83 FR 32252 - Medicaid Program; Reassignment of Medicaid Provider Claims

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services

Federal Register Volume 83, Issue 134 (July 12, 2018)

Page Range		32252-32255
FR Document		2018-14786

This proposed rule would remove the regulatory text that allows a state to make payments to third parties on behalf of an individual provider for benefits such as health insurance, skills training, and other benefits customary for employees. We are concerned that these provisions are overbroad, and insufficiently linked to the exceptions expressly permitted by the statute. As we noted in our prior rulemaking, section 1902(a)(32) of the Act provides for a number of exceptions to the direct payment requirement, but it does not authorize the agency to create new exceptions.

Federal Register, Volume 83 Issue 134 (Thursday, July 12, 2018)

[Federal Register Volume 83, Number 134 (Thursday, July 12, 2018)]
[Proposed Rules]
[Pages 32252-32255]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2018-14786]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 447

[CMS-2413-P]
RIN 0938-AT61

Medicaid Program; Reassignment of Medicaid Provider Claims

AGENCIES: Centers for Medicare & Medicaid Services, Department of
Health and Human Services.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would remove the regulatory text that
allows a state to make payments to third parties on behalf of an
individual provider for benefits such as health insurance, skills
training, and other benefits customary for employees. We are concerned
that these provisions are overbroad, and insufficiently linked to the
exceptions expressly permitted by the statute. As we noted in our prior
rulemaking, section 1902(a)(32) of the Act provides for a number of
exceptions to the direct payment requirement, but it does not authorize
the agency to create new exceptions.

DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on August 13, 2018.

ADDRESSES: In commenting, please refer to file code CMS-2413-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2413-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2413-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

FOR FURTHER INFORMATION CONTACT: Christopher Thompson, (410) 786-4044.

SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: http://www.regulations.gov. Follow the search instructions on
that website to view public comments.

I. Background

The Medicaid program was established by the Congress in 1965 to

[[Page 32253]]

provide health care services for low-income and disabled beneficiaries.
Section 1902(a)(32) of the Social Security Act (the Act) requires
direct payment to providers who render services to Medicaid
beneficiaries. It states that no payment under the plan for care and
services provided to an individual shall be made to anyone other than
such individual or the person or institution providing such care or
service, under an assignment or power of attorney or otherwise.
We codified Sec. 447.10 implementing section 1902(a)(32) of the
Act in the ``Payment for Services'' final rule published on September
29, 1978 (43 FR 45253). The statute provides several specific
exceptions to the general principle of requiring that direct payment be
made to the individual provider. The regulations implementing section
1902(a)(32) of the Act have generally tracked the plain statutory
language and required direct payments absent a statutory exception.
In 2012, we proposed a new regulatory exception in the ``Provider
Payment Reassignment, and Setting Requirements for Community First
Choice'' proposed rule published on May 3, 2012 (77 FR 26361, 26406)
for ``a class of practitioners for which the Medicaid program is the
primary source of service revenue'' such as home health care providers.
We recognized in the preamble to the proposed rule that section
1902(a)(32) of the Act does not authorize additional exceptions to the
direct payment requirement (See 77 FR 26382).
We received a total of 7 comments on the proposed regulatory
exception, all generally supportive of the proposed rule. This
provision was finalized in the ``Provider Payment Reassignment, and
Home and Community-Based Setting Requirements for Community First
Choice and Home and Community-Based Services (HCBS) Waivers'' final
rule published on January 16, 2014 (79 FR 2947, 3001) and authorized a
state to make payments to third parties on behalf of the individual
provider ``for benefits such as health insurance, skills training, and
other benefits customary for employees.''
We are concerned that Sec. 447.10(g)(4) is overbroad, and
insufficiently linked to the exceptions expressly permitted by the
statute. As we noted in our prior rulemaking, section 1902(a)(32) of
the Act provides for a number of exceptions to the direct payment
requirement, but it does not authorize the agency to create new
exceptions. Therefore, the regulatory provision grants permissions that
Congress has foreclosed, so we are proposing to remove the regulatory
exception at Sec. 447.10(g)(4).

II. Provisions of the Proposed Regulations

This proposal would remove Sec. 447.10(g)(4), but leave in place
the other provisions in Sec. 447.10 including the exceptions at Sec.
447.10(e), (f) and (g)(1) through (3). We seek comments regarding how
we might provide further clarification on the types of payment
arrangements that would be permissible assignments of Medicaid
payments, such as arrangements where a state government withholds
payments under a valid assignment. Specifically, we invite comments
with examples of payment withholding arrangements between states and
providers that we should address.
With regard to section 1915(c), 1915(i), 1915(j), and 1915(k)
authority, this proposed rule will not impact a state's ability to
perform Financial Management Services (FMS) or secure FMS through a
vendor arrangement. However, we also request comments on whether and
how the proposed removal of Sec. 447.10(g)(4) would impact self-
directed service models, where the Medicaid beneficiary takes
responsibility for retaining and managing his or her own services, and,
in some cases, may be performing payroll and other employer-related
duties. We are especially interested in comments that describe the
additional flexibilities needed to support beneficiaries opting for
self-directed service models, which may ensure stable, high-quality
care for those beneficiaries.

III. Collection of Information Requirements

To the extent a state changes its payment as a result of this rule,
the state would be required to notify entities of the pending change in
payment and update its payment system. We believe the associated burden
is exempt from the Paperwork Reduction Act (PRA) in accordance with 5
CFR 1320.3(b)(2). We believe that the time, effort, and financial
resources necessary to comply with the aforementioned requirement would
be incurred by the state during the normal course of their activities
and, therefore, should be considered usual and customary business
practices.

IV. Response to Comments

Because of the large number of public comments we normally receive
on Federal Register documents, we are not able to acknowledge or
respond to them individually. We will consider all comments we receive
by the date and time specified in the DATES section of this preamble,
and, when we proceed with a subsequent document, we will respond to the
comments in the preamble to that document.

V. Regulatory Impact Analysis

A. Statement of Need

We are concerned that Sec. 447.10(g)(4) is overbroad, and
insufficiently linked to the exceptions expressly permitted by the
statute. Therefore, the regulatory provision grants permissions that
Congress has foreclosed. As we noted in our prior rulemaking published
on January 16, 2014 (79 FR 2947, 3001), section 1902(a)(32) of the Act
provides for a number of exceptions to the direct payment requirement,
but the language does not explicitly authorize the agency to create new
exceptions. Therefore, we are proposing to remove the regulatory
exception at Sec. 447.10(g)(4). To the extent a state increased
reimbursement levels to reassign portions of a provider's reimbursement
to a third party, implementation of this rule may affect the rates that
are set by the state in the future.

B. Overall Impact

We have examined the impacts of this proposed rule as required by
Executive Order 12866 on Regulatory Planning and Review (September 30,
1993), Executive Order 13563 on Improving Regulation and Regulatory
Review (January 18, 2011), the Regulatory Flexibility Act (RFA)
(September 19, 1980, Pub. L. 96-354), section 1102(b) of the 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 Orders 12866 and 13563 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). Section
3(f) of Executive Order 12866 defines a ``significant regulatory
action'' as an action that is likely to result in a rule that may: (1)
Have an annual effect on the economy of $100 million or more in any 1
year, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities (also
referred to as ``economically significant''); (2) create a serious

[[Page 32254]]

inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially alter the budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof; or (4) raise novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any 1
year). We estimate that this proposed rule could be ``economically
significant'' as it may have an annual effect on the economy in excess
of the $100 million threshold of Executive Order 12866, and hence that
this proposed rule is also a major rule under the Congressional Review
Act. However there is considerable uncertainty around this estimate and
the Department invites public comments to help refine this analysis.
As discussed above, in the ``Provider Payment Reassignment, and
Home and Community-Based Setting Requirements for Community First
Choice and Home and Community-Based Services (HCBS) Waivers'' final
rule published on January 16, 2014 (79 FR 2947, 3001), we authorized a
state to make payments to third parties on behalf of the individual
provider ``for benefits such as health insurance, skills training, and
other benefits customary for employees.'' We lack information with
which to quantify the potential impacts of this policy on these types
of payments as the Department does not formally track the amount of
reimbursement that is being reassigned to third parties by states. To
offer one example, one such potential impact of the proposed rulemaking
would be that states stop reassigning homecare workers' dues to unions.
We estimate that unions may currently collect as much as $71 million
from such assignments.\1\ While we have not similarly quantified the
amount of other authorized reassignments, such as health insurance,
skills training, or other benefits, we believe that the amount of
payments made to third parties on behalf of individual providers for
the variety of benefits within the scope of this rulemaking is likely
in excess of $100 million. We seek comment on this estimate, and
particularly on the type and amount of payments currently being
reassigned under the exceptions in Sec. 447.10(g).
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\1\ Dues payments potentially associated with policies of the
type being proposed for revision have been reported to be $8 million
in Pennsylvania and $10 million in Illinois (https://www.fairnesscenter.org/cases/detail/protecting-the-vulnerable and
https://www.washingtonexaminer.com/illinois-politicians-forced-home-care-workers-into-union-that-donates-heavily-to-them/article/2547368). The total population is approximately 26 million in these
two states and 102 million across the states that have been reported
by the State Policy Network to have relevant third-party payment
policies (California, Connecticut, Illinois, Maryland,
Massachusetts, Minnesota, Missouri, New Jersey, Oregon, Vermont and
Washington) (https://www2.census.gov/programs-surveys/popest/tables/2010-2017/state/totals/nst-est2017-01.xlsx and https://spn.org/dues-skimming-faqs/). Factoring the $18 million (= $8 million + $10
million) proportionately by population yields a nationwide total of
approximately $71 million in union dues payments potentially
affected by this proposed rule. This transfer estimate could be
over- or understated if other states pay home care workers different
average wages than Pennsylvania and Illinois, if dues payments are
collected at different rates, or if participation in Medicaid home
care programs is not proportionate to total population.
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The potential direct financial impact to providers of this policy
change could be affected by many factors, such as the nature and
amounts of the types of payments currently being reassigned and
decisions made by homecare providers after a final policy takes effect
about whether or not to resume payments to third parties for these
types of benefits. The Department is unable to quantify these direct
financial impacts in the absence of specific information about the
types and amount of payments being reassigned. Even where it may be
possible to derive such estimates, such as with the example of union
dues, the Department lacks information to reliably estimate the
proportion of homecare providers likely to stop making payments versus
those likely to continue making payments through alternative means. We
request comments on the factors that might influence the direct
financial impacts to providers and recipients of reassignments of this
policy change for the varied types and amount of payments currently
being reassigned under the exceptions in Sec. 447.10(g).
Although states will no longer be able to withhold portions of a
provider's payment, states may elect to maintain the same level of
payment, thus affording the provider the opportunity to purchase the
items that were previously funded through the reassignment of
reimbursement. Conversely, states may elect to decrease payment levels
because rescission of Sec. 447.10(g)(4) will limit their ability to
reassign payment to third parties. In other words, states may have
previously factored their ability to reassign provider payments into
their payment rates and might choose to revise their rates in response
to this regulatory change. We request comments, particularly from
states, on potential state behavior under the proposed policy.
If a state elected to maintain the same level of payment, and if
homecare providers opt to continue all voluntary payments presently
being reassigned, then the rule may have no impacts. However, if a
state elected to reduce payment levels and/or if homecare providers opt
to discontinue all voluntary payments, then the impacts of the rule may
be close to the full amount of current reassignments, thus making the
rule economically significant.
While it is difficult for us to conduct a detailed quantitative
analysis given this considerable uncertainty and lack of data, we
believe that without this proposed rulemaking, states may apply the
exceptions at Sec. 447.10(g) in ways that do not comport with section
1902(a)(32) of the Act and we welcome comment with regard to the
quantitative impact of the elimination of states' ability to reassign
Medicaid payment for items such as health insurance, skills training
and other benefits customary for employees. We also seek comments
identifying impacts to states and the federal government as a result of
this proposed rule, including on the assumption that the time, effort
and financial resources necessary to comply with the proposed
requirement would be incurred by states during the normal course of
their activities and, therefore, does not impose incremental costs.

C. Anticipated Effects

The RFA requires agencies to analyze options for regulatory relief
of small entities. 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
less than $7.5 million to $38.5 million in any 1 year. Individuals and
states are not included in the definition of a small entity. We are not
preparing an analysis for the RFA because we have determined, and the
Secretary proposes to certify, that this proposed rule would not have a
significant economic impact on a substantial number of small entities.
In addition, section 1102(b) of the Act requires us to prepare an
RIA if a rule may have a significant impact on the operations of a
substantial number of small rural hospitals. This analysis must conform
to the provisions of section 603 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 for Medicare
payment

[[Page 32255]]

regulations and has fewer than 100 beds. We are not preparing an
analysis for section 1102(b) of the Act because we have determined, and
the Secretary proposes to certify, that this proposed rule would not
have a significant impact on the operations of a substantial number of
small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 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 2018, that
threshold is approximately $150 million. This rule will have no
consequential effect on state, local, or tribal governments or on the
private sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final 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.

D. Alternatives Considered

We considered issuing guidance to require states to formally
document consent to reassign portions of a provider's payment. We also
considered limiting the items for which provider reassignment could be
made. However, we are concerned that Sec. 447.10(g)(4)) is overbroad,
and insufficiently linked to the exceptions expressly permitted by the
statute. Therefore, we believe removing the regulatory exception is the
best course of action.

E. Accounting Statement

As required by OMB Circular A-4 under Executive Order 12866
(available at https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf) in Table 1, we have prepared an accounting
statement showing the classification of transfers associated with the
provisions in this proposed rule. The accounting statement is based on
estimates provided in this regulatory impact analysis and omits
categories of impacts for which partial quantification has not been
possible.

Table 1--Accounting Statement
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Units
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Category Low estimate High estimate Discount rate Period
Year dollars (%) covered
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Transfers:
Annualized Monetized $ 0 $71 2017 3 2019
millions/year..............
0 71 2017 7 2019
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From whom to whom?.......... From third parties to home health providers.
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F. Regulatory Reform Analysis Under E.O. 13771

Executive Order 13771, entitled ``Reducing Regulation and
Controlling Regulatory Costs,'' was issued on January 30, 2017 and
requires that the costs associated with significant new regulations
``shall, to the extent permitted by law, be offset by the elimination
of existing costs associated with at least two prior regulations.''
This proposed rule is not expected to be subject to the requirements of
E.O. 13771 because this proposed rule is expected to result in no more
than de minimis costs.

G. Conclusion

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

List of Subjects in 42 CFR Part 447

Accounting, Administrative practice and procedure, Drugs, Grant
programs--health, Health facilities, Health professions, Medicaid,
Reporting and recordkeeping requirements, Rural areas.

For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services proposes to amend 42 CFR chapter IV as set forth
below:

PART 447--PAYMENTS FOR SERVICES

0
1. The authority citation for part 447 continues to read as follows:

Authority: Sec. 1102 of the Social Security Act (42 U.S.C.
1302).

Sec. 447.10 [Amended]

0
2. Section 447.10 is amended by removing paragraph (g)(4).

Dated: May 3, 2018.
Seema Verma,
Administrator, Centers for Medicare & Medicaid Services.
Dated: May 7, 2018.
Alex M. Azar II,
Secretary, Department of Health and Human Services.
[FR Doc. 2018-14786 Filed 7-10-18; 11:15 am]
BILLING CODE 4120-01-P

Document Created: 2018-11-06 10:22:29
Document Modified: 2018-11-06 10:22:29

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule.
Dates		To be assured consideration, comments must be received at one of
Contact		Christopher Thompson, (410) 786-4044.
FR Citation		83 FR 32252
RIN Number		0938-AT61
CFR Associated		Accounting; Administrative Practice and Procedure; Drugs; Grant Programs-Health; Health Facilities; Health Professions; Medicaid; Reporting and Recordkeeping Requirements and Rural Areas

83 FR 32252 - Medicaid Program; Reassignment of Medicaid Provider Claims

DEPARTMENT OF HEALTH AND HUMAN SERVICESCenters for Medicare & Medicaid Services

Federal Register Volume 83, Issue 134 (July 12, 2018)

DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services