02-6349. Notice of Hearing: Reconsideration of Disapproval of West Virginia State Plan Amendment (SPA) 01-05

AGENCY:

Centers for Medicare and Medicaid Services (CMS), HHS.

ACTION:

Notice of hearing.

SUMMARY:

This notice announces an administrative hearing to reconsider our decision to disapprove West Virginia SPA (01-05), on April 25, 2002 at 10 a.m.; Room 339; the Public Ledger Building; 150 SouthIndependence Mall West; Philadelphia, PA 19106-3499.

Closing Date: Requests to participate in the hearing as a party must be received by the presiding officer by April 2, 2002.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-HayesOffice of Hearings, Centers for Medicare Medicaid Services, Suite L 2520 Lord Baltimore Drive, Baltimore, Maryland 21244-2670, Telephone: [phone].

SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider our decision to disapprove West Virginia SPA (01-05).

Section 1116 of the Social Security Act (the Act) and 42 CFR part 430 establish HHS procedures that provide an administrative hearing for reconsideration of a disapproval of a State plan or plan amendment. The Centers for Medicare Medicaid Services (CMS) is required to publish a copy of the notice to a State Medicaid agency that informs the agency of the time and place of the hearing and the issues to be considered. If we subsequently notify the agency of additional issues that will be considered at the hearing, we will also publish that notice. Any individual or group that wants to participate in the hearing as a party must petition the presiding officer within 15 days after publication of this notice, in accordance with the requirements contained at 42 CFR 430.76(b)(2). Any interested person or organization that wants to participate as amicus curiae must petition the presiding officer before the hearing begins in accordance with the requirements contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the presiding officer will notify all participants.

The primary issue in the hearing is whether West Virginia's SPA 01-05 complies with the requirement of section 1917(b)(3) of the Act governing criteria for establishing an undue hardship under which the provisions governing mandatory estate recovery will be waived. That provision requires the State to use criteria established by the Secretary for determining whether estate recovery constitutes an undue hardship: 1. In resolving this issue, the hearing will consider whether publication in the State Medicaid Manual meets the requirements for adopting standards governing a homestead of modest value for purposes of qualifying for the undue hardship exception section 1917(b)(3); 2. The hearing will also consider if properly adopted, whether the Secretary appropriately applied these standards in disapproving the amendment.

West Virginia initially submitted SPA 01-05 on March 13, 2001. Section 1917 (b)(3) of the Act requires the state agency to establish procedures and standards to waive estate recoveries when such recoveries would cause an undue hardship as determined on the basis of criteria established by the Secretary. The State Medicaid Manual (SMM) defines one basis for an undue hardship as “a homestead of modest value.”

The SPA proposes to exempt homestead property based on a statewide arithmetic mean appraised value of a home that is to be updated yearly by the West Virginia Department of Tax and Revenue.

The CMS has informed West Virginia that it has provided standards for determining the maximum amount which can be excluded from estate recovery as a “homestead of modest value.” Section 3810.C1 provides that states may not set the threshold for the market value of a homestead of modest value so high as to negate the intent of the estate recovery program. It specifically notes that “a homestead of “modest value” can be defined as 50 percent or less of the average price of homes in the county where the homestead is located, as of the date of the beneficiary's death.” Under West Virginia's amendment, in many counties, the $50,735 homestead of modest value exemption is greater than 100 percent of the average appraised value of homes in the county. In others it is twice that amount. Accordingly, CMS found the amendment did not comport with the standards for defining a homestead of modest value, which a state may exempt as part of its undue hardship exemption.

The CMS has noted that West Virginia's statewide homestead exemption was not included in the amendment as part of its “undue hardship” waiver of the mandatory estate recovery. The State included this exemption in the State plan as a separate item. Any homestead exempted must be excluded either on the basis of “undue hardship” or that it is not cost-effective for the State to recover.

The notice to West Virginia announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

Nancy V. Atkins, MSN, RNC, NP, Commissioner, State of West Virginia, Department of Health and Human Services, Bureau for Medical Services, 350 Capitol Street, Room 251, Charleston, West Virginia 25301-3706

Dear Ms. Atkins:

I am responding to your request for reconsideration of the decision to disapprove West Virginia State Plan Amendment (SPA) 01-05.

The primary issue in the hearing is whether West Virginia's SPA 01-05 complies with the requirement of section 1917 (b)(3) of the Social Security Act (the Act) governing criteria for establishing an undue hardshipunder which the provisions governing mandatory estate recovery will be waived. That provision requires the State to use criteria established by the Secretary for determining whether estate recovery constitutes an undue hardship: 1. In resolving this issue, the hearing will consider whether publication in the State Medicaid Manual meets the requirements for adopting standards governing a homestead of modest value for purposes of qualifying for the undue hardship exception Section 1917(b)(3); 2. The hearing will also consider if properly adopted, whether the Secretary appropriately applied these standards in disapproving the amendment.

West Virginia initially submitted SPA 01-05 on March 13, 2001. Section 1917 (b)(3) of the Act requires the State agency to establish procedures and standards to waive estate recoveries when such recoveries would cause an undue hardship as determined on the basis of criteria established by the Secretary. The State Medicaid Manual (SMM) defines one basis for an undue hardship as “a homestead of modest value.”

The SPA proposes to exempt homestead property based on a statewide arithmetic mean appraised value of a home that is to be updated yearly by the West Virginia Department of Tax and Revenue.

The Centers for Medicare Medicaid Services (CMS) has informed West Virginia that it has provided standards for determining the maximum amount which can be excluded from estate recovery as a “homestead of modest value.” Section 3810.C1 provides that states may not set the threshold for the market value of a homestead of modest value so high as to negate the intent of the estate recovery program. It specifically notes that “a homestead of ‘modest value’ can be defined as 50 percent or less of the average price of homes in the county where the homestead is located, as of the date of the beneficiary's death.” Under West Virginia's amendment, in many counties, the $50,735 homestead of modest value exemption is greater than 100 percent of the average appraised value of homes in the county. In others it is twice that amount. Accordingly, CMS found the amendment did not comport with the standards for defining a homestead of modest value, which a state may exempt as part of its undue hardship exemption.

The CMS has noted that West Virginia's statewide homestead exemption was not included in the amendment as part of its “undue hardship” waiver of the mandatory estate recovery. The State included this exemption in the State plan as a separate item. Any homestead exempted must be excluded either on the basis of “undue hardship” or that it is not cost-effective for the State to recover.

I am scheduling a hearing on your request for reconsideration to be held on April 25, 2002, at 10 a.m.; Room 339; The Public Ledger Building; 150 South Independence Mall West; Philadelphia, Pennsylvania 19106-3499.

If this date is not acceptable, we would be glad to set another date that is mutually agreeable to the parties. The hearing will be governed by the procedures prescribed at 42 CFR, part 430.

I am designating Ms. Kathleen Scully-Hayes as the presiding officer. If these arrangements present any problems, please contact the presiding officer. In order to facilitate any communication which may be necessary between the parties to the hearing, please notify the presiding officer to indicate acceptability of the hearing date that has been scheduled and provide names of the individuals who will represent the State at the hearing. The presiding officer may be reached at [phone].

Sincerely,

Thomas A. Scully.

(Sect. 1116 of the Social Security Act (42 U.S.C. 1316); 42 CFR 430.18)

(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid Assistance Program)

Dated: March 7, 2002.

Thomas A. Scully,

Administrator, Centers for Medicare Medicaid Services.