2010-8498. Medicaid Program; State Allotments for Payment of Medicare Part B Premiums for Qualifying Individuals: Federal Fiscal Year 2009 and Federal Fiscal Year 2010

AGENCY:

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

ACTION:

Notice.

SUMMARY:

This notice sets forth final allotments available to States to pay the Medicare Part B premiums for Qualifying Individuals (QIs) for the Federal fiscal year (FY) 2009 and the preliminary QI allotments for FY 2010. The amounts of these QI allotments were determined in accordance with the methodology set forth in regulations, as amended in the Federal Register published on November 24, 2008, and reflect funding for the QI program made available under recent legislation.

DATES:

Effective dates: The final QI allotments for payment of Medicare Part B premiums for FY 2009 are effective October 1, 2008. The preliminary QI allotments for FY 2010 are effective October 1, 2009.

FOR FURTHER INFORMATION CONTACT:

Richard Strauss, [phone].

SUPPLEMENTARY INFORMATION:

I. Background

A. History of the QI Program

Section 1902 of the Social Security Act (the Act) sets forth the requirements for State plans for medical assistance. Before August 5, 1997, section 1902(a)(10)(E) of the Act specified that State Medicaid plans must provide for some or all types of Medicare cost-sharing for three eligibility groups of low-income Medicare beneficiaries. These three groups included qualified Medicare beneficiaries (QMBs), specified low-income Medicare beneficiaries (SLMBs), and qualified disabled and working individuals (QDWIs).

A QMB is an individual entitled to Medicare Part A with income at or below 100 percent of the Federal poverty level (FPL). A SLMB is an individual who meets the QMB criteria, except that his or her income is above 100 percent of the FPL and does not exceed 120 percent of the FPL. Effective January 1, 2010, the resource limits for a QMB, SLMB, and QI are $6,600 for a single person and $9,910 for a married person living with a spouse and no other dependents. These resource limits are adjusted January 1 of each year, based upon the change in the annual consumer price index (CPI) since September of the previous year.

A QDWI is a disabled individual who is entitled to enroll in Medicare Part A under section 1818A of the Act, whose income does not exceed 200 percent of the FPL, for a family of the size involved, whose resources do not exceed twice the amount allowed under SSI program, and who is not otherwise eligible for Medicaid. The definition of Medicare cost-sharing at section 1905(p)(3) of the Act includes payment for premiums for Medicare Part B.

Section 4732 of the Balanced Budget Act of 1997 (BBA), (Pub. L. 105-33), enacted on August 5, 1997, amended section 1902(a)(10)(E) of the Act to require States to provide for Medicaid payment of the Medicare Part B premiums for two additional eligibility groups of low-income Medicare beneficiaries, referred to as qualifying individuals (QIs).

Specifically, under BBA, a new section 1902(a)(10)(E)(iv)(I) of the Act was added, under which States must pay the full amount of the Medicare Part B premium for QIs who are eligible QMBs but their income level is at least 120 percent of the FPL but less than 135 percent of the FPL for a family of the size involved. These individuals cannot otherwise be eligible for medical assistance under the approved State Medicaid plan. The BBA also added the second group of QIs under section 1902(a)(10)(E)(iv)(II) of the Act, which includes Medicare beneficiaries who would be QMBs except that their income is at least 135 percent but less than 175 percent of the FPL for a family of the size involved, who are not otherwise eligible for Medicaid under the approved State plan. These QIs were eligible for only a portion of Medicare cost-sharing consisting of a percentage of the increase in the Medicare Part B premium attributable to the shift of Medicare home health coverage from Part A to Part B (as provided in section 4611 of the BBA).

Coverage of the second eligibility group of QIs ended on December 31, 2002, and section 401 of the Welfare Reform Bill (Pub. L. 108-89), enacted on October 1, 2003, eliminated reference to the second QI benefit (for the Medicare beneficiaries who would be QMBs except that their income is at least 135 percent but less than 175 percent of the FPL for a family of the size involved, who are not otherwise eligible for Medicaid under the approved State plan). In 2002 and 2003, continuing resolutions extended the coverage of the first group of QIs (whose income is at least 120 percent but less than 135 percent of the FPL) through the following FY, but maintained the annual funding at the FY 2002 level. Section 1933(g) of the Act was amended by the Extension of Medicare Cost-Sharing for Medicare Part B Premium for Qualifying Individuals Act, (Pub. L. 108-448), enacted December 8, 2004, which continued coverage of this group of QIs (whose income is at least 120 percent but less than 135 percent of the FPL) through September 30, 2005, again, with no change in funding.

The BBA also added a new section 1933 to the Act to provide for Medicaid payment of Medicare Part B premiums for QIs. (The previous section 1933 of the Act was re-designated as section 1934.) Section 1933(a) of the Act specifies that a State plan must provide, through a State plan amendment, for medical assistance to pay for the cost of Medicare cost-sharing on behalf of QIs who are selected to receive assistance. Section 1933(b) of the Act sets forth the rules that States must follow in selecting QIs and providing payment for Medicare Part B premiums. Specifically, the State must permit all qualifying individuals to apply for assistance and must select individuals on a first-come, first-served basis (that is, the State must select QIs in the order in which they apply). Further, under section 1933(b)(2)(B) of the Act, in selecting persons who will receive assistance in years after 1998, States must give preference to those individuals who received assistance as QIs, QMBs, SLMBs, or QDWIs in the last month of the previous year and who continue to be (or become) QIs.

Under section 1933(b)(4) of the Act, persons selected to receive assistance in a calendar year are entitled to receive assistance for the remainder of the year, but not beyond, as long as they continue to qualify. The fact that an individual is selected to receive assistance at any time during the year does not entitle the individual to continued assistance for any succeeding year. Because the State's QI allotment is limited by law, section 1933(b)(3) of the Act provides that the State must limit the number of QIs so that the amount of assistance provided during the year is approximately equal to the allotment for that year.

Section 1933(c) of the Act limits the total amount of Federal funds available for payment of Part B premiums for QIs each FY and specifies the formula that is to be used to determine an allotment for each State from this total amount. For States that executed a State plan amendment in accordance with section 1933(a) of the Act, a total of $1.5 billion was allocated over 5 years as follows: $200 million in FY 1998; $250 million in FY 1999; $300 million in FY 2000; $350 million in FY 2001; and $400 million in FY 2002.

On March 29, 1999, we published a notice in the Federal Register (64 FR 14931) to advise States of the methodology used to calculate allotments and each State's specific allotment for that year. Following that notice, there was no change in methodology and States have been notified annually of their allotments. We did not include the methodology for computing the allocation in our regulations. Although the BBA originally provided coverage of QIs through FY 2002, based on several legislative actions, coverage has continued (as discussed below) through December 31, 2010.

The Federal medical assistance percentage, for Medicaid payment of Medicare Part B premiums for QIs, is 100 percent for expenditures up to the amount of the State's allotment. No Federal funds are available for expenditures in excess of the State allotment amount. The Federal matching rate for administrative expenses associated with the payment of Medicare Part B premiums for QIs remains at the 50 percent matching level. Federal financial participation in the administrative expenses is not counted against the State's allotment.

The amount available for each FY is to be allocated among States according to the formula set forth in section 1933(c)(2) of the Act. The formula provides for an amount to each State that is based on each State's share of the Secretary's estimate of the ratio of: (a) An amount equal to the total number of individuals in the State who meet all but the income requirements for QMBs, whose incomes are at least 120 percent but less than 135 percent of the Federal poverty level, and who are not otherwise eligible for Medicaid; to (b) the sum of all individuals for all eligible States.

B. Allotments for FY 2005 Through 2009

In FY 2005, some States exhausted their FY 2005 allotments before the end of the FY, which caused States to deny benefits to eligible persons under section 1933(b)(3) of the Act, while other States projected a surplus in their allotments. We asked those States that exhausted or expected to exhaust their FY 2005 allotments before the end of the FY to project the amount of funds that would be required to grant eligibility to all eligible persons in their State, that is, their need. We also asked those States that did not expect to use their full allotments in FY 2005 to project the difference between the amount they expected to spend and their allotment, that is, their surplus. After all States reported these figures, it was evident that the total surplus exceeded the total need. In spite of there being adequate overall funding for the QI benefit, some eligible individuals would have been denied benefits due to the allocation methodology initially used to determine the FY 2005 allotments.

We believe that it was the intent of the statute to provide benefits to eligible persons up to the full amount of funds made available for the program. We attributed the difference between the surplus in available QI allotments for some States and the need in other States in FY 2005 as due to the imprecision in the data that we used to provide States with their initial allocations under section 1933 of the Act. Therefore, on August 26, 2005, we published in the Federal Register an interim final rule (70 FR 50214), which we compensated for this imprecision in order to enable States to enroll those QIs whom they would have been able to enroll had the data been more precise.

The August 26, 2005 interim final rule amended 42 CFR 433.10(c) to specify the formula and the data to be used to determine States' allotments and to revise, under certain circumstances, individual State allotments for a Federal FY for the Medicaid payment of Medicare Part B premiums for qualifying individuals identified under section 1902(a)(10)(E)(iv) of the Act. Section 433.10(c)(5)(iv) states that CMS will notify States of any changes in allotments resulting from any reallocations.

The FY 2005 allotments were determined by applying the U.S. Census Bureau data to the formula set forth in section 1933(c)(2) of the Act. However, the statute requires that the allocation of the FY allotment be based upon a ratio of the amount of “total number of individuals described in section 1902(a)(10)(E)(iv) of the Act in the State” to the sum of these amounts for all States. Because this formula requires an estimate of an unknown number, that is, the number of individuals who could be QIs (rather than the number of individuals who were QIs in a previous period), our use of the Census Bureau data in the formula represented a rough proxy to attain the statutory number. Actual expenditure data, however, revealed that the Census Bureau data yielded an inappropriate distribution of the total appropriated funds as evidenced by the fact that several States projected significant shortfalls in their allotments, while many other States projected a significant surplus by the end of the FY 2005. The Census Bureau data were not accurate for the purpose of projecting States' needs because the data could not take into consideration all variables that contribute to QI eligibility and enrollment, such as resource levels and the application process itself. While section 1933 of the Act requires the Secretary to estimate the allocation of the allotments among the States, it did not preclude a subsequent readjustment of that allocation, when it became clear that the data used for that estimate did not effectuate the statutory objective. The August 26, 2005 interim final rule published in the Federal Register, permitted in this specific circumstance a redistribution of surplus funds, as it was demonstrated that the States' projections and estimates resulted in an inequitable initial allocation for FY 2005, such that some States were granted an allocation in excess of their total projected need, while the allocation granted to other States proved insufficient to meet their projected QI expenditures.

In the August 26, 2005 interim final rule, we codified the methodology we have been using to approximate the statutory formula for determining State allotments. However, since certain States projected a deficit in their allotment before the end of FY 2005, the rule permitted FY 2005 funds to be reallocated from the surplus States to the need States. The regulation specified the methodology for computing the annual allotments, and for reallocating funds in this circumstance. The formula used to reallocate funds was intended to minimize the impact on States with FY QI allotments that might be greater than their QI expenditures for the FY, to equitably distribute the total needed amount among those surplus States, and to meet the immediate needs for those States projecting deficits. At the time of the publication of the August 26, 2005 interim final rule, the authorization for the QI benefit was scheduled to expire at the end of calendar year (CY) 2005, and no additional funds were appropriated for the QI benefit beyond September 30, 2005; therefore, the regulation specified a sunset at the end of CY 2005.

On October 20, 2005, the QI, TMA, and Abstinence Programs Extension and Hurricane Katrina Unemployment Relief Act of 2005 (Pub. L. 109-91) was enacted. Section 101 of Public Law 109-91 extended the QI program through September 30, 2007 with no change in the level of funding; that is, under this legislation $400 million per FY was appropriated for each of FY 2006 and FY 2007. The provisions of section 101 of Public Law 109-91 were effective as of September 30, 2005.

On October 16, 2006, we published a final rule in the Federal Register (71 FR 60663), which implemented the provisions of section 101 of Public Law 109-91 relating to the QI allotments for final FY 2006 allotments and preliminary FY 2007 allotments. As we stated in that final rule, we believe that the intent of the statute is to provide benefits to eligible persons up to the full amount of funds made available for the program in each FY. We recognized that because of the imprecise data for computing the States' QI allotments for a FY, some States would experience either surpluses or shortages in their FY 2006 and FY 2007 allotments. In accordance with § 433.10(c), the FY 2006 and FY 2007 QI allotments were designed to compensate for the imprecise data to permit shortage States to enroll more QIs than otherwise would have been possible.

Section 3 of the TMA, Abstinence Education, and QI Program Extension Act of 2007, Public Law 110-90 (enacted on September 29, 2007) provided $100 million and extended the QI program through December 31, 2007. Section 203 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (Pub. L. 110-173, enacted on December 29, 2007) provided an additional $200 million and extended the QI program through June 30, 2008. Section 111 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (Pub. L. 110-275) enacted on July 15, 2008, and section 2 of the QI Program Supplemental Funding Act of 2008 (the SFA) enacted on October 8, 2008, (Pub. L. 110-379), extended and provided additional funds for the QI program. As amended by MIPPA and the SFA, a total of $415 million was made available for the QI program for FY 2008, and $480 million was made available for the QI program for FY 2009. Additionally, $150 million was provided for the QI program for the first quarter of FY 2010 (that is, October 1, 2009 through December 31, 2009).

However, the then-existing regulation at § 433.10(c)(5)(v) authorized the methodology for determining each State's QI allotment under the QI program only through FY 2007. Therefore, on November 24, 2008, we published an interim final rule with comment period entitled, “Medicaid Program; State Allotments for Payment of Medicare Part B Premiums for Qualifying Individuals: Federal Fiscal Year 2008 and Federal Fiscal Year 2009” (73 FR 70886). This rule revised paragraph § 433.10(c)(5)(ii) by changing the statutory reference “section 1933(c)(1)” to “section 1933(g)”. It also revised paragraph (c)(5)(iii) introductory text, and paragraphs (c)(5)(iii)(D), and (c)(5)(v) to more generally refer to the period for which QI program funding is available under the statute, rather than referring to particular years.

C. Allotments for FY 2010 and Thereafter

Section 5005 of the American Recovery and Reinvestment Act of 2009 (the Recovery Act, Pub. L. 111-5, enacted on February 17, 2009) extended the QI program by providing $412.5 million in additional funds for the remaining three quarters of FY 2010 and $150 million in additional funds for the first quarter of 2011 (that is, through December 31, 2010). However, most recently, on January 27, 2010 the President signed into law the “Emergency Aid to American Survivors of the Haiti Earthquake Act”, P.L. 111-127 (Haiti Earthquake Act); section 3 of this legislation amends section 1933(g)(2)(M) of the Act to make available $462.5 million for the last three quarters of FY 2010 (this replaces the $412.5 million provided under the Recovery Act for that period). Prior to enactment of the Haiti Earthquake Act, through the Recovery Act there was a total of $562.5 million available for States' QI allotments for FY 2010. With the enactment of the Haiti Earthquake Act, a total of $612.5 million is available for States' QI allotments for FY 2010. The Haiti Earthquake Act also amended section 1933(g)(2) of the Act to make $165 million available for the QI program for FY 2011 (this replaces the $150 million for FY 2011 previously provided under the Recovery Act).

The amounts of the final FY 2009 and preliminary FY 2010 QI allotments were determined in accordance with the methodology set forth in existing Medicaid regulations at § 433.10(c)(5), as amended in the Federal Register published on November 24, 2008 (73 FR 70893).

II. Charts

The Final QI Allotments for FY 2009 and the Preliminary QI Allotments for FY 2010 are shown by State in Chart 1 and Chart 2 below, respectively:

Chart 1—Final Qualifying Individuals Allotments for October 1, 2008 through September 30, 2009.

Chart 2—Preliminary Qualifying Individuals Allotments for October 1, 2009 through September 30, 2010.

The following describes the information contained in the columns of Chart 1 and Chart 2.

Column A—State. Column A shows the name of each State.

Columns B through D show the determination of an Initial QI Allotment for FY 2009 (Chart 1) or FY 2010 (Chart 2) for each State, based only on the indicated Census Bureau data.

Column B—Number of Individuals. Column B contains the estimated average number of Medicare beneficiaries for each State that are not covered by Medicaid whose family income is at least 120 percent but less than 135 percent of the poverty level. With respect to the final FY 2009 QI allotment (Chart 1), Column B contains the number of such individuals for the years 2005 through 2007, as obtained from the Census Bureau's Annual Social and Economic Supplement to the 2008 Current Population Survey. With respect to the preliminary FY 2010 QI allotment (Chart 2), Column B contains the number of such individuals for the years 2006 through 2008, as obtained from the Census Bureau's Annual Social and Economic Supplement to the 2009 Current Population Survey.

Column C—Percentage of Total. Column C provides the percentage of the total number of individuals for each State, that is, the Number of Individuals for the State in Column B divided by the sum total of the Number of Individuals for all States in Column B.

Column D—Initial QI Allotment. Column D contains each State's Initial QI Allotment for FY 2009 (Chart 1) or FY 2010 (Chart 2), calculated as the State's Percentage of Total in Column C multiplied by the total amount available nationally for QI allotments for the FY. The total amount available nationally for QI allotments each FY is $480,000,000 for FY 2009 (Chart 1) and $612,500,000 for FY 2010 (Chart 2).

Columns E through L show the determination of the States' Final QI Allotments for FY 2009 (Chart 1) or Preliminary QI Allotments for FY 2010 (Chart 2).

Column E—FY 2009 Estimated QI Expenditures. Column E contains the States' estimates of their total QI expenditures for FY 2009 (Chart 1) or FY 2010 (Chart 2) based on information obtained from States in the summer of 2009.

Column F—Need (Difference). Column F contains the additional amount of QI allotment needed for those States whose estimated expenditures in Column E exceeded their Initial QI allotments in Column D for FY 2009 (Chart 1) or for FY 2010 (Chart 2). For such States, Column F shows the amount in Column E minus the amount in Column D. For other “Non-Need” States, Column F shows “NA”.

Column G—Percent of Total Need States. For States whose projected QI expenditures in Column E are greater than their initial QI allotment in Column D for FY 2009 (Chart 1) or FY 2010 (Chart 2), respectively, Column G shows the percentage of total need, determined as the amount for each Need State in Column F divided by the sum of the amounts for all States in Column F. For Non-Need States, the entry in Column G is “NA”.

Column H—Reduction Pool for Non-Need States. “Column H shows the amount of the pool of surplus QI allotments for FY 2009 (Chart 1) or FY 2010 (Chart 2), respectively, for those States that project QI expenditures for the FY (in Column E) that are less than the initial QI allotments (in Column D) for the FY (referred to as non-need States). The amount in Column H is calculated as the amount in Column D minus the amount in Column E, representing the surplus of QI allotment funds for the indicated FYs. There will only be an amount shown in Column H for States whose projected QI expenditures in Column E are less than the initial QI allotment for the FY shown in Column D.” For the States with a need, Column H shows “Need.” The reduction pool of excess QI allotments is equal to the sum of the amounts in Column H.

Column I—Percent of Total Non-Need States. For States whose Projected QI Expenditures in Column E are less than their Initial QI Allotment in Column D for FY 2009 (Chart 1) or FY 2010 (Chart 2), Column I shows the percentage of the total reduction pool in Column H, determined as the amount for each Non-Need State in Column H divided by the sum of the amounts for all States in Column H. For Need States, the entry in Column I is “Need”.

Column J—Reduction Adjustment for Non-Need States. Column J shows the amount of adjustment needed to reduce the Initial QI Allotments in Column D for FY 2009 (Chart 1) or FY 2010 (Chart 2) for Non-Need States in order to address the total need shown in Column F. The amount in Column J is determined as the percentage in Column I for Non-Need States multiplied by the lesser of the total need in Column F (equal to the sum of Needs in Column F) or the total Reduction Pool in Column H (equal to the sum of the Non-Need amounts in Column H). For Need States, the entry in Column J is “Need”.

Column K—Increase Adjustment for Need States. Column K shows the amount of adjustment to increase the Initial QI Allotment in Column D for FY 2009 (Chart 1) or FY 2010 (Chart 2) for Need States in order to address the total need shown for the FY in Column F. The amount in Column K is determined as the percentage in Column G for Need States multiplied by the lesser of the total need in Column F (equal to the sum of Needs in Column F) or the total Reduction Pool in Column H (equal to the sum of the Non-Need amounts in Column H). For Non-Need States, the entry in Column K is “NA”.

Column L—Final FY 2009 QI Allotment (Chart 1) or Preliminary FY 2010 QI Allotment (Chart 2). Column L contains the Final QI Allotment for each State for FY 2009 (Chart 1) or the Preliminary QI Allotment for FY 2010 (Chart 2). For Need States, additional QI allotment amounts for the FY are based on the Estimated QI Expenditures in Column E as compared to their Initial QI allotments in Column D for the FY (States with a projected need amount are shown in Column F); and Column L is equal to the Initial QI Allotment in Column D for FY 2009 (Chart 1) or FY 2010 (Chart 2) plus the amount determined in Column K for Need States. For Non-Need States (States with a projected surplus in Column H), Column L is equal to the QI Allotment in Column D reduced by the Reduction Adjustment amount in Column J.

III. Waiver of Notice With Comment and 30-Day Delay in Effective Date

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on a 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. 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 in accordance with the Administrative Procedure Act (5 U.S.C. 551 et seq.).

We are publishing this notice without a comment period or delay in effective date because of the need to notify individual States of the limitations on Federal funds for their Medicaid expenditures for payment of Medicare Part B premiums for qualifying individuals. Some States have experienced deficits in their current allotments that have caused them to deny benefits to eligible applicants, while other States project a surplus in their allotments. This notice adjusts the allocation of Federal funds, which will reduce the impact of States denying coverage to eligible QIs when there is sufficient funding to cover all or some of these individuals. Because access to Medicare Part B coverage for QIs, who without this coverage would have difficulty paying for needed health care, is critically important, we believe that it is in the public interest to waive the usual notice and comment procedure which we undertake before making a rule final. Moreover, we are not making any changes to the process we use for allocating allotments. We are simply implementing a process already set forth in regulations. For these reasons, we also believe a notice and comment process would be unnecessary.

Therefore, for the reasons discussed above, we find that good cause exists to dispense with the normal requirement that a regulation cannot become effective any earlier than 30 days after its publication. States that will have access to additional funds for QIs need to know that these funds are available as soon as possible. While we believe the surplus States that will have diminished amounts available for this FY will have sufficient funds for enrolling all potential QIs in their States, they also need to know as soon as possible that a certain amount of their unused allocation will no longer be available to them for this FY.

IV. Collection of Information Requirements

This notice does not impose information collection and recordkeeping requirements. Consequently, it need not be reviewed by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 35).

V. Regulatory Impact Statement

We have examined the impact of this notice as required by Executive Order 12866 on Regulatory Planning and Review, 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 (March 22, 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 ($100 million or more in any 1 year). This notice does not reach the economic threshold and thus is not considered a major rule.

The RFA requires agencies to analyze options for regulatory relief for small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of $7 million to $34.5 million in any 1 year. Individuals and States are not included in the definition of a small entity.

This notice codifies our procedures for implementing provisions of the Balanced Budget Act of 1997 to allocate, among the States, Federal funds to provide Medicaid payment for Medicare Part B premiums for low-income Medicare beneficiaries. The total amount of Federal funds available during a Federal FY and the formula for determining individual State allotments are specified in the law. We have applied the statutory formula for the State allotments. Because the data specified in the law were not initially available, we used comparable data from the U.S. Census Bureau on the number of possible qualifying individuals in the States. This notice also permits, in a specific circumstance, reallocation of funds to enable enrollment of all eligible individuals to the extent of the available funding.

We believe that the statutory provisions implemented in this notice will have a positive effect on States and individuals. Federal funding at the 100 percent matching rate is available for Medicare cost-sharing for Medicare Part B premium payments for qualifying individuals. Also, as a result of the reallocation of State allotments, a greater number of low-income Medicare beneficiaries will be eligible to have their Medicare Part B premiums paid under Medicaid. The changes in allotments will not result in fewer individuals receiving the QI benefit in any State. The FY 2009 and FY 2010 costs for this provision have been included in the Mid-session Review of the FY 2010 President's Budget.

Section 1102(b) of the Social Security Act (the Act) requires us to prepare a regulatory impact analysis for any rule that may have a significant impact on the operations of a substantial number of small rural hospitals. The 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. We are not preparing analyses for either the RFA or section 1102(b) of the Act because we have determined and certify that this notice will not have a significant economic impact on a substantial number of small entities or 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) (Pub. L. 104-4) 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 2010, that threshold is approximately $135 million. This notice will have no consequential effect on the governments mentioned or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a rule that imposes substantial direct requirement costs on State and local governments, preempts State law, or otherwise has federalism implications. Since this regulation does not impose any costs on State or local governments, the requirements of Executive Order 13132 are not applicable.

In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget.

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance Program)

Dated: December 17, 2009.

Charlene Frizzera,

Acting Administrator, Centers for Medicare & Medicaid Services.

Approved: January 22, 2010.

Kathleen Sebelius,

Secretary.