[Federal Register Volume 62, Number 176 (Thursday, September 11, 1997)]
[Rules and Regulations]
[Pages 47896-47903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-24266]
[[Page 47895]]
_______________________________________________________________________
Part IV
Department of Health and Human Services
_______________________________________________________________________
Health Care Financing Administration
_______________________________________________________________________
42 CFR Part 440
Personal Care Services Medicaid Program Coverage; Final Rule
Federal Register / Vol. 62, No. 176 / Thursday, September 11, 1997 /
Rules and Regulations
[[Page 47896]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 440
[MB-071-F]
RIN 0938-AH00
Medicaid Program; Coverage of Personal Care Services
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule.
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SUMMARY: This final rule specifies the revised requirements for
Medicaid coverage of personal care services furnished in a home or
other location as an optional benefit, effective for services furnished
on or after October 1, 1994. In particular, this final rule specifies
that personal care services may be furnished in a home or other
location by any individual who is qualified to do so. This rule
conforms the Medicaid regulations to the provisions of section
13601(a)(5) of the Omnibus Budget Reconciliation Act of 1993, which
added section 1905(a)(24) to the Social Security Act. Additionally, we
are making two minor changes to the Medicaid regulations concerning
home health services.
EFFECTIVE DATE: November 10, 1977.
FOR FURTHER INFORMATION CONTACT: Terese Klitenic, (410) 786-5942.
SUPPLEMENTARY INFORMATION:
I. Background
Under section 1902(a)(10) of the Social Security Act (the Act),
States with Medicaid programs must provide certain basic services to
Medicaid recipients. Section 1905(a) of the Act defines the required
and optional services that are provided as medical assistance. Before
the enactment of the Omnibus Budget Reconciliation Act of 1990 (OBRA
'90, Public Law 101-508), a State had the option to elect to cover
personal care services under its Medicaid State plan. Although not
specifically mentioned in section 1905(a) of the Act, personal care
services could be covered under section 1905(a)(22) of the Act
(redesignated as section 1905(a)(25) of the Act on November 5, 1990),
under which a State may furnish any additional services specified by
the Secretary and recognized under State law. In regulations at 42 CFR
440.170(f), the Secretary specified that personal care services may be
covered.
Section 4721 of OBRA '90 amended section 1905(a)(7) of the Act to
include personal care services as part of the home health services
benefit and to impose certain conditions on the provision of personal
care services, effective for services furnished on or after October 1,
1994. This amendment would have had a significant effect since, under
section 1902(a)(10)(D) of the Act, home health services are a mandatory
benefit for all Medicaid recipients eligible for nursing facility
services under the State plan. Thus, had section 1905(a)(7) of the Act
not been further amended (as discussed below) before the effective date
of section 4721 of OBRA '90, personal care services would have become a
mandatory benefit for all recipients eligible for nursing facility
services, effective October 1, 1994.
Before the provisions of OBRA '90 became effective, the Omnibus
Budget Reconciliation Act of 1993 (OBRA '93, Public Law 103-66) was
enacted on August 10, 1993. Section 13601(a)(1) of OBRA '93 amended
section 1905(a)(7) of the Act to remove personal care services from the
definition of home health services. Additionally, section 13601(a)(5)
of OBRA '93 added a new paragraph (24) to section 1905(a) of the Act,
to include payment for personal care services under the definition of
medical assistance. Under section 1905(a)(24) of the Act, personal care
services furnished to an individual who is not an inpatient or resident
of a hospital, nursing facility, intermediate care facility for persons
with mental retardation (ICF/MR), or institution for mental disease is
an optional benefit for which States may provide medical assistance
payments. The statute specifies that personal care services must be:
(1) Authorized for an individual by a physician in accordance with a
plan of treatment or (at the option of the State) otherwise authorized
for the individual in accordance with a service plan approved by the
State; (2) provided by an individual who is qualified to provide such
services and who is not a member of the individual's family; and (3)
furnished in a home or other location. This amendment was effective
October 1, 1994. Therefore, as a result of the legislative changes made
by OBRA '93, personal care services continue to be an optional State
plan benefit, and are now authorized under section 1905(a)(24) of the
Act, effective for services furnished on or after October 1, 1994.
II. Issuance of the Proposed Rule
A. Personal Care Services in a Home or Other Location (Sec. 440.167)
On March 8, 1996, we published in the Federal Register a proposed
rule that specified that personal care services may be furnished in a
home or other location by any individual who is qualified to do so (61
FR 9405). Throughout the preamble to the proposed rule, we emphasized
our main goal in implementing the statutory provisions regarding
personal care services. Specifically, our objective was to provide
States maximum flexibility in tailoring their Medicaid programs to meet
the needs of recipients while also setting guidelines so that States
that choose to offer the personal care services benefit furnish quality
services in an effective manner.
In the preamble to the proposed rule, we stated that as
historically used in the Medicaid program, personal care services means
services related to a patient's physical requirements, such as
assistance with eating, bathing, dressing, personal hygiene, activities
of daily living, bladder and bowel requirements, and taking medications
(61 FR 9406). These services primarily involve ``hands on'' assistance
by a personal care attendant with a recipient's physical dependency
needs (as opposed to purely housekeeping services). We noted that
although personal care services may be similar to or overlap some
services furnished by home health aides, skilled services that may be
performed only by a health professional are not considered personal
care services. Alternatively, services that require a lower level of
skill such as personal care services may also be provided by home
health aides under the home health benefit. We did not propose to
include the above description of personal care services in the
regulations. The specific changes we proposed to the regulations are
set forth below:
The existing regulations at Sec. 440.170 specify that personal care
services in a recipient's home means services prescribed by a physician
in accordance with the recipient's plan of treatment, and furnished by
an individual who is (1) qualified to provide the services, (2)
supervised by a registered nurse, and (3) not a member of the
recipient's family. The existing regulations do not provide for
personal care services furnished in settings other than the recipient's
home. To conform the regulations to the provisions of section
1905(a)(24) of the Act, we proposed to add a new Sec. 440.167,
``Personal care services in a home or other location.'' We proposed
[[Page 47897]]
that personal care services are services furnished to an individual who
is not an inpatient or resident of a hospital, nursing facility,
intermediate care facility for persons with mental retardation, or
institution for mental disease, that are: (1) Authorized for the
individual by a physician in accordance with a plan of treatment or (at
the option of the State) otherwise authorized for the individual in
accordance with a service plan approved by the State; (2) provided by
an individual who is qualified to provide such services and who is not
a member of the individual's family; and (3) furnished in a home, and
if the State chooses, in another location.
Since section 1905(a)(24) of the Act does not require that the
services be supervised by a registered nurse, we proposed that we would
not require such supervision in new Sec. 440.167. In addition, we
proposed that States that elect to offer the personal care services
benefit must, at a minimum, cover personal care services provided in
the home, but also have the option to cover personal care services
provided in other locations. We set forth a detailed discussion of
alternatives that we considered in implementing the provision of OBRA
'93 that allows States to cover personal care services provided outside
the home (61 FR 9406).
We proposed to leave to the State's option the decision of whether
personal care services are to be authorized by a physician in
accordance with a plan of treatment, or otherwise authorized in
accordance with a service plan approved by the State. Similarly, we
proposed to permit States to determine, through development of provider
qualifications, which individuals are qualified to provide personal
care services (other than family members).
Section 1905(a)(24)(B) of the Act specifies that, for Medicaid
purposes, personal care services may not be furnished by a member of
the individual's family. To provide for more clarity and consistency in
this regard, we proposed to define family members under new
Sec. 440.167(b) as spouses of recipients and parents (or stepparents)
of minor recipients. Finally, since personal care services are now an
optional benefit under section 1905(a)(24) of the Act, we proposed to
remove existing Sec. 440.170(f), which provides for coverage of
personal care services in a recipient's home as part of any other
medical care or remedial care recognized under State law and specified
by the Secretary.
B. Proposed Changes Concerning Home Health Services (Sec. 440.70)
We proposed several changes to the regulations concerning home
health services. Specifically, we proposed to revise Sec. 440.70(b)(3)
to provide that the frequency of physician review of a recipient's need
for medical supplies, equipment, and appliances suitable for use in the
home under the home health benefit would be determined on a case-by-
case basis depending on the nature of the item prescribed (rather than
every 60 days, as provided for in the existing regulations). Absent
changes in a recipient's condition, we do not believe that a
recipient's need for medical equipment necessitates routine inclusion
in a plan of care reviewed every 60 days by a physician.
Additionally, existing Sec. 440.70(d) defines a home health agency
for purposes of Medicaid reimbursement as a public or private agency or
organization, or part of an agency or organization, that meets
requirements for participation in Medicare. We proposed to revise this
definition to indicate that in order to participate in Medicaid, the
agency must meet Medicare requirements for participation as well as any
additional standards the State may wish to apply that are not in
conflict with Federal requirements. Finally, we proposed a technical
change to Sec. 440.70(c) to remove an obsolete reference to subparts F
and G of part 442.
III. Discussion of Public Comments and Departmental Responses
We received 73 timely comments in response to the proposed rule. A
summary of these comments and our responses follow.
Comment: Many commenters disagreed with our proposal to eliminate
the requirement that personal care services be supervised by a
registered nurse. The commenters indicated that the registered nurse is
the only medical contact many (mostly elderly) beneficiaries have and
that the nurse is instrumental in identifying health needs that require
immediate attention by a health care professional.
Response: Section 1905(a)(24) of the Act, as added by OBRA ``93,
does not specify that personal care services must be supervised by a
registered nurse. Therefore, we proposed to remove the requirement from
the existing regulations. While we believe that it was clearly the
intent of Congress to eliminate this requirement from the statute, we
agree with the commenters that there may be situations in which
individuals providing personal care services need supervision. However,
while some individuals' conditions may dictate a need for nurse
supervision, many individuals receiving personal care services are
either capable of directing their own care or have needs that are not
based on a ``medical'' condition (for example, individuals with mental
retardation). Additionally, a stable, physically disabled beneficiary
without cognitive impairments may not need supervision of his or her
personal care attendant. In some cases, supervision of personal care
services by a registered nurse may be unnecessary, but the services of
a case manager may be appropriate to oversee the individual's needs. We
note that case management services could be reimbursed as either
administrative costs or, as applicable, targeted case management
services under Medicaid. Our revision to the regulations does not
prohibit the supervision of a registered nurse; rather, it allows
States to make the determination of when supervision of personal care
services is necessary and what type of professional is qualified to
supervise the personal care attendant. Therefore, we believe that the
need for supervision, whether by a registered nurse or another
individual, should be made on a case-by-case basis by the State.
Comment: A few commenters were concerned that we did not define
``qualified'' personal care providers. Others suggested that we require
States to establish criteria for determining provider qualifications.
In addition, several commenters recommended that, without the nursing
supervision requirement, we establish Federal quality assurance
standards or minimal standards of training or testing for personal care
providers.
Response: We are not establishing provider qualifications for
personal care services. Rather, in the interest of maintaining a high
level of flexibility in providing personal care services, we suggest
that States develop their own provider qualifications and establish
mechanisms for quality assurance. While we recognize the importance of
provider qualifications and quality assurance, we also firmly believe
in allowing States the greatest flexibility in designing their Medicaid
programs. There are several methods States may use to ensure that
recipients are receiving high quality personal care services. For
example, States may opt to screen personal care attendants before they
are employed and/or train them afterward or allow the recipient to be
the judge of quality through an initial screening. Alternatively,
States may require agency providers to train their
[[Page 47898]]
employees on the job. State level oversight of overall program
compliance standards, case level oversight, attendant training and
screening, and recipient complaint and grievance mechanisms are ways in
which States can influence the quality of their personal care programs.
In this way, States can best address the needs of their target
populations (for example, individuals with AIDS or with physical
disabilities) and set unique provider qualifications and quality
assurance mechanisms. We note that home health aides employed by home
health agencies may sometimes provide personal care services. Home
health aides that provide only personal care services under Medicaid
need only meet the qualifications set forth at Sec. 484.36(e) (and not
other qualifications for home health aide services).
Comment: Some commenters disagreed with our proposal that States
electing to offer personal care services must cover these services when
provided in the home and may also choose to cover personal care
services provided in other locations. The commenters believed that we
should require States to provide the services in locations outside the
home. One commenter stated that we should indicate that assisted living
facilities may be considered an individual's home. Other commenters
asked that we clarify the meaning of ``other locations.''
Response: In the proposed rule, we set forth a detailed discussion
of options we considered for implementing the provision of OBRA '93
that allows States to cover personal care services outside the home (61
FR 9406). We proposed that States electing the personal care services
benefit must provide the services in the home but may also choose to
provide personal care in locations outside the home. We stated that our
main goal in implementing the provision was to afford States maximum
flexibility in tailoring their Medicaid programs to meet the needs of
their recipients while also expanding the settings in which personal
care services may be provided.
We do not believe that adopting the commenters' suggestion that we
require States to provide the services in the home and in other
locations would be appropriate since section 1905(a)(24)(C) of the Act
refers to services ``furnished in a home or other location.'' We
believe that Congress clearly did not intend to impose such a mandate
on State Medicaid programs. Moreover, a policy such as the one
suggested by the commenters could work against the best interests of
recipients if States choose not to offer the personal care services
benefit at all because of the expense involved in covering the services
both inside and outside the home. In addition, the Medicaid program has
always given States latitude in establishing the criteria or conditions
under which optional services (such as personal care) may be covered,
as long as the services available are sufficient to achieve their
purpose. States have the flexibility to define optional services to
include less than the full array of services that could be covered
under the regulatory definitions, if they so choose. (In accordance
with section 1905(r)(5) of the Act, coverage of personal care services
outside the home is not optional with respect to those individuals who
are eligible for the Early and Periodic Screening, Diagnostic, and
Treatment (EPSDT) program. Personal care services outside the home are
mandatory for these individuals when medically necessary under the
EPSDT program.)
We note that an individual need not receive personal care services
inside the home to be eligible to receive them in another location.
Rather, as stated above, a State that opts to furnish personal care
services must provide them inside the home to recipients that need them
in that setting, but also has the option to provide them in other
locations. Thus, depending on whether the State also chooses to provide
personal care services outside the home, an individual recipient could
receive personal care services inside the home, outside the home or in
both locations. We believe that our policy is the most appropriate
interpretation of the statute, is in the best interest of recipients,
and gives States the discretion necessary to operate their programs in
an efficient manner.
With regard to the other issues raised by commenters, States may
consider an assisted living facility as an individual's home but we do
not believe we need to add this requirement to the regulations.
Additionally, ``other locations'' may be any location, as specified by
the State, except for the statutorily excluded locations set forth in
section 1905(a)(24) of the Act (hospital, nursing facility, or ICF/MR).
Comment: One commenter disagreed with our position that the EPSDT
provisions mandate coverage of personal care services outside the home
when medically necessary.
Response: As stated above, under section 1905(r)(5) of the Act, the
provision of medically necessary personal care services outside the
home is not an option but a mandate for individuals eligible under the
EPSDT program. The EPSDT benefit includes all medically necessary
services described in section 1905(a) of the Act, whether or not such
services are covered under the State's Medicaid plan. Therefore,
personal care services must be provided outside the home when medically
necessary to individuals under the EPSDT program.
Comment: Some commenters disagreed with our proposed definition of
personal care services and others believed that we should define the
services in regulation. The commenters recommended that we provide a
detailed description of the services that can be provided under the
personal care services benefit in the regulatory language. One
commenter indicated that personal care services should include those
that are delegated by a nurse or physician to an unlicensed personal
care provider. They also suggested that the definition be revised to
delete reference to physical tasks while referring to assistance with
both activities of daily living (ADLs) and instrumental activities of
daily living (IADLs), including assistance with cognitive tasks and
services to prevent an individual from harming himself. One commenter
suggested changing the name of the service from personal care services
to ``personal assistant services.'' One commenter asserted that
assistance with taking medications should not be included as a personal
care service.
Response: As stated in the proposed rule, in order to more easily
address changes that may occur in the definition and delivery of
personal care services and to allow greatest State flexibility, in the
near future we plan to publish in a State Medicaid Manual instruction a
definition that States may use. As suggested by the commenter, we plan
to define the services in terms of assistance with ADLs and IADLs.
Services such as those delegated by nurses or physicians to personal
care attendants may be provided so long as the delegation is in keeping
with State law or regulation and the services fit within the personal
care services benefit covered under a State's plan. Services such as
assistance with taking medications would be allowed if they are
permissible in States' Nurse Practice Acts, although States may need to
ensure proper training is provided when necessary. We will not change
the name of the service as suggested, as the regulations now are
consistent with the statutory language.
Comment: Some commenters were concerned about our proposed
definition of ``family member'' for purposes of individuals providing
personal care services. A few commenters suggested that we expand the
definition to preclude Medicaid
[[Page 47899]]
coverage of personal care services provided by children, grandchildren,
and legal guardians of recipients. Other commenters believed that
parents and spouses should be allowed to provide personal care
services. Another commenter recommended that stepparents be allowed to
provide personal care services in States where stepparents are not
legally responsible for the recipient. Finally, several commenters
disagreed with our proposal to allow States to further restrict family
members from providing services and indicated that States should be
required to limit excluded family members to spouses and parents.
Response: Section 1905(a)(24)(B) of the Act specifies that personal
care services may not be furnished by a member of the individual's
family. We proposed to define family members as spouses of recipients
and parents (or stepparents) of minor recipients. Additionally, we
proposed that States could further restrict which family members could
qualify as providers by extending the definition to apply to family
members other than spouses and parents.
To provide for more clarity and consistency, we have revised the
definition of family member at new Sec. 440.167(b) to provide that a
family member is a legally responsible relative. Thus, spouses of
recipients and parents of minor recipients (including stepparents who
are legally responsible for minor children) are included in the
definition of family member. This definition is identical to the
revised definition that applies to personal care services provided
under a home and community-based services waiver.
Congress clearly intended to preclude family members from providing
personal care services and we believe our revised definition is the
most reasonable interpretation of the term. Furthermore, we have always
maintained that spouses and parents are inherently responsible for
meeting the personal care needs of their family members, and,
therefore, it would not be appropriate to allow Medicaid reimbursement
for such services. If stepparents are not legally responsible for the
recipient in some States, they could provide personal care services
under our revised definition. However, because States can further
restrict which family members can qualify as providers by extending the
definition to apply to individuals other than those legally responsible
for the recipient, States could choose to exclude stepparents
regardless of their legal responsibility. In addition, by allowing
States to further define ``family members'' for purposes of personal
care services, States can tailor their programs to meet their
individual needs.
Comment: A few commenters indicated that the personal care services
benefit should be a mandatory service that States must provide under
their Medicaid programs. One commenter believed that the regulation
should specifically allow various methods of delivering personal care
services (for example, vouchers, individual providers, consumer-
directed agency models, or traditional agency models).
Response: The Medicaid program is a Federal-State program that
provides for mandatory services that States must provide and optional
services that States may choose to provide. Sections 1902(a)(10)(A) and
1905(a) of the Act define those services that are optional and those
that are mandatory. Under section 1905(a)(24) of the Act, personal care
services are an optional benefit that States may choose to provide to
their Medicaid populations. To mandate that States provide personal
care services would require legislative action by Congress. With regard
to methods for delivering personal care services, we believe in
allowing States the flexibility to determine the best method of
providing services and will not specify such methods in a regulation.
Comment: One commenter suggested that we retain the requirement for
physician plan of care authorization for personal care services. The
commenter believed that eliminating this requirement will lead to fraud
and excess spending.
Response: Section 1905(a)(24) of the Act provides that personal
care services must be authorized ``by a physician in accordance with a
plan of treatment or (at the option of the State) otherwise authorized
for the individual in accordance with a service plan approved by the
State.'' In accordance with this section of the Act, we proposed to
include this provision in new Sec. 440.167. We believe that the statute
clearly indicates Congress' intent to allow States the flexibility to
utilize alternative means of plan of care authorization. Further,
regarding the commenter's concern that the elimination of the
requirement for physician authorization will encourage fraud, we
believe that it is in the best interest of States to control spending
and to establish methods to prevent providers from engaging in
fraudulent activities. Our revisions do not preclude physician
authorization of personal care services. Rather, in accordance with the
statute, we are allowing States to determine the appropriate method for
plan of care authorization. Therefore, we will not continue to require
that the plan of care be authorized by a physician.
Comment: One commenter disagreed with our revision to the frequency
of review of an individual's plan of care for medical supplies,
equipment, and appliances suitable for use in the home under the home
health services benefit. The commenter was concerned that our proposal
might compromise quality of care and utilization control concerns.
Response: We proposed that Sec. 440.70(b)(3) be revised to provide
that physician review of a recipient's need for medical supplies,
equipment, and appliances suitable for use in the home under the home
health benefit would be required annually instead of every 60 days. The
frequency of review on other than an annual basis would be determined
by the State on a case-by-case basis depending on the nature of the
item prescribed. We have found that, in many cases, once a recipient's
need for medical supplies, equipment, and appliances is indicated by a
physician, that need is unlikely to change within 60 days. A
recipient's need for supplies or pieces of equipment that generally
tend to be used on a long-term basis would not be reviewed as
frequently as equipment that is usually used only temporarily. For
example, review of the need for a wheelchair need not be as frequent as
review of the need for an oxygen concentrator. In all cases, a
physician's order for the equipment would be required initially, and
frequency of further review of a recipient's continuing needs would
depend on the type of equipment prescribed. We believe that the
requirement for annual review of medical supplies and equipment
balances States flexibility in furnishing home health services with
providing an appropriate level of oversight. In addition, this may
allow a decrease in physicians' paperwork burden, time, and costs.
Comment: Two commenters disagreed with our proposal to revise the
definition of a home health agency for purposes of Medicaid
reimbursement to indicate that in order to participate in Medicaid, the
agency must meet Medicare requirements for participation as well as any
additional standards the State may wish to apply that are not in
conflict with Federal requirements.
Response: Under this provision a State would have the option of
imposing additional standards on home health agencies for participation
in Medicaid beyond the Medicare conditions of participation. Our
intention in revising the home health agency definition is to afford
States greater flexibility in
[[Page 47900]]
establishing Medicaid program requirements tailored to their own
specific needs. This will enable States to conform existing State and
Federal requirements but by no means mandates that additional
requirements be established.
Comment: One commenter indicated that our proposed revision to
Sec. 440.70(c) would erroneously preclude home health services from
being provided to ICF/MR residents regardless of whether those services
are not otherwise available.
Response: We proposed to make a technical revision to
Sec. 440.70(c) to remove an obsolete reference to subparts F and G of
part 442. We agree with the commenter that our proposed revision would
have the effect of precluding home health services from being made
available to ICF/MR residents even when the services are not otherwise
available. We have revised the language in Sec. 440.70(c) to correct
this error.
IV. Provisions of the Final Rule
We are adopting the proposed rule as final with some revisions.
Specifically:
We have revised Sec. 440.70(c) to provide that a
recipient's place of residence, for home health services, does not
include a hospital, nursing facility, or ICF/MR, except for home health
services in an ICF/MR that are not required to be provided by the
facility under subpart I of part 483. We also have reinstated the
example given.
We have revised the definition of family member at
proposed Sec. 440.167(b) to provide that a family member is a legally
responsible relative.
In the proposed rule, we failed to include language
currently located in existing Sec. 440.170(f) in new Sec. 440.167.
Specifically, the introductory text of existing Sec. 440.170(f) permits
States to define personal care services differently for purposes of a
section 1915(c) waiver. We have revised new Sec. 440.167 to include
this provision.
V. Impact Statement
A. Background
For proposed rules such as this, we generally prepare a regulatory
flexibility analysis that is consistent with the Regulatory Flexibility
Act (RFA) (5 U.S.C. 601 through 612), unless we certify that a final
rule will not have a significant economic impact on a substantial
number of small entities. For purposes of a RFA, States and individuals
are not considered small entities. However, providers are considered
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis for any final rule that may have a
significant impact on the operation of a substantial number of small
rural hospitals. Such an 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 50 beds.
We are not preparing a rural impact statement since we have
determined, and we certify, that this final rule will not have a
significant impact on the operations of a substantial number of small
rural hospitals.
This final rule revises the Medicaid regulations to incorporate the
statutory requirements of section 1905(a)(24) of the Act concerning
personal care services. In accordance with the statute, we are
providing that the services must be: (1) Authorized for the individual
by a physician in accordance with a plan of treatment or (at the option
of the State) otherwise authorized for the individual in accordance
with a service plan approved by the State; (2) provided by an
individual who is qualified to provide the services and who is not a
member of the individual's family; and (3) furnished in a home or other
location.
In general, the provisions of this final rule are prescribed by
section 1905(a)(24) of the Act, as added by section 13601(a)(5) of
OBRA'93. The most significant change required under the statute is
that, as of October 1, 1994, the settings in which States may elect to
cover personal care services have been expanded to include locations
outside the home. We believe that this statutory provision will
increase Medicaid program expenditures regardless of whether or not we
promulgate this rule. The primary discretionary aspect of this rule is
the requirement that States electing to offer the personal care
services benefit must cover the services in the home and may choose to
cover them in any other location. As discussed in the proposed rule (61
FR 9406), we considered requiring States that elect to offer the
personal care services benefit to cover the services in both the home
and other locations. We also considered allowing States to cover the
services either in the home or in other locations. However, we believe
that the policy in this final rule is the most appropriate
interpretation of the statute and gives States the discretion necessary
to operate their programs in an efficient manner and in the best
interest of their recipients.
As noted above, the major provisions of this final rule are
required by the statute. Thus, costs associated with these regulations
are the result of legislation, and this rule, in and of itself, has
little or no independent effect or burden. However, to the extent that
a legislative provision being implemented through rulemaking may have a
significant effect on recipients or providers or may be viewed as
controversial, we believe that we should address any potential
concerns. In this instance, we believe it is desirable to inform the
public of our estimate of the substantial budgetary effect of these
statutory changes. The statutorily driven costs have been included in
the Medicaid budget baseline. In addition, we anticipate that a large
number of Medicaid recipients and providers, particularly home health
agencies, will be affected. The expansion of settings where personal
care services may be furnished represents an expansion of Medicaid
benefits that, if exercised by States, will likely have significant
effects, particularly on Medicaid recipients. Therefore, the following
discussion constitutes a voluntary regulatory flexibility analysis.
B. Impact of New Personal Care Services Provision
1. Overview
This analysis addresses a wide range of costs and benefits of this
rule. Whenever possible, we express impact quantitatively. In cases
where quantitative approaches are not feasible, we present our best
examination of determinable costs, benefits, and associated issues.
It is difficult to predict the economic impact of expanding the
settings where personal care services may be covered under Medicaid to
locations outside the home. We do not know the exact number and type of
personal care services furnished by individual States or how much these
services currently cost. Currently, approximately 32 States offer
coverage for personal care services, and we do not have cost data from
all of those States. States also differ in their definitions of
personal care services and rules concerning who may furnish them. Since
we do not have a full picture of the scope or cost of the different
services, it is difficult for us to quantify the impact these changes
will have. Other unknown factors regarding the future provision of
personal care services include which States now offering the personal
care services benefit will choose to cover services furnished outside
the home, how many additional States will opt to offer coverage, how
many Medicaid recipients will elect to use these
[[Page 47901]]
services in States in which the services have not been covered, and the
type and costs of these specific services. We believe that the majority
of those individuals who qualify for these services will elect to use
this benefit. Thus, although costs to States will rise as they begin to
pay for the additional services, there will be substantial benefits to
some providers and to Medicaid recipients as described in detail below.
2. Effects Upon Medicaid Recipients
Permitting States that elect to offer the personal care services
benefit the option of covering these services in locations outside the
home will have a positive effect on recipients. In States where
coverage has been provided only for personal care services in the home,
this final rule may expand the types of personal care services
available and/or the settings where recipients may receive these
services. Expansion of personal care services or settings could help
improve the quality of life for these recipients as well as for
recipients who have not been receiving personal care services. It also
could save money for some Medicaid recipients or their families since
they would no longer have to pay for these services. No data are
available on the number of recipients or family members who are
currently paying for these services. However, since only 32 States
currently pay for personal care services, we believe that a substantial
number of recipients who receive these services are paying for them out
of pocket.
3. Effects on Providers
By expanding the range of settings in which Medicaid will cover
personal care services, we anticipate that this final rule will
increase the demand for such services. We believe this effect will be
viewed as beneficial to providers of personal care services. If the
increase in demand for such services is sufficient, the number of
providers of personal care services may increase.
4. Effects on Medicaid Program Expenditures
This final rule implements the provisions of section 1905(a)(24) of
the Act by specifying that personal care services are an optional State
plan benefit under the Medicaid program. The rule allows States the
option to cover personal care services furnished in a home or other
location, effective for services furnished on or after October 1, 1994.
Table 1 below provides an estimate of the anticipated additional
Medicaid program expenditures associated with furnishing these services
outside the home, beginning on October 1, 1997. This estimate was made
using various assumptions about increases in utilization by current
recipients, adjusted for age, as well as assumptions about the induced
utilization that may result from the availability of these services. We
have assumed a utilization increase of 5 percent for the aged and 10
percent for the non-aged, and an overall induction factor of 10
percent. Given these assumptions, our estimate based on Federal budget
projections is shown in Table 1, which also provides a breakdown of
these costs. The first row of figures shows the Federal costs of
providing this optional State plan benefit. The second row shows the
Federal administrative costs associated with furnishing these services.
We estimate the following costs to the Medicaid program:
Table 1.--Personal Care Services Outside the Home
----------------------------------------------------------------------------------------------------------------
Federal medicaid cost estimate (in millions) \1\
----------------------------------------------------------------
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
----------------------------------------------------------------------------------------------------------------
Services....................................... $185 $440 $545 $685 $855
Admin. Costs................................... 10 15 15 15 20
----------------------------------------------------------------
Total.................................... 195 455 560 700 875
----------------------------------------------------------------------------------------------------------------
\1\ Figures are rounded to the nearest $5 million.
5. Effects on States
As stated above, the coverage of personal care services is optional
except when such services are medically necessary to correct or
ameliorate medical problems found as a result of a screen under the
EPSDT program. Many States (approximately 18) currently do not cover
optional personal care services. In those States that do offer the
personal care services benefit, services furnished outside the home
previously could not be covered. Therefore, there may be a substantial
economic impact on States that decide to provide coverage for personal
care services furnished outside the home. The varying State definitions
of personal care services and rules concerning who may furnish them
make it difficult to estimate accurately the potential increases in
expenditures for those States that choose to expand coverage of
personal care services to include services furnished outside the home.
However, Table 2 includes estimated costs to States, which are based
upon the same data and assumptions used to formulate the Federal
expenditures shown in Table 1.
Table 2.--Personal Care Services Outside the Home
----------------------------------------------------------------------------------------------------------------
Federal medicaid cost estimate (in millions) \1\
----------------------------------------------------------------
FY 1998 FY 1999 FY 2000 FY 2001 FY 2002
----------------------------------------------------------------------------------------------------------------
Services....................................... $140 $330 $415 $515 $645
Admin. Costs................................... 5 10 10 20 20
----------------------------------------------------------------
Total.................................... 145 340 425 535 665
----------------------------------------------------------------------------------------------------------------
\1\ Figures are rounded to the nearest $5 million.
[[Page 47902]]
C. Conclusion
The provisions of this final rule are required by section
1905(a)(24) of the Act. We believe that the provisions of this rule
adding personal care services as an optional State plan benefit and
expanding the possible settings for covering personal care services to
locations outside the home will benefit providers, recipients, and
their families.
As shown above in Tables 1 and 2, the costs to the Federal
Government and States associated with paying for personal care services
furnished outside the home are substantial. There may be some minor
offsetting of costs if the number of admissions to nursing facilities
decreases as a result of these provisions, but we have no data to
determine the potential savings, if any. Regardless of any possible
savings, the economic impact of these provisions is attributable to the
statutory changes mandated by OBRA '93.
In accordance with the provisions of Executive Order 12866, this
final rule was reviewed by the Office of Management and Budget.
This final rule has been classified as a major rule subject to
congressional review. The effective date is November 10, 1997. If,
however, at the conclusion of the congressional review process the
effective date has been changed, HCFA will publish a document in the
Federal Register to establish the actual effective date or to issue a
notice of termination of the final rule action.
VI. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, agencies are required to
provide 60-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, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995
requires that we solicit comment on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility, and clarity of the information to be
collected; and
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
Section Sec. 440.167 of this final rule contains requirements that
are subject to review by the Office of Management and Budget (OMB)
under the Paperwork Reduction Act of 1995. The rule requires States to
amend their State plans to specify whether they will cover personal
care services and in what locations they will provide the services.
Public reporting burden for this collection of information is estimated
to be 1 hour per State. A notice will be published in the Federal
Register when approval is obtained. Organizations and individuals
desiring to submit comments on the information collection and
recordkeeping requirements should mail them directly to the following:
Health Care Financing Administration, Office of Financial and Human
Resources, Management Planning and Analysis Staff, Room C2-26-17, 7500
Security Boulevard, Baltimore, Maryland 21255-1850.
Any comments submitted on the information collection requirements
must be received by these two offices on or before November 10, 1997,
to enable OMB to act promptly on HCFA's information collection approval
request.
List of Subjects in 42 CFR Part 440
Grant programs-health, Medicaid.
42 CFR part 440 is amended as set forth below:
PART 440--SERVICES: GENERAL PROVISIONS
1. The authority citation for part 440 continues to read as
follows:
Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).
Subpart A--Definitions
2. In Sec. 440.70, the introductory text of paragraphs (a) and (b)
are republished and paragraphs (a)(2), (b)(3), (c), and (d) are revised
to read as follows:
Sec. 440.70 Home health services.
(a) ``Home health services'' means the services in paragraph (b) of
this section that are provided to a recipient--
(1) * * *
(2) On his or her physician's orders as part of a written plan of
care that the physician reviews every 60 days, except as specified in
paragraph (b)(3) of this section.
(b) Home health services include the following services and items.
* * *
(3) Medical supplies, equipment, and appliances suitable for use in
the home.
(i) A recipient's need for medical supplies, equipment, and
appliances must be reviewed by a physician annually.
(ii) Frequency of further physician review of a recipient's
continuing need for the items is determined on a case-by-case basis,
based on the nature of the item prescribed;
* * * * *
(c) A recipient's place of residence, for home health services,
does not include a hospital, nursing facility, or intermediate care
facility for the mentally retarded, except for home health services in
an intermediate care facility for the mentally retarded that are not
required to be provided by the facility under subpart I of part 483.
For example, a registered nurse may provide short-term care for a
recipient in an intermediate care facility for the mentally retarded
during an acute illness to avoid the recipient's transfer to a nursing
facility.
(d) ``Home health agency'' means a public or private agency or
organization, or part of an agency or organization that meets
requirements for participation in Medicare and any additional standards
legally promulgated by the State that are not in conflict with Federal
requirements.
* * * * *
3. A new Sec. 440.167 is added to read as follows:
Sec. 440.167 Personal care services.
Unless defined differently by a State agency for purposes of a
waiver granted under part 441, subpart G of this chapter--
(a) ``Personal care services'' means services furnished to an
individual who is not an inpatient or resident of a hospital, nursing
facility, intermediate care facility for the mentally retarded, or
institution for mental disease that are--
(1) Authorized for the individual by a physician in accordance with
a plan of treatment or (at the option of the State) otherwise
authorized for the individual in accordance with a service plan
approved by the State;
(2) Provided by an individual who is qualified to provide such
services and who is not a member of the individual's family; and
(3) Furnished in a home, and at the State's option, in another
location.
(b) For purposes of this section, ``family member'' means a legally
responsible relative.
Sec. 440.170, [Amended]
4. Sec. 440.170, paragraph (f) is removed and reserved.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program.)
[[Page 47903]]
Dated: June 26, 1997.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 97-24266 Filed 9-10-97; 8:45 am]
BILLING CODE 4120-01-P
