[Federal Register: August 27, 2004 (Volume 69, Number 166)]
[Notices]
[Page 52708-52710]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27au04-50]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
Notice of Hearing: Reconsideration of Disapproval of Minnesota's
Medicaid State Plan Amendment 03-06
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice of hearing.
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SUMMARY: This notice announces an administrative hearing on October 21,
2004, at 10 a.m., 233 North Michigan Avenue,Suite 600; RE-6E Board
Room; Chicago, Illinois 60601 to reconsider our decision to disapprove
Minnesota State PlanAmendment (SPA) 03-06.
DATES: Requests to participate in the hearing as a party must be
received by the presiding officer by September 13, 2004.
FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes; Presiding
Officer,CMS,Lord Baltimore Drive,Mail Stop: LB-23-20,Baltimore,
Maryland 21244,Telephone: 410-786-2055.
SUPPLEMENTARY INFORMATION: This notice announces an administrative
hearing to reconsider our decision to disapprove Minnesota's Medicaid
State Plan Amendment (SPA) 03-06. This SPA was submitted on March 31,
2003, with a proposed effective date of January 1, 2003. This amendment
would modify the State's reimbursement methodology for nursing facility
services. Specifically, it would increase a disproportionate share
nursing facility add-on made to 14 of the State's county-owned nursing
facilities. The Centers for Medicare & Medicaid Services (CMS) was
unable to approve SPA 03-06 because the State did not document that the
proposed payment methodology, in combination with funding requirements
under section 4.19 D of the State's plan, meet the conditions specified
in sections 1902(a)(2), 1902(a)(30)(A), and 1902(a)(19) of the Social
Security Act (the Act) and are consistent with the overall Federal-
state financial partnership under title XIX of the Act.
In formal requests for additional information and several
subsequent discussions, CMS asked that the State describe any transfers
of funds between providers and State or local governments, and indicate
whether the providers kept 100 percent of the total computable funds
given as Medicaid payments. The State did not provide the requested
information on transfers of funds between providers and local
governments, nor did it indicate that the providers keep 100 percent of
the total computable funds given as Medicaid payments.
The State provided information about the flow of funds between the
State and local governments and from the State to providers. However,
the State did not provide information about the flow of funds from
providers to the State or to local governments. This information is
necessary in order to validate the funding sources of the non-Federal
share of Medicaid payments and to determine the appropriateness of the
payment levels. If providers refund part or all of the Medicaid
payments to the State or its political subdivisions, the proposed
payment rate would not reflect the net expenditure by the State, and
the net non-Federal share would not meet the requirements of section
1902(a)(2) of the Act. Moreover, if such refunds are made by providers,
it is an indication that the full payment amount is not required to
ensure Medicaid beneficiaries access to the providers' services. The
result is that payments under this section of the plan would not be in
compliance with the requirement under section 1902(a)(30)(A) of the Act
that payment rates must be consistent with ``efficiency, economy, and
quality of care.''
Since the State has not provided the necessary information
regarding provider payment retention, CMS could not find that SPA 03-06
is consistent with the requirement of section 1902(a)(19) of the Act
that requires that care and services will be provided consistent with
``simplicity of administration and the best interests of the
recipients.'' The best interest of recipients is not served by a
proposed payment structure that would divert Medicaid payments from the
providers to the State and shift financial burdens from the State to
the Federal
[[Page 52709]]
Government. The best interest of recipients requires that the full
amount of Medicaid payments should be available to support access to
quality care and services. Furthermore, SPA 03-06 was not consistent
with the requirements for a State plan that are set forth in the
regulations implementing section 1902(a) of the Act. Under 42 CFR
430.10, the State plan must contain all the information necessary for
CMS to determine whether the plan can serve as a basis for Federal
financial participation (FFP) availability under section 1903(a)(1) of
the Act. CMS could not determine whether the proposed plan amendment
sets forth a payment methodology that could be a basis for FFP without
information about whether providers refund payments and, if so, whether
these refunds are offset against expenditures as an applicable credit.
Moreover, absent the requested information, the State did not
document whether the proposed payment methodology set forth under SPA
03-06 is consistent with the basic Federal and State financial
partnership of the Medicaid program set forth by the Congress. Section
1905(b) of the Act specifies how the Federal medical assistance
percentage will be calculated for states. This section clearly sets
forth how the financial partnership of the Medicaid program should
operate, including a definition of the required non-Federal
expenditure. The requested information is necessary to determine
whether the proposed payments under SPA 03-06 would accurately reflect
net expenditures with a sufficient non-Federal share consistent with
the Federal and State financial partnership set forth in section
1905(b) of the Act.
For these reasons, and after consultation with the Secretary as
required by Federal regulations at 42 CFR 430.15, CMS disapproved this
SPA.
Section 1116 of the Act and 42 CFR, part 430 establish Departmental
procedures that provide an administrative hearing for reconsideration
of a disapproval of a State plan or plan amendment. CMS is required to
publish a copy of the notice to a state Medicaid agency that informs
the agency of the time and place of the hearing and the issues to be
considered. If we subsequently notify the agency of additional issues
that will be considered at the hearing, we will also publish that
notice.
Any individual or group that wants to participate in the hearing as
a party must petition the presiding officer within 15 days after
publication of this notice, in accordance with the requirements
contained at 42 CFR 430.76(b)(2). Any interested person or organization
that wants to participate as amicus curiae must petition the presiding
officer before the hearing begins in accordance with the requirements
contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the
presiding officer will notify all participants. Therefore, based on the
reasoning set forth above, and after consultation with the Secretary as
required under 42 CFR 430.15(c)(2), CMS disapproved Minnesota SPA 03-
06.
The notice to Minnesota announcing an administrative hearing to
reconsider the disapproval of its SPA reads as follows:
Ms. Mary Kennedy, Medical Director, Department of Human Services,
444 Lafayette Road, St. Paul, MN 55155-3852.
Dear Ms. Kennedy: Minnesota submitted State Plan Amendment (SPA) 03-
06 on March 31, 2003, with a proposed effective date of January 1,
2003. This amendment proposes to modify the State's reimbursement
methodology for nursing facility services. Specifically, this
amendment increases a disproportionate share nursing facility add-on
made to 14 of the State's county-owned nursing facilities. The
Centers for Medicare & Medicaid Services (CMS) was unable to approve
SPA 03-06 because the State did not document that the proposed
payment methodology, in combination with funding requirements under
section 4.19 D of the State's plan, meet the conditions specified in
sections 1902(a)(2), 1902(a)(30)(A), and 1902(a)(19) of the Social
Security Act (the Act) and are consistent with the overall Federal-
state financial partnership under title XIX of the Act.
In formal requests for additional information and several
subsequent discussions, CMS asked that the State describe any
transfers of funds between providers and State or local governments,
and indicate whether the providers keep 100 percent of the total
computable funds given as Medicaid payments. The State did not
provide the requested information on transfers of funds between
providers and local governments, nor did it indicate that the
providers keep 100 percent of the total computable funds given as
Medicaid payments.
The State provided information about the flow of funds between
the State and local governments and from the State to providers.
However, the State did not provide information about the flow of
funds from providers to the State or to local governments. This
information is necessary in order to validate the funding sources of
the non-Federal share of Medicaid payments and to determine the
appropriateness of the payment levels. If providers refund part or
all of the Medicaid payments to the State or its political
subdivisions, the proposed payment rate would not reflect the net
expenditure by the State, and the net non-Federal share would not
meet the requirements of section 1902(a)(2) of the Act. Moreover, if
such refunds are made by providers, it is an indication that the
full payment amount is not required to ensure Medicaid beneficiaries
access to the providers' services. The result is that payments under
this section of the plan would not be in compliance with the
requirement under section 1902(a)(30)(A) of the Act that payment
rates must be consistent with ``efficiency, economy, and quality of
care.''
Since the State did not provide the necessary information
regarding provider payment retention, CMS could not find that SPA
03-06 is consistent with the requirement of section 1902(a)(19) of
the Act that care and services are consistent with ``simplicity of
administration and the best interests of the recipients.'' The best
interest of recipients is not served by a proposed payment structure
that would divert Medicaid payments from the providers to the State
and shift financial burdens from the State to the Federal
Government. The best interest of recipients requires that the full
amount of Medicaid payments are available to support access to
quality care and services. Furthermore, SPA 03-06 is not consistent
with the requirements for a State plan that are set forth in the
regulations implementing section 1902(a) of the Act. Under 42 CFR
430.10, the State plan must contain all the information necessary
for CMS to determine whether the plan can serve as a basis for
Federal financial participation (FFP) that would be available under
section 1903(a)(1) of the Act. CMS cannot determine whether the
proposed plan amendment sets forth a payment methodology that could
be a basis for FFP without information about whether providers
refund payments and, if so, whether these refunds are offset against
expenditures as an applicable credit.
Moreover, absent the requested information, the State did not
document whether the proposed payment methodology set forth under
SPA 03-06 is consistent with the basic Federal and State financial
partnership of the Medicaid program set forth by the Congress.
Section 1905(b) of the Act specifies how the Federal medical
assistance percentage will be calculated for states. This section
clearly sets forth how the financial partnership of the Medicaid
program should operate, including a definition of the required non-
Federal expenditure. The requested information is necessary to
determine whether the proposed payments under SPA 03-06 would
accurately reflect net expenditures with a sufficient non-Federal
share consistent with the Federal and State financial partnership
set forth in section 1905(b) of the Act.
For these reasons, and after consultation with the Secretary as
required by 42 CFR 430.15(c)(2), CMS disapproved Minnesota SPA 03-
06.
I am scheduling a hearing on your request for reconsideration to
be held on October 21, 2004, at 10 a.m., at 233 North Michigan
Avenue, Suite 600, RE-6E Board Room, Chicago, Illinois 60601. If
this date is not acceptable, we would be glad to set another date
that is mutually agreeable to the parties. The hearing will be
governed by the procedures prescribed at 42 CFR, part 430.
I am designating Ms. Kathleen Scully-Hayes as the presiding
officer. If these
[[Page 52710]]
arrangements present any problems, please contact the presiding
officer. In order to facilitate any communication which may be
necessary between the parties to the hearing, please notify the
presiding officer to indicate acceptability of the hearing date that
has been scheduled and provide names of the individuals who will
represent the State at the hearing. The presiding officer may be
reached at (410) 786-2055.
Sincerely,
Mark B. McClellan, M.D., Ph.D.
Section 1116 of the Social Security Act (42 U.S.C. section 1316); 42
CFR Section 430.18
(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid
Assistance Program)
Dated: August 18, 2004.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 04-19574 Filed 8-26-04; 8:45 am]
BILLING CODE 4120-03-P