[Federal Register: October 6, 2006 (Volume 71, Number 194)]
[Notices]
[Page 59116-59117]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc06-74]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
Centers for Medicare & Medicaid Services
Notice of Hearing: Reconsideration of Disapproval of Oregon State
Plan Amendment 05-003
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
December 8, 2006, at 2201 6th Street, Suite 1101, Seattle, Washington
98121, to reconsider CMS' decision to disapprove Oregon State plan
amendment 05-003.
Closing Date: Requests to participate in the hearing as a party
must be received by the presiding officer by October 23, 2006.
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 CMS' decision to disapprove Oregon State plan
amendment (SPA) 05-003 which was resubmitted on April 11, 2006. This
SPA was disapproved on July 10, 2006. Under SPA 05-003, Oregon proposed
to modify the State's methodology for calculating supplemental payments
that are tied to the regulatory upper payment limit (UPL) for inpatient
hospital services.
This amendment was disapproved because it did not comport with the
general requirements of section 1902(a) and the specific requirements
of 1902(a)(30)(A) of the Social Security Act (the Act).
At issue in this reconsideration is whether the State has
demonstrated that the proposed supplemental payments, in conjunction
with regular payments, would result in rates that are consistent with
the regulatory UPL established at 42 CFR 447.272 under the authority of
section 1902(a)(30)(A) of the Act, which requires that provider payment
rates be ``consistent with efficiency, economy, and quality of care.''
Under that regulatory UPL, rates must be based on a reasonable estimate
of what would be paid under Medicare payment principles for the same
services. Also at issue is whether, in the absence of such a showing,
the State plan can be a sound basis for Federal financial participation
(FFP).
In a formal request for additional information and several
subsequent discussions, CMS requested that the State demonstrate that
its calculation of the UPL for inpatient hospital services would be a
reasonable estimate of what would be paid under Medicare payment
principles for the same services, which is the standard set forth in
the Federal regulations at 42 CFR 447.272(b)(1). Oregon currently uses
a case-mix index model to determine the UPL as specified in the
approved Medicaid State plan, but proposed in SPA 05-003 to change to a
length of stay (LOS) model. Case mix acuity appears to be a more
accurate adjuster for Medicaid acuity than the LOS model because it
reflects increases in services furnished, as opposed to just being
based on the amount of time that patients spend in the hospital.
Applying a case-mix index model to services furnished by the Oregon
Health and Science University to adjust for Medicaid acuity reduced the
UPL for inpatient hospital services for all non-State governmentally
owned or operated hospitals by about 25 percent compared to the LOS
model. (The difference between the two adjustments is an indication
that, while Medicaid patients may have longer lengths of stay, the
length of stay does
[[Page 59117]]
not reflect greater service needs.) In other words, Oregon proposed to
use the LOS adjustment instead of the case-mix adjustment, but did not
provide CMS any additional information in order to demonstrate that use
of the LOS adjustment would accurately reflect UPL requirements, or
would otherwise result in rates that were consistent with efficiency,
economy, and quality of care pursuant to section 1902(a)(30)(A) of the
Act.
Furthermore, under Federal regulations at 42 CFR 430.10,
implementing the requirements for State plans in section 1902(a)
generally, the State plan must demonstrate to CMS that the plan can
serve as a basis for FFP available under section 1903(a)(1) of the Act.
Absent information that the proposed rates would be consistent with the
applicable UPL, we could not conclude that the proposed rates could be
a basis for FFP.
Section 1116 of the Act and Federal regulations at 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 42CFR 430.76(c). If the hearing is later rescheduled, the
presiding officer will notify all participants.
The notice to Oregon announcing an administrative hearing to
reconsider the disapproval of its SPA reads as follows:
Allen Douma, M.D., Administrator, Department of Human Services,
Health Services, Office of Medical Assistance Programs, 500 Summer
Street, NE., E49, Salem, OR 97301-1079.
Dear Dr. Douma:
I am responding to your request for reconsideration of the
decision to disapprove the Oregon State plan amendment (SPA) 05-003,
which was resubmitted on April 11, 2006, and disapproved on July 10,
2006.
Under SPA 05-003, Oregon was proposing to modify the State's
methodology for calculating supplemental payments that are tied to
the regulatory upper payment limit (UPL) for inpatient hospital
services.
This amendment was disapproved because it did not comport with
the general requirements of section 1902(a) and the specific
requirements of 1902(a)(30)(A) of the Social Security Act (the Act).
At issue in this reconsideration is whether the State has
demonstrated that the proposed supplemental payments, in conjunction
with regular payments, would result in rates that are consistent
with the regulatory UPL established at 42 CFR 447.272 under the
authority of section 1902(a)(30)(A) of the Act, which requires that
provider payment rates be ``consistent with efficiency, economy, and
quality of care.'' Under that regulatory UPL, rates must be based on
a reasonable estimate of what would be paid under Medicare payment
principles for the same services. Also at issue is whether, in the
absence of such a showing, the State plan can be a sound basis for
Federal financial participation (FFP).
In a formal request for additional information and several
subsequent discussions, the Centers for Medicare & Medicaid Services
(CMS) requested that the State demonstrate that its calculation of
the UPL for inpatient hospital services would be a reasonable
estimate of what would be paid under Medicare payment principles for
the same services, which is the standard set forth in the Federal
regulations at 42 CFR 447.272(b)(1). Oregon currently uses a case-
mix index model to determine the UPL as specified in the approved
Medicaid State plan, but proposed in SPA 05-003 to change to a
length of stay (LOS) model. Case mix acuity appears to be a more
accurate adjuster for Medicaid acuity than the LOS model because it
reflects increases in services furnished, as opposed to just being
based on the amount of time that patients spend in the hospital.
Applying a case-mix index model to services furnished by the Oregon
Health and Science University to adjust for Medicaid acuity reduced
the UPL for inpatient hospital services for all non-State
governmentally owned or operated hospitals by about 25 percent
compared to the LOS model. (The difference between the two
adjustments is an indication that, while Medicaid patients may have
longer lengths of stay, the length of stay does not reflect greater
service needs.) In other words, Oregon proposed to use the LOS
adjustment instead of the case-mix adjustment, but did not provide
CMS any additional information in order to demonstrate that use of
the LOS adjustment would accurately reflect UPL requirements, or
would otherwise result in rates that were consistent with
efficiency, economy, and quality of care pursuant to section
1902(a)(30)(A) of the Act.
Furthermore, under Federal regulations at 42 CFR 430.10,
implementing the requirements for State plans in section 1902(a)
generally, the State plan must demonstrate to CMS that the plan can
serve as a basis for FFP available under section 1903(a)(1) of the
Act. Absent information that the proposed rates would be consistent
with the applicable UPL, we could not conclude that the proposed
rates could be a basis for FFP.
I am scheduling a hearing on your request for reconsideration to
be held on December 8, 2006, at 2201 6th Avenue, Suite 1101,
Seattle, Washington 98121, to reconsider the decision to disapprove
SPA 05-003. 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 at (410) 786-2055. 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.
Sincerely, Mark B. McClellan, M.D., PhD.
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: September 29, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. E6-16600 Filed 10-5-06; 8:45 am]
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