E6-15779. Notice of Hearing: Reconsideration of Disapproval of New York State Plan Amendment 05-50

AGENCY:

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

ACTION:

Notice of Hearing.

SUMMARY:

This notice announces an administrative hearing to be held on December 6, 2006, at 26 Federal Plaza, New York, NY 10278, Room 38-110a, to reconsider CMS' decision to disapprove New York State plan amendment 05-50.

Closing Date: Requests to participate in the hearing as a party must be received by the presiding officer by October 12, 2006.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes, Presiding Officer, CMS, Lord Baltimore Drive, Mail Stop LB-23-20, Baltimore, Maryland 21244, telephone: [phone].

SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider CMS' decision to disapprove New York State plan amendment (SPA) 05-50 which was submitted on September 29, 2005. This SPA was disapproved on June 23, 2006.

Under SPA 05-50, New York proposed to extend payment provisions for New York's Indigent Care Program for certain diagnostic and treatment centers. The amendment was disapproved because it did not comport with the requirements of section 1902(a)(4), 1902(a)(10), 1902(a)(30)(A), and 1905(a) of the Social Security Act (the Act).

At issue on reconsideration is: (1) Whether the proposed payments under SPA 05-50 would be for services furnished to individuals within the statutory categories of permissible eligible individuals set forth in sections 1902(a)(10) and 1905(a) of the Act; (2) whether the proposed payments under SPA 05-50 would result in claims for Federal financial participation that would not be within the scope of medical assistance which would be inconsistent with sections 1902(a)(4), 1902(a)(10), and 1905(a) of the Act; and (3) whether the State has demonstrated that the proposed payment rate, which would provide for payments unrelated to the covered Medicaid services furnished by the provider, is an efficient and economical method to pay for covered Medicaid services, consistent with the requirements of section 1902(a)(30)(A). The basis for these issues was set out in the disapproval determination and is summarized below.

Section 1902(a)(4) of the Act requires that State Medicaid plans provide for methods of administration that are found by the Secretary to be necessary for the proper and efficient operation of the plan. Section 1902(a)(10) of the Act sets forth mandatory and optional groups of individuals for whom States may make medical assistance available under a State plan. Section 1902(a)(10) of the Act must be read in concert with the definition of medical assistance at section 1905(a), which includes additional specification of the categories of eligible individuals. SPA 05-50 would provide for payment for services furnished to individuals who are not within the listed groups or categories of individuals for whom medical assistance is authorized under the statute. Such payment is outside the scope of the definition of medical assistance. Including in the State plan a provision which would pay for provider costs that are not within the scope of medical assistance furnished to eligible individuals is not necessary for the proper and efficient operation of the plan. It will result in State claims for Federal financial participation in expenditures as medical assistance, which are not within the statutory definition of medical assistance.

The requirements of section 1902(a)(10) of the Act, read in concert with section 1905(a) of the Act, as noted above, define the range of individuals who must or may be eligible under a State plan, and the scope of medical assistance that may be made available. These sections do not provide for payment of provider costs of treating ineligible individuals, which is the apparent purpose of the Indigent Care Program.

Section 1902(a)(30)(A) of the Act requires that State plans provide payment methods for care and services available under the plan that are consistent with efficiency, economy, and quality of care. The proposed Medicaid payment method is determined by the individual diagnostic and treatment center's level of uncompensated care associated with uninsured patients and distributed without regard to the volume of Medicaid activity in the facility. The specific Medicaid reimbursement methodology applies a Medicaid rate to bad debt and charity care visits in the facility. This method results in an aggregate Medicaid payment which clearly is without regard to the provision of covered Medicaid services to eligible individuals, and cannot be considered an economical means of paying for such services.

Section 1116 of the Act and Federal regulations at 42 CFR part 430, establish Department procedures that provide an administrative hearing for reconsideration of a disapproval of a State plan or plan amendment. 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 notice to New York announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

Mr. Gregor N. Macmillan, Director, Bureau of Medicaid Law, State of New York, Department of Health, Corning Tower, The Governor Nelson A. Rockefeller Empire State Plaza, Albany, NY 12237.

Dear Mr. Macmillan: I am responding to your request for reconsideration of the decision to disapprove the New York State plan amendment (SPA) 05-50, which was submitted on September 29, 2005, and disapproved on June 23, 2006.

Under SPA 05-50, New York was proposing to extend payment provisions for New York's Indigent Care Program for certain diagnostic and treatment centers. The amendment was disapproved because it did not comport with the requirements of section 1902(a)(4), 1902(a)(10), 1902(a)(30)(A), and 1905(a) of the Social Security Act (the Act).

At issue on reconsideration is: (1) Whether the proposed payments under SPA 05-050 would be for services furnished to individuals within the statutory categories of permissible eligible individuals set forth in sections 1902(a)(10) and 1905(a) of the Act; (2) whether the proposed payments under SPA 05-50 would result in claims for Federal financial participation that would not be within the scope of medical assistance which would be inconsistent with sections 1902(a)(4), 1902(a)(10), and 1905(a) of the Act; and (3) whether the State has demonstrated that the proposed payment rate, which would provide for payments unrelated to the covered Medicaid services furnished by the provider, is an efficient and economical method to pay for covered Medicaid services, consistent with the requirements of section 1902(a)(30)(A). The basis for these issues was set out in the disapproval determination and is summarized below.

Section 1902(a)(4) of the Act requires that State Medicaid plans provide for methods of administration that are found by the Secretary to be necessary for the proper and efficient operation of the plan. Section 1902(a)(10) of the Act sets forth mandatory and optional groups of individuals for whom States may make medical assistance available under a State plan. Section 1902(a)(10) of the Act must be read in concert with the definition of medical assistance at section 1905(a), which includes additional specification of the categories of eligible individuals. SPA 05-50 would provide for payment for services furnished to individuals who are not within the listed groups or categories of individuals for whom medical assistance is authorized under the statute. Such payment is outside the scope of the definition of medical assistance. Including in the State plan a provision which would pay for provider costs that are not within the scope of medical assistance furnished to eligible individuals is not necessary for the proper and efficient operation of the plan. It will result in State claims for Federal financial participation in expenditures as medical assistance, which are not within the statutory definition of medical assistance.

The requirements of section 1902(a)(10) of the Act, read in concert with section 1905(a) of the Act, as noted above, define the range of individuals who must or may be eligible under a State plan, and the scope of medical assistance that may be made available. These sections do not provide for payment of provider costs of treating ineligible individuals, which is the apparent purpose of the Indigent Care Program.

Section 1902(a)(30)(A) of the Act requires that State plans provide payment methods for care and services available under the plan that are consistent with efficiency, economy, and quality of care. The proposed Medicaid payment method is determined by the individual diagnostic and treatment center's level of uncompensated care associated with uninsured patients and distributed without regard to the volume of Medicaid activity in the facility. The specific Medicaid reimbursement methodology applies a Medicaid rate to bad debt and charity care visits in the facility. This method results in an aggregate Medicaid payment which clearly is without regard to the provision of covered Medicaid services to eligible individuals, and cannot be considered an economical means of paying for such services. For the reasons cited above, and after consultation with the Secretary, as required by Federal regulations at 42 CFR 430.15(c)(2), New York 05-50 was disapproved on June 23, 2006.

I am scheduling a hearing on your request for reconsideration to be held on December 6, 2006, at 26 Federal Plaza, New York, NY 10278, Room 38-110a, to reconsider the decision to disapprove SPA 05-50. 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 at [phone]. 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.

  Sincerely,

Mark B. McClellan, M.D., PhD.

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

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

Dated: September 18, 2006.

Mark B. McClellan,

Administrator, Centers for Medicare & Medicaid Services.