[Federal Register Volume 62, Number 8 (Monday, January 13, 1997)]
[Rules and Regulations]
[Pages 1682-1685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-673]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 435
[MB-105-FC]
Medicaid Program; Redeterminations of Medicaid Eligibility Due to
Welfare Reform
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Final rule with comment period.
-----------------------------------------------------------------------
SUMMARY: The Personal Responsibility and Work Opportunity
Reconciliation Act of 1996 and the Contract with America Advancement
Act of 1996 created changes in Federal law affecting the eligibility of
large numbers of Medicaid recipients. These changes include revisions
to the definition of disability for children and to the eligibility
requirements of non-U.S. citizens and individuals receiving disability
cash assistance based on a finding of alcoholism and drug addiction.
This final rule with comment period protects Federal financial
participation
[[Page 1683]]
(FFP) in State Medicaid expenditures for States with unusual volumes of
eligibility redeterminations caused by these recent changes in the law.
We are making changes to the regulations to provide for additional time
for States to process these redeterminations and provide services
pending the redeterminations.
DATES: Effective date. These regulations are effective on January 13,
1997.
Comments. Written comments will be considered if we receive them at
the appropriate address, as provided below, no later than 5:00 p.m. on
March 14, 1997.
ADDRESSES: Mail written comments (one original and three copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: MB-105-FC, P.O. Box 7517,
Baltimore, Maryland 21207-0517.
If you prefer, you may deliver your written comments (one original
and three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room C5-09-26, Central Building, 7500 Security Boulevard, Baltimore,
Maryland 21244-1850
Office of Information and Regulatory Affairs.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code MB-105-FC. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(Phone: (202) 690-7890).
FOR FURTHER INFORMATION CONTACT: Bob Tomlinson, (410) 786-4463.
SUPPLEMENTARY INFORMATION:
I. Background
Two recent laws have brought about major changes in the cash
assistance programs under title IV-A (Aid to Families with Dependent
Children (AFDC)) and title XVI (Supplemental Security Income (SSI)) of
the Social Security Act, with substantial implications for Medicaid
eligibility. These two laws are: the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Public Law 104-193), enacted on
August 22, 1996, and the Contract with America Advancement Act of 1996
(Public Law 104-121), enacted on March 29, 1996. These laws have
affected the eligibility of individuals receiving cash payments by
replacing the Aid to Families with Dependent Children (AFDC) program
with a block grant to States for Temporary Assistance for Needy
Families (TANF) and eliminated the automatic linkage between cash
assistance to families and children and Medicaid. It replaced the
automatic link with special Medicaid eligibility rules primarily based
on whether the individuals would have received AFDC benefits under the
program in effect on July 16, 1996. These laws also affected the
eligibility of children who are receiving disability benefits under
SSI, individuals receiving SSI disability benefits based on a finding
of alcoholism and drug addiction, and non-U.S. citizens.
In most States, individuals who are eligible for AFDC or SSI are
(or were) also automatically eligible for Medicaid. These legislative
changes will result in a large number of individuals losing cash
assistance eligibility and therefore Medicaid. Under existing
regulations at 42 CFR 435.916 and 435.1003, States are required to
perform a redetermination of Medicaid eligibility in any case in which
an individual loses eligibility based on receipt of cash assistance and
that termination affects the individual's eligibility for Medicaid.
The legislative changes have created a substantial new workload for
States in the administration of their programs. We estimate that States
will have to perform redeterminations on approximately 1.6 million
individuals, most of which must occur by July 1, 1997. Considering this
volume of redeterminations, we believe that our existing regulations do
not allow sufficient time for States to comply with the requirements
without risking loss of FFP in their administrative expenditures. Our
existing regulations at Sec. 435.916 require that States must
``redetermine the eligibility of Medicaid recipients, with respect to
circumstances that may change, at least every 12 months * * * .'' The
regulations also require the State to promptly redetermine eligibility
when the State agency receives information about changes in a
recipient's circumstances that may affect the recipient's eligibility;
and, at the appropriate time, when the agency has information about
anticipated changed in a recipient's circumstances, such as the loss of
SSI payments because the individual has been found ineligible for SSI.
This requirement also applies when changes in Federal or State law
occur affecting the Medicaid eligibility of individuals or groups.
Regulations at Sec. 435.1003 provide that, with respect to individuals
who had been eligible for SSI, FFP is available until the end of the
month if the SSI termination notice is received from SSA by the 10th of
the month; and until the end of the following month if the SSA notice
is received after the 10th of the month. Both regulations require that
States determine or redetermine eligibility promptly.
States are required to redetermine the Medicaid eligibility of any
recipient who loses eligibility based on receipt of cash assistance.
The redetermination must examine whether or not the individual would be
Medicaid eligible on any other available basis under the State's
approved plan. For example, a person who loses SSI may still be
eligible for Medicaid as medically needy, optional categorically needy,
or even based on receipt of cash assistance under title IV-A. This
policy derives in part from the court decisions in Stenson v. Blum, 476
F.Supp., 1331 (S.D.N.Y. 1979) aff'd without opinion, 628 F.2d 1345 (2d
Cir. 1980) and Massachusetts Association of Older Americans v. Sharp
(700 F.2d 749 (1st Cir. 1983). In these cases, the courts ruled that
before a State may terminate an individual's Medicaid eligibility, it
must redetermine the individual's Medicaid eligibility on any other
available basis under the State's approved plan.
Section 435.1003 allows States a limited period of time to perform
redeterminations of individuals who have been determined ineligible for
SSI in order to be eligible for FFP. The time allowed varies between 20
and 45 days based on the date of receipt of information from SSA about
the individual's SSI eligibility.
States have expressed concerns regarding the time required to
perform these redeterminations, and thus the implications for potential
loss of FFP, given the current regulatory constraints and the
complexity of Medicaid eligibility determination and redetermination
processes. In situations such as those created by these recent laws, in
which States have large redetermination workloads and short timeframes
for adjusting the eligibility of affected beneficiaries, they believe
that more time is needed. States and HCFA are concerned that retaining
the existing time constraints would not allow sufficient time to
process such a volume adequately, and would result in sharply increased
appeals workloads, and the concomitant delays and expense attendant on
such appeals. In some cases, it possibly may result in the
[[Page 1684]]
inappropriate loss of Medicaid eligibility and potential harm to the
health of recipients. We believe that this approach may also shift the
burden of finding a basis for eligibility to the recipient, who may be
the least knowledgeable in this area.
II. Provisions of the Final Rule With Comment Period
Under current rules, when changes in Federal law cause a
significant change in eligibility for Medicaid and a consequent
increase in the eligibility determination/redetermination workload, two
equally undesirable results may occur. In an effort to comply with the
regulations, States may make inadequate or cursory redeterminations
that, in some cases, may result in inappropriate termination of
Medicaid eligibility. The affected recipients may be denied medical
care or become impoverished attempting to pay for care they do receive.
In the alternative, the State may take longer than permitted to make
the redetermination and thus risk denial of FFP. In either case, the
State risks loss of FFP or incurs increased administrative costs coping
with appeals or increased application workloads, while the individual
is unnecessarily deprived of the means to pay for needed medical care
with attendant adverse consequences.
To promote the proper and efficient administration of the Medicaid
program, we believe that when there is a change in Federal law that
significantly affects Medicaid eligibility, the Secretary should be
able to grant States additional time to redetermine eligibility without
risk of loss of FFP and to assure that redeterminations are not
performed hastily. We believe the Secretary is best able to determine
when additional time and FFP should be granted, because the granting of
additional time is intended to be used only when Federal law makes
significant changes in Medicaid eligibility requiring voluminous
redeterminations of eligibility.
Therefore, we have determined that when changes in Federal law
cause sharp increases in State eligibility redetermination workloads,
the Secretary should have the flexibility to authorize additional time
during which FFP would be available. Such flexibility assures that FFP
will be available to meet the redetermination workload while assuring
that the time and FFP available are directly proportional to the
expected volume of redeterminations arising from the particular
legislation.
A grant of additional time would be made only in exceptional
circumstances, such as the passage of recent Public Laws 104-193 and
104-121. This legislation requires a significant volume of
redeterminations, estimated at upwards of 1.6 million, most of which
must be performed within the next 9 months. It is for this reason that
we are providing in this notice that States may take up to 120 days to
process all redeterminations of Medicaid eligibility governed by 42 CFR
Sec. 435.1003 through the end of calendar year 1997 unless the
Secretary further extends the waiver.
The issue of whether more time should be routinely available to
States for completing redeterminations will likely be dealt with in a
separate regulation at a future date. We are not addressing that issue
in this regulation because we do not believe it is an appropriate
subject for an emergency regulation.
We considered providing a fixed but longer period of time than that
currently provided in Sec. 435.1003. However, such a fixed period would
not address the type of extraordinary circumstance, such as welfare
reform, which necessitates the changes we are making in this final rule
with comment period.
An alternative approach to providing more time, consistent with the
theme that a uniform time for redeterminations be used, would be to
provide 60 days to redetermine Medicaid eligibility for anyone losing
SSI or cash assistance under title IV-A, or in cases where there is a
change in circumstances of the recipient. This alternative would
include an escape clause similar to one already in existence in
Sec. 435.911, which permits States to take longer to make eligibility
determinations than the generally specified time period, when
extraordinary circumstances prevent adherence to the time standards.
Such an escape clause would permit States to take longer when a change
in Federal law necessitates large numbers of redeterminations without
risking loss of FFP. We did not adopt this option because of concerns
that such an open-ended redetermination period would require
substantially more monitoring by the Federal Government and
recordkeeping by States to ensure that when a State uses the escape
clause, the use is justified and the period of time for which it is
used is reasonable.
We are adding a new paragraph (c) to Sec. 435.1003 to provide that
when a change in Federal law affects the eligibility of large numbers
of Medicaid recipients, the Secretary may waive the otherwise
applicable FFP requirements and redetermination time limits. This is
done to make FFP available for a reasonable period of time, designated
by the Secretary, while States redetermine the eligibility of Medicaid
recipients. These recipients may otherwise lose Medicaid eligibility,
possibly due to loss of SSI eligibility, because of a change in Federal
law. In such situations, the States are given a reasonable period of
time, designated by the Secretary, to do the redetermination.
III. Waiver of Proposed Rule and 30-Day Delay in the Effective Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register for a substantive rule to provide a period for public
comment. However, we may waive that procedure if we find good cause
that notice and comment are impractical, unnecessary, or contrary to
the public interest. In addition we also normally provide a delay of 30
days in the effective date. However, if adherence to this procedure
would be impractical, unnecessary, or contrary to public interest, we
may waive the delay in the effective date.
We are adopting this regulation as a final with comment period
without publication of a notice of proposed rule making because of the
urgent need to provide the States with FFP in their Medicaid
expenditures for additional time for completing the massive number of
redeterminations caused by the recent statutory changes. This need is
critical because States must begin redetermining eligibility for large
numbers of individuals who may lose Medicaid or SSI beginning January
1, 1997. Publication of a proposed rule with a 60-day comment period
prior to publication of a final rule would cost valuable time in
processing the mandated redeterminations, and would leave large numbers
of beneficiaries without Medicaid or SSI beginning January 1, 1997.
Thus, we believe that it is contrary to the public interest to delay
implementation of the statutory provisions until the process of
publishing both proposed and final rules can be completed. Therefore,
we find good cause to waive proposed rulemaking and to issue these
regulations as final.
Also, because States must begin such redeterminations as of January
1, 1997, we are not making the effective date of the regulation the
usual 30 days after publication. Instead, we will make the regulation
effective on the date of publication. For the reasons discussed above,
we find good cause to waive the usual 30-day delay so that the
provisions may take effect upon publication of this final rule with
comment period.
Although we are publishing this as a final rule, we are providing a
60-day period for public comment. Because of the large number of items
of
[[Page 1685]]
correspondence we normally receive concerning regulations, we are not
able to acknowledge or respond to the comments individually. However,
if we decide that changes are necessary as a result of our
consideration of timely comments, we will issue a final rule and
respond to the comments in the preamble of that rule.
IV. Regulatory Impact Statement
For final rules with comment period, 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,
individuals and States are not considered to be small entities.
In addition, section 1102(b) of the Social Security Act requires us
to prepare a regulatory impact analysis for any final rule that may
have a significant impact on the operations of a substantial number of
small rural hospitals. Such an analysis must conform to the provisions
of section 604 of the RFA. With the exception of hospitals located in
certain rural counties adjacent to urban areas, 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 estimate that the costs of performing the redeterminations
arising from recent Federal laws will be substantial. We expect that
nearly 1,600,000 individuals will have their eligibility redetermined.
Of this number, most are SSI-eligible individuals, and of these,
500,000 involve redetermination of disability. We estimate that the
cost to the Medicaid program, emanating from Public Laws 104-193 and
104-121, of allowing a longer period of time to make eligibility
redeterminations on those individuals who may lose benefits to be
approximately $50 million (Federal share) in FY 1998. This is estimated
on the basis of the redeterminations occurring within one year of
implementation of this rule and requiring an approximate extra 75 days
to complete.
Because these final regulations affect only States and individuals,
which are not defined as small entities, we have determined, and we
certify, that this rule will not have a significant economic impact
under the threshold criteria of the RFA. Further, we certify, for the
same reasons, that this final rule does not have a significant impact
on the operations of a substantial number of small rural hospitals.
Therefore, we have not prepared a regulatory flexibility analysis or an
analysis of the effects of this rule on small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
V. Collection of Information Requirements
This rule does not impose any new information collection or
recordkeeping requirements that are subject to review by the Office of
Management and Budget under the Paperwork Reduction Act of 1995 (44
U.S.C. 3501 et seq.) The existing collection requirements under
Sec. 435.1003 are currently approved under OMB approval number 0938-
0247 through May 31, 1997.
Redetermination of eligibility is currently required for all
individuals whose eligibility is affected either by change in law or
change in individual circumstances. The passage of Public Laws 104-193
and 104-121 requires that SSA redetermine the SSI eligibility of large
numbers of recipients. Once SSA issues redetermination notices to the
affected individuals, States must redetermine Medicaid eligibility of
these individuals. Regulations at Sec. 435.1003 require that such
redeterminations be performed promptly. These new rules will not change
the redetermination requirement and the associated paperwork needed to
perform a redetermination. However, because of the change in Federal
law, there will be a substantial increase in the volume of
redeterminations States will have to make. These regulations are
designed to relieve the States of the pressures and costs of these
redeterminations by providing both more time and FFP to conduct the
redeterminations and to provide FFP in Medicaid expenditures while the
redeterminations are pending.
We estimate that each redetermination will involve approximately 18
hours.
List of Subjects in 42 CFR Part 435
Aid to Families with Dependent Children, Grant programs--health,
Medicaid, Reporting and recordkeeping requirements, Supplemental
Security Income (SSI), Wages.
42 CFR Part 435 is amended as follows:
PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA
1. The authority citation for part 435 continues to read as
follows:
Authority: Section 1102 of the Social Security Act (42 U.S.C.
1302).
2. In Sec. 435.1003, the title is revised, and a new paragraph (c)
is added to read as follows:
Sec. 435.1003 FFP for redeterminations.
* * * * *
(c) When a change in Federal law affects the eligibility of
substantial numbers of Medicaid recipients, the Secretary may waive the
otherwise applicable FFP requirements and redetermination time limits
of this section, in order to provide a reasonable time to complete such
redeterminations. The Secretary will designate an additional amount of
time beyond that allowed under paragraphs (a) and (b) of this section,
within which FFP will be available, to perform large numbers of
redeterminations arising from a change in Federal law.
(Catalog of Federal Domestic Assistance Program No. 93.778, Medical
Assistance Program)
Dated: December 10, 1996.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
Dated: December 20, 1996.
Donna E. Shalala,
Secretary.
[FR Doc. 97-673 Filed 1-10-97; 8:45 am]
BILLING CODE 4120-01-P
