Federal Register, Volume 75 Issue 103 (Friday, May 28, 2010)

[Federal Register Volume 75, Number 103 (Friday, May 28, 2010)]
[Rules and Regulations]
[Pages 30244-30265]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12954]

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Part V

Department of Health and Human Services

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Centers for Medicare & Medicaid Services

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47 CFR Parts 447 and 457

Medicaid Program; Premiums and Cost Sharing; Final Rule

Federal Register / Vol. 75, No. 103 / Friday, May 28, 2010 / Rules
and Regulations

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 447 and 457

[CMS-2244-FC]
RIN 0938-AP73

Medicaid Program; Premiums and Cost Sharing

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

ACTION: Final rule with comment period.

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SUMMARY: This final rule revises the November 25, 2008 final rule
entitled, ``Medicaid Programs; Premiums and Cost Sharing (73 FR
71828),'' to address public comments received during reopened comment
periods, and to reflect relevant statutory changes made in section
5006(a) of the American Recovery and Reinvestment Act of 2009 (the
Recovery Act). This revised final rule implements and interprets
section 1916A of the Social Security Act (the Act), which was added by
sections 6041, 6042, and 6043 of the Deficit Reduction Act of 2005
(DRA), amended by section 405(a)(1) of the Tax Relief and Health Care
Act of 2006 (TRHCA) and further amended by section 5006(a) of the
American Recovery and Reinvestment Act of 2009 (the Recovery Act).
These provisions increase State flexibility to impose premiums and cost
sharing for coverage of certain individuals whose family income exceeds
specified levels. This revised rule also provides a further opportunity
for public comment on revisions made to implement and interpret section
5006(a) of the Recovery Act. The Recovery Act prohibits States from
charging premiums and cost sharing under Medicaid to Indians furnished
items or services directly by the Indian Health Service, Indian Tribes,
Tribal Organizations, or Urban Indian Organizations or through referral
under contract health services.

DATES:
Effective Date: These regulations are effective on July 1, 2010.
Comment Date: To be assured of consideration, comments limited to
the implementation of section 5006(a) of the Recovery Act must be
received at one of the addresses provided below, no later than 5 p.m.
on July 27, 2010.

ADDRESSES: In commenting, please refer to file code CMS-2244-FC.
You may submit comments in one of four ways (please choose only one
of the ways listed). We cannot accept comments by facsimile (FAX)
transmission.
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2244-FC, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2244-FC, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:

a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.

(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)

b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.

If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by following the
instructions at the end of the ``Collection of Information
Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Christine Gerhardt, (410) 786-0693.

SUPPLEMENTARY INFORMATION:
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will be also available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.

I. Background

A. Statutory Authority

The Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) was
enacted on February 8, 2006. Sections 6041, 6042, and 6043 of the DRA
established a new section 1916A of the Social Security Act (the Act),
which was amended by section 405(a)(1) of the Tax Relief and Health
Care Act of 2006 (TRHCA) (Pub. L. 109-432, enacted on December 20,
2006). Section 1916A of the Act sets forth State options for
alternative premiums and cost sharing, including options for higher
cost sharing for non-preferred prescription drugs and for non-emergency
use of a hospital emergency room.
Section 6041 of the DRA established new subsections 1916A(a) and
(b) of the Act, which allow States to amend their State plans to impose
alternative premiums and cost sharing on certain groups of individuals,
for items and services other than drugs (which are subject to a
separate provision discussed below), and to adopt certain rules with
respect to the nonpayment and payment of the premiums and cost sharing.
Subsections 1916A(a) and (b) of the Act set forth limitations on
alternative premiums and cost sharing that vary based on family income,
and exclude some specific services from alternative

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cost sharing. Section 6041 of the DRA also created a new section
1916(h) of the Act, which requires the Secretary to increase the
``nominal'' cost sharing amounts under section 1916 of the Act for each
year (beginning with 2006) by the annual percentage increase in the
medical care component of the consumer price index for all urban
consumers (CPI-U) as rounded up in an appropriate manner. Section
405(a)(1) of the TRHCA modified subsections 1916A(a) and (b) of the
Act.
Section 6042 of the DRA created section 1916A(c) of the Act, which
provides States with additional options to encourage the use of
preferred drugs. Section 405(a)(1) of the TRHCA also modified section
1916A(c) of the Act. Under section 1916A(c) of the Act, States may
amend their State plans to require increased cost sharing by certain
groups of individuals for non-preferred drugs and to waive or reduce
the otherwise applicable cost sharing for preferred drugs. States may
also permit pharmacy providers to require the receipt of a cost sharing
payment from an individual before filling a prescription.
Section 6043 of the DRA created section 1916A(e) of the Act, which
permits States to amend their State plans to allow hospitals, after an
appropriate medical screening examination under section 1867 of the Act
(per the Emergency Medical Treatment and Active Labor Act), to impose
higher cost sharing upon certain groups of individuals for non-
emergency care or services furnished in a hospital emergency
department. Section 405(a)(1) of the TRHCA modified section 1916A(e) of
the Act. Under this option, if the hospital determines that an
individual does not have an emergency medical condition and that an
available and accessible alternate non-emergency services provider can
provide the services in a timely manner without the imposition of the
same cost sharing, before providing the non-emergency services and
imposing cost sharing, it must inform the individual of the
availability of such services from the accessible non-emergency
services provider and coordinate a referral to that provider. After
notice is given, the hospital may require payment of the cost sharing
before providing non-emergency services, if the individual elects to
receive the non-emergency services from the hospital. The cost sharing
cannot be imposed if no available alternative non-emergency service
provider exists.
Section 5006(a) of the American Recovery and Reinvestment Act of
2009 (the Recovery Act) (Pub. L. 111-5, enacted on February 17, 2009)
amended sections 1916 and 1916A of the Act effective July 1, 2009.
Specifically, Section 5006(a)(1)(A) of the Recovery Act amended section
1916 of the Act to add a new subsection (j), which prohibits premiums
and cost sharing for Indians who are provided services or items covered
under the Medicaid State plan by Indian health care providers or
through referral under contract health services. Section 5006(a)(2) of
the Recovery Act amended section 1916A(b)(3)(A) of the Act to add a new
clause prohibiting premiums on an Indian furnished an item or service
directly by Indian health care providers or through referral under
contract health services, and also added a clause to 1916A(b)(3)(B)
prohibiting cost sharing for that population. In addition, section
5006(a)(1)(B) of the Recovery Act amended section 1916 of the Act to
specify that payments to Indian health care providers or to a health
care provider through referral under contract health services for
Medicaid services or items furnished to Indians cannot be reduced by
the amount of any enrollment fee, premium, or cost sharing that
otherwise would be due from the individual.
We also acknowledge the importance of providing adequate mental
health benefits and will be separately addressing how the laws
following the DRA, including the Paul Wellstone and Pete Domenici
Mental Health Parity and Addiction Equity Act of 2008 (Pub. L. 110-
343), relate to the Medicaid program regarding the treatment of
beneficiary cost sharing.

B. Regulatory History

On February 22, 2008, we published a proposed rule in the Federal
Register (73 FR 9727) that proposed to implement and interpret the
provisions of sections 6041, 6042, and 6043 of the DRA. A final rule
entitled ``Medicaid Program; Premiums and Cost Sharing'' was published
in the Federal Register on November 25, 2008 (73 FR 71828).
On January 27, 2009, prior to the effective date of the November
25, 2008 final rule, we published a final rule in the Federal Register
(74 FR 4888) that temporarily delayed for 60 days the effective date of
the November 25, 2008 final rule and reopened the comment period on the
policies set out in the November 25, 2008 final rule.
On March 27, 2009, we published a second final rule in the Federal
Register (74 FR 13346) that further delayed the effective date of the
November 25, 2008 final rule until December 31, 2009. We stated that
the delay was needed because our initial review had indicated that
substantial revisions to the final rule would be needed. Also, the
comment period was again reopened, for two purposes: for additional
comments on the policies set forth in the November 25, 2008 final rule,
and for comments on revisions needed to reflect section 5006(a) of the
Recovery Act (related to the exclusion of Indians from payment of
premiums and cost sharing).
On October 30, 2009, we published a proposed rule in the Federal
Register (74 FR 56151) to delay further the effective date of the
November 25, 2008 final rule until July 1, 2010. Upon review and
consideration of the public comments received and the provisions of the
Recovery Act, we determined that we needed more time to review and
revise the November 25, 2008 final rule. On November 30, 2009, we
published a third final rule in the Federal Register (74 FR 62501) that
delayed the effective date of the November 25, 2008 final rule until
July 1, 2010.

II. Provisions of the November 25, 2008 Final Rule and the Extended
Comment Period and Analysis of and Response to Public Comments

A. Public Comments

We received approximately 50 timely items of correspondence during
the public comment period for the February 22, 2008 proposed rule,
which we addressed in the November 25, 2008 final rule. We received
approximately 5 timely items of correspondence (including 20 specific
comments) in response to the January 27, 2009 reopening of the comment
period. In addition, we received approximately 10 timely items of
correspondence (including 36 specific comments) in response to the
March 27, 2009 reopening of the comment period. Summaries of those
public comments and our responses are set forth in the various sections
of this final rule under the appropriate heading.

B. General Comments

A majority of the public comments received for the January 27, 2009
and March 27, 2009 extended comment periods were similar to comments
received on the February 22, 2008 proposed rule, which we addressed in
the November 25, 2008 final rule. In light of the continued concerns
reflected by these comments, and additional review of available
research, State practice, and changes in overall economic circumstances
throughout the country, we have reconsidered our responses to these
comments. In

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particular, we have given greater weight to concerns about maintaining
access to services for needy families. A summary of the general
comments received and our responses are as follows:
Comment: Several commenters stated that the rule would
significantly reduce affordability of care and patients' access to
adequate care, and would result in decreased utilization of essential
health care services, increased adverse events, and worsened health
status due to less use of health care characterized as ``effective''
and subsequent use of more costly care. These commenters requested that
the final rule reflect the need for caution and care when imposing
premiums and cost sharing charges on low-income Medicaid beneficiaries.
These commenters asserted that the November 25, 2008 final rule would
allow States to increase health care expenses for vulnerable citizens,
result in more crisis situations that lead to more expensive
hospitalizations, limit access to basic health care, and force out
people who need services most. These commenters argued that increased
flexibility for States to impose premiums or cost sharing is
detrimental to low-income populations, unless there are explicit
restrictions on maximum premium and cost sharing levels.
One commenter described her personal situation that she would have
inadequate money for food or rent if her copayments were increased.
Response: We appreciate the significant concerns expressed in these
comments and agree that there is ample evidence that cost is a
significant barrier to people accessing coverage and care, particularly
for those with low or moderate incomes. These are important issues with
which States must contend when they determine whether to impose
premiums and cost sharing for their Medicaid and Children's Health
Insurance Program (CHIP) populations and as they design and implement
these provisions. CMS also must be mindful of these issues as we
promulgate rules and oversee the operation of Medicaid and CHIP.
However, to the extent that these comments reflect fundamental
disagreements with the statutory flexibility and requirements enacted
in sections 1916 and 1916A of the Act, we note that CMS is charged with
implementing applicable statutory provisions.
We have developed the revised final rule in accordance with the
provisions set forth at sections 1916 and 1916A of the Act. This
regulation is consistent with the statute and reflects little
interpretive policy by CMS; therefore, we are unable to change major
aspects of the revised final rule based on these comments.
In light of public comments, we have, however, reconsidered some of
our prior responses to comments on specific interpretive issues, in
order to increase the protections for vulnerable populations to the
extent consistent with the statutory requirements. As we discuss in
greater detail in responding to specific public comments on each issue
below, in this revised rule we are:
Reducing the maximum copayment amount from $5.70 (the
maximum copayment amount for children in separate CHIP programs) to
$3.40 per visit in fiscal year 2009 (which is then adjusted for
inflation annually) for Medicaid expansion optional targeted low income
children enrolled in managed care organizations, when a State does not
have a fee-for-service system.
Specifying that a State that adopts cost sharing rules
that could result in aggregate costs to the family that exceed five
percent of the family's income must: (1) Describe in its Medicaid State
plan the methodology it will use to identify beneficiaries who are
subject to premiums or cost sharing for specific items or services; and
(2) track beneficiaries' incurred premiums and cost sharing through a
mechanism developed by the State that does not rely on beneficiaries.
These requirements are imposed so that the State is able to inform
beneficiaries and providers of beneficiaries' liability and notify
beneficiaries and providers when individual beneficiaries have reached
the five percent limit on family out-of-pocket expenses and so are no
longer subject to further cost sharing for the remainder of the
family's current monthly or quarterly cap period. Ideally, for ease of
administration and accuracy, States will use automated systems to track
these cost sharing amounts.
Specifying that a State must describe in its Medicaid
State plan how the State identifies for providers, ideally through the
use of automated systems, whether cost sharing for a specific item or
service may be imposed on an individual beneficiary and whether the
provider may require the beneficiary, as a condition for receiving the
item or service, to pay the cost sharing charge.
Specifying at a minimum the services listed at Sec.
457.520 as the preventive services that must be excluded from cost
sharing for children younger than age 18, which reflect the well baby
and well child care and immunizations described by the Bright Futures
guidelines of the American Academy of Pediatrics.
Requiring States to describe in their Medicaid State plan
their process for beneficiaries to request a reassessment of the
family's aggregate limit for premiums and cost sharing if the family's
income is reduced or if eligibility is being terminated due to
nonpayment of premiums.
Clarifying that the statutory exclusion of family planning
services and supplies from cost sharing encompasses the entire range of
such services for which the State claims or could claim the enhanced
Federal matching rate for family planning services and supplies under
section 1903(a)(5) of the Act, including contraceptives and other
pharmaceuticals.
Clarifying that the statutory exclusion of certain
populations and services from cost sharing exceeding a nominal amount
means that drugs not identified by a State as non-preferred drugs
within a class of pharmaceuticals are subject to the same exclusions
from cost sharing as preferred drugs.
Requiring States to submit documentation with a State plan
amendment proposing to establish or substantially modify alternative
premiums or cost sharing under section 1916A of the Act that the State
provided the public with advance notice of the amendment and reasonable
opportunity for comment in a form and manner provided under applicable
State law.
CMS will continue to carefully review State plan amendments
submitted to implement or modify premiums or cost sharing to ensure
that the processes described adhere to the statutory and regulatory
requirements.
We further note that the concerns expressed by the commenters may
be widely shared. To date, only 8 States have approved State plan
amendments for alternative premiums and/or cost sharing under section
1916A of the Act. These provisions are usually applied to narrowly
defined, higher income populations and/or to limited services, such as
premiums for specific expansion populations or slightly more than
nominal pharmacy copayments.
Comment: We also received a recommendation that the rule should
reflect the change in course signaled by the Children's Health
Insurance Program Reauthorization Act of 2009 (CHIPRA) to strengthen
quality of care, ensure the availability of preventive services, and
enhance access to needed services to improve health outcomes. The
commenter also recommended that rigorous data collection accompany any
enhanced cost sharing, to determine whether higher co-payment
requirements present a greater access

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barrier to people with disabilities. The commenter further recommended
that providers report to States and that States report to CMS at least
a sample of the race and ethnicity of individuals for whom providers
approved a waiver from mandatory co-payments on a case-by-case basis,
in order to demonstrate that the waiver does not have a disparate
effect on people of color or non-English-speaking individuals.
Response: While we agree with the commenter's overall sentiments,
we believe it is important to consider these kinds of recommended
information collection and reporting requirements separately, in
conjunction with other similar potential information collection and
reporting requirements. CMS has broad authority under section
1902(a)(6) of the Act to require States to report any needed
information, but it is important to carefully consider such reporting
requirements and ensure that they can be integrated with existing State
responsibilities and are not overly burdensome. Because providers are
not required to report on their claims for Medicaid reimbursement
whether the provider collected a mandatory copayment, requiring
providers to obtain and submit information about the race and ethnicity
of individuals for whom the provider waived a copayment would be
burdensome and costly for all involved, even for a sample of claims.

C. General Comments on the Exemption of Indians From Premiums and Cost
Sharing

We received the following general comments concerning the exemption
of Indians furnished items or services directly by an Indian health
care provider (the Indian Health Service (IHS), an Indian Tribe, a
Tribal Organization, or an Urban Indian Organization) or through
referral under contract health services from payment of premiums and
cost sharing effective July 1, 2009, in accordance with the section
5006(a) of the Recovery Act.
Comment: Several commenters urged CMS to fulfill its
responsibilities for early Tribal consultation, which did not occur
with the original cost-sharing rule.
Response: CMS believes that it is in compliance with applicable
Tribal consultation responsibilities, but notes that considerable
additional consultation was undertaken since the original cost sharing
rule was published. Further, we are open to specific suggestions as to
how to maximize the effectiveness of Tribal consultation. In our March
27, 2009 final rule, we specifically requested public comment on the
new provisions exempting Indians from premiums and cost sharing, and we
believe that there has been a full opportunity for Tribes to raise
issues of concern. Moreover, the Recovery Act contains expanded
consultation responsibilities for States in implementing options under
the Federal Medicaid and CHIP statutes.
In keeping with the Department's Tribal consultation policy and the
new provisions in the Recovery Act, CMS collaborated and consulted with
the Tribal Technical Advisory Group (TTAG) and the IHS to solicit
advice on implementing these provisions. The Tribal Affairs Group and
the Center for Medicaid, CHIP and Survey and Certification within CMS
jointly hosted two All Tribes Calls on June 5 and 12, 2009, to consult
on implementation of section 5006 of the Recovery Act. Two face-to-face
consultation meetings were held in Denver on July 8 and 10, 2009, to
solicit advice and input on these provisions from federally-recognized
Tribes, Indian health care providers, and Urban Indian Organizations.
An All-States Call was held on June 10, 2009, with the State Medicaid
and CHIP programs, to describe the CMS Tribal consultation process and
the Recovery Act provisions and to solicit feedback and questions from
States.
Comment: A commenter asserted that CMS should adopt the TTAG
recommendation to adopt an interim rule to implement section 5006(a) of
the Recovery Act by July 1, 2009, because, otherwise, violations of the
new provision could occur and go undetected. The commenter stated that
it is important for CMS to assure that mechanisms are put in place
timely at the State level, to assure compliance with this new provision
as of the effective date of July 1, 2009.
Response: The requirements of section 5006(a) of the Recovery Act
were effective as of July 1, 2009, and CMS intends to work with States
to implement the statutory requirements through its compliance reviews
and reviews of State plan amendments. CMS issued a letter to State
Medicaid Directors and State Health Officials on January 22, 2010
(SMDL 10-001/ARRA 6), providing guidance on
implementation of section 5006 of the Recovery Act.
The Congress did not expressly provide authority for interim final
rulemaking authority under the Recovery Act. In light of the strong
public interest in timely protection of the exempt Indian populations,
we provided the interim guidance to States described above and have
diligently pursued the rulemaking process.
Comment: A commenter asked that CMS establish effective procedures
to properly enforce this provision, including a new audit element to
quickly detect any prohibited reductions in providers' payments or
other violations. The commenter asserted that States must make
supplemental payments to providers for any prohibited reductions in
payment.
Response: Congress did not provide for any new enforcement
mechanism for these provisions, and it is not clear that existing
enforcement mechanisms are inadequate. All States have an appeal
process through which beneficiaries and providers can appeal State
determinations concerning the amount of medical assistance. CMS
involvement is primarily through the State plan approval process. In
addition, CMS has authority to initiate compliance actions under
section 1904 of the Act in the event of systemic noncompliance by a
State.
Comment: Another commenter recommended that CMS include
requirements for administrative simplicity in the implementation of the
Recovery Act's new exclusion of Native Americans from cost-sharing,
including ease of tribal membership documentation.
Response: We agree that administrative simplicity is very
important. Therefore, we have defined the term ``Indian'' for purposes
of the exemption from premiums and cost sharing in broad terms that
indicate the kinds of documentation that could support the application
of the exception.
Specifically, Indian means any individual defined at 25 USC
1603(c), 1603(f), or 1679(b), or who has been determined eligible as an
Indian, pursuant to 42 CFR 136.12. This means the individual:
(1) Is a member of a Federally-recognized Indian tribe;
(2) 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
promulgated by the Secretary;
(3) is considered by the Secretary of the Interior to be an Indian
for any purpose; or

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(4) 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.
Documentation that an individual is an Indian could include Tribal
enrollment and membership cards, a certificate of degree of Indian
blood issued by the Bureau of Indian Affairs, a Tribal census document,
or a document issued by a Tribe indicating an individual's affiliation
with the Tribe. The Indian health care programs and urban Indian health
programs are responsible for determining who is eligible to receive an
item or service furnished by their programs and so a medical record
card or similar documentation that specifies an individual is an Indian
as defined above could suffice as appropriate documentation. These
documents are examples of documents that may be used, but do not
constitute an all-inclusive list of such documents.
Comment: A commenter also stated that Tribal leaders are not
cognizant of all the impacts that these changes will have on the
elderly Indian populations enrolled in Medicaid. The commenter stated
that none of this information has been provided by CMS or the IHS.
Response: As described above, CMS has engaged in an extensive
Tribal consultation process, providing information to the Tribes,
soliciting their input, and incorporating changes into this revised
rule based on that input.
Comment: A commenter stated that for Indians who use the IHS
system, Medicaid is considered the primary payer, and IHS is considered
the payer of last resort according to 42 CFR 136.61. Therefore, the
commenter asserted that a conflict exists between section 5006 of the
Recovery Act specifying circumstances under which Indians may not be
charged cost-sharing (and so defining when they may be charged cost
sharing) and the IHS payer of last resort policy, as well as Federal
responsibility in providing health care for Native Americans.
Response: We do not see any conflict between the exclusion of
Indians from Medicaid premiums and cost sharing and the IHS payer of
last resort rule, which was included in section 2901 of the Patient
Protection and Affordable Care Act of 2010, Public Law 111-148. We also
do not see any conflict with overall Federal responsibilities toward
Indian health care. Indeed, we believe that these policies are
consistent and ensure that Medicaid programs will pay for health care
coverage of Medicaid items and services primary to both IHS and to
individual Indians.
Comment: A commenter expressed concern that CMS seems to feel that
the statutory framework for the cost sharing rule reflects the
principle that States are in the best position to weigh the Tribes'
concerns, as Sovereign Nations, and that the States alone are to
determine the appropriate levels and scope of alternative cost sharing.
The commenter noted that the Tribes' poorest people who are on Medicaid
cannot afford even the smallest cost sharing, and the commenter was
concerned that CMS ensure that States follow requirements to consult
with Tribes prior to implementing cost sharing that will directly
affect the Tribes and indigent patients.
Response: We agree that there are special concerns about cost
sharing for Indians, and we believe that Congress recognized these
concerns in enacting the Recovery Act protections for Indians from cost
sharing that are being implemented in this revised final rule, and the
new requirements for CMS to maintain the TTAG and for States to engage
in tribal consultation under section 5006(e) of the Recovery Act. We
will continue to monitor State compliance with tribal consultation
requirements in all aspects of the Medicaid program.

D. Comments From the January 27, 2009 and March 27, 2009 Extended
Comment Periods on the November 25, 2008 Final Rule

Following is a summary of each provision in the February 22, 2008
proposed rule entitled ``Medicaid Programs: Premiums and Cost Sharing''
that was addressed in a public comment. We include a background summary
of any changes included in the final rule published on November 25,
2008 based on comments received during the initial comment period; and
then a summary of the additional comments on the final rule that were
received during the reopened comment periods beginning on January 27
and March 27, 2009; and responses to those additional comments.
Maximum Allowable and Nominal Charges (Sec. 447.54)
Under DRA Sec. 6041(b)(2), adding Sec. 1916(h) to the Social
Security Act, the Secretary was authorized to adjust the regulatory
definition of nominal charges. In reviewing those definitions, we also
addressed the issue of maximum charges by managed care organizations
(MCO). CMS had previously, in interpreting regulatory provisions that
addressed maximum charges only under fee-for-service systems, limited
MCO charges to an estimate of the charges that would have been allowed
under a fee-for-service system. In the February 22, 2008 proposed rule,
we proposed to revise Sec. 447.54 to provide updates for Federal
fiscal year (FY) 2007 to the existing ``nominal'' Medicaid cost sharing
amounts, specifically the nominal deductible amount described at Sec.
447.54(a)(1) and the nominal copayment amounts described at Sec.
447.54(a)(3) by applying an inflation factor, and described a
methodology for future inflation-based updates that included rounding
the maximum copayment amounts to the next highest 10-cent increment. We
also proposed to add a new Sec. 447.54(a)(4) to establish a maximum
copayment amount for Federal FY 2007 for services provided by an MCO,
in light of the difficulty in determining comparable fee-for-service
charges. We noted that a similar MCO limit was applied under the CHIP
program.
In the November 25, 2008 final rule, we updated the maximum nominal
copayments to reflect amounts for Federal FY 2009. The amounts were
rounded to the next highest 5-cent increment rather than 10-cent
increment, to be consistent with the Medicare Part D program. In
addition, we clarified that we would calculate the update each year
without considering any rounding adjustment made in the previous year.
A new paragraph (a)(4) was added to specify that the copayment amount
for services provided by an MCO may not exceed the copayment amount for
comparable services under a fee-for-service delivery system. In the
circumstance when there is no fee-for-service delivery system under the
plan, we specified that the copayment amount for services furnished by
an MCO may not exceed the maximum copayment amount under a fee-for-
service delivery system, which was $3.40 per visit for Federal FY 2009
(based on the maximum fee-for-service copayment under Medicaid), or for
individuals referenced in an approved State child health plan under
title XXI of the Act, a higher different maximum MCO copayment amount
of $5.70 per visit (based on the maximum fee-for-service amount for
children enrolled in separate CHIP programs under title XXI of the
Act).
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: Several commenters recommended deletion of the $5.70 per

[[Page 30249]]

visit maximum Medicaid copayment specifically for children in CHIP-
related Medicaid expansions under managed care plans when a State does
not have a fee-for-service system. This amount was added in the final
rule published on November 25, 2008.
Response: We agree with the underlying concern that copayments for
such children would exceed levels otherwise considered nominal under
the Medicaid program. Therefore, in this revised final rule, we have
deleted the higher maximum copayment amount for Medicaid expansion
children enrolled with MCOs. The same maximum copayment of $3.40 per
visit for Federal FY 2009 will be applied for Medicaid expansion
children as for all other Medicaid beneficiaries enrolled in MCOs.
While our intent had been to align the Medicaid and CHIP programs by
permitting the same copayment levels under either program, we have been
convinced by the commenters that the status of the children under the
Medicaid program should be of primary importance, because it indicates
a State's determination that the children should be entitled to all the
benefits and protections of the Medicaid program. We have always
applied Medicaid-specific rules to Medicaid expansion programs, even if
those rules vary from the rules applicable to separate CHIP programs.
The importance of ensuring coverage for children and reducing barriers
to such coverage has been affirmed generally by Congress in CHIPRA,
which expanded and improved the CHIP program while maintaining the
option of using CHIP funding for serving children through the Medicaid
program.
Alternative Premiums and Cost Sharing: Basis, Purpose and Scope (Sec.
447.62)
In the February 22, 2008 proposed rule, we proposed to implement
the flexibility for States to impose alternative premiums and cost
sharing with the protections outlined in the TRHCA, including the
imposition of nominal cost sharing for individuals with family income
at or below 100 percent of the FPL limited to prescription drugs and
non-emergency services furnished in a hospital emergency room.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without change but added a provision that clarified
that individuals with family income at or below 100 percent of the FPL
could be charged nominal copayments to the extent consistent with
section 1916 of the Act.
Specific comments on this section received during the reopened
comment period, and our responses to those additional comments, are as
follows:
Comment: Several commenters recommended that the alternative
premium and cost sharing rules be simplified and clarified as much as
possible, such as the different requirements based on the family's
income level, because neither the State nor providers have the
resources to implement these complex rules.
Response: We agree that the regulatory presentation of the
statutory limitations on alternative premiums and cost sharing may have
been confusing. In this revised final rule at Sec. 447.62(a) and
(b)(1), we have attempted to clarify the regulatory provisions to
better ensure consistency with the statutory requirements in sections
1916 and 1916A of the Act. The basic provisions of this section, such
as the different exclusions and limits based on a family's income
level, are defined in statute and are by nature complex. We have
attempted to describe these complex exclusions and limits in the
simplest and most straightforward manner possible in this revised rule.
Comment: A commenter recommended that the rule be revised to make
it clear that the Secretary of Health and Human Services' (HHS)
authority to waive cost sharing provisions under section 1916A of the
Act is limited in accordance with section 1916(f) of the Act.
Response: In this revised final rule, we included language in Sec.
447.62(b) to clarify the text, taking into account the amendment to
section 1916(f) of the Act made by section 6041(b)(1) of the DRA. In
light of section 1916A of the Act and the provision of the DRA that
applies section 1916(f) to 1916A of the Act, we are reviewing our
policies under section 1115 of the Social Security Act.
Comment: Several commenters advised that giving States the
flexibility to exclude additional groups of individuals from payment of
premiums or cost sharing should not have the effect of discriminating
against individuals on the basis of race, color, national origin, or
disability (title VI of the Civil Rights Act of 1964, Americans with
Disabilities Act (ADA), 42 CFR 430.2(b), 45 CFR Part 80).
Response: We agree. Existing HHS regulations under these civil
rights and other statutes, including section 504 of the Rehabilitation
Act, already prohibit both States and entities that receive Federal
Medicaid funding from taking discriminatory actions. The HHS Office for
Civil Rights (responsible for Departmental enforcement of most civil
rights laws) and the Department of Justice (which also has
responsibility for enforcement of certain civil rights laws, including
the Americans with Disabilities Act), are available to investigate any
questions or complaints as to illegal discrimination under these
statutes and the implementing regulations.
Alternative Premiums, Enrollment Fees, or Similar Charges: State Plan
Requirements (Sec. 447.64)
We proposed at Sec. 447.64(a), that the State plan describe the
group or groups of individuals that may be subject to such premiums,
enrollment fees, or similar charges. We further proposed in Sec.
447.64(b) that the State plan include a schedule of the premiums,
enrollment fees, or similar charges. At Sec. 447.64(c), we proposed
that the State plan describe the methodology used to determine family
income, including the period and periodicity of those determinations.
We also proposed in Sec. 447.64(d) that the State plan describe the
methodology the State would use to ensure that the aggregate amount of
premiums and cost sharing imposed for all individuals in the family
does not exceed 5 percent of family income as applied during the
monthly or quarterly period specified by the State. In addition, at
Sec. 447.64(e), we proposed that the State plan specify the process
for informing beneficiaries, applicants, providers, and the public of
the schedule. We further proposed in Sec. 447.64(f) that the State
plan describe the premium payment terms for the group or groups and the
consequences for an individual who does not pay.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule with no substantive changes.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: Several commenters requested that the State agency, rather
than beneficiaries or managed care organizations, be required to track
each beneficiary's aggregate incurred premiums and cost sharing, to
assure that a beneficiary's aggregate limit is not exceeded.
Response: We agree with the commenters' request because we are
concerned that it would be overly burdensome for beneficiaries to track
aggregate incurred cost sharing that may have been made in small cash
transactions when such information can be more efficiently tracked
through the State's eligibility, enrollment, and claims processing
systems. In this

[[Page 30250]]

revised final rule, we have modified paragraph (d) of Sec. 447.64 to
specify that if a State chooses to charge premiums and cost sharing
that could result in aggregate costs to a family that exceed 5 percent
of the family's income, the State must develop a tracking mechanism and
not rely on the so-called ``shoebox'' method that puts the burden on
families to track cost sharing. Specifically, a State must describe in
its Medicaid State plan the methodology it will use to identify
beneficiaries who are subject to premiums or cost sharing for specific
items or services and track their incurred premiums and cost sharing,
in order to inform beneficiaries and providers of beneficiaries'
liability and notify beneficiaries and providers when individual
beneficiaries have incurred the 5 percent limit on family out-of-pocket
expenses and are no longer subject to further cost sharing for the
remainder of the family's current monthly or quarterly cap period. Such
methods must assure that families' cost sharing will not exceed the
statutory limits. Ideally, for ease of administration and accuracy,
States will use automated systems to track these cost sharing amounts.
We encourage States to track such costs through their Medicaid
Management Information System (MMIS). Some States already use MMIS for
this purpose. To the extent that they do so, enhanced Federal funding
is available for development and operation of system improvements.
As part of our review of State plan amendments and our ongoing
reviews and audits of State Medicaid programs, we will review how
States that impose costs that could exceed the 5 percent limit meet
these requirements, to assure their compliance with the statutory and
regulatory requirements. We will also share best practices among States
to promote effective and efficient tracking systems. We note that
States that design their cost sharing rules so that costs cannot exceed
the 5 percent limit need not develop a tracking system.
General Alternative Premium Protections (Sec. 447.66)
In the February 22, 2008 proposed rule at Sec. 447.66(a), we
proposed to implement statutory requirements of section 1916A(b)(3)(A)
of the Act that limit the application of alternative premiums under
section 1916A by requiring that States exclude certain classes of
individuals from the imposition of premiums. In addition, we proposed
at Sec. 447.66(b) that a State may exempt additional classes of
individuals from premiums.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without change.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: Several commenters requested that the Recovery Act's
exclusion of premiums and cost sharing for Indians under certain
circumstances be broadened to exclude from premiums and cost-sharing
all Indians receiving any Medicaid service from any Medicaid provider.
Response: The Recovery Act specifies under what circumstances
States are required to exclude Indians from payments of premiums and
cost sharing under sections 1916 and 1916A of the Act, and we are not
authorized to expand on these statutory circumstances. In this revised
final rule at Sec. 447.66(a)(7), we are specifying that States may not
impose alternative premiums upon an Indian who is eligible to receive
or has received an item or service furnished by an Indian health care
provider or through referral under contract health services under
authorities for serving Indians. This language would not preclude
States from excluding from premiums individuals based on other criteria
that could have the effect of broadening the circumstances in which
Indian populations would be exempt from premiums. We add at Sec.
447.66(c) to clarify that nothing in this subsection shall be construed
as restricting the application of any other limitations on the
imposition of premiums that may apply to an individual receiving
Medicaid who is an Indian. And, at Sec. 447.70(e) we specify that
States may exempt additional individuals, items, or services from cost
sharing. We anticipate that additional exemptions, if needed to protect
Indian populations, will be an issue raised in the tribal consultation
process.
Alternative Copayments, Coinsurance, Deductibles, or Similar Cost
Sharing Charges: State Plan Requirements (Sec. 447.68)
In the February 22, 2008 proposed rule at Sec. 447.68(a), we
proposed that the State plan describe the group or groups of
individuals that may be subject to such cost sharing. We further
proposed in Sec. 447.68(b) that the State plan must describe the
methodology used to determine family income, including the period and
periodicity of those determinations. We also proposed in Sec.
447.68(c) that the State plan describe the item or service for which
the charge is imposed. In Sec. 447.68(d), we proposed that the State
plan must describe methods, such as the use of integrated automated
systems, for tracking cost sharing charges, informing beneficiaries and
providers of the beneficiary's liability, and notifying them when a
beneficiary has reached the aggregate maximum for a period. In Sec.
447.68(e), we proposed that the State plan must specify the process of
publicizing the schedule of cost sharing charges. In Sec. 447.68(f),
we proposed that the State plan must explain the methodology the State
would use to ensure that the aggregate amount of premiums and cost
sharing imposed for all individuals in the family does not exceed 5
percent as applied during the monthly or quarterly period specified by
the State. In addition, at Sec. 447.68(g), we proposed that the State
plan specify how notice is provided of the time frame and manner of
required cost sharing and the consequences for an individual who does
not pay.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without any substantive change.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: Several commenters requested that States be required to
describe in their State plans a method by which States identify for
Medicaid providers which beneficiaries, services, and items are
exempted from cost sharing, in accordance with Sec. 447.70 and Sec.
447.71. Commenters also stated that States should be required to
provide accurate and updated information to providers about appropriate
cost sharing for each beneficiary. One commenter stated that States
should be required to demonstrate, before implementing alternative
premiums and cost sharing, that adequate State administrative systems
are in place to protect families from exceeding the cost sharing
limits. Other commenters requested that States, rather than
beneficiaries or managed care organizations, be required to track
beneficiaries' aggregate premiums and cost sharing, to assure that 5
percent of a family's income is not exceeded. Another commenter stated
that CMS should require States to implement automated systems to
support the tracking and computing of beneficiaries' copayments at the
point-of-sale and to adopt policies that support electronic
identification of non-preferred drugs. The commenter also stated that
States must be required to make information

[[Page 30251]]

electronically available at the point-of-sale regarding a beneficiary's
required cost sharing and whether the beneficiary's family has met its
applicable monthly or quarterly aggregate limit. In addition, the
commenter stated that CMS should make an enhanced 90 percent
administrative match available to States that implement such a system.
Response: We agree with many of these comments that beneficiaries
should not bear the full burden of accounting for aggregate cost
sharing maximums. In this revised final rule, we have thus revised
paragraph (d) of Sec. 447.68 to specify that a State must describe in
its Medicaid State plan the methodology it will use to identify
beneficiaries who are subject to premiums or to cost sharing for
specific items or services and, if cost sharing could exceed 5 percent
of family income, to track beneficiaries' incurred premiums and cost
sharing in order to inform beneficiaries and providers of
beneficiaries' liability and to notify beneficiaries and providers when
individual beneficiaries have reached the five percent limit on family
out-of-pocket expenses to assure that costs do not exceed the 5 percent
statutory limit. Also, a State is required to describe in its State
plan the State's methods for assuring that providers and beneficiaries
are effectively informed of cost sharing requirements in the State
plan, in accordance with Sec. 447.68(d). States must be mindful of the
need for clear, non-technical explanations and that accommodations must
be made for individuals for whom English is not the first language.
For example, one State informs providers and members
(beneficiaries) of allowable cost sharing amounts via provider updates
and a member Enrollment and Benefits booklet. Another State conducts
public meetings and sends a letter to each beneficiary for whom cost
sharing is applicable.
While this rule requires States imposing cost sharing that could
exceed the 5 percent statutory cap to have a methodology to track costs
and to assure that costs do not exceed the 5 percent limit, the rule
does not require one particular system for tracking. Some of the
methods that States are using to track families' incurred premiums and
cost sharing and to assure that they do not exceed the aggregate
maximum of 5 percent of the family's income include:
On State has its premium collection vendor track premium
payments. Its MCPs track enrollees' copayments. If a family reaches its
aggregate maximum, the premium vendor will waive premiums and suspend
invoicing for the remainder of the benefit period. The MCOs will notify
their pharmacy and ambulance transportation providers to waive the
family's copayments through a specified date.
Another State uses MMIS to track and enforce cost sharing
limits. The system calculates a family's quarterly out-of-pocket
maximum based on the family's income, and tracks the family's cost
sharing payments associated with submitted claims. If a family's
maximum is reached, an indicator is changed in MMIS and providers are
alerted as part of eligibility verification that the family is not
subject to copayments.
Another State calculates each family's cost sharing limit
as part of the eligibility determination process, records this
information in the eligibility system, copies the State's benefits
administrator, and informs the family of the limit in the eligibility
approval notice. It encourages families to track their payments, but it
also has the benefits administrator track families' payments and notify
the State if a family reaches its maximum. Families can also call the
State to check on the amount of out-of-pocket expenses they have
incurred. If the maximum is reached, the State moves the family to a
no-cost benefits plan for the remainder of their plan year and notifies
the family of this change in writing.
Another State has its eligibility and enrollment broker
inform families of their out-of-pocket limits in the letter notifying
them of enrollment in a health plan. It also notifies the health plan.
The health plan tracks families' cost sharing payments. If the limit is
reached, the health plan notifies the family by letter and annotates
the family's file in the electronic claims system in order to notify
providers that no further cost sharing is required.
Another State has its system track families' out-of-pocket
payments, and stops deducting the copayment amount from the allowed
amount on a provider's claim if a family reaches its limit. The system
notes on an Explanation of Benefits (EOB) when a family reaches its
maximum, and families may share the EOB with providers. Such a notice
is also included in the point-of-sale system used by pharmacists.
Monthly reports are generated to track copayments.
We are requiring that States describe their method of tracking when
they impose cost sharing that could exceed the 5 percent statutory
limit, and are recommending that, whenever possible, they employ
automated systems to do so. The Health Insurance Portability and
Accountability Act of 1996 (HIPAA) governs the contents and format of
electronic transactions providing information from a State's MMIS,
including an electronic transaction sent by a State Medicaid program in
response to an enrolled provider's electronic request for information
related to a beneficiary's Medicaid eligibility (for example,
information about a beneficiary's cost sharing responsibilities and
payments). MMIS system changes and operations are subject to an
enhanced Federal matching rate. As part of our review of State plan
amendments and our ongoing reviews and audits of State Medicaid
programs, we will review how States meet the premium and cost sharing
requirements, to assure their compliance with the statutory and
regulatory requirements. We will also share best practices to help
other States learn about effective and efficient ways to track cost
sharing.
General Alternative Cost Sharing Protections (Sec. 447.70)
In the February 22, 2008 proposed rule, we proposed that State
plans may not impose alternative cost sharing under section 1916A(a) of
the Act for certain services including emergency services and family
planning services and supplies. We also proposed that State plans could
not impose cost sharing for preferred drugs within a class for the same
categories of individuals. We proposed that the State may exempt
additional individuals or services from cost sharing. Also, we proposed
that cost sharing applicable to a preferred drug be charged for a non-
preferred drug if the prescribing physician determines that the
preferred drug would not be as effective for the individual or would
have adverse effects for the individual or both. We further proposed
that such overrides meet the State's criteria for prior authorization
and be approved through the State's prior authorization process.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without substantive changes.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: One commenter recommended that the rule define the
preventive services which are excluded from alternative cost-sharing
(see Sec. 447.70(a)(2)), such as by using the definition in the
American Academy of Pediatrics Bright Futures guidelines.
Response: We agree. In this revised final rule, we revised Sec.
447.70(a)(2) to

[[Page 30252]]

specify that, at the minimum, the preventive services listed at Sec.
457.520 must be excluded from cost sharing for children younger than 18
years old, which reflect the well baby and well child care and
immunizations described by the Bright Futures guidelines of the
American Academy of Pediatrics. These guidelines are used for well baby
and well child care services in the CHIP program. They provide an
explanation of the periodicity schedule recommended by the American
Academy of Pediatrics for preventive visits and appropriate
immunizations for children. The referencing of such a schedule allows
for flexibility in the definition of preventive services to reflect the
most current medical practice standards. States are permitted to exempt
preventive services beyond those described in the Bright Futures
guidelines.
Comment: Several commenters recommended that the entire package of
family planning services and supplies described and mandated at section
1905(a)(4)(C) of the Act be excluded from cost sharing, as required by
sections 1916A(b)(3)(B)(vii) and 1916(a)(2)(D) of the Act, so that even
nominal cost sharing is not permitted for non-preferred family planning
drugs (for example, contraceptive drugs not on a State's preferred drug
list) and cost sharing does not otherwise distinguish between family
planning methods.
Response: While we agree with the concerns of commenters, we are
not authorized by the statute to generally preclude alternate cost
sharing under section 1916A(c) of the Act for family planning drugs.
The protections under section 1916A(b)(3)(B)(vii) of the Act are
``subject to the succeeding provisions of this section'' which include
the special provisions concerning alternate cost sharing under section
1916A(c) of the Act. But we believe it is reasonable to require that
States have a consistent treatment of family planning drugs. In this
revised final rule, we have revised Sec. 447.70(a)(7) to clarify that
the exclusion for family planning services and supplies encompasses
contraceptives and other prescription drugs for which the State claims
or could claim the Federal matching rate available under section
1903(a)(5) of the Act for family planning services and supplies.
Comment: Several commenters requested that the rule be made
consistent with section 1916A(c)(2)(B) of the Act by limiting
alternative cost sharing for non-preferred prescription drugs for the
items or services listed at Sec. 447.70(a) to no more than the nominal
amount, in order to protect vulnerable populations such as pregnant
women.
Response: While we understand the underlying concerns of
commenters, we are not authorized by the statute to generally preclude
alternate cost sharing under section 1916A(c) of the Act for the
services listed at Sec. 447.70(a). The protections under section
1916A(b)(3)(B)(vii) of the Act are ``subject to the succeeding
provisions of this section'' which include the special provisions
concerning alternate cost sharing under section 1916A(c) of the Act. As
a result of our review of these comments, however, we realized that we
had not integrated the protections at section 1916A(c)(3) of the Act
into these regulations, and thus we have integrated into the revised
final rule at Sec. 447.70(d) the provision that drugs identified as
non-preferred drugs are subject to the same exclusions and limits for
cost-sharing as preferred drugs if the individual's prescribing
physician determines that the preferred drug for treatment of the same
condition either would be less effective for the individual or would
have adverse effects for the individual or both. We deleted as
unnecessary the additional requirement that the State's criteria for
prior authorization, if any, must be met.
Alternative Premium and Cost Sharing Exemptions and Protections for
Individuals With Family Incomes Above 100 Percent but at or Below 150
Percent of the FPL (Sec. 447.72)
In the February 22, 2008 proposed rule, we proposed at Sec.
447.72(a) that the State plan exclude individuals with family incomes
above 100 percent but at or below 150 percent of the FPL from the
imposition of premiums. We also proposed at Sec. 447.72(b) that cost
sharing for those individuals under the State plan not exceed 10
percent of the payment the State Medicaid agency makes for that item or
service, with the exception that cost sharing not exceed the nominal
cost sharing amount for non-preferred drugs or twice the nominal cost
sharing amount for non-emergency services furnished in a hospital
emergency department. In the case of States that do not have fee-for-
service payment rates, we proposed that any copayment imposed by a
State for services provided by an MCO may not exceed $5.20 for FY 2007.
In addition, we proposed at Sec. 447.72(c) that aggregate premiums and
cost sharing for individuals whose family income exceeds 100 percent,
but does not exceed 150 percent of the FPL, not exceed the 5 percent
aggregate maximum permitted under Sec. 447.78(a).
In the November 25, 2008 final rule, we revised Sec. 447.74(b) to
specify that the copayment amount for services provided by an MCO may
not exceed $3.40 per visit for Federal FY 2009 when the State does not
have a comparable fee-for-service system. We added a higher copayment
limit of $5.70 for Federal FY 2009 for services provided by an MCO for
Medicaid expansion optional targeted low-income children in that
circumstance. In addition, we revised the methodology for updating the
maximum nominal amounts for Medicaid each October 1 by rounding to the
next highest 5-cent increment rather than 10-cent increment, to be
consistent with the Medicare Part D program.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: As we discussed above, several commenters recommended that
the separate $5.70 per visit maximum co-payment added in the final rule
published on November 25, 2008, be deleted for Medicaid expansion
optional targeted low income children in managed care plans when a
State does not have a fee-for-service system.
Response: We are accepting this comment for the reasons discussed
above. The result is that the same per visit maximum will apply to all
Medicaid managed care enrollees when the State does not have a fee-for-
service system.
Alternative Premium and Cost Sharing Protections for Individuals With
Family Incomes Above 150 Percent of the FPL (Sec. 447.74)
In the February 22, 2008 proposed rule at Sec. 447.74(a), we
proposed that a State plan may impose premiums upon individuals with
family income above 150 percent of the FPL, subject to the aggregate
limit on premiums and cost sharing at Sec. 447.78. We also proposed at
Sec. 447.74(b) that cost sharing for those individuals under the State
plan not exceed 20 percent of the payment the State Medicaid agency
makes for that item or service. In the case of States that do not have
fee-for-service payment rates, we proposed that any copayment that the
State imposes for services provided by an MCO may not exceed $5.20 for
FY 2007. In addition, we proposed at Sec. 447.74(c) that aggregate
cost sharing for individuals whose family income exceeds 150 percent of
the FPL not exceed the maximum permitted under Sec. 447.78(a).
In the November 25, 2008 final rule, we revised Sec. 447.74(b) to
specify that

[[Page 30253]]

the copayment amount for services provided by an MCO may not exceed
$3.40 per visit for Federal FY 2009. We added a higher limit for
Medicaid expansion optional targeted low-income children of $5.70 for
Federal FY 2009. In addition, we revised the methodology for updating
the nominal amounts for Medicaid each October 1 by rounding to the next
highest 5-cent increment rather than 10-cent increment, to be
consistent with the Medicare Part D program.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: One commenter stated that the cost sharing permitted for
higher income individuals would be excessive. The commenter stated that
for individuals with incomes above 150 percent FPL, the cost sharing
amount would increase to 20 percent. The commenter also recommended
that cost sharing be capped at a reasonable amount.
Response: Cost sharing limits are specified in this rule as
required by section 1916A of the Act. However, because a 20 percent
cost sharing amount can be difficult or even impossible for Medicaid
beneficiaries to pay given their limited incomes, in this revised final
rule at Sec. 447.62(b)(3), we clarify that States have the option to
impose premiums and cost sharing that are below the maximum levels
permitted under this subpart.
Public Schedule (Sec. 447.76)
In the February 22, 2008 proposed rule, we proposed at Sec.
447.76(a) that State plans provide for schedules of premiums and cost
sharing and specified the information contained on such schedules. In
addition, at Sec. 447.76(b), we proposed that the State make the
public schedule available to beneficiaries at the time of enrollment
and reenrollment, applicants, all participating providers, and the
general public.
In the November 25, 2008 final rule, we added Sec. 447.76(a)(7) to
specify that the State must make available either a list of preferred
drugs or a method to obtain such a list upon request.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: One commenter requested that States give adequate notice
to pharmacy providers, beneficiaries, and the public of changes to
cost-sharing requirements when State plan amendments implementing the
changes are submitted to CMS, no later than 60 days prior to the
effective date.
Response: We agree that providers need adequate time to adjust
their procedures and protocols to incorporate changes, and that
beneficiaries and their advocates need time to prepare for changes in
cost sharing. Such notice is consistent with administration of the
State plan in the best interests of beneficiaries. In this revised
final rule, we added a new paragraph (c) to Sec. 447.76 to require a
State to provide the public with advance notice and reasonable
opportunity to comment in a form and manner provided under applicable
State law prior to submitting for CMS approval a Medicaid State plan
amendment (SPA) to establish alternative premiums or cost sharing under
section 1916A of the Act or to modify substantially an existing plan
for alternative premiums or cost sharing. Also, the State must submit
documentation with the SPA to demonstrate that this requirement was
met. This requirement is similar to the requirements at Sec. 447.205
about public notice prior to submitting a Medicaid SPA revising
providers' payment rates for services and at Sec. 457.65(b)-(d) about
public notice prior to submitting a CHIP SPA eliminating or restricting
eligibility or benefits or implementing or increasing cost sharing
charges or the cumulative cost sharing maximum.
Section 447.76 also requires States to make a public schedule with
cost sharing information available to beneficiaries, applicants,
providers, and the general public. Therefore, the public schedule must
be changed as necessary to remain current. In this revised final rule,
we modified Sec. 447.76 (b)(1), to clarify that beneficiaries must
receive advance written notice when their premiums, cost sharing
charges, or aggregate limits are revised.
Aggregate Limits on Alternative Premiums and Cost Sharing (Sec.
447.78)
In the February 22, 2008 proposed rule at Sec. 447.78(a), we
proposed that for individuals with family income above 100 percent of
the FPL the aggregate amount of premiums and cost sharing imposed under
sections 1916 and 1916A of the Act not exceed 5 percent of a family's
income for a monthly or quarterly period, as specified in the State
plan. We received no comments questioning this proposal, and received
at least one comment supporting the broad reach of this language. Thus,
we included this language in the November 25, 2008 final rule. While
sections 1916A(b)(1)(B)(ii) and (2)(A) of the Act for families with
income above 100 percent of the FPL only specifically reference
sections 1916A(c) and (e) of the Act in reference to the 5 percent
aggregate limit, we read these provisions together with the provision
at section 1916A(a)(2)(B) to establish a 5 percent aggregate limit
regardless of which statutory option the State selects. To read these
provisions in isolation would frustrate the statutory purpose and
permit a State to effectively impose aggregate cost sharing far in
excess of 5 percent of family income by using the two statutory cost
sharing options cumulatively. Such a result would be an inadequate
beneficiary protection, and would not achieve the statutory purpose of
the aggregate limit. The clear statutory purpose is to limit family
cost sharing obligations to 5 percent of family income and that purpose
can be achieved only if the aggregate limit applies to all cost sharing
imposed under the State plan for all family members, including cost
sharing imposed under section 1916. Thus, we believe that Congress
intended the three aggregate limit provisions to establish a single
aggregate limit for cost sharing under either section 1916 or 1916A
regardless of the underlying authority for the cost sharing. Applying
all cost sharing under the State plan to the aggregate limit is also
consistent with simplicity of administration and the best interests of
beneficiaries as required by section 1902(a)(19) of the Act because it
eliminates any need to distinguish between the statutory authority for
any particular cost sharing.
At Sec. 447.78(b) of the proposed rule, we proposed that for
individuals with family income at or below 100 percent of the FPL the
aggregate amount of cost sharing under sections 1916 and 1916A of the
Act not exceed 5 percent of a family's income for the monthly or
quarterly period, as required by section 1916A(a)(2)(B) of the Act, and
consistent with the reading above. We also proposed at Sec. 447.78(c)
that family income should be determined in a manner for that period as
specified by the State in the State plan. We clarified that States may
use gross income to compute family income and that they may use a
different methodology for computing family income for purposes of
determining the aggregate limits than for determining income
eligibility.
In the November 25, 2008 final rule, we revised Sec. 447.78(c) to
include the phrase, ``including the use of such disregards as the State
may provide.''
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:

[[Page 30254]]

Comment: One commenter recommended that the total aggregate amount
of cost sharing for individuals in a family be limited to 2 percent of
the family's income.
Response: We are unable by rule-making to revise the total
aggregate limit of 5 percent specified in statute at sections
1916A(b)(1)(B)(ii) and 1916A(b)(2)(A) of the Act. However, in this
revised final rule, we clarify at Sec. 447.62(b)(3) that States have
the option to impose premiums and cost sharing below the maximum levels
under this subpart. Also, we recognize that some families include
children in Medicaid and CHIP, so we encourage States to consider
implementing a 5 percent limit on families' aggregate premiums and cost
sharing in both Medicaid and CHIP.
Comment: One commenter stated that families should be permitted to
request a change in the aggregate limit on their cost sharing when the
household's income changes.
Response: We had not previously considered this issue, and we agree
with the commenter. In this revised final rule, we have modified Sec.
447.78(c) to require that State plans include a process for individuals
to request a reassessment of the family's aggregate limit if the
family's income is reduced or if eligibility is being terminated due to
nonpayment of a premium.
Enforceability of Alternative Premiums and Cost Sharing (Sec. 447.80)
In the February 22, 2008 proposed rule at Sec. 447.80(a), we
proposed to permit a State to condition Medicaid eligibility for
individuals in a specified group or groups upon prepayment of premiums,
to terminate the eligibility of an individual for failure to pay after
60 days or more, and to waive payment in any case where requiring the
payment would create undue hardship. At Sec. 447.80(b), we proposed
that a State permit a provider, including a pharmacy, to require an
individual to pay cost sharing imposed under section 1916A of the Act
as a condition of receiving an item or service. However, at Sec.
447.80(b)(1), we specified that a provider, including a pharmacy or
hospital, may not require an individual whose family income is at or
below 100 percent of the FPL to pay the cost sharing charge as a
condition of receiving the item or service. In addition, at Sec.
447.80(b)(2), we proposed that a hospital that has determined after an
appropriate medical screening under section 1867 of the Act that an
individual does not have an emergency medical condition, before it can
require payment of the cost sharing and treat the non-emergency medical
condition, must first provide the individual with the name and location
of an available and accessible alternate non-emergency services
provider, information that the alternate provider can provide the
services with imposition of no or lesser cost sharing, and a referral
to coordinate scheduling of treatment. Finally, at Sec. 447.80(b)(3),
we proposed that a provider may reduce or waive cost sharing imposed
under section 1916A of the Act on a case-by-case basis.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without substantive changes.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: One commenter recommended that States not be given the
option to deny treatment for Medicaid beneficiaries or terminate them
from Medicaid eligibility if they are unable to pay a premium or
copayment. Also, the commenter recommended that States be encouraged to
use alternative payment schedules.
Response: Under section 1916A(d) of the Act, States have the
flexibility to take certain specified actions in the event of
nonpayment of premiums, and may allow providers to condition the
delivery of services on payment of the alternative cost sharing. The
statute expressly permits States and providers to use such enforcement
flexibly, to respond to individual circumstances. For example, a State
may waive premiums on a case-by-case basis due to hardship. Also,
providers may reduce or waive cost sharing on a case-by-case basis.
Comment: One commenter asked who would want to decide if an
emergency was ``serious enough'' so a copayment would not be charged.
Response: We clarify here that we interpret an emergency to include
circumstances consistent with the ``prudent layperson'' standard set
forth in section 1932(b)(2) of the Act and Sec. 438.114(a). Under that
standard, an emergency service is one needed to evaluate or stabilize
an emergency medical condition, which is a condition manifesting itself
by acute symptoms of sufficient severity (including severe pain) such
that a prudent layperson, who possesses an average knowledge of health
and medicine, could reasonably expect the absence of medical attention
to result in jeopardy to health (including the health of an unborn
child), serious impairment to bodily functions, or the serious
dysfunction of any bodily organ or part. This would, at a minimum,
include the required medical screening under current regulations at
Sec. 489.24, including circumstances under which services are required
to stabilize the patient.
Comment: One commenter recommended that copayments for non-
emergency use of hospital emergency departments not be imposed if
Medicaid beneficiaries are using the emergency room due to lack of
access to primary care physicians or other alternative care.
Response: We agree that this is what the statute requires. The
requirements at Sec. 447.80(b)(2) are intended to assure that
alternative copayments for non-emergency use of hospital emergency
departments are not imposed if alternative non-emergency services
providers are not available and accessible in a timely manner to treat
the individual's medical condition.
Comment: Several commenters recommended that Sec. 447.80(b)
specify that giving providers the discretion to waive mandatory
copayments on a case-by-case basis may not have the effect of
discriminating against individuals who do not speak English or against
individuals on the basis of race, color, national origin, or disability
(title VI of the Civil Rights Act of 1964, Americans with Disabilities
Act, 42 CFR 430.2(b), 45 CFR Part 80).
Response: Existing HHS regulations under these civil rights and
other statutes, including section 504 of the Rehabilitation Act,
already prohibit both States and entities that receive Medicaid funding
from taking discriminatory actions. The HHS Office for Civil Rights
(responsible for Departmental enforcement of most civil rights laws)
and the Department of Justice (which also has responsibility for
enforcement of certain civil rights laws, including the Americans with
Disabilities Act), are available to investigate any questions or
complaints as to illegal discrimination under these statutes and the
implementing regulations.
Comment: A commenter agreed with the rule that providers should be
able to decide when to reduce or waive cost sharing on a case-by-case
basis. If a State significantly increases cost sharing, the pharmacy
provider, rather than the State, must decide whether to condition
rendering pharmacy services on the receipt of full payment of cost-
sharing from the beneficiary. Otherwise, the providers will likely be
the ones paying the higher charges, especially in States where pharmacy
providers are quite often unable to collect the current nominal co-
payments.
Response: We agree. This policy is consistent with the statute and
the

[[Page 30255]]

revised final rule at Sec. 447.82(a). If a State elects the option
permitting providers to require a beneficiary to pay an allowable cost
sharing charge as a condition for receiving an item or service, the
provider has the discretion to reduce or waive the application of cost
sharing on a case-by-case basis. In this revised final rule, we added a
new paragraph (c) to Sec. 447.82 requiring States to identify for
providers, ideally through the use of automated systems, whether cost
sharing for a specific item or service may be imposed on an individual
beneficiary and whether the provider may require the beneficiary, as a
condition for receiving the item or service, to pay the cost sharing
charge.
Comment: A commenter advised that the rule should provide guidance
for how hospitals are to implement cost sharing for non-emergency
services rendered in a hospital emergency department without violating
the Emergency Medical Treatment and Active Labor Act (EMTALA), which
requires hospitals to screen patients who request an emergency
examination and not delay treatment to stabilize a patient in order to
inquire about the individual's method of payment or insurance status.
Response: We are revising Sec. 447.80(c)(1) to state that nothing
in paragraph (b)(2) relating to alternate cost sharing for non-
emergency services in hospital emergency departments shall be construed
to limit a hospital's obligations with respect to screening and
stabilizing treatment of an emergency medical condition under EMTALA,
which is codified at section 1867 of the Act relating to EMTALA, and is
the basis for the regulation at Sec. 489.24.
Restrictions on Payments to Providers (Sec. 447.82)
In the February 22, 2008 proposed rule at Sec. 447.80(a), we
proposed to require States to reduce the amount of the State's payments
to providers by the amount of beneficiaries' cost sharing obligations,
regardless of whether the provider successfully collects the cost
sharing. We noted in the rule's preamble that States have the ability
to increase total State plan rates to providers to maintain the same
level of State payment when cost sharing is introduced.
In the November 25, 2008 final rule, we accepted the provisions of
the proposed rule without change.
Specific comments to this section submitted during the reopened
comment periods and our responses to those additional comments are as
follows:
Comment: One commenter recommended that States not be required to
reduce payments to providers by the required copayments if the provider
waives or reduces the cost sharing amounts. Another commenter stated
that the DRA cost sharing is tantamount to a hidden rate reduction for
MCOs and other providers. Since cost sharing is deducted from
providers' payments, MCOs must decide whether to absorb high
administrative costs to track cost sharing or to forego the collection
of the fees. Also, commenters requested that MCOs be required to pay
providers in full when providers decide not to collect cost sharing
from beneficiaries; otherwise, providers will leave the network.
Response: The requirement that States not reimburse providers for
unpaid cost sharing is a longstanding Medicaid policy set forth at
Sec. 447.57, and is consistent with the overall policy set forth at
Sec. 447.15, that the Medicaid agency must limit participation in the
Medicaid program to providers who accept, as payment in full, the
amounts paid by the agency plus any deductible, coinsurance or
copayment required by the State plan to be paid by the individual.
There is no indication of any intent to change this longstanding policy
in the DRA provisions that added section 1916A to the Act.
Consistent with such requirements, section 5006(a) of the Recovery
Act added section 1916(j)(1)(B) of the Act to require that payment due
to an Indian health care provider or a health care provider through
referral under contract health services for directly furnishing an item
or service to a Medicaid-eligible Indian not be reduced by the amount
of any enrollment fee, premium, or similar charge, or any deductible,
copayment, cost sharing, or similar charge that would otherwise be due.
Each State through its regular administrative and political processes,
in consultation with the Tribes as required by section 5006(e) of the
Recovery Act, must decide how to implement this requirement and how to
assure that providers are paid in full under such circumstances.

III. Provisions of the Revised Final Rule

In this revised final rule, we are adopting the provisions as set
forth in the November 25, 2008 final rule, subject to the following
changes.

A. Implementation of Section 5006(a) of the Recovery Act

The following provisions are open for public comment. The
provisions implement and interpret section 5006(a) of the Recovery Act,
which exempts Indians from premiums and cost sharing under certain
circumstances effective July 1, 2009. Also, the provisions respond to
public comments received on these new statutory requirements during the
March 27, 2009 extended comment period on the November 25, 2008 final
rule.
Section 5006(a) of the Recovery Act amends sections 1916 and 1916A
of the Act, to exempt Indian applicants and beneficiaries from Medicaid
premium and cost sharing requirements under certain circumstances and
to assure that Indian health care providers, and health care providers
providing contract health services (CHS) under a referral from an
Indian health care provider, will receive full payment. Premiums and
cost sharing exemptions for Indians under CHIP are not affected. The
provisions took effect on July 1, 2009.
Specifically, the Recovery Act:
Exempts Indians from payments of enrollment fees,
premiums, or similar chargesif they either are eligible to receive or
have received an item or service furnished by an Indian health care
provider or through referral under CHS.
Exempts Indians from payment of a deductible, coinsurance,
copayment, or similar charge for any item or service covered by
Medicaid if the Indian is furnished the item or service directly by an
Indian health care provider or through referral under CHS.
Prohibits any reduction of payment that is due under
Medicaid to an Indian health care provider or a health care provider
through referral under CHS for directly furnishing an item or service
to an Indian. The State must pay these providers the full Medicaid
payment rate for furnishing the item or service. Their payments may not
be reduced by the amount of any enrollment fee, premium, deductible,
copayment, or similar charge that otherwise would be due from the
Indian.
Definitions
In administering the Recovery Act's cost sharing provisions related
to Indians, the following definitions apply--
Indian health care provider 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 means any individual defined at 25 U.S.C. 1603(c),
1603(f), or 1679(b), or who has been determined eligible as an Indian,
pursuant to 42 CFR 136.12. This means the individual:

[[Page 30256]]

(1) Is a member of a Federally-recognized Indian tribe;
(2) 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
promulgated by the Secretary;
(3) is considered by the Secretary of the Interior to be an Indian
for any purpose; or
(4) 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.
The IHS administers the CHS Program for the provision of services
to Indians when those services are not available at IHS or Tribal
facilities. Any IHS-eligible Indian Medicaid beneficiary who receives a
referral, including any authorization for payment, by an IHS or Tribal
provider to an outside provider for contract health service is eligible
for the exemption from cost sharing for that service. States will need
to educate non-IHS providers about such documents, so that providers
will know to waive cost sharing requirements for referrals through CHS
for which payment may be made by Medicaid. States must inform
providers, ideally through the use of automated systems, whether an
individual is exempted from premiums or cost sharing. Reference
materials about CHS may be accessed on the IHS Web page at: http://www.ihs.gov/NonMedicalPrograms/chs/.
State Medicaid programs must consult with the IHS, Tribes, Tribal
Organizations, and Urban Indian Organizations within the State to
determine what documents the Indian health care providers will use for
exemption of Indians from enrollment fees, premiums, or other similar
charges and from deductibles, coinsurance, copayments, or similar
charges for referrals to providers through the CHS Program.
Cost Sharing: Basis and Purpose (Sec. 447.50)
We added a new paragraph (b) with definitions for ``Indian'' and
``Indian health care provider.''
Requirements and Options (Sec. 447.51)
We added a new paragraph (a)(2) that exempts Indians from payments
of enrollment fees, premiums, or similar charges if they are eligible
to receive or have received an item or service furnished by an Indian
health care provider or through referral under CHS.
Applicability; Specification; Multiple Charges (Sec. 447.53)
We added a new paragraph (b)(6) to exclude from cost sharing under
Medicaid all items and services furnished to an Indian directly by an
Indian health care provider or through referral under CHS.
Restrictions on Payments to Providers (Sec. 447.57)
We added a new paragraph (c) to specify that payment under Medicaid
due to an Indian health care provider or a health care provider through
referral under CHS for directly furnishing an item or service to an
Indian may not be reduced by the amount of any enrollment fee, premium,
or similar charge or any deductible, copayment, cost sharing, or
similar charge that otherwise would be due. Note that there is no
exemption for cost sharing, such as deductibles, coinsurance or co-
payments, on services rendered to eligible individuals at non-Indian
health care providers where there was not referral or authorization
through CHS as defined below.
Contract health service means any health service that is (1)
delivered based on a referral by, or at the expense of, an Indian
health program; and (2) provided by a public or private medical
provider or hospital that is not a provider or hospital of the Indian
health program.
General Alternative Premium Protections (Sec. 447.66)
We added a new paragraph (a)(7) to exclude Indians from payments of
enrollment fees, premiums, or similar charges if they are eligible to
receive or have received an item or service furnished by an Indian
health care provider or through referral under contract health
services.
In addition, we added a new paragraph (c) to specify that a State
may apply additional limitations on imposition of premiums that may
apply to an individual receiving Medicaid who is an Indian.
General Alternative Cost Sharing Protections (Sec. 447.70)
We added a new paragraph (a)(10) to exclude from cost sharing under
Medicaid all items and services furnished to an Indian directly by an
Indian health care provider or through referral under CHS.
Restrictions on Payments to Providers (Sec. 447.82)
We added a new paragraph (b) to specify that payment under Medicaid
due to an Indian health care provider or a health care provider through
referral under CHS for furnishing an item or service directly to an
Indian may not be reduced by the amount of any enrollment fee, premium,
or similar charge, or any deductible, copayment, cost sharing, or
similar charge that otherwise would be due.

B. Additional Changes to the Medicaid Regulations in Response to Public
Comments Requirements and Options (Sec. 447.51)

We revised paragraphs (a) and (c) to clarify the requirements for
consistency with section 1916 of the Act, to specify the categorically
needy populations for which the State Medicaid agency may impose an
enrollment fee, premium, or similar charge in accordance with section
1916(c), (d), (g), or (i) of the act.
Applicability; Specification; Multiple Charges (Sec. 447.53)
We revised the definition of ``emergency services'' in paragraph
(b)(4) to cite the definition which includes the ``prudent layperson''
standard at section 1932(b)(2) of the Act and Sec. 438.114(a).
Maximum Allowable and Nominal Charges (Sec. 447.54)
We revised paragraph (a)(1) and (a)(3)(ii) to clarify the
requirements for consistency with section 1916 of the Act. Also, we
revised the example in paragraph (a)(1) for a 6-month certification
period rather than a 3-month period for consistency with States'
practices.
We also revised paragraph (a)(4), in response to public comments,
to delete a higher maximum copayment of $5.70 per visit for services
provided by an MCO, when the State does not have a fee-for-service
delivery system, for Medicaid expansion optional targeted low income
children for whom enhanced Federal match is paid under section XXI of
the Act. Since these are Medicaid-eligible children, they will be
subject to the Medicaid limit for such coverage of $3.40 per visit,
rather than the limit imposed for separate CHIP programs under title
XXI.
In addition, we revised paragraph (b) to correct a citation to
Sec. 431.57. Also, the paragraph was revised for consistency with
sections 1916(a)(3) and 1916(b)(3) of the Act that the Secretary of
Health & Human Services will only

[[Page 30257]]

approve a waiver of the requirement that cost sharing charges must be
limited to a nominal amount if the State establishes to the Secretary's
satisfaction that alternative sources of nonemergency, outpatient
services are actually available and accessible to Medicaid
beneficiaries in a timely manner.
Standard Co-Payment (Sec. 447.55)
We revised paragraph (b) to correct a citation to Sec. 447.54(a)
and (c).
Alternative Premiums and Cost Sharing: Basis, Purpose and Scope (Sec.
447.62)
We revised paragraph (a) to clarify the requirements for
consistency with section 1916A of the Act.
We also revised paragraph (b) to take into account the amendment to
section 1916(f) of the Act made by section 6041(b)(1) of the DRA.
Alternative Premiums, Enrollment Fees, or Similar Charges: State Plan
Requirements (Sec. 447.64)
We revised paragraphs (a), (c), and (d) to clarify the requirements
for consistency with section 1916A of the Act.
We also revised paragraph (d), in response to public comments, to
require that if a State imposes cost sharing that could result in
aggregate costs to a family that exceed five percent of the family's
income, the State must develop a tracking mechanism and not rely on the
so-called ``shoebox'' method that puts the burden on families to track
cost sharing. Specifically, a State must describe in its Medicaid State
plan the methodology it will use to identify beneficiaries who are
subject to premiums or cost sharing for specific items or services and
track the premiums and cost sharing incurred, in order to inform
beneficiaries and providers of beneficiaries' liability and notify
beneficiaries and providers when individual beneficiaries have reached
the five percent limit on family out-of-pocket expenses and are no
longer subject to further cost sharing for the remainder of the
family's current monthly or quarterly cap period. Such methods must
assure that families' cost sharing will not exceed the statutory limit.
Alternative Copayments, Coinsurance, Deductibles, or Similar Cost
Sharing Charges: State Plan Requirements (Sec. 447.68)
We revised paragraphs (b), (c), (d), (f)(1), and (f)(2) to clarify
the requirements for consistency with section 1916A of the Act.
We revised paragraph (d) to specify that a State must describe in
its Medicaid State plan the methodology it will use to identify
beneficiaries who are subject to premiums or cost sharing for specific
items or services and, if cost sharing could exceed five percent of
family income, to track beneficiaries' incurred premiums and cost
sharing through a tracking system developed by the State, in order to
inform beneficiaries and providers of beneficiaries' liability and
notify beneficiaries and providers when individual beneficiaries have
reached the five percent limit on family out-of-pocket expenses to
assure that costs do not exceed the five percent statutory limit.
Paragraph (f) is revised to clarify that the aggregate limit under
Sec. 447.78 on a family's premium and cost sharing applies to section
1916 and/or 1916A for all individuals in the family enrolled in
Medicaid.
General Alternative Cost Sharing Protections (Sec. 447.70)
We renumbered and revised this section to make it consistent with
section 1916A of the Act. In addition, we revised this section in
response to public comments.
We revised the definition of ``emergency services'' in paragraph
(a)(6) (previously (a)(1)(vi)) and referenced this term in paragraph
(b) to cite the definition which includes the ``prudent layperson''
standard at section 1932(b)(2) of the Act and Sec. 438.114(a).
We revised paragraph (a)(2) (previously (a)(1)(ii)) to specify at a
minimum the services listed at Sec. 457.520 as the preventive services
excluded from alternative cost sharing for children younger than age
18, which reflect the well baby and well child care and immunizations
described by the Bright Futures guidelines of the American Academy of
Pediatrics.
We revised paragraph (a)(7) (previously (a)(1)(vii)) to specify
that the family planning services and supplies exempted from cost
sharing include contraceptives and other pharmaceuticals for which the
State claims or could claim Federal match at the enhanced rate under
section 1903(a)(5) of the Act for family planning services and
supplies.
We revised paragraph (a)(9) (previously (a)(1)(ix)) to explain that
disabled children receiving medical assistance by virtue of sections
1902(a)(10)(A)(ii)(XIX) and 1902(cc) of the Act who are exempted from
alternative cost sharing are those covered in accordance with the
Medicaid eligibility option offered by the Family Opportunity Act.
We revised paragraph (a)(11) (previously (a)(1)(x)) and paragraph
(c) (previously (b)) to specify that drugs not identified by the
State's Medicaid program as non-preferred drugs within a class are
subject to the same exclusions and limits for cost sharing as drugs
identified by the State as preferred drugs within a class.
We revised paragraph (b) (previously (a)(2)) for consistency with
section 1916A(e)(2)(B) of the Act to specify that cost sharing of no
more than the nominal amounts defined in Sec. 447.54 may be imposed on
the exempt populations specified in paragraph (a) of this section for
nonemergency services furnished in a hospital emergency department,
under certain conditions.
Also, we revised paragraph (d) (previously (c)) to specify that
drugs identified by a State's Medicaid program as non-preferred drugs
within a class are subject to the same exclusions and limits for cost
sharing as preferred drugs within a class if the individual's
prescribing physician determines that the preferred drug for treatment
of the same condition either would be less effective for the individual
or would have adverse effects for the individual or both. We deleted as
unnecessary the additional requirement that the State's criteria for
prior authorization, if any, must be met.
Alternative Premium and Cost Sharing Exemptions and Protections for
Individuals With Family Incomes at or Below 100 Percent of the FPL
(Sec. 447.71)
We revised paragraphs (b)(1), (b)(3), and (c) and added a new
paragraph (d) to clarify the requirements for consistency with sections
1916 and 1916A of the Act. Paragraph (d) specifies that a State may not
impose on individuals with family income at or below 100 percent of the
FPL the DRA's alternative premiums and cost sharing defined at section
1916A of the Act, but may impose cost sharing that does not exceed the
nominal amounts specified at Sec. 447.54.
Alternative Premium and Cost Sharing Exemptions and Protections for
Individuals With Family Incomes Above 100 Percent but at or Below 150
Percent of the FPL (Sec. 447.72)
We revised the introduction to paragraph (b) and its subsection (2)
and paragraph (c) to clarify the requirements for consistency with
section 1916A of the Act.
We revised paragraph (b)(3), in response to public comments, to
delete a higher maximum copayment of $5.70

[[Page 30258]]

per visit for services provided by an MCO, when the State does not have
a fee-for-service delivery system, for Medicaid expansion optional
targeted low income children for whom enhanced Federal match is paid
under section XXI of the Act. Since these are Medicaid-eligible
children, they will be subject to the Medicaid limit for such coverage
of $3.40 per visit in FY 2009, rather than the limit imposed for
separate CHIP programs under title XXI.
Alternative Premium and Cost Sharing Protections for Individuals With
Family Incomes Above 150 Percent of the FPL (Sec. 447.74)
We revised paragraphs (a), (b), and (c) to clarify the requirements
for consistency with section 1916A of the Act.
We also revised paragraph (b) to delete a higher maximum copayment
of $5.70 per visit for services provided by an MCO, when the State does
not have a fee-for-service delivery system, for Medicaid expansion
optional targeted low income children for whom enhanced Federal match
is paid under section XXI of the Act. Since these are Medicaid-eligible
children, they will be subject to the Medicaid limit for such coverage
of $3.40 per visit in FY 2009, rather than the limit imposed for
separate CHIP programs under title XXI.
Public Schedule (Sec. 447.76)
We revised paragraph (b)(1) for a minor change by replacing the
words ``and the'' with the word ``or'' before ``aggregate''.
Also, in response to public comments, we added a new paragraph (c)
to require a State to provide the public with advance notice and
reasonable opportunity to comment in a form and manner provided under
applicable State law prior to submitting for CMS approval a Medicaid
State plan amendment (SPA) to establish alternative premiums or cost
sharing under section 1916A of the Act or to modify substantially an
existing plan for alternative premiums or cost sharing. Also, the State
must submit documentation with the SPA to demonstrate that this
requirement was met.
Aggregate Limits on Alternative Premiums and Cost Sharing (Sec.
447.78)
We revised paragraphs (a), (b), (c), and (c)(2) to clarify the
requirements for consistency with section 1916A of the Act. In
particular, we clarify that the total aggregate limit of 5 percent of a
family's income applies for premiums and/or cost sharing imposed under
section 1916 and/or 1916A of the Act for all individuals in the family
enrolled in Medicaid.
We also revised paragraph (c), in response to public comments, to
require that States describe in their State plan for alternative
premiums or cost sharing the process for individuals to request a
reassessment of the family's aggregate limit if the family's income is
reduced or if eligibility is being terminated due to nonpayment of a
premium.
Enforceability of Alternative Premiums and Cost Sharing (Sec. 447.80)
We revised paragraphs (a)(3) and (b) and added a new paragraph (c)
to clarify and specify the requirements for consistency with section
1916A of the Act related to alternative cost sharing for nonemergency
services provided in hospital emergency departments. Also, we revised
paragraph (b)(2) to reference the definition of ``emergency services''
at section 1932(b)(2) of the Act and Sec. 438.114(a).
Restrictions on Payments to Providers (Sec. 447.82)
We revised this section to make the existing text a new paragraph
(a).
We added a new paragraph (c) to require that a State describe in
its Medicaid State plan how the State identifies for providers, ideally
through the use of automated systems, whether cost sharing for a
specific item or service may be imposed on an individual beneficiary
and whether the provider may require the beneficiary, as a condition
for receiving the item or service, to pay the cost sharing charge.

C. Changes to the CHIP Regulations

Maximum Allowable Cost Sharing Charges on Targeted Low-Income Children
in Families With Income From 101 to 150 Percent of the FPL (Sec.
457.555)
We revised paragraphs (a)(1)(i) and (a)(2) for minor changes in
clarification.

IV. Response to Comments on Revised Final Rule

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

V. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the
Federal Register and invite public comment on the proposed rule. The
notice of proposed rulemaking includes a reference to the legal
authority under which the rule is proposed, and the terms and
substances of the proposed rule or a description of the subjects and
issues involved. This procedure can be waived, however, if an agency
finds good cause that a notice-and-comment procedure is impracticable,
unnecessary, or contrary to the public interest and incorporates a
statement of the finding and its reasons in the rule issued.
A proposed rule was published on February 22, 2008 with a public
comment period. A final rule was issued on November 25, 2008. The
November 25, 2008 final rule published in the Federal Register included
a description of changes to the proposed rule based on the public
comments and our responses to comments received during the public
comment period. On January 27, 2009 and March 27, 2009, we published
final rules to delay the effective date of the November 25, 2008 final
rule and to reopen the public comment period. The March 27, 2009 final
rule specifically indicated that analysis of comments received during
the first reopened comment period indicated a need for revisions to the
November 25, 2008 final rule, and also specifically requested public
comments on changes needed to address section 5006(a) of the Recovery
Act. On October 30, 2009, we published a proposed rule in the Federal
Register to delay the effective date of the November 25, 2008 final
rule until July 1, 2010.
In keeping with the Department's Tribal consultation policy and the
new provisions in the Recovery Act, CMS collaborated and consulted with
the Tribal Technical Advisory Group (TTAG) and the IHS to solicit
advice on implementing these provisions. The Tribal Affairs Group and
the Center for Medicaid, CHIP, and Survey and Certification within CMS
jointly hosted two All Tribes Calls on June 5 and 12, 2009, to consult
on implementation of section 5006 of the Recovery Act. Two face-to-face
consultation meetings were held in Denver on July 8 and 10, 2009, to
solicit advice and input on these provisions from federally-recognized
Tribes, Indian health care providers, and Urban Indian Organizations.
An All States Call was held on June 10, 2009, with the State Medicaid
and CHIP programs to describe the CMS Tribal consultation process and
the Recovery Act provisions and to solicit feedback and questions from
States. We believe the requirement of a notice of proposed rulemaking
has been effectively met through the issuances described in the

[[Page 30259]]

preceding paragraphs. However, to the extent that the requirement has
not been met, we find good cause to waive a notice of proposed
rulemaking because it is unnecessary when the purposes of the
requirement have been met through the prior issuances, which clearly
indicated the intent to revise the November 25, 2008 final rule and
invited public comment to inform our revisions.
Specifically, the two 2009 final rules included a reopening of the
public comment period, indicated that the November 25, 2008 final rule
would be revised, and requested specific comments on the changes
required by section 5006(a) of the Recovery Act. In doing so, these
final rules effectively proposed revision of the November 25, 2008
final rule and invited public comment. These actions fully satisfied
the requirements for notice of proposed rulemaking, and further process
would be unnecessary.
With respect to the provisions of this revised final rule that
concern section 5006(a) of the Recovery Act, we further find good cause
to waive the notice of proposed rulemaking based on the strong public
interest in protecting beneficiaries from premiums and cost sharing in
accordance with law. Section 5006(a)(1) became effective on July 1,
2009, and prompt implementation is necessary to ensure that its
protections are applied without delay. Delay in implementation would
harm the Indian beneficiaries whom the statute was specifically
intended to help.
Therefore, we find good cause to waive the notice of proposed
rulemaking and to issue this final rule on an interim basis. We are
providing a 30-day public comment period.

VI. Collection of Information Requirements

Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
We are soliciting public comment on each of these issues for the
following sections of this document that contain information collection
requirements (ICRs):

A. ICRs Regarding

Section 447.64 Alternative Premiums, Enrollment Fees, or Similar
Charges: State Plan Requirements
Section 447.64 requires a State imposing alternative premiums,
enrollment fees, or similar charges on individuals to describe in the
State plan:
(a) The group or groups of individuals that may be subject to the
premiums, enrollment fees, or similar charges.
(b) The schedule of the premiums, enrollment fees, or similar
charges imposed.
(c) The methodology used to determine family income for purposes of
the imitations on premiums related to family income level that are
described in Sec. 447.78(c) of this chapter, including the period and
periodicity of those determinations.
(d) The methodology used by the State to:
(1) Identify beneficiaries who are subject to premiums or to cost
sharing for specific items or services; and
(2) If the State adopts cost sharing rules that could place
families at risk of reaching the total aggregate limit for premiums and
cost sharing under Medicaid, defined at Sec. 447.78 as 5 percent of
the family's income, track beneficiaries' incurred premiums and cost
sharing through a mechanism developed by the State that does not rely
on beneficiaries, in order to inform beneficiaries and providers of
beneficiaries' liability and notify beneficiaries and providers when
individual beneficiaries have reached the 5 percent limit on family
out-of-pocket expenses and are no longer subject to further cost
sharing for the remainder of the family's current monthly or quarterly
cap period.
(e) The process for informing the beneficiaries, applicants,
providers, and the public of the schedule of premiums, enrollment fees,
or similar charges for a group or groups of individuals in accordance
with Sec. 447.76.
(f) The notice of, timeframe for, and manner of required premium
payments for a group or groups of individuals and the consequences for
an individual who does not pay.
The burden associated with this requirement is the time and effort
it would take for a State to include this detailed description in the
State plan. We estimate it would take one State approximately 20
minutes to incorporate this information in their plan. We believe 56
States will be affected by this requirement for a total annual burden
of 18.67 hours.
Section 447.68 Alternative Copayments, Coinsurance, Deductibles, or
Similar Cost Sharing Charges: State Plan Requirements
Section 447.68 requires a State imposing alternative copayments,
coinsurance, deductibles, or similar cost sharing charges on
individuals to describe in the State plan:
(a) The group or groups of individuals that may be subject to the
cost sharing charge.
(b) The methodology used to determine family income, for purposes
of the limitations on cost sharing related to family income that are
described in Sec. 447.78(c) of this chapter, including the period and
periodicity of those determinations.
(c) The schedule of the copayments, coinsurance, deductibles, or
similar cost sharing charges imposed for each item or service for which
a charge is imposed.
(d) The methodology used by the State to identify beneficiaries who
are subject to premiums or cost sharing for specific items or services
and, if the State adopts cost sharing rules that could place families
at risk of reaching the total aggregate limit for premiums and cost
sharing under Medicaid, defined at Sec. 447.78 as 5 percent of the
family's income, track beneficiaries' incurred premiums and cost
sharing through a tracking system developed by the State, in order to
inform beneficiaries and providers of beneficiaries' liability and
notify beneficiaries and providers when the individual beneficiaries
reached the 5 percent limit on family out-of-pocket expenses and are no
longer subject to further cost sharing for the remainder of the
family's current monthly or quarterly cap period.
(e) The process for informing beneficiaries, applicants, providers,
and the public of the schedule of cost sharing charges for specific
items and services for a group or groups of individuals in accordance
with Sec. 447.76 of this chapter.
(f) The methodology used to ensure that:
(1) The aggregate amount of premiums and cost sharing imposed under
section 1916 and section 1916A of the Act for all individuals in the
family enrolled in Medicaid with family income above 100

[[Page 30260]]

percent of the Federal poverty level (FPL) does not exceed 5 percent of
the family's income of the family involved.
(2) The aggregate amount of cost sharing under section 1916 and
section 1916A of the Act for all individuals in the family enrolled in
Medicaid with family income at or below 100 percent of the FPL does not
exceed 5 percent of the family's income of the family involved.
(g) The notice of, timeframe for, and manner of required cost
sharing and the consequences for failure to pay.
The burden associated with this requirement is the time and effort
it would take for a State to include this detailed description in the
State plan. We estimate it would take one State approximately 20
minutes to incorporate this information in their plan. We believe 56
States will be affected by this requirement for a total annual burden
of 18.67 hours.
Section 447.76 Public Schedule
Section 447.76(a) requires States to make available to the groups
in paragraph (b) of this section a public schedule that contains the
following information:
(1) Current premiums, enrollment fees, or similar charges.
(2) Current cost sharing charges.
(3) The aggregate limit on premiums and cost sharing or just cost
sharing.
(4) Mechanisms for making payments for required premiums and
charges.
(5) The consequences for an applicant or beneficiary who does not
pay a premium or charge.
(6) A list of hospitals charging alternative cost sharing for non-
emergency use of the emergency department.
(7) Either a list of preferred drugs or a method to obtain such a
list upon request.
The burden associated with this requirement is the time and effort
it would take the State to prepare and make available to appropriate
parties a public schedule. We estimate that it would take 20 minutes
per State. We believe 56 States and territories will be affected by
this requirement for an annual burden of 18.67 hours.
Section 447.76(c) requires the State, prior to submitting to the
Centers for Medicare & Medicaid Services for approval a Medicaid State
plan amendment to establish alternative premiums or cost sharing under
section 1916A of the Act or an amendment to modify substantially an
existing plan for alternative premiums or cost sharing, to provide the
public with advance notice of the amendment and allow reasonable
opportunity to comment with respect to such amendment in a form and
manner provided under applicable State law. The State must submit
documentation with the SPA to demonstrate that this requirement was
met.
The burden associated with this requirement is the time and effort
it would take for a State to provide advance notice to the public and
prepare and submit documentation with the SPA. We estimate it would
take 1 State approximately 3 hours to meet this requirement; therefore,
the total annual burden associated with this requirement is 3 hours.
Section 447.80 Enforceability of Alternative Premiums and Cost Sharing
Section 447.80(b)(2) states that a hospital that has determined
after an appropriate medical screening pursuant to Sec. 489.24, that
an individual does not need emergency services before providing
treatment and imposing alternative cost sharing on an individual in
accordance with Sec. 447.72(b)(2) and Sec. 447.74(b) of this chapter
for non-emergency services as defined in section 1916A(e)(4)(A) of the
Act, must provide:
(1) The name and location of an available and accessible alternate
non-emergency services provider, as defined in section 1916A(e)(4)(B)
of the Act;
(2) Information that the alternate provider can provide the
services in a timely manner with the imposition of a lesser cost
sharing amount or no cost sharing; and
(3) A referral to coordinate scheduling of treatment by this
provider.
The burden associated with this requirement is the time and effort
it would take for a hospital to provide the name and location of an
alternate provider who can provide services of a lesser cost sharing
amount or no cost sharing and a referral to that provider. We estimate
the burden on a hospital to be 5 minutes. We believe the number of
hospital visits will be 4,077,000; therefore, the total annual burden
is 339,750 hours.

B. Comments on ICRs

We have submitted a copy of this final rule to OMB for its review
of the information collection requirements described above. We will
revise OMB number 0938-0993 to reflect any additional burden not
currently approved.
If you comment on these information collection and recordkeeping
requirements, please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this revised final rule with comment period; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Attention: CMS Desk Officer,
2244-FC, Fax: (202) 395-6974; or E-mail: [email protected].

VII. Response to Comments

VIII. Regulatory Impact Analysis

A. Overall Impact

We have examined the impacts of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993), the
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354),
section 1102(b) of the Social Security Act, section 202 of the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order 13132 on
Federalism (August 4, 1999), and the Congressional Review Act (5 U.S.C.
804(2)).
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). A regulatory impact
analysis (RIA) must be prepared for major rules with economically
significant effects of $100 million or more in any 1 year. We estimate
this final rule with comment period will not reach the economically
significant threshold of $100 million in benefits and costs and
consequently is not a major rule under the Congressional Review Act.
The economic impact associated with this final rule relates to
changes it proposes to the November 25, 2008, final rule. The main
change estimated to have a budget impact is the Recovery Act's
exemption of Indians from premiums and cost sharing under certain
circumstances. The estimated budget impact of section 5006 of the
Recovery Act has been included in the FY 2011 President's budget. The
RFA requires agencies to analyze options for regulatory relief of small
businesses, if a rule has a significant impact on a

[[Page 30261]]

substantial number of small entities. The great majority of hospitals
and most other health care providers and suppliers are small entities,
either by being nonprofit organizations or by meeting the Small
Business Administration's (SBA) definition of a small business (having
revenues of less than $7 million to $34.5 million in any 1 year.)
Individuals and States are not included in the definition of a small
entity. Therefore, the Secretary has determined that this final rule
with comment period will not have a significant impact on a substantial
number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a metropolitan
statistical area and has fewer than 100 beds. Therefore, the Secretary
has determined that this final rule with comment period will not have a
significant impact on the operations of a substantial number of small
rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also
requires that agencies assess anticipated costs and benefits before
issuing any rule whose mandates require spending in any 1 year of $100
million in 1995 dollars, updated annually for inflation. In 2009, that
threshold is approximately $133 million. This final rule with comment
period will not impose spending costs on State, local, or tribal
governments in the aggregate, or by the private sector, of $133 million
in any one year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This final rule with comment period will not have
substantial direct requirement costs on State and local governments,
preempt State law, or otherwise have Federalism implications.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 447

Accounting, Administrative practice and procedure, Drugs, Grant
programs--Health, Health facilities, Health professions, Medicaid,
Reporting and recordkeeping requirements, Rural areas.

42 CFR Part 457

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

0
For the reasons set forth in the preamble, the Centers for Medicare &
Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 447--PAYMENTS FOR SERVICES

0
1. The authority citation for part 447 continues to read as follows:

Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).

0
2. Section 447.50 is amended by adding a new paragraph (b) to read as
follows:

Sec. 447.50 Cost sharing: Basis and purpose.

* * * * *
(b) Definitions. For the purposes of this subpart:
(1) Indian means any individual defined at 25 USC 1603(c), 1603(f),
or 1679(b), or who has been determined eligible as an Indian, pursuant
to Sec. 136.12 of this part. 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
following 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 promulgated 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.

0
3. Section 447.51 is amended by revising paragraph (a) and the
introductory text of paragraph (c) to read as follows:

Sec. 447.51 Requirements and options.

(a) The plan must provide that the Medicaid agency does not impose
any enrollment fee, premium, or similar charge for any services
available under the plan upon:
(1) Categorically needy individuals, as defined in Sec. 435.4 and
Sec. 436.3 of this subchapter, except for the following populations in
accordance with sections 1916(c), (d), (g), and (i) of the Act:
(i) A pregnant woman or an infant under one year of age described
in subparagraph (A) or (B) of section 1902(l)(1) of the Act, who is
receiving medical assistance on the basis of section
1902(a)(10)(A)(ii)(IX) of the Act and whose family income equals or
exceeds 150 percent of the Federal poverty level (FPL) applicable to a
family of the size involved;
(ii) A qualified disabled and working individual described in
section 1905(s) of the Act whose income exceeds 150 percent of the FPL;
(iii) An individual provided medical assistance only under section
1902(a)(10)(A)(ii)(XV) or section 1902(a)(10)(A)(ii)(XVI) of the Act
and the Ticket to Work and Work Incentives Improvement Act of 1999
(TWWIIA); and
(iv) A disabled child provided medical assistance under section
1902(a)(10)(A)(ii)(XIX) of the Act in accordance with the Family
Opportunity Act; and
(2) An Indian who either is eligible to receive or has received an
item or service furnished by an Indian health care provider or through
referral under contract health services.
* * * * *
(c) For each charge imposed under paragraph (a) or (b) of this
section, the plan must specify--
* * * * *

0
4. Section 447.53 is amended by revising paragraph (b)(4) and adding a
new paragraph (b)(6) to read as follows:

Sec. 447.53 Applicability; specification; multiple charges.

* * * * *
(b) * * *
(4) Emergency services. Services as defined at section 1932(b)(2)
of the Act and Sec. 438.114(a).
* * * * *
(6) Indians. Items and services furnished to an Indian directly by
an

[[Page 30262]]

Indian health care provider or through referral under contract health
services.
* * * * *

Sec. 447.54 [Amended]

0
5. Section 447.54 is amended by--
0
A. Republishing the introductory text.
0
B. Revising paragraph (a)(1), paragraph (a)(3)(ii), and paragraph
(a)(4).
0
C. Revising paragraph (b).
The revisions read as follows:

Sec. 447.54 Maximum allowable and nominal charges.

Except as provided at Sec. 447.62 through Sec. 447.82 of this
part, the following requirements must be met:
(a) Non-institutional services. Except as specified in paragraph
(b) of this section, for non-institutional services, the plan must
provide that the following requirements are met:
(1) For Federal FY 2009, any deductible it imposes does not exceed
$2.30 per month per family for each period of Medicaid eligibility. For
example, if Medicaid eligibility is certified for a 6-month period, the
maximum deductible which may be imposed on a family for that period of
eligibility is $13.80. In succeeding years, any deductible may not
exceed these amounts as updated each October 1 by the percentage
increase in the medical care component of the CPI-U for the period of
September to September ending in the preceding calendar year, and then
rounded to the next higher 5-cent increment.
* * * * *
(3) * * *
(ii) Thereafter, any copayments may not exceed these amounts as
updated each October 1 by the percentage increase in the medical care
component of the CPI-U for the period of September to September ending
in the preceding calendar year and then rounded to the next higher 5-
cent increment.
(4) For Federal FY 2009, any copayment that the State imposes for
services provided by a managed care organization (MCO) may not exceed
the copayment permitted under paragraph (a)(3)(i) of this section for
comparable services under a fee-for-service delivery system. When there
is no fee-for-service delivery system, the copayment may not exceed
$3.40 per visit. In succeeding years, any copayment may not exceed
these amounts as updated each October 1 by the percentage increase in
the medical care component of the CPI-U for the period of September to
September ending in the preceding calendar year and then rounded to the
next higher 5-cent increment.
(b) Waiver of the requirement that cost sharing amounts be nominal.
Upon approval from CMS, the requirement that cost sharing charges must
be nominal may be waived, in accordance with sections 1916(a)(3) and
1916(b)(3) of the Act and Sec. 431.57 of this chapter, for non-
emergency services furnished in a hospital emergency department, if the
State establishes to the satisfaction of the Secretary that alternative
sources of nonemergency, outpatient services are actually available and
accessible to Medicaid beneficiaries in a timely manner.
* * * * *

0
6. Section 447.55 is amended by revising paragraph (b) to read as
follows:

Sec. 447.55 Standard co-payment.

* * * * *
(b) This standard copayment amount for any service may be
determined by applying the maximum copayment amounts specified in Sec.
447.54(a) and (c) to the agency's average or typical payment for that
service. For example, if the agency's typical payment for prescribed
drugs is $4 to $5 per prescription, the agency might set a standard
copayment of $.60 per prescription. This standard copayment may be
adjusted based on updated copayments as permitted under Sec.
447.54(a)(3).

0
7. Section 447.57 is amended by adding a new paragraph (c) to read as
follows:

Sec. 447.57 Restrictions on payments to providers.

* * * * *
(c) Payment under Medicaid due to an Indian health care provider or
a health care provider through referral under contract health services
for directly furnishing an item or service to an Indian may not be
reduced by the amount of any enrollment fee, premium, or similar
charge, or any deductible, copayment, cost sharing, or similar charge
that otherwise would be due from the Indian.

0
8. Section 447.62 is revised to read as follows:

Sec. 447.62 Alternative premiums and cost sharing: Basis, purpose and
scope.

(a) Section 1916A of the Act sets forth options for a State through
a Medicaid State plan amendment to impose alternative premiums and cost
sharing, which are premiums and cost sharing that are not subject to
the limitations under section 1916 of the Act as described in
Sec. Sec. 447.51 through 447.56. For States that impose alternative
premiums or cost sharing, Sec. 447.64, Sec. 447.66, Sec. 447.68,
Sec. 447.70, Sec. 447.71, Sec. 447.72, Sec. 447.74, Sec. 447.76,
Sec. 447.78, Sec. 447.80, and Sec. 447.82 prescribe State plan
requirements and options for alternative premiums and cost sharing for
a group or groups of individuals (as specified by the State) for
services or items (as specified by the State) and the standards and
conditions under which States may impose them. The State may vary the
premiums and cost sharing among groups of individuals or types of
services or items, consistent with the limitations specified in this
subpart and section 1916A(a)(1) of the Social Security Act. Otherwise,
premiums and cost sharing must comply with the requirements described
in Sec. 447.50 through Sec. 447.60.
(b) Waivers of the limitations described in this subpart on
deductions, cost sharing, and similar charges may be granted only in
accordance with the provisions of section 1916(f) of the Act.

Sec. 447.64 [Amended]

0
9. Section 447.64 is amended by revising paragraphs (a), (c), and (d)
to read as follows:

Sec. 447.64 Alternative premiums, enrollment fees, or similar
charges: State plan requirements.

* * * * *
(a) The group or groups of individuals that may be subject to the
premiums, enrollment fees, or similar charges.
* * * * *
(c) The methodology used to determine family income for purposes of
the limitations on premiums related to family income level that are
described in Sec. 447.78(c) of this chapter, including the period and
periodicity of those determinations.
(d) The methodology used by the State to:
(1) Identify beneficiaries who are subject to premiums or cost
sharing for specific items or services; and
(2) If the State adopts cost sharing rules that could place
families at risk of reaching the total aggregate limit for premiums and
cost sharing under Medicaid, defined at Sec. 447.78, track
beneficiaries' incurred premiums and cost sharing through a mechanism
developed by the State that does not rely on beneficiaries, in order to
inform beneficiaries and providers of beneficiaries' liability and
notify beneficiaries and providers when individual beneficiaries have
incurred family out-of-pocket expenses up to that limit and are no
longer subject to further cost sharing for the remainder of the
family's current monthly or quarterly cap period.
* * * * *

0
10. Section 447.66 is amended by--

[[Page 30263]]

0
A. Adding a new paragraph (a)(7).
0
B. Adding a new paragraph (c).
The additions read as follows:

Sec. 447.66 General alternative premium protections.

(a) * * *
(7) An Indian who is eligible to receive or has received an item or
service furnished by an Indian health care provider or through referral
under contract health services.
* * * * *
(c) Nothing in this subsection shall be construed as restricting
the application of any other limitations on the imposition of premiums
that may apply to an individual receiving Medicaid who is an Indian.

0
11. Section 447.68 is amended by revising paragraphs (b) through (d)
and (f) to read as follows:

Sec. 447.68 Alternative copayments, coinsurance, deductibles, or
similar cost sharing charges: State plan requirements.

* * * * *
(b) The methodology used to determine family income, for purposes
of the limitations on cost sharing related to family income level that
are described in Sec. 447.78(c) of this chapter, including the period
and periodicity of those determinations.
(c) The schedule of the copayments, coinsurance, deductibles, or
similar cost sharing charges imposed for each item or service for which
a charge is imposed.
(d) The methodology used by the State to identify beneficiaries who
are subject to premiums or cost sharing for specific items or services
and, if families are at risk of reaching the total aggregate limit for
premiums and cost sharing under Medicaid defined at Sec. 447.78, track
beneficiaries' incurred premiums and cost sharing through a mechanism
developed by the State that does not rely on beneficiaries, in order to
inform beneficiaries and providers of beneficiaries' liability and
notify beneficiaries and providers when individual beneficiaries have
incurred family out-of-pocket expenses up to that limit and are no
longer subject to further cost sharing for the remainder of the
family's current monthly or quarterly cap period.
* * * * *
(f) The methodology used to ensure that:
(1) The aggregate amount of premiums and cost sharing imposed under
section 1916 and section 1916A of the Act for all individuals in the
family enrolled in Medicaid with family income above 100 percent of the
Federal poverty level (FPL) does not exceed 5 percent of the family's
income of the family involved.
(2) The aggregate amount of cost sharing imposed under section 1916
and section 1916A of the Act for all individuals in the family enrolled
in Medicaid with family income at or below 100 percent of the FPL does
not exceed 5 percent of the family's income of the family involved.
* * * * *

0
12. Section 447.70 is revised to read as follows:

Sec. 447.70 General alternative cost sharing protections.

(a) States may not impose alternative cost sharing for the
following items or services. Except as indicated, these limits do not
apply to alternative cost sharing for prescription drugs identified by
a State's Medicaid program as non-preferred within a class of such
drugs or for non-emergency use of the emergency room.
(1) Services furnished to individuals under 18 years of age who are
required to be provided Medicaid under section 1902(a)(10)(A)(i) of the
Act, including services furnished to individuals with respect to whom
child welfare services are being made available under Part B of title
IV of the Act on the basis of being a child in foster care and
individuals with respect to whom adoption or foster care assistance is
made available under Part E of that title, without regard to age.
(2) Preventive services, at a minimum the services specified at
Sec. 457.520, provided to children under 18 years of age regardless of
family income, which reflect the well baby and well child care and
immunizations in the Bright Futures guidelines issued by the American
Academy of Pediatrics.
(3) Services furnished to pregnant women, if those services relate
to the pregnancy or to any other medical condition which may complicate
the pregnancy.
(4) Services furnished to a terminally ill individual who is
receiving hospice care (as defined in section 1905(o) of the Act).
(5) Services furnished to any individual who is an inpatient in a
hospital, nursing facility, intermediate care facility for the mentally
retarded, or other medical institution, if the individual 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.
(6) Emergency services as defined at section 1932(b)(2) of the Act
and Sec. 438.114(a), except charges for services furnished after the
hospital has determined, based on the screening and any other services
required under Sec. 489.24 of this chapter, that the individual does
not need emergency services consistent with the requirements of
paragraph (b) of this section.
(7) Family planning services and supplies described in section
1905(a)(4)(C) of the Act, including contraceptives and other
pharmaceuticals for which the State claims or could claim Federal match
at the enhanced rate under section 1903(a)(5) of the Act for family
planning services and supplies.
(8) Services furnished to women who are receiving medical
assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XVIII) and 1902(aa) of the Act (breast or cervical
cancer provisions).
(9) Services furnished to disabled children who are receiving
medical assistance by virtue of the application of sections
1902(a)(10)(A)(ii)(XIX) and 1902(cc) of the Act, in accordance with the
Family Opportunity Act.
(10) Items and services furnished to an Indian directly by an
Indian health care provider or through referral under contract health
services.
(11) Preferred drugs within a class, or drugs not identified by the
State's Medicaid program as a non-preferred drug within a class, for
individuals for whom cost sharing may not otherwise be imposed as
described in paragraphs (a)(1) through (10) of this section.
(b) For the exempt populations specified in paragraph (a) of this
section, a State may impose nominal cost sharing as defined in Sec.
447.54 of this chapter for services furnished in a hospital emergency
department, other than those required under Sec. 489.24, if the
hospital has determined based on the medical screening required under
Sec. 489.24 that the individual does not need emergency services as
defined at section 1932(b)(2) of the Act and Sec. 438.114(a), the
requirements of Sec. 447.80(b)(1) are met, and the services are
available in a timely manner without cost sharing through an outpatient
department or another alternative non-emergency health care provider in
the geographic area of the hospital emergency department involved.
(c) In the case of a drug that a State's Medicaid program either
has identified as a preferred drug within a class or has not otherwise
identified as a non-preferred drug within a class, cost sharing may not
exceed the nominal levels permitted under section 1916 of the Act as
specified in Sec. 447.54 of this chapter. Cost sharing can be imposed

[[Page 30264]]

that exceeds the nominal levels permitted under section 1916 of the Act
for drugs that are identified by a State's Medicaid program as non-
preferred drugs within a class in accordance with section 1916A(c) of
the Act.
(d) In the case of a drug that is identified by a State's Medicaid
program as a non-preferred drug within a class, the cost sharing is
limited to the amount imposed for a preferred drug if the individual's
prescribing physician determines that the preferred drug for treatment
of the same condition either would be less effective for the individual
or would have adverse effects for the individual or both.
(e) States may exempt additional individuals, items, or services
from cost sharing.

0
13. Section 447.71 is amended by--
0
A. Revising paragraphs (b)(1), (b)(3), and (c).
0
B. Adding a new paragraph (d).
The additions and revisions read as follows:

Sec. 447.71 Alternative premium and cost sharing exemptions and
protections for individuals with family incomes at or below 100 percent
of the FPL.

* * * * *
(b) * * *
(1) The State may impose cost sharing under authority provided
under section 1916 of the Act and consistent with the levels described
in such section and Sec. 447.54.
* * * * *
(3) The State may impose cost sharing for non-emergency services
furnished in a hospital emergency department that does not exceed the
nominal amount as defined in Sec. 447.54 as long as the services are
available in a timely manner without cost sharing through an outpatient
department or other alternative non-emergency services health care
provider in the geographic area of the hospital emergency department
involved.
(c) Aggregate cost sharing under sections 1916 and 1916A of the Act
for all individuals in the family enrolled in Medicaid may not exceed
the maximum permitted under Sec. 447.78(b).
(d) The State may not impose alternative premiums and cost sharing
in accordance with section 1916A of the Act on individuals whose family
income is at or below 100 percent of the FPL, but may impose cost
sharing that does not exceed the nominal amount as defined at Sec.
447.54 and section 1916 of the Act.
0
14. Section 447.72 is amended by revising paragraphs (b) and (c) to
read as follows:

Sec. 447.72 Alternative premium and cost sharing exemptions and
protections for individuals with family incomes above 100 percent but
at or below 150 percent of the FPL.

* * * * *
(b) Cost sharing may be imposed under the State plan for
individuals whose family income exceeds 100 percent, but does not
exceed 150 percent, of the FPL if the cost sharing does not exceed 10
percent of the payment the agency makes for the item or service, with
the following exceptions:
(1) Cost sharing for non-preferred drugs cannot exceed the nominal
amount as defined in Sec. 447.54.
(2) Cost sharing for non-emergency services furnished in the
hospital emergency department cannot exceed twice the nominal amount as
defined in Sec. 447.54. A hospital must meet the requirements
described at Sec. 447.80(b)(2) before the cost sharing can be imposed.
(3) In the case of States that do not have fee-for-service payment
rates, any copayment that the State imposes for services provided by an
MCO to a Medicaid beneficiary, including a child covered under a
Medicaid expansion program for whom enhanced match is claimed under
title XXI of the Act, may not exceed $3.40 per visit for Federal FY
2009. Thereafter, any copayment may not exceed this amount as updated
each October 1 by the percentage increase in the medical care component
of the CPI-U for the period of September to September ending in the
preceding calendar year and then rounded to the next highest 5-cent
increment.
(c) Aggregate cost sharing under sections 1916 and 1916A of the Act
for all individuals in the family enrolled in Medicaid may not exceed
the maximum permitted under Sec. 447.78(a).

0
15. Section 447.74 is revised to read as follows:

Sec. 447.74 Alternative premium and cost sharing protections for
individuals with family incomes above 150 percent of the FPL.

(a) States may impose premiums under the State plan consistent with
the aggregate limits set forth in Sec. 447.78(a) on individuals whose
family income exceeds 150 percent of the FPL.
(b) Cost sharing may be imposed under the State plan on individuals
whose family income exceeds 150 percent of the FPL if the cost sharing
does not exceed 20 percent of the payment the agency makes for the item
(including a non-preferred drug) or service, with the following
exception: In the case of States that do not have fee-for-service
payment rates, any copayment that the State imposes for services
provided by an MCO to a Medicaid beneficiary, including a child covered
under a Medicaid expansion program for whom enhanced match is claimed
under title XXI of the Act, may not exceed $3.40 per visit for Federal
FY 2009. Thereafter, any copayment may not exceed this amount as
updated each October 1 by the percentage increase in the medical care
component of the CPI-U for the period of September to September ending
in the preceding calendar year and then rounded to the next highest 5-
cent increment.
(c) Aggregate premiums and cost sharing under sections 1916 and
1916A of the Act for all individuals in the family enrolled in Medicaid
may not exceed the maximum permitted under Sec. 447.78(a).

0
16. Section 447.76 is amended by revising paragraph (b)(1) and adding a
new paragraph (c) to read as follows:

Sec. 447.76 Public schedule.

* * * * *
(b) * * *
(1) Beneficiaries, at the time of their enrollment and reenrollment
after a redetermination of eligibility, and when premiums, cost sharing
charges, or aggregate limits are revised.
* * * * *
(c) Prior to submitting to the Centers for Medicare & Medicaid
Services for approval a State plan amendment (SPA) to establish
alternative premiums or cost sharing under section 1916A of the Act or
an amendment to modify substantially an existing plan for alternative
premiums or cost sharing, the State must provide the public with
advance notice of the amendment and reasonable opportunity to comment
with respect to such amendment in a form and manner provided under
applicable State law, and must submit documentation with the SPA to
demonstrate that this requirement was met.

0
17. Section 447.78 is revised to read as follows:

Sec. 447.78 Aggregate limits on alternative premiums and cost
sharing.

(a) The total aggregate amount of premiums and cost sharing imposed
under sections 1916 and 1916A of the Act for all individuals in a
family enrolled in Medicaid with family income above 100 percent of the
FPL may not exceed 5 percent of the family's income for the monthly or
quarterly period, as specified by the State in the State plan.
(b) The total aggregate amount of cost sharing imposed under
sections 1916 and 1916A of the Act for all individuals

[[Page 30265]]

in a family enrolled in Medicaid with family income at or below 100
percent of the FPL may not exceed 5 percent of the family's income for
the monthly or quarterly period, as specified by the State in the State
plan.
(c) Family income shall be determined in a manner, for such period,
and at such periodicity as specified by the State in the State plan,
including the use of such disregards as the State may provide and the
process for individuals to request a reassessment of the family's
aggregate limit if the family's income is reduced or if eligibility is
being terminated due to nonpayment of a premium.
(1) States may use gross income or any other methodology.
(2) States may use a different methodology for determining the
family's income to which the 5 percent aggregate limit is applied than
is used for determining income eligibility.

0
18. Section 447.80 is amended by--
0
A. Revising paragraph (a)(3), the introductory text of paragraph (b),
and paragraph (b)(2).
0
B. Adding a new paragraph (c).
The additions and revisions read as follows:

Sec. 447.80 Enforceability of alternative premiums and cost sharing.

* * * * *
(a) * * *
(3) Waive payment of a premium in any case where the State
determines that requiring the payment would create an undue hardship
for the individual.
(b) With respect to alternative cost sharing, a State may amend its
Medicaid State plan to permit a provider, including a pharmacy or
hospital, to require an individual, as a condition for receiving the
item or service, to pay the cost sharing charge, except as specified in
paragraphs (b)(1) through (3) of this section.
* * * * *
(2) A hospital that has determined after an appropriate medical
screening pursuant to Sec. 489.24 of this chapter, that an individual
does not need emergency services as defined at section 1932(b)(2) of
the Act and Sec. 438.114(a), before providing treatment and imposing
alternative cost sharing on an individual in accordance with Sec.
447.72(b)(2) and Sec. 447.74(b) of this chapter for non-emergency
services as defined in section 1916A(e)(4)(A) of the Act, must provide:
(i) The name and location of an available and accessible alternate
non-emergency services provider, as defined in section 1916A(e)(4)(B)
of the Act.
(ii) Information that the alternate provider can provide the
services in a timely manner with the imposition of a lesser cost
sharing amount or no cost sharing.
(iii) A referral to coordinate scheduling of treatment by this
provider.
* * * * *
(c) Nothing in paragraph (b)(2) of this section shall be construed
to:
(1) Limit a hospital's obligations with respect to screening and
stabilizing treatment of an emergency medical condition under section
1867 of the Act; or
(2) Modify any obligations under either State or Federal standards
relating to the application of a prudent-layperson standard with
respect to payment or coverage of emergency medical services by any
managed care organization.

Sec. 447.82 [Amended]

0
19. Section 447.82 is revised to read as follows:

Sec. 447.82 Restrictions on payments to providers.

(a) The plan must provide that the State Medicaid agency reduces
the payment it makes to a provider by the amount of a beneficiary's
cost sharing obligation, regardless of whether the provider
successfully collects the cost sharing.
(b) Payment that is due under Medicaid to an Indian health care
provider or a health care provider through referral under contract
health services for directly furnishing an item or service to an Indian
may not be reduced by the amount of any enrollment fee, premium, or
similar charge, or any deductible, copayment, cost sharing, or similar
charge that otherwise would be due.
(c) The plan must describe how the State identifies for providers,
ideally through the use of the automated systems, whether cost sharing
for a specific item or service may be imposed on an individual
beneficiary and whether the provider may require the beneficiary, as a
condition for receiving the item or service, to pay the cost sharing
charge.

PART 457--ALLOTMENTS AND GRANTS TO STATES

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

Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).

0
21. Section 457.555 is amended by revising paragraphs (a)(1)(i) and
(a)(2) to read as follows:

Sec. 457.555 Maximum allowable cost sharing charges on targeted low-
income children in families with income from 101 to 150 percent of the
FPL.

(a) * * * *
(1)(i) For Federal FY 2009, any co-payment or similar charge the
State imposes under a fee-for-service delivery system may not exceed
the amounts shown in the following table:

------------------------------------------------------------------------
Maximum
State payment for the service Copayment
------------------------------------------------------------------------
$15 or less................................................. $1.15
$15.01 to $40............................................... $2.30
$40.01 to $80............................................... $3.40
$80.01 or more.............................................. $5.70
------------------------------------------------------------------------

* * * * *
(2) For Federal FY 2009, any co-payment that the State imposes for
services provided by a managed care organization may not exceed $5.70
per visit. In succeeding years, any copayment may not exceed this
amount as updated each October 1 by the percentage increase in the
medical care component of the CPI-U for the period of September to
September ending in the preceding calendar year and then rounded to the
next higher 5-cent increment.
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)

Dated: April 22, 2010.
Marilyn Tavenner,
Acting Administrator and Chief Operating Officer, Centers for Medicare
& Medicaid Services.
Approved: May 18, 2010.
Kathleen Sebelius,
Secretary.
[FR Doc. 2010-12954 Filed 5-27-10; 8:45 am]
BILLING CODE 4120-01-P