[Federal Register: January 10, 2005 (Volume 70, Number 6)]
[Notices]
[Page 1719-1721]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ja05-40]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
Notice of Hearing: Reconsideration of Disapproval of Indiana
State Plan Amendment 02-021
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice of hearing.
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SUMMARY: This notice announces an administrative hearing to be held on
January 20, 2005, at 10 a.m., 233 North Michigan Avenue, Minnesota
Room, Chicago, Illinois 60601 to reconsider the decision to disapprove
Indiana State Plan Amendment (SPA) 02-021.
Closing Date: Requests to participate in the hearing as a party
must be received by the presiding officer by January 25, 2005.
FOR FURTHER INFORMATION CONTACT: Kathleen Scully-Hayes, Presiding
Officer, CMS, LB-23-20, Lord Baltimore Drive, Baltimore, Maryland
21244, Telephone: (410) 786-2055.
SUPPLEMENTARY INFORMATION: This notice announces an administrative
hearing to reconsider the decision to disapprove Indiana Medicaid State
Plan Amendment (SPA) 02-021, which was submitted on December 27, 2002.
In SPA 02-021, Indiana proposed to expand the State's Medicaid
mental health rehabilitation benefit to include services furnished by
five types of child care facilities to inpatients in the facilities.
The State incorporated into the SPA portions of the Indiana State code
(470 IAC 3-11, 470 IAC 3-12, 470 IAC 3-13, 470 IAC 3-14, and 470 IAC 3-
15) that govern the operation of these facilities.
At issue in this reconsideration is whether SPA 02-021 is
consistent with the requirements contained in sections 1902(a)(10),
1902(a)(19), 1902(a)(30)(A), and 1902(a)(4) of the Social Security Act
(the Act) as described in more detail below. In general, the Centers
for Medicare & Medicaid Services (CMS) found that the SPA had four
basic problems: (1) The proposed services would be provided to
individuals under age 65 who are patients in institutions for mental
diseases (IMDs) (that are not juvenile psychiatric hospitals) and who
have not been determined eligible for Medicaid; (2) the proposed
services would be provided on order of individuals who are neither
physicians nor licensed practitioners; (3) the proposed services would
be provided in facilities which permit use of mechanical restraints and
provide for seclusion of children and which, therefore, cannot be
considered to be ``in the best interests'' of the recipients; and (4)
the proposed payment methodology includes items not encompassed in the
definition of Medicaid rehabilitation services and improperly includes
payment for state administrative costs.
More specifically, at issue is whether the proposed SPA complies
with the requirements of section 1902(a)(10) of the Act, which provides
generally that state plans must make ``medical assistance'' as defined
in section 1905(a) of the Act, available to eligible individuals. The
definition of medical assistance at section 1905(a)(27), excludes
payment for care and services for individuals under age 65 who are
patients in institutions for mental diseases (IMDs), except payment for
juvenile psychiatric hospital services pursuant to section 1905(a)(16)
of the Act. Indiana proposed to furnish services to individuals who are
under age 65 in institutions that appear to meet the definition of an
IMD at section 1905(i) of the Act and applicable Federal regulations at
42 CFR 435.1009. However, these facilities do not provide services that
meet the definition of inpatient psychiatric hospital services
contained in section 1905(h) of the Act and do not comply with the
regulatory requirements for providers of inpatient psychiatric hospital
services set forth at 42 CFR 483 Subpart G (concerning use of restraint
or seclusion). Thus, the State has failed to establish that the
services are within the scope of medical assistance that is authorized
under the Act.
In addition, section 1905(a)(13) of the Act defines rehabilitative
services as those that are recommended by a physician or other licensed
practitioner of the healing arts. The proposed SPA would include
services that are recommended by individuals who are neither physicians
nor licensed practitioners, but who are operating under the supervision
of these individuals. Nor do the proposed services meet the
requirements or services in any inpatient setting within the scope of
medical assistance (hospitals, nursing facilities, psychiatric hospital
services for juveniles, or intermediate care facilities for the
mentally retarded).
Finally, section 1905(a) of the Act defines the term ``medical
assistance'' as payment of part or all of the cost of care and services
furnished to eligible individuals. The reimbursement section of this
amendment, detailed at section 4.2.2 of the Indiana Residential Care
Reimbursement Rate Establishment document, and included in Attachment
4.19B of this amendment, would provide payment for services furnished
to individuals who have not been determined eligible for Medicaid.
In addition, at issue is whether the proposed SPA is consistent
with the requirement in section 1902(a)(19) of the Act that services be
provided ``in the best interests of the recipients.'' Indiana permits
the use of mechanical restraints and provides for extended periods of
seclusion of children in the facilities covered by this amendment. CMS
has determined that these policies, defined in the Indiana
Administrative Code (470 IAC 3-11, 470 IAC 3-12, and 470 IAC 3-13) and
incorporated in this amendment by reference, would endanger the health
and welfare of the victims of these procedures, and cannot be
considered to be in the best interests of the children affected.
Finally, at issue is whether the proposed payment methodology
complies with section 1902(a)(30)(A) of the Act, which requires that
payments for services under the plan be ``consistent with efficiency,
economy, and quality of care,'' and with section 1902(a)(4) which
requires that the State use methods of administration that are found by
the Secretary to be ``necessary for the proper and efficient operation
of the plan.'' The payment methodology proposed by the State includes
payment for numerous cost items, including elements of room and board
and transportation services, that are not encompassed in the definition
of Medicaid rehabilitation services. For this reason, CMS found that
the State has not documented that the proposed payment methodology
would be efficient or economical, as required by section 1902(a)(30)(A)
of the Act. Furthermore, CMS determined that the payment methodology
improperly includes payment for State administrative costs as medical
assistance. The amendment would include Medicaid administrative costs
as part of the payment to providers and thus would likely result in
incorrect payment of FFP. Because the proposed payment methodology
commingles medical assistance and administrative costs, it is not
consistent with the requirement for proper and efficient
[[Page 1720]]
plan administration contained in section 1902(a)(4) of the Act.
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 Indiana SPA 02-021.
Section 1116 of the Act and 42 CFR Part 430 establish Department
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.
The notice to Indiana announcing an administrative hearing to
reconsider the disapproval of its SPA reads as follows:
Ms. Melanie Bella, Assistant Secretary, Medicaid Policy, 402 West
Washington Street, Indianapolis, IN 46204.
Dear Ms. Bella: I am responding to your request for
reconsideration of the decision to disapprove Indiana Medicaid State
Plan Amendment (SPA) 02-021 submitted on December 27, 2002.
In SPA 02-021, Indiana proposed to expand the State's Medicaid
mental health rehabilitation benefit to include services furnished
by five types of child care facilities to inpatients in the
facilities. The State incorporated into the SPA portions of the
Indiana State code (470 IAC 3-11, 470 IAC 3-12, 470 IAC 3-13, 470
IAC 3-14, and 470 IAC 3-15) that govern the operation of these
facilities.
We do not find the proposed SPA to be consistent with section
1902(a) of the Social Security Act (the Act), which provides
generally that state plans must make ``medical assistance,'' as
defined in section 1905(a) of the Act, available to eligible
individuals. The proposed SPA would provide a facility-based benefit
that within the scope of ``medical assistance'' as that term is used
in section 1902(a) of the Act and defined in section 1905(a) of the
Act. The definition of medical assistance at section 1905(a) of the
Act excludes payment for care and services to individuals under age
65 who are patients in institutions for mental diseases (IMDs),
except payment for juvenile psychiatric hospital services pursuant
to section 1905(a)(16) of the Act. The services proposed under this
SPA would be furnished to individuals who are under age 65 in
institutions that appear to meet the definition of an IMD at section
1905(i) of the Act and applicable Federal regulations at 42 CFR
435.1009. (In responses to Centers for Medicare & Medicaid Services
(CMS) inquiries, the State itself indicated that the facilities can
have over 16 beds, and that the patients reside in the facility in
order to receive treatment for mental illness.) But, the proposed
services are not within the scope of juvenile psychiatric hospital
services which, pursuant to section 1905(h) of the Act, includes
services provided to individuals under age 21 in psychiatric
residential treatment facilities. It appears that the proposed
services would be furnished in facilities that do not meet the
regulatory requirements for providers of inpatient psychiatric
hospital services set forth at 42 CFR 483 Subpart G (concerning use
of restraint or seclusion). Thus, CMS does not find that the State
has established that the services are within the scope of medical
assistance that is authorized under the Act.
Even if the State were to demonstrate that the individuals were
not inpatients in IMDs, CMS does not believe the State has
demonstrated that the proposed services are within the proper scope
of medical assistance. The proposed services do not meet the
requirement under section 1905(a)(13) of the Act that rehabilitation
services be recommended by a physician or other licensed
practitioner of the healing arts. The proposed SPA would include
services that are recommended by individuals who are neither
physicians nor licensed practitioners, but who are operating under
the supervision of these individuals. Nor has the State shown that
the proposed services meet the requirements for any inpatient
setting within the scope of medical assistance, including hospitals,
nursing facilities, psychiatric hospital services for juveniles, or
intermediate care facilities for the mentally retarded.
In addition, the proposed SPA, does not appear to be consistent
with the requirement in section 1902(a)(19) of the Act that services
be provided ``in the best interests of the recipients.'' Indiana
permits the use of mechanical restraints and provides for extended
periods of seclusion of children in the facilities covered by this
amendment. CMS believes that these policies, defined in the Indiana
Administrative Code (470 IAC 3-11, 470 IAC 3-12, and 470 IAC 3-13)
and incorporated in this amendment by reference, would endanger the
health and welfare of the victims of these procedures, and cannot be
considered to be in the best interests of the children affected.
CMS found that the State has not demonstrated that the proposed
payment methodology would comply with section 1902(a)(30)(A) of the
Act, which requires that payments for services under the plan be
``consistent with efficiency, economy, and quality of care.'' The
payment methodology proposed by the State includes payment for
numerous cost items, including elements of room and board and
transportation services, that are not encompassed in the definition
of Medicaid rehabilitation services. For this reason, CMS found that
the State has not documented that the proposed payment methodology
would be efficient or economical.
Furthermore, the proposed payment methodology does not appear to
comply with the requirement for methods of administration that are
found by the Secretary to be ``proper and efficient'' for the
operation of the State plan, because the payment methodology
improperly includes payment for State administrative costs as
medical assistance. Section 1903(a) of the Act provides for FFP for
medical assistance at the Federal medical assistance percentage
rate, which is currently 62.32 percent in Indiana. Section 1903(a)
of the Act provides for FFP at the 50 percent match rate for
activities that have been found to be in support of the proper and
efficient administration of the state plan. The amendment would
include Medicaid administrative costs as part of the payment to
providers and thus would likely result in incorrect payment of FFP.
Because the proposed payment methodology commingles medical
assistance and administrative costs, CMS finds that the payment
methodology is not consistent with the requirement for proper and
efficient plan administration.
Equally important, section 1905(a) of the Act defines the term
``medical assistance'' as payment of part or all of the cost of care
and services furnished to eligible individuals. The reimbursement
section of this amendment, detailed at section 4.2.2 of the Indiana
Residential Care Reimbursement Rate Establishment document, and
included in Attachment 4.19B of this amendment, would appear to
provide payment for services furnished to individuals who have not
been determined eligible for Medicaid.
Based on the reasoning set forth above, and after consulting
with the Secretary as required by 42 CFR 430.15(c)(2), CMS
disapproved Indiana Medicaid SPA 02-021.
I am scheduling a hearing on your request for reconsideration to
be held January 20, 2005, at 10:00 a.m., 233 North Michigan Avenue,
Minnesota Room, Chicago, Illinois 60601 to reconsider the decision
to disapprove Indiana SPA 02-021.
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 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.
[[Page 1721]]
Section 1116 of the Social Security Act (42 U.S.C. 1316); 42 CFR
430.18.
(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid
Assistance Program)
Dated: January 5, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 05-445 Filed 1-7-05; 8:45 am]
BILLING CODE 4120-03-P