On June 30, 2008, President Bush signed H.R. 2642, the Supplemental Appropriations Act of 2008. The legislation extends until April 1, 2009, the moratoria imposed on CMS Medicaid rulemaking enacted in previous appropriations legislation.
Controversy over rules
During 2007, CMS issued several proposed rules and final rules announcing new policies narrowing the types of activities and expenditures for which states could claim Medicaid reimbursement, called federal financial participation (FFP). The proposals would limit FFP for: (1) rates paid to government operated providers and expenses incurred by units of government within the state, called certified public expenditures and purportedly adopted on May 29, 2007; (2) state payments for graduate medical education (GME); (3) rehabilitation services; (4) school-based transportation for severely disabled children; (5) the definitions of "case management services" and "targeted case management services" and (6) healthcare-related taxes counted toward state expenditures eligible for federal matching funds.
CMS contends that these rules are needed to close loopholes that state Medicaid agencies use to fund unrelated programs that are the responsibility of other units of government and, perhaps, other federal programs. State Medicaid agencies, local governments and other advocates for children and individuals with disabilities claim that the administration is changing long-standing policies to deprive the most vulnerable populations of essential services.
CMS argues that its rules simply implement the legislative directions of the Deficit Reduction Act of 2005 (PubLNo 109-171) (DRA). Opponents of the regulations responded that CMS went beyond the requirements of the DRA to cut services that Congress intended to fund.
This appropriations legislation preserves the status quo before each proposed or final regulation was published with three exceptions. First, CMS may amend the regulation on case management and targeted case management services to implement section 6052 of the DRA. However, the regulation may not be more restrictive than the policies outlined in letters to state Medicaid directors published in 2000 and 2001. Second, the amendment to 42 C.F.R. §433.68(f) reducing the threshold for "hold harmless" payments from 6 percent to 5.5 percent, remains in effect as necessary to carry out the requirements of section 403 of the Medicare Improvement and Extension Act of 2006 (PubLNo 109-432.) Finally, the amendment to the definition of "managed care" remains effective as required to implement section 6051 of the DRA.
Independent review of need for rules
By January 1, 2009, the HHS Secretary must submit reports to the House Committee on Energy and Commerce and the Senate Finance Committee outlining the specific problems that the regulations were intended to address, how the regulations were intended to address the problems and the legal authority for the regulations. By the same date, HHS must contact with an independent organization to prepare a comprehensive report describing the prevalence of the problems, the existing strategies to address them and the impact of each regulation on each of the 50 states and the District of Columbia. The report, which is due September 1, 2009, also must address the reasons that states' claims are not processed under the automated system and ways to improve the accuracy of the claims. States that refuse to cooperate are subject to penalties of $25,000 per day.
Asset verification program
States are required to add "asset verification programs" to their Medicaid plans. Individuals whose eligibility is being determined or redetermined (and others whose finances are relevant to eligibility) must authorize the state agency to obtain records from any financial institution in connection with the eligibility determination in order to verify the individual's assets. The verification program is to be "consistent with the approach of the Commissioner of Social Security" under Soc. Sec. Act §1631. Individuals who refuse or revoke their authorization may be determined ineligible for medical assistance.
The asset verification requirement will be phased in over five years, with 100 percent of programs implemented by the end of fiscal year 2013.
Source: PubLNo 110-252 (passed as H.R. 2642), June 30, 2008.
For more information on this and related topics, consult the CCH® Medicare and Medicaid Guide.
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