Notice of Hearing: Reconsideration of Disapproval of Minnesota State Plan Amendment (SPA) 98-10

This notice announces an administrative hearing to reconsider HCFA's decision to disapprove Minnesota State Plan Amendment 98-10 submitted March 30, 1998. Section 1116 of the Social Security Act (the Act) and 42 CFR Part 430 establish Department procedures that provide an administrative hearing for reconsideration of a disapproval of a State plan or plan amendment. These requirements are made applicable under Title XIX. The Health Care Financing Administration (HCFA) is required to publish a copy of the notice to the State that informs the State of the time and place of the hearing and the issues to be considered. If we subsequently notify the State 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. Minnesota submitted this State Plan Amendment (SPA) on March 30, 1998. The issue is whether the State's proposal to adopt several less restrictive Medicaid financial eligibility methodologies for the group of low income families with children under section 1931 of the Social Security Act comports with the requirements of section 1902(a)(17)of the Act that a state use reasonable standards which are comparable for all groups in determining eligibility for and the amount of medical assistance. Specifically, the State proposed to disregard earned income and resources used to determine a grant under the Temporary Assistance for Needy Families (TANF) program. If these proposals mean that the types of income and resources which TANF would count will be disregarded in determining the eligibility of all individuals under Section 1931, HCFA would have no objections. However, HCFA understands that the intent of these provisions was to disregard the earned income and resources only in situations in which the family receives a TANF grant. Given this understanding, these proposed disregards are not in accordance with Federal law. HCFA concluded that these provisions violate the requirement in Section 1902 (a)(17). Section 1931(b)(2)(C)of the Act permits a State to use less restrictive income and resource methodologies in determining eligibility than it used under its Aid to Families with Dependent Children (AFDC) State plan in effect on July 16, 1996. Nevertheless, HCFA believes this language must be read in context of other title XIX requirements rather than in a vacuum. Therefore, the requirements of section 1902 (a)(17) apply.This section requires States to have reasonable standards for determining eligibility for Medicaid assistance which are ``comparable for all groups.'' A disregard which treats the same types of income or the same amounts of resources differently whether or not an individual participates in the TANF program, does not result in comparable treatment of income and resources for all individuals under the 1931 group. If two individuals have identical amounts of income from the same source, that income would be counted in determining the eligibility of an individual who applied only for Medicaid but would be disregarded if the individual received a TANF grant in addition to applying for Medicaid. This does not comport with the comparability requirements of Section 1902(a)(17). Therefore, the proposal to disregard earned income used in determining a TANF grant and to disregard resources used in determining a TANF grant was disapproved by HCFA. The deficiencies described above left HCFA no choice but to recommend disapproval of Minnesota SPA 98-10. The notice to Minnesota announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

Mary B. Kennedy, State Medicaid Director, Assistant Commissioner Health Care Administration, Minnesota Department of Health Services, 444 Lafayette Road North, Saint Paul, Minnesota 55155. Dear Ms. Kennedy: I am responding to your request for reconsideration of the decision to disapprove Minnesota State Plan Amendment (SPA) 98-10. The issue is the State's proposal to adopt several less restrictive methodologies for the group of low income families with children eligible under Section 1931 of the Social Security Act. Specifically, the State proposed to disregard earned income and resources used in determining a grant under the Temporary Assistance for Needy Families (TANF) program. If these proposals mean that the types of income and resources which TANF would count will be disregarded in determining the eligibility of all individuals under section 1931, HCFA would have no objections. However, HCFA understands that the intent of these provisions is to disregard the earned income and the resources only in situations in which the family receives a TANF grant. Given this understanding, these proposed disregards are not in accordance with Federal law. These provisions violate the requirement in section 1902(a)(17) that all individuals in a group be subject to comparable standards for determining eligibility. Section 1931(b)(2)(C) of the Act permits a State to use less restrictive income and resource methodologies in determining eligibility than it used under its Aid to Families with Dependent Children (AFDC) State plan in effect on July 16,1996. Nevertheless, this language must be read in context of other title XIX requirements rather than in a vacuum. The comparability requirements of Section 1902(a)(17) must apply. This section requires States to have reasonable standards for determining eligibility for Medicaid assistance which are ``comparable for all groups.'' A disregard which treats the same types of income or the same amounts of resources differently whether or not an individual participates in the TANF program, does not result in comparable treatment of income and resources for all individuals under the 1931 group. If two individuals have identical amounts of income from the same source, that income would be counted in determining the eligibility of an individual who applied only for Medicaid but would be disregarded if the individual received a TANF grant in addition to applying for Medicaid. This does not comport with the comparability requirements of section 1902(a)(17). Therefore, the proposal to disregard earned income used in determining a TANF grant and to disregard resources used in determining a TANF grant was disapproved by HCFA. The deficiencies described above left HCFA no choice but to

recommend disapproval of Minnesota SPA 98-10. I am scheduling a hearing on your request for reconsideration to be held on June 9, 1999 on the Twenty-First Floor; 105 W. Adams Street; Chicago, Illinois 60603. 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 Mr. Stanley Katz as the presiding officer. If these arrangements present any problems, please contact the presiding officer. 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. The presiding officer may be reached at (410)-786-2661. Sincerely, Nancy-Ann Min DeParle, Administrator.

(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: April 22, 1999. Nancy Ann Min DeParle, Administrator, Health Care Financing Administration. [FR Doc. 99-10610 Filed 4-27-99; 8:45 am] BILLING CODE 4120-01-P