dcl9348.htm

HCFA proposed rule regarding medical assistance

DC-93-48

October 14, 1993

TO ALL STATE IV-D DIRECTORS

Dear Colleague:

This is to inform you of the recent publication by the Health Care Financing Administration (HCFA) of a proposed rule, with comment period, addressing the process of referring to IV-D agencies cases in which medical assistance is furnished to families who may be in need of child support services and cooperative agreements with IV-D agencies.

Attached is a copy of the proposed rule published in the Federal Register on September 22, 1993 (58 FR 49274). The rule proposes to require State Medicaid agencies to promptly refer cases to IV-D agencies when it is appropriate, and to develop criteria and procedures, in conjunction with State IV-D agencies, to implement the referral requirements. The proposed rule would also revise õ 433.151 to make cooperative agreements with IV-D agencies optional instead of mandatory.

We encourage State IV-D Directors to review the attached proposed rule with comment period and to consult with their State Medicaid agencies regarding this proposed rule.

We also encourage you forward your comments to HCFA, at the address listed in the Federal Register, on the proposed rule during the comment period, which ends November 22, 1993. We would appreciate if you also send us a copy of any comments you submit to HCFA.

If you have any questions, or need additional information please contact either Susan A. Notar, or Andrew J. Hagan, OCSE Policy and Planning Division, (202) 401-4606.

Sincerely,

Robert C. Harris

Acting Deputy Director

Office of Child Support

Enforcement

Attachment

cc: ACF Regional Administrators

Child Support Program Managers, Regions I-X

Will have to scan HCFA's regulation

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Part 433

[MB-051-P]

RIN 0938-AF68

Medicaid Program; Referrals to Child Support Enforcement Agencies of Medicaid Families

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Proposed rule.

SUMMARY: This proposed rule would amend the Medicaid regulations governing third party liability to require a Medicaid agency to give prompt notice to the child support enforcement (CSE) agency for referral whenever medical assistance is furnished to families who may be in need of CSE services. Section 434 of the Social Security Act [the Act requires CSE agencies to provide statutorily mandated CSE services to these Medicaid families, including establishing paternity, locating absent parents, and obtaining child and spousal support, including medical support. This proposed rule would assist CSE agencies in carrying out the provisions of section 454 of the Act by requiring Medicaid agencies to refer families to the CSE agency when appropriate. This proposed rule would also make technical revisions to the Medicaid regulations governing cooperative agreements to address changes in the CSE regulations resulting from the requirement in section 454 of the Act.

DATES: Written comments will be considered if we receive them at the appropriate address, as provided below no later than 5 p.m. on November 22, 1993.

ADDRESS: Mail written comments (an original and 3 copies) to the following address:

Health Care Financing Administration.

Department of Health and Human Services, Attention: MB-051-P.P.O. Box 7518. Baltimore. Maryland 212O7-0518.

If you prefer, you may deliver your written comments (an original and 3 copies) to one of the following addresses:

Room 3O9--G. Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201, or Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore, Maryland 21207.

Due to staffing and resource limitations, we cannot accept comment by facsimile (FAX) transmission. In commenting, please refer to file code MB-051-P. Written comments received timely will be available for public inspection as they are received. generally beginning approximately three weeks after publication of this document, in room 309-G of the Department's offices at 200Independence Avenue, SW., Washington, DC. on Monday through Friday of each week from 8:30 a.m. to 5 p.m. (phone: 202-690-7890).

Organizations and individuals desiring to submit comments on the reporting requirements discussed under the "Collection of Information Requirements" of this preamble should direct them to the Health Care Financing Administration at one of the addresses cited above, and to the Office of Information and Regulatory Affairs. Attention: Laura Oliven, Office of Management and Budget, New Executive Office Building (room 3002), Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT:

Robert Nakielny, (410) 966-4466.

SUPPLEMENTARY INFORMATION:

I. Background

Medicaid (title XIX of the Social Security Act (the Act)) is a State and Federally-funded program that provides medical services to certain groups of low-income needy individuals. These groups include individuals who are aged, blind, or disabled or members of families with dependent children, and who meet the financial eligibility requirements of the most closely related cash assistance program (Aid to Families with Dependent Children (AFDC) or Supplemental Security Income (SSI)). In addition, some States provide Medicaid to individuals who do not receive cash assistance, but whose income and resources are insufficient to cover medical expenses ("medically needy" persons). States also provide Medicaid to certain institutionalized individuals, pregnant women, and other mandatory and optional eligibility groups.

Medicaid programs are administered by the States in accordance with Federal regulations. State Medicaid agencies conduct their programs according to a Medicaid State plan approved by HCFA.

Section 1912 of the Act specifies certain State plan requirements relating to third party liability that applicants and recipients of Medicaid and the Medicaid agency must meet. Under section 1912(a)(1), Medicaid applicants and recipients, as a condition of eligibility, must: (1) Assign to the State their rights, or the rights of any individual on whose behalf an assignment may be executed, to medical support and to payments for medical care from any third party (section 1912(a)(1)(A)); (2) cooperate with the State agency, in the absence of good cause for the failure to cooperate, in establishing the paternity of any child who is eligible for Medicaid and who is born out of wedlock, and in obtaining medical support and payments (section 1912(a)(1)(B)); and (3) cooperate with the State in identifying and providing information to assist the State in pursuing any third party who may be liable to pay for medical care and services available under the State plan (unless good cause exists for refusing to cooperate) (section 1912(a)(1)(C)).

In addition, section 1912(a)(1)(B) provides that poverty level pregnant women described in section 1902(a)(1)(A) of the Act are exempt from the cooperation requirements in section 1912(a)(1)(B) relating to establishing paternity and obtaining support. (Section 1902(l)(1)(A) of the Act describes this group as women during pregnancy (and during the 60-day period beginning on the last day of the pregnancy) who are not members of other specified Medicaid eligibility groups and whosefamily income does not exceed the income level established by the State. The income level is expressed in

terms of a percentage of the Federal poverty level.)

Section 1912(a)(2) of the Act requires a State plan to provide for entering into cooperative arrangements (including financial arrangements) with other entities to assist the agency or agencies

administering State plan with respect to the enforcement and collection of rights of payment for medical care by or through a parent, the State's agency established or designated under title IV-D of the Act, and appropriate courts and law enforcement officials.

II. Child Support Enforcement Services

Title IV-D of the Act specifies requirements for the enforcement of support obligations owe by absent parents of families receiving benefits under title IV-A of the Act (AFDC). Section 454 of the Act specifies that States must provide for the establishment or designation of a single and separate organizational unit to administer the IV-D provisions for child and spousal support under the State plan. These organizations are called child support enforcement (CSE) agencies. CSE agencies are required under section 454 of the Act to provide statutorily mandated CSE services to AFDC recipients, title IV-E foster care recipients, non-AFDC Medicaid recipients, and applicants for CSE services who are not otherwise eligible for such services. These services include establishing paternity, locating absent parents, and obtaining child and spousal support, including medical support.

Federal regulations at 45 Part 232 and õ235.70 set forth the AFDC program requirements for the collection and referral of information to CSE agencies. Specifically, õ 235.70(a) requires AFDC agencies to provide prompt notice to the CSE agency whenever aid is furnished to a child who has been deserted or abandoned by a parent, or when aid is furnished to the parent(s) with whom the child lives. Prompt notice is defined in õ 235.70(b)(2) as a written notice that is provided within 2 working days of the furnishing of aid or the determination of eligibility for benefits.

Section 9142 of the Omnibus Budget Reconciliation Act of 1987 (OBRA '87), Public Law 100-203), amended section 454 of the Act by adding a requirement that CSE agencies must provide the statutorily mandated CSE services to families who receive Medicaid, in addition to those families receiving AFDC. CSE regulations published in the Federal Register on February 26, 1991 (56 FR 7988) incorporated this statutory provision by revising 45 CFR 3O3.30 and 3O3.31 to mandate CSE agencies to provide medical support enforcement services to all Medicaid recipients referred to agencies.

In addition, regulations at 45 CFR part 306 specify that such activities may be conducted in accordance with optional cooperative agreements between CSE agencies and State Medicaid agencies. CSE agencies are not required to have a cooperative agreement with the State Medicaid agencies in order to perform these activities. However, a cooperative agreement is required for performance of additional, non-statutory activities.

III. Proposed Changes to the Regulations

A.Medicaid Referrals to CSE Agencies

In order for CSE agencies to perform the requirements of section 454 of the Act by providing CSE services to those Medicaid families in need of such services, the CSE agencies must be aware of who those families are. Although CSE agencies are needed to provide CSE services to Medicaid families, States are currently not required to refer Medicaid families to CSE agencies. Consequently, information derived from program reviews from both HCFA regional offices and CSE agencies has shown that there is a lack of consistency among States in making this referral. The result is that some Medicaid families in need of CSE services do not receive them, while other families who are not in need of such services are being inappropriately referred.

To assist CSE agencies in carrying out the provisions of section 454 of the Act, we are proposing, in a new 42 CFR 433.160, that Medicaid agencies be required to provide prompt notice to the CSE agency for referral whenever medical assistance is furnished to families who may be in need of CSE services. For purposes of this section, we are defining "prompt notice" as communication of all relevant information, as prescribed by the CSE agency, by the most efficient and cost-effective means available, using manual or automated systems, no later than 2 working days after a determination of medical assistance eligibility has been made. For consistency, these are the same timeliness requirements for referrals found in the AFDC regulations at 45 CFR 235.70(b)(2).

We are also proposing to require that the State Medicaid agency develop criteria and procedure, in conjunction with the State CSE agency, to implement the referral requirements. Because many States have already developed criteria and administrative procedures for working with CSE agencies for the purpose of enforcement of rights to and collection of medical support or payments, we want to extend States maximum flexibility in implementing the proposed requirements for case referrals. Therefore, we are proposing general requirements for referrals that can be implemented through criteria and procedures developed by the State Medicaid agency in conjunction with the State CSE agency. We believe that State CSE agencies must be involved when State Medicaid agencies develop criteria and procedures for referral so that only appropriate cases are referred to the CSE agency. In addition, the type of information needed by the CSE agency and the method of transmitting the information may vary from State to State. Therefore, we believe a more favorable outcome would be achieved if the State Medicaid agency coordinates its criteria and procedures with the State CSE agency.

While we are proposing general requirements for the development of the referral criteria and procedures, we are proposing that, at a minimum, the criteria and procedures must incorporate a methodology for identifying the Medicaid cases that would be appropriate for referral to the CSE agency, and provide for review of the criteria and procedures when both the State medicaid agency and the State CSE agency agree that such revision is warranted. In addition, we propose to require that such criteria and procedures be described in the State plan.

B. Cooperative Agreements

We are proposing changes to 42 CFR 433.151, Cooperative agreements and incentive payments State plan requirements, to address revisionsthat were made in the CSE regulations. Current regulations at

õ 433.151 require Medicaid agencies to enter into cooperative agreements with specified entities in accordance with the requirements stipulated for cooperative agreements under regulations at 45 CFR part 306. In accordance with section 1912(a)(2) of the Act, these entities include any appropriate agency of any State (including, with respect to the enforcement and collection of rights of payment for medical care by or through a parent, the State CSE agency), and appropriate courts and law enforcement officials.

Section 433.152(b)(2) also requires State Medicaid agencies to make reimbursement for services performed by the CSE agency under a cooperative agreement that are not reimbursable under title IV-D and that are necessary for the collection of amounts for the Medicaid program. As discussed earlier in this preamble, CSE regulations at 45 CFR part 306 provide for optional cooperative agreements between CSE agencies and Medicaid agencies that include the medical support enforcement and collection activities CSE agencies are required to perform under title IV-D. However, in accordance with 45 CFR 304.23(g) (Expenditures for which Federal financial participation (FFP) is not available), Federal funding under the IV-D program is not available for these required activities if they are performed under an optional cooperative agreement with the Medicaid agency under 45 CFR part 306. Thus, if a CSE agency performs medical support enforcement services, as it is now mandated to do, without a cooperative agreement, it will be reimbursed under title IV-D. However, if it performs these services under an optional cooperative agreement, it cannot be reimbursed under title IV-D. Because title IV-D funds are not available in this situation, Medicaid is required to pay CSE agencies for activities which they are required to perform under title IV-D.

In addition, Medicaid agencies are required to pay incentive payments under 42 CFR 433.153, to a political subdivision, a legal entity for the subdivision, or another State, for the enforcement of rights to and collection of medical support or payments under the mandatory Medicaid cooperative agreement. County or local CSE agencies administering the cooperative agreement between the State Medicaid agency and the State CSE agency would receive the required incentive payment, in addition to the Medicaid reimbursement, for any activities covered under the cooperative agreement with the State agency.

The intent of our current regulations concerning mandatory cooperative agreements was to ensure medical support enforcement and collection activities were performed for Medicaid recipients. Because several of the functions previously performed under cooperative agreements are now mandatory for CSE agencies, with or without a cooperative agreement, we believe there is no longer a need to require State Medicaid agencies to have cooperative agreements with the State CSE agencies. Therefore, we are proposing to revise õ 433.151 to make cooperative agreements with CSE agencies optional instead of mandatory. We also propose to revise this section to add a State plan requirement that the State must meet the referral requirements in new õ 433.160, regardless of whether the State enters into a cooperative agreement. For consistency and clarity in making these changes, we propose to redesignate the cooperative agreement requirements currently found in õ 433.151 (a) and (b) as new õ 433.151(b)(1) and (2).

CSE regulations at 45 CFR 302.34 additionally require CSE agenciesto enter into cooperative arrangements with appropriate courts and law enforcement officials. We believe that this requirement, coupled with the requirement to provide CSE services to Medicaid families, eliminates the need for State Medicaid agencies to enter into mandatory cooperative agreements with these same entities, as currently required in õ 433.151. Therefore, our proposed change to õ 433.151 to make cooperative agreements optional instead of mandatory also encompasses these other entities, as well as CSE agencies.

C. Additional Proposed Revisions to the Regulations

We propose to revise õ 433.136 to define the term "political subdivision" as a county or locality within a State. We have interpreted "political subdivision" as a county or locality since 1977. Our interpretation is based upon the Conference Committee report accompanying the 1977 Medicare-Medicaid Anti-Fraud and Abuse Amendments, Public Law 95-142. In the report, when discussing the addition of sections 1903(p) and 1912 to the Act, Congress differentiated local governments from those entities that are not State-level, denominating the former as "political subdivision(s) of a State" and "localities". (H.R. Conf. Rep. No. 673, 95th Cong., 1st Sess. 45, reprinted in 1977 U.S. Code Cong. & Admin. News 3113, 3119(1977)).

In addition, Departmental regulations at 45 CFR 74.3 include in the definition of "State" as it applies to Medicaid State plans, "any agency or instrumentality of a State exclusive of local governments." This section also provides a definition of "local government" that appears to encompass the concept of "political subdivisions" and "localities." Under 45 CFR 74.3, local government means a "local unit of government including specifically a county, municipality, city, town, township, local public authority, school district, special district, Intrastate district, council of governments (whether or not incorporated as a nonprofit corporation under State law), sponsor or sponsoring local organization of a watershed project (as defined in 7 CFR 620.2, 40 FR 12472, March 19, 1975), any other regional or interstate government entity, or any agency or instrumentality of a local government. However, for policies applicable to government hospitals and institutions of higher education, see õ 74.4(c), Applicability of this part." We believe that our proposed definition of 'political subdivision" not only reflects Congressional intent, but is also consistent with other Departmental regulations that reflect the interpretation that a "political subdivision" means a county or locality.

In addition, we propose to--

þ Revise õ 433.135, Basis and purpose, to add a reference to the referral requirement: and

þ Revise õ433.137, State plan requirements, to add the requirement of referrals to CSE agencies.

IV. Collection of Information Requirements

The new regulation at õ 433.160 contains information collection requirements that are subject to review by the Office of Management and Budget under the Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.). The information collection requirements concern the development of State plan amendment material concerning the referral of certainMedicaid families to CSE agencies. The respondents who will provide the information include State Medicaid agencies. Public reporting burden for this collection of information is estimated to be one hour per amendment.

Organizations and individuals desiring to submit comments on the information collection requirements should direct them to the OMB official whose name appears in the ADDRESSES section of this preamble.

V. Response to Comments

Because of the large number of items of correspondence we normally receive on a proposed rule, we are not able to acknowledge or respond to them individually. However, we will consider all comments that we receive by the date and time specified in the DATES section of this preamble, and we will respond to the comments in the final rule.

VI. Regulatory Impact Statement

Executive Order 12291 (E.O. 12291) requires us to prepare and publish an initial regulatory impact analysis for any proposed regulations that are likely to meet criteria for a "major rule." A major rule is one that would result in--

þ An annual effect on the economy of $100 million or more;

þ A major increase in costs or prices for consumers, individual Industries, Federal, State or local government agencies, or any geographic regions; or

þ Significant adverse effects on competition, employment, investment, productivity, innovation or on the ability of United States-based enterprises to compete with foreign-based domestic or export markets.

In addition, consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C 601-612), we prepare and publish an initial regulatory flexibility analysis for proposed regulations unless the Secretary certifies that the regulations would not have a significant impact on a substantial number of small entities. For purposes of the RFA, we do not consider States or individuals to be small entities.

These proposed regulations require that Medicaid agencies refer appropriate Medicaid families to agencies for the enforcement and collection functions to be performed by the CSE agency. "The terms of the referral would be determined by the State Medicaid agency and the State CSE agency. The intent of these regulations is merely to ensure that Medicaid agencies refer all Medicaid recipients in need of CSE services to the CSE agency. In addition, the intent of the modifications proposed to the regulations governing cooperative agreements is to limit the transfer of program payment from title XIX to title IV-D for activities performed by the CSE agency that are mandated under title IV-D.

While this proposed rule will have some overall effect on Medicaid program expenditures, we do not believe that the impact will be significantficant. Therefore, we have determined, and the Secretary certifies, that this proposed rule is not a major rule under Executive Order 12291, and would not have a significant economic impact on a substantial number of small entities.

Section 1102(b) of the Act requires the Secretary to prepare a regulatory impact analysis for any proposed rule that may have a significant impact on the operations of a substantial number of smallrural hospitals. Such an analysis must conform to the provisions of section 603 of the REA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital with fewer than 50 beds located outside a metropolitan statistical area. We have determined, and the Secretary certifies, that this proposed regulation would not have a significant economic impact on the operations of a substantial number of small rural hospitals.

Executive Order 126O6 requires an analysis in formulating and implementing policies and regulations that may have significant impact on family formation, maintenance, and general well being. These proposed regulatory provisions are expected to have an overall beneficial family impact.

Section 454 of the Act requires CSE agencies to provide CSE services to Medicaid families. However, under existing regulations, Medicaid agencies are not required to refer Medicaid families to CSE agencies. Consequently, information derived from program reviews from both HCFA regional offices and CSE agencies has shown that there is a lack of consistency among States in making this referral. The result is that some Medicaid families in need of CSE services do not receive them, while other families who are not in need of such services are being

inappropriately referred.

We believe that the proposed regulatory provision that requires Medicaid agencies to provide prompt notice (within 2 working days) to the CSE agency for referral of certain families to receive all appropriate CSE services will greatly enhance the general well-being of families. Specifically, these families will receive access to CSE services that are in excess of medical support and payment collection, such as establishing paternity, locating absent parents and obtaining child and spousal support.

List of Subjects in 42 CFR Part 433

Administrative practice and procedure, Child Support, Claims, Grant programs-health, Medicaid, Reporting and record keeping requirements.

Part 433 of chapter IV of title 42 would be amended as set forth below:

1. The authority citation for part 433 continues to read as follows:

Authority: Sec. 1102, l9O2(a)(4), 1902(a)(18), 19O2[a)(25), 19O2(a)(45), 1903(a)(3), 1903(d)(2), 1903(d)(5), 1903(o), 1903(p), 1903(r), 1912, and 1917 of the Social Security Act (42 U.S.C. 1302, I396a(a)(4), 1396a(a)(18), 1396a(a)(25), 1396a(a)(45), 1396b(a)(3), 1396b(d)(2), 1396b(d)(5), 1396b(o), 1396b(p), 1396b(r), 1396k, and 1396p).

2. In õ 433.135 the introductory text and paragraph (a) are republished paragraphs (b) and (c) are revised and a new paragraph (d) is added to read as follows:

õ 433.135 Basis and purpose.

This subpart implements sections 1902(a)(25), 1902(a)(45), 1903[d)(2), 1903(o), 1903(p), and 1912 of the Act by setting forth State plan requirements concerning--

(a) The legal liability of third parties to pay for services provided under the plan;

(b) Assignment to the State of an individual's right to third party payments;

(d) referrals of certain Medicaid families to child support enforcement agencies.

3. In õ 433.136, the introductory text is republished and a new definition is added in alphabetical order to read as follows:

õ 433.136 Definitions

For purposes of this subpart-

* * * * *

Political subdivision means a country or locality within a State.

* * * * *

4. In õ 433.137, the introductory text of paragraph (b) is republished and paragraphph (b)(2) is revised to read as follows:

õ 433.137 State Plan Requirements.

* * * * *

A State plan must provide that-

* * * * *

(2) The requirements of õõ433.151 through 433.160 are met for cooperative agreements and incentive payments for third party collections, and referrals of certain Medicaid families to child support enforcement agencies.

* * * * *

5. The undesignated heading following õ433.148 is revised to read as

follows:

Cooperative Agreements, Incentive Payments, and Referrals to Child

Support Enforcement Agencies

6. Section 433.151 is revised to read as follows:

õ 433.151 Cooperative agreements and incentive payments--State plan requirements.

For medical assistance furnished on or after October 1, 1984-

(a) A State plan must specify whether or not the State has entered into cooperative agreements (including financial arrangements) with other entities to assist the agency or agencies administering the State plan with respect to the enforcement and collection of rights to medical support or payments assigned and any other matters of common concern. These cooperative agreements may be with any of the following entities: Any appropriate agency of any State (including, with respect to the enforcement and collection of rights of payment for medical care by or through a parent the State's agency designated under title IV-D of the Act); and appropriate courts and law enforcement officials.

(b) If a State elects to enter into a cooperative agreement, as specified in paragraph (a) of this section, the State must provide that-

(1) The agreement is in accordance with the provisions of õ 433.152; and

(2) The requirements for making incentive payments and for distributing third party collections specified in õõ 433.153 and 433.154 are met.

(c) Regardless of whether a State enters into a cooperative agreement, as specified in paragraph (a) of this section, it must meet the requirements specified in õ 433.160 for referring certain Medicaid families to the child support enforcement agency.

7. A new õ433.160 is add to read as follows:

õ433.160 Referrals to child support enforcement agencies.

(a) Requirements for referral. (1) The Medicaid agency must provide prompt notice to the child support enforcement (CSE) agency for referral whenever medical assistance is furnished to families who may be in need of CSE services, as determined under the criteria and procedures specified in paragraph (b) of this section.

(2) For purposes of thIs section, prompt notice means communication of all relevant information, as prescribed by the CSE agency, by the most efficient cost effective means available, using manual or automated systems, no later than 2 working days after a determination of medical assistance eligibility has been made.

(3) Criteria and procedures. The State Medicaid agency, in conjunction with the State CSE agency, must develop criteria and procedures to implement the requirements in paragraph (a) of this section. At a minimum, the criteria and procedures must-

(1) Incorporate a methodology for identifying the Medicaid cases that would be appropriate for referral to the CSE agency; and

(2) Provide for revision of the criteria and procedures when both the State Medicaid agency and the State CSE agency agree that such revision is warranted.

(c) State plan requirement. The State Medicaid agency must describe the criteria and procedures specified in paragraph (b) of this section in its State plan.

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

Dated: April 12, 1993.

William Toby, Jr.,

Acting Deputy Administrator, Health Care Financing Administration.

Approved: June 7, 1993.

Donna E. Shalala.

Secretary

[FR Doc. 93-23118 Filed 9-21-93; 8:45am]