHP, or PAHP that provides coverage for mental health or substance use disorder benefits only to the extent required under 1905(a)(4)(D) of the Act to provide additional mental health or substance use disorder benefits in any classification in accordance with this section; or
(3) Affect the terms and conditions relating to the amount, duration, or scope of mental health or substance use disorder benefits under the Medicaid MCO, PIHP, or PAHP contract except as specifically provided in §§ 438.905 and 438.910.
§ 438.930 Compliance dates.
In general, contracts with MCOs, PIHPs, and PAHPs offering Medicaid State plan services to enrollees, and those entities, must comply with the requirements of this subpart no later than October 2, 2017.
PART 440 – SERVICES: GENERAL PROVISIONS
Subpart A – Definitions
§ 440.1 Basis and purpose.
This subpart interprets and implements the following sections of the Act:
1902(a)(70), State option to establish a non-emergency medical transportation program.
1905(a) Services included in the term “medical assistance.”
1905 (c), (d), (f) through (i), (l), and (m) Definitions of institutions and services that are included in the term “medical assistance.”
1913 “Swing-bed” services. (See §§ 447.280 and 482.58 of this chapter for related provisions on “swing-bed” services.)
1915(c) Home and community-based services listed as “medical assistance” and furnished under waivers under that section to individuals who would otherwise require the level of care furnished in a hospital, NF, or ICF/IID.
1915(d) Home and community-based services listed as “medical assistance” and furnished under waivers under that section to individuals age 65 or older who would otherwise require the level of care furnished in a NF.
1915(i) Home and community-based services furnished under a State plan to elderly and disabled individuals.
§ 440.2 Specific definitions; definitions of services for FFP purposes.
(a) Specific definitions.
Inpatient means a patient who has been admitted to a medical institution as an inpatient on recommendation of a physician or dentist and who –
(1) Receives room, board and professional services in the institution for a 24 hour period or longer, or
(2) Is expected by the institution to receive room, board and professional services in the institution for a 24 hour period or longer even though it later develops that the patient dies, is discharged or is transferred to another facility and does not actually stay in the institution for 24 hours.
Outpatient means a patient of an organized medical facility, or distinct part of that facility who is expected by the facility to receive and who does receive professional services for less than a 24-hour period regardless of the hour of admission, whether or not a bed is used, or whether or not the patient remains in the facility past midnight.
Patient means an individual who is receiving needed professional services that are directed by a licensed practitioner of the healing arts toward the maintenance, improvement, or protection of health, or lessening of illness, disability, or pain. (See also § 435.1010 of this chapter for definitions relating to institutional care.)
(b) Definitions of services for FFP purposes. Except as limited in part 441, FFP is available in expenditures under the State plan for medical or remedial care and services as defined in this subpart.
§ 440.10 Inpatient hospital services, other than services in an institution for mental diseases.
(a) Inpatient hospital services means services that –
(1) Are ordinarily furnished in a hospital for the care and treatment of inpatients;
(2) Are furnished under the direction of a physician or dentist; and
(3) Are furnished in an institution that –
(i) Is maintained primarily for the care and treatment of patients with disorders other than mental diseases;
(ii) Is licensed or formally approved as a hospital by an officially designated authority for State standard-setting;
(iii) Meets the requirements for participation in Medicare as a hospital; and
(iv) Has in effect a utilization review plan, applicable to all Medicaid patients, that meets the requirements of § 482.30 of this chapter, unless a waiver has been granted by the Secretary.
(b) Inpatient hospital services do not include SNF and ICF services furnished by a hospital with a swing-bed approval.
§ 440.20 Outpatient hospital services and rural health clinic services.
(a) Outpatient hospital services means preventive, diagnostic, therapeutic, rehabilitative, or palliative services that –
(1) Are furnished to outpatients;
(2) Are furnished by or under the direction of a physician or dentist; and
(3) Are furnished by an institution that –
(i) Is licensed or formally approved as a hospital by an officially designated authority for State standard-setting; and
(ii) Meets the requirements for participation in Medicare as a hospital; and
(4) May be limited by a Medicaid agency in the following manner: A Medicaid agency may exclude from the definition of “outpatient hospital services” those types of items and services that are not generally furnished by most hospitals in the State.
(b) Rural health clinic services. If nurse practitioners or physician assistants (as defined in § 491.2 of this chapter) are not prohibited by State law from furnishing primary health care, “rural health clinic services” means the following services when furnished by a rural health clinic that has been certified in accordance with part 491 of this chapter.
(1) Services furnished by a physician within the scope of practice of his profession under State law, if the physician performs the services in the clinic or the services are furnished away from the clinic and the physician has an agreement with the clinic providing that he will be paid by it for such services.
(2) Services furnished by a physician assistant, nurse practitioner, nurse midwife or other specialized nurse practitioner (as defined in §§ 405.2401 and 491.2 of this chapter) if the services are furnished in accordance with the requirements specified in § 405.2414(a) of this chapter.
(3) Services and supplies that are furnished as an incident to professional services furnished by a physician, physician assistant, nurse practitioner, nurse midwife, or specialized nurse practitioner. (See §§ 405.2413 and 405.2415 of this chapter for the criteria for determining whether services and supplies are included under this paragraph.)
(4) Part-time or intermittent visiting nurse care and related medical supplies (other than drugs and biologicals) if:
(i) The clinic is located in an area in which the Secretary has determined that there is a shortage of home health agencies (see § 405.2417 of this chapter):
(ii) The services are furnished by a registered nurse or licensed practical nurse or a licensed vocational nurse employed by, or otherwise compensated for the services by, the clinic;
(iii) The services are furnished under a written plan of treatment that is established and reviewed at least every 60 days by a supervising physician of the clinic or that is established by a physician, physician assistant, nurse practitioner, nurse midwife, or specialized nurse practitioner and reviewed and approved at least every 60 days by a supervising physician of the clinic; and
(iv) The services are furnished to a homebound beneficiary. For purposes of visiting nurse care, a “homebound” beneficiary means one who is permanently or temporarily confined to his place of residence because of a medical or health condition. He may be considered homebound if he leaves the place of residence infrequently. For this purpose, “place of residence” does not include a hospital or a skilled nursing facility.
(c) Other ambulatory services furnished by a rural health clinic. If the State plan covers rural health clinic services, other ambulatory services means ambulatory services other than rural health clinic services, as defined in paragraph (b) of this section, that are otherwise included in the plan and meet specific State plan requirements for furnishing those services. Other ambulatory services furnishd by a rural health clinic are not subject to the physician supervision requirements specified in § 491.8(b) of this chapter, unless required by State law or the State plan.
§ 440.30 Other laboratory and X-ray services.
Other laboratory and X-ray services means professional and technical laboratory and radiological services –
(a) Ordered and provided by or under the direction of a physician or other licensed practioner of the healing arts within the scope of his practice as defined by State law or ordered by a physician but provided by referral laboratory;
(b) Provided in an office or similar facility other than a hospital outpatient department or clinic; and
(c) Furnished by a laboratory that meets the requirements of part 493 of this chapter.
(d) During the Public Health Emergency defined in 42 CFR 400.200 or any future Public Health Emergency resulting from an outbreak of communicable disease, and during any subsequent period of active surveillance (as defined in this paragraph), Medicaid coverage is available for laboratory tests and X-ray services that do not meet conditions specified in paragraph (a) or (b) of this section, if the purpose of such laboratory and X-ray services is to diagnose or detect SARS-CoV-2, antibodies to SARS-CoV-2, COVID-19, or the communicable disease named in the Public Health Emergency or its causes, and if the deviation from the conditions specified in paragraph (a) or (b) of this section is intended to avoid transmission of the communicable disease. For purposes of this paragraph, a period of active surveillance is defined as an outbreak of communicable disease during which no approved treatment or vaccine is widely available, and it ends on the date the Secretary terminates it, or the date that is two incubation periods after the last known case of the communicable disease, whichever is sooner. Additionally, during the Public Health Emergency defined in 42 CFR 400.200 or any future Public Health Emergency resulting from an outbreak of communicable disease, and during any subsequent period of active surveillance (as defined in this paragraph), Medicaid coverage is available for laboratory processing of self-collected laboratory test systems that are authorized by the FDA for home use, if available to diagnose or detect SARS-CoV-2, antibodies to SARS-CoV-2, COVID-19, or the communicable disease named in the Public Health Emergency or its causes, even if those self-collected tests would not otherwise meet the requirements of paragraph (a) or (b) of this section, provided that the self-collection of the test is intended to avoid transmission of the communicable disease. If, pursuant to this paragraph, a laboratory processes a self-collected test system that is authorized by the FDA for home use, and the test system does not meet the conditions in paragraph (a) of this section, the laboratory must notify the patient and the patient’s physician or other licensed non-physician practitioner (if known by the laboratory), of the results.
§ 440.40 Nursing facility services for individuals age 21 or older (other than services in an institution for mental disease), EPSDT, and family planning services and supplies.
(a) Nursing facility services. (1) “Nursing facility services for individuals age 21 or older, other than services in an institution for mental diseases”, means services that are –
(i) Needed on a daily basis and required to be provided on an inpatient basis under §§ 409.31 through 409.35 of this chapter.
(ii) Provided by –
(A) A facility or distinct part (as defined in § 483.5(b) of this chapter) that meets the requirements for participation under subpart B of part 483 of this chapter, as evidenced by a valid agreement between the Medicaid agency and the facility for providing nursing facility services and making payments for services under the plan; or
(B) If specified in the State plan, a swing-bed hospital that has an approval from CMS to furnish skilled nursing facility services in the Medicare program; and
(iii) Ordered by and provided under the direction of a physician.
(2) Nursing facility services include services provided by any facility located on an Indian reservation and certified by the Secretary as meeting the requirements of subpart B of part 483 of this chapter.
(b) EPSDT. “Early and periodic screening and diagnosis and treatment” means –
(1) Screening and diagnostic services to determine physical or mental defects in beneficiaries under age 21; and
(2) Health care, treatment, and other measures to correct or ameliorate any defects and chronic conditions discovered. (See subpart B of part 441 of this chapter.)
(c) Family planning services and supplies for individuals of child-bearing age. [Reserved]
§ 440.50 Physicians’ services and medical and surgical services of a dentist.
(a) “Physicians’ services,” whether furnished in the office, the beneficiary’s home, a hospital, a skilled nursing facility, or elsewhere, means services furnished by a physician –
(1) Within the scope of practice of medicine or osteopathy as defined by State law; and
(2) By or under the personal supervision of an individual licensed under State law to practice medicine or osteopathy.
(b) “Medical and surgical services of a dentist” means medical and surgical services furnished, on or after January 1, 1988, by a doctor of dental medicine or dental surgery if the services are services that –
(1) If furnished by a physician, would be considered physician’s services.
(2) Under the law of the State where they are furnished, may be furnished either by a physician or by a doctor of dental medicine or dental surgery; and
(3) Are furnished by a doctor of dental medicine or dental surgery who is authorized to furnish those services in the State in which he or she furnished the services.
§ 440.60 Medical or other remedial care provided by licensed practitioners.
(a) “Medical care or any other type remedial care provided by licensed practitioners” means any medical or remedial care or services, other than physicians’ services, provided by licensed practitioners within the scope of practice as defined under State law.
(b) Chiropractors’ services include only services that –
(1) Are provided by a chiropractor who is licensed by the State and meets standards issued by the Secretary under § 405.232(b) of this chapter; and
(2) Consists of treatment by means of manual manipulation of the spine that the chiropractor is legally authorized by the State to perform.
§ 440.70 Home health services.
(a) “Home health services” means the services in paragraph (b) of this section that are provided to a beneficiary –
(1) At his place of residence, as specified in paragraph (c) of this section; and
(2) On orders written by a physician, nurse practitioner, clinical nurse specialist or physician assistant, working in accordance with State law, as part of a written plan of care that the ordering practitioner reviews every 60 days for services described in (b)(1), (2), and (4) of this section; and
(3) On his or her physician’s orders or orders written by a licensed practitioner of the healing arts acting within the scope of practice authorized under State law, as part of a written plan of care for services described in paragraph (b)(3) of this section. The plan of care must be reviewed by the ordering practitioner as specified in paragraph (b)(3)(iii) of this section.
(b) Home health services include the following services and items. Paragraphs (b)(1), (2) and (3) of this section are required services and items that must be covered according to the home health coverage parameters. Services in paragraph (b)(4) of this section are optional. Coverage of home health services cannot be contingent upon the beneficiary needing nursing or therapy services.
(1) Nursing service, as defined in the State Nurse Practice Act, that is provided on a part-time or intermittent basis by a home health agency as defined in paragraph (d) of this section, or if there is no agency in the area, a registered nurse who –
(i) Is currently licensed to practice in the State;
(ii) Receives written orders from the patient’s practitioner as defined in (a)(2) of this section;
(iii) Documents the care and services provided; and
(iv) Has had orientation to acceptable clinical and administrative recordkeeping from a health department nurse.
(2) Home health aide service provided by a home health agency,
(3) Medical supplies, equipment, and appliances suitable for use in any setting in which normal life activities take place, as defined at § 440.70(c)(1).
(i) Supplies are health care related items that are consumable or disposable, or cannot withstand repeated use by more than one individual, that are required to address an individual medical disability, illness or injury.
(ii) Equipment and appliances are items that are primarily and customarily used to serve a medical purpose, generally are not useful to an individual in the absence of a disability, illness or injury, can withstand repeated use, and can be reusable or removable. State Medicaid coverage of equipment and appliances is not restricted to the items covered as durable medical equipment in the Medicare program.
(iii) A beneficiary’s need for medical supplies, equipment, and appliances must be reviewed by a physician or, as defined in § 400.200 of this chapter, an other licensed practitioner of the healing arts acting within the scope of practice authorized under State law, annually.
(iv) Frequency of further physician or, as defined in § 400.200 of this chapter, an other licensed practitioner review of a beneficiary’s continuing need for the items is determined on a case-by-case basis based on the nature of the item prescribed.
(v) States can have a list of preapproved medical equipment supplies and appliances for administrative ease but States are prohibited from having absolute exclusions of coverage on medical equipment, supplies, or appliances. States must have processes and criteria for requesting medical equipment that is made available to individuals to request items not on the State’s list. The procedure must use reasonable and specific criteria to assess items for coverage. When denying a request, a State must inform the beneficiary of the right to a fair hearing.
(4) Physical therapy, occupational therapy, or speech pathology and audiology services, provided by a home health agency or by a facility licensed by the State to provide medical rehabilitation services. (See § 441.15 of this subchapter.)
(c) A beneficiary’s place of residence, for home health services, does not include a hospital, nursing facility, or intermediate care facility for individuals with intellectual disabilities, except for home health services in an intermediate care facility for Individuals with Intellectual Disabilities that are not required to be provided by the facility under subpart I of part 483. For example, a registered nurse may provide short-term care for a beneficiary in an intermediate care facility for Individuals with Intellectual Disabilities during an acute illness to avoid the beneficiary’s transfer to a nursing facility.
(1) Nothing in this section should be read to prohibit a beneficiary from receiving home health services in any setting in which normal life activities take place, other than a hospital, nursing facility; intermediate care facility for individuals with intellectual disabilities; or any setting in which payment is or could be made under Medicaid for inpatient services that include room and board. Home health services cannot be limited to services furnished to beneficiaries who are homebound.
(2) Additional services or service hours may, at the State’s option, be authorized to account for medical needs that arise in the settings home health services are provided.
(d) “Home health agency” means a public or private agency or organization, or part of an agency or organization, that meets requirements for participation in Medicare, including the capitalization requirements under § 489.28 of this chapter.
(e) A “facility licensed by the State to provide medical rehabilitation services” means a facility that –
(1) Provides therapy services for the primary purpose of assisting in the rehabilitation of disabled individuals through an integrated program of –
(i) Medical evaluation and services; and
(ii) Psychological, social, or vocational evaluation and services; and
(2) Is operated under competent medical supervision either –
(i) In connection with a hospital; or
(ii) As a facility in which all medical and related health services are prescribed by or under the direction of individuals licensed to practice medicine or surgery in the State.
(f) No payment may be made for services referenced in paragraphs (b)(1) through (4) of this section, unless a practitioner referenced in paragraph (a)(2) of this section or for medical equipment, a practitioner described in paragraph (a)(3) of this section documents that there was a face-to-face encounter with the beneficiary that meets the following requirements.
(1) For the initiation of home health services, the face-to-face encounter must be related to the primary reason the beneficiary requires home health services and must occur within the 90 days before or within the 30 days after the start of the services.
(2) For the initiation of medical equipment, the face-to-face encounter must be related to the primary reason the beneficiary requires medical equipment and must occur no more than 6 months prior to the start of services.
(3) The face-to-face encounter may be conducted by one of the following practitioners:
(i) A physician;
(ii) A nurse practitioner or clinical nurse specialist, as those terms are defined in section 1861(aa)(5) of the Act, in accordance with State law;
(iii) A certified nurse midwife, as defined in section 1861(gg) of the Act, as authorized by State law;
(iv) A physician assistant, as defined in section 1861(aa)(5) of the Act, in accordance with State law; or
(v) For beneficiaries admitted to home health immediately after an acute or post-acute stay, the attending acute or post-acute physician.
(vi) For medical equipment, supplies, or appliances, a licensed practitioner of the healing arts acting within the scope of practice authorized under state law.
(4) If State law does not allow the non-physician practitioner, as described in paragraphs (f)(3)(ii) through (vi) of this section, to perform the face-to-face encounter independently, the non-physician practitioner must communicate the clinical findings of that face-to-face encounter to the ordering physician. Those clinical findings must be incorporated into a written or electronic document included in the beneficiary’s medical record.
(5) To assure clinical correlation between the face-to-face encounter and the associated home health services, the practitioner responsible for ordering the services must:
(i) Document the face-to-face encounter which is related to the primary reason the patient requires home health services, occurred within the required timeframes prior to the start of home health services.
(ii) Must indicate the practitioner who conducted the encounter, and the date of the encounter.
(6) The face-to-face encounter may occur through telehealth, as implemented by the State.
(g)(1) No payment may be made for medical equipment, supplies, or appliances referenced in paragraph (b)(3) of this section to the extent that a face-to-face encounter requirement would apply as durable medical equipment (DME) under the Medicare program, unless a practitioner referenced in paragraph (a)(3) of this section documents a face-to-face encounter with the beneficiary consistent with the requirements of paragraph (f) of this section except as indicated in paragraph (g)(2) of this section.
(2) The face-to-face encounter may be performed by any of the practitioners described in paragraph (f)(3) of this section, with the exception of certified nurse-midwives, as described in paragraph (f)(3)(iii) of this section.
§ 440.80 Private duty nursing services.
Private duty nursing services means nursing services for beneficiaries who require more individual and continuous care than is available from a visiting nurse or routinely provided by the nursing staff of the hospital or skilled nursing facility. These services are provided –
(a) By a registered nurse or a licensed practical nurse;
(b) Under the direction of the beneficiary’s physician; and
(c) To a beneficiary in one or more of the following locations at the option of the State –
(1) His or her own home;
(2) A hospital; or
(3) A skilled nursing facility.
§ 440.90 Clinic services.
Clinic services means preventive, diagnostic, therapeutic, rehabilitative, or palliative services that are furnished by a facility that is not part of a hospital but is organized and operated to provide medical care to outpatients. The term includes the following services furnished to outpatients:
(a) Services furnished at the clinic by or under the direction of a physician or dentist.
(b) Services furnished outside the clinic, by clinic personnel under the direction of a physician, to an eligible individual who does not reside in a permanent dwelling or does not have a fixed home or mailing address.
§ 440.100 Dental services.
(a) “Dental services” means diagnostic, preventive, or corrective procedures provided by or under the supervision of a dentist in the practice of his profession, including treatment of –
(1) The teeth and associated structures of the oral cavity; and
(2) Disease, injury, or impairment that may affect the oral or general health of the beneficiary.
(b) “Dentist” means an individual licensed to practice dentistry or dental surgery.
§ 440.110 Physical therapy, occupational therapy, and services for individuals with speech, hearing, and language disorders.
(a) Physical therapy – (1) Physical therapy means services prescribed by a physician or other licensed practitioner of the healing arts within the scope of his or her practice under State law and provided to a beneficiary by or under the direction of a qualified physical therapist. It includes any necessary supplies and equipment.
(2) A “qualified physical therapist” is an individual who meets personnel qualifications for a physical therapist at § 484.115.
(b) Occupational therapy – (1) Occupational therapy means services prescribed by a physician or other licensed practitioner of the healing arts within the scope of his or her practice under State law and provided to a beneficiary by or under the direction of a qualified occupational therapist. It includes any necessary supplies and equipment.
(2) A “qualified occupational therapist” is an individual who meets personnel qualifications for an occupational therapist at § 484.115.
(c) Services for individuals with speech, hearing, and language disorders – (1) Services for individuals with speech, hearing, and language disorders means diagnostic, screening, preventive, or corrective services provided by or under the direction of a speech pathologist or audiologist, for which a patient is referred by a physician or other licensed practitioner of the healing arts within the scope of his or her practice under State law. It includes any necessary supplies and equipment.
(2) A “speech pathologist” is an individual who meets one of the following conditions:
(i) Has a certificate of clinical competence from the American Speech and Hearing Association.
(ii) Has completed the equivalent educational requirements and work experience necessary for the certificate.
(iii) Has completed the academic program and is acquiring supervised work experience to qualify for the certificate.
(3) A “qualified audiologist” means an individual with a master’s or doctoral degree in audiology that maintains documentation to demonstrate that he or she meets one of the following conditions:
(i) The State in which the individual furnishes audiology services meets or exceeds State licensure requirements in paragraph (c)(3)(ii)(A) or (c)(3)(ii)(B) of this section, and the individual is licensed by the State as an audiologist to furnish audiology services.
(ii) In the case of an individual who furnishes audiology services in a State that does not license audiologists, or an individual exempted from State licensure based on practice in a specific institution or setting, the individual must meet one of the following conditions:
(A) Have a Certificate of Clinical Competence in Audiology granted by the American Speech-Language-Hearing Association.
(B) Have successfully completed a minimum of 350 clock-hours of supervised clinical practicum (or is in the process of accumulating that supervised clinical experience under the supervision of a qualified master or doctoral-level audiologist); performed at least 9 months of full-time audiology services under the supervision of a qualified master or doctoral-level audiologist after obtaining a master’s or doctoral degree in audiology, or a related field; and successfully completed a national examination in audiology approved by the Secretary.
§ 440.120 Prescribed drugs, dentures, prosthetic devices, and eyeglasses.
(a) “Prescribed drugs” means simple or compound substances or mixtures of substances prescribed for the cure, mitigation, or prevention of disease, or for health maintenance that are –
(1) Prescribed by a physician or other licensed practitioner of the healing arts within the scope of this professional practice as defined and limited by Federal and State law;
(2) Dispensed by licensed pharmacists and licensed authorized practitioners in accordance with the State Medical Practice Act; and
(3) Dispensed by the licensed pharmacist or practitioner on a written prescription that is recorded and maintained in the pharmacist’s or practitioner’s records.
(b) “Dentures” are artificial structures made by or under the direction of a dentist to replace a full or partial set of teeth.
(c) “Prosthetic devices” means replacement, corrective, or supportive devices prescribed by a physician or other licensed practitioner of the healing arts within the scope of his practice as defined by State law to –
(1) Artificially replace a missing portion of the body;
(2) Prevent or correct physical deformity or malfunction; or
(3) Support a weak or deformed portion of the body.
(d) “Eyeglasses” means lenses, including frames, and other aids to vision prescribed by a physician skilled in diseases of the eye or an optometrist.
§ 440.130 Diagnostic, screening, preventive, and rehabilitative services.
(a) “Diagnostic services,” except as otherwise provided under this subpart, includes any medical procedures or supplies recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, to enable him to identify the existence, nature, or extent of illness, injury, or other health deviation in a beneficiary.
(b) “Screening services” means the use of standardized tests given under medical direction in the mass examination of a designated population to detect the existence of one or more particular diseases or health deviations or to identify for more definitive studies individuals suspected of having certain diseases.
(c) “Preventive services” means services recommended by a physician or other licensed practitioner of the healing arts acting within the scope of authorized practice under State law to –
(1) Prevent disease, disability, and other health conditions or their progression;
(2) Prolong life; and
(3) Promote physical and mental health and efficiency.
(d) “Rehabilitative services,” except as otherwise provided under this subpart, includes any medical or remedial services recommended by a physician or other licensed practitioner of the healing arts, within the scope of his practice under State law, for maximum reduction of physical or mental disability and restoration of a beneficiary to his best possible functional level.
§ 440.140 Inpatient hospital services, nursing facility services, and intermediate care facility services for individuals age 65 or older in institutions for mental diseases.
(a) Inpatient hospital services. “Inpatient hospital services for individuals age 65 or older in institutions for mental diseases” means services provided under the direction of a physician for the care and treatment of beneficiaries in an institution for mental diseases that meets the requirements specified in § 482.60(b), (c), and (e) of this chapter and –
(1) Meets the requirements for utilization review in § 482.30(a), (b), (d), and (e) of this chapter; or
(2) Has been granted a waiver of those utilization review requirements under section 1903(i)(4) of the Act and subpart H of part 456 of this chapter.
(b) Nursing facility services. “Nursing facility services for individuals age 65 or older in institutions for mental diseases” means nursing facility services as defined in § 440.40 and in subpart B of part 483 of this chapter that are provided in institutions for mental diseases, as defined in § 435.1010 of this chapter.
§ 440.150 Intermediate care facility (ICF/IID) services.
(a) “ICF/IID services” means those items and services furnished in an intermediate care facility for Individuals with Intellectual Disabilities if the following conditions are met:
(1) The facility fully meets the requirements for a State license to provide services that are above the level of room and board;
(2) The primary purpose of the ICF/IID is to furnish health or rehabilitative services to persons with Intellectual Disability or persons with related conditions;
(3) The ICF/IID meets the standards specified in subpart I of part 483 of this chapter.
(4) The beneficiary with Intellectual Disability for whom payment is requested is receiving active treatment, as specified in § 483.440 of this chapter.
(5) The ICF/IID has been certified to meet the requirements of subpart C of part 442 of this chapter, as evidenced by a valid agreement between the Medicaid agency and the facility for furnishing ICF/IID services and making payments for these services under the plan.
(b) ICF/IID services may be furnished in a distinct part of a facility other than an ICF/IID if the distinct part –
(1) Meets all requirements for an ICF/IID, as specified in subpart I of part 483 of this chapter;
(2) Is clearly an identifiable living unit, such as an entire ward, wing, floor or building;
(3) Consists of all beds and related services in the unit;
(4) Houses all beneficiaries for whom payment is being made for ICF/IID services; and
(5) Is approved in writing by the survey agency.
§ 440.155 Nursing facility services, other than in institutions for mental diseases.
(a) “Nursing facility services, other than in an institution for mental diseases” means services provided in a facility that –
(1) Fully meets the requirements for a State license to provide, on a regular basis, health-related services to individuals who do not require hospital care, but whose mental or physical condition requires services that –
(i) Are above the level of room and board; and
(ii) Can be made available only through institutional facilities;
(2) Has been certified to meet the requirements of subpart C of part 442 of this chapter as evidenced by a valid agreement between the Medicaid agency and the facility for providing nursing facility services and making payments for services under the plan; and
(b) “Nursing facility services” include services –
(1) Considered appropriate by the State and provided by a religious nonmedical institution as defined in § 440.170(b); or
(2) Provided by a facility located on an Indian reservation that –
(i) Furnishes, on a regular basis, health-related services; and
(ii) Is certified by the Secretary to meet the standards in subpart E of part 442 of this chapter.
(c) “Nursing facility services” may include services provided in a distinct part (as defined in § 483.5(b) of this chapter) of a facility other than a nursing facility if the distinct part (as defined in § 483.5(b) of this chapter) –
(1) Meets all requirements for a nursing facility;
(2) Is an identifiable unit, such as an entire ward or contiguous ward, a wing, floor, or building;
(3) Consists of all beds and related facilities in the unit;
(4) Houses all beneficiaries for whom payment is being made for nursing facility services, except as provided in paragraph (d) of this section;
(5) Is clearly identified; and
(6) Is approved in writing by the survey agency.
(d) If a State includes as nursing facility services those services provided by a distinct part of a facility other than a nursing facility, it may not require transfer of a beneficiary within or between facilities if, in the opinion of the attending physician, it might be harmful to the physical or mental health of the beneficiary.
(e) Nursing facility services may include services provided in a swing-bed hospital that has an approval to furnish nursing facility services.
§ 440.160 Inpatient psychiatric services for individuals under age 21.
“Inpatient psychiatric services for individuals under age 21” means services that –
(a) Are provided under the direction of a physician;
(b) Are provided by –
(1) A psychiatric hospital that undergoes a State survey to determine whether the hospital meets the requirements for participation in Medicare as a psychiatric hospital as specified in § 482.60 of this chapter, or is accredited by a national organization whose psychiatric hospital accrediting program has been approved by CMS; or a hospital with an inpatient psychiatric program that undergoes a State survey to determine whether the hospital meets the requirements for participation in Medicare as a hospital, as specified in part 482 of this chapter, or is accredited by a national accrediting organization whose hospital accrediting program has been approved by CMS.
(2) A psychiatric facility which is accredited by the Joint Commission on Accreditation of Healthcare Organizations, the Council on Accreditation of Services for Families and Children, the Commission on Accreditation of Rehabilitation Facilities, or by any other accrediting organization, with comparable standards, that is recognized by the State.
(c) Meet the requirements in § 441.151 of this subchapter.
§ 440.165 Nurse-midwife service.
(a) “Nurse-midwife services” means services that –
(1) Are furnished by a nurse-midwife within the scope of practice authorized by State law or regulation and, in the case of inpatient or outpatient hospital services or clinic services, are furnished by or under the direction of a nurse-midwife to the extent permitted by the facility; and
(2) Unless required by State law or regulations or a facility, are reimbursed without regard to whether the nurse-midwife is under the supervision of, or associated with, a physician or other health care provider. (See § 441.21 of this chapter for provisions on independent provider agreements for nurse-midwives.)
(b) “Nurse-midwife” means a registered professional nurse who meets the following requirements:
(1) Is currently licensed to practice in the State as a registered professional nurse.
(2) Is legally authorized under State law or regulations to practice as a nurse-midwife.
(3) Except as provided in paragraph (b)(4) of this section, has completed a program of study and clinical experience for nurse-midwives, as specified by the State.
(4) If the State does not specify a program of study and clinical experience that nurse-midwives must complete to practice in that State, meets one of the following conditions:
(i) Is currently certified as a nurse-midwife by the American College of Nurse-Midwives (ACNM or by the ACNM Certification Council, Inc. (ACC).
(ii) Has satisfactorily completed a formal education program (of at least one academic year) that, upon completion qualifies the nurse to take the certification examination offered by the American College of Nurse-Midwives (ACNM) or by the ACNM Certification Council, Inc. (ACC).
(iii) Has successfully completed a formal educational program for preparing registered nurses to furnish gynecological and obstetrical care to women during pregnancy, delivery, and the postpartum period, and care to normal newborns, and was practicing as a nurse-midwife for a total of 12 months during any 18-month period from August 8, 1976 to July 16, 1982.
§ 440.166 Nurse practitioner services.
(a) Definition of nurse practitioner services. Nurse practitioner services means services that are furnished by a registered professional nurse who meets a State’s advanced educational and clinical practice requirements, if any, beyond the 2 to 4 years of basic nursing education required of all registered nurses.
(b) Requirements for certified pediatric nurse practitioner. The practitioner must be a registered professional nurse who meets the requirements specified in either paragraphs (b)(1) or (b)(2) of this section.
(1) If the State specifies qualifications for pediatric nurse practitioners, the practitioner must –
(i) Be currently licensed to practice in the State as a registered professional nurse; and
(ii) Meet the State requirements for qualification of pediatric nurse practitioners in the State in which he or she furnishes the services.
(2) If the State does not specify, by specialty, qualifications for pediatric nurse practitioners, but the State does define qualifications for nurses in advanced practice or general nurse practitioners, the practitioner must –
(i) Meet qualifications for nurses in advanced practice or general nurse practitioners as defined by the State; and
(ii) Have a pediatric nurse practice limited to providing primary health care to persons less than 21 years of age.
(c) Requirements for certified family nurse practitioner. The practitioner must be a registered professional nurse who meets the requirements specified in either paragraph (c)(1) or (c)(2) of this section.
(1) If the State specifies qualifications for family nurse practitioners, the practitioner must –
(i) Be currently licensed to practice in the State as a registered professional nurse; and
(ii) Meet the State requirements for qualification of family nurse practitioners in the State in which he or she furnishes the services.
(2) If the State does not specify, by specialty, qualifications for family nurse practitioners, but the State does define qualifications for nurses in advanced practice or general nurse practitioners, the practitioner must –
(i) Meet qualifications for nurses in advanced practice or general nurse practitioners as defined by the State; and
(ii) Have a family nurse practice limited to providing primary health care to individuals and families.
(d) Payment for nurse practitioner services. The Medicaid agency must reimburse nurse practitioners for their services in accordance with § 441.22(c) of this subchapter.
§ 440.167 Personal care services.
Unless defined differently by a State agency for purposes of a waiver granted under part 441, subpart G of this chapter –
(a) Personal care services means services furnished to an individual who is not an inpatient or resident of a hospital, nursing facility, intermediate care facility for individuals with intellectual disabilities, or institution for mental disease that are –
(1) Authorized for the individual by a physician in accordance with a plan of treatment or (at the option of the State) otherwise authorized for the individual in accordance with a service plan approved by the State;
(2) Provided by an individual who is qualified to provide such services and who is not a member of the individual’s family; and
(3) Furnished in a home, and at the State’s option, in another location.
(b) For purposes of this section, family member means a legally responsible relative.
§ 440.168 Primary care case management services.
(a) Primary care case management services means case management related services that –
(1) Include location, coordination, and monitoring of primary health care services; and
(2) Are provided under a contract between the State and either of the following:
(i) A PCCM who is a physician or may, at State option, be a physician assistant, nurse practitioner, or certified nurse-midwife.
(ii) A physician group practice, or an entity that employs or arranges with physicians to furnish the services.
(b) Primary care case management services may be offered by the State –
(1) As a voluntary option under the State plan; or
(2) On a mandatory basis under section 1932 (a)(1) of the Act or under section 1915(b) or section 1115 waiver authority.
§ 440.169 Case management services.
(a) Case management services means services furnished to assist individuals, eligible under the State plan who reside in a community setting or are transitioning to a community setting, in gaining access to needed medical, social, educational, and other services, in accordance with § 441.18 of this chapter.
(b) Targeted case management services means case management services furnished without regard to the requirements of § 431.50(b) of this chapter (related to statewide provision of services) and § 440.240 (related to comparability). Targeted case management services may be offered to individuals in any defined location of the State or to individuals within targeted groups specified in the State plan.
(c) [Reserved]
(d) The assistance that case managers provide in assisting eligible individuals obtain services includes –
(1) Comprehensive assessment and periodic reassessment of individual needs, to determine the need for any medical, educational, social, or other services. These assessment activities include the following:
(i) Taking client history.
(ii) Identifying the needs of the individual, and completing related documentation.
(iii) Gathering information from other sources, such as family members, medical providers, social workers, and educators (if necessary) to form a complete assessment of the eligible individual.
(2) Development (and periodic revision) of a specific care plan based on the information collected through the assessment, that includes the following:
(i) Specifies the goals and actions to address the medical, social, educational, and other services needed by the eligible individual.
(ii) Includes activities such as ensuring the active participation of the eligible individual and working with the individual (or the individual’s authorized health care decision maker) and others to develop those goals.
(iii) Identifies a course of action to respond to the assessed needs of the eligible individual.
(3) Referral and related activities (such as scheduling appointments for the individual) to help the eligible individual obtain needed services, including activities that help link the individual with medical, social, and educational providers or other programs and services that are capable of providing needed services to address identified needs and achieve goals specified in the care plan.
(4) Monitoring and follow-up activities, including activities and contacts that are necessary to ensure that the care plan is effectively implemented and adequately addresses the needs of the eligible individual and which may be with the individual, family members, service providers, or other entities or individuals and conducted as frequently as necessary, and including at least one annual monitoring, to help determine whether the following conditions are met:
(i) Services are being furnished in accordance with the individual’s care plan.
(ii) Services in the care plan are adequate.
(iii) There are changes in the needs or status of the eligible individual. Monitoring and follow-up activities include making necessary adjustments in the care plan and service arrangements with providers.
(e) Case management may include contacts with non-eligible individuals that are directly related to the identification of the eligible individual’s needs and care, for the purposes of helping the eligible individual access services, identifying needs and supports to assist the eligible individual in obtaining services, providing case managers with useful feedback, and alerting case managers to changes in the eligible individual’s needs.
§ 440.170 Any other medical care or remedial care recognized under State law and specified by the Secretary.
(a) Transportation. (1) “Transportation” includes expenses for transportation and other related travel expenses determined to be necessary by the agency to secure medical examinations and treatment for a beneficiary.
(2) Except as provided in paragraph (a)(4), transportation, as defined in this section, is furnished only by a provider to whom a direct vendor payment can appropriately be made by the agency.
(3) “Travel expenses” include –
(i) The cost of transportation for the beneficiary by ambulance, taxicab, common carrier, or other appropriate means;
(ii) The cost of meals and lodging en route to and from medical care, and while receiving medical care; and
(iii) The cost of an attendant to accompany the beneficiary, if necessary, and the cost of the attendant’s transportation, meals, lodging, and, if the attendant is not a member of the beneficiary’s family, salary.
(4) Non-emergency medical transportation brokerage program. At the option of the State, and notwithstanding § 431.50 (statewide operation) and § 431.51 (freedom of choice of providers) of this chapter and § 440.240 (comparability of services for groups), a State plan may provide for the establishment of a non-emergency medical transportation brokerage program in order to more cost-effectively provide non-emergency medical transportation services for individuals eligible for medical assistance under the State plan who need access to medical care or services, and have no other means of transportation. These transportation services include wheelchair vans, taxis, stretcher cars, bus passes and tickets, secured transportation containing an occupant protection system that addresses safety needs of disabled or special needs individuals, and other forms of transportation otherwise covered under the state plan.
(i) Non-emergency medical transportation services may be provided under contract with individuals or entities that meet the following requirements:
(A) Is selected through a competitive bidding process that is consistent with 45 CFR 75.326 through 75.340 and is based on the State’s evaluation of the broker’s experience, performance, references, resources, qualifications, and costs.
(B) Has oversight procedures to monitor beneficiary access and complaints and ensure that transportation is timely and that transport personnel are licensed, qualified, competent, and courteous.
(C) Is subject to regular auditing and oversight by the State in order to ensure the quality and timeliness of the transportation services provided and the adequacy of beneficiary access to medical care and services.
(D) Is subject to a written contract that imposes the requirements related to prohibitions on referrals and conflicts of interest described at § 440.170(a)(4)(ii), and provides for the broker to be liable for the full cost of services resulting from a prohibited referral or subcontract.
(ii) Federal financial participation is available at the medical assistance rate for the cost of a written brokerage contract that:
(A) Except as provided in paragraph (a)(4)(ii)(B) of this section, prohibits the broker (including contractors, owners, investors, Boards of Directors, corporate officers, and employees) from providing non-emergency medical transportation services or making a referral or subcontracting to a transportation service provider if:
(1) The broker has a financial relationship with the transportation provider as defined at § 411.354(a) of this chapter with “transportation broker” substituted for “physician” and “non-emergency transportation” substituted for “DHS”; or
(2) The broker has an immediate family member, as defined at § 411.351 of this chapter, that has a direct or indirect financial relationship with the transportation provider, with the term “transportation broker” substituted for “physician.”
(B) Exceptions: The prohibitions described at clause (A) of this paragraph do not apply if there is documentation to support the following:
(1) Transportation is provided in a rural area, as defined at § 412.62(f), and there is no other available Medicaid participating provider or other provider determined by the State to be qualified except the non-governmental broker.
(2) Transportation is so specialized that there is no other available Medicaid participating provider or other provider determined by the State to be qualified except the non-governmental broker.
(3) Except for the non-governmental broker, the availability of other Medicaid participating providers or other providers determined by the State to be qualified is insufficient to meet the need for transportation.
(4) The broker is a government entity and the individual service is provided by the broker, or is referred to or subcontracted with another government-owned or operated transportation provider generally available in the community, if the following conditions are met:
(i) The contract with the broker provides for payment that does not exceed the actual costs calculated as though the broker were a distinct unit, and excludes from these payments any personnel or other costs shared with or allocated from parent or related entities; and the governmental broker maintains an accounting system such that all funds allocated to the Medicaid brokerage program and all costs charged to the brokerage program will be completely separate from any other program;
(ii) The broker documents that, with respect to the individual’s specific transportation needs, the government provider is the most appropriate and lowest cost alternative; and
(iii) The broker documents that the Medicaid program is paying no more for fixed route public transportation than the rate charged to the general public and no more for public paratransit services than the rate charged to other State human services agencies for comparable services.
(C) Transportation providers may not offer or make any payment or other form of remuneration, including any kickback, rebate, cash, gifts, or service in kind to the broker in order to influence referrals or subcontracting for non-emergency medical transportation provided to a Medicaid beneficiary.
(D) In referring or subcontracting for non-emergency medical transportation with transportation providers, a broker may not withhold necessary non-emergency medical transportation from a Medicaid beneficiary or provide non-emergency medical transportation that is not the most appropriate and a cost-effective means of transportation for that beneficiary for the purpose of financial gain, or for any other purpose.
(b) Services furnished in a religious nonmedical health care institution. Services furnished in a religious nonmedical health care institution are services furnished in an institution that:
(1) Is an institution that is described in (c)(3) of section 501 of the Internal Revenue Code of 1986 and is exempt from taxes under section 501(a) of that section.
(2) Is lawfully operated under all applicable Federal, State, and local laws and regulations.
(3) Furnishes only nonmedical nursing items and services to patients who choose to rely solely upon a religious method of healing and for whom the acceptance of medical health services would be inconsistent with their religious beliefs.
(4) Furnishes nonmedical items and services exclusively through nonmedical nursing personnel who are experienced in caring for the physical needs of nonmedical patients.
(5) Furnishes these nonmedical items and services to inpatients on a 24-hour basis.
(6) Does not furnish, on the basis of its religious beliefs, through its personnel or otherwise, medical items and services (including any medical screening, examination, diagnosis, prognosis, treatment, or the administration of drugs) for its patients.
(7) Is not owned by, is not under common ownership with, or does not have an ownership interest of 5 percent or more in, a provider of medical treatment or services and is not affiliated with a provider of medical treatment or services or with an individual who has an ownership interest or 5 percent or more in a provider of medical treatment or services. Permissible affiliations are described in paragraph (c) of this section.
(8) Has in effect a utilization review plan that meets the following criteria:
(i) Provides for the review of admissions to the institution, duration of stays, cases of continuous extended duration, and items and services furnished by the institution.
(ii) Requires that the reviews be made by a committee of the institution that included the individuals responsible for overall administration and for supervision of nursing personnel at the institution.
(iii) Provides that records be maintained of the meetings, decisions, and actions of the utilization review committee.
(iv) Meets other requirements as CMS finds necessary to establish an effective utilization review plan.
(9) Provides information CMS may require to implement section 1821 of the Act, including information relating to quality of care and coverage determinations.
(10) Meets other requirements as CMS finds necessary in the interest of the health and safety of patients who receive services in the institution. These requirements are the conditions of participation found at part 403, subpart G of this chapter.
(c) Affiliations. An affiliation is permissible for purposes of paragraph (b)(7) of this section if it is between one of the following:
(1) An individual serving as an uncompensated director, trustee, officer, or other member of the governing body of an RNHCI and a provider of medical treatment or services.
(2) An individual who is a director, trustee, officer, employee, or staff member of an RNHCI and an another individual, with whom he or she has a family relationship, who is affiliated with (or has an ownership interest in) a provider of medical treatment or services.
(3) The RNHCI and an individual or entity furnishing goods or services as a vendor to both providers of medical treatment or services and RNHCIs.
(d) Skilled nursing facility services for individuals under age 21. “Skilled nursing facility services for individuals under 21” means those services specified in § 440.40 that are provided to beneficiaries under 21 years of age.
(e) Emergency hospital services. “Emergency hospital services” means services that –
(1) Are necessary to prevent the death or serious impairment of the health of a beneficiary; and
(2) Because of the threat to the life or health of the beneficiary necessitate the use of the most accessible hospital available that is equipped to furnish the services, even if the hospital does not currently meet –
(i) The conditions for participation under Medicare; or
(ii) The definitions of inpatient or outpatient hospital services under §§ 440.10 and 440.20.
(f) [Reserved]
(g) Critical access hospital (CAH). (1) CAH services means services that (i) are furnished by a provider that meet the requirements for participation in Medicare as a CAH (see subpart F of part 485 of this chapter), and (ii) are of a type that would be paid for by Medicare when furnished to a Medicare beneficiary.
(2) Inpatient CAH services do not include nursing facility services furnished by a CAH with a swing-bed approval.
§ 440.180 Home and community-based waiver services.
(a) Description and requirements for services. “Home or community-based services” means services, not otherwise furnished under the State’s Medicaid plan, that are furnished under a waiver granted under the provisions of part 441, subpart G of this chapter.
(1) These services may consist of any or all of the services listed in paragraph (b) of this section, as those services are defined by the agency and approved by CMS.
(2) The services must meet the standards specified in § 441.302(a) of this chapter concerning health and welfare assurances.
(3) The services are subject to the limits on FFP described in § 441.310 of this chapter.
(b) Included services. Home or community-based services may include the following services, as they are defined by the agency and approved by CMS:
(1) Case management services.
(2) Homemaker services.
(3) Home health aide services.
(4) Personal care services.
(5) Adult day health services.
(6) Habilitation services.
(7) Respite care services.
(8) Day treatment or other partial hospitalization services, psychosocial rehabilitation services and clinic services (whether or not furnished in a facility) for individuals with chronic mental illness, subject to the conditions specified in paragraph (d) of this section.
(9) Other services requested by the agency and approved by CMS as cost effective and necessary to avoid institutionalization.
(c) Expanded habilitation services, effective October 1, 1997 – (1) General rule. Expanded habilitation services are those services specified in paragraph (c)(2) of this section.
(2) Services included. The agency may include as expanded habilitation services the following services:
(i) Prevocational services, which means services that prepare an individual for paid or unpaid employment and that are not job-task oriented but are, instead, aimed at a generalized result. These services may include, for example, teaching an individual such concepts as compliance, attendance, task completion, problem solving and safety. Prevocational services are distinguishable from noncovered vocational services by the following criteria:
(A) The services are provided to persons who are not expected to be able to join the general work force or participate in a transitional sheltered workshop within one year (excluding supported employment programs).
(B) If the beneficiaries are compensated, they are compensated at less than 50 percent of the minimum wage;
(C) The services include activities which are not primarily directed at teaching specific job skills but at underlying habilitative goals (for example, attention span, motor skills); and
(D) The services are reflected in a plan of care directed to habilitative rather than explicit employment objectives.
(ii) Educational services, which means special education and related services (as defined in sections 602(16) and (17) of the Education of the Handicapped Act) (20 U.S.C. 1401 (16 and 17)) to the extent they are not prohibited under paragraph (c)(3)(i) of this section.
(iii) Supported employment services, which facilitate paid employment, that are –
(A) Provided to persons for whom competitive employment at or above the minimum wage is unlikely and who, because of their disabilities, need intensive ongoing support to perform in a work setting;
(B) Conducted in a variety of settings, particularly worksites in which persons without disabilities are employed; and
(C) Defined as any combination of special supervisory services, training, transportation, and adaptive equipment that the State demonstrates are essential for persons to engage in paid employment and that are not normally required for nondisabled persons engaged in competitive employment.
(3) Services not included. The following services may not be included as habilitation services:
(i) Special education and related services (as defined in sections 602(16) and (17) of the Education of the Handicapped Act) (20 U.S.C. 1401 (16) and (17)) that are otherwise available to the individual through a local educational agency.
(ii) Vocational rehabilitation services that are otherwise available to the individual through a program funded under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 730).
(d) Services for the chronically mentally ill – (1) Services included. Services listed in paragraph (b)(8) of this section include those provided to individuals who have been diagnosed as being chronically mentally ill, for which the agency has requested approval as part of either a new waiver request or a renewal and which have been approved by CMS on or after October 21, 1986.
(2) Services not included. Any home and community-based service, including those indicated in paragraph (b)(8) of this section, may not be included in home and community-based service waivers for the following individuals:
(i) For individuals aged 22 through 64 who, absent the waiver, would be institutionalized in an institution for mental diseases (IMD); and, therefore, subject to the limitation on IMDs specified in § 435.1009(a)(2) of this chapter.
(ii) For individuals, not meeting the age requirements described in paragraph (d)(2)(i) of this section, who, absent the waiver, would be placed in an IMD in those States that have not opted to include the benefits defined in § 440.140 or § 440.160.
§ 440.181 Home and community-based services for individuals age 65 or older.
(a) Description of services – Home and community-based services for individuals age 65 or older means services, not otherwise furnished under the State’s Medicaid plan, or services already furnished under the State’s Medicaid plan but in expanded amount, duration, or scope, which are furnished to individuals age 65 or older under a waiver granted under the provisions of part 441, subpart H of this subchapter. Except as provided in § 441.310, the services may consist of any of the services listed in paragraph (b) of this section that are requested by the State, approved by CMS, and furnished to eligible beneficiaries. Service definitions for each service in paragraph (b) of this section must be approved by CMS.
(b) Included services. (1) Case management services.
(2) Homemaker services.
(3) Home health aide services.
(4) Personal care services.
(5) Adult day health services.
(6) Respite care services.
(7) Other medical and social services requested by the Medicaid agency and approved by CMS, which will contribute to the health and well-being of individuals and their ability to reside in a community-based care setting.
§ 440.182 State plan home and community-based services.
(a) Definition. State plan home and community-based services (HCBS) benefit means the services listed in paragraph (c) of this section when provided under the State’s plan (rather than through an HCBS waiver program) for individuals described in paragraph (b) of this section.
(b) State plan HCBS coverage. State plan HCBS can be made available to individuals who –
(1) Are eligible under the State plan and have income, calculated using the otherwise applicable rules, including any less restrictive income disregards used by the State for that group under section 1902(r)(2) of the Act, that does not exceed 150 percent of the Federal Poverty Line (FPL); and
(2) In addition to the individuals described in paragraph (b)(1) of this section, to individuals based on the State’s election of the eligibility groups described in § 435.219(b) or § 436.219(b) of this chapter.
(c) Services. The State plan HCBS benefit consists of one or more of the following services:
(1) Case management services.
(2) Homemaker services.
(3) Home health aide services.
(4) Personal care services.
(5) Adult day health services.
(6) Habilitation services, which include expanded habilitation services as specified in § 440.180(c).
(7) Respite care services.
(8) Subject to the conditions in § 440.180(d)(2), for individuals with chronic mental illness:
(i) Day treatment or other partial hospitalization services;
(ii) Psychosocial rehabilitation services;
(iii) Clinic services (whether or not furnished in a facility).
(9) Other services requested by the agency and approved by the Secretary as consistent with the purpose of the benefit.
(d) Exclusion. FFP is not available for the cost of room and board in State plan HCBS. The following HCBS costs are not considered room or board for purposes of this exclusion:
(1) The cost of temporary food and shelter provided as an integral part of respite care services in a facility approved by the State.
(2) Meals provided as an integral component of a program of adult day health services or another service and consistent with standard procedures in the State for such a program.
(3) A portion of the rent and food costs that may be reasonably attributed to an unrelated caregiver providing State plan HCBS who is residing in the same household with the recipient, but not if the recipient is living in the home of the caregiver or in a residence that is owned or leased by the caregiver.
§ 440.185 Respiratory care for ventilator-dependent individuals.
(a) “Respiratory care for ventilator-dependent individuals” means services that are not otherwise available under the State’s Medicaid plan, provided on a part-time basis in the beneficiary’s home by a respiratory therapist or other health care professional trained in respiratory therapy (as determined by the State) to an individual who –
(1) Is medically dependent on a ventilator for life support at least 6 hours per day;
(2) Has been so dependent for at least 30 consecutive days (or the maximum number of days authorized under the State plan, whichever is less) as an inpatient in one or more hospitals, NFs, or ICFs/IID;
(3) Except for the availability of respiratory care services, would require respiratory care as an inpatient in a hospital, NF, or ICF/IID and would be eligible to have payment made for inpatient care under the State plan;
(4) Has adequate social support services to be cared for at home;
(5) Wishes to be cared for at home; and
(6) Receives services under the direction of a physician who is familiar with the technical and medical components of home ventilator support, and who has medically determined that in-home care is safe and feasible for the individual.
(b) For purposes of paragraphs (a)(4) and (5) of this section, a beneficiary’s home does not include a hospital, NF, ICF/IID or other institution as defined in § 435.1010 of this chapter.
Subpart B – Requirements and Limits Applicable to All Services
§ 440.200 Basis, purpose, and scope.
(a) This subpart implements the following statutory requirements –
(1) Section 1902(a)(10), regarding comparability of services for groups of beneficiaries, and the amount, duration, and scope of services described in section 1905(a) of the Act that the State plan must provide for beneficiaries;
(2) Section 1902(a)(22)(D), which provides for standards and methods to assure quality of services;
(3) Section 1903(v)(1), which provides that no payment may be made to a State under this section for medical assistance furnished to an alien who is not lawfully admitted for permanent residence or otherwise permanently residing in the United States under color of law;
(4) Section 1903(v)(2) which provides that FFP will be available for services necessary to treat an emergency medical condition of an alien not described in paragraph (a)(3) of this section if that alien otherwise meets the eligibility requirements of the State plan;
(5) Section 1907 on observance of religious beliefs;
(6) Section 1915 on exceptions to section 1902(a)(10) and waivers of other requirements of section 1902 of the Act; and
(7) Sections 245A(h), 210 and 210A of the Immigration and Nationality Act which provide that certain aliens who are legalized may be eligible for Medicaid.
(b) The requirements and limits of this subpart apply for all services defined in subpart A of this part.
§ 440.210 Required services for the categorically needy.
(a) A State plan must specify that, at a minimum, categorically needy beneficiaries are furnished the following services:
(1) The services defined in §§ 440.10 through 440.50, 440.70, and (to the extent nurse-midwives and nurse practitioners are authorized to practice under State law or regulation) the services defined in §§ 440.165 and 440.166, respectively.
(2) Pregnancy-related services and services for other conditions that might complicate the pregnancy.
(i) Pregnancy-related services are those services that are necessary for the health of the pregnant woman and fetus, or that have become necessary as a result of the woman having been pregnant. These include, but are not limited to, prenatal care, delivery, postpartum care, and family planning services.
(ii) Services for other conditions that might complicate the pregnancy include those for diagnoses, illnesses, or medical conditions which might threaten the carrying of the fetus to full term or the safe delivery of the fetus; and
(3) For women who, while pregnant, applied for, were eligible for, and received Medicaid services under the plan, all services under the plan that are pregnancy-related for an extended postpartum period. The postpartum period begins on the last day of pregnancy and extends through the end of the month in which the 60-day period following termination of pregnancy ends.
(b) A State plan must specify that eligible aliens as defined in §§ 435.406(a) and 436.406(a) of this subchapter will receive at least the services provided in paragraph (a) of this section.
(c) A State plan must specify that aliens not defined in §§ 435.406(a) and 436.406(a) of this subchapter will only be provided the limited services specified in § 440.255.
§ 440.220 Required services for the medically needy.
(a) A State plan that includes the medically needy must specify that the medically needy are provided, as a minimum, the following services:
(1) Prenatal care and delivery services for pregnant women.
(2) Ambulatory services, as defined in the State plan, for:
(i) Individuals under age 18; and
(ii) Groups of individuals entitled to institutional services.
(3) Home health services (§ 440.70) to any individual entitled to skilled nursing facility services.
(4) If the State plan includes services in an institution for mental diseases (§ 440.140 or § 440.160) or in an intermediate care facility for Individuals with Intellectual Disabilities (§ 440.150(c)) for any group of medically needy, either of the following sets of services to each of the medically needy groups:
(i) The services contained in §§ 440.10 through 440.50 and (to the extent nurse-midwives are authorized to practice under State law or regulation) § 440.165; or
(ii) The services contained in any seven of the sections in §§ 440.10 through 440.165.
(5) For women who, while pregnant, applied for, were eligible as medically needy for, and received Medicaid services under the plan, services under the plan that are pregnancy-related (as defined in § 440.210(a)(2)(i) of this subpart) for an extended postpartum period. The postpartum period begins on the last day of pregnancy and extends through the end of the month in which the 60-day period following termination of pregnancy ends.
(b) A State plan must specify that eligible aliens as defined in §§ 435.406(a) and 436.406(a) of this subchapter will receive at least the services provided in paragraphs (a)(4) (i) and (ii) of this section.
(c) A State plan must specify that aliens defined in §§ 435.406(b), 435.406(c), 436.406(b) and 436.406(c) of this subchapter will only be provided the limited services specified in § 440.255.
§ 440.225 Optional services.
Any of the services defined in subpart A of this part that are not required under §§ 440.210 and 440.220 may be furnished under the State plan at the State’s option.
§ 440.230 Sufficiency of amount, duration, and scope.
(a) The plan must specify the amount, duration, and scope of each service that it provides for –
(1) The categorically needy; and
(2) Each covered group of medically needy.
(b) Each service must be sufficient in amount, duration, and scope to reasonably achieve its purpose.
(c) The Medicaid agency may not arbitrarily deny or reduce the amount, duration, or scope of a required service under §§ 440.210 and 440.220 to an otherwise eligible beneficiary solely because of the diagnosis, type of illness, or condition.
(d) The agency may place appropriate limits on a service based on such criteria as medical necessity or on utilization control procedures.
§ 440.240 Comparability of services for groups.
Except as limited in § 440.250 –
(a) The plan must provide that the services available to any categorically needy beneficiary under the plan are not less in amount, duration, and scope than those services available to a medically needy beneficiary; and
(b) The plan must provide that the services available to any individual in the following groups are equal in amount, duration, and scope for all beneficiaries within the group:
(1) The categorically needy.
(2) A covered medically needy group.
§ 440.250 Limits on comparability of services.
(a) Skilled nursing facility services (§ 440.40(a)) may be limited to beneficiaries age 21 or older.
(b) Early and periodic screening, diagnosis, and treatment (§ 440.40(b)) must be limited to beneficiaries under age 21.
(c) Family planning services and supplies must be limited to beneficiaries of childbearing age, including minors who can be considered sexually active and who desire the services and supplies.
(d) If covered under the plan, services to beneficiaries in institutions for mental diseases (§ 440.140) must be limited to those age 65 or older.
(e) If covered under the plan, inpatient psychiatric services (§ 440.160) must be limited to beneficiaries under age 22 as specified in § 441.151(c) of this subchapter.
(f) If Medicare benefits under Part B of title XVIII are made available to beneficiaries through a buy-in agreement or payment of premiums, or part or all of the deductibles, cost sharing or similar charges, they may be limited to beneficiaries who are covered by the agreement or payment.
(g) If services in addition to those offered under the plan are made available under a contract between the agency or political subdivision and an organization providing comprehensive health services, those additional services may be limited to beneficiaries who reside in the geographic area served by the contracting organization and who elect to receive services from it.
(h) Ambulatory services for the medically needy (§ 440.220(a)(2)) may be limited to:
(1) Individuals under age 18; and
(2) Groups of individuals entitled to institutional services.
(i) Services provided under an exception to requirements allowed under § 431.54 may be limited as provided under that exception.
(j) If CMS has approved a waiver of Medicaid requirements under § 431.55, services may be limited as provided by the waiver.
(k) If the agency has been granted a waiver of the requirements of § 440.240 (Comparability of services) in order to provide for home or community-based services under § 440.180 or § 440.181, the services provided under the waiver need not be comparable for all individuals within a group.
(l) If the agency imposes cost sharing on beneficiaries in accordance with 447.53, the imposition of cost sharing on an individual who is not exempted by one of the conditions in section 447.53(b) shall not require the State to impose copayments on an individual who is eligible for such exemption.
(m) Eligible legalized aliens who are not in the exempt groups described in §§ 435.406(a) and 436.406(a), and considered categorically needy or medically needy must be furnished only emergency services (as defined in § 440.255), and services for pregnant women as defined in section 1916(a)(2)(B) of the Social Security Act for 5 years from the date the alien is granted lawful temporary resident status.
(n) Aliens who are not lawful permanent residents, permanently residing in the United States under color of law, or granted lawful status under section 245A, 210 or 210A of the Immigration and Nationality Act, who, otherwise meet the eligibility requirements of the State plan (except for receipt of AFDC, SSI or a State Supplementary payment) must be furnished only those services necessary to treat an emergency medical condition of the alien as defined in § 440.255(c).
(o) If the agency makes respiratory care services available under § 440.185, the services need not be made available in equal amount, duration, and scope to any individual not eligible for coverage under that section. However, the services must be made available in equal amount, duration, and scope to all individuals eligible for coverage under that section.
(p) A State may provide a greater amount, duration, or scope of services to pregnant women than it provides under its plan to other individuals who are eligible for Medicaid, under the following conditions:
(1) These services must be pregnancy-related or related to any other condition which may complicate pregnancy, as defined in § 440.210(a)(2) of this subpart; and
(2) These services must be provided in equal amount, duration, and scope to all pregnant women covered under the State plan.
(q) [Reserved]
(r) If specified in the plan, targeted case management services may be limited to the following:
(1) Certain geographic areas within a State, without regard to the statewide requirements in § 431.50 of this chapter.
(2) Targeted groups specified by the State.
§ 440.255 Limited services available to certain aliens.
(a) FFP for services. FFP is available for services provided to aliens described in this section which are necessary to treat an emergency medical condition as defined in paragraphs (b)(1) and (c) or services for pregnant women described in paragraph (b)(2).
(b) Legalized aliens eligible only for emergency services and services for pregnant women. Aliens granted lawful temporary resident status, or lawful permanent resident status under sections 245A, 210 or 210A of the Immigration and Nationality Act, who are not in one of the exempt groups described in §§ 435.406(a)(3) and 436.406(a)(3) and who meet all other requirements for Medicaid will be eligible for the following services –
(1) Emergency services required after the sudden onset of a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in:
(i) Placing the patient’s health in serious jeopardy;
(ii) Serious impairment to bodily functions; or
(iii) Serious dysfunction of any bodily organ or part.
(2) Services for pregnant women which are included in the approved State plan. These services include routine prenatal care, labor and delivery, and routine post-partum care. States, at their option, may provide additional plan services for the treatment of conditions which may complicate the pregnancy or delivery.
(c) Effective January 1, 1987, aliens who are not lawfully admitted for permanent residence in the United States or permanently residing in the United States under the color of law must receive the services necessary to treat the condition defined in paragraph (1) of this section if –
(1) The alien has, after sudden onset, a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in:
(i) Placing the patient’s health in serious jeopardy;
(ii) Serious impairment to bodily functions; or
(iii) Serious dysfunction of any bodily organ or part, and
(2) The alien otherwise meets the requirements in §§ 435.406(c) and 436.406(c) of this subpart.
§ 440.260 Methods and standards to assure quality of services.
The plan must include a description of methods and standards used to assure that services are of high quality.
§ 440.262 Access and cultural conditions.
The State must have methods to promote access and delivery of services in a culturally competent manner to all beneficiaries, including those with limited English proficiency, diverse cultural and ethnic backgrounds, disabilities, and regardless of sex. These methods must ensure that beneficiaries have access to covered services that are delivered in a manner that meets their unique needs.
§ 440.270 Religious objections.
(a) Except as specified in paragraph (b) of this section, the agency may not require any individual to undergo any medical service, diagnosis, or treatment or to accept any other health service provided under the plan if the individual objects, or in the case of a child, a parent or guardian objects, on religious grounds.
(b) If a physical examination is necessary to establish eligibility based on disability or blindness, the agency may not find an individual eligible for Medicaid unless he undergoes the examination.
Subpart C – Benchmark Benefit and Benchmark-Equivalent Coverage
§ 440.300 Basis.
This subpart implements section 1937 of the Act, which authorizes States to provide for medical assistance to one or more groups of Medicaid-eligible individuals, specified by the State under an approved State plan amendment, through enrollment in coverage that provides benchmark or benchmark-equivalent health care benefit coverage.
§ 440.305 Scope.
(a) General. This subpart sets out requirements for States that elect to provide medical assistance to certain Medicaid eligible individuals within one or more groups of individuals specified by the State, through enrollment of the individuals in coverage, identified as “benchmark” or “benchmark-equivalent.” Groups must be identified by characteristics of individuals rather than the amount or level of FMAP.
(b) Limitations. A State may only apply the option in paragraph (a) of this section for an individual whose eligibility is based on an eligibility category under section 1905(a) of the Act that could have been covered under the State’s plan on or before February 8, 2006, except that individuals who are eligible under section 1902(a)(10)(A)(i)(VIII) of the Act must enroll in an Alternative Benefit Plan to receive medical assistance.
(c) A State may not require but may offer enrollment in benchmark or benchmark-equivalent coverage to the Medicaid eligible individuals listed in § 440.315. States allowing individuals to voluntarily enroll must be in compliance with the rules specified at § 440.320.
§ 440.310 Applicability.
(a) Enrollment. The State may require “full benefit eligible” individuals not excluded in § 440.315 to enroll in benchmark or benchmark-equivalent coverage.
(b) Full benefit eligible. An individual is a full benefit eligible if determined by the State to be eligible to receive the standard full Medicaid benefit package under the approved State plan if not for the application of the option available under this subpart.
§ 440.315 Exempt individuals.
Individuals within one (or more) of the following categories are exempt from mandatory enrollment in an Alternative Benefit Plan, unless the individuals are eligible under section 1902(a)(10)(A)(i)(VIII) of the Act. Individuals in that eligibility group who meet the conditions for exemption must be given the option of an Alternative Benefit Plan that includes all benefits available under the approved State plan.
(a) The individual is a pregnant woman who is required to be covered under the State plan under section 1902(a)(10)(A)(i) of the Act.
(b) The individual qualifies for medical assistance under the State plan on the basis of being blind or disabled (or being treated as being blind or disabled) without regard to whether the individual is eligible for Supplemental Security Income benefits under title XVI on the basis of being blind or disabled and including an individual who is eligible for medical assistance on the basis of section 1902(e)(3) of the Act.
(c) The individual is entitled to benefits under any part of Medicare.
(d) The individual is terminally ill and is receiving benefits for hospice care under title XIX.
(e) The individual is an inpatient in a hospital, nursing facility, intermediate care facility for individuals with intellectual disabilities, or other medical institution, and is required, as a condition of receiving services in that institution under the State plan, to spend for costs of medical care all but a minimal amount of the individual’s income required for personal needs.
(f) The individual is medically frail or otherwise an individual with special medical needs. For these purposes, the State’s definition of individuals who are medically frail or otherwise have special medical needs must at least include those individuals described in § 438.50(d)(3) of this chapter, individuals with disabling mental disorders (including children with serious emotional disturbances and adults with serious mental illness), individuals with chronic substance use disorders, individuals with serious and complex medical conditions, individuals with a physical, intellectual or developmental disability that significantly impairs their ability to perform 1 or more activities of daily living, or individuals with a disability determination based on Social Security criteria or in States that apply more restrictive criteria than the Supplemental Security Income program, the State plan criteria.
(g) The individual qualifies based on medical condition for medical assistance for long-term care services described in section 1917(c)(1)(C) of the Act.
(h) The individual is eligible and enrolled for Medicaid under § 435.145 of this chapter based on current eligibility for assistance under title IV-E of the Act or under § 435.150 of this chapter based on current status as a former foster care child.
(i) The individual is a parent or caretaker relative whom the State is required to cover under section 1931 of the Act.
(j) The individual is a woman who is receiving medical assistance by virtue of the application of sections 1902(a)(10)(ii)(XVIII) and 1902(aa) of the Act.
(k) The individual qualifies for medical assistance on the basis of section 1902(a)(10)(A)(ii)(XII) of the Act.
(l) The individual is only covered by Medicaid for care and services necessary for the treatment of an emergency medical condition in accordance with section 1903(v) of the Act.
(m) The individual is determined eligible as medically needy or eligible because of a reduction of countable income based on costs incurred for medical or other remedial care under section 1902(f) of the Act or otherwise based on incurred medical costs.
§ 440.320 State plan requirements: Optional enrollment for exempt individuals.
(a) General rule. A State plan that offers exempt individuals as defined in § 440.315 the option to enroll in benchmark or benchmark-equivalent coverage must identify in its State plan the exempt groups for which this coverage is available, and must comply with the following provisions:
(1) In any case in which the State offers an exempt individual the option to obtain coverage in a benchmark or benchmark-equivalent benefit package, the State must effectively inform the individual prior to enrollment that the enrollment is voluntary and that the individual may disenroll from the benchmark or benchmark-equivalent coverage at any time and regain immediate access to standard full Medicaid coverage under the State plan.
(2) Prior to any enrollment in benchmark or benchmark-equivalent coverage, the State must inform the exempt individual of the benefits available under the benchmark or benchmark-equivalent benefit package and the costs under such a package and provide a comparison of how they differ from the benefits and costs available under the standard full Medicaid program. The State must also inform exempt individuals that they may disenroll at any time and provide them with information about the process for disenrolling.
(3) The State must document in the exempt individual’s eligibility file that the individual was informed in accordance with this section prior to enrollment, was given ample time to arrive at an informed choice, and voluntarily and affirmatively chose to enroll in the benchmark or benchmark-equivalent benefit package.
(4) For individuals who the State determines have become exempt individuals while enrolled in benchmark or benchmark-equivalent coverage, the State must comply with the requirements in paragraphs (a)(1) through (a)(3) of this section above within 30 days after such determination.
(b) Disenrollment Process. (1) The State must act upon requests promptly for exempt individuals who choose to disenroll from benchmark or benchmark-equivalent coverage.
(2) The State must have a process in place to ensure that exempt individuals have access to all standard State plan services while disenrollment requests are being processed.
(3) The State must maintain data that tracks the total number of beneficiaries that have voluntarily enrolled in a benchmark plan and the total number of individuals that have disenrolled from the benchmark plan.
§ 440.325 State plan requirements: Coverage and benefits.
Subject to requirements in §§ 440.345 and 440.365, States may elect to provide any of the following types of health benefits coverage:
(a) Benchmark coverage in accordance with § 440.330.
(b) Benchmark-equivalent coverage in accordance with § 440.335.
§ 440.330 Benchmark health benefits coverage.
Benchmark coverage is health benefits coverage that is equal to the coverage under one or more of the following benefit plans:
(a) Federal Employees Health Benefit Plan Equivalent Coverage (FEHBP – Equivalent Health Insurance Coverage). A benefit plan equivalent to the standard Blue Cross/Blue Shield preferred provider option service benefit plan that is described in and offered to Federal employees under 5 U.S.C. 8903(1).
(b) State employee coverage. Health benefits coverage that is offered and generally available to State employees in the State.
(c) Health maintenance organization (HMO) plan. A health insurance plan that is offered through an HMO, (as defined in section 2791(b)(3) of the Public Health Service Act) that has the largest insured commercial, non-Medicaid enrollment in the State.
(d) Secretary-approved coverage. Any other health benefits coverage that the Secretary determines, upon application by a State, provides appropriate coverage to meet the needs of the population provided that coverage. Secretarial coverage may include benefits of the type that are available under 1 or more of the standard benchmark coverage packages defined in paragraphs (a) through (c) of this section, State plan benefits described in section 1905(a), 1915(i), 1915(j), 1915(k) or section 1945 of the Act, any other Medicaid State plan benefits enacted under title XIX, or benefits available under base benchmark plans described in 45 CFR 156.100.
(1) States wishing to elect Secretary-approved coverage should submit a full description of the proposed coverage (including a benefit-by-benefit comparison of the proposed plan to one or more of the three other benchmark plans specified above or to the State’s standard full Medicaid coverage package), and of the population to which coverage will be offered. In addition, the State should submit any other information that will be relevant to a determination that the proposed health benefits coverage will be appropriate for the proposed population.
(2) [Reserved]
§ 440.335 Benchmark-equivalent health benefits coverage.
(a) Aggregate actuarial value. Benchmark-equivalent coverage is health benefits coverage that has an aggregate actuarial value, as determined under § 440.340, that is at least actuarially equivalent to the coverage under one of the benchmark benefit packages described in § 440.330 for the identified Medicaid population to which it will be offered.
(b) Required coverage. Benchmark-equivalent health benefits coverage must include coverage for the following categories of services:
(1) Inpatient and outpatient hospital services.
(2) Physicians’ surgical and medical services.
(3) Laboratory and x-ray services.
(4) Well-baby and well-child care, including age-appropriate immunizations.
(5) Emergency services.
(6) Family planning services and supplies and other appropriate preventive services, as designated by the Secretary.
(7) Prescription drugs.
(8) Mental health benefits.
(c) Additional coverage. (1) In addition to the types of benefits of this section, benchmark-equivalent coverage may include coverage for any additional benefits of the type which are covered in 1 or more of the standard benchmark coverage packages described in § 440.330(a) through (c) or State plan benefits, described in section 1905(a), 1915(i), 1915(j), 1915(k) and 1945 of the Act, any other Medicaid State plan benefits enacted under title XIX, or benefits available under base-benchmark plans described in 45 CFR 156.100.
(2) If the benchmark coverage package used by the State for purposes of comparison in establishing the aggregate actuarial value of the benchmark-equivalent package includes any of the following four categories of services: Prescription drugs; mental health services; vision services; and hearing services; then the actuarial value of the coverage for each of these categories of service in the benchmark-equivalent coverage package must be at least 75 percent of the actuarial value of the coverage for that category of service in the benchmark plan used for comparison by the State.
§ 440.340 Actuarial report for benchmark-equivalent coverage.
(a) A State plan amendment that would provide for benchmark-equivalent health benefits coverage described in § 440.335, must include an actuarial report. The actuarial report must contain an actuarial opinion that the benchmark-equivalent health benefits coverage meets the actuarial requirements set forth in § 440.335. The report must also specify the benchmark coverage used for comparison.
(b) The actuarial report must state that it was prepared according to the following requirements:
(1) By an individual who is a member of the American Academy of Actuaries (AAA).
(2) Using generally accepted actuarial principles and methodologies of the AAA.
(3) Using a standardized set of utilization and price factors.
(4) Using a standardized population that is representative of the population involved.
(5) Applying the same principles and factors in comparing the value of different coverage (or categories of services).
(6) Without taking into account any differences in coverage based on the method of delivery or means of cost control or utilization used.
(7) Taking into account the ability of the State to reduce benefits by considering the increase in actuarial value of health benefits coverage offered under the State plan that results from the limitations on cost sharing (with the exception of premiums) under that coverage.
(c) The actuary preparing the opinion must select and specify the standardized set of factors and the standardized population to be used in paragraphs (b)(3) and (b)(4) of this section.
(d) The State must provide sufficient detail to explain the basis of the methodologies used to estimate the actuarial value or, if requested by CMS, to replicate the State’s result.
§ 440.345 EPSDT and other required benefits.
(a) The State must assure access to early and periodic screening, diagnostic and treatment (EPSDT) services through benchmark or benchmark-equivalent plan benefits or as additional benefits provided by the State for any child under 21 years of age eligible under the State plan in a category under section 1902(a)(10)(A) of the Act.
(1) Sufficiency. Any additional EPSDT benefits not provided by the benchmark or benchmark-equivalent plan must be sufficient so that, in combination with the benchmark or benchmark-equivalent benefits plan, these individuals have access to the full EPSDT benefit.
(2) State Plan requirement. The State must include a description of how the additional benefits will be provided, how access to additional benefits will be coordinated and how beneficiaries and providers will be informed of these processes in order to ensure that these individuals have access to the full EPSDT benefit.
(b) Family planning. Alternative Benefit Plans must include coverage for family planning services and supplies.
(c) Mental health parity. Alternative Benefit Plans that provide both medical and surgical benefits, and mental health or substance use disorder benefits, must comply with the Mental Health Parity and Addiction Equity Act.
(d) Essential health benefits. Alternative Benefit Plans must include at least the essential health benefits described in § 440.347, and include all updates or modifications made thereafter by the Secretary to the definition of essential health benefits.
(e) Updating of benefits. States are not required to update Alternative Benefit Plans that have been determined to include essential health benefits as of January 1, 2014, until December 31, 2015. States will adhere to future guidance for updating benefits beyond that date, as described by the Secretary.
(f) Covered outpatient drugs. To the extent states pay for covered outpatient drugs under their Alternative Benefit Plan’s prescription drug coverage, states must comply with the requirements under section 1927 of the Act.
§ 440.347 Essential health benefits.
(a) Alternative Benefit Plans must contain essential health benefits coverage, including benefits in each of the following ten categories, consistent with the applicable requirements set forth in 45 CFR part 156:
(1) Ambulatory patient services;
(2) Emergency services;
(3) Hospitalization;
(4) Maternity and newborn care;
(5) Mental health and substance use disorders, including behavioral health treatment;
(6) Prescription drugs;
(7) Rehabilitative and habilitative services and devices, except that such coverage shall be in accordance with § 440.347(d);
(8) Laboratory services;
(9) Preventive and wellness services and chronic disease management; and
(10) Pediatric services, including oral and vision care, in accordance with section 1905(r) of the Act.
(b) Alternative Benefit Plans must include essential health benefits in one of the state options for establishing essential health benefits described in 45 CFR 156.100, subject to supplementation under 45 CFR 156.110(b) and substitution as permitted under 45 CFR 156.115(b).
(c) States may select more than one base benchmark option for establishing essential health benefits in keeping with the flexibility for States to implement more than one Alternative Benefit Plan for targeted populations.
(d) To comply with paragraph (a) of this section, Alternative Benefit Plan coverage of habilitative services and devices will be based on the habilitative services and devices that are in the applicable base benchmark plan. If habilitative services and devices are not in the applicable base benchmark plan, the state will define habilitative services and devices required as essential health benefits using the methodology set forth in 45 CFR 156.115(a)(5).
(e) Essential health benefits cannot be based on a benefit design or implementation of a benefit design that discriminates based on an individual’s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life or other health conditions.
§ 440.350 Employer-sponsored insurance health plans.
(a) A State may provide benchmark or benchmark-equivalent coverage by obtaining employer sponsored health plans (either alone or with additional services covered separately under Medicaid) for individuals with access to private health insurance.
(b) The State must assure that employer sponsored plans meet the requirements of benchmark or benchmark-equivalent coverage, including the economy and efficiency requirements at § 440.370.
(c) A State may provide benchmark or benchmark-equivalent coverage through a combination of employer sponsored health plans and additional benefit coverage provided by the State that wraps around the employer sponsored health plan which, in the aggregate, results in benchmark or benchmark-equivalent level of coverage for those individuals.
Payment of premiums by the State, net of beneficiary contributions, to obtain benchmark or benchmark-equivalent benefit coverage on behalf of beneficiaries under this section will be treated as medical assistance under section 1905(a) of the Act.
§ 440.360 State plan requirements for providing additional services.
In addition to the requirements of § 440.345, the State may elect to provide additional coverage to individuals enrolled in Alternative Benefit Plans, except that the coverage for individuals eligible only through section 1902(a)(10)(A)(i)(VIII) of the Act is limited to benchmark or benchmark-equivalent coverage. The State must describe the populations covered and the payment methodology for these benefits. Additional benefits must be benefits of the type, which are covered in 1 or more of the standard benchmark coverage packages described in § 440.330(a) through (c) or State plan benefits including those described in sections 1905(a), 1915(i), 1915(j), 1915(k) and 1945 of the Act and any other Medicaid State plan benefits enacted under title XIX, or benefits available under base benchmark plans described in 45 CFR 156.100.
§ 440.365 Coverage of rural health clinic and federally qualified health center (FQHC) services.
If a State provides benchmark or benchmark-equivalent coverage to individuals, it must assure that the individual has access, through that coverage or otherwise, to rural health clinic services and FQHC services as defined in subparagraphs (B) and (C) of section 1905(a)(2) of the Act. Payment for these services must be made in accordance with the payment provisions of section 1902(bb) of the Act.
§ 440.370 Economy and efficiency.
Benchmark and benchmark-equivalent coverage and any additional benefits must be provided in accordance with Federal upper payment limits, procurement requirements and other economy and efficiency principles that would otherwise be applicable to the services or delivery system through which the coverage and benefits are obtained.
§ 440.375 Comparability.
States have the option to amend their State plan to provide benchmark or benchmark-equivalent coverage to individuals without regard to comparability.
§ 440.380 Statewideness.
States have the option to amend their State plan to provide benchmark or benchmark-equivalent coverage to individuals without regard to statewideness.
§ 440.385 Delivery of benchmark and benchmark-equivalent coverage through managed care entities.
In implementing benchmark or benchmark-equivalent benefit packages, States must comply with the managed care provisions at section 1932 of the Act and part 438 of this chapter, if benchmark and benchmark-equivalent benefits are provided through a managed care entity.
§ 440.386 Public notice.
Prior to submitting to the Centers for Medicare and Medicaid Services for approval of a State plan amendment to establish an Alternative Benefit Plan or an amendment to substantially modify an existing Alternative Benefit Plan, a state must have provided the public with advance notice of the amendment and reasonable opportunity to comment for such amendment, and have included in the notice a description of the method for assuring compliance with § 440.345 related to full access to EPSDT services, and the method for complying with the provisions of section 5006(e) of the American Recovery and Reinvestment Act of 2009.
§ 440.390 Assurance of transportation.
If a benchmark or benchmark-equivalent plan does not include transportation to and from medically necessary covered Medicaid services, the State must nevertheless assure that emergency and non-emergency transportation is covered for beneficiaries enrolled in the benchmark or benchmark-equivalent plan, as required under § 431.53 of this chapter.
§ 440.395 Parity in mental health and substance use disorder benefits.
(a) Meaning of terms. For purposes of this section, except where the context clearly indicates otherwise, the following terms have the meanings indicated:
Aggregate lifetime dollar limit means a dollar limitation on the total amount of specified benefits that may be paid under an ABP.
Alternative Benefit Plans (ABPs) mean benefit packages in one or more of the benchmark coverage packages described in §§ 440.330(a) through (c) and 440.335. Benefits may be delivered through managed care and non-managed care delivery systems. Consistent with the requirements of § 440.385, States must comply with the managed care provisions at section 1932 of the Act and part 438 of this chapter, if benchmark and benchmark-equivalent benefits are provided through a managed care entity.
Annual dollar limit means a dollar limitation on the total amount of specified benefits that may be paid in a 12-month period under an ABP.
Cumulative financial requirements are financial requirements that determine whether or to what extent benefits are provided based on accumulated amounts and include deductibles and out-of-pocket maximums. (However, cumulative financial requirements do not include aggregate lifetime or annual dollar limits because these two terms are excluded from the meaning of financial requirements.)
EPSDT means benefits defined in section 1905(r) of the Act.
Financial requirements include deductibles, copayments, coinsurance, or out-of-pocket maximums. Financial requirements do not include aggregate lifetime or annual dollar limits.
Medical/surgical benefits means benefits for items or services for medical conditions or surgical procedures, as defined by the State under the terms of the ABP and in accordance with applicable Federal and State law, but does not include mental health or substance use disorder benefits. Any condition defined by the state as being or as not being a medical/surgical condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the International Classification of Diseases (ICD) or State guidelines). Medical/surgical benefits include long term services.
Mental health benefits means benefits for items or services for mental health conditions, as defined by the State under the terms of the ABP and in accordance with applicable Federal and State law. Any condition defined by the State as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most current version of the ICD, or State guidelines. Mental health benefits include long term care services.
Substance use disorder benefits means benefits for items or services for substance use disorder, as defined by the State under the terms of the ABP and in accordance with applicable Federal and State law. Any disorder defined by the State as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the DSM, the most current version of the ICD, or State guidelines). Substance use disorder benefits include long term care services.
Treatment limitations include limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment. Treatment limitations include both quantitative treatment limitations, which are expressed numerically (such as 50 outpatient visits per year), and nonquantitative treatment limitations, which otherwise limit the scope or duration of benefits for treatment under an ABP. (See paragraph (b)(4)(ii) of this section for an illustrative list of nonquantitative treatment limitations.) A permanent exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of this definition.
(b) Parity requirements for financial requirements and treatment limitations – (1) Clarification of terms – (i) Classification of benefits. When reference is made in this paragraph (b) to a classification of benefits, the term “classification” means a classification as described in paragraph (b)(2)(ii) of this section.
(ii) Type of financial requirement or treatment limitation. When reference is made in this paragraph (b) to a type of financial requirement or treatment limitation, the reference to type means its nature. Different types of financial requirements include deductibles, copayments, coinsurance, and out-of-pocket maximums. Different types of quantitative treatment limitations include annual, episode, and lifetime day and visit limits. See paragraph (b)(4)(ii) of this section for an illustrative list of nonquantitative treatment limitations.
(iii) Level of a type of financial requirement or treatment limitation. When reference is made in this paragraph (b) to a level of a type of financial requirement or treatment limitation, level refers to the magnitude of the type of financial requirement or treatment limitation.
(2) General parity requirement – (i) General rule. A State may not apply within an ABP any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the predominant financial requirement or treatment limitation of that type applied to substantially all medical/surgical benefits in the same classification. Whether a financial requirement or treatment limitation is a predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in a classification is determined separately for each type of financial requirement or treatment limitation. The application of the rules of this paragraph (b)(2) to financial requirements and quantitative treatment limitations is addressed in paragraph (b)(3) of this section; the application of the rules of this paragraph (b)(2) to nonquantitative treatment limitations is addressed in paragraph (b)(4) of this section.
(ii) Classifications of benefits used for applying rules. ABPs must include mental health or substance use disorder benefits in every classification of benefits described in this paragraph (b)(2)(ii) in which medical/surgical benefits are provided. In determining the classification in which a particular benefit belongs, the State must apply the same reasonable standards to medical/surgical benefits and to mental health or substance use disorder benefits. To the extent that a State provides ABP benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, the rules of this paragraph (b) apply separately for that classification for all financial requirements or treatment limitations. The following classifications of benefits are the only classifications used in applying the rules of this paragraph (b):
(A) Inpatient. Benefits furnished on an inpatient basis.
(B) Outpatient. Benefits furnished on an outpatient basis. See special rules for office visits in paragraph (b)(3)(ii)(B)(1) of this section.
(C) Emergency care. Benefits for emergency care.
(D) Prescription drugs. Benefits for prescription drugs. See special rules for multi-tiered prescription drug benefits in paragraph (b)(3)(ii) of this section.
(3) Financial requirements and quantitative treatment limitations – (i) Determining “substantially all” and “predominant” – (A) Substantially all. For purposes of this paragraph (b), a type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification. If a type of financial requirement or quantitative treatment limitation does not apply to at least two-thirds of all medical/surgical benefits in a classification, then that type cannot be applied to mental health or substance use disorder benefits in that classification.
(B) Predominant – (1) If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical/surgical benefits in a classification as determined under paragraph (b)(3)(i)(A) of this section, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical/surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.
(2) If, for a type of financial requirement or quantitative treatment limitation that applies to at least two-thirds of all medical/surgical benefits in a classification, there is no single level that applies to more than one-half of medical/surgical benefits in the classification subject to the financial requirement or quantitative treatment limitation, the State may combine levels until the combination of levels applies to more than one-half of medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification. The least restrictive level within the combination is considered the predominant level of that type in the classification. (For this purpose, a State may combine the most restrictive levels first, with each less restrictive level added to the combination until the combination applies to more than one-half of the benefits subject to the financial requirement or treatment limitation.)
(C) Portion based on ABP payments. For purposes of this paragraph (b), the determination of the portion of medical/surgical benefits in a classification of benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation) is based on the dollar amount of all ABP payments for medical/surgical benefits in the classification expected to be paid under the ABP for the plan year (or for the portion of the plan year after a change in ABP benefits that affects the applicability of the financial requirement or quantitative treatment limitation).
(D) Clarifications for certain threshold requirements. For any deductible, the dollar amount of ABP payments includes all payments for claims that would be subject to the deductible if it had not been satisfied. For any out-of-pocket maximum, the dollar amount of ABP payments includes all payments associated with out-of-pocket payments that are taken into account towards the out-of-pocket maximum as well as all payments associated with out-of-pocket payments that would have been made towards the out-of-pocket maximum if it had not been satisfied. Similar rules apply for any other thresholds at which the rate of payment changes.
(E) Determining the dollar amount of ABP payments. Subject to paragraph (b)(3)(i)(D) of this section, any reasonable method may be used to determine the dollar amount expected to be paid for medical/surgical benefits subject to a financial requirement or quantitative treatment limitation (or subject to any level of a financial requirement or quantitative treatment limitation).
(ii) Special rules – (A) Multi-tiered prescription drug benefits. If a State or plan administrator applies different levels of financial requirements to different tiers of prescription drug benefits based on reasonable factors determined in accordance with the rules in paragraph (b)(4)(i) of this section (relating to requirements for nonquantitative treatment limitations) and without regard to whether a drug is generally prescribed for medical/surgical benefits or for mental health or substance use disorder benefits, the ABP satisfies the parity requirements of this paragraph (b) for prescription drug benefits. Reasonable factors include cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up/delivery.
(B) Sub-classifications permitted for office visits, separate from other outpatient services. For purposes of applying the financial requirement and treatment limitation rules of this paragraph (b), a State may divide its benefits furnished on an outpatient basis into the two sub-classifications described in this paragraph (b)(3)(ii)(B). After the sub-classifications are established, the State may not impose any financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any sub-classification that is more restrictive than the predominant financial requirement or quantitative treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in paragraph (b)(3)(i) of this section. Sub-classifications other than these special rules, such as separate sub-classifications for generalists and specialists, are not permitted. The two sub-classifications permitted under this paragraph (b)(3)(ii)(B) are:
(1) Office visits (such as physician visits); and
(2) All other outpatient items and services (such as outpatient surgery, laboratory services, or other medical items).
(iii) No separate cumulative financial requirements. A State may not apply any cumulative financial requirement for mental health or substance use disorder benefits in a classification that accumulates separately from any established for medical/surgical benefits in the same classification.
(iv) Compliance with other cost-sharing rules. States must meet the requirements of §§ 447.50 through 447.57 of this chapter when applying Medicaid cost-sharing.
(4) Nonquantitative treatment limitations – (i) General rule. A State may not impose a nonquantitative treatment limitation for mental health or substance use disorder benefits in any classification unless, under the terms of the ABP as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation for medical/surgical benefits in the classification.
(ii) Illustrative list of nonquantitative treatment limitations. Nonquantitative treatment limitations include –
(A) Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
(B) Formulary design for prescription drugs;
(C) Standards for provider admission to participate in a network, including reimbursement rates;
(D) Methods for determining usual, customary, and reasonable charges;
(E) Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols);
(F) Exclusions based on failure to complete a course of treatment; and
(G) Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits or services provided under the ABP.
(c) ABP providing EPSDT benefits. An ABP that provides EPSDT benefits is deemed to be compliant with the parity requirements for financial requirements and treatment limitations with respect to individuals entitled to such benefits. Annual or lifetime limits are not permissible in EPSDT benefits.
(d) Availability of information – (1) Criteria for medical necessity determinations. The criteria for medical necessity determinations made by the State for beneficiaries served through the ABP for mental health or substance use disorder benefits must be made available by the State to any beneficiary or Medicaid provider upon request.
(2) Reason for any denial. The reason for any denial made by the State in the case of a beneficiary served through an ABP of reimbursement or payment for services for mental health or substance use disorder benefits must be made available by the State to the beneficiary.
(3) Provisions of other law. Compliance with the disclosure requirements in paragraphs (d)(1) and (2) of this section is not determinative of compliance with any other provision of applicable Federal or State law.
(e) Applicability – (1) ABPs. The requirements of this section apply to States providing benefits through ABPs. For those States providing ABPs through an MCO, PIHP, or PAHP, the rules of 42 CFR part 438, subpart K also apply, and approved contracts will be viewed as evidence of compliance with the requirements of this section.
(2) Scope. This section does not –
(i) Require a State to provide any specific mental health benefits or substance use disorder benefits; however, in providing coverage through an ABP, the State must include EHBs, including the ten EHBs as required in § 440.347, which include mental health and substance use disorder benefits; or
(ii) Affect the terms and conditions relating to the amount, duration, or scope of mental health or substance use disorder benefits under the ABP except as specifically provided in paragraph (b) of this section.
(3) State plan requirement. If a State plan provides for an ABP, the State must provide sufficient information in ABP State plan amendment requests to assure compliance with the requirements of this subpart.
(4) Compliance dates – (i) In general. ABP coverage offered by States must comply with the requirements of this section no later than October 2, 2017.
(ii) [Reserved]
PART 441 – SERVICES: REQUIREMENTS AND LIMITS APPLICABLE TO SPECIFIC SERVICES
§ 441.1 Purpose.
This part sets forth State plan requirements and limits on FFP for specific services defined in part 440 of this subchapter. Standards for payments for services provided in intermediate care facilities and skilled nursing facilities are set forth in part 442 of this subchapter.
Subpart A – General Provisions
§ 441.10 Basis.
This subpart is based on the following sections of the Act which state requirements and limits on the services specified or provide Secretarial authority to prescribe regulations relating to services:
(a) Section 1102 for end-stage renal disease (§ 441.40).
(b) Section 1138(b) for organ procurement organization services (§ 441.13(c)).
(c) Sections 1902(a)(10)(A) and 1905(a)(21) for nurse practitioner services (§ 441.22).
(d) Sections 1902(a)(10)(D) and 1905(a)(7) for home health services (§ 441.15).
(e) Section 1903(i)(1) for organ transplant procedures (§ 441.35).
(f) Section 1903(i)(5) for certain prescribed drugs (§ 441.25).
(g) Section 1903(i)(6) for prohibition (except in emergency situations) of FFP in expenditures for inpatient hospital tests that are not ordered by the attending physician or other licensed practitioner (§ 441.12).
(h) Section 1903(i)(18) for the requirement that each home health agency provide the Medicaid agency with a surety bond (§ 441.16).
(i) Section 1905(a)(4)(C) for family planning (§ 441.20).
(j) Sections 1905 (a)(12) and (e) for optometric services (§ 441.30).
(k) Section 1905(a)(17) for nurse-midwife services (§ 441.21).
(l) Section 1905(a) (following (a)(24)) for prohibition of FFP in expenditures for certain services (§ 441.13).
(m) Section 1905(a)(19) and 1915(g) of the Act for case management services as set forth in § 441.18 and section 8435 of the Technical and Miscellaneous Revenue Act of 1988.
§ 441.11 Continuation of FFP for institutional services.
(a) Basic conditions for continuation of FFP. FFP may be continued for up to 30 days after the effective date of termination or expiration of a provider agreement, if the following conditions are met:
(1) The Medicaid payments are for beneficiaries admitted to the facility before the effective date of termination or expiration.
(2) The State agency is making reasonable efforts to transfer those beneficiaries to other facilities or to alternate care.
(b) When the 30-day period begins. The 30-day period begins on one of the following:
(1) The effective date of termination of the facility’s provider agreement by CMS;
(2) The effective date of termination of the facility’s Medicaid provider agreement by the Medicaid agency on its own volition; or
(3) In the case of an ICF/IID, the later of –
(i) The effective date of termination or nonrenewal of the facility’s provider agreement by the Medicaid agency on its own volition; or
(ii) The date of issuance of an administrative hearing decision that upholds the agency’s termination or nonrenewal action.
(c) Services for which FFP may be continued. FFP may be continued for any of the following services, as defined in subpart A of part 440 of this chapter:
(1) Inpatient hospital services.
(2) Inpatient hospital services for individuals age 65 or older in an institution for mental diseases.
(3) Nursing facility services for individuals age 21 or older.
(4) Nursing facility services for individuals age 65 or older in an institution for mental diseases.
(5) Inpatient psychiatric services for individuals under age 21.
(6) Nursing facility services for individuals under 21.
(7) Intermediate care facility services for individuals with intellectual disabilities.
§ 441.12 Inpatient hospital tests.
Except in an emergency situation (see § 440.170(e)(1) of this chapter for definition), FFP is not available in expenditures for inpatient hospital tests unless the tests are specifically ordered by the attending physician or other licensed practitioner, acting within the scope of practice as defined under State law, who is responsible for the diagnosis or treatment of a particular patient’s condition.
§ 441.13 Prohibitions on FFP: Institutionalized individuals.
(a) FFP is not available in expenditures for services for –
(1) Any individual who is in a public institution, as defined in § 435.1010 of this chapter; or
(2) Any individual who is under age 65 and is in an institution for mental diseases, except an individual who is under age 22 and receiving inpatient psychiatric services under subpart D of this part.
(b) With the exception of active treatment services (as defined in § 483.440(a) of this chapter for residents of ICFs/IID and in § 441.154 for individuals under age 21 receiving inpatient psychiatric services), payments to institutions for Individuals with Intellectual Disabilities or persons with related conditions and to psychiatric facilities or programs providing inpatient psychiatric services to individuals under age 21 may not include reimbursement for formal educational services or for vocational services. Formal educational services relate to training in traditional academic subjects. Subject matter rather than setting, time of day, or class size determines whether a service is educational. Traditional academic subjects include, but are not limited to, science, history, literature, foreign languages, and mathematics. Vocational services relate to organized programs that are directly related to the preparation of individuals for paid or unpaid employment. An example of vocational services is time-limited vocational training provided as a part of a regularly scheduled class available to the general public.
(c) FFP is not available in expenditures for services furnished by an organ procurement organization on or after April 1, 1988, that does not meet the requirements of part 486 subpart G of this chapter.
§ 441.15 Home health services.
With respect to the services defined in § 440.70 of this subchapter, a State plan must provide that –
(a) Home health services include, as a minimum –
(1) Nursing services;
(2) Home health aide services; and
(3) Medical supplies, equipment, and appliances.
(b) The agency provides home health services to –
(1) Categorically needy beneficiaries age 21 or over;
(2) Categorically needy beneficiaries under age 21, if the plan provides skilled nursing facility services for them; individuals; and
(3) Medically needy beneficiaries to whom skilled nursing facility services are provided under the plan.
(c) The eligibility of a beneficiary to receive home health services does not depend on his need for or discharge from institutional care.
(d) The agency providing home health services meets the capitalization requirements included in § 489.28 of this chapter.
§ 441.16 Home health agency requirements for surety bonds; Prohibition on FFP.
(a) Definitions. As used in this section, unless the context indicates otherwise –
Assets includes but is not limited to any listing that identifies Medicaid beneficiaries to whom home health services were furnished by a participating or formerly participating HHA.
Participating home health agency means a “home health agency” (HHA) as that term is defined at § 440.70(d) of this subchapter.
Surety bond means one or more bonds issued by one or more surety companies under 31 U.S.C. 9304 to 9308 and 31 CFR parts 223, 224, and 225, provided the bond otherwise meets the requirements of this section.
Uncollected overpayment means an “overpayment,” as that term is defined under § 433.304 of this subchapter, plus accrued interest, for which the HHA is responsible, that has not been recouped by the Medicaid agency within a time period determined by the Medicaid agency.
(b) Prohibition. FFP is not available in expenditures for home health services under § 440.70 of this subchapter unless the home health agency furnishing these services meets the surety bond requirements of paragraphs (c) through (l) of this section.
(c) Basic requirement. Except as provided in paragraph (d) of this section, each HHA that is a Medicaid participating HHA or that seeks to become a Medicaid participating HHA must –
(1) Obtain a surety bond that meets the requirements of this section and instructions issued by the Medicaid agency; and
(2) Furnish a copy of the surety bond to the Medicaid agency.
(d) Requirement waived for Government-operated HHAs. An HHA operated by a Federal, State, local, or tribal government agency is deemed to have provided the Medicaid agency with a comparable surety bond under State law, and is therefore exempt from the requirements of this section if, during the preceding 5 years, the HHA has not had any uncollected overpayments.
(e) Parties to the bond. The surety bond must name the HHA as Principal, the Medicaid agency as Obligee, and the surety company (and its heirs, executors, administrators, successors and assignees, jointly and severally) as Surety.
(f) Authorized Surety and exclusion of surety companies. An HHA may obtain a surety bond required under this section only from an authorized Surety.
(1) An authorized Surety is a surety company that –
(i) Has been issued a Certificate of Authority by the U.S. Department of the Treasury in accordance with 31 U.S.C. 9304 to 9308 and 31 CFR parts 223, 224, and 225 as an acceptable surety on Federal bonds and the Certificate has neither expired nor been revoked;
(ii) Has not been determined by the Medicaid agency to be an unauthorized Surety for the purpose of an HHA obtaining a surety bond under this section; and
(iii) Meets other conditions, as specified by the Medicaid agency.
(2) The Medicaid agency may determine that a surety company is an unauthorized Surety under this section –
(i) If, upon request by the Medicaid agency, the surety company fails to furnish timely confirmation of the issuance of, and the validity and accuracy of information appearing on, a surety bond that an HHA presents to the Medicaid agency that shows the surety company as Surety on the bond;
(ii) If, upon presentation by the Medicaid agency to the surety company of a request for payment on a surety bond and of sufficient evidence to establish the surety company’s liability on the bond, the surety company fails to timely pay the Medicaid agency in full the amount requested up to the face amount of the bond; or
(iii) For other good cause.
(3) The Medicaid agency must specify the manner by which public notification of a determination under paragraph (f)(2) of this section is given and the effective date of the determination.
(4) A determination by the Medicaid agency that a surety company is an unauthorized Surety under paragraph (f)(2) of this section –
(i) Has effect only within the State; and
(ii) Is not a debarment, suspension, or exclusion for the purposes of Executive Order No. 12549 (3 CFR 1986 Comp., p. 189).
(g) Amount of the bond – (1) Basic rule. The amount of the surety bond must be $50,000 or 15 percent of the annual Medicaid payments made to the HHA by the Medicaid agency for home health services furnished under this subchapter for which FFP is available, whichever is greater.
(2) Computation of the 15 percent: Participating HHA. The 15 percent is computed by the Medicaid agency on the basis of Medicaid payments made to the HHA for the most recent annual period for which information is available as specified by the Medicaid agency.
(3) Computation of 15 percent: An HHA that seeks to become a participating HHA by obtaining assets or ownership interest. For an HHA that seeks to become a participating HHA by purchasing the assets or the ownership interest of a participating or formerly participating HHA, the 15 percent is computed on the basis of Medicaid payments made by the Medicaid agency to the participating or formerly participating HHA for the most recent annual period as specified by the Medicaid agency.
(4) Computation of 15 percent: Change of ownership. For an HHA that undergoes a change of ownership (as “change of ownership” is defined by the State Medicaid agency) the 15 percent is computed on the basis of Medicaid payments made by the Medicaid agency to the HHA for the most recent annual period as specified by the Medicaid agency.
(5) An HHA that seeks to become a participating HHA without obtaining assets or ownership interest. For an HHA that seeks to become a participating HHA without purchasing the assets or the ownership interest of a participating or formerly participating HHA, the 15 percent computation does not apply.
(6) Exception to the basic rule. If an HHA’s overpayment in the most recent annual period exceeds 15 percent, the State Medicaid agency may require the HHA to secure a bond in an amount up to or equal to the amount of the overpayment, provided the amount of the bond is not less than $50,000.
(7) Expiration of the 15 percent provision. For an annual surety bond, or for a rider on a continuous surety bond, that is required to be submitted on or after June 1, 2005, notwithstanding any reference in this section to 15 percent as a basis for determining the amount of the bond, the amount of the bond or rider, as applicable, must be $50,000 or such amount as the Medicaid agency specifies in accordance with paragraph (g)(6) of this section, whichever amount is greater.
(h) Additional requirements of the surety bond. The surety bond that an HHA obtains under this section must meet the following additional requirements:
(1) The bond must guarantee that, upon written demand by the Medicaid agency to the Surety for payment under the bond and the Medicaid agency furnishing to the Surety sufficient evidence to establish the Surety’s liability under the bond, the Surety will timely pay the Medicaid agency the amount so demanded, up to the stated amount of the bond.
(2) The bond must provide that the Surety is liable for uncollected overpayments, as defined in paragraph (a), provided such uncollected overpayments are determined during the term of the bond and regardless of when the overpayments took place. Further, the bond must provide that the Surety remains liable if the HHA fails to furnish a subsequent annual bond that meets the requirements of this subpart or fails to furnish a rider for a year for which a rider is required to be submitted, or if the HHA’s provider agreement terminates and that the Surety’s liability shall be based on the last bond or rider in effect for the HHA, which shall then remain in effect for an additional 2-year period.
(3) The bond must provide that the Surety’s liability to the Medicaid agency is not extinguished by any of the following:
(i) Any action by the HHA or the Surety to terminate or limit the scope or term of the bond. The Surety’s liability may be extinguished, however, when –
(A) The Surety furnishes the Medicaid agency with notice of such action not later than 10 days after receiving notice from the HHA of action by the HHA to terminate or limit the scope of the bond, or not later than 60 days before the effective date of such action by the Surety; or
(B) The HHA furnishes the Medicaid agency with a new bond that meets the requirements of both this section and the Medicaid agency.
(ii) The Surety’s failure to continue to meet the requirements of paragraph (f)(1) of this section or the Medicaid agency’s determination that the surety company is an unauthorized surety under paragraph (f)(2) of this section.
(iii) Termination of the HHA’s provider agreement described under § 431.107 of this subchapter.
(iv) Any action by the Medicaid agency to suspend, offset, or otherwise recover payments to the HHA.
(v) Any action by the HHA to –
(A) Cease operation;
(B) Sell or transfer any assets or ownership interest;
(C) File for bankruptcy; or
(D) Fail to pay the Surety.
(vi) Any fraud, misrepresentation, or negligence by the HHA in obtaining the surety bond or by the Surety (or by the Surety’s agent, if any) in issuing the surety bond, except that any fraud, misrepresentation, or negligence by the HHA in identifying to the Surety (or to the Surety’s agent) the amount of Medicaid payments upon which the amount of the surety bond is determined shall not cause the Surety’s liability to the Medicaid agency to exceed the amount of the bond.
(vii) The HHA’s failure to exercise available appeal rights under Medicaid or to assign such rights to the Surety (provided the Medicaid agency permits such rights to be assigned).
(4) The bond must provide that actions under the bond may be brought by the Medicaid agency or by an agent that the Medicaid agency designates.
(i) Term and type of bond – (1) Initial term: Each participating HHA that is not exempted by paragraph (d) of this section must submit to the State Medicaid agency a surety bond for a term beginning January 1, 1998. If an annual bond is submitted for the initial term it must be effective for an annual period specified by the State Medicaid agency.
(2) Type of bond. The type of bond required to be submitted by an HHA, under this section, may be either –
(i) An annual bond (that is, a bond that specifies an effective annual period that corresponds to an annual period specified by the Medicaid agency); or
(ii) A continuous bond (that is, a bond that remains in full force and effect from term to term unless it is terminated or canceled as provided for in the bond or as otherwise provided by law) that is updated by the Surety for a particular period, via the issuance of a “rider,” when the bond amount changes. For the purposes of this section, “Rider” means a notice issued by a Surety that a change to a bond has occurred or will occur. If the HHA has submitted a continuous bond and there is no increase or decrease in the bond amount, no action is necessary by the HHA to submit a rider as long as the continuous bond remains in full force and effect.
(3) HHA that seeks to become a participating HHA. (i) An HHA that seeks to become a participating HHA must submit a surety bond before a provider agreement described under § 431.107 of this subchapter can be entered into.
(ii) An HHA that seeks to become a participating HHA through the purchase or transfer of assets or ownership interest of a participating or formerly participating HHA must also ensure that the surety bond is effective from the date of such purchase or transfer.
(4) Change of ownership. An HHA that undergoes a change of ownership (as “change of ownership” is defined by the State Medicaid agency) must submit the surety bond to the State Medicaid agency by such time and for such term as is specified in the instructions of the State Medicaid agency.
(5) Government-operated HHA that loses its waiver. A government-operated HHA that, as of January 1, 1998, meets the criteria for waiver of the requirements of this section but thereafter is determined by the Medicaid agency to not meet such criteria, must submit a surety bond to the Medicaid agency within 60 days after it receives notice from the Medicaid agency that it does not meet the criteria for waiver.
(6) Change of Surety. An HHA that obtains a replacement surety bond from a different Surety to cover the remaining term of a previously obtained bond must submit the new surety bond to the Medicaid agency within 60 days (or such earlier date as the Medicaid agency may specify) of obtaining the bond from the new Surety for a term specified by the Medicaid agency.
(j) Effect of failure to obtain, maintain, and timely file a surety bond. (1) The Medicaid agency must terminate the HHA’s provider agreement if the HHA fails to obtain, file timely, and maintain a surety bond in accordance with this section and the Medicaid agency’s instructions.
(2) The Medicaid agency must refuse to enter into a provider agreement with an HHA if an HHA seeking to become a participating HHA fails to obtain and file timely a surety bond in accordance with this section and instructions issued by the State Medicaid agency.
(k) Evidence of compliance. (1) The Medicaid agency may at any time require an HHA to make a specific showing of being in compliance with the requirements of this section and may require the HHA to submit such additional evidence as the Medicaid agency considers sufficient to demonstrate the HHA’s compliance.
(2) The Medicaid agency may terminate the HHA’s provider agreement or refuse to enter into a provider agreement if an HHA fails to timely furnish sufficient evidence at the Medicaid agency’s request to demonstrate compliance with the requirements of this section.
(l) Surety’s standing to appeal Medicaid determinations. The Medicaid agency must establish procedures for granting appeal rights to Sureties.
(m) Effect of conditions of payment. If a Surety has paid the Medicaid agency an amount on the basis of liability incurred under a bond obtained by an HHA under this section, and the Medicaid agency subsequently collects from the HHA, in whole or in part, on such overpayment that was the basis for the Surety’s liability, the Medicaid agency must reimburse the Surety such amount as the Medicaid agency collected from the HHA, up to the amount paid by the Surety to the Medicaid agency, provided the Surety has no other liability under the bond.
§ 441.17 Laboratory services.
(a) The plan must provide for payment of laboratory services as defined in § 440.30 of this subchapter if provided by –
(1) An independent laboratory that meets the requirements for participation in the Medicare program found in part 491 of this chapter;
(2) A hospital-based laboratory that meets the requirements for participation in the Medicare program found in § 482.27 of this chapter;
(3) A rural health clinic, as defined in § 491.9 of this chapter; or
(4) A skilled nursing facility – based clinical laboratory, as defined in part 491 of this chapter.
(b) Except as provided under paragraph (c), if a laboratory or other entity is requesting payment under Medicaid for testing for the presence of the human immunodeficiency virus (HIV) antibody or for the isolation and identification of the HIV causative agent as described in part 491 of this chapter, the laboratory records must contain the name and other identification of the person from whom the specimen was taken.
(c) An agency may choose to approve the use of alternative identifiers, in place of the requirement for patient’s name, in paragraph (b) of this section for HIV antibody or causative agent testing of Medicaid beneficiaries.
§ 441.18 Case management services.
(a) If a State plan provides for case management services (including targeted case management services), as defined in § 440.169 of this chapter, the State must meet the following requirements:
(1) Allow individuals the free choice of any qualified Medicaid provider within the specified geographic area identified in the plan when obtaining case management services, in accordance with § 431.51 of this chapter, except as specified in paragraph (b) of this section.
(2) Not use case management (including targeted case management) services to restrict an individual’s access to other services under the plan.
(3) Not compel an individual to receive case management services, condition receipt of case management (or targeted case management) services on the receipt of other Medicaid services, or condition receipt of other Medicaid services on receipt of case management (or targeted case management) services.
(4) Indicate in the plan that case management services provided in accordance with section 1915(g) of the Act will not duplicate payments made to public agencies or private entities under the State plan and other program authorities;
(5) [Reserved]
(6) Prohibit providers of case management services from exercising the agency’s authority to authorize or deny the provision of other services under the plan.
(7) Require providers to maintain case records that document for all individuals receiving case management as follows:
(i) The name of the individual.
(ii) The dates of the case management services.
(iii) The name of the provider agency (if relevant) and the person providing the case management service.
(iv) The nature, content, units of the case management services received and whether goals specified in the care plan have been achieved.
(v) Whether the individual has declined services in the care plan.
(vi) The need for, and occurrences of, coordination with other case managers.
(vii) A timeline for obtaining needed services.
(viii) A timeline for reevaluation of the plan.
(8) Include a separate plan amendment for each group receiving case management services that includes the following:
(i) Defines the group (and any subgroups within the group) eligible to receive the case management services.
(ii) Identifies the geographic area to be served.
(iii) Describes the case management services furnished, including the types of monitoring.
(iv) Specifies the frequency of assessments and monitoring and provides a justification for those frequencies.
(v) Specifies provider qualifications that are reasonably related to the population being served and the case management services furnished.
(vi) [Reserved]
(vii) Specifies if case management services are being provided to Medicaid-eligible individuals who are in institutions (except individuals between ages 22 and 64 who are served in IMDs or individuals who are inmates of public institutions).
(9) Include a separate plan amendment for each subgroup within a group if any of the following differs among the subgroups:
(i) The case management services to be furnished;
(ii) The qualifications of case management providers; or
(iii) The methodology under which case management providers will be paid.
(b) If the State limits qualified providers of case management services for target groups of individuals with developmental disability or chronic mental illness, in accordance with § 431.51(a)(4) of this chapter, the plan must identify any limitations to be imposed on the providers and specify how these limitations enable providers to ensure that individuals within the target groups receive needed services.
(c) Case management does not include, and FFP is not available in expenditures for, services defined in § 440.169 of this chapter when the case management activities constitute the direct delivery of underlying medical, educational, social, or other services to which an eligible individual has been referred, including for foster care programs, services such as, but not limited to, the following:
(1) Research gathering and completion of documentation required by the foster care program.
(2) Assessing adoption placements.
(3) Recruiting or interviewing potential foster care parents.
(4) Serving legal papers.
(5) Home investigations.
(6) Providing transportation.
(7) Administering foster care subsidies.
(8) Making placement arrangements.
(d) After the State assesses whether the activities are within the scope of the case management benefit (applying the limitations described above), in determining the allowable costs for case management (or targeted case management) services that are also furnished by another federally-funded program, the State must use cost allocation methodologies, consistent with OMB Circular A-87, CMS policies, or any subsequent guidance and reflected in an approved cost allocation plan.
§ 441.20 Family planning services.
For beneficiaries eligible under the plan for family planning services, the plan must provide that each beneficiary is free from coercion or mental pressure and free to choose the method of family planning to be used.
§ 441.21 Nurse-midwife services.
If a State plan, under § 440.210 or 440.220 of this subchapter, provides for nurse-midwife services, as defined in § 440.165, the plan must provide that the nurse-midwife may enter into an independent provider agreement, without regard to whether the nurse-midwife is under the supervision of, or associated with, a physician or other health care provider.
§ 441.22 Nurse practitioner services.
With respect to nurse practitioner services that meet the definition of § 440.166(a) and the requirements of either § 440.166(b) or § 440.166(c), the State plan must meet the following requirements:
(a) Provide that nurse practitioner services are furnished to the categorically needy.
(b) Specify whether those services are furnished to the medically needy.
(c) Provide that services furnished by a nurse practitioner, regardless of whether the nurse practitioner is under the supervision of, or associated with, a physician or other health care provider, may –
(1) Be reimbursed by the State Medicaid agency through an independent provider agreement between the State and the nurse practitioner; or
(2) Be paid through the employing provider.
§ 441.25 Prohibition on FFP for certain prescribed drugs.
(a) FFP is not available in expenditures for the purchase or administration of any drug product that meets all of the following conditions:
(1) The drug product was approved by the Food and Drug Administration (FDA) before October 10, 1962.
(2) The drug product is available only through prescription.
(3) The drug product is the subject of a notice of opportunity for hearing issued under section 505(e) of the Federal Food, Drug, and Cosmetic Act and published in the
(4) The drug product is presently not subject to a determination by FDA, made under its efficacy review program (see 21 CFR 310.6 for an explanation of this program), that there is a compelling justification of the drug product’s medical need.
(b) FFP is not available in expenditures for the purchase or administration of any drug product that is identical, related, or similar, as defined in 21 CFR 310.6, to a drug product that meets the conditions of paragraph (a) of this section.
§ 441.30 Optometric services.
The plan must provide for payment of optometric services as physician services, whether furnished by an optometrist or a physician, if –
(a) The plan does not provide for payment for services provided by an optometrist, except for eligibility determinations under §§ 435.531 and 436.531 of this subchapter, but did provide for those services at an earlier period; and
(b) The plan specifically provides that physicians’ services include services an optometrist is legally authorized to perform.
§ 441.35 Organ transplants.
(a) FFP is available in expenditures for services furnished in connection with organ transplant procedures only if the State plan includes written standards for the coverage of those procedures, and those standards provide that –
(1) Similarly situated individuals are treated alike; and
(2) Any restriction on the practitioners or facilities that may provide organ transplant procedures is consistent with the accessibility of high quality care to individuals eligible for the procedures under the plan.
(b) Nothing in paragraph (a) permits a State to provide, under its plan, services that are not reasonable in amount, duration, and scope to achieve their purpose.
§ 441.40 End-stage renal disease.
FFP in expenditures for services described in subpart A of part 440 is available for facility treatment of end-stage renal disease only if the facility has been approved by the Secretary to furnish those services under Medicare. This requirement for approval of the facility does not apply under emergency conditions permitted under Medicare (see § 482.2 of this chapter).
Subpart B – Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) of Individuals Under Age 21
§ 441.50 Basis and purpose.
This subpart implements sections 1902(a)(43) and 1905(a)(4)(B) of the Social Security Act, by prescribing State plan requirements for providing early and periodic screening and diagnosis of eligible Medicaid beneficiaries under age 21 to ascertain physical and mental defects, and providing treatment to correct or ameliorate defects and chronic conditions found.
§ 441.55 State plan requirements.
A State plan must provide that the Medicaid agency meets the requirements of §§ 441.56-441.62, with respect to EPSDT services, as defined in § 440.40(b) of this subchapter.
§ 441.56 Required activities.
(a) Informing. The agency must –
(1) Provide for a combination of written and oral methods designed to inform effectively all EPSDT eligible individuals (or their families) about the EPSDT program.
(2) Using clear and nontechnical language, provide information about the following –
(i) The benefits of preventive health care;
(ii) The services available under the EPSDT program and where and how to obtain those services;
(iii) That the services provided under the EPSDT program are without cost to eligible individuals under 18 years of age, and if the agency chooses, to those 18 or older, up to age 21, except for any enrollment fee, premium, or similar charge that may be imposed on medically needy beneficiaries; and
(iv) That necessary transportation and scheduling assistance described in § 441.62 of this subpart is available to the EPSDT eligible individual upon request.
(3) Effectively inform those individuals who are blind or deaf, or who cannot read or understand the English language.
(4) Provide assurance to CMS that processes are in place to effectively inform individuals as required under this paragraph, generally, within 60 days of the individual’s initial Medicaid eligibility determination and in the case of families which have not utilized EPSDT services, annually thereafter.
(b) Screening. (1) The agency must provide to eligible EPSDT beneficiaries who request it, screening (periodic comprehensive child health assessments); that is, regularly scheduled examinations and evaluations of the general physical and mental health, growth, development, and nutritional status of infants, children, and youth. (See paragraph (c)(3) of this section for requirements relating to provision of immunization at the time of screening.) As a minimum, these screenings must include, but are not limited to:
(i) Comprehensive health and developmental history.
(ii) Comprehensive unclothed physical examination.
(iii) Appropriate vision testing.
(iv) Appropriate hearing testing.
(v) Appropriate laboratory tests.
(vi) Dental screening services furnished by direct referral to a dentist for children beginning at 3 years of age. An agency may request from CMS an exception from this age requirement (within an outer limit of age 5) for a two year period and may request additional two year exceptions. If an agency requests an exception, it must demonstrate to CMS’s satisfaction that there is a shortage of dentists that prevents the agency from meeting the age 3 requirement.
(2) Screening services in paragraph (b)(1) of this section must be provided in accordance with reasonable standards of medical and dental practice determined by the agency after consultation with recognized medical and dental organizations involved in child health care.
(c) Diagnosis and treatment. In addition to any diagnostic and treatment services included in the plan, the agency must provide to eligible EPSDT beneficiaries, the following services, the need for which is indicated by screening, even if the services are not included in the plan –
(1) Diagnosis of and treatment for defects in vision and hearing, including eyeglasses and hearing aids;
(2) Dental care, at as early an age as necessary, needed for relief of pain and infections, restoration of teeth and maintenance of dental health; and
(3) Appropriate immunizations. (If it is determined at the time of screening that immunization is needed and appropriate to provide at the time of screening, then immunization treatment must be provided at that time.)
(d) Accountability. The agency must maintain as required by §§ 431.17 and 431.18 –
(1) Records and program manuals;
(2) A description of its screening package under paragraph (b) of this section; and
(3) Copies of rules and policies describing the methods used to assure that the informing requirement of paragraph (a)(1) of this section is met.
(e) Timeliness. With the exception of the informing requirements specified in paragraph (a) of this section, the agency must set standards for the timely provision of EPSDT services which meet reasonable standards of medical and dental practice, as determined by the agency after consultation with recognized medical and dental organizations involved in child health care, and must employ processes to ensure timely initiation of treatment, if required, generally within an outer limit of 6 months after the request for screening services.
§ 441.57 Discretionary services.
Under the EPSDT program, the agency may provide for any other medical or remedial care specified in part 440 of this subchapter, even if the agency does not otherwise provide for these services to other beneficiaries or provides for them in a lesser amount, duration, or scope.
§ 441.58 Periodicity schedule.
The agency must implement a periodicity schedule for screening services that –
(a) Meets reasonable standards of medical and dental practice determined by the agency after consultation with recognized medical and dental organizations involved in child health care;
(b) Specifies screening services applicable at each stage of the beneficiary’s life, beginning with a neonatal examination, up to the age at which an individual is no longer eligible for EPSDT services; and
(c) At the agency’s option, provides for needed screening services as determined by the agency, in addition to the otherwise applicable screening services specified under paragraph (b) of this section.
§ 441.59 Treatment of requests for EPSDT screening services.
(a) The agency must provide the screening services described in § 441.56(b) upon the request of an eligible beneficiary.
(b) To avoid duplicate screening services, the agency need not provide requested screening services to an EPSDT eligible if written verification exists that the most recent age-appropriate screening services, due under the agency’s periodicity schedule, have already been provided to the eligible.
§ 441.60 Continuing care.
(a) Continuing care provider. For purposes of this subpart, a continuing care provider means a provider who has an agreement with the Medicaid agency to provide reports as required under paragraph (b) of this section and to provide at least the following services to eligible EPSDT beneficiaries formally enrolled with the provider:
(1) With the exception of dental services required under § 441.56, screening, diagnosis, treatment, and referral for follow-up services as required under this subpart.
(2) Maintenance of the beneficiary’s consolidated health history, including information received from other providers.
(3) Physicians’ services as needed by the beneficiary for acute, episodic or chronic illnesses or conditions.
(4) At the provider’s option, provision of dental services required under § 441.56 or direct referral to a dentist to provide dental services required under § 441.56(b)(1)(vi). The provider must specify in the agreement whether dental services or referral for dental services are provided. If the provider does not choose to provide either service, then the provider must refer beneficiaries to the agency to obtain those dental services required under § 441.56.
(5) At the provider’s option, provision of all or part of the transportation and scheduling assistance as required under § 441.62. The provider must specify in the agreement the transportation and scheduling assistance to be furnished. If the provider does not choose to provide some or all of the assistance, then the provider must refer beneficiaries to the agency to obtain the transportation and scheduling assistance required under § 441.62.
(b) Reports. A continuing care provider must provide to the agency any reports that the agency may reasonably require.
(c) State monitoring. If the State plan provides for agreements with continuing care providers, the agency must employ methods described in the State plan to assure the providers’ compliance with their agreements.
(d) Effect of agreement with continuing care providers. Subject to the requirements of paragraphs (a), (b), and (c) of this section, CMS will deem the agency to meet the requirements of this subpart with respect to all EPSDT eligible beneficiaries formally enrolled with the continuing care provider. To be formally enrolled, a beneficiary or beneficiary’s family agrees to use one continuing care provider to be a regular source of the described set of services for a stated period of time. Both the beneficiary and the provider must sign statements that reflect their obligations under the continuing care arrangement.
(e) If the agreement in paragraph (a) of this section does not provide for all or part of the transportation and scheduling assistance required under § 441.62, or for dental service under § 441.56, the agency must provide for those services to the extent they are not provided for in the agreement.
(a) The agency must provide referral assistance for treatment not covered by the plan, but found to be needed as a result of conditions disclosed during screening and diagnosis. This referral assistance must include giving the family or beneficiary the names, addresses, and telephone numbers of providers who have expressed a willingness to furnish uncovered services at little or no expense to the family.
(b) The agency must make available a variety of individual and group providers qualified and willing to provide EPSDT services.
(c) The agency must make appropriate use of State health agencies, State vocational rehabilitation agencies, and Title V grantees (Maternal and Child Health/Crippled Children’s Services). Further, the agency should make use of other public health, mental health, and education programs and related programs, such as Head Start, Title XX (Social Services) programs, and the Special Supplemental Food Program for Women, Infants and Children (WIC), to ensure an effective child health program.
§ 441.62 Transportation and scheduling assistance.
The agency must offer to the family or beneficiary, and provide if the beneficiary requests –
(a) Necessary assistance with transportation as required under § 431.53 of this chapter; and
(b) Necessary assistance with scheduling appointments for services.
Subpart C – Medicaid for Individuals Age 65 or Over in Institutions for Mental Diseases
§ 441.100 Basis and purpose.
This subpart implements section 1905(a)(14) of the Act, which authorizes State plans to provide for inpatient hospital services, skilled nursing services, and intermediate care facility services for individuals age 65 or older in an institution for mental diseases, and sections 1902(a)(20)(B) and (C) and 1902(a)(21), which prescribe the conditions a State must meet to offer these services. (See § 431.620 of this subchapter for regulations implementing section 1902(a)(20)(A), which prescribe interagency requirements related to these services.)
§ 441.101 State plan requirements.
A State plan that includes Medicaid for individuals age 65 or older in institutions for mental diseases must provide that the requirements of this subpart are met.
§ 441.102 Plan of care for institutionalized beneficiaries.
(a) The Medicaid agency must provide for a recorded individual plan of treatment and care to ensure that institutional care maintains the beneficiary at, or restores him to, the greatest possible degree of health and independent functioning.
(b) The plan must include –
(1) An initial review of the beneficiary’s medical, psychiatric, and social needs –
(i) Within 90 days after approval of the State plan provision for services in institutions for mental disease; and
(ii) After that period, within 30 days after the date payments are initiated for services provided a beneficiary.
(2) Periodic review of the beneficiary’s medical, psychiatric, and social needs;
(3) A determination, at least quarterly, of the beneficiary’s need for continued institutional care and for alternative care arrangements;
(4) Appropriate medical treatment in the institution; and
(5) Appropriate social services.
§ 441.103 Alternate plans of care.
(a) The agency must develop alternate plans of care for each beneficiary age 65 or older who would otherwise need care in an institution for mental diseases.
(b) These alternate plans of care must –
(1) Make maximum use of available resources to meet the beneficiary’s medical, social, and financial needs; and
(2) In Guam, Puerto Rico, and the Virgin Islands, make available appropriate social services authorized under sections 3(a)(4) (i) and (ii) or 1603(a)(4)(A) (i) and (ii) of the Act.
§ 441.105 Methods of administration.
The agency must have methods of administration to ensure that its responsibilities under this subpart are met.
§ 441.106 Comprehensive mental health program.
(a) If the plan includes services in public institutions for mental diseases, the agency must show that the State is making satisfactory progress in developing and implementing a comprehensive mental health program.
(b) The program must –
(1) Cover all ages;
(2) Use mental health and public welfare resources; including –
(i) Community mental health centers;
(ii) Nursing homes; and
(iii) Other alternatives to public institutional care; and
(3) Include joint planning with State authorities.
(c) The agency must submit annual progress reports within 3 months after the end of each fiscal year in which Medicaid is provided under this subpart.
Subpart D – Inpatient Psychiatric Services for Individuals Under Age 21 in Psychiatric Facilities or Programs
§ 441.150 Basis and purpose.
This subpart specifies requirements applicable if a State provides inpatient psychiatric services to individuals under age 21, as defined in § 440.160 of this subchapter and authorized under section 1905 (a)(16) and (h) of the Act.
§ 441.151 General requirements.
(a) Inpatient psychiatric services for individuals under age 21 must be:
(1) Provided under the direction of a physician;
(2) Provided by –
(i) A psychiatric hospital that undergoes a State survey to determine whether the hospital meets the requirements for participation in Medicare as a psychiatric hospital as specified in § 482.60 of this chapter, or is accredited by a national organization whose psychiatric hospital accrediting program has been approved by CMS; or a hospital with an inpatient psychiatric program that undergoes a State survey to determine whether the hospital meets the requirements for participation in Medicare as a hospital, as specified in part 482 of this chapter, or is accredited by a national accrediting organization whose hospital accrediting program has been approved by CMS.
(ii) A psychiatric facility that is not a hospital and is accredited by the Joint Commission on Accreditation of Healthcare Organizations, the Commission on Accreditation of Rehabilitation Facilities, the Council on Accreditation of Services for Families and Children, or by any other accrediting organization with comparable standards that is recognized by the State.
(3) Provided before the individual reaches age 21, or, if the individual was receiving the services immediately before he or she reached age 21, before the earlier of the following –
(i) The date the individual no longer requires the services; or
(ii) The date the individual reaches 22; and
(4) Certified in writing to be necessary in the setting in which the services will be provided (or are being provided in emergency circumstances) in accordance with § 441.152.
(b) Inpatient psychiatric services furnished in a psychiatric residential treatment facility as defined in § 483.352 of this chapter, must satisfy all requirements in subpart G of part 483 of this chapter governing the use of restraint and seclusion.
(c) COVID-19 Vaccination of facility staff. The facility must develop and implement policies and procedures to ensure that all staff are fully vaccinated for COVID-19. For purposes of this section, staff are considered fully vaccinated if it has been 2 weeks or more since they completed a primary vaccination series for COVID-19. The completion of a primary vaccination series for COVID-19 is defined here as the administration of a single-dose vaccine, or the administration of all required doses of a multi-dose vaccine.
(1) Regardless of clinical responsibility or resident contact, the policies and procedures must apply to the following facility staff, who provide any care, treatment, or other services for the facility and/or its residents:
(i) Facility employees;
(ii) Licensed practitioners;
(iii) Students, trainees, and volunteers; and
(iv) Individuals who provide care, treatment, or other services for the facility and/or its residents, under contract or by other arrangement.
(2) The policies and procedures of this section do not apply to the following facility staff:
(i) Staff who exclusively provide telehealth or telemedicine services outside of the facility setting and who do not have any direct contact with residents and other staff specified in paragraph (c)(1) of this section; and
(ii) Staff who provide support services for the facility that are performed exclusively outside of the center setting and who do not have any direct contact with residents and other staff specified in paragraph (c)(1) of this section.
(3) The policies and procedures must include, at a minimum, the following components:
(i) A process for ensuring all staff specified in paragraph (c)(1) of this section (except for those staff who have pending requests for, or who have been granted, exemptions to the vaccination requirements of this section, or those staff for whom COVID-19 vaccination must be temporarily delayed, as recommended by the CDC, due to clinical precautions and considerations) have received, at a minimum, a single-dose COVID-19 vaccine, or the first dose of the primary vaccination series for a multi-dose COVID-19 vaccine prior to staff providing any care, treatment, or other services for the facility and/or its residents;
(ii) A process for ensuring that all staff specified in paragraph (c)(1) of this section are fully vaccinated for COVID-19, except for those staff who have been granted exemptions to the vaccination requirements of this section, or those staff for whom COVID-19 vaccination must be temporarily delayed, as recommended by the CDC, due to clinical precautions and considerations;
(iii) A process for ensuring that the facility follows nationally recognized infection prevention and control guidelines intended to mitigate the transmission and spread of COVID-19, and which must include the implementation of additional precautions for all staff who are not fully vaccinated for COVID-19;
(iv) A process for tracking and securely documenting the COVID-19 vaccination status of all staff specified in paragraph (c)(1) of this section;
(v) A process for tracking and securely documenting the COVID-19 vaccination status of any staff who have obtained any booster doses as recommended by the CDC;
(vi) A process by which staff may request an exemption from the staff COVID-19 vaccination requirements based on an applicable Federal law;
(vii) A process for tracking and securely documenting information provided by those staff who have requested, and for whom the facility has granted, an exemption from the staff COVID-19 vaccination requirements;
(viii) A process for ensuring that all documentation, which confirms recognized clinical contraindications to COVID-19 vaccines and which supports staff requests for medical exemptions from vaccination, has been signed and dated by a licensed practitioner, who is not the individual requesting the exemption, and who is acting within their respective scope of practice as defined by, and in accordance with, all applicable State and local laws, and for further ensuring that such documentation contains:
(A) All information specifying which of the authorized COVID-19 vaccines are clinically contraindicated for the staff member to receive and the recognized clinical reasons for the contraindications; and
(B) A statement by the authenticating practitioner recommending that the staff member be exempted from the facility’s COVID-19 vaccination requirements for staff based on the recognized clinical contraindications;
(ix) A process for ensuring the tracking and secure documentation of the vaccination status of staff for whom COVID-19 vaccination must be temporarily delayed, as recommended by the CDC, due to clinical precautions and considerations, including, but not limited to, individuals with acute illness secondary to COVID-19, and individuals who received monoclonal antibodies or convalescent plasma for COVID-19 treatment; and
(x) Contingency plans for staff who are not fully vaccinated for COVID-19.
§ 441.152 Certification of need for services.
(a) A team specified in § 441.154 must certify that –
(1) Ambulatory care resources available in the community do not meet the treatment needs of the beneficiary;
(2) Proper treatment of the beneficiary’s psychiatric condition requires services on an inpatient basis under the direction of a physician; and
(3) The services can reasonably be expected to improve the beneficiary’s condition or prevent further regression so that the services will no longer be needed.
(b) The certification specified in this section and in § 441.153 satisfies the utilization control requirement for physician certification in §§ 456.60, 456.160, and 456.360 of this subchapter.
§ 441.153 Team certifying need for services.
Certification under § 441.152 must be made by terms specified as follows:
(a) For an individual who is a beneficiary when admitted to a facility or program, certification must be made by an independent team that –
(1) Includes a physician;
(2) Has competence in diagnosis and treatment of mental illness, preferably in child psychiatry; and
(3) Has knowledge of the individual’s situation.
(b) For an individual who applies for Medicaid while in the facility of program, the certification must be –
(1) Made by the team responsible for the plan of care as specified in § 441.156; and
(2) Cover any period before application for which claims are made.
(c) For emergency admissions, the certification must be made by the team responsible for the plan of care (§ 441.156) within 14 days after admission.
§ 441.154 Active treatment.
Inpatient psychiatric services must involve “active treatment”, which means implementation of a professionally developed and supervised individual plan of care, described in § 441.155 that is –
(a) Developed and implemented no later than 14 days after admission; and
(b) Designed to achieve the beneficiary’s discharge from inpatient status at the earliest possible time.
§ 441.155 Individual plan of care.
(a) “Individual plan of care” means a written plan developed for each beneficiary in accordance with §§ 456.180 and 456.181 of this chapter, to improve his condition to the extent that inpatient care is no longer necessary.
(b) The plan of care must –
(1) Be based on a diagnostic evaluation that includes examination of the medical, psychological, social, behavioral and developmental aspects of the beneficiary’s situation and reflects the need for inpatient psychiatric care;
(2) Be developed by a team of professionals specified under § 441.156 in consultation with the beneficiary; and his parents, legal guardians, or others in whose care he will be released after discharge;
(3) State treatment objectives;
(4) Prescribe an integrated program of therapies, activities, and experiences designed to meet the objectives; and
(5) Include, at an appropriate time, post-discharge plans and coordination of inpatient services with partial discharge plans and related community services to ensure continuity of care with the beneficiary’s family, school, and community upon discharge.
(c) The plan must be reviewed every 30 days by the team specified in § 441.156 to –
(1) Determine that services being provided are or were required on an inpatient basis, and
(2) Recommend changes in the plan as indicated by the beneficiary’s overall adjustment as an inpatient.
(d) The development and review of the plan of care as specified in this section satisfies the utilization control requirements for –
(1) Recertification under §§ 456.60(b), 456.160(b), and 456.360(b) of this subchapter; and
(2) Establishment and periodic review of the plan of care under §§ 456.80, 456.180, and 456.380 of this subchapter.
§ 441.156 Team developing individual plan of care.
(a) The individual plan of care under § 441.155 must be developed by an interdisciplinary team of physicians and other personnel who are employed by, or provide services to patients in, the facility.
(b) Based on education and experience, preferably including competence in child psychiatry, the team must be capable of –
(1) Assessing the beneficiary’s immediate and long-range therapeutic needs, developmental priorities, and personal strengths and liabilities;
(2) Assessing the potential resources of the beneficiary’s family;
(3) Setting treatment objectives; and
(4) Prescribing therapeutic modalities to achieve the plan’s objectives.
(c) The team must include, as a minimum, either –
(1) A Board-eligible or Board-certified psychiatrist;
(2) A clinical psychologist who has a doctoral degree and a physician licensed to practice medic