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WASHINGTON, MAY 12, 2008—Dennis G. Smith, the former director of the federal Center for Medicaid and State Operations, has been named a senior fellow in health care reform at The Heritage Foundation's Center for Health Policy Studies.

Smith begins work in a visiting position at the prominent conservative think tank this week, where he will research ways to improve the Medicaid program, the future of long-term care and state health care reform initiatives.

As House leaders pulled the emergency supplemental spending bill from Thursday's calendar, they face new problems from the party's left wing in even getting the bill to the floor.

A leader of the Out-of-Iraq Caucus, upset that the spending bill continues the war well into 2009, said this morning that liberal members may join conservative Democrats in voting against the procedural motion needed to bring the bill to the floor.

Leaders of the conservative Blue Dog Democrats[1] have said they may have enough votes to block the bill from coming up. They are angered that the bill would create a new educational benefit for veterans, called the GI Bill of Rights, without offsetting the cost with tax hikes or spending cuts.

If Republicans hold together, 15 Democratic "no" votes would block consideration. Out-of-Iraq Caucus leader Rep. Maxine Waters (D-Calif.) said her caucus could add to the total.

"We know there are some people who are considering voting against it," Waters told reporters. "If they do, we may join them."

Waters also said the Out-of-Iraq Caucus has not committed to supporting the "war policy" portion of the supplemental that makes withdrawal of combat troops from Iraq by December 2009 a goal, and orders that Iraq repay half the reconstruction funds included in the bill.

In meetings among liberal Democrats there have been complaints this week that the "goal language" is too weak, and that the U.S. should not make Iraq pay for its reconstruction after bombing the country.

House Speaker Nancy Pelosi (D-Calif.) indicated Wednesday night that the bill could be held until next week because of what she says are Republican delaying tactics. Aides indicated that negotiations with Blue Dogs on the GI Bill were also a consideration. When Thursday's schedule was made public, the supplemental spending bill was not on the calendar.

The Senate Appropriations Committee has moved to next week plans to mark up[2] a supplemental war appropriations bill that will include language to block for one year seven new Medicaid regulations proposed by the Bush administration, as well as additional funds for FDA, CQ Today reports (Higa, CQ Today, 5/7). The House version of the legislation, which would cost more than $183 billion, includes the Medicaid language but not the FDA funds.

According to Sen. Herb Kohl (D-Wis.), chair of the Senate Appropriations Subcommittee on Agriculture, Rural Development, FDA and Related Agencies, the Senate version of the bill will include $275 million for FDA. The legislation would provide $125 million for food safety; $100 million for medication and medical device safety; $40 million to modernize FDA science and the agency work force; and $10 million to upgrade FDA facilities and laboratories. Kohl said, "With serious concerns about the FDA lacking the resources to do its job, this much needed increase in funding means the agency can hire more food inspectors, open offices overseas, expand data collection and take other necessary steps to prevent our food and drug safety being severely compromised" .

However, the mark up of the bill might "prove to be nothing more than an exercise in regular appropriations procedure," as Senate Majority Leader Harry Reid (D-Nev.) "has made it clear that he intends to bring the House bill to the floor" and Republicans likely will oppose the legislation, which "appeared certain to have much more domestic spending than the House bill," CQ Today reports.

Democratic leaders had hoped to move the House version of the bill to the floor on Thursday, but on Wednesday they "expressed pessimism that they would be able to move the bill" this week because of opposition from the Blue Dog Coalition and "Republican procedural delays" on a separate bill.

The Blue Dog Coalition opposes the legislation because of a lack of offsets for some of the funds that the bill would provide. The House Rules Committee late Wednesday "sent out a notice that it did not plan to consider a rule for debate of the supplemental measure until next week -- a clear indication that the House leadership's appeals to the Blue Dogs had failed," according to CQ Today.

On Wednesday Bush reiterated his promise to veto the legislation in the event that the cost would exceed $108 billion.

Blue Dog Democrats are a group of 47 moderate and conservative Democratic Party members of the House. The Blue Dogs promote, among other things, fiscal conservatism and accountability. Many members come from conservative districts. In 2006, Blue Dog a number of Democratic candidates were elected in conservative-leaning districts, ending years of Republican dominance in these districts.

The term, Blue Dog Democrat, is playfully derived from the original term Yellow Dog Democrat. It was former Democrat Rep. Pete Geren, of Texas, who said that the members have been "choked blue" by those extreme Democrats, from the left who are usually referred to as Yellow Dog Democrats. When the South as a region was a political stronghold for Democrats in the first half of the 20th century, it was said that a Southern voter would vote for a mangy yellow dog before he/she would vote for a Republican. So a “Yellow Dog Democrat” implies one fiercely loyal to the Democratic party.

A Mark-Up refers to the meeting of a Committee held to review the text of a bill before reporting it out.

Committee members offer and vote on proposed changes to the bill's language, known as amendments. Most mark-ups end with a vote to send the new version of the bill to the floor for final approval.

LEAnet, a national coalition of local education agencies, will host a live national conference on May 21st from one to three pm, EST. You can participate in the conference on the Web. Participation requires only a broadband connection to the Internet and a piece of free software called Quicktime. Speakers will include Sara Rosenbaum from the Center on Public Health Law at George Washington University; Bruce Hunter, Legislative Affairs Director from the American Association of School Administrators; Dr. Luann Purcell, Executive Director of the International Council of Administrators of Special Education; John DiCecco, who manages a number of federal reimbursement programs for the Los Angeles Unified School District; and Greg Morris, Executive Director of LEAnet. Attendance is limited to the first one thousand applicants. This is your chance to get the latest news on Congressional action to protect reimbursement for Medicaid in the schools, potential impact on school programs, an overview of the Medicaid program as it applies to school programs, and efforts by LEAnet to build and maintain a national coalition to oppose CMS program funding cuts. It will also be possible to submit questions by phone or email during the conference.

The troubled economy could soon create a major fiscal crisis for the state-run Medicaid and children’s health programs that would only be exacerbated by the Bush administration’s efforts to cut these programs back. Congress must provide temporary aid to the most beleaguered states and find a permanent way to protect Medicaid and children’s health programs from wrenching cuts every time a recession hits.

The problem was laid bare in a report this week from the Urban Institute, funded by the Kaiser Family Foundation. Researchers estimated that each percentage-point rise in the unemployment rate would increase Medicaid and children’s health enrollments by one million people as more families fall into poverty. And it was estimated that it would drive another 1.1 million people into the ranks of the uninsured as they lose their employer-sponsored coverage.

This will happen at a time when state governments are ill prepared to cope because their tax revenues are plunging during the economic downturn. By one count, 27 states and the District of Columbia are forecasting some $40 billion in budget deficits for the coming year. . . . This is a terrible time to reduce funding for safety-net programs. Congress needs to place a moratorium on the Medicaid regulations by a veto-proof margin and find a way to overturn the children’s health rules. As a permanent remedy, Congress should restructure Medicaid and children’s health programs so that federal financing increases during bad economic times — when people most need their government’s help.

As part of the Administration’s ongoing efforts to eliminate health care coverage for 28 million of our nation’s most vulnerable children, the White House continues to press for a package of seven ill-advised cuts to Medicaid programs. The cuts jeopardize the ability of states to provide critical health services to millions of children, including low-income children, disabled children, children with special health needs, and foster youth.

In the aftermath of its embarrassing defeat in the House, which passed a moratorium on the seven regulations on a vote of 349 to 62, with nearly two-thirds of the House Republicans voting with their Democratic colleagues, the administration has turned to desperate measures. One of these is an attempt to divide a coalition of groups opposing the cuts by offering to accept a short-term moratorium on two of seven proposed Medicaid regulations, leaving victims of the other five to twist slowly in the wind. This arrangement would temporarily stall two of the new regulations that would prevent states from using Federal Medicaid funds to help pay for physician training, reduce reimbursement to hospitals and nursing homes operated by state and local governments, and limit coverage of rehabilitation services for individuals with disabilities and mental illnesses. The other five regulations would be implemented.

Attempting to reduce the political power of the coalition by separating out these two regulations is a disingenuous and transparent move on the part of an anxious White House and is political suicide for many Republican Senators. Thirty-five Senators are up for reelection in the Fall. Twenty-three of those Senate seats are currently held by Republicans and of those, five are open due to retirement of the Republican incumbents. Is the White House really prepared to have 18 of its Senators run for reelection carrying not only the burden of the President’s war and a badly wounded economy but also a concerted effort to remove health care coverage for fragile children? If I were a Republican Senator I would be getting as far away from 1600 Pennsylvania Avenue as possible.

Opposing a temporary moratorium on the seven regulations is bad public policy and bad politics.

Electing more of your own party is not possible when you force your candidates to defend ill-advised regulatory action.

Whether the moratorium on the CMS cuts will make it through the Senate and with enough votes to override a presidential veto remains to be seen. The primary opponent, Senator Charles Grassley (R-IA) said, in a recent speech, ‘‘It is an absolute farce for anyone to argue that all of those [Medicaid] dollars are being appropriately spent and that Congress ought to just walk away from these issues.’’ The same thing could be said about any governmental program or agency, including the U.S. Senate.

It is possible that the Senate finally seems ready to check the thinly veiled animosity the Bush administration has been showing toward Medicaid and other federal health programs for the poor and uninsured.

We all want any problems with Medicaid fixed. But forcing the states to pick up more of the tab at a time when a likely recession could make it difficult for them to balance their budgets isn’t doing the taxpayers any favors. H.R. 5613 won’t prevent the rule changes, just delay them a year to give the states more time to prepare and for the nation’s economy to turn around. It’s a reasonable precaution that Senators should back.

Based on information submitted to Representative Henry Waxman by the Commonwealth of Kentucky, here is the impact of the cuts Senator McConnell (R-KY) is attempting to protect. Comments are from the State report.

Impact: "The primary loss would be in payments that could be made to Public Hospitals who are an essential part of the Health Care safety network in this state."

Impact: "…the hardest hit provider groups are Kentucky’s publicly funded University Hospitals which provide the lion’s share of indigent hospital care for Kentucky’s poorest citizens. The two University Hospitals are also the largest teaching hospitals in the state and they can not afford to lose their Medical Education payments."

Impact: "Obviously, cuts in services provided to recipients or even the number of recipients served would have to be considered in order for Kentucky to absorb this large financial impact … this regulation could have dramatic and real impact on all of Kentucky’s 722,000 Medicaid recipients."

Impact: "It is intuitive that there will be some impact as CMS continues to carve away at the edges of what is an allowable Medicaid service … there will be considerable administrative impact as multiple Kentucky Medicaid programs are reviewed to see if our current covered services meet the new rehabilitation definition."

Payments for costs of school administrative and transportation services (CMS 2287-P)

Impact: "The regulation … would have a definitive impact on care to Kentucky’s 200,000 Medicaid children who are served through this program.

Total amount lost in the first year would be just under a quarter of a billion dollars.

And, according to another study, done in 2003, every $10 million cut in Kentucky’s state share of Medicaid spending could lead to a loss of $45.9 million in state business activity, resulting in 491 jobs lost in the state.

Perhaps the good folks in Kentucky might want to contact the Senator and let him know what they think about all of this.

The Departmental Appeals Board (DAB) provides impartial, independent review of disputed decisions in a wide range of Department programs under more than 60 statutory provisions. The DAB generally issues the final decision for the Department, which may then be appealed to federal court. The DAB may issue a recommended decision for action by another official. The DAB has three broad areas of jurisdiction each with its own set of judges and staff. The DAB also has a leadership role in implementing Alternative Dispute Resolution (ADR) across the Department since the DAB Chair is the designated Dispute Resolution Specialist under the Administrative Dispute Resolution Act of 1996. DAB staff include trained mediators and facilitators. The DAB's ADR responsibilities include providing ADR services and training and coordinating and facilitating negotiated rulemaking committees.

The DAB resolves disputes with outside parties such as state agencies, Head Start grantees, universities, nursing homes, doctors, and Medicare beneficiaries. In a single year, disputes heard by the DAB may involve as much as $1 billion in federal grant funds.

As a part of its ongoing attempt to dismantle the Medicaid program, CMS has proposed significant changes in the operation of the Board. A response to those proposed changes can be found here.

In a Notice in the Federal Register (Volume 72) on December 28, 2007, CMS announced that it is abolishing all ten of its regional offices. The move comes with CMS’ Statement of Organization, Functions, and Delegations of Authority. In place of the regional offices, which handled many day-to-day operations of CMS’ practices, four new consortia (listed below) will be formed:

Consortium for Medicare Health Plans Operations (FAU)
Consortium for Financial Management and Fee for Service Operations (FAV)
Consortium for Medicaid and Children’s Health Operations (FAW)
Consortium for Quality Improvement and Survey and Certification Operations (FAX)
Specific functions to be fulfilled by each consortium are listed in the Notice.

The reorganization comes as a surprise, as CMS provided little word of the changes before the official notice. CMS still has yet to explain reasons for the reorganization. Many questions remain regarding the newly-formed consortia, including the location of the consortia, who will staff the consortia, the exact timing of the changes, and other unknowns. As of this time, CMS’ website still lists details regarding the regional offices.

Now This is a Classic - Having Ignored Bowen, the OBRA, and IDEA (in CMS-2261), HHS Now Issues a Notice of Proposed Rulemaking that Eviscerates the Departmental Appeals Board, Giving the HHS Secretary Authority Over Their Rulings

On December 28, 2007, the Department of Health and Human Services published a Proposed Rule in the Federal Register, which would revise the procedures for the Departmental Appeals Board (DAB).

The Proposed Rule would require that the DAB not only follow Federal statutes and regulations in hearings and appeals procedures, but also follow published guidance issued by the Secretary of the Department of Health and Human Services (Secretary) to the extent such guidance is not inconsistent with applicable statutes or regulations. The Proposed Rule would also provide the Secretary with the authority to review DAB decisions for errors in the application of statutes, regulations and interpretative policy.

According to the Secretary, the Proposed Rule is needed to ensure consistency in decision making and to ensure that the Secretary's policies are being correctly implemented.

In its current form, the Proposed Rule does not include a process for either party to request the Secretary's review or address briefing procedures. Instead, the Proposed Rule seeks to "maintain flexibility" so that the Secretary can tailor the review process to the needs of a particular case. However, the Proposed Rule does solicit comments on whether the regulations should specify procedures for the Secretary's review. One can only presume such comments will be given the same careful consideration demonstrated by HHS/CMS in the recent past.

The changes contemplated by the Proposed Rule would impact various appeals procedures, including: (i) the review of certain determinations under 42 C.F.R. Part 498 and impacting certain provider's participation in the Medicare program; (ii) disputes governed by 42 C.F.R. Part 1005 and concerning the imposition of exclusions, civil monetary penalties and assessments related to health care fraud and abuse; and (iii) appeals governed by 42 C.F.R. Parts 422 and 423 and involving civil monetary penalties imposed on Medicare Advantage organizations and Medicare prescription drug sponsors.

The deadline for submitting comments on the Proposed Rule is January 28, 2008. Get those PCs humming.

Any federal legislation with potential fiscal impact must be “scored” by the Congressional Budget Office. In the last Congress, CBO scored the Dingell and Kennedy bills at something over a billion dollars. Even though the Dingell and Kennedy bills, with the 504 reimbursement issue discounted, merely maintained the status quo with regard to Medicaid, by some sleight of hand CMS managed to have the bills scored against the President’s proposed budget, which recommended cutting administrative and transportation services. It was obvious that any legislation with a high score had little chance of passing.

CBO just scored the impact of the moratorium on administrative and transportation services. According to CBO, the moratorium has zero impact on the federal budget and not just this year but through at least through 2017. (see line 206).

To see the glass as half empty, perhaps the CBO scoring reflects the fact that the two programs had already been funded through the end of this Federal fiscal year, so there would be no impact now and, since they plan on doing away with the programs at the end of this Federal FY, there would be no future impact.

We shall await clarification from CMS or CBO. Stay tuned, and in any event, don't abandon your administrative and transportation services record keeping, 'cause the the fat lady has not even warmed up yet.

"The publication of the final school-based rule (CMS-2287-F) on December 28, 2007 does not affect the ability of States to submit claims for costs incurred prior to the effective date of the rule; the rule will be applied prospectively. However, as you know, there’s a six-month moratorium on CMS’ ability to enforce the rule, due to legislation recently signed into law. This moratorium is scheduled to end June 30, 2008.

Final regulations are typically effective 60 days after publication; however, due to the moratorium, that 60 day period starts once the moratorium ends. As a result, the implementation date for the rule will technically be September 1, 2008. CMS never intended States and schools to be in compliance with the final rule prior to the start of the 2008-2009 school year, so the moratorium really has no effect on that timeline.

With respect to claims for prior periods, all such claims must meet the timeliness requirements specified at 45 Code of Federal Regulations (CFR) 95.7. In addition, Section 1132(a) of the Social Security Act requires that a claim for federal financial participation (FFP) must be filed within a two-year period that begins on the first day of the calendar quarter immediately following the quarter in which the expenditure was made. The implementing regulations for timely filing are at 45 CFR Subpart A and provide specific guidelines for determining when an expenditure is said to have been made, so as to initiate the two-year filing period.

Finally, although I indicated that CMS was considering developing some sort of additional guidance to address questions surrounding implementation of CMS-2287-F, there are no official plans to do so at the current time and no format specified for any guidance that may ultimately be issued.

Hope this helps. Let me know if you have additional questions.
Thank you.

Sharon Brown | Administrative Claiming Team, Division of Reimbursement and State Financing | Financial Management Group | Centers for Medicare & Medicaid Services | (: 410-786-0673 | *: sharon.brown@cms.hhs.gov"

The Sixth Federal Circuit Court has ruled that NCLB is unconstitutional because the Fed did not provide clear notice to the states of the cost implications if the states accepted the money and that the the Secretary’s interpretation of the NCLB unfunded mandates provision was not correct. Copy of the opinion is here. This decision sends the case back to the lower court (Eastern District of Michigan) for another look.

The Congressional Research Service provides research and analysis for Members of Congress. Attached is their report, dated December 20, 2007, on CMS-2287.

This rule modifies 42 CFR Parts 431, 433, and 440. A .PDF copy of the rule can be found here.

To: Congressional Health Staff
From: Carleen Talley
Director, Congressional Affairs Group
Office of Legislation
Centers for Medicare & Medicaid Services

Re: CMS Issues Final Rule on Medicaid Reimbursement for School-based Administration and Transportation

Today, the Centers for Medicare & Medicaid Services (CMS) placed on display at the Office of the Federal Register a final rule (CMS-2287-F) regarding Medicaid reimbursement for school-based administration and transportation. Improper billing by school districts for administrative costs and transportation services under the Medicaid program is a longstanding concern of the Department of Health and Human Services (HHS). Both HHS’ Office of the Inspector General (OIG) and the Government Accountability Office (GAO) have identified these categories of expenses as being susceptible to fraud, waste, and abuse.

Under the Medicaid program, Federal payment is available for the costs of administrative activities “as found necessary by the Secretary for the proper and efficient administration of the State plan.” The final rule would eliminate reimbursement under the Medicaid program for the costs of certain activities based on a Secretarial finding that these activities are not necessary for the proper and efficient administration of the State plan, nor do they meet the definition of an optional transportation benefit. Based on these determinations, under the final rule, Federal Medicaid payments would no longer be available for administrative activities performed by school employees or contractors, or anyone under the control of a public or private educational institution, and transportation from home to school and back for school-aged children.

The final rule would not affect the treatment of expenditures for direct medical services that are included in the approved State Medicaid plan and provided in schools, nor does it affect transportation of school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, or from the non-school-based provider to school or home. Under the final rule, CMS would continue to reimburse States for:

· School-based direct Medicaid services in their approved State plans;
· Transportation costs related to school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, and from the non-school-based provider to school or home;
· Transportation costs related to children who are not yet school-age and are being transported from home to another location, including a school, and back to receive direct medical services, as long as the visit does not include an educational component or any activity unrelated to the covered direct medical service;
· Administrative overhead costs that are integral to, or an extension of, a direct medical service and, as such, are claimed as medical assistance. These activities are properly reimbursed at the applicable Federal Medical Assistance Percentage (FMAP) rate for the related direct medical service, and include patient follow-up, assessment, counseling, education, parent consultations, and billing activities; and
· School-based administrative activities, such as Medicaid outreach and eligibility intake, that are conducted by employees of the State or local Medicaid agency.

These regulations are effective 60 days after the date of publication in the Federal Register; however, under recently passed legislation, there will be a six month delay in implementing these changes so school budgets in the 2007-2008 school year will not be affected. The final rule will be published in the Federal Register on Friday, December 28, 2007. A copy of the final rule attached. A media fact sheet will also be available on the CMS website shortly and may be accessed at: www.cms.hhs.gov/apps/media/fact_sheets.asp.

For questions or additional information, please contact Frankee Wright at (202) 690-5445 in the CMS Office of Legislation.

This bill has cleared both chambers and is ready for the President's signature, which is likely, before Christmas. PDF of the bill is available here. See sections 201 (SCHIP extension) and 206 (moratorium on CMS cuts).

[Does anyone out there know how to remove that box? It doesn't respond to any command I know. Thanks. greg8355@gmail.com]

Minnesota lawmakers say they will push legislation to head off new federal Medicaid rules that would cut reimbursement for programs serving abused and neglected kids and others, which could cost the state tens of millions of dollars in aid. For the full story, click here

Washington, Dec 11 - U.S. Representative John Boozman (R-AR) today took steps to protect Medicaid reimbursements from cuts in financial support under rules proposed by the Administration.

Rep. Boozman joined with Rep. Mike Ross (D-AR) and Rep. John R. "Randy" Kuhl, Jr. (R-NY) to introduce H.R. 4355. The legislation, offered by Rep. Boozman, would place a moratorium on enforcement of a proposed rule from the Centers for Medicare and Medicaid Services that would eliminate hundreds of millions in federal funding for administrative, transportation and habilitative services for eligible children.

“This funding is important for the health of the children and families of Arkansas,” Boozman said. “This is common-sense legislation enjoying significant bipartisan support. It need not be held hostage by haggling over other legislation.”

“Many Arkansans rely heavily on the vital services of day habilitation programs,” Ross said. “As a member of the Health Subcommittee of the House Energy and Commerce Committee, I am proud to join with my colleagues to introduce legislation that will ensure that our patients will have continued access to these valuable services.”

“This bill will proactively eliminate a very large problem and expense that the proposed rule will create,” said Rep. Kuhl. “I applaud Congressman Boozman for his leadership on this issue.”

In Arkansas, state programs totaling $165 million are at risk, affecting nearly 21,000 Arkansans.

The language of the Boozman bill is the same language contained in the second State Children’s Health Insurance Program reauthorization plan put forward by House Democrats – a bill already vetoed by the administration and the subject of continued negotiations to find a bipartisan solution. Those negotiations have not proved fruitful.

“This is an important enough issue that it deserves to stand on its own. The battle over SCHIP continues in Congress, but it has yet to come to a point where enough people can put forward a bill which can become law. I offered this bill because I don’t want to see this important money cut due to being part of the SCHIP debate. I don’t know of any one in Congress who wants to see this money taken away, nor do I see any reason why this bill should not move quickly,” Boozman added.

Day habilitation services provide individualized training for people with disabilities in order to provide them with the life skills necessary to avoid institutional settings.

Mr. BOOZMAN (for himself, Mr. ROSS, and Mr. KUHL of New York) introduced the following bill; which was referred to the Committee on Energy and Commerce

We have received numerous requests for an estimate of the additional funding required to

maintain the State Children’s Health Insurance Program (SCHIP) at currently projected

levels of enrollment for 2008. We currently estimate that Congress would need to provide

an additional $1.4 billion in funding to maintain SCHIP programs at those levels, and that

Our estimate of the additional funding required to maintain existing SCHIP programs is

based on the $5.0 billion in funding for 2008 that CBO assumes in its baseline projections,

the amount of funding from previous years that remains available, and states’ projections of

spending in 2008. (The continuing resolution provided funding at an annual level of $5.0

billion, but limited states’ use of the funds to the period ending December 14, 2007.)

Without additional funding, but assuming that states would be able to use the funding in the

continuing resolution for the entire fiscal year, we anticipate that a total of 21 states will

exhaust their SCHIP funding in 2008, and that the first states to exhaust their funding will

Under current law, we expect that states that exhaust their SCHIP funds will respond in part

by expanding Medicaid eligibility. Doing so would allow states to continue receiving federal

matching funds, albeit at a less-favorable matching rate. The provision of additional SCHIP

funding would keep states from expanding Medicaid eligibility, and thus generate about

$600 million in savings in the Medicaid program. As a result, the net federal cost ($800

million) of providing funding to maintain existing SCHIP programs is lower than the amount

MEDICAID DEFINITION OF COVERED CASE MANAGEMENT SERVICES CLARIFIED

The Centers for Medicare & Medicaid Services (CMS) interim final rule with comment period (IFC) implementing section 6052 of the Deficit Reduction Act of 2005 (DRA) clarifies the Medicaid definition of covered case management and targeted case management (TCM) services. The rule includes measures to address concerns about improper billing of non-Medicaid services to the Medicaid program by some states, while also including significant beneficiary protections that ensure comprehensive and coordinated services to meet the needs of beneficiaries.

Case management consists of services which help beneficiaries gain access to needed medical, social, educational, and other services. “Targeted” case management services are those aimed specifically at special groups of enrollees such as those with developmental disabilities or chronic mental illness.

Widespread improper billing by states of the Medicaid program for services mandated by other programs helped prompt Congress to address the problem in the DRA, which redefined the scope of allowable case management services, strengthened state accountability, and required that CMS issue regulations.

Many accounts of inappropriate Medicaid billing of TCM services have been documented by the Government Accountability Office (GAO). In one investigation of TCM claims, GAO found that inappropriate billing to Medicaid generated an estimated $12 million in extra federal funds to Georgia and $68 million in extra federal funds to Massachusetts from 2000-2004.

Across the nation, total spending for TCM services jumped by 76 percent between 1999 and 2003 from $1.7 billion to $3 billion. GAO officials believe that some of this increase can be linked to a growing trend among states to hire consultants to assist in administering their Medicaid programs. In some cases, states will pay these consultants a contingency fee based on their performance in maximizing federal Medicaid reimbursement.

The IFC proposes certain refinements and clarifications to Medicaid’s case management benefit that are expected to save the program $1.2 billion over the next five years. At the same time, the rule ensures that Medicaid case management services include a comprehensive assessment and care plan that would not otherwise be available to beneficiaries. Further, the IFC clarifies that case management services include assessment of an eligible individual; development of a specific care plan; referral to services; and monitoring and follow-up activities. The IFC specifies that direct services, such as transporting a beneficiary to an appointment or accompanying a beneficiary to a court appearance are not allowable under the definition of the Medicaid case management or TCM benefit. MAJOR PROVISIONS IN THE FINAL RULE:

• Defines case management

o the IFC reiterates the definitions of case management and targeted case management services contained in sections 1905(a)(19) and 1915(g) of the Social Security Act; and

o the IFC ensures that case management services will be comprehensive and coordinated, and will include an assessment of an eligible individual; development of a specific care plan; referral to services; and monitoring and follow-up activities.

• Specifies and provides examples of excluded activities. The IFC excludes from the definition of case management services, activities that:

o are an integral component of another Medicaid service;

o include the direct delivery of an underlying medical, educational, social, or other service to which an eligible individual has been referred;

o constitute the administration of foster care programs;

o constitute the administration of another non-medical program such as guardianship, child welfare or child protective services, parole and probation functions, legal services, and special education (except case management included in an individualized education plan or individualized family services plan); and

o are claimed as necessary for the administration of the State Medicaid Plan.

• Defines the term “targeted case management services” as case management services that can be furnished to an individual, not necessarily to all persons eligible for TCM services

o states may “target” case management services to specific classes of individuals, or to individuals who reside in specified areas of the state.

• Clarifies when a case manager’s contacts with individuals who are not eligible for Medicaid, or who are not included in the target population, may qualify as Medicaid case management services

o contact with family members that are for the purpose of helping a Medicaid-eligible individual access services can be covered by Medicaid.

Section 6052 of the DRA was effective January 1, 2006. The public comment period will close 60 days from the date of publication in the Federal Register. The rule’s provisions will be effective 90 days after publication.

November 6, 2007

Kerry Weems
Acting Administrator
Centers for Medicare and Medicaid Services
U.S. Department of Health and Human Services
Attention: CMS-2258-P
P.O. Box 8017
Baltimore, MD 21244-8017

Dear Mr. Weems:

On behalf of the nation's governors, we request that the Centers for Medicare and Medicaid Services (CMS) rescind the proposed rule regarding Medicaid school-based services [CMS 2287-P], published in the Federal Register on September 7, 2007. Governors remain committed to working closely with our partners at the federal level to improve the integrity of the Medicaid program. However, the proposed rule represents a significant departure from our joint efforts to clarify and properly apply Medicaid policies as they relate to school-based services. Further, the rule fails to recognize that certain administrative activities performed by school-based staff and limited transportation services are instrumental to ensuring access to Medicaid services for eligible low income children. The end result of the new policies would be an unnecessary shift of $3.6 billion over five years to states.

In the proposed rule, CMS prohibits states from receiving reimbursement for administrative claims, unless the administrative activities are conducted by employees of the state Medicaid agency. Governors believe this is inconsistent with federal and state officials; shared goal of operating an efficient Medicaid program and contrary to approved current state plans. School-based administrative activities include developing, compiling, and explaining materials to inform individuals about the Medicaid program, assisting families in collecting required information for the Medicaid application, and conducting other outreach-related activities. As required by CMS; 2003 Medicaid School-Based Administrative Claiming Guide, in order to submit claims for reimbursement by Medicaid, states must enter into an interagency agreement between the Medicaid agency and the appropriate state education entity. Subsequent to the 2003 guidance, states newly sought and received approval from CMS for any school-based administrative claiming programs. The proposed rule would result in a de facto requirement that state Medicaid agencies hire and retain a significant number of new state Medicaid agency staff to conduct the activities currently performed by school-based staff. This result would be financially and operationally inefficient compared to the current system and represents a significant cost shift to state Medicaid agencies.

Governors also oppose the proposed rule's new restriction on transportation services to and from home and school for Medicaid eligible children. In earlier guidance, CMS clarified that federal Medicaid reimbursement was not permissible for transportation between home and school and states have worked with federal officials to comply with this policy. However, CMS also recognized there were limited situations where specialized transportation from home to school and back was necessary and appropriate due to a Medicaid eligible child's health condition. As such, CMS should preserve the authority for states to submit claims for transportation from home to school and back for Medicaid eligible children if the child's health status requires monitoring or medical related services during transport.

In recent years several iterations of the Medicaid School-Based Administrative Claiming Guide and guidance on transportation services have helped bring much-needed clarity to the Medicaid policy for activities performed at schools and by employees of the education system. States have worked with CMS to improve and revise, when necessary, billing policies and practices for school-based administrative claims and transportation services. Notably, CMS also has encouraged state education authorities to develop close working relationships with their state Medicaid agencies. In turn, this has helped foster a streamlined approach to delivering services and providing information to Medicaid eligible children and their families. The partnership among state agencies in conjunction with federal guidance in interpreting the school-based administrative manual has resulted in increased consistency in the application of reimbursement policies.

In addition, as an alternative to this regulation, CMS should consider investing resources from the new Medicaid Integrity Program (MIP), established in the Deficit Reduction Act of 2005 (P.L. 109-432), to address school-based policy and reimbursement concerns that may remain. Governors worked closely with the Congress and the Administration to establish the MIP program to further strengthen the integrity of Medicaid policy and financing. We believe MIP resources could assist state agencies in determining when it is reasonable to bill Medicaid and developing cost-effectiveness guidelines related to school-based administration and transportation services.

Governors believe ongoing communication between state and federal officials and targeting of MIP resources is preferable to a general prohibition on practices that are otherwise efficient and appropriate for reimbursement by Medicaid. Schools are the primary and most logical location to reach and serve children who are enrolled in or eligible for (but not yet enrolled) in Medicaid. For these reasons, we urge CMS to pursue a more reasonable approach to address any remaining concerns related to school-based services without shifting costs to states and jeopardizing critical information and services for Medicaid eligible children.

Sincerely,

Raymond C. Scheppach
Executive Director

Medicaid School-Based Services in Utah * Review of Payment Rates (A-07-06-04069)
http://www.oig.hhs.gov/oas/reports/region7/70604069.pdf

The State agency's claims for Medicaid reimbursement for school-based services generally were not in accordance with Federal requirements or the State plan. We were unable to determine what portion of $36.8 million of the $37.9 million claimed was allowable as final payments. The State agency did not perform a cost settlement reconciling interim payments to actual costs to determine final payments, as required by the State plan, because it considered payments made to school districts to be final payments. The State agency's claims for the remaining $1.1 million, which were for nursing services that were paid based on the Medicaid fee-for-service schedule, were allowable.

We recommended that the State agency (1) work with the Centers for Medicare and Medicaid Services to determine what portion of the $36.8 million claimed based on interim payments is allowable and (2) perform cost settlements to ensure that future final payments for school-based services are based on actual costs. The State agency concurred with the recommendations.
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Review of Minnesota Medicaid Reimbursement for Targeted Case Management Services for Fiscal Years 2003 and 2004 (A-05-05-00059)
http://www.oig.hhs.gov/oas/reports/region5/50500059.pdf

This audit was part of a nationwide review of targeted case management (TCM) Medicaid program payments. Our objective was to determine whether the State agency's claim for Medicaid reimbursement of TCM services provided during fiscal years (FY) 2003 and 2004 complied with Federal and State requirements.

Based on our review of 118 claims in 100 sampled beneficiary-months, 7 claims included in 7 beneficiary-months were unallowable because the services were insufficiently documented or unsupported by the case records. As a result, we estimate that during FYs 2003 and 2004, the State agency claimed $7,311,860 ($3,759,338 Federal share) in TCM costs that were unallowable. We considered the remaining 111 claims included in 93 beneficiary-months to be acceptable.

We recommend that the State agency (1) refund to the Federal Government the $3,759,338 for undocumented and unsupported TCM services and (2) ensure that TCM services claimed under the Medicaid program are properly documented and meet Federal and State requirements. In written comments on our draft report, the State agency did not address our recommendations.

Throughout this year, our Committee has held a series of hearings on making government work again. We’ve focused on programs or agencies that once were effective but are now broken or dysfunctional.

Today’s hearing examines one of our government’s most important agencies — the Centers for Medicare and Medicaid Services at the Department of Health and Human Services. Called “CMS” for short, the agency is responsible for administering the country’s two largest health insurance programs, Medicare and Medicaid, which cover nearly 100 million Americans at a cost of over $600 billion. As the largest single purchaser of healthcare in the country, CMS has enormous power to do good or to do harm.

Over the past few months, public and congressional attention has largely been focused on the State Children’s Health Insurance Program, or S-CHIP. Legislation to strengthen S-CHIP and to expand it to cover 10 million children has cleared the House of Representatives on three separate occasions. Members of the House and Senate have already debated S-CHIP numerous times, and that debate is not yet over.

Medicaid is funded jointly by the federal government and the states. It covers more than 60 million low-income Americans. Medicaid is the largest insurer of infants and children in the United States, covering more than 28 million kids. It is also the largest insurer of people with disabilities, covering almost 10 million people. Medicaid is the single largest source of funding for our nation’s public teaching hospitals, children’s hospitals, community health centers, and public clinics — programs that benefit not only the poor, but everyone in their communities.

Unfortunately, little notice has been paid to a series of Medicaid regulations proposed by the Administration over the last ten months. But these proposals would have enormous impacts. They are a thinly disguised assault on the healthcare safety net. If implemented, they would cause major disruption to state Medicaid programs and the people and institutions that depend on them.

In total, the proposals would shift at least $11 billion in costs to state and local governments — the largest Medicaid regulatory cost shift in memory. Since these are federal matching funds, the real cuts in programs at the local level would be at least twice this amount. This would force states to make a difficult choice: either raise taxes or cut vital services. This scenario probably understates the potential for damage, as there are almost certainly more proposals to come.

This morning, our Committee will examine six rules the Bush Administration has proposed. These rules seek to:

o Restrict coverage of rehabilitation services for Medicaid-eligible people with disabilities;

o Eliminate the ability of schools to provide administrative services, such as enrollment, eligibility counseling, and referrals, for Medicaid children;