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Medicaid-eligibility NPRM 1011

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  • pg 1
									                                                   51148                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   DEPARTMENT OF HEALTH AND                                address ONLY: Centers for Medicare &                     Inspection of Public Comments: All
                                                   HUMAN SERVICES                                          Medicaid Services, Department of                      comments received before the close of
                                                                                                           Health and Human Services, Attention:                 the comment period are available for
                                                   Centers for Medicare & Medicaid                         CMS–2349–P, P.O. Box 8016, Baltimore,                 viewing by the public, including any
                                                   Services                                                MD 21244–8016.                                        personally identifiable or confidential
                                                                                                              Please allow sufficient time for mailed            business information that is included in
                                                   42 CFR Parts 431, 433, 435, and 457                     comments to be received before the                    a comment. We post all comments
                                                   [CMS–2349–P]                                            close of the comment period.                          received before the close of the
                                                                                                              3. By express or overnight mail. You               comment period on the following Web
                                                   RIN 0938–AQ62                                           may send written comments to the                      site as soon as possible after they have
                                                                                                           following address ONLY: Centers for                   been received: http://
                                                   Medicaid Program; Eligibility Changes                   Medicare & Medicaid Services,                         www.regulations.gov. Follow the search
                                                   Under the Affordable Care Act of 2010                   Department of Health and Human                        instructions on that Web site to view
                                                   AGENCY:  Centers for Medicare &                         Services, Attention: CMS–2349–P, Mail                 public comments.
                                                   Medicaid Services (CMS), HHS.                           Stop C4–26–05, 7500 Security                             Comments received timely will also
                                                   ACTION: Proposed rule.
                                                                                                           Boulevard, Baltimore, MD 21244–1850.                  be available for public inspection as
                                                                                                              4. By hand or courier. Alternatively,              they are received, generally beginning
                                                   SUMMARY:    This proposed rule would                    you may deliver (by hand or courier)                  approximately 3 weeks after publication
                                                   implement provisions of the Patient                     your written comments ONLY to the                     of a document, at the headquarters of
                                                   Protection and Affordable Care Act of                   following addresses prior to the close of             the Centers for Medicare & Medicaid
                                                   2010 and the Health Care and Education                  the comment period:                                   Services, 7500 Security Boulevard,
                                                   Reconciliation Act of 2010 (collectively                   a. For delivery in Washington, DC—                 Baltimore, Maryland 21244, Monday
                                                   referred to as the Affordable Care Act).                Centers for Medicare & Medicaid                       through Friday of each week from
                                                   The Affordable Care Act expands access                  Services, Department of Health and                    8:30 a.m. to 4 p.m. To schedule an
                                                   to health insurance through                             Human Services, Room 445–G, Hubert                    appointment to view public comments,
                                                   improvements in Medicaid, the                           H. Humphrey Building, 200                             phone 1–800–743–3951.
                                                   establishment of Affordable Insurance                   Independence Avenue, SW.,
                                                                                                           Washington, DC 20201.                                 Table of Contents
                                                   Exchanges (‘‘Exchanges’’), and
                                                   coordination between Medicaid, the                         (Because access to the interior of the             I. Background
                                                   Children’s Health Insurance Program                     Hubert H. Humphrey Building is not                       A. Introduction
                                                                                                           readily available to persons without                     B. Legislative Overview
                                                   (CHIP), and Exchanges. This proposed
                                                                                                           Federal government identification,                       C. Overview of the Proposed Rule
                                                   rule would implement sections of the                                                                          II. Provisions of the Proposed Rule
                                                   Affordable Care Act related to Medicaid                 commenters are encouraged to leave
                                                                                                                                                                    A. Changes to Medicaid Eligibility
                                                   and CHIP eligibility, enrollment                        their comments in the CMS drop slots                     1. Coverage for Individuals Age 19 or Older
                                                   simplification, and coordination.                       located in the main lobby of the                            and Under Age 65 at or Below 133
                                                      In addition, this proposed rule also                 building. A stamp-in clock is available                     Percent FPL (§ 435.119)
                                                   sets out the increased Federal Medical                  for persons wishing to retain a proof of                 2. Individuals Above 133 Percent FPL
                                                   Assistance Percentage (FMAP) rates and                  filing by stamping in and retaining an                      (§ 435.218)
                                                   the related conditions and requirements                 extra copy of the comments being filed.)                 3. Amendments to Part 435, Subparts A
                                                                                                              b. For delivery in Baltimore, MD—                        Through D
                                                   that will be available for State medical                                                                         a. Eligibility for Parents and Other
                                                   assistance expenditures relating to                     Centers for Medicare & Medicaid
                                                                                                                                                                       Caretaker Relatives, Pregnant Women,
                                                   ‘‘newly eligible’’ individuals and certain              Services, Department of Health and                          and Children
                                                   medical assistance expenditures in                      Human Services, 7500 Security                            (1) Parents and Other Caretaker Relatives
                                                   ‘‘expansion States’’ beginning January 1,               Boulevard, Baltimore, MD 21244–1850.                        (§ 435.110)
                                                   2014, including a proposal of three                        If you intend to deliver your                         (2) Pregnant Women (§ 435.116)
                                                   alternative methodologies to use for                    comments to the Baltimore address, call                  (3) Infants and Children Under Age 19
                                                   purposes of applying the appropriate                    telephone number (410) 786–7195 in                          (§ 435.118)
                                                                                                           advance to schedule your arrival with                    b. Other Conforming Changes to Existing
                                                   FMAP for expenditures in accordance                                                                                 Regulations
                                                   with section 2001 of the Affordable Care                one of our staff members.                                B. Financial Methodologies for
                                                   Act.                                                       Comments erroneously mailed to the                       Determining Medicaid Eligibility Based
                                                   DATES: To be assured consideration,                     addresses indicated as appropriate for                      on MAGI Under the Affordable Care Act
                                                   comments must be received at one of                     hand or courier delivery may be delayed                  1. Point-in-Time Measurement of Income
                                                   the addresses provided below, no later                  and received after the comment period.                      (Budget Periods) (§ 435.603(h))
                                                   than 5 p.m. on October 31, 2011.                           For information on viewing public                     2. Changes to Medicaid Financial Methods
                                                                                                           comments, see the beginning of the                       3. Provisions of Proposed Rule
                                                   ADDRESSES: In commenting, please refer                                                                              Implementing MAGI Methods
                                                                                                           SUPPLEMENTARY INFORMATION section.
                                                   to file code CMS–2349–P. Because of                                                                              a. Proposed Methods for Counting Income
                                                   staff and resource limitations, we cannot               FOR FURTHER INFORMATION CONTACT:
                                                                                                                                                                       Based on MAGI (§ 435.603(e))
                                                   accept comments by facsimile (FAX)                      Sarah Delone, (410) 786–0615.                            b. Proposed Rules for Determining
                                                   transmission.                                           Stephanie Kaminsky, (410) 786–4653.                         Household Composition Under MAGI
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                                                      You may submit comments in one of                    SUPPLEMENTARY INFORMATION: A detailed                       Based Methods (§ 435.603(f))
                                                   four ways (please choose only one of the                Preliminary Regulatory Impact Analysis                   (1) Household Composition for Tax Filers
                                                   ways listed):                                           associated with this proposed rule is                       (§ 435.603(f)(1)) and Their Tax
                                                                                                                                                                       Dependents (§ 435.603(f)(2))
                                                      1. Electronically. You may submit                    available at http://www.cms.gov/
                                                                                                                                                                    (2) Household Composition for Non-Filers
                                                   electronic comments on this regulation                  MedicaidEligibility/downloads/CMS-                          (§ 435.603(f)(3))
                                                   to http://www.regulations.gov. Follow                   2349-P-Preliminary                                       (3) Retention of Existing Financial Methods
                                                   the ‘‘Submit a comment’’ instructions.                  RegulatoryImpactAnalysis.pdf. A                             (§ 435.603(i))
                                                      2. By regular mail. You may mail                     summary of the aforementioned analysis                   C. Residency for Medicaid Eligibility
                                                   written comments to the following                       is included as part of this proposed rule.                  Defined



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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                           51149

                                                      1. Residency Definition for Adults (Age 21              b. Expansion State FMAP (§ 433.10(c)(7)            March 23, 2010), was amended by the
                                                         and Over) § 435.403(h))                                 and § 433.10(c)(8))                             Health Care and Education
                                                      2. Residency Definition for Children                    (1) 2.2 Percentage Points Increase in FMAP         Reconciliation Act of 2010 (Pub. L. 111–
                                                         (Under Age 21) (§ 435.403(i))                           (§ 433.10(c)(7))
                                                                                                              (2) Expansion State FMAP (§ 433.10(c)(8))
                                                                                                                                                                 152, enacted on March 30, 2010), and
                                                      D. Application and Enrollment Procedures
                                                         for Medicaid                                         2. Methodology (§ 433.206(a) and                   together these laws are referred to as the
                                                      1. Availability of Program Information                     § 433.206(b))                                   Affordable Care Act. In addition, section
                                                         (§ 435.905)                                          3. Alternative 1: 2009 Eligibility Standard        205 of the Medicare & Medicaid
                                                      2. Applications (§ 435.907)                                Threshold                                       Extenders Act of 2010 (Pub. L. 111–309,
                                                      3. Assistance With Application and                      4. Alternative 2: Statistically Valid              enacted December 15, 2010) made
                                                         Redetermination (§ 435.908)                             Sampling Methodology (§ 433.210)                technical corrections to the Social
                                                      E. MAGI Screen (§ 435.911)                              5. Alternative 3: Use of a FMAP                    Security Act (the Act) to implement the
                                                      F. Coverage Month                                          Methodology Based on Reliable Data
                                                                                                                 Sources (§ 433.212)
                                                                                                                                                                 Affordable Care Act. This proposed rule
                                                      G. Verification of Income and Other
                                                                                                              6. Additional Methodology Approaches               addresses changes to Medicaid and
                                                         Eligibility Criteria (§ 435.940 Through
                                                         § 435.956)                                        III. Collection of Information Requirements           CHIP eligibility in the Affordable Care
                                                      1. Basis, Scope, and General Requirements            IV. Response to Comments                              Act.
                                                         (§ 435.940 and § 435.945)                         V. Summary of Preliminary Regulatory                     Prior to the implementation of the
                                                      2. Verification of Financial Eligibility                   Impact Analysis                                 Affordable Care Act in 2014, individuals
                                                         (§ 435.948)                                       Regulations Text                                      who fall into certain ‘‘categories’’ or
                                                      3. Verification of Information From Federal
                                                                                                           Acronyms                                              ‘‘categorical groups’’ are eligible for
                                                         Agencies (§ 435.949)                                                                                    Medicaid, including low-income
                                                      4. Use of Information and Request for                  Because of the many organizations                   children, pregnant women, parents and
                                                         Additional Information (§ 435.952)                and terms to which we refer by acronym                other caretaker relatives, seniors, and
                                                      5. Verification of Other Non-Financial               in this proposed rule, we are listing                 people with disabilities. Federal
                                                         Information (§ 435.956)                           these acronyms and their corresponding
                                                      H. Periodic Redetermination of Medicaid                                                                    minimum income eligibility standards
                                                                                                           terms in alphabetical order below:                    vary by category. All States currently
                                                         Eligibility (§ 435.916)
                                                      I. Coordination of Eligibility and                   Act Social Security Act                               cover pregnant women and children
                                                         Enrollment Among Insurance                        AFDC Aid to Families with Dependent                   under age 6 at or below 133 percent of
                                                         Affordability Programs—Medicaid                     Children                                            the Federal poverty level (FPL) (in some
                                                         Agency Responsibilities (§ 435.1200)              BBA Balanced Budget Act of 1997                       States the minimum eligibility level is
                                                      1. Basic Responsibilities (§ 435.1200(c))            CHIP Children’s Health Insurance Program
                                                                                                                                                                 185 percent FPL for pregnant women
                                                      2. Internet Web Site (§ 435.1200(d))                 CMS Centers for Medicare & Medicaid
                                                                                                             Services                                            and children under one), and children
                                                      3. Provision of Medical Assistance for                                                                     age 6 through age 18 with family
                                                         Individuals Found Eligible for Medicaid           DHS Department of Homeland Security
                                                                                                           EITC Earned Income Tax Credit                         incomes at or below 100 percent of the
                                                         by an Exchange (§ 435.1200(e))
                                                      4. Transfer of Applications From Other               EPSDT Early and periodic screening,                   FPL, though many States have
                                                         Insurance Affordability Programs to the             diagnosis, and treatment                            implemented higher standards for
                                                                                                           FFP Federal financial participation                   pregnant women and children. The
                                                         State Medicaid Agency (§ 435.1200(f))
                                                                                                           FMAP Federal medical assistance                       Federally specified minimum eligibility
                                                      5. Evaluation of Eligibility for Other
                                                                                                             percentage
                                                         Insurance Affordability Programs                                                                        levels for parents, people with
                                                                                                           FPL Federal poverty level
                                                         (§ 435.1200(g))
                                                                                                           HCERA Health Care and Education                       disabilities and the elderly are
                                                      J. Single State Agency (§ 431.10 and                   Reconciliation Act of 2010 (Pub. L. 111–            significantly lower, although States have
                                                         § 431.11)                                           152, enacted March 30, 2010)                        the option to expand coverage to people
                                                      K. Provisions of Proposed Regulation                 HHS [U.S.] Department of] Health and                  within these categories at higher income
                                                         Implementing Application of MAGI to                 Human Services                                      levels. Prior to the Affordable Care Act,
                                                         CHIP                                              IRA Individual Retirement Account
                                                      1. Definitions and Use of Terms (§ 457.10                                                                  States could not cover non-disabled,
                                                                                                           IRC Internal Revenue Code of 1986                     non-elderly adults who do not have
                                                         and § 457.301)                                    IRS Internal Revenue Service
                                                      2. State Plan Provisions (§ 457.305)                                                                       dependent children, regardless of their
                                                                                                           LEP Limited English Proficient
                                                      3. Application of MAGI and Household                 MAGI Modified adjusted gross income
                                                                                                                                                                 income level, except through a
                                                         Definition (§ 457.315)                            MSA Medical Savings Account                           Medicaid demonstration under Section
                                                      4. Other Eligibility Standards (§ 457.320)           PRWORA Personal Responsibility and                    1115 of the Act. As a result of the
                                                      5. Clarifications Related to MAGI                      Work Opportunity Reconciliation Act of              varying Federal minimum standards
                                                      L. Residency for CHIP Eligibility                      1996                                                and State options, eligibility for
                                                         (§ 457.320)                                       QI Qualifying Individuals                             Medicaid is complicated and significant
                                                      M. CHIP Coordinated Eligibility and                  QMB Qualified Medicare Beneficiaries                  gaps continue to exist even among the
                                                         Enrollment Process                                SHO State Health Official
                                                      1. Applications and Outreach Standards                                                                     lowest income Americans.
                                                                                                           SLMB Specified Low-Income Medicare                       The Affordable Care Act extends and
                                                         (§ 457.330, § 457.334, § 457.335 and                Beneficiaries
                                                         § 457.340)                                                                                              simplifies Medicaid eligibility. Starting
                                                                                                           SMD State Medicaid Director
                                                      2. Determination of CHIP Eligibility and             SNAP Supplemental Nutrition Assistance                in calendar year (CY) 2014, it replaces
                                                         Coordination With Exchange and                      Program                                             the complex categorical groupings and
                                                         Medicaid (§ 457.348 and § 457.350)                SPA State Plan Amendment                              limitations to provide Medicaid
                                                      3. Periodic Redetermination of CHIP                  SSA Social Security Administration                    eligibility to all individuals under age
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                                                         Eligibility (§ 457.343) and Coverage              SSI Supplemental Security Income                      65 with income at or below 133 percent
                                                         Months                                            SSN Social Security number                            FPL, provided that the individual meets
                                                      4. Verification of Eligibility (§ 457.380)           TANF Temporary Assistance for Needy                   certain non-financial eligibility criteria,
                                                      5. Ministerial Changes (§ 457.80, § 457.300,           Families                                            such as citizenship or satisfactory
                                                         § 457.301, § 457.305, and § 457.353)
                                                      N. Federal Medical Assistance Percentage             I. Background                                         immigration status. Children and, in
                                                         (FMAP) for Newly Eligible Individuals                                                                   some States, pregnant women will be
                                                                                                           A. Introduction                                       eligible at income levels equal to or
                                                         and for Expansion States
                                                      1. Availability of FMAP (§ 433.10(c))                  The Patient Protection and Affordable               higher than the 133 percent level,
                                                      a. Newly Eligible FMAP (§ 433.10(c)(6))              Care Act (Pub. L. 111–148, enacted on                 depending on existing State-established


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                                                   51150                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   income eligibility standards. In                        increased FMAP for all newly eligible                 The Departments of Health and Human
                                                   addition, States will have a new option                 individuals, defined as those who                     Services, Labor, and the Treasury (the
                                                   to expand eligibility beyond the new                    would not have been eligible in the                   Departments) are issuing regulations
                                                   simplified Federal minimums.                            State in December 2009. The FMAP for                  implementing Exchanges in several
                                                      In addition, starting January 1, 2014,               these newly eligible individuals will be              phases. The first in this series was a
                                                   eligibility for Medicaid for most                       100 percent for Calendar Year (CY)                    Request for Comment relating to
                                                   individuals, as well as for CHIP, will be               2014—2016, gradually declining to 90                  Exchanges, published in the August 3,
                                                   determined using methodologies that                     percent in 2020 where it remains                      2010 Federal Register (75 FR 45584).
                                                   are based on modified adjusted gross                    indefinitely. In addition, some States                Second, Initial Guidance to States on
                                                   income (MAGI), as defined in the                        that had expanded coverage to adults                  Exchanges was published issued on
                                                   Internal Revenue Code of 1986 (IRC).                    (parents and adults without children)                 November 18, 2010. Third, a proposed
                                                   Per the Affordable Care Act, eligibility                prior to December 2009, referred to as                rule for the application, review, and
                                                   for advance payments of premium tax                     ‘‘expansion States,’’ shall also receive an           reporting process for waivers for State
                                                   credits for the purchase of private                     increased FMAP that begins in 2014                    innovation was published in the March
                                                   coverage through the Exchange will use                  between the regular FMAP and the                      14, 2011 Federal Register (76 FR
                                                   MAGI as it is defined in the IRC to                     FMAP for newly eligible individuals                   13553). Fourth, two proposed
                                                   determine eligibility as well. Medicaid,                and equalizing with the newly eligible                regulations were published in the
                                                   CHIP and the Exchanges will use                         FMAP in 2019 and beyond. The                          Federal Register on July 15, 2011 (76 FR
                                                   common income methodologies and                         proposed rule sets forth the definitions              41866 and 76 FR 41930) to implement
                                                   will align the rules and methodologies                  of newly eligible individuals and                     components of the Exchange and health
                                                   used to evaluate eligibility for most                   expansion States as well as the                       insurance premium stabilization
                                                   individuals under all three programs.                   applicable FMAPs beginning in 2014.                   policies in the Affordable Care Act.
                                                      The alignment of the methods for                        While the new FMAPs provide                        Fifth, a proposed regulation for the
                                                   determining eligibility is one part of an               significant new federal financial support             establishment of the Consumer
                                                   overall system established by the                       for States, they could cause States                   Operated and Oriented Plan (CO–OP)
                                                   Affordable Care Act that allows for real-               significant burden to administer if                   Program under section 1322 of the
                                                   time eligibility determinations of most                 States had to evaluate all applicants                 Affordable Care Act was published in
                                                   applicants and allows for prompt                        under the new simplified rules for                    the Federal Register on July 20, 2011
                                                   enrollment of individuals in the                        purposes of determining eligibility and               (76 FR 43237). Sixth, three proposed
                                                   ‘‘insurance affordability program’’ for                 under their otherwise obsolete                        rules, including this one, are being
                                                   which they qualify. In this proposed                    December 2009 eligibility rules for                   published in the Federal Register on
                                                   rule, insurance affordability programs                  purposes of determining the appropriate               August 17, 2011 to provide guidance on
                                                   include Medicaid, CHIP, advance                         FMAP. A dual system would be                          the eligibility determination process
                                                   payments of premium tax credits and                     inefficient and likely lead to                        related to enrollment in a qualified
                                                   cost-sharing reductions through the                     inaccuracies. To promote States’ ability              health plan, advance payments of the
                                                   Exchange, and any State-established                     to operate efficient and effective                    premium tax credit, cost-sharing
                                                   Basic Health Program, if applicable.                    processes, this rule proposes three                   reductions, Medicaid, and the
                                                      Individuals will not have to apply to                alternative approaches for determining                Children’s Health Insurance Program
                                                   multiple programs nor will they be sent                 the applicable FMAP. Based on the                     (CHIP).
                                                   from one program to another if they                     comments received through this
                                                   initially apply to a program for which                  proposed rule and the results of an                   B. Legislative Overview
                                                   they are not ultimately eligible. To                    upcoming CMS/HHS feasibility study,                      This proposed rule implements the
                                                   achieve coordination, this proposed rule                we expect to modify, narrow or combine                Medicaid and CHIP eligibility and
                                                   for Medicaid and CHIP eligibility is                    the approaches available to States in the             enrollment provisions of the Affordable
                                                   aligned with the applicable provisions                  final rule. By establishing an alternative            Care Act including:
                                                   in the proposed rule establishing the                   methodology or methodologies for use                     • Section 1413, which directs the
                                                   Exchanges published in the July 15,                     in the FMAP determination by a State,                 Secretary of HHS (the ‘‘Secretary’’) to
                                                   2011 Federal Register (76 FR 41866)                     the proposed rule aims to ensure that it              establish a streamlined system for
                                                   (‘‘Patient Protection and Affordable Care               will not be necessary for a State to make             individuals to apply for and be enrolled
                                                   Act; Establishment of Exchanges and                     an eligibility determination for every                in an insurance affordability program if
                                                   Qualified Health Plans’’), as well as in                individual using two separate eligibility             eligible.
                                                   the accompanying proposed rule                          systems and thereby advancing efficient                  • Section 1414, which directs the
                                                   published elsewhere in this Federal                     and effective operations for States,                  Secretary of Treasury, upon written
                                                   Register implementing the Affordable                    individuals, and the Federal                          request, to provide the Secretary with
                                                   Care Act provisions related to the                      government.                                           certain tax return information used in
                                                   eligibility for advance payments of                        Starting in 2014, individuals and                  determining an individual’s eligibility
                                                   premium tax credits and cost-sharing                    small businesses will be able to                      for all insurance affordability programs.
                                                   reductions and enrollment in a qualified                purchase private health insurance                        • Section 2001, which sets out the
                                                   health plan through the Exchanges                       through State-based competitive                       Medicaid eligibility changes and new
                                                   (referred to hereinafter as the ‘‘Exchange              marketplaces called Affordable                        optional coverage effective in CY 2014.
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                                                   proposed rule’’) as well as the proposed                Insurance Exchanges. Exchanges will                      • Section 2002, which references the
                                                   rule developed by the Department of the                 offer Americans competition, choice,                  determination of financial eligibility for
                                                   Treasury regarding the health insurance                 and clout. Insurance companies will                   Medicaid for certain populations.
                                                   premium assistance tax credit (‘‘the                    compete for business on a level playing                  • Section 2101, which implements
                                                   Treasury proposed rule’’), also                         field, driving down costs. Consumers                  new eligibility standards for CHIP.
                                                   published elsewhere in this Federal                     will have a choice of health plans to fit                • Section 2201, which simplifies and
                                                   Register.                                               their needs. And Exchanges will give                  coordinates eligibility and enrollment
                                                      Section 2001 of the Affordable Care                  individuals and small businesses the                  system between all insurance
                                                   Act ensures that States will receive an                 same purchasing clout as big businesses.              affordability programs.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51151

                                                      • Section 2001(a)(3), which added a                  published the Federal Funding for                     in proposed paragraph (b), financial
                                                   new section 1905(y) of the Act, which                   Medicaid Eligibility Determination and                eligibility for the adult group will be
                                                   provides for a significant increase in the              Enrollment Activities final rule (76 FR               based on MAGI, as defined in section
                                                   FMAP for medical assistance                             21950) that provides details on                       1902(e)(14) of the Act and implemented
                                                   expenditures for individuals determined                 enhanced Federal funding for Medicaid                 at proposed § 435.603; there is no
                                                   eligible under the adult group in the                   eligibility systems.                                  resource test.
                                                   State and who are considered to be                         We also intend to issue additional                    Section 1902(a)(10)(A)(i)(VIII) of the
                                                   ‘‘newly eligible’’, as defined in section               proposed rules on related matters such                Act specifies that individuals may be
                                                   1905(y)(2)(A) of the Act.                               as appeals, notices, presumptive                      eligible for the adult group if they ‘‘are
                                                      • Section 10201(c)(4), which added a                 eligibility, eligibility for former foster            not described in a previous subclause
                                                   new section 1905(z) to the Act. As                      care children, deletion of existing                   of’’ section 1902(a)(10)(A)(i) of the Act.
                                                   discussed in section N of this rule,                    regulations that have been rendered                   Under these proposed rules, an
                                                   Section 1905(z) of the Act contains two                 obsolete, and eligibility policy in the               individual is not eligible under the new
                                                   provisions, which make available                        territories. In addition, we intend to                adult group if the individual is
                                                   additional FMAP rates for the expansion                 release a Request for Information (RFI)               otherwise eligible under section
                                                   States.                                                 related to State conversion of current                1902(a)(10)(A)(i) of the Act and 42 CFR
                                                      In this rule, ‘‘CHIP’’ refers to a                   income standards to MAGI-equivalent                   435 subpart B, but may be eligible for
                                                   separate child health program operated                  standards per section 2002 of the                     the adult group if the individual is
                                                   by a State under title XXI and the                      Affordable Care Act as well as a RFI                  described in but not eligible for
                                                   regulations governing such programs at                  related to the State flexibility to                   Medicaid under another mandatory
                                                   42 CFR part 457.                                        establish basic health programs for low-              group. This will mean that an
                                                   C. Overview of the Proposed Rule                        income individuals not eligible for                   individual who is a recipient of
                                                                                                           Medicaid under section 1331 of the                    Supplemental Security Income (SSI)
                                                      The proposed amendments to 42 CFR                                                                          benefits, and so potentially eligible
                                                                                                           Affordable Care Act.
                                                   parts 431, 435, and 457 in this rule                                                                          under section 1902(a)(10)(A)(i)(II) of the
                                                   propose the Federal policies and                        II. Provisions of the Proposed Rule                   Act, may be eligible for coverage under
                                                   guidelines necessary to facilitate the                     The following descriptions are                     the adult group in a State that has
                                                   creation of the eligibility and enrollment              structured to explain the provisions                  elected in accordance with section
                                                   system established by the Affordable                    being proposed and do not necessarily                 1902(f) of the Act and § 435.121 to use
                                                   Care Act. Amendments to 42 CFR part                     follow the order of the regulation’s text.            more restrictive eligibility criteria for
                                                   435 subparts B and C are proposed to                                                                          Medicaid than SSI.
                                                   implement the statutory changes to                      A. Changes to Medicaid Eligibility                       The new adult group will include
                                                   Medicaid eligibility. We propose                        1. Coverage for Individuals Age 19 or                 parents as well as adults not living with
                                                   amendments to subpart A to add new or                   Older and Under Age 65 at or Below 133                children. It will also include individuals
                                                   revised definitions.                                    Percent FPL (§ 435.119)                               currently eligible under an optional
                                                      Amendments to 42 CFR part 435                                                                              coverage group (such as, for individuals
                                                   subpart G propose that, for most                           Section 2001(a) of the Affordable Care             with disabilities) who have household
                                                   individuals, financial eligibility for                  Act adds a new section                                income, based on the new MAGI
                                                   Medicaid will be based on MAGI, to                      1902(a)(10)(A)(i)(VIII) of the Act                    methods, at or below 133 percent of the
                                                   define the new MAGI-based financial                     (referred to as ‘‘the adult group’’), under           FPL and otherwise meet the criteria for
                                                   methodologies, and to identify those                    which States will provide Medicaid                    coverage under the new group. At
                                                   individuals whose eligibility will not be               coverage starting in CY 2014 to                       proposed § 435.119(c), we codify section
                                                   based on MAGI.                                          individuals under age 65 who are not                  1902(k)(3) of the Act, which permits
                                                      Proposed amendments to subpart J                     otherwise mandatorily eligible for                    coverage of parents and other caretaker
                                                   and the addition of a new subpart M                     Medicaid under sections                               relatives under the new adult group
                                                   provide Federal rules to promote the                    1902(a)(10)(A)(i)(I) through (VII) or (IX)            only if their children under age 19 (or
                                                   establishment by States of a seamless                   of the Act and have household income,                 higher if the State has elected to cover
                                                   and coordinated system to determine                     based on the new MAGI methods                         children under age 20 or 21 under
                                                   eligibility of individuals seeking                      described in section II.B of this                     § 435.222) are enrolled in Medicaid or
                                                   assistance and to enroll them in the                    proposed rule, at or below 133 percent                ‘‘other health insurance coverage.’’ In
                                                   appropriate insurance affordability                     FPL. Although the Act specifies that this             paragraph (c)(1), we propose to define
                                                   program. We propose a new subpart M                     new group is for individuals under age                ‘‘other health insurance coverage’’ to
                                                   to delineate the responsibilities of the                65, individuals under age 19 are not                  mean minimum essential coverage, as
                                                   State Medicaid agency in the                            included because such individuals with                defined in § 435.4 of this proposed rule.
                                                   coordinated system of eligibility and                   household income at or below 133
                                                   enrollment established under the                        percent FPL are covered in the                        2. Individuals Above 133 Percent FPL
                                                   Affordable Care Act, and propose                        eligibility groups under sections                     (§ 435.218)
                                                   comparable amendments for CHIP at 42                    1902(a)(10)(A)(i)(IV), (VI), and (VII) of                Section 2001(e) of the Affordable Care
                                                   CFR part 457.                                           the Act.                                              Act adds a new section
                                                      We propose to amend 42 CFR part 433                     We propose to replace the current                  1902(a)(10)(A)(ii)(XX) of the Act, giving
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   to add new provisions at § 433.10(c) to                 § 435.119 (which addresses obsolete                   States the option starting in CY 2014 to
                                                   indicate the increases to the FMAPs as                  provisions for eligibility of qualified               provide Medicaid coverage to
                                                   available to States under the Affordable                family members under section                          individuals under age 65 (including
                                                   Care Act. A number of provisions in the                 1902(a)(10)(A)(i)(V) of the Act for which             pregnant women and children) with
                                                   Affordable Care Act are not included in                 the statutory authority ended on                      income above 133 percent FPL. This
                                                   this proposed rule, but either have been                September 30, 1998), to establish this                new eligibility group provides a
                                                   or will be addressed in separate                        new eligibility group.                                simplified mechanism for States to
                                                   rulemaking or other guidance. In the                       Proposed § 435.119(a) and (b) set forth            cover individuals whose income
                                                   April 19, 2011 Federal Register, we                     the policy, explained above. Reflected                exceeds the State’s income standard for


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                                                   51152                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   mandatory coverage (for example, 133                    he or she could still be enrolled in this             patchwork of multiple mandatory and
                                                   percent FPL for the adult group). This                  optional group. States would still have               optional eligibility groups for different
                                                   option is an alternative to the use of                  to determine eligibility under all                    ‘‘categorical populations.’’ Many States
                                                   income disregards under section                         possible categories if the individual is              cover 50, 60, or more distinct eligibility
                                                   1902(r)(2) or 1931(b)(2)(C) of the Act,                 not eligible under this new optional                  groups. Financial eligibility is
                                                   which have been used in the past to                     group.                                                determined using methodologies based
                                                   expand eligibility, but which will no                      Section 1902(a)(10)(A)(ii)(XX) of the              on other programs, such as the SSI and
                                                   longer be available starting in 2014.                   Act provides that, to be eligible under               the former AFDC programs, adding
                                                      We propose to add a new § 435.218                    this optional group, an individual’s                  further complexity to the eligibility
                                                   establishing this optional eligibility                  income must ‘‘not exceed the highest                  determination process. In this rule,
                                                   group, which covers individuals who                     income eligibility level established                  consistent with the Affordable Care Act
                                                   are under 65 years old; are not eligible                under the State plan or under a waiver                policies, we propose to streamline and
                                                   for and enrolled in an eligibility group                of the plan[.]’’ We are interpreting the              simplify current regulations governing
                                                   under section 1902(a)(10)(A)(i) of the                  statute to give States flexibility in                 Medicaid eligibility for children,
                                                   Act and 42 CFR 435 subpart B or under                   establishing the income standard for                  pregnant women, parents, and other
                                                   section 1902(a)(10)(A)(ii) of the Act and               this group, provided such standard
                                                                                                                                                                 caretaker relatives whose financial
                                                   42 CFR part 435 subpart C; and have                     exceeds 133 percent FPL and is
                                                                                                                                                                 eligibility, beginning in CY 2014, will be
                                                   household income based on MAGI that                     approved in the State plan.
                                                                                                                                                                 based on MAGI.
                                                   exceeds 133 percent of the FPL but does                    Section 1902(hh)(1) of the Act
                                                   not exceed the optional income                          provides that States ‘‘may elect to                      In response to the President’s request,
                                                   standard established by the State. The                  phase-in’’ coverage for this optional                 outlined in Executive Order 13563, that
                                                   basis and basic eligibility criteria for                group ‘‘based on the categorical group                agencies streamline and simplify
                                                   this group are set forth in proposed                    (including non-pregnant childless                     Federal regulations, we propose to use
                                                   § 435.218(a) and (b)(1).                                adults) or income, so long as the State               the authority of section 1902(a)(19) of
                                                      Section 1902(a)(10)(A)(ii)(XX) of the                does not extend such eligibility to                   the Act, which provides ‘‘that eligibility
                                                   Act specifies that individuals may be                   individuals * * * with higher income                  * * * be determined * * * in a manner
                                                   eligible under this category if they ‘‘are              before making individuals * * * with                  consistent with simplicity of
                                                   not described in or enrolled under a                    lower income eligible for medical                     administration and the best interests of
                                                   previous subclause of’’ section                         assistance.’’ We propose that if a State              recipients,’’ to simplify and consolidate
                                                   1902(a)(10)(A)(ii) of the Act. We                       wants to phase in coverage for this                   certain existing mandatory and optional
                                                   interpret the language ‘‘described in or                group, it submit a plan for Secretarial               eligibility groups into three categories
                                                   enrolled under’’ to mean eligible for                   approval.                                             starting in CY 2014, to complement the
                                                   another optional or mandatory group                        Children are included in this new                  new adult group: (1) Parents and
                                                   under section 1902(a)(10)(A) of the Act,                optional group for individuals above                  caretaker relatives (new § 435.110); (2)
                                                   and we propose at § 435.218(b)(1)(ii)                   133 percent FPL if they are not already               pregnant women (new § 435.116); and
                                                   and (iii) that this limitation applies only             eligible for Medicaid. Therefore, if a                (3) children (new § 435.118).
                                                   if the individual is eligible for or                    State covers children above 133 percent
                                                   enrolled under another eligibility group                FPL under a separate CHIP and adopts                     As illustrated in Table 1, we are
                                                   that is covered by the State.                           coverage under this new optional group,               proposing to collapse existing Medicaid
                                                      To ease administrative burden on                     the State ultimately must shift coverage              eligibility categories, with the goal of
                                                   States and to make it easier for States to              of children with income at or below the               making the program significantly easier
                                                   enroll eligible individuals under the                   income standard from CHIP to Medicaid                 for States to administer and for the
                                                   simplest eligibility category, we also                  under this group. The State would still               public to understand. In subsequent
                                                   propose in § 435.218(b)(1)(ii) and (iii)                be able to claim enhanced FMAP under                  rulemaking, we will provide additional
                                                   that an individual who meets the                        title XXI for such children.                          guidance on existing regulatory
                                                   eligibility criteria at § 435.218(b)(1)(i)                 Section 1902(hh)(2) of the Act limits              provisions that are effectively subsumed
                                                   and (iv) would be determined eligible                   eligibility of parents and other caretaker            under the provisions contained in these
                                                   under this group, unless the individual                 relatives under the new optional group                proposed rules or have been rendered
                                                   can be determined eligible under                        to individuals whose children have                    obsolete for other reasons. In proposing
                                                   another eligibility group based on                      coverage in the same manner as                        a simplified approach to eligibility for
                                                   information available to the State from                 eligibility is limited for parents and                populations whose eligibility will be
                                                   the application. A State is not required                caretaker relatives under the new adult               based on MAGI, it is our intent that
                                                   to make determinations regarding                        group per section 1902(k)(3) of the Act.              eligibility for coverage will not change
                                                   eligibility factors such as disability,                 At § 435.218(b)(2)(ii), we propose to                 for any of the populations as a result of
                                                   level of care, or resources first in order              implement this provision in the same                  this proposal. We solicit comments on
                                                   to decide whether an individual would                   manner as proposed for the new adult                  the implications of these proposed rules
                                                   be eligible for another eligibility group,              group at § 435.119(c).                                for individuals as well as States. Table
                                                   unless such determination can be made                                                                         1 shows how the mandatory and
                                                   based only on the information provided                  3. Amendments to Part 435, Subparts A                 optional groups in current regulations
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   on the application. However, as an                      Through D                                             (the column on the left) are moved into
                                                   exception to this, if an individual                       Determining Medicaid eligibility prior              the new broader groups (parents,
                                                   appears to be eligible as ‘‘medically                   to the Affordable Care Act changes in                 pregnant women, and children) under
                                                   needy’’ based on information provided,                  CY 2014 is complicated due to a                       this proposed rule.




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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                                                       51153

                                                                                                                                 TABLE 1
                                                                                                                                                                                 Medicaid Proposed Rule

                                                                          Social Security Act and Pre-ACA Regulations                                                                                  Pregnant                Children
                                                                                                                                                               Parents/caretaker                        women                    < 19
                                                                                                                                                              relatives (§ 435.110)                   (§ 435.116)            (§ 435.118)

                                                                                                                 Mandatory Medicaid Eligibility Groups

                                                   Low-income families—1902(a)(10)(A)(i)(I) and 1931 AFDC recipients—§ 435.110 ........                                     X                                 X                  X
                                                   Qualified Pregnant Women & Children < 19—1902(a)(10)(A)(i)(III)—§ 435.116 .............               ..........................................           X                  X
                                                   Poverty-level related pregnant women & infants—1902(a)(10)(A)(i)(IV)—No rule ..........               ..........................................           X                  X

                                                   Poverty-level related children 1–5—1902(a)(10)(A)(i)(VI)—No rule ................................     ..........................................   ....................       X
                                                   Poverty-level related children 6–18—1902(a)(10)(A)(i)(VII)—No rule .............................      ..........................................   ....................       X

                                                                                                                  Optional Medicaid Eligibility Groups

                                                   Families & children financially eligible for AFDC—1902(a)(10)(A)(ii)(I)—§ 435.210 .......             Keeps 435.210 for par-                               X                  X
                                                                                                                                                            ents/caretaker relatives.
                                                   Families & children who would be eligible for AFDC if not institutionalized—                          ..........................................           X                  X
                                                     1902(a)(10)(A)(ii)(IV)—§ 435.211.
                                                   Poverty-level related pregnant women & infants—1902(a)(10)(A)(ii)(IX)—No rule .........               ..........................................           X                  X



                                                   a. Eligibility for Parents and Other                    parent and other caretaker relative                          proposed § 435.119. We note that
                                                   Caretaker Relatives, Pregnant Women,                    eligibility group would be the higher of:                    parents and other caretaker relatives
                                                   and Children                                               • The State’s effective income level                      who are Medicare-eligible or elderly
                                                                                                           (including any disregard of a block of                       may be covered under § 435.110 and
                                                   (1) Parents and Other Caretaker
                                                                                                           income) for section 1931 families under                      § 435.210, even though they are
                                                   Relatives (§ 435.110)
                                                                                                           the State plan or waiver of such plan as                     excluded from coverage under the adult
                                                      We propose to delete in its entirety                 of March 23, 2010 or December 31,                            group at § 435.119.
                                                   § 435.110 for individuals receiving                     2013, if higher, converted to a MAGI-                           We are also proposing to simplify the
                                                   AFDC and to replace it with a new                       equivalent income standard in                                income methods for determining
                                                   § 435.110 for existing eligibility that is              accordance with guidance to be issued                        eligibility under the new parent and
                                                   continuing under sections                               by the Secretary under section                               other caretaker relative group. Pre-
                                                   1902(a)(10)(A)(i)(I) and 1931(b) and (d)                1902(e)(14)(A) and (E) of the Act (The                       Affordable Care Act, section 1931 of the
                                                   of the Act for parents and other                        conversion of current income standards                       Act requires a two-step process in
                                                   caretaker relatives of dependent                        to a MAGI-equivalent standard is                             determining income eligibility: (1) The
                                                   children (including pregnant women                      discussed in section II.B.3.a of this                        family must have gross income at or
                                                   who are parents or caretaker relatives).                proposed rule.); and                                         below 185 percent of the State’s
                                                   These statutory provisions remain and                      • The State’s AFDC income standard                        consolidated standard of need under its
                                                   are not superseded by the provisions of                 in effect as of July 16, 1996, increased                     AFDC program, in effect as of July 16,
                                                   the Affordable Care Act establishing a                  by no more than the percentage increase                      1996; and (2) the family’s net countable
                                                   new adult group for individuals not                     in the Consumer Price Index for all                          income after subtracting various income
                                                   otherwise eligible under section                        urban consumers since such date.                             exclusions and disregards and expenses
                                                   1902(a)(10)(A)(i) of the Act. While the                    If a State’s income standard for the                      must be at or below the State’s AFDC
                                                   parent/caretaker relative category                      parent/caretaker relative group is below                     payment standard or a higher income
                                                   continues to apply, our proposed rules                  133 percent FPL, parents and other                           standard established by the State under
                                                   simplify this category considerably and                 caretaker relatives with income above                        section 1931 of the Act. Because each
                                                   provides States flexibility to set their                that income standard and at or below                         State’s net countable income standard
                                                   income eligibility standard under this                  133 percent FPL would qualify for                            converted to a MAGI-equivalent income
                                                   category within allowable Federal                       Medicaid under the new adult group.                          standard will be lower than its current
                                                   parameters.                                             The conversion of current income                             gross income standard, we propose to
                                                      Under the proposed rule, each State                  standards to a MAGI-equivalent                               eliminate the 185 percent gross income
                                                   will establish an income standard in its                standard is discussed in section II.B.3.a                    test as unnecessary and, to simplify
                                                   State plan for coverage of parents and                  of this proposed rule.                                       eligibility, base income eligibility in
                                                   other caretaker relatives under                            States currently have the option to                       proposed § 435.110 only on the second
                                                   § 435.110. The Federal minimum and                      cover parents and other caretaker                            prong of the income test, that is, the net
                                                   maximum income standards for this                       relatives at income levels above the                         countable income standard converted to
                                                   group are set forth in sections                         standard for families under section 1931                     a MAGI-equivalent income standard.
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   1931(b)(2)(A) and 1931(b)(2)(B) of the                  of that Act. They can do so under the                           Consistent with section 1931 of the
                                                   Act. The minimum income standard for                    authority at section 1902(a)(10)(A)(ii)(I)                   Act, we propose Medicaid definitions of
                                                   the new parent/caretaker relative group                 of the Act and § 435.210 of the existing                     ‘‘caretaker relative’’ and ‘‘dependent
                                                   is a State’s AFDC income standards for                  regulations. This option will continue                       child’’ at § 435.4. A caretaker relative is
                                                   a household of the applicable family                    under the Affordable Care Act for                            defined as a parent or other relative
                                                   size in effect as of May 1, 1988. The                   coverage of parents and other caretaker                      (related by blood, adoption, or marriage)
                                                   maximum income standard would be                        relatives who are not eligible for                           living with a dependent child for whom
                                                   established as set forth below. The                     mandatory Medicaid coverage under                            such individual is assuming primary
                                                   maximum income standard for the                         § 435.110 or the new adult group at                          responsibility. Per section 1931 of the


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                                                   51154                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   Act, to be ‘‘dependent,’’ the child must                to the minimum permitted under the                    State plan as of March 23, 2010 or
                                                   be ‘‘deprived’’ of at least one parent’s                statute would retain eligibility under the            December 31, 2013, if higher, for
                                                   support by reason of death, absence, or                 new adult group. Pregnant women                       coverage of pregnant women under the
                                                   unemployment. Under the statute, a                      would be affected if a State were to                  sections of the Act identified above; and
                                                   parent is considered to be unemployed                   decrease its income standard to the                      • 185 percent FPL.
                                                   if he or she is working less than 100                   statutory minimum level, as the MOE                      We are also codifying current law to
                                                   hours per month. However, we propose                    for pregnant women ends with the                      add a definition of ‘‘pregnant woman’’
                                                   to codify in this rule the flexibility given            establishment of an Exchange in 2014                  in § 435.4, incorporating the post
                                                   States in a final rule amending 45 CFR                  and there is no other coverage group to               partum period.
                                                   233.101 (63 FR 42270) and in a State                    which affected pregnant women would                      While we propose to consolidate
                                                   Medicaid Director letter dated                          necessarily be transferred; instead,                  various eligibility categories for
                                                   September 22, 1997 to eliminate the                     pregnant women affected by a State’s                  pregnant women, States continue to
                                                   ‘‘deprivation’’ requirement altogether                  decision to reduce its Medicaid income                have flexibility under the statute to
                                                   (which most States have done) or to                     standard for pregnant women to the                    provide different benefits to certain
                                                   establish a higher number of working                    minimum permitted under the Act                       pregnant women or to provide all
                                                   hours as the threshold for determining                  would likely become eligible for                      pregnant women with full Medicaid
                                                   unemployment.                                           advanced payments of the premium tax                  coverage, as many States do today.
                                                      In proposing this rule, we are                       credit for enrollment through the                     Thus, under clause (V) in the matter
                                                   retaining the minimum income                            Exchange.                                             following section 1902(a)(10)(G) of the
                                                   standards specified in Federal statute                                                                        Act, pregnant women eligible for
                                                   for each eligibility group, while giving                (2) Pregnant Women (§ 435.116)                        Medicaid under sections
                                                   States flexibility to set new standards at                 As is true for parents and caretaker               1902(a)(10)(A)(i)(IV),
                                                   a level that takes into account a State’s               relatives, the law retains eligibility                1902(a)(10)(A)(ii)(IX), and 1902(l) of the
                                                   current rules regarding how income is                   based on pregnancy. To simplify the                   Act are only covered for services related
                                                   counted. In all cases, the income                       eligibility rules, we propose to replace              to pregnancy or to a condition which
                                                   standard would be applied to an                         the current § 435.116 for qualified                   may complicate the pregnancy. In
                                                   individual’s MAGI-based household                       pregnant women and qualified children                 accordance with section 1902(a)(10)(B)
                                                   income. We considered whether or not                    under section 1902(a)(10)(A)(i)(III) of               of the Act, all other pregnant women
                                                   States should convert the Federal                       the Act with a new § 435.116 for                      eligible for coverage under the sections
                                                   minimum income standards prescribed                     pregnant women. In addition, under the                of the Act listed in § 435.116(a) are
                                                   in statute—for example, the minimum                     authority of section 1902(a)(19) of the               eligible for all services that the State
                                                   standard for pregnant women and                         Act, we are consolidating many                        covers under the State plan, regardless
                                                   children specified in section 1902(l) and               different eligibility categories for                  of whether the service is related to
                                                   for parents and other caretaker relatives               pregnant women and are proposing to                   pregnancy or to a condition that may
                                                   in section 1931(b) of the Act—to a                      include in the revised § 435.116 all                  complicate pregnancy.
                                                   MAGI-equivalent minimum income                          mandatory and optional eligibility                       However, States currently have the
                                                   standard based on the income                            groups, except the medically needy, for               flexibility to provide full Medicaid
                                                   exclusions and disregards currently                     which pregnancy status and income are                 coverage as pregnancy-related services
                                                   used by the State. While doing so could                 the only factors of eligibility. The                  for all pregnant women. Thus, we
                                                   result in maintaining eligibility for                   following sections of the Act are                     propose at § 435.116(d) that pregnant
                                                   individuals who might otherwise lose                    included under the proposed § 435.116:                women are covered for full Medicaid
                                                   Medicaid due to the elimination of                      1931 (low-income families);                           coverage, unless a State elects to
                                                   income exclusions and disregards under                  1902(a)(10)(A)(i)(III) (qualified pregnant            provide only the pregnancy-related
                                                   MAGI, if a State were to reduce its                     women); 1902(a)(10)(A)(i)(IV),                        services described at § 435.116(d)(3) for
                                                   income standard to the minimum                          1902(a)(10)(A)(ii)(IX), and 1902(l)                   pregnant women whose income exceeds
                                                   permitted, it also would result in                      (poverty-level related pregnant women);               an income limit established by the State
                                                   different minimum income eligibility                    1902(a)(10)(A)(ii)(I) (pregnant women                 for full coverage. States have flexibility
                                                   standards being applied across States                   who meet AFDC financial eligibility                   under existing regulations at
                                                   and reduce the amount of eligibility                    criteria); and 1902(a)(10)(A)(ii)(IV)                 § 440.210(a)(2) to establish a policy that
                                                   simplification that could be achieved.                  (institutionalized pregnant women).                   all services covered under the State plan
                                                   We, therefore, do not propose to require                   Under the proposed rule, paragraphs                are related to pregnancy or to a
                                                   conversion of the Federal minimum                       (a) through (c) set forth the basis and               condition that may complicate
                                                   income standards currently prescribed                   basic provisions for coverage of                      pregnancy. Therefore, States will not
                                                   in statute to MAGI-equivalent standards.                pregnant women under § 435.116. We                    have to establish an income limit for full
                                                      Furthermore, we do not believe that                  propose at § 435.116(c) that each State               coverage for pregnant women under
                                                   the impact on eligibility of the proposed               will establish an income standard in its              § 435.116(d)(4), but may elect to provide
                                                   policy will be significant. Eligibility                 State plan for coverage of pregnant                   full coverage for all pregnant women.
                                                   standards for children must be                          women. The minimum income standard                    Reflected at proposed paragraph (d)(3),
                                                   maintained through September 2019, in                   is 133 percent FPL, unless a higher                   States also may elect to cover certain
                                                   accordance with the maintenance of                      income standard, at or below 185                      enhanced pregnancy-related services, as
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   effort provisions (MOE) in section                      percent FPL, was in effect for pregnant               specified in § 440.250(p), for pregnant
                                                   1902(gg) of the Act, and when the MOE                   women on December 19, 1989 (section                   women only.
                                                   provision expires, eligibility for only a               1902(l)(2)(A) of the Act). The maximum                   (3) Infants and Children Under age 19
                                                   small number of children would be                       income standard is the higher of:                     (§ 435.118)
                                                   affected if a State were to drop coverage                  • The highest effective income level                  Section 2001(a)(4) of the Affordable
                                                   to the minimum level permitted. Parents                 (including any disregard of a block of                Care Act amends section 1902(l)(2)(C) of
                                                   and other caretaker relatives who could                 income), converted to a MAGI-                         the Act to provide Medicaid to children
                                                   lose eligibility under section 1931 of the              equivalent income standard, in effect                 ages 6 through 18 with household
                                                   Act if a State were to reduce coverage                  under the State plan or waiver of the                 income at or below at least 133 percent


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51155

                                                   FPL. This amendment eliminates certain                  income disregards in determining                      income using MAGI-based
                                                   of the age-based differences in Federal                 eligibility for individuals whose                     methodologies.
                                                   Medicaid eligibility rules for children,                eligibility is based on MAGI. Coverage                   The adoption of MAGI-based
                                                   which currently provide for a minimum                   at higher income levels can be                        methodologies to determine income
                                                   income standard of 100 percent FPL for                  implemented through adoption of the                   represents a significant simplification
                                                   coverage of children ages 6 through 18                  new optional group at proposed                        for the Medicaid program, eligibility for
                                                   (although many States have                              § 435.218.                                            which has historically been linked to
                                                   implemented optional coverage at                           The maintenance of effort (MOE)                    programs providing cash assistance to
                                                   higher levels), and means that all                      provisions of the Affordable Care Act at              low-income populations. We are
                                                   children and adults under age 65 with                   section 2001(b) maintain the minimum                  considering permitting States to convert
                                                   household income at or below 133                        income standards for children at the                  to MAGI-based methodologies prior to
                                                   percent FPL will be eligible for                        levels in effect on March 23, 2010; these             2014 through section 1115
                                                   Medicaid. Section 205(b) of the                         standards are maintained for children                 demonstrations.
                                                   Medicare and Medicaid Extenders Act                     until September 30, 2019. These                          Proposed § 435.603 sets forth
                                                   of 2010 clarifies that this amendment is                proposed regulations do not address the               proposed methodologies to implement
                                                   effective January 1, 2014. If some or all               MOE provisions specified in sections                  MAGI in determining Medicaid
                                                   of these children are covered under a                   1902(a)(74) and 1902(gg) of the Act, as               eligibility for affected individuals
                                                   separate CHIP before this provision                     added by section 2001(b) of the                       effective January 1, 2014. Our proposed
                                                   takes effect, these children will move to               Affordable Care Act. As a condition of                methodologies codify the section 36B
                                                   coverage under Medicaid. Such a                         receiving Federal financial                           definitions of MAGI and household
                                                   change, however, will not affect States’                participation, States must comply with                income, except in a very limited number
                                                   ability to claim enhanced FMAP under                    these provisions, which are being                     of cases discussed below. At proposed
                                                   title XXI for these children.                           addressed through subregulatory                       § 435.603(i), we identify those
                                                      Currently, there are many different                  guidance.                                             populations excepted under the
                                                   mandatory and optional eligibility                                                                            Affordable Care Act from application of
                                                                                                           Other Conforming Changes to Existing                  MAGI-based methodologies; for these
                                                   categories for children. To simplify the
                                                                                                           Regulations                                           populations pre-Affordable Care Act
                                                   eligibility rules, we propose to include
                                                   under § 435.118 all mandatory and                          Revisions are proposed at § 435.4 to               Medicaid financial methodologies—
                                                   optional eligibility groups for which age               the definition of ‘‘families and children’’           generally set forth in existing
                                                   under 19 and income are the only                        to delete references to AFDC rules.                   regulations at § 435.601 and § 435.602—
                                                   factors of eligibility. The following                   Definitions are proposed for ‘‘agency,’’              will continue to apply.
                                                   sections of the Act are included under                  ‘‘caretaker relative,’’ ‘‘dependent child,’’
                                                                                                           and ‘‘pregnant woman.’’ Definitions                   1. Point-in-Time Measurement of
                                                   proposed § 435.118: 1931 (low-income                                                                          Income (Budget Periods) (§ 435.603(h))
                                                   families); 1902(a)(10)(A)(i)(III) (qualified            related to implementation of the
                                                   children who meet AFDC financial                        Affordable Care Act are proposed for                     Under pre-Affordable Care Act
                                                   eligibility criteria); 1902(a)(10)(A)(i)(IV)            ‘‘advance payments of the premium tax                 Medicaid rules, per section
                                                   and 1902(a)(10)(A)(ii)(IX) (infants);                   credit,’’ ‘‘Affordable Insurance Exchange             402(a)(13)(A) of former title IV–A of the
                                                   1902(a)(10)(A)(i)(VI) (children ages 1                  (Exchange),’’ ‘‘effective income level,’’             Act, income eligibility for Medicaid is
                                                   through 5); 1902(a)(10)(A)(i)(VII)                      ‘‘electronic account,’’ ‘‘household                   based on current income actually
                                                   (children ages 6 through 18); and                       income,’’ ‘‘insurance affordability                   available to the individual in any given
                                                   1902(a)(10)(A)(ii)(IV) (institutionalized               program,’’ ‘‘MAGI-based income,’’                     month. MAGI, as defined in section 36B
                                                   children).                                              ‘‘minimum essential coverage,’’                       of the IRC, is determined on the basis of
                                                      Proposed § 435.118(a) through (c) set                ‘‘modified adjusted gross income                      annual income. The Affordable Care Act
                                                   forth the basis and eligibility criteria for            (MAGI),’’ ‘‘secure electronic interface,’’            addresses this issue by adding section
                                                   children, as explained above. We                        and ‘‘tax dependent’’.                                1902(e)(14)(H)(i) of the Act to provide
                                                   propose in § 435.118(c) that each State                                                                       that the use of MAGI in determining
                                                                                                           B. Financial Methodologies for                        eligibility for Medicaid shall not be
                                                   will establish income standard(s) in its                Determining Medicaid Eligibility Based
                                                   State plan for coverage of children by                                                                        ‘‘construed as affecting or limiting the
                                                                                                           on MAGI Under the Affordable Care Act                 application of the requirement under
                                                   age group. There is no resource test. The
                                                   minimum income standard for all age                        Section 2002 of the Affordable Care                this title to determine an individual’s
                                                   groups is 133 percent FPL, unless, for                  Act, as amended by section 1004 of the                income as of the point in time at which
                                                   infants per section 1902(l)(2)(A) of the                HCERA, creates a new section                          an application for medical assistance is
                                                   Act, a higher income standard, at or                    1902(e)(14) of the Act, which provides                processed.’’ Moreover, section
                                                   below 185 percent FPL, was in effect on                 that effective January 1, 2014, financial             1902(a)(17) of the Act provides that
                                                   December 19, 1989. The maximum                          eligibility for most individuals shall be             States use eligibility standards and
                                                   income standard for each age group is                   based on MAGI and ‘‘household                         methodologies that are ‘‘reasonable,’’
                                                   the higher of:                                          income,’’ as defined in section 36B(d)(2)             ‘‘consistent with the objectives of [the
                                                      • The highest effective income level                 of the IRC (hereinafter referred to as                Act],’’ and take into account only such
                                                   for the age group (including any                        ‘‘section 36B definitions’’). In this                 income as is ‘‘determined in accordance
                                                   disregard of a block of income)—                        preamble, ‘‘MAGI-based methodologies’’                with standards prescribed by the
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                                                   converted to a MAGI-equivalent                          refers both to the rules governing the                Secretary, available to the applicant or
                                                   standard—in effect under the State plan                 determination of the MAGI of an                       recipient[.]’’
                                                   or waiver as of March 23, 2010 or                       individual or a married couple filing a                  In this proposed rule, we refer to the
                                                   December 31, 2013; or                                   joint tax return, as well as to the                   ‘‘point in time’’ rules referenced in the
                                                      • For infants, 185 percent FPL.                      determination of total household                      statute as the ‘‘budget period’’ (that is,
                                                      A State may not otherwise increase its               income. Similarly, reference to the                   monthly versus annual income) based
                                                   income standard above the levels                        determination of income eligibility                   upon which income eligibility is
                                                   specified because, effective January 1,                 ‘‘based on MAGI’’ refers to                           determined. At proposed
                                                   2014, States may no longer apply new                    determinations based on household                     § 435.603(h)(3), we are retaining the


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                                                   51156                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   current flexibility afforded States to take             2. Changes to Medicaid Financial                      3. Provisions of Proposed Rule
                                                   into account future changes in income                   Methods                                               Implementing MAGI Methods
                                                   that can be reasonably anticipated (as                     Under pre-Affordable Care Act                         Proposed § 435.603(a)(1) and (2) set
                                                   may be the case with certain seasonal                   Medicaid rules for families and                       forth the basis and scope of this section.
                                                   workers or someone with a signed                        children, essentially all money received,             At proposed § 435.603(a)(3), we
                                                   employment contract or layoff notice).                  from whatever source, is counted as                   implement section 1902(e)(14)(D)(v) of
                                                   Such anticipated changes would be                       income in the month in which it is                    the Act, as added by section 2002(a) of
                                                   determined in accordance with the                       received, unless explicitly excluded or               the Affordable Care Act, which specifies
                                                   verification regulations at § 435.940 et                disregarded under the Act, disregarded                that, in determining ongoing eligibility
                                                   seq. Uncertain changes in future income                 at State option, or excluded under other              of individuals enrolled in the Medicaid
                                                   (for example, someone who is looking                    Federal statutes. A ‘‘household’’ (for                program as of January 1, 2014, the
                                                   for, but has not secured, a job) may not                purposes of determining family size and               financial methodologies based on MAGI
                                                   be considered under the option reflected                whose income is counted) generally                    shall not be applied until the next
                                                   at proposed § 435.603(h)(3). Actual                     consists of parents and the children                  regularly-scheduled redetermination of
                                                   changes in income—including                             with whom they are living. Other non-                 eligibility after December 31, 2013 or
                                                   deviations from reasonably anticipated                  legally responsible relatives and                     March 31, 2014, whichever is later, if
                                                   fluctuations in income—must still be                    unrelated individuals living together are             such individual otherwise would lose
                                                   reported to, and acted upon by, the                     not included, nor are spouses or parents              eligibility as a result of the shift to
                                                   agency in accordance with § 435.916(c)                  living apart from the rest of the family,             MAGI-based methodologies before such
                                                   and (d).                                                which means that the income of such                   date.
                                                                                                           individuals is not deemed available to                   Consistent with the 36B definition,
                                                      To promote flexibility, administrative               the Medicaid applicant. Under pre-                    we propose in § 435.603(b) to define
                                                   simplification and continuity of                        Affordable Care Act Medicaid rules,                   ‘‘family size’’ as equal to the number of
                                                   coverage for beneficiaries already                      inclusion of stepparents in a stepchild’s             persons in the individual’s household
                                                   enrolled in Medicaid, we propose at                     household depends on State law                        (as defined in paragraph (f) of this
                                                   § 435.603(h)(2) to give States the                      relating to obligations to support                    section and discussed below); ‘‘tax
                                                   additional flexibility, for individuals                 stepchildren. A stepparent’s income is                dependent’’ is defined in proposed
                                                   eligible for Medicaid based on MAGI, to                 considered available to his or her                    revisions to § 435.4, and cross
                                                   maintain eligibility as long as annual                  spouse since spouses are legally                      referenced at proposed § 435.603(b), as
                                                   income based on MAGI methods for the                    responsible for each other.                           an individual for whom another
                                                   calendar year remains at or below the                      Section 36B of the IRC, and § 1.36B–               individual properly claims a deduction
                                                   Medicaid income standard. This gives                    1 of the IRS proposed premium tax                     for a personal exemption under section
                                                   States the option to align with the                     credit rule, define ‘‘MAGI, ’’ ‘‘household            151 of the IRC for a taxable year.
                                                   annual eligibility period applied in the                income,’’ and ‘‘family size.’’ See also               Proposed § 435.603(c) sets forth the
                                                   Exchanges and to minimize the extent to                 section 152 of the IRC and Internal                   basic rule that, except for eligibility
                                                   which individuals experiencing                          Revenue Service (IRS) Publication 501                 determinations exempt from MAGI
                                                   relatively small fluctuations in income                 regarding rules for claiming ‘‘qualifying             methodologies, financial eligibility for
                                                                                                           children’’ and ‘‘qualifying relatives’’ as            Medicaid must be based on household
                                                   bounce back and forth between
                                                                                                           tax dependents. To be eligible to receive             income as defined in § 435.603(d).
                                                   programs.
                                                                                                           advance payments of a premium tax                        Consistent with the section 36B
                                                      We believe that these flexibilities will             credit for the purchase of coverage                   definition of household income,
                                                   help address some of the challenges that                through an Exchange, married couples                  proposed § 435.603(d)(1) provides that,
                                                   will arise due to the reliance on                       generally must file jointly.                          for purposes of determining Medicaid
                                                   monthly income for purposes of                             As discussed in section II.I of this               eligibility under § 435.603, ‘‘household
                                                   eligibility for Medicaid versus annual                  proposed rule, sections 1413 and 2201                 income’’ is the sum of the income based
                                                   income for purposes of eligibility for                  of the Affordable Care Act direct the                 on MAGI-based methods of every
                                                   advance payments of premium tax                         creation of a seamless, simplified                    individual who is: (1) included in the
                                                   credits. In particular, if a State does not             system of coordinated eligibility and                 individual’s household; and (2) required
                                                   opt to take into account a reasonably                   enrollment between insurance                          to file a tax return under section 6012
                                                   predictable drop in future income,                      affordability programs, and in most                   of the IRC, except that, also consistent
                                                   someone with current monthly income                     instances, section 36B definitions of                 with section 36B definitions, the MAGI-
                                                   above the Medicaid income standard,                     ‘‘MAGI’’ and ‘‘household income’’ are                 based income of a child who files a tax
                                                   but projected annual income below 100                   applied to Medicaid to promote                        return, but is not required to file, is not
                                                   percent FPL could be determined both                    seamless coordination. In some                        included in household income under
                                                   ineligible for Medicaid (until their                    situations, the application of these new              proposed § 435.603(d)(2). The MAGI-
                                                                                                           rules will have the impact of                         based income of adults as well as
                                                   monthly income actually dropped) and
                                                                                                           constraining Medicaid eligibility, but                children who are not included in the
                                                   for advance payments of the premium
                                                                                                           consistent with the statute, we have                  household of their parent(s) is always
                                                   tax credit for enrollment through the                   applied the 36B rules because of the                  counted in determining the household
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                                                   Exchange (because, with very limited                    impact on coordination. In a few limited              income of the adult or such child as
                                                   exceptions, individuals with income                     situations in which the potential                     well as the household income of their
                                                   below 100 percent FPL are not eligible                  adverse impact of adopting the section                spouse and children with whom they
                                                   for advance payments of the premium                     36B definitions could be significant                  are living (if any).
                                                   tax credit). We solicit comments on how                 (albeit for a relatively small group of                  a. Proposed Methods for Counting
                                                   best to prevent a gap in coverage,                      individuals), and the impact on                       Income Based on MAGI (§ 435.603(e))
                                                   including whether to ensure that State                  coordination minimal, we propose,                        In general, we propose income
                                                   Medicaid agencies take into account a                   consistent with the statute, retention of             counting rules at § 435.603(e) that are
                                                   predictable future drop in income.                      current Medicaid rules.                               the same as the section 36B definitions


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                           51157

                                                   to ensure streamlined eligibility rules                 Medicaid eligibility, and the challenges              income disregards and to ensure
                                                   and avoid coverage gaps. There are                      in amortizing a lump sum payment over                 continued coverage at pre-Affordable
                                                   some differences in the treatment of                    time to pay for coverage, we propose in               Care Act levels, per section
                                                   several types of income under the IRC                   § 435.603(e)(1) to count lump sum                     1902(e)(14)(A) and (E), States will
                                                   as compared to pre-Affordable Care Act                  payments of taxable income as income                  convert current income standards for
                                                   Medicaid rules, in which the changes                    only in the month received.                           eligibility groups under which financial
                                                   occasioned by the adoption of the                          Second, certain types of educational               eligibility will be based on MAGI to a
                                                   section 36B definitions would have                      scholarships and grants (for example,                 ‘‘MAGI-equivalent’’ income standard.
                                                   varying effects on the Medicaid                         work-study arrangements and other                     Separate guidance will be issued
                                                   eligibility of potential beneficiaries.                 situations in which the individual has                regarding the methodologies States may
                                                   Given the general directive to apply the                to provide a service) are generally                   employ to determine such MAGI-
                                                   section 36B definitions and the value of                counted as taxable income under the                   equivalent income standards.
                                                   alignment, these proposed rules                         IRC, but not counted as income under                  Application of the statutory across-the-
                                                   generally codify the section 36B rules                  current Medicaid rules. To avoid low-                 board 5 percent disregard is reflected in
                                                   and definitions. This is the case with                  income students having to forgo either                proposed § 435.603(d)(1).
                                                   respect to the treatment of child support               Medicaid or this education-related aid,                  Detailed guidance on the treatment of
                                                   payments, depreciation of business                      we propose in § 435.603(e)(2) to retain               all types of income under the new
                                                   expenses, and capital gains and losses.                 the Medicaid rules for this type of                   MAGI-based methodologies will be
                                                      Under this regulation as proposed, we                income.                                               provided in subregulatory guidance.
                                                   also are applying the section 36B rules                    Third, American Indian and Alaska
                                                   and definitions of Social Security                      Native (AI/AN) income is the subject of               b. Proposed Rules for Determining
                                                   benefits under title II of the Act. Such                special treatment and protections in                  Household Composition Under MAGI–
                                                   benefits count as income for the purpose                multiple provisions of titles XIX and                 Based Methods (§ 435.603(f))
                                                   of determining eligibility for Medicaid                 XXI of the Act. Most recently, the                    (1) Household Composition for Tax
                                                   under pre-Affordable Care Act treatment                 Recovery Act added section 1902(ff) to                Filers (§ 435.603(f)(1)) and Their Tax
                                                   of income, but certain amounts of Social                the Act (applied also to CHIP through                 Dependents (§ 435.603(f)(2))
                                                   Security benefits are not counted as                    the addition of section 2107(e)(1)(c) of
                                                   income under the 36B definition of                      the Act) to broaden exemptions related                   Our proposed rules for household
                                                   MAGI. The section 36B treatment of                      to certain AI/AN financial interests to               composition are divided into two
                                                   Social Security benefits may increase                   ensure that low-income AI/AN                          categories: those for individuals filing
                                                   State Medicaid costs, as some                           individuals have access to Medicaid.                  taxes (§ 435.603(f)(1)) and their tax
                                                   individuals who receive Social Security                 There are certain instances where the                 dependents (§ 435.603(f)(2)); and those
                                                   benefits would gain Medicaid eligibility                IRC and the section 36B definition of                 for individuals who neither file a tax
                                                   using the 36B definitions. The                          MAGI are identical to or more liberal                 return nor are claimed as a tax
                                                   Administration is concerned about this                  than current Medicaid rules with regard               dependent on someone else’s tax return,
                                                   unintended consequence and is                           to income exclusions for AI/AN                        whom we refer to as ‘‘non-filers’’
                                                   exploring options to address it,                        populations, and therefore, are adopted               (§ 435.603(f)(3)).
                                                   including a modification of the section                 in the proposed rule. However, there are                 After analyzing the differences
                                                   36B treatment of Social Security                        several instances in which the IRC treats             between the section 36B definitions and
                                                   benefits through regulation. We seek                    as taxable income distributions from AI/              current Medicaid rules, we believe that
                                                   comment on this issue, including how                    AN trust properties, which are excluded               for most families, the section 36B
                                                   any modification of the proposed                        from income for purposes of Medicaid                  definitions and current Medicaid rules
                                                   regulation may affect eligibility for                   and CHIP eligibility under the Recovery               yield the same household. However,
                                                   premium tax credits for enrollment in a                 Act and other current law. In these                   there are a relatively small number of
                                                   qualified health plan through the                       instances, we propose at § 435.603(e) to              situations in which application of the
                                                   Exchange and how any potential gaps in                  codify current Medicaid treatment of                  section 36B definitions yields a different
                                                   coverage that may be created by such                    AI/AN income, including distributions                 household than current Medicaid rules,
                                                   modification could be minimized.                        from Alaska Native corporations and                   including the following:
                                                      There are three types of income for                  settlement trusts; distributions from any                (1) Families in which the parents
                                                   which we propose to codify current                      property held in trust, or otherwise                  claim as tax dependents children age 21
                                                   Medicaid rules. We solicit comments on                  under the supervision of the Secretary                or older.
                                                   these proposed policies.                                of the Interior; distributions resulting                 (2) Families in which the parents
                                                      The first is lump sum payments,                      from certain real property ownership                  claim as tax dependents children living
                                                   which consist of non-recurring income                   interests; payments from other                        outside of the home.
                                                   received on a one-time-only basis (for                  ownership interests or usage rights that                 (3) Families with stepchildren/
                                                   example, insurance settlements, back                    support subsistence or a traditional                  stepparents (in States without a law
                                                   pay, State tax refunds, inheritance, and                lifestyle; and student financial                      requiring stepparents to support their
                                                   retroactive benefit payments). Under                    assistance provided under the Bureau of               stepchildren.
                                                   section 36B definitions, taxable ‘‘lump                 Indian Affairs education programs.                       (4) Families in which one or more
                                                   sum’’ payments are included in                             In addition, section 1902(B)(e)(14)(B)             children are required to file a tax return.
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                                                   computing MAGI in the year the lump                     of the Act, codified at § 435.603(g),                    (5) Families in which one member is
                                                   sum is received. Currently in Medicaid,                 prohibits the continued use of any asset              supporting and claiming as a tax
                                                   most States count lump sum payments                     test or income or expense disregards for              dependent extended family members or
                                                   as income in the month received and,                    individuals whose financial eligibility is            unrelated individuals, including
                                                   for any amounts retained, as a resource                 based on MAGI (other than a disregard                 children other than their own biological
                                                   in months following. Because of the                     of 5 percent of the FPL to be applied to              or adopted children.
                                                   statutory directive to consider point-in-               every such individual under section                      (6) Children claimed as a tax
                                                   time (that is, current monthly) rather                  1902(e)(14)(I) of the Act.) In order to               dependent by a non-custodial parent.
                                                   than annual income for determination of                 account for the general elimination of                   (7) Pregnant women.


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                                                   51158                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                      (8) Married couples who do not file                  a non-custodial parent, we are                        a tax return in determining the other’s
                                                   jointly.                                                proposing at § 435.603(f)(2)(iii) to apply            household income, regardless of
                                                      In the first four types of households                rules based on pre-Affordable Care Act                whether the couple files a joint tax
                                                   identified, consistent with the general                 Medicaid principles of parents’ legal                 return. We recognize that at times two
                                                   statutory directive to apply the section                responsibility for the children with                  legally married individuals may live
                                                   36B definitions to Medicaid, we are                     whom they are living. By applying the                 apart. Therefore, consistent with current
                                                   proposing at § 435.603(f)(1) to adopt the               rules for non-filers in this situation, as            Medicaid rules, the proposed rule also
                                                   household composition rules embodied                    proposed in these rules, these children               limits the inclusion of spouses in each
                                                   in the section 36B definitions. Doing so                would be treated as members of the                    other’s household to those who are
                                                   will result in some loss of Medicaid                    custodial parent’s household for                      living together.
                                                   eligibility compared to pre-2014                        Medicaid eligibility purposes, and the                   In some cases, a child may be living
                                                   Medicaid rules. However, maintaining                    income of the custodial parent (and                   with both parents, but the parents do
                                                   different rules for the insurance                       other members of the custodial parent’s               not file, or are not married and therefore
                                                   affordability programs for these                        household required to file a tax return)              cannot file, a joint tax return. Consistent
                                                   household types would undermine                         would be counted in determining the                   with current Medicaid principles of
                                                   simplicity and coordination, which                      child’s Medicaid eligibility.                         legal responsibility, we propose at
                                                   benefits consumers and States alike, and                Alternatively, the child could enroll in              § 435.603(f)(2)(ii) to apply the proposed
                                                   add to States’ and potentially families’                coverage through the Exchange in the                  rules for non-filers in the case of
                                                   administrative burden.                                  child’s State of residence as a member                children living with such parents, so
                                                      For the fifth type of household                      of the non-custodial parent’s household.              that both parents, if living with the
                                                   identified (for example, a grandparent                  (See discussion in section II.A.4 (b) of              child, will be included in the child’s
                                                   caring for a grandchild claimed as a tax                the preamble for the accompanying                     household and their income counted in
                                                   dependent), the income of the claimed                   Exchange proposed rule.) We                           determining the child’s eligibility.
                                                   tax dependent is likely to be quite low,                specifically solicit comments on the
                                                   making them likely eligible for                         proposed handling of the household                    (2) Household Composition for Non-
                                                   Medicaid based on their income alone.                   composition for these children.                       Filers (§ 435.603(f)(3))
                                                   However, in such situations adoption of                    Under pre-2014 Medicaid rules, a                      The IRC contains provisions regarding
                                                   the section 36B definitions for                         pregnant woman is considered as a                     filing thresholds—ranging from $9,350
                                                   household composition for determining                   household of two for purposes of                      in 2010 (86 percent FPL) for a single
                                                   the Medicaid eligibility of the tax                     determining eligibility. States have the              individual to $19,800 for a married
                                                   dependent could significantly affect                    option to count a pregnant woman as                   couple filing jointly with one spouse 65
                                                   both the taxpayer and the relative or                   two in determining the family size of                 or older (137 percent FPL)—below
                                                   unrelated individual whom the taxpayer                  other members of a pregnant woman’s                   which individuals are not required to
                                                   has no legal responsibility to support,                 household (for example, her spouse or
                                                                                                                                                                 file. Individuals below these thresholds
                                                   putting such taxpayers in the position                  other children). Under the section 36B
                                                                                                                                                                 may file a tax return, but for non-filers,
                                                   either of: (1) Forgoing a tax advantage                 definition of family size, pregnant
                                                   (including, in some cases, an Earned                                                                          section 36B of the IRC does not
                                                                                                           women count as one person for
                                                   Income Tax Credit) so as to enable the                                                                        specifically address household
                                                                                                           purposes of eligibility for advance
                                                   tax dependent to apply for Medicaid on                                                                        composition.
                                                                                                           payments of the premium tax credit, but
                                                   his own; or (2) assuming financial                      if the child is born by the end of the                   To be eligible for a premium tax
                                                   responsibility for purchasing health care               calendar year, the annual premium tax                 credit, spouses must file jointly and
                                                   for such individual—a responsibility                    credit would be for two persons.                      (except in cases of divorce or separation
                                                   which they do not have under current                    Counting the pregnant woman as a                      in which the non-custodial parent is
                                                   law. Accordingly, we propose at                         household that will be comprised of two               permitted to claim a child) parents who
                                                   § 435.603(f)(2)(i) to codify current                    for Medicaid eligibility purposes                     file can claim their children under 19
                                                   Medicaid rules in determining the                       essentially anticipates the change in                 who are living with them (or under age
                                                   eligibility of qualifying relatives claimed             household size that will occur after the              24 if a full time student) as a qualifying
                                                   as tax dependents by another taxpayer.                  birth. Applying the 36B definitions                   child. See IRS Publication 501. The
                                                   MAGI-based definitions would be used                    would result in some women being                      current Medicaid principle that parents
                                                   in determining household composition                    enrolled, with advance payments of the                are legally responsible for their children
                                                   for purposes of the taxpayer’s eligibility,             premium tax credit, in a qualified health             and that spouses are legally responsible
                                                   per proposed § 435.603(f)(1). It is also                plan through the Exchange who, after                  for each other is consistent with section
                                                   important to note that, reflected in                    giving birth, will be eligible for                    36B of the IRC. In the case of Medicaid,
                                                   proposed § 435.603(d)(3) and consistent                 Medicaid. Therefore, the proposed                     parents are assumed to be financially
                                                   with current Medicaid rules, actually                   definition of family size in § 435.603(b)             responsible for their children up to age
                                                   available cash support provided by the                  retains current Medicaid rules for                    21; this does not vary with the child’s
                                                   non-legally responsible relative is                     pregnant women to promote continuity                  student status.
                                                   counted as income to the claimed tax                    of coverage for the family and to ease                   Under either section 36B of the IRC or
                                                   dependent. The purpose of retaining the                 State administrative burden.                          pre-Affordable Care Act Medicaid rules,
                                                   Medicaid household rules as a backstop                     Married couples who file separately                spouses living together are considered
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                                                   in these situations is to prevent the                   are not eligible for premium tax credits.             to be part of the same household for
                                                   attribution of income from non-legally                  However, there is no similar provision                eligibility purposes, and proposed
                                                   responsible relatives when that income                  in title XIX of the Act with respect to               paragraph § 435.603(f)(3) similarly
                                                   is not in fact available to the tax                     Medicaid eligibility. Therefore, in such              specifies that spouses living together be
                                                   dependent. We do not believe that this                  situations, we propose at § 435.603(f)(4)             included in the same household. We
                                                   proposal would disrupt coordination or                  to codify current Medicaid rules to                   considered several alternatives
                                                   create a gap in coverage.                               include each spouse in the household of               regarding when children who are living
                                                      Regarding households in which a                      the other and to count the MAGI-based                 with their parent(s), but are not claimed
                                                   child is claimed as a tax dependent by                  income of each spouse required to file                as a tax dependent on such parent’s tax


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51159

                                                   return, should be included in the                          • Individuals eligible for Medicaid on             they should be identified in these
                                                   parent’s household.                                     a basis that does not require a                       regulations.
                                                      Applying pre-Affordable Care Act                     determination of income by the                           • Individuals age 65 or older are
                                                   Medicaid rules making parents                           Medicaid agency. This exception from                  categorically excepted from MAGI
                                                   financially responsible for children who                use of MAGI-based methods includes,                   methods under section
                                                   are under age 21 could result in a gap                  but is not limited to, individuals                    1902(e)(14)(D)(i)(II) of the Act. We
                                                   in coverage for children aged 19 and 20                 receiving or deemed to be receiving SSI,              recognize that the exception of all
                                                   who are not in school and are not                       individuals receiving assistance under                elderly individuals from MAGI
                                                   claimed as dependents on their parents’                 title IV–E of the Act, and individuals for            methodologies for all eligibility groups
                                                   tax return, but whose parents do file a                 whom the agency is relying on a finding               could result in States having to retain
                                                   tax return and have household income                    of income made by an Express Lane                     application of AFDC financial
                                                   above the Medicaid income standard for                  Agency under section 1902(e)(13) of the               methodologies in a small number of
                                                   19 and 20 year-olds. (Coverage for 19                   Act.                                                  cases in which an elderly individual is
                                                   and 20-year olds, in most States, will be                  • Individuals who qualify for medical              being evaluated for coverage on the
                                                   under the new group for adults with                     assistance on the basis of being blind or             basis of being a parent or caretaker
                                                   household income at or below 133                        disabled. This exception applies only to              relative, for which age is not a factor.
                                                   percent FPL). On the other hand,                        those individuals for whom the                        We solicit comments on possible
                                                   adopting the IRC rule allowing parents                  determination of eligibility is made on               approaches we might adopt to avoid this
                                                   to claim as a qualifying child their                    the basis of being blind or disabled.                 result—for example, interpreting the
                                                   children only until age 19, unless a full-              Individuals who are blind or who have                 exception to apply only in the case of
                                                   time student, could result in an increase               disabilities can also be covered under                elderly individuals when age is a
                                                   in Medicaid eligibility for 19 and 20-                  the new mandatory eligibility group for               condition of eligibility or of applying
                                                   year olds who are not full-time students                adults (codified at proposed § 435.119)               SSI methodologies (which will continue
                                                   and are living with their parents, as                   with MAGI-based household income at                   to be used for most MAGI-excepted
                                                   compared to pre-Affordable Care Act                     or below 133 percent of FPL. To the                   groups) in determining the eligibility of
                                                   Medicaid rules. Adopting the IRC rule                   extent that their income exceeds that                 elderly individuals for coverage as a
                                                   with respect to adult children ages 21–                 level, current financial methodologies                caretaker relative.
                                                   23 who are full-time students could                     will be used to determine their                          • Individuals whose eligibility is
                                                   result in a decrease in Medicaid                        eligibility for coverage on the basis of              being determined on the basis of the
                                                   eligibility and an imposition of legal                                                                        need for long-term care services,
                                                                                                           being blind or disabled under an
                                                   responsibility for certain adult children
                                                                                                           optional eligibility group for blind or               including nursing facility services or a
                                                   not consistent with current law.
                                                                                                           disabled individuals.                                 level of care equivalent to such services.
                                                      In balancing these considerations, we
                                                   propose at § 435.603(f)(3), to treat                       In proposed § 435.603(i)(3), we                    Similar to the exceptions from MAGI for
                                                   spouses/parents (including stepparents)                 identify the most common of the                       determinations based on being blind or
                                                   and all children (including stepchildren                eligibility groups for blind and disabled             disabled, we propose to apply this
                                                   and stepsiblings) under age 19 or, if a                 individuals excepted from MAGI                        exception in the case of individuals
                                                   full-time student, under age 21, who are                methods under the Act. We are not                     whose eligibility is based on the need
                                                   living together, as members of the same                 listing coverage provided to individuals              for or receipt of such services.
                                                   household. This proposed policy will                    receiving SSI in so-called ‘‘criteria                 Individuals otherwise eligible for
                                                   avoid the gap in coverage for 19 and 20                 States’’ because they are encompassed                 Medicaid under an eligibility group to
                                                   year olds, discussed above, while                       under proposed § 435.603(i)(1)(iii)(A).               which MAGI-based methods apply (for
                                                   limiting any unnecessary increase in                    (These individuals are receiving SSI but              example, children eligible under
                                                   Medicaid eligibility. Children who are                  the State does not have an agreement                  proposed § 435.118) will not be
                                                   not living with their parents, or who are               under section 1634 of the Act under                   excepted from application of MAGI-
                                                   over the specified age limit, would not                 which the Social Security                             based methods in determining ongoing
                                                   be included in their parents’ household,                Administration makes a determination                  eligibility under such group simply
                                                   and as with tax filing households,                      of Medicaid eligibility for the State.) We            because they may need long-term care
                                                   individuals other than a spouse,                        also are not specifically identifying                 services.
                                                   biological, adopted, or step-parent, child              children under age 18 who were                           • Individuals eligible for assistance
                                                   or sibling would not be included in the                 receiving SSI as of the date of enactment             with Medicare cost sharing under
                                                   same Medicaid household under this                      of the Personal Responsibility and Work               section 1902(a)(10)(E) of the Act. We
                                                   proposed rule. We specifically solicit                  Opportunity Reconciliation Act of 1996                propose to interpret this exception to
                                                   comments on the proposed rule for                       (PRWORA) (August 22, 1996), who                       apply only to the determination of
                                                   household composition of non-filers at                  would continue to receive SSI but for                 eligibility for Medicare cost sharing
                                                   § 435.603(f)(3).                                        the enactment of section 211 of that Act              assistance.
                                                                                                           and who are eligible for Medicaid in                     • Medically needy individuals
                                                   (3) Retention of Existing Financial                     accordance with section                               eligible under section 1902(a)(10)(C) of
                                                   Methods (§ 435.603(i))                                  1902(a)(10)(A)(i)(II) of the Act. While               the Act. This exception also applies
                                                     Section 1902(e)(14)(D) of the Act                     financial eligibility for continued                   only to the determination of eligibility
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                                                   provides that the financial                             coverage of these children will be                    for medically-needy coverage.
                                                   methodologies based on MAGI will not                    excepted from MAGI, most, if not all, of              Individuals who meet the eligibility
                                                   apply in certain situations. In those                   the affected children will have reached               criteria for coverage under another
                                                   cases, eligibility will be determined                   age 18 as of January 1, 2014, the                     eligibility group—for example, the new
                                                   using the rules in effect prior to the                  effective date for the transition to MAGI-            adult group—are not excepted from
                                                   Affordable Care Act, codified in existing               based methods. We seek comment as to                  application of MAGI-based methods for
                                                   regulations at § 435.601 and § 435.602.                 whether there might be children still                 purposes of determining their eligibility
                                                   Proposed § 435.603(i) sets out six                      eligible under this mandatory coverage                for such other groups simply because
                                                   exceptions:                                             group as of 2014, and therefore, whether              they would qualify for coverage as a


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                                                   51160                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   medically needy individual if not                       residents of the State visited. By                    allow children to establish residency to
                                                   eligibility under such other group.                     removing the term ‘‘living’’ in the State             the same extent as adults when a parent
                                                      Section 1902(e)(14)(D)(iii) of the Act               or replacing the term ‘‘remain’’ with                 or caretaker is seeking or has confirmed
                                                   provides that MAGI-based methods                        ‘‘reside,’’ we do not intend to have any              employment is intended to ensure a
                                                   shall not be used in determining                        policy impact on State policy. Indeed,                consistent approach for migrant,
                                                   eligibility for Medicare Part D premium                 we note that section 1902(b)(2) of the                seasonal workers and other families
                                                   and cost sharing subsidies under section                Act refers to individuals who ‘‘reside in             living in a State while employed or in
                                                   1860D–14 of the Act. Because such                       the State’’. We are removing the word                 search of employment. The proposed
                                                   subsidies are not a form of Medicaid                    ‘‘living’’ from the definition in order to            definition also allows flexibility for
                                                   and determinations for Part D cost                      simplify the language. An individual                  families in which children attend school
                                                   sharing subsidies are not performed                     must still maintain present intent to                 in a State other than where the parents
                                                   under the authority of the Medicaid                     reside in the State being claimed as the              live; such children may be considered
                                                   statute, we are not proposing to include                State of residence; a State would not be              residents of the parents’ ‘‘home State,’’
                                                   regulations regarding this exception in                 required to recognize an intent to reside             if the parent expresses the requisite
                                                   these rules.                                            at some future point in time. We have                 intent. However, we do not change
                                                   C. Residency for Medicaid Eligibility                   retained the term ‘‘living’’ for                      States’ current flexibility to determine
                                                   Defined                                                 individuals who do not have the                       whether students ‘‘reside’’ in a State, as
                                                                                                           capacity to state intent, as we are not               long as each individual has the
                                                      We propose to simplify Medicaid’s                    modifying the regulations for that                    opportunity to provide evidence of
                                                   residency rules to promote achievement                  population.                                           actual residence. The proposed rule
                                                   of the coordinated eligibility and                         Our proposal to remove language                    excludes children who are visitors for
                                                   enrollment system established under                     regarding permanency and ‘‘an                         pleasure or for purposes of obtaining
                                                   sections 1413 and 2201 of the                           indefinite period’’ will help to facilitate           medical care. Parents, caretakers, and
                                                   Affordable Care Act and discussed in                    coordination of eligibility                           persons acting responsibly on behalf of
                                                   section II.I of this proposed rule. We                  determinations across and between                     a child may attest to where the child
                                                   propose to redesignate and revise                       programs and is also consistent with                  resides, under new § 435.956(c).
                                                   paragraphs § 435.403(h) and § 435.403(i)                long-standing statutory requirements.
                                                   to § 435.403(i) (rules for individuals                  Under section 1902(b)(2) of the Act,                     While we do not believe our proposed
                                                   under age 21) and (h) (rules for                        States may not exclude from coverage                  changes significantly affect Federal
                                                   individuals age 21 and older), which set                an individual who resides in the State                guidance on residency, we seek
                                                   parameters for States to determine who                  ‘‘regardless of whether or not the                    comments on the proposed
                                                   is a State resident. These revisions are                residence is maintained permanently or                modifications to § 435.403(h) and (i),
                                                   not significantly different than the                    at a fixed address[.]’’                               particularly on the impact of this
                                                   current rules. We do not propose                                                                              proposed rule on children eligible for
                                                   changes to our current regulations                      2. Residency Definition for Children                  Medicaid based on disability. We also
                                                   regarding individuals living in                         (Under Age 21) (§ 435.403(i))                         seek comments on whether to change
                                                   institutions, receiving Federal foster                     For individuals who are emancipated                the current State residency policy with
                                                   care or adoption assistance under title                 or married, we propose language to                    regard to individuals living in
                                                   IV–E of the Act, or adults who do not                   align the residency rules with the                    institutions and adults who do not have
                                                   have the capacity to state intent. Note                 proposed definition for adults.                       the capacity to express intent.
                                                   that policies regarding verification of                 Accordingly, at redesignated
                                                                                                                                                                 D. Application and Enrollment
                                                   residency are proposed at § 435.956(c)                  § 435.403(i)(1), we propose to strike the
                                                                                                                                                                 Procedures for Medicaid
                                                   and discussed in section II.H.5 of this                 term ‘‘permanently and for an indefinite
                                                   proposed rule.                                          period’’ and to replace the word                      1. Availability of Program Information
                                                                                                           ‘‘remain’’ with ‘‘reside.’’                           (§ 435.905)
                                                   1. Residency Definition for Adults (Age                    We propose in § 435.403(i)(2) to
                                                   21 and Over) (§ 435.403(h))                             combine and consolidate two different                   Section 2201 of the Affordable Care
                                                      We propose to strike the term                        definitions of residency currently set                Act adds a new section 1943(b)(1)(A) to
                                                   ‘‘permanently and for an indefinite                     forth in paragraphs (h)(2) and (h)(3) for             the Act which directs States to develop
                                                   period’’ from the definition for adults in              unemancipated individuals under age                   procedures that enable individuals to
                                                   redesignated § 435.403(h)(1) and (h)(4),                21: (1) those whose Medicaid eligibility              apply for, renew, and enroll in coverage
                                                   and replace the term ‘‘remain’’ with                    is based on a disability and (2) those                through an Internet Web site. Section
                                                   ‘‘reside.’’ An adult’s residency will be                who are not disabled and not living in                1943(b)(4) directs States to establish a
                                                   determined based upon where the                         an institution or receiving foster care or            Web site (which must be linked to the
                                                   individual is living and has intent to                  adoption assistance under IV–E of the                 Web site established by the Exchange
                                                   reside, including without a fixed                       Act. We eliminate the cross-reference to              operating in the State) that will allow
                                                   address, or the State which the                         the AFDC rules at 45 CFR 233.40 and for               individuals to obtain information
                                                   individual entered with a job                           both groups of children we propose to                 regarding coverage under Medicaid and
                                                   commitment or seeking employment                        apply a similar definition as that                    CHIP and compare such coverage to that
                                                   (whether or not currently employed).                    proposed for most adults, but without                 available through the Exchange. Thus,
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                                                   While proposing to remove the phrase                    the ‘‘intent’’ component, as individuals              we propose to amend § 435.905 to
                                                   ‘‘permanently or for an indefinite                      under age 21 may not legally be able to               ensure that program information be
                                                   period’’ and use the term ‘‘reside,’’ we                express intent. Under the proposed rule,              made available electronically through a
                                                   are maintaining existing policy that an                 States may not determine residency of a               Web site in addition to providing
                                                   individual must intend to remain living                 child based solely on the residency of                information to applicants both orally
                                                   in the State in which he or she is                      the parent.                                           and in writing. We propose to modify
                                                   seeking coverage. Persons visiting a                       Our proposal will simplify State                   § 435.905(b) to eliminate specific
                                                   State for personal pleasure or purposes                 administration and make the rules                     requirements regarding quantity and
                                                   of obtaining medical care are not                       clearer to the public. Our proposal to                electronic availability of bulletins and


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                         51161

                                                   pamphlets, as we do not believe these                   an application through a variety of                   Service, in September 2000, at http://
                                                   are necessary in regulations.                           means including online, in person, over               www.hhs.gov/ocr/civilrights/resources/
                                                                                                           the phone and by mail. Applications                   specialtopics/tanf/triagencyletter.html.
                                                   2. Applications (§ 435.907)                                                                                     Section 1943(b)(1)(A) of the Act
                                                                                                           may be submitted in person, but under
                                                      To support States in developing a                    this proposed rule, particularly in light             directs Medicaid agencies to permit
                                                   coordinated eligibility and enrollment                  of the seamless coordination process                  enrollment and reenrollment in the
                                                   system for all insurance affordability                  required for enrollment in Medicaid and               State plan or under a waiver through
                                                   programs, section 1943(b)(3) and section                the Exchange, in person interviews                    electronic signature. Accordingly, we
                                                   1413 of the Affordable Care Act direct                  cannot be required for the individuals                propose in § 435.907(f) that States must
                                                   the Secretary to develop and provide                    whose eligibility is based on MAGI.                   accept applications signed through the
                                                   States with a single, streamlined                          For individuals not seeking coverage               use of electronic signature techniques,
                                                   application. The single application, to                 for themselves (‘‘non-applicants’’), to               including telephonically recorded
                                                   be used for all insurance affordability                 ensure privacy we propose in                          signatures, as well as handwritten
                                                   programs and available through a                        § 435.907(e)(1) to codify the long-                   signatures transmitted by fax or other
                                                   variety of formats including on-line and                standing policy against requiring such                electronic means. This is consistent
                                                   phone applications, will build on the                   individuals to provide Social Security                with current practice in most States.
                                                   successes many States have had in                       numbers (SSNs) or information
                                                   developing simplified applications.                                                                           3. Assistance With Application and
                                                                                                           regarding their citizenship, nationality,
                                                      Accordingly, we propose to amend                                                                           Redetermination (§ 435.908)
                                                                                                           or immigration status. To promote
                                                   current regulations at § 435.907 to                     enrollment of eligible applicants, States                Some of the individuals eligible for
                                                   reflect use of the new single,                          may request an SSN of a non-applicant                 coverage in 2014 may need assistance
                                                   streamlined application. The Secretary                  on a voluntary basis. Proposed                        with the application and renewal
                                                   will develop the data elements for the                  § 435.907(e)(2) codifies existing policy              process. Therefore, we propose to
                                                   application in collaboration with States                grounded in Title VI of the Civil Rights              amend current § 435.908(b) to ensure
                                                   and consumer groups. As permitted in                    Act of 1964, the Privacy Act, and                     that the agency provides assistance
                                                   section 1413(b)(1)(B) of the Affordable                 Medicaid confidentiality provisions at                through a variety of means to any
                                                   Care Act, proposed § 435.907(b)(2)                      section 1902(a)(7) of the Act to allow                individual seeking help with the
                                                   provides States the option to develop                   States to request an SSN of a non-                    application or redetermination process.
                                                   and use an alternative streamlined                      applicant only if: (1) Providing an SSN               This is consistent with current State
                                                   application, subject to review and                      is voluntary; (2) use of a non-applicant’s            practice and is in accordance with
                                                   approval by the Secretary. Under the                    SSN is limited to processing the                      section 1902(a)(19) of the Act.
                                                   law, those who are limited English                      applicant’s eligibility or for other                     We are proposing that States have
                                                   proficient (LEP) and persons with                       functions necessary to the                            flexibility to design the available
                                                   disabilities must have equal access to                  administration of the State’s plan; and               assistance, while assuring that such
                                                   health care and the benefits. We intend                 (3) the State provides notice that                    assistance is provided in a manner
                                                   to address the readability and                          provision of an SSN is voluntary and                  accessible to individuals with
                                                   accessibility of applications, forms and                indicates how the SSN will be used.                   disabilities and who are LEP. In
                                                   other communications with applicants                       In support of the proposed rule, we                addition, section 1943(b)(1)(F) of the
                                                   and beneficiaries in future guidance.                   note that sections 1411(g) and 1414(a)(2)             Act directs States to conduct outreach to
                                                      In § 435.907(c), we propose two                      of the Affordable Care Act specify that               vulnerable and underserved populations
                                                   alternative approaches related to                       taxpayer information may only be used                 eligible for Medicaid. Such outreach
                                                   applications for individuals who may                    for eligibility determinations and other              and assistance will be particularly
                                                   qualify for coverage on a basis other                   functions directly related to the                     important for those who are newly
                                                   than MAGI. First, we propose that States                administration of benefits. Section                   eligible, as well as for people with
                                                   may use supplemental forms to gather                    1902(a)(7) of the Act directs States to               disabilities, underserved racial and
                                                   additional information, such as                         have safeguards that restrict the ‘‘use or            ethnic minorities and other groups. We
                                                   information pertaining to resources,                    disclosure of information concerning                  will provide technical assistance and
                                                   needed to make an eligibility                           applicants and recipients only for                    subregulatory guidance to further
                                                   determination. This approach would                      purposes directly connected with the                  address application and renewal
                                                   permit anyone seeking coverage to begin                 administration of the [State] plan                    assistance to meet the needs of the
                                                   by completing the same single,                          * * *’’ Non-applicant information used                multiple populations served by the
                                                   streamlined application as all other                    to determine an applicant’s eligibility is            program.
                                                   applicants. Second, we propose to                       considered to be information
                                                   permit States to develop and use an                                                                           E. MAGI Screen (§ 435.911)
                                                                                                           ‘‘concerning’’ the applicant or recipient;
                                                   alternative single, streamlined                         thus, this information must be                          This section of the preamble and the
                                                   application form designed specifically                  appropriately safeguarded.                            proposed rules at § 435.911 describe the
                                                   to capture information needed to                           We propose to continue the current                 process for applying a new simplified
                                                   determine eligibility for individuals                   policy that Medicaid applicants and                   test for determining eligibility based on
                                                   whose eligibility is not determined                     beneficiaries must provide an SSN, if                 MAGI—which is facilitated by the
                                                   based on MAGI. Under the statute and                    the individual has one. Under our                     simplified eligibility categories,
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                                                   proposed 435.907(c), such supplemental                  current regulations at § 435.910, if an               including the new adult coverage group,
                                                   and alternative forms are subject to the                individual does not have an SSN, the                  discussed in section II.A of this
                                                   Secretary’s approval. We seek comment                   agency must assist the individual in                  proposed rule—as well as the steps
                                                   on both of the proposed approaches as                   obtaining one. For background and a                   States will take to ensure that
                                                   well as other alternatives to ensure a                  detailed discussion of the current policy             individuals who do not meet the
                                                   simple application process.                             on the collection of SSNs, see the Tri-               simplified test are evaluated for
                                                      In § 435.907(d), we explain that the                 Agency Guidance issued in conjunction                 Medicaid eligibility on other bases and
                                                   agency must establish procedures to                     with the Administration for Children                  for potential eligibility for other
                                                   allow persons seeking coverage to file                  and Families and the Food Nutrition                   insurance affordability programs.


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                                                   51162                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                      Proposed § 435.911(a) sets forth the                 § 435.1200(e)(2) and the Exchange                     would apply. This is the current
                                                   statutory basis for this section. In                    Proposed Rule at 45 CFR 155.345, the                  practice in many States which now end
                                                   proposed § 435.911(b) we set forth                      Medicaid agency will retain                           Medicaid coverage at the end of a month
                                                   several pertinent definitions, including                responsibility for making such                        for administrative convenience or to
                                                   ‘‘applicable modified adjusted gross                    determinations, although the State can                align with coverage offered by
                                                   income standard,’’ which will be at least               establish procedures whereby the                      participating health plans paid on a per
                                                   133 percent FPL, but in some States may                 Exchange will undertake such other                    capita per month basis, as permitted
                                                   be higher for certain individuals,                      determinations in certain                             under current regulations. We believe
                                                   including parents or other caretaker                    circumstances, consistent with                        that providing coverage through the end
                                                   relatives, pregnant women or children.                  regulations at § 431.10 and § 431.11, as              of the month is similar to existing
                                                      Proposed § 435.911(c) describes the                  revised in and discussed in section J of              regulations at redesignated § 435.915(b),
                                                   key steps in the proposed streamlined                   this proposed rule.                                   which allows States to make eligibility
                                                   eligibility process. Under                                 Proposed § 435.911(c)(2)(iii) specifies            effective from the beginning of a month.
                                                   § 435.911(c)(1), for every individual                   that the agency must follow the policies                 We invite comments on this potential
                                                   who has submitted an application and                    of proposed § 435.1200(g) to assess                   approach to coverage, its likely impact
                                                   who meets the non-financial criteria for                individuals determined not eligible for               on maintaining continuous coverage,
                                                   eligibility (or for whom the agency is                  Medicaid based on MAGI for potential                  whether the costs of this approach
                                                   providing a reasonable opportunity to                   eligibility for other insurance                       outweigh the benefits, or whether we
                                                   provide documentation of citizenship or                 affordability programs and to facilitate              should retain the current policy that
                                                   immigrations status in accordance with                  seamless transfer of the individual’s                 provides State flexibility to end
                                                   sections 1903(x), 1902(ee) and 1137(d)                  electronic account to these other                     coverage at any time during a month.
                                                   of the Act), the Medicaid agency would                  programs. Under proposed
                                                                                                                                                                 G. Verification of Income and Other
                                                   determine whether such individual has                   § 435.1200(g)(2), evaluation of
                                                                                                                                                                 Eligibility Criteria (§ 435.940 Through
                                                   household income at or below the                        individuals for Medicaid eligibility
                                                                                                                                                                 § 435.956)
                                                   applicable MAGI standard. This means                    based on blindness or disability in
                                                   that States will not need to review                     accordance with proposed                                 In this section, we discuss changes to
                                                   whether an individual who meets the                     § 435.911(c)(2) should occur at that                  42 CFR part 435 subpart J to make
                                                   applicable MAGI standard (for example,                  same time as evaluation for potential                 verification processes more efficient,
                                                   133 percent FPL for the new adult                       eligibility for premium tax credits for               modernized and coordinated with the
                                                   group) is also eligible as a disabled or                enrollment through the Exchange.                      Exchange. In general, the proposed rules
                                                   medically needy individual, both of                        We are not proposing specific                      maximize reliance on electronic data
                                                   which typically entail a more involved                  timeliness standards for the                          sources, shift certain verification
                                                   eligibility determination.                              determination of eligibility under                    responsibilities to the Federal
                                                      For individuals with household                       proposed § 435.911. In collaboration                  government, and provide States
                                                   income at or below the applicable MAGI                  with States, we will be developing                    flexibility in how and when they verify
                                                   standard, the agency would provide                      performance standards and metrics for                 information needed to determine
                                                   Medicaid benefits promptly and without                  the streamlined and coordinated                       Medicaid eligibility. The proposed
                                                   undue delay. Benefits will be addressed                 eligibility and enrollment system. These              changes draw from successful State
                                                   in subsequent guidance.                                 metrics will also support the standards               systems and are aligned with those
                                                      Some individuals with household                      and conditions described in the Federal               proposed at § 155.315 and § 155.320 of
                                                   income above the applicable MAGI                        Funding for Medicaid Eligibility                      the Exchange proposed rule. The major
                                                   standard may be eligible for Medicaid                   Determination and Enrollment                          changes are:
                                                   on another basis. In some States, for                   Activities final rule (76 FR 21950)                      • In accordance with section 1413(c)
                                                   example, some individuals may be                        published in the April 19, 2011 Federal               of the Affordable Care Act, State
                                                   eligible based on disability or need for                Register.                                             Medicaid agencies will use a system
                                                   long-term care services, even if their                                                                        established by the Secretary pursuant to
                                                   income exceeds the applicable MAGI                      F. Coverage Month                                     her authority under sections 1411(c) and
                                                   standard, and individuals eligible for                    In proposed § 155.410 of the Exchange               1413(c) of such Act, through which all
                                                   Medicare may be eligible for assistance                 proposed rule, enrollment through the                 insurance affordability programs can
                                                   with Medicare premiums and cost                         Exchange for individuals terminated                   corroborate or verify certain information
                                                   sharing charges. In accordance with                     from Medicaid can begin at the earliest               with other Federal agencies (for
                                                   § 435.911(c)(2), for each individual who                on the 1st day of the month following                 example, citizenship with the Social
                                                   is not eligible for Medicaid based on                   the date the individual loses Medicaid                Security Administration (SSA),
                                                   MAGI under § 435.911(c)(1), the                         and is determined eligible for                        immigration status through the
                                                   Medicaid agency shall collect additional                enrollment through the Exchange. If the               Department of Homeland Security
                                                   information, consistent with proposed                   individual loses Medicaid eligibility                 (DHS), and income data from the IRS.)
                                                   § 435.907(c), as may be needed to                       and is determined eligible for                        This system will reduce administrative
                                                   determine Medicaid eligibility on other                 enrollment through the Exchange after                 burden on State Medicaid agencies and
                                                   such other bases.                                       the 22nd day of the month, enrollment                 Exchanges.
                                                      We note that the MAGI screen                         through the Exchange begins at the                       • Consistent with current policy,
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                                                   proposed for State Medicaid agencies is                 earliest on the first day of the second               State Medicaid agencies may accept
                                                   the same process as that at proposed 45                 month following such date. To promote                 self-attestation of all eligibility criteria,
                                                   CFR 155.305(c) of the Exchange                          coordination with coverage through the                with the exception of citizenship and
                                                   Proposed Rule published elsewhere in                    Exchange, we are considering adding a                 immigration status. To ensure program
                                                   this Federal Register; however, the                     provision to the regulations to extend                integrity, States must comply with the
                                                   Exchange will not be required to                        Medicaid coverage until the end of the                requirements of section 1137 of the Act
                                                   undertake Medicaid eligibility                          month that the appropriate termination                to request information from trusted data
                                                   determinations based on factors other                   notice period ends. Certain exceptions—               sources when useful to verifying
                                                   than MAGI. Under proposed                               such as the death of a beneficiary—                   financial eligibility.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                             51163

                                                      • We propose that in verifying                       citizenship and immigration status, as                deleted, as we believe these
                                                   eligibility States will rely, to the                    these are subject to separate statutory               requirements are not within the purview
                                                   maximum extent possible, on electronic                  requirements. States must continue to                 of the State Medicaid agency.
                                                   data matches with trusted third party                   comply with the provisions of section                    Per section 1413(c) of the Affordable
                                                   data sources. Additional information,                   1137 of the Act relating to income                    Care Act, we add a new § 435.945(h)
                                                   including paper documentation, may be                   information in accordance with rules set              (renumbering the next paragraph) to
                                                   requested from individuals when                         out in this section.                                  require that data exchanged
                                                   information cannot be obtained through                     Redesignated § 435.945(c) directs the              electronically under this section must
                                                   an electronic data source or is not                     agency to request and use information                 be sent and received via secure
                                                   ‘‘reasonably compatible’’ with                          in accordance with the appropriate                    electronic interfaces which, as defined
                                                   information provided by the individual.                 sections of the regulations. We modify                in proposed § 435.4, must be consistent
                                                   These changes align eligibility                         existing cross references to reflect other            with 42 CFR part 433.
                                                   verification methods for Medicaid with                  changes proposed and add cross                           Redesignated § 435.945(i), pertaining
                                                   those used for advance payments of                      references to the new § 435.949 and                   to written agreements between agencies
                                                   premium tax credits and other                           § 435.956. In addition, we have deleted               engaged in data exchanges, has been
                                                   insurance affordability programs. This                  references in § 435.945(c) and                        modified to eliminate specific
                                                   proposal would apply to the specific                    throughout the regulation to verifying                requirements regarding the precise
                                                   financial and non-financial information                 ‘‘medical assistance payments,’’                      content of such agreements and the
                                                   referenced in these rules, as well as to                ‘‘amount of medical assistance                        timing and frequency of data exchanges
                                                   any additional information the agency                   payments’’ and ‘‘benefit amount’’ as the              to provide States greater flexibility. This
                                                   finds it necessary to verify in order to                reference to the verification of                      flexibility will facilitate coordination
                                                   determine eligibility, regardless of                    ‘‘eligibility’’ is sufficient.                        with Exchanges and other insurance
                                                   whether that information is specifically                   We removed the list of programs with               affordability programs and allow States
                                                   referenced in the regulation.                           which the State Medicaid agency must                  to take full advantage of the increased
                                                      • A new section at § 435.956 relates                 exchange information at § 435.945(d)                  automation of electronic data matching
                                                   to requests by the agency for                           and instead include a reference to those              enabled through the provision of
                                                   information about non-financial                         programs listed in 1137(b) of the Act, as             enhanced Federal funding for the
                                                   eligibility factors.                                    well as the child support enforcement                 development and implementation of
                                                      • Finally, we have deleted a number                  program under Part IV–D of the Act                    such systems available under 42 CFR
                                                   of prescriptive provisions that are in                  (which is also referenced in section                  part 433 subpart C.
                                                   current regulations as to when or how                   1137) and SSA. Pursuant to sections
                                                                                                                                                                 2. Verification of Financial Eligibility
                                                   often States must query certain data                    1413 of the Affordable Care Act and
                                                                                                                                                                 (§ 435.948)
                                                   sources, or when certain State wage                     1943 of the Social Security Act, we have
                                                   agencies must provide data to the State                 added insurance affordability programs                   Under sections 1137 and 1902(a)(46)
                                                   Medicaid agency. We do not believe that                 as programs with which the agency                     of the Act, certain Federally-funded,
                                                   this level of specificity regarding State               must exchange information.                            State-administered programs, including
                                                   use of data sources is necessary, nor do                   We have not changed the rules for                  Medicaid, are required to conduct
                                                   we believe it is appropriate to include                 reimbursement arrangements between                    electronic data matches to obtain
                                                   in Medicaid regulations requirements                    agencies for data exchanges at                        income information from the State
                                                   that bind other agencies, such as State                 redesignated § 435.945(e), except for an              quarterly wage reports and
                                                   wage agencies.                                          updated cross reference and citing to                 Unemployment Insurance Benefits, the
                                                      These and other proposed revisions                   section 1137(a)(7) of the Act.                        IRS, and the SSA to verify financial
                                                   are discussed in more detail below.                        Redesignated § 435.945(f) specifies                eligibility for benefits, if such
                                                                                                           that before a request for information                 information may be useful in verifying
                                                   1. Basis, Scope, and General                            from a third-party data source is                     eligibility for Medicaid, as determined
                                                   Requirements (§ 435.940 and § 435.945)                  initiated, an individual must receive                 by the Secretary.
                                                      At § 435.940, we add statutory                       notice of the information being                          However, not all data sources are
                                                   citations to the basis and scope of the                 requested and its use. Consistent with                useful in all situations and under
                                                   income and eligibility verification                     current State practice, we anticipate that            section 1137(a)(4)(C). The use of
                                                   regulations to include, in addition to                  this notice would be provided as part of              information identified in section 1137 of
                                                   section 1137 of the Act, sections                       the application process. We have                      the Act ‘‘shall be targeted to those uses
                                                   1902(a)(4), 1902(a)(19), 1903(r)(3) and                 deleted the current exception to this                 which are most likely to be productive
                                                   1943 of the Act, as well as section 1413                notice requirement when an                            in identifying and preventing
                                                   of the Affordable Care Act.                             individual’s eligibility has been                     ineligibility * * * and no State shall be
                                                      At § 435.945(a), consistent with 42                  determined by another agency because,                 required to use such information to
                                                   CFR part 455, we are specifying that                    under our revised rule, proper notice is              verify the eligibility of all recipients.’’ In
                                                   nothing in this proposed rule shall                     required only when the agency itself                  addition to the data sources specifically
                                                   prevent a State from acting to ensure                   will be requesting data from another                  listed in section 1137 of the Act, many
                                                   program integrity. Program integrity is a               agency or program. The reporting                      States also rely on other data matches,
                                                   top priority and should be considered in                requirements at redesignated                          which they find useful to verify income.
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                                                   commenting on the proposed rule.                        § 435.945(g) remain unchanged;                           We believe that States are in the best
                                                      Consistent with current policy, at                   however the regulatory citations relating             position to determine the usefulness of
                                                   § 435.945(b), we add language to                        to MEQC and documentation have been                   the available data sources in specific
                                                   expressly permit States to accept                       updated.                                              cases. Therefore, we propose at
                                                   attestation of information related to                      Existing § 435.945(g), regarding a                 § 435.948(a) to delegate to the State
                                                   eligibility, including income, age, birth               State Wage Information Collection                     Medicaid agency the discretion afforded
                                                   date and State residency, without                       Agency (SWICA) that does not use the                  to the Secretary of the HHS under
                                                   requesting paper documentation. The                     quarterly wages reported by employers                 section 1137(a)(2) of the Act to
                                                   exceptions to this provision are                        under section 1137 of the Act, has been               determine when the information


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                                                   51164                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   identified in section 1137 of the Act is                the Affordable Care Act, we add that the              insurance affordability programs.
                                                   useful to verifying financial eligibility               use of an alternative data source                     Section 435.949(c) is proposed to be
                                                   for an individual and must be requested.                facilitate coordination between all other             consistent and coordinated with
                                                   The sources of data which States much                   insurance affordability programs.                     § 155.315 of the proposed Exchange
                                                   check, if useful, remain unchanged,                                                                           rule.
                                                                                                           3. Verification of Information From
                                                   except as follows:
                                                      • For the reasons discussed above,                   Federal Agencies (§ 435.949)                          4. Use of Information and Requests for
                                                   specific references to the timing and/or                   Section 1413(c) of the Affordable Care             Additional Information (§ 435.952)
                                                   frequency with which information must                   Act directs the Secretary of HHS, in                     We are proposing changes to
                                                   be requested are deleted;                               consultation with the Secretary of the                § 435.952, which describes the
                                                      • Public Assistance Reporting                        Treasury, the Secretary of Homeland                   appropriate use of information. We are
                                                   Information System (PARIS) is added as                  Security and the Commissioner of                      proposing to eliminate vague language
                                                   a new data source given the requirement                 Social Security, to establish a system of             at the end of § 435.952(a) regarding the
                                                   in 1903(r)(3) of the Act that all                       verification, using secure electronic                 requirement to independently verify
                                                   eligibility determination systems must                  interfaces, through which all State                   information ‘‘* * * if determined
                                                   conduct data matching through PARIS;                    health coverage programs can verify                   appropriate by agency experience.’’ We
                                                      • We eliminate reference to the                      information needed to determine                       expect processes to occur in real time
                                                   former AFDC program; and                                eligibility. Section 1411(c) of the                   wherever possible and we will be
                                                      • We replace reference to ‘‘Food                     Affordable Care Act specifically directs              defining more detailed standards and
                                                   Stamps’’ with ‘‘Supplemental Nutrition                  that the system enable electronic                     other performance metrics, with State
                                                   Assistance Program’’ to reflect the new                 verification of household income and                  and stakeholder input, in subsequent
                                                   name under the Food, Conservation and                   family size with the IRS, citizenship                 Federal guidance. Accordingly, we also
                                                   Energy Act of 2008.                                     data with SSA, and immigration status                 are proposing to delete the specific
                                                      As noted above and discussed in more                 with DHS.                                             timeliness requirements contained in
                                                   detail below in relation to proposed                       By enabling access to multiple                     the current regulation at § 435.952(c),
                                                   § 435.949, the Secretary is required to                 Federal sources though a single inquiry,              which now requires agency action
                                                   establish a system through which all                    insurance affordability programs can                  within 45 days from the date new
                                                   insurance affordability programs can                    receive prompt, reliable data through                 information is received.
                                                   verify certain information with other                   the same service, thereby alleviating                    Under § 435.952(b), as revised, if
                                                   Federal agencies. At new § 435.948(b),                  multiple data inquiries that the State                information provided by an individual
                                                   we propose that, to the extent available,               might otherwise have to make. Since all               is reasonably compatible with
                                                   States must access needed information                   of the insurance affordability programs               information that the agency has
                                                   when available through the system                       will rely on certain common sources                   obtained from other trusted sources, the
                                                   established by the Secretary, consistent                (that is, SSA, DHS and IRS), once such                agency must act on such information
                                                   with sections 1943(b)(3) and 1902(a)(4)                 information is gathered and evaluated                 and may not request additional
                                                   of the Act.                                             by one program, reevaluation or re-                   information from the individual. To
                                                      At § 435.948(c)(1), we provide that                  verification of data will not be                      establish an appropriate balance
                                                   information not available through the                   necessary, and thus, not permitted by                 between reliance on electronic
                                                   service established by the Secretary                    another program (unless an individual                 verification and paper documentation,
                                                   under § 435.949 may be obtained                         reports a change in circumstances).                   we propose to establish a ‘‘reasonable
                                                   directly from the agency or program                        We propose at § 435.949(a) to specify              compatibility’’ standard governing when
                                                   housing the information. At                             the Federal agencies from which                       additional information, including paper
                                                   § 435.948(c)(2), we retain the current                  information will be available through                 documentation, can be requested from
                                                   policy in paragraph (c) of the existing                 the Secretary, including SSA, DHS and                 applicants and beneficiaries. Under
                                                   regulations that information be                         the IRS. We propose in § 435.949(b)                   proposed § 435.952(c), no further
                                                   requested by SSN, but clarify that, when                that, if data included in § 435.949 is                information may be required from the
                                                   an SSN is not available, the agency                     available through the Secretary, States               individual unless the agency is unable
                                                   attempt to obtain needed information                    would be required to obtain such data                 to obtain information through electronic
                                                   using other personally identifying                      through the service established by the                data matching or the information
                                                   information otherwise available in the                  Secretary. Other applicable regulations,              obtained is not reasonably compatible
                                                   individual’s account, as described in                   including those set forth at § 435.948,               with that provided by the individual. In
                                                   § 435.4. Note that when an SSN is not                   § 435.956 and § 435.960, remain in                    such cases, the agency may contact the
                                                   available, the agency must assist the                   effect for information, which cannot be               individual and accept the individual’s
                                                   individual in obtaining a SSN in                        requested through the Secretary.                      explanation without further
                                                   accordance with § 435.910.                                 We propose § 435.949(c) to codify                  documentation, if reasonable, or the
                                                      States may request and use alternate                 section 1413(c)(3) of the Affordable Care             agency may request additional
                                                   data sources, as permitted at proposed                  Act, which provides that the Secretary                information, including paper
                                                   § 435.948(d), subject to Secretarial                    may modify the methods used in the                    documentation. ‘‘Reasonably
                                                   approval. Such alternative sources                      verification system established if she                compatible’’ does not necessarily mean
                                                   should reduce administrative costs and                  determines that modifications would                   an identical match for the data, only
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                                                   burdens on individuals and States,                      reduce the administrative costs and                   that the information is generally
                                                   maximize accuracy, and minimize                         burdens on individuals or agencies;                   consistent. Since what is ‘‘reasonably
                                                   delay. Also, we make explicit existing                  ensure accurate and timely verification;              compatible’’ may vary depending on the
                                                   policy that use of any such alternative                 comply with applicable requirements                   particular circumstances, we are
                                                   data source must meet applicable                        for the confidentiality, disclosure,                  proposing to provide States flexibility to
                                                   requirements relating to the                            program integrity, and maintenance or                 apply this standard. Under § 435.948(d),
                                                   confidentiality, disclosure,                            use of the information, including the                 if the individual fails to respond to a
                                                   maintenance, or use of information.                     requirements of section 6103 of the IRC;              request for additional information
                                                   Finally, consistent with section 1413 of                and promote coordination among                        permitted under the proposed rule, the


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51165

                                                   agency shall proceed to deny, terminate,                Medicaid eligibility is reviewed at the                 When agencies obtain information
                                                   or reduce Medicaid only after notice                    appropriate time.                                     regarding residency, SSN, pregnancy,
                                                   and appeal rights have been provided in                    Proposed § 435.956(d) simply cross-                age, and birth date in accordance with
                                                   accordance with part 431, subpart E.                    references current policy at § 435.910(f)             paragraphs (c) through (f) that is not
                                                      Sections 435.953 and 435.955 of the                  and (g) regarding issuance and                        reasonably compatible with the
                                                   current regulations are deleted in the                  verification of SSNs.                                 information or attestation provided by
                                                   proposed rule. Provisions contained in                     Current Federal rules regarding                    an individual, they must take reasonable
                                                   § 435.953(a) and § 435.955(a) through (c)               verification of pregnancy vary based on               steps to reconcile discrepancies that
                                                   and (f) are revised and incorporated into               the woman’s eligibility category, but                 would affect eligibility, following the
                                                   § 435.948 and § 435.952, in accordance                  verification of pregnancy is not required             process set out in § 435.952(c) and (d).
                                                   with the discussion above. We propose                   in all cases under current rules.
                                                   to remove the remaining requirements                    Verification (except by self-attestation)             H. Periodic Redetermination of
                                                   in § 435.953(b) through (d) (relating to                may not be required for pregnant                      Medicaid Eligibility (§ 435.916)
                                                   detailed information the State must                     women eligible for pregnancy related                     Consistent with section 1943(b)(3) of
                                                   submit for the Secretary’s approval to                  services under section                                the Act and sections 1413(a) and
                                                   exclude specific data requests) and the                 1902(a)(10)(A)(i)(IV) or (ii)(IX) of the              1413(c)(2) of the Affordable Care Act,
                                                   detailed requirements in § 435.955(a)                   Act, but pregnant women must provide                  which aim to ensure that individuals
                                                   and (d), (e) and (g) (relating to the                   medical verification of pregnancy to be               remain enrolled for as long as they meet
                                                   additional provisions regarding                         eligible for full Medicaid coverage as a              eligibility standards, we propose to
                                                   information released by a Federal                       qualified pregnant woman (with very                   amend § 435.916 to establish simplified,
                                                   agency, including State reporting                       low-income below the State’s former                   data-driven renewal policies and
                                                   requirements and requests for a waiver                  AFDC standard) under section                          procedures for individuals whose
                                                   from the Federal agency’s Data Integrity                1902(a)(10)(A)(i)(III) of the Act or under            eligibility is based on MAGI, consistent
                                                   Board). We believe that the detailed                    section 1931 of the Act, if medical                   with ensurance of program integrity.
                                                   nature of these provisions may                          verification was required under the                      States are increasingly re-engineering
                                                   unnecessarily hamper development of                     State’s AFDC program in effect on July                their renewal processes, recognizing
                                                   an efficient, modernized and                            16, 1996.                                             that the traditional process, which
                                                   coordinated system and that such                           In light of the proposed regulations at            involves a new application and
                                                   details are best developed in                           § 435.116, which combine these                        documentation, may be unnecessary
                                                   collaboration with States and addressed                 different eligibility categories to achieve           and can be burdensome for families and
                                                   through subregulatory guidance.                         greater simplicity in the program, we                 agencies. In addition, many eligible
                                                                                                           believe a verification rule for the                   beneficiaries lose coverage at renewal
                                                   5. Verification of Other Non-Financial                  combined group is needed. Thus, we are                for procedural reasons, only to reapply,
                                                   Information (§ 435.956)                                 exercising the authority provided in                  and to regain eligibility, soon after
                                                      We propose a new § 435.956 to                        section 1902(e)(14)(A)of the Act to                   losing coverage. This churning on and
                                                   address verifying non-financial                         propose application of the self-                      off of coverage is administratively costly
                                                   information. As with financial                          attestation verification rule under                   and burdensome for the agency, health
                                                   information, to the extent non-financial                section 1902(a)(10)(A)(i)(IV) or (ii)(IX) of          plans, and consumers, and is disruptive
                                                   information is available through the                    the Act in determining eligibility under              to continuity of care and efforts to
                                                   electronic service established by the                   § 435.116. Although a change in federal               achieve quality and efficiency in the
                                                   Secretary, States would use that service                guidelines, we do not believe that this               delivery of care. This rule proposes
                                                   under proposed § 435.949(b).                            will have significant practical impact for            renewal procedures that are consistent
                                                      Under the proposed rule, at                          States, as we believe most pregnant                   with those that will operate for the
                                                   § 435.956(c), States may use attestation                women today are covered under the                     premium tax credit and that mirror the
                                                   (including attestation of someone acting                eligibility groups for which medical                  practices many States have adopted as
                                                   responsibly on behalf of the individual)                verification is already not required.                 they have sought to simplify the
                                                   or electronic data sources to determine                 Proposed § 435.956(e) reflects this                   enrollment process and promote
                                                   State residency, in accordance with                     policy, providing that the agency must                continuity of coverage.
                                                   § 435.945(b) and § 435.952. Under                       rely on the woman’s attestation of                       Under current Federal policy,
                                                   proposed § 435.956(c), documents that                   pregnancy, unless the agency has other                eligibility must be redetermined at least
                                                   provide information regarding                           information (for example, claims                      once every 12 months, and although
                                                   immigration status should be used as a                  history) that is not reasonably                       States can have a shorter regular
                                                   source of evidence to verify satisfactory               compatible with her attestation. To                   redetermination period, very few States
                                                   immigration status, but may not, by                     promote coordination of eligibility rules             do so today. According to a 2011 50-
                                                   themselves, be used to demonstrate lack                 and procedures with the Exchange, we                  State survey by the Kaiser Family
                                                   of residency. For example, a temporary                  also propose at § 435.956(e) to codify                Foundation, all but two States currently
                                                   or time-limited immigration status, such                the widespread State practice of                      have a 12-month renewal period for
                                                   as Temporary Protected Status (TPS),                    accepting attestation of household                    children and all but five also provide
                                                   does not necessarily establish that the                 composition unless the State has                      12-month renewal periods to parents.
                                                   individual is not a State resident                      information which is not reasonably                   Consistent with this State trend and the
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                                                   because TPS is routinely renewed. The                   compatible with such attestation.                     annual redetermination procedures for
                                                   proposed rule relating to residency does                   In proposed § 435.956(f), in the                   individuals eligible for tax credits to
                                                   not diminish States’ responsibility to                  situations when age is a factor of                    purchase coverage through the
                                                   ensure that only individuals with valid                 eligibility, States may apply the same                Exchange at § 155.335 of the Exchange
                                                   and satisfactory immigration status are                 proposed verification procedures and                  proposed rule, we propose at
                                                   determined eligible for and enrolled in                 options, as are available for other                   § 435.916(a)(1) that States schedule
                                                   Medicaid; if an individual has a                        eligibility criteria verification, in                 regular redeterminations or renewals for
                                                   temporary immigration status, the                       accordance with § 435.945(b) and                      beneficiaries whose eligibility is based
                                                   agency must ensure that the individual’s                § 435.952.                                            on MAGI once every 12 months.


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                                                   51166                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   Consistent with current policy,                         the process described above, we propose               available to both the MAGI and MAGI-
                                                   eligibility should be redetermined more                 in § 435.916(a)(3) a process in which the             excepted populations.
                                                   frequently if a beneficiary reports a                   agency would provide the individual                     We note that we will be modifying the
                                                   change in circumstance that may affect                  with a pre-populated renewal form                     Payment Error Rate Measurement
                                                   continued eligibility, or the agency                    containing information that is relevant               (PERM) and Medicaid Eligibility Quality
                                                   obtains information (for example,                       to the renewal and available to the                   Control (MEQC) regulations to ensure
                                                   through a data match from other                         agency. The agency would then provide                 that both the PERM Medicaid eligibility
                                                   program records) that suggests the need                 the individual with a reasonable                      review and MEQC processes take into
                                                   for an eligibility review. States maintain              period—these rules propose at least 30                account these rules and procedures,
                                                   authority and flexibility to establish                  days—to furnish necessary information                 including the use of authoritative data
                                                   procedures that ensure program                          and to correct any inaccurate                         sources in redetermining eligibility. We
                                                   integrity.                                              information either in person, online, by              also note that any State expenditures
                                                      In recent years, States also have                    telephone, and via mail. We seek                      (before the end of 2015) for system
                                                   increasingly adopted measures to                        comments on this proposed process.                    changes necessary to adopt these
                                                   streamline the renewal process,                            At § 435.916(a)(3)(ii), we propose that            renewal procedures should be subject to
                                                   including the use of administrative,                    the agency verify the information                     the enhanced (90 percent) match as
                                                   telephone and online renewals.                          reported by the beneficiary in                        outlined in the Federal Funding for
                                                   Consistent with this State trend, under                 accordance with § 435.945 through                     Medicaid Eligibility Determination and
                                                   the proposed process at § 435.916(a),                   § 435.956, as revised in these proposed               Enrollment Activities final rule
                                                   States would not need a renewal form                    rules, including, at State option,                    published in the April 19, 2011 Federal
                                                   from all individuals, further                           reliance on self-attestation consistent               Register (76 FR 21950), provided these
                                                   streamlining the process for individuals                with those sections. In                               systems meet the standards and
                                                   and States. Similar to the proposed                     § 435.916(a)(3)(iii), to avoid unnecessary            conditions set forth in that rule.
                                                   verification processes at initial                       reapplications for coverage, we also
                                                                                                                                                                 I. Coordination of Eligibility and
                                                   application, discussed in section II.H. of              propose a reconsideration period for
                                                                                                                                                                 Enrollment Among Insurance
                                                   this proposed rule, the proposed                        individuals who lose coverage for
                                                                                                                                                                 Affordability Programs—Medicaid
                                                   renewal procedures maximize the use of                  failure to return the renewal form.
                                                                                                                                                                 Agency Responsibilities (§ 435.1200)
                                                   current third-party data matching to                    Individuals who return the form within
                                                   verify continued eligibility. Thus, at                  a reasonable period after coverage is                    We propose to add a new subpart M,
                                                   § 435.916(a)(2), we propose to codify the               terminated would be redetermined                      Coordination between Medicaid and
                                                   longstanding policy (see http://                        without the need for a new application.               other insurance affordability programs,
                                                   www.cms.gov/smdl/downloads/                             We considered specifying a 90-day                     including a new § 435.1200 to delineate
                                                   smd040700.pdf) that agencies renew                      reconsideration period to align with the              the State Medicaid agency’s
                                                   eligibility for beneficiaries by first                  3-month retroactive assistance period                 responsibilities in effectuating such
                                                   evaluating information available to the                 provided under section 1902(a)(34) of                 coordination. Proposed § 435.1200 also
                                                   agency in the electronic account or from                the Act, but did not specify a particular             includes policies previously included in
                                                   other reliable data sources. If the                     length of time in this proposed rule. We              § 431.636, Coordination of Medicaid
                                                   information available to the agency is                  seek comments on the use and length of                with the State CHIP. Section 435.1200(a)
                                                   sufficient to make a determination of                   a specified reconsideration period.                   and (b) set forth the basis for and
                                                   continued eligibility, including                           Finally, consistent with section 1413              definitions used in the proposed
                                                   information that establishes that the                   of the Affordable Care Act, we propose                section.
                                                   individual or family continues to reside                at § 435.916(a)(4) that for beneficiaries             1. Basic Responsibilities (§ 435.1200(c))
                                                   in the State, coverage shall be renewed                 no longer eligible for Medicaid, the
                                                   on the basis of this information and the                agency assess the individual for                         Proposed § 435.1200(c) sets forth the
                                                   agency would send the appropriate                       eligibility in other insurance                        basic responsibilities of the State
                                                   notice to the beneficiary without                       affordability programs and transmit the               Medicaid agency. Proposed
                                                   requiring any further action. This                      electronic account and other pertinent                § 435.1200(c)(1) specifies that the
                                                   eliminates the need for and                             data to the appropriate program for a                 Medicaid agency must participate in the
                                                   administrative burden of a renewal form                 determination of eligibility in                       coordinated eligibility and enrollment
                                                   or a signed returned notice and                         accordance with proposed                              system described in section 1943 of the
                                                   unnecessary requests for information                    § 435.1200(g).                                        Act. As discussed, most individuals will
                                                   already on hand.                                           We have not proposed amending the                  be evaluated for eligibility in the
                                                      State experience with this type of                   renewal procedures for beneficiaries                  Exchange, Medicaid, and CHIP using a
                                                   renewal process shows that it reduces                   eligible on a basis other than MAGI                   coordinated set of rules and these
                                                   the number of eligible beneficiaries who                (reflected in current regulations at                  programs will work together to ensure
                                                   lose coverage for procedural reasons                    redesignated § 435.916(b)), but seek                  that eligible applicants are enrolled in
                                                   while maintaining program integrity.                    comment on extending the renewal                      the appropriate program, no matter
                                                   Beneficiaries must correct any                          procedures proposed in § 435.916(a) to                where their application originates. For
                                                   inaccurate information contained in the                 such individuals.                                     example, an individual who directly
                                                   determination notice and would be                          We propose to expand the standards                 applies for and is determined ineligible
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                                                   permitted to do so through a variety of                 under redesignated § 435.916(c) to                    for Medicaid would be immediately
                                                   means, including online, in person, by                  include options for permitting all                    assessed for eligibility for advance
                                                   telephone, or via mail. As noted below,                 beneficiaries to report changes online,               payment of the premium tax credit and
                                                   if any information is missing or is not                 over the telephone, by mail or in person.             coverage through the Exchange. That
                                                   reasonably compatible with ongoing                      Given the evolving reliance on methods                individual would not need to file a new
                                                   eligibility, the agency must take further               for communication that go beyond the                  application in order to participate in
                                                   action to complete the renewal process.                 in-person interview, we solicit comment               Exchange coverage, if eligible.
                                                      If the agency cannot determine that                  on whether more modernized                            Integration among these programs will
                                                   the individual remains eligible through                 procedures to report changes should be                help to avoid duplication of costs,


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51167

                                                   processes, data, and effort on the part of              entities (the Exchange, Medicaid or                   supports, and health education
                                                   both the State and the individual.                      CHIP agencies) could enter into an                    information from a broad array of
                                                      We expect the use of a shared                        agreement whereby some or all of the                  entities. Additionally, a State could
                                                   eligibility service to adjudicate                       responsibilities of each entity are                   establish a Medicaid presence on an
                                                   placement for most individuals. The                     performed by one or more of the others.               existing State Web site. This Web site
                                                   shared eligibility service would                        Second, a State could develop a fully                 must be coordinated with the Exchange
                                                   coordinate determination and renewal                    integrated system whereby the                         Web site as described at § 155.205 of the
                                                   requirements for eligibility in each of                 responsibilities of all entities are                  Exchange proposed rule.
                                                   the insurance affordability programs. It                performed by a single integrated entity.                 Proposed § 435.1200(d) gives
                                                   may include processes such as those                     Third, each entity could fulfill its                  individuals the option to apply for or
                                                   used for collecting and verifying                       responsibilities and establish strong                 renew their eligibility for Medicaid
                                                   applicant information, including                        connections to ensure the seamless                    online. A Web site that connects an
                                                   verification of citizenship and                         exchange of information and data. We                  individual directly into the Medicaid
                                                   immigration status and certain income                   solicit public comments on these                      eligibility determination system is
                                                   information as well as determining and                  different working relationships and the               eligible for enhanced FFP under the
                                                   renewing eligibility. Regardless of an                  best mechanisms to facilitate States’                 April 2011 final rule establishing
                                                   applicant’s point of entry (directly                    ability to coordinate eligibility and                 enhanced funding for Medicaid
                                                   online at home, with a navigator or                     enrollment.                                           eligibility and enrollment activities, if
                                                   community organization/assister,                           We note that relationships between                 the system in its totality, including the
                                                   through the mail, or through a consumer                 the State Medicaid program and other                  Web site, meets certain standards and
                                                   assistance office established by the                    insurance affordability programs must                 conditions. Additional information on
                                                   Exchange), this shared eligibility service              be established in accordance with                     Web site specifications will be provided
                                                   would be used whenever the single                       section 1902(a)(5) of the Act, which                  in forthcoming guidance.
                                                   streamlined application for enrollment,                 specifies that a single State agency will                Because the Internet Web site may
                                                   discussed in section II.E.2 of this                     administer or supervise the                           serve as the primary mechanism
                                                   proposed rule, is initiated or whenever                 administration of the Medicaid program.               through which individuals
                                                   a renewal occurs.                                       When the Exchange or other entity is                  communicate with the agency, it must
                                                      We note that shared systems and the                  performing delegated functions, it must               be accessible to individuals with
                                                   Medicaid functions they perform are                     at all times conduct such business                    disabilities and persons who are limited
                                                   eligible for enhanced Federal financial                 consistent with the rules adopted by the              English proficient (LEP). At
                                                   participation (FFP) of 90 percent for                   Medicaid agency. This is further                      § 435.1200(d)(2) we propose that the
                                                   development (through December 31,                       discussed in section II.J of this proposed            agency must ensure accessibility of Web
                                                   2015) and 75 percent for operations (no                 rule.                                                 resources in accordance with the
                                                   time limit) if certain conditions and                      At § 435.1200(c)(3), we propose that               Americans with Disabilities Act and
                                                   standards are met. For additional                       the State Medicaid agency must certify                section 504 of the Rehabilitation Act,
                                                   information, see the April 19, 2011 final               criteria necessary for the Exchange to                and must take reasonable steps to
                                                   rule establishing enhanced funding for                  use in determining Medicaid eligibility               provide meaningful access for LEP
                                                   Medicaid eligibility and enrollment                     based on MAGI. This includes the                      persons. Accessibility needs of LEP
                                                   activities. Such systems are subject to                 applicable Medicaid MAGI standard for                 persons may be met by providing
                                                   cost allocation principles, per OMB                     parents and caretaker relatives, other                language assistance services, such as
                                                   Circular A–87 and guidance from CMS.                    adults, pregnant women, and children,                 translated information and ‘‘taglines’’
                                                   In addition, the entities and agencies                  as well as the criteria for determining               that inform LEP persons of the ability to
                                                   performing functions on behalf of one                   satisfactory immigration status, in                   talk to a multilingual staff person or an
                                                   another that involve the use or                         accordance with the Medicaid State                    interpreter.
                                                   disclosure of an individual’s health                    plan. We invite public comment on                        Web sites, interactive kiosks, and
                                                   information will be required to comply                  other eligibility rules or criteria that              other information systems would be
                                                   with the applicable business associate                  should be certified by the Medicaid                   viewed as being in compliance with
                                                   provisions of the Privacy and Security                  agency for Medicaid eligibility                       section 504 if they meet or exceed
                                                   Rules under the Health Insurance                        determinations made by the Exchange.                  section 508 standards, which ensure
                                                   Portability and Accountability Act of                   MAGI methodologies and Medicaid                       that Federal agencies’ electronic
                                                   1996.                                                   eligibility based on the applicable MAGI              information technology is accessible to
                                                      Section 435.1200(c)(2) proposes that                 standards are discussed in sections                   people with disabilities. The latest
                                                   State Medicaid agencies enter into one                  II.B.3 and II.E of this proposed rule.                Section 508 guidelines issued by the US
                                                   or more agreements with the Exchange                                                                          Access Board can be accessed at
                                                   and other insurance affordability                       2. Internet Web Site (§ 435.1200(d))
                                                                                                                                                                 http://access-board.gov/sec508/
                                                   programs as necessary to ensure                            Section 1943 of the Act says that no               standards.htm, and W3C’s Web Content
                                                   coordination of eligibility and                         later than January 1, 2014, States shall              Accessibility Guidelines (WCAG) 2.0
                                                   enrollment, including coordination with                 establish an Internet Web site, linked to             can be accessed at http://www.w3.org/
                                                   a Basic Health Program if applicable.                   the Web sites of other insurance                      TR/WCAG20/.
                                                   Details about the Basic Health Program                  affordability programs, through which
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                                                   will be included in forthcoming                         individuals may obtain information,                   3. Provision of Medical Assistance for
                                                   guidance. States may also use such                      apply for, and enroll in Medicaid. To                 Individuals Found Eligible for Medicaid
                                                   agreements to coordinate related                        accomplish this, States could, for                    by an Exchange (§ 435.1200(e))
                                                   activities, such as health plan                         example, create one enrollment Web site                  Consistent with sections 1413 and
                                                   management.                                             for information and enrollment in all                 2201 of the Affordable Care Act, under
                                                      States may design these agreements in                insurance affordability programs, or                  the coordinated system proposed in
                                                   different ways that reflect their                       they could establish a broad health care              these rules, if the Exchange finds that an
                                                   governance structures. We see three                     Web site that includes health insurance               individual is eligible for Medicaid, the
                                                   broad options. First, one or more of the                coverage, health care services and                    State Medicaid agency must enroll the


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                                                   51168                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   individual without further                              4. Transfer of Applications From Other                ineligibility. Issues related to the notices
                                                   determination of eligibility. This                      Insurance Affordability Programs to the               needed to effectuate coordinated
                                                   enrollment is subject to the rules                      State Medicaid Agency (§ 435.1200(f))                 eligibility will be addressed in future
                                                   established by the agency. We note that                    To ensure a coordinated eligibility                rulemaking.
                                                   the State Medicaid agency has the                       and enrollment process as directed by                 5. Evaluation of Eligibility for Other
                                                   responsibility to facilitate health plan                the Affordable Care Act and address
                                                   selection for enrolled individuals, but                                                                       Insurance Affordability Programs
                                                                                                           existing coordination rules for separate              (§ 435.1200(g))
                                                   may arrange with the Exchange to                        CHIP and Medicaid agencies in section
                                                   undertake this function. This could                     2102(b)(3)(B) of the Act, we propose a                   Section 1943(b)(1)(C) of the Act
                                                   include providing the individual with                   new § 435.1200(f). This provision                     directs States to ensure that any
                                                   available health plan options and                       includes and revises provisions                       individual who applies for, but is
                                                   transmitting enrollment transactions to                 previously covered under                              determined ineligible for, Medicaid or
                                                   the health plan, if applicable.                         § 431.636(b)(1) through (b)(3). Under                 CHIP is screened for eligibility for
                                                      As discussed in section II.B.3 of this                                                                     advance payment of the premium tax
                                                                                                           proposed § 435.1200(f), the State
                                                   proposed rule, for most individuals,                                                                          credit, cost sharing reductions, and
                                                                                                           Medicaid agency must adopt procedures
                                                   eligibility for Medicaid would be                                                                             enrollment in a qualified health plan
                                                   determined based on MAGI. As                            to promptly determine the eligibility of
                                                                                                           individuals assessed as potentially                   offered through the Exchange.
                                                   described in the Exchange proposed                                                                            Therefore, in § 435.1200(g)(1), we
                                                   rule, the scope of the final eligibility                Medicaid-eligible by other insurance
                                                                                                           affordability programs and, if eligible, to           propose that the Medicaid agency must
                                                   determinations made by the Exchanges                                                                          assess potential eligibility for other
                                                   is limited to those based on individuals                enroll them without delay.
                                                                                                              Under this proposal, individuals with              insurance affordability programs when
                                                   having MAGI-based income at or below                                                                          the agency determines that an
                                                                                                           household income below the applicable
                                                   the applicable MAGI standard. Note that                                                                       individual is not eligible for Medicaid.
                                                   in certain circumstances the State may                  MAGI level who are assessed as
                                                                                                           potentially Medicaid eligible by another                 While the Affordable Care Act does
                                                   establish procedures whereby the                                                                              not provide express authority for
                                                   Exchange will undertake Medicaid                        insurance affordability program would
                                                                                                           be quickly and easily enrolled in                     Medicaid to make eligibility
                                                   eligibility determinations on other                                                                           determinations for coverage through the
                                                   bases. Individuals who are not eligible                 Medicaid. Because all insurance
                                                                                                           affordability programs will be utilizing              Exchanges, sections 1943(b)(2) of the
                                                   for Medicaid based on MAGI, would be                                                                          Act and 1413(d)(2) of the Affordable
                                                   screened, using information provided                    a common process for MAGI-based
                                                                                                           eligibility determinations, an individual             Care Act do permit the agency to enter
                                                   on the application, for potential
                                                                                                           assessed by such a program as                         into a contract with the Exchange to do
                                                   Medicaid eligibility on other bases. As
                                                                                                           potentially Medicaid eligible based on                so. Absent such an agreement, the
                                                   appropriate, their applications and other
                                                                                                           MAGI should receive a seamless                        agency must promptly transfer the
                                                   relevant information would be
                                                                                                           determination from the Medicaid                       electronic account of individuals
                                                   transmitted to the Medicaid agency for
                                                                                                           agency, and no further action should be               screened as potentially eligible, via
                                                   a full Medicaid eligibility
                                                                                                           required of the applicant. For                        secure electronic interface, to the
                                                   determination. See section 155.345 of
                                                                                                           individuals with household income                     Exchange so that such individuals can
                                                   the Exchange proposed rule for
                                                                                                           above the applicable MAGI standard,                   receive an immediate eligibility
                                                   additional information. Further, all
                                                                                                           who are either assessed by an insurance               determination and, if eligible, be
                                                   applicants have the right to request and
                                                   receive a full determination of eligibility             affordability program as potentially                  enrolled without delay. This provision
                                                   on bases other than MAGI from the State                 eligible on a basis other than MAGI, or               assumes that verification of any
                                                   Medicaid agency.                                        who request an eligibility determination              information required only for eligibility
                                                      Section 435.1200(e) describes the                    on another basis, we propose that the                 in the Exchange, such as access to
                                                   standards for the Medicaid agency to                    Medicaid agency must conduct a full                   affordable employer-sponsored
                                                   promptly and efficiently enroll                         Medicaid eligibility determination in                 insurance, will be completed by the
                                                   individuals determined to be Medicaid                   the same manner as if their application               applicable program once the applicant’s
                                                   eligible by the Exchange. To accomplish                 had been submitted directly to the                    case is transferred. (Under current law
                                                   this, we propose that the agency                        agency.                                               and regulations, States also have the
                                                   establish procedures to receive, via                       We propose that the Medicaid agency                flexibility to have the State Medicaid
                                                   secure electronic interface from the                    establish procedures to receive the                   agency administer some or all of the
                                                   Exchange, the finding of Medicaid                       electronic account of any individual                  administrative functions for a separate
                                                   eligibility and the individual’s                        determined potentially Medicaid                       CHIP, including the determination of
                                                   electronic account, including all                       eligible by another insurance                         eligibility for such program.)
                                                   application information. We recognize                   affordability program, and to promptly                   We further propose that the electronic
                                                   that an actual transfer of data may not                 and without undue delay conduct an                    account transferred include the
                                                   occur, as the Medicaid agency and the                   eligibility determination in accordance               determination of ineligibility made by
                                                   Exchange may be utilizing a shared                      with the provisions set forth in                      the Medicaid agency as well as all
                                                   eligibility system. However, the legal                  § 435.911(c). The agency must not                     information provided on the single
                                                   responsibility for the electronic                       request any information already                       streamlined application and, as
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                                                   accounts and for further action, as                     obtained, or duplicate any eligibility                appropriate, verified by the State
                                                   appropriate, will transfer from the                     verifications already performed, by the               Medicaid agency. We note again that an
                                                   Exchange to the Medicaid agency. We                     other insurance affordability program                 actual transfer of data may not be
                                                   expect processes to occur in real time                  and included in the individual’s                      necessary, but legal responsibility for
                                                   whenever possible and, as noted earlier,                electronic account. Once the Medicaid                 the case will transfer from Medicaid to
                                                   we will be defining more detailed                       determination is complete, we propose                 the appropriate program. We also note
                                                   standards and other performance                         that the agency notify the insurance                  that the Exchange cannot reverse a
                                                   metrics, with State and stakeholder                     affordability program of the                          determination of Medicaid ineligibility
                                                   input, in subsequent Federal guidance.                  determination of Medicaid eligibility or              made by the Medicaid agency.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51169

                                                      In this and the Exchange proposed                    ways to achieve integration across                    addition, there have been concerns
                                                   rule, we propose that individuals                       Exchanges, Medicaid agencies and                      about whether States that contract out
                                                   determined ineligible for Medicaid                      CHIP.                                                 their eligibility determination capacity
                                                   based on MAGI, for whom the Medicaid                       Under Medicaid’s ‘‘single State                    would be able to effectively monitor and
                                                   agency is evaluating eligibility on the                 agency’’ requirement in section                       if necessary bring that capacity back ‘‘in
                                                   basis of being blind or disabled, may                   1902(a)(5) of the Act, as codified in                 house’’ if policy implementation issues
                                                   enroll in other insurance affordability                 § 431.10 and § 431.11, States must                    arose.
                                                   programs while a final Medicaid                         identify a ‘‘single State agency to                      Section 1413(d)(2)(B) of the
                                                   determination is pending. Once the                      administer or to supervise the                        Affordable Care Act reaffirms the single
                                                   Medicaid determination is completed, if                 administration’’ of the Medicaid                      State agency requirement by providing
                                                   the individual is Medicaid-eligible, such               program (that is, the Medicaid agency).               that nothing in the law ‘‘changes any
                                                   coverage would be terminated in favor                   This ensures that there is a single point             requirement under Title XIX that
                                                   of Medicaid, but if not Medicaid-                       of responsibility and accountability for              eligibility for participation in a State’s
                                                   eligible, coverage would continue                       proper administration of the State                    Medicaid program must be determined
                                                   through the other program. This avoids                  Medicaid program, including for                       by a public agency.’’ The proposed
                                                   unnecessary delays in coverage for                      eligibility determinations.                           regulation is consistent with this
                                                   individuals whose Medicaid eligibility                     We note, however, that the statute at              provision. Simultaneously, we solicit
                                                   determination process may be lengthy,                   1902(a)(5) specifically permits and in                comments on how these statutory
                                                   while avoiding any overlap in coverage                  some cases requires the single State                  provisions should apply in the context
                                                   for those eventually determined                         agency to delegate the authority to make              of Exchanges making Medicaid
                                                   Medicaid eligible based on blindness or                 eligibility determinations to certain                 eligibility determinations and simpler,
                                                   disability. Proposed § 435.1200(g)(2)                   other agencies. Current regulations                   more uniform eligibility criteria.
                                                   reflects the Medicaid agency’s                          provide for such delegation of eligibility
                                                                                                                                                                    In this rule, we propose to allow
                                                   responsibilities in effectuating this                   functions in § 431.10(c). The regulations
                                                                                                                                                                 Medicaid agencies to delegate eligibility
                                                   policy. We note that proposed 26 CFR                    at § 431.10(e) provide that, in delegating
                                                                                                                                                                 determinations for individuals whose
                                                   1.36B(2)(c)(2)(iii)(B) in the Treasury                  any single State agency functions, the
                                                                                                                                                                 eligibility will be determined according
                                                   proposed rule specifies that if an                      Medicaid agency retain authority to
                                                                                                                                                                 to MAGI to Exchanges that are public
                                                   individual receiving advance payments                   exercise administrative discretion in the
                                                                                                           administration or supervision of the                  agencies. Specifically, we propose to
                                                   of the premium tax credit is approved                                                                         permit Exchanges that are public
                                                   for Medicaid coverage, the individual is                plan, and that if other State or local
                                                                                                           agencies perform services for the                     agencies to make Medicaid eligibility
                                                   treated for purposes of eligibility for                                                                       determinations as long as the single
                                                   such credit, as eligible for minimum                    Medicaid agency, they must not have
                                                                                                           the authority to change or disapprove                 State Medicaid agency retains discretion
                                                   essential coverage no earlier than the
                                                                                                           any administrative decision of the                    in the administration or supervision of
                                                   first day of the first calendar month after
                                                                                                           Medicaid agency, or otherwise                         the plan. We note that if Exchanges are
                                                   such coverage is approved; thus, an
                                                                                                           substitute their judgment for that of the             established as a non-governmental
                                                   applicant who is being evaluated by the
                                                                                                           Medicaid agency in the application of                 entity as allowed by the Affordable Care
                                                   Medicaid agency for eligibility based on
                                                                                                           policies, rules and regulations issued by             Act, the coordination provisions in the
                                                   blindness or disability and who is
                                                                                                           the Medicaid agency. It is our                        law may mean the co-location of
                                                   provided with advance payments of the
                                                                                                           understanding that the use of this                    Medicaid State workers at Exchanges or
                                                   premium tax credit in the interim would
                                                                                                           delegation authority is widespread                    other accommodations to ensure
                                                   not be liable to repay such advance
                                                                                                           across the nation, and in some States,                coordination is accomplished. We
                                                   payments upon retroactive approval of
                                                   Medicaid during the period for which                    multiple State agencies separate and                  solicit comment on approaches to
                                                   advance payments were paid.                             apart from the State Medicaid agency, as              accommodate the statutory option for a
                                                      Since it would be inefficient and                    well as county agencies make Medicaid                 State to operate an Exchange through a
                                                   confusing to transfer and enroll                        eligibility determinations on behalf of               private entity, including whether such
                                                   individuals in other coverage, only to be               the single State agency and under its                 entities should be permitted to conduct
                                                   disenrolled from such coverage days or                  supervision. In all instances, the single             Medicaid eligibility determinations
                                                   even a few weeks later for enrollment in                State agency is responsible under the                 consistent with the law.
                                                   Medicaid, we propose to limit                           statute to set the rules for the program,                In § 431.10(c)(1)(iii), we propose to
                                                   application of the policy described to                  and to ensure that the determinations                 permit Medicaid single State agencies to
                                                   individuals whom the Medicaid agency,                   made are consistent with the statute.                 delegate their MAGI eligibility
                                                   in accordance with procedures in                           Related section 1902(a)(4) of the Act              determination function to Exchanges
                                                   proposed § 435.911(c)(3), is evaluating                 requires a State plan to provide for                  operated by governmental entities,
                                                   for eligibility on the basis of being blind             certain methods of administration,                    provided the single State agency
                                                   or disabled.                                            including the establishment of                        remains solely responsible for setting
                                                                                                           personnel standards on a merit basis.                 eligibility policies and is accountable
                                                   J. Single State Agency (§ 431.10 and                    We have historically advised States that              for ensuring the program operates
                                                   § 431.11)                                               public employees must make Medicaid                   consistently with such polices. In
                                                      As discussed in section II.I above, to               eligibility determinations. This position             § 431.10(c), we propose that the single
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                                                   ensure a fully coordinated eligibility                  has been based on the premise that                    State agency be responsible for ensuring
                                                   determination and enrollment process,                   certain activities in the eligibility                 that eligibility determinations are made
                                                   the Exchange proposed rule provides                     determination process cannot be                       consistent with its rules and that
                                                   that Exchanges will make Medicaid                       delegated to private entities because                 corrective actions are instituted as
                                                   eligibility determinations to effectuate                they involve discretion or value                      appropriate; that there is no conflict of
                                                   Section 1943(b)(B). For numerous                        judgment that are inherently                          interest by any agency delegated the
                                                   reasons, including the coordinated                      governmental in nature, and in such                   responsibility to make determinations;
                                                   enrollment process, we anticipate that                  instances we have stated that State merit             that eligibility determinations are made
                                                   States will want to consider different                  system employees must be utilized. In                 in the best interest of beneficiaries; and


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                                                   51170                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   that it guard against improper incentives               guidance provided by the Secretary                    eligibility for CHIP, States use the
                                                   or outcomes.                                            under sections 1902(e)(14)(A) and (E) of              methodologies for determining
                                                      We further propose to add new                        the Act. We are also adding other new                 household composition and income as
                                                   § 435.10(d)(l) through (5), and a                       terms related to the proposed                         those proposed for Medicaid at
                                                   conforming change to the introductory                   regulations.                                          § 435.603(b)–(h), as well as the
                                                   text at § 431.10(d), to provide that                                                                          exception, codified at proposed
                                                   agreements between single State                         2. State Plan Provisions (§ 457.305)
                                                                                                                                                                 § 435.603(i)(1), to permit States to rely
                                                   agencies and agencies making                               Section 2102(a)(5) of the Act directs              on a finding of income made by an
                                                   determinations must state the quality                   States to include a description of their              Express Lane Agency in accordance
                                                   control and oversight plans by the single               income eligibility standards in their                 with section 2107(e)(1)(E) of the Act. As
                                                   State agency to review determinations                   State plan. We propose to add a                       discussed in section II.B. of this
                                                   made by agencies making Medicaid                        reference to the new § 457.315 on                     proposed rule, our proposed MAGI-
                                                   eligibility determinations; that the                    application of MAGI and household                     based methods for determining
                                                   agencies making Medicaid eligibility                    income.                                               Medicaid eligibility mirror the section
                                                   determinations report to the single State               3. Application of MAGI and Household                  36B definitions of MAGI and household
                                                   agency; that confidentiality and security               Definition (§ 457.315)                                income, except in a very limited number
                                                   requirements in accordance with                                                                               of situations.
                                                   sections 1902(a)(7) and 1942 of the Act                    Under section 2102(b)(1)(B)(v) of the
                                                   for all beneficiary data are met; and that              Act, as added by section 2101(d)(1) of                   For a more detailed discussion of the
                                                   all agencies making Medicaid eligibility                the Affordable Care Act, beginning                    proposed financial methodologies based
                                                   determinations meet the requirements of                 January 1, 2014, States will use                      on MAGI to be applied to both CHIP and
                                                   1902(a)(4) relating to personnel                        ‘‘modified adjusted gross income’’                    Medicaid, see section II.B.1 and II.B.3 of
                                                   standards.                                              (MAGI) and ‘‘household income,’’ as                   this proposed rule.
                                                      Finally, we would retain the                         those terms are defined in section                    4. Other Eligibility Standards
                                                   requirement in § 431.10(e) that                         36B(d)(2) of the IRC, to determine
                                                                                                                                                                 (§ 457.320)
                                                   Medicaid agencies may not delegate the                  eligibility for CHIP, and for other
                                                   authority to exercise administrative                    purposes for which an income                             As discussed in section II.B.3.a and
                                                   discretion or issue policies and rules on               determination is needed, ‘‘consistent                 consistent with current practice in
                                                   program matters; that the authority must                with section 1902(e)(14)’’ of the Act,                almost all State CHIPs, assets will no
                                                   not be impaired if subject to review by                 which governs the application of MAGI                 longer be considered in determining
                                                   other entities; and that other entities                 and ‘‘household’’ income in Medicaid                  financial eligibility for Medicaid or
                                                   must not have the authority to change                   and which is implemented at proposed                  CHIP. Section 457.320(a) lists the
                                                   or disapprove any administrative                        § 435.603 of these rules. In addition,                various eligibility standards States may
                                                   decision of that agency, or otherwise                   section 2107(e)(1)(F) of the Act, as                  adopt for one or more groups of
                                                   substitute their judgment for that of the               added by section 2101(d)(2) of the                    children. We propose eliminating
                                                   Medicaid agency for the application of                  Affordable Care Act, states that section              ‘‘resources’’ and ‘‘disposition of
                                                   policies, rules and regulations issued by               1902(e)(14) be applied to CHIP ‘‘in the               resources’’ in conformance with the law.
                                                   the Medicaid agency.                                    same manner’’ as it is applied to
                                                                                                           Medicaid.                                                The Affordable Care Act also
                                                   K. Provisions of Proposed Regulation                       Currently, States use different                    eliminates the use of income disregards
                                                   Implementing Application of MAGI to                     methods for defining income and                       other than a disregard of 5 percent of
                                                   CHIP                                                    household composition under CHIP.                     income specified under section
                                                                                                           Many States operate their programs                    1902(e)(14)(I) of the Act. This means
                                                     Section 2101(d) of the Affordable Care
                                                                                                           through expansions of Medicaid                        that, as of 2014, States no longer will be
                                                   Act revises section 2102(b)(1)(B) of the
                                                                                                           coverage. Among States with separate                  able to raise their effective income
                                                   Act to ensure that, effective January 1,
                                                                                                           CHIP programs, some follow Medicaid                   standards for their CHIPs through the
                                                   2014, that States base income eligibility
                                                                                                           financial methodologies while others                  use of a ‘‘block of income’’ disregard.
                                                   for CHIP on MAGI and household
                                                                                                           rely on different methods, including                  The maximum income standard will be
                                                   income, as defined in section 36B of the
                                                                                                           gross income tests. While we recognize                the higher of 200 percent FPL, 50
                                                   IRC, consistent with section 1902(e)(14)
                                                                                                           that the statutory application of MAGI                percentage points above the applicable
                                                   of the Act. Below we outline proposed
                                                                                                           rules to CHIP represents a change for                 Medicaid income level defined in
                                                   changes to existing sections (§ 457.10,
                                                                                                           some States, doing so is consistent with              section 2110(b)(4) of the Act and
                                                   § 457.301, § 457.305 and § 457.320) of
                                                                                                           broader goals of coordination across                  § 457.301, and the effective income
                                                   the CHIP regulations, as well as the
                                                                                                           programs. The adoption of MAGI-based                  standard in effect in the State (taking
                                                   addition of new § 457.315, to implement
                                                                                                           methodologies to determine income for                 into account any income disregards
                                                   the CHIP MAGI components of the law.
                                                                                                           CHIP represents a necessary alignment                 adopted) as of December 31, 2013,
                                                   1. Definitions and Use of Terms                         with other insurance affordability                    converted to a MAGI-equivalent income
                                                   (§ 457.10 and § 457.301)                                programs and is particularly important                standard in accordance with section
                                                      We propose a nomenclature change,                    for families both because children will               1902(e)(14)(A) and (E) of the Act.
                                                   replacing the term ‘‘family income’’                    be moving among different programs as                 5. Clarifications Related to MAGI
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                                                   with ‘‘household income’’ wherever it                   family circumstances changes and
                                                   appears in 42 CFR part 457, and adding                  because CHIP-eligible children will                      Nothing in this regulation affects
                                                   a definition for ‘‘household income.’’                  often be in families where the parent is              existing rules regarding family size in
                                                   We propose to modify the term                           eligible for a premium tax credit                     States that take up the CHIP ‘‘unborn
                                                   ‘‘Medicaid applicable income level’’ to                 through the Exchange. Because the                     child option’’ (per the existing
                                                   clarify that the 1997 Medicaid                          statute provides that CHIP apply the                  definition of child at § 457.10). In States
                                                   applicable income level used in CHIP                    new MAGI methodologies in the same                    that provide coverage under the option
                                                   will also be converted to a MAGI-                       manner as Medicaid, we propose at                     at § 457.10, the unborn child is counted
                                                   equivalent income level, consistent with                § 457.315 that, in determining financial              in family size.


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                                                   L. Residency for CHIP Eligibility                       1. Applications and Outreach Standards                ensure that the method adopted by the
                                                   (§ 457.320)                                             (§ 457.330, § 457.334, § 457.335 and                  State for determining the effective date
                                                                                                           § 457.340)                                            of coverage will provide for a
                                                      CHIP regulations currently allow                                                                           coordinated transition of children
                                                   States the option to adopt eligibility                     We propose revisions to § 457.330
                                                                                                           similar to those proposed for Medicaid                between programs as family
                                                   standards related to residency. The                                                                           circumstances change, without gaps or
                                                                                                           at § 435.907 to implement the use of a
                                                   following changes to the regulations                                                                          overlaps in coverage.
                                                                                                           single, streamlined application for all
                                                   governing residency standards for
                                                                                                           insurance affordability programs, which               2. Determination of CHIP Eligibility and
                                                   separate CHIPs are proposed to ensure                   builds on the successful experience                   Coordination With Exchange and
                                                   coordination between all insurance                      many States have had with joint                       Medicaid (§ 457.348 and § 457.350)
                                                   affordability programs. Further                         Medicaid-CHIP applications.
                                                   discussion on the rationale behind the                     We propose adding § 457.335 and                       We propose to add new coordination
                                                   proposed changes can be found in                        modifying § 457.340(a) to set forth                   rules at § 457.348 to mirror the rules for
                                                   section II.C of this proposed rule.                     standards for the availability of program             Medicaid agencies at proposed
                                                                                                           information and application assistance,               § 435.1200(e) and (f), and to coordinate
                                                      We propose at § 457.320(d) to modify
                                                                                                           similar to those proposed for Medicaid                with the rules in 45 CFR § 155.345 of
                                                   the definition of residency for non-
                                                                                                           at § 435.905 and at § 435.908, discussed              the Exchange proposed rule. Proposed
                                                   institutionalized children who are not
                                                                                                           in section II.E.3 of this proposed rule.              § 457.348(a) and (b) would ensure that
                                                   wards of the State under CHIP to                                                                              State CHIP agencies promptly enroll
                                                   reference the Medicaid definition for                   We propose removing the mention of
                                                                                                           enrollment caps in § 457.340(a) to                    individuals determined eligible for
                                                   children at proposed § 435.403(i). As                                                                         CHIP by the Exchange, without
                                                   under § 435.403(i), for purposes of CHIP                support the role of CHIP agencies in
                                                                                                           accepting the single streamlined                      requiring additional information or
                                                   eligibility, a child under the proposed                                                                       making further determinations, and
                                                                                                           application and screening for all
                                                   rule is considered a resident of the State                                                                    promptly determine the eligibility of
                                                                                                           insurance affordability programs
                                                   in which he or she resides (for example,                                                                      (and, if eligible, enroll) individuals
                                                                                                           regardless of whether CHIP enrollment
                                                   with a parent or caretaker and including                is capped. To implement section                       determined potentially eligible for CHIP
                                                   without a fixed address), or in which a                 1943(b)(4)of the Act, relating to the                 by the State Medicaid agency.
                                                   parent or caretaker is employed or                      establishment of Web sites to facilitate              Consistent with current CHIP policy,
                                                   seeking employment, including seasonal                  application and enrollment in all                     proposed § 457.348(c) clarifies that
                                                   workers. The provisions of the proposed                 insurance affordability programs, we                  CHIP agencies may enter into
                                                   rule are not intended to effect a                       propose adding § 457.335 similar to the               arrangements with the State Medicaid
                                                   significant change in policy, and are                   rule proposed for Medicaid at                         agency to accept that agency’s
                                                   discussed in more detail in section                     § 435.1200(d), discussed in section II.I.             determinations of CHIP eligibility.
                                                   II.C.2 of this proposed rule. The                       of this proposed rule.                                   We also propose revisions to
                                                   provision at § 435.403(m) of the                           We propose to revise § 457.340(b) to               regulations at § 457.350, which
                                                   Medicaid rule, involving situations in                  specify that all CHIP agencies require                currently relate to the responsibilities of
                                                   which two or more States dispute a                      applicants who have an SSN to provide                 the CHIP agency to coordinate with
                                                   child’s State of residence, is also                     it. We recognize that the Privacy Act                 Medicaid. The proposed revisions are
                                                   applied under the proposed rule to                      makes it unlawful for States to deny                  consistent with those proposed for
                                                   CHIP; under that provision, physical                    benefits to an individual based upon                  Medicaid agencies at § 435.1200(g),
                                                   location governs.                                       that individual’s failure to disclose his             discussed in section II.I.5 of this
                                                                                                           or her Social Security number, unless                 preamble, and 45 CFR § 155.345 of the
                                                   M. CHIP Coordinated Eligibility and                     such disclosure is required by Federal                Exchange rule, discussed in section
                                                   Enrollment Process                                      law or was part of a Federal, State or                II.A.1 of the Exchange preamble.
                                                                                                           local system of records in operation                     Two of the proposed revisions to
                                                      Section 2101(e) of the Affordable Care               before January 1, 1975. However,                      § 457.350 warrant particular mention.
                                                   Act adds section 2107(e)(1)(O) to the                   section 1414(a)(2) of the Affordable Care             First, the standards at § 457.350, as
                                                   Act to apply to CHIP the same                           Act authorizes the Secretary to collect               revised, apply to all individuals who are
                                                   enrollment simplification standards                     and use SSNs where necessary to                       included as applicants on the single
                                                   described for Medicaid under the new                    administer the provisions of, and                     application—for example, parents and
                                                   section 1943 of the Act. These standards                amendments made by, the Affordable                    other adults in the household. Second,
                                                   build on existing practices and                         Care Act. We believe such section                     at § 457.350(j), we propose that, for
                                                   provisions in section 2102(b)(3)(B) of                  provides the authority for the                        children who do not appear Medicaid
                                                   the Act relating to coordinated                         requirement of SSNs when applicants                   eligible based on MAGI, but whom the
                                                   eligibility and enrollment between                      are using the coordinated system and                  CHIP agency identifies as potentially
                                                   Medicaid and CHIP. The regulatory                       streamlined application designed by the               eligible for Medicaid on another basis,
                                                   amendments proposed correspond to                       Secretary under section 1413 of the                   such as disability, the CHIP agency both
                                                   proposed changes and additions to                       Affordable Care Act. However, similar                 transmit the application and all
                                                   Medicaid at § 435.905 through                           to Medicaid, non-applicants cannot be                 pertinent information to the Medicaid
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                                                   § 435.908, § 435.916, § 435.917,                        required (but may be requested) to                    agency for a full Medicaid evaluation
                                                   § 435.940 through § 435.956, and                        provide an SSN. Consistent with                       and continue to process the CHIP
                                                   § 435.1200, discussed more fully at                     Medicaid regulations at § 435.910, the                determination, enrolling the child, if
                                                   sections II.D, II.E, II.G, II.H, II.I, and II.K         CHIP agency must not deny or delay                    eligible, in the program unless and until
                                                   of this proposed rule. We seek                          services to an otherwise eligible                     the child is determined eligible for
                                                   comments for CHIP on the issues raised                  applicant pending issuance or                         Medicaid. This is consistent with the
                                                   in these corresponding sections for                     verification of an applicant’s SSN.                   process proposed for the Exchange at 45
                                                                                                              We propose revisions to the effective              CFR 155.345 in the Exchange proposed
                                                   Medicaid.
                                                                                                           date of eligibility in § 457.340(f) to                rule and with the responsibilities of the


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                                                   Medicaid agency at proposed                             the Act), we propose revising § 457.380,              available. In proposed § 457.380(h), we
                                                   § 435.1200(f).                                          based on section 1413 of the Affordable               affirm that program integrity
                                                     We anticipate significant variation in                Care Act, relating to verification of                 responsibilities for CHIP are not affected
                                                   how States choose to operationalize the                 eligibility for separate CHIPs consistent             by this proposed regulation.
                                                   coordination of CHIP with other                         with the rules proposed for the                          Finally, we propose adding
                                                   insurance affordability programs, and                   Exchanges and Medicaid. Consistent                    § 457.380(i), similar to proposed
                                                   we will work with States to achieve the                 verification procedures prevent gaps in               § 435.948(f) and § 435.949(c) of the
                                                   high level of integration of processes,                 coverage caused by different programs                 Medicaid regulation, and to enable
                                                   which will be needed to effectuate the                  operating under different rules.                      States, with approval from the
                                                   coordination required and to avoid                         To better align all insurance                      Secretary, to modify the verification
                                                   duplication of costs and reduce                         affordability programs, we reference                  procedures used by its program. We
                                                   administrative burden on States,                        specific verification methods for                     solicit comments on alternative
                                                   children, and their families. At                        residency and income. Proposed                        verification methods that may help
                                                   proposed § 457.350(k), we note that                     § 457.380(c) references proposed                      improve coordination between CHIP
                                                   CHIP agencies may enter into                            regulations for verification of residency             and other insurance affordability
                                                   arrangements with the Exchange to                       for purposes of Medicaid eligibility at               programs.
                                                   make eligibility determinations for                     § 435.956(c), which also align with
                                                   advanced premium tax credits in                         proposed Exchange regulations at 45                   5. Ministerial Changes (§ 457.80,
                                                   accordance with section 1943(b)(2) of                   CFR 155.315(c). At proposed                           § 457.300, § 457.301, § 457.305 and
                                                   the Act.                                                § 457.380(d), we require separate CHIPs               § 457.353)
                                                                                                           to verify income in accordance with                     We are also proposing a number of
                                                   3. Periodic Redetermination of CHIP
                                                                                                           proposed Medicaid regulations at                      ministerial changes necessary to bring
                                                   Eligibility (§ 457.343) and Coverage
                                                                                                           § 435.948, which are coordinated with                 other sections of the current CHIP into
                                                   Months
                                                                                                           proposed Exchange regulations at 45                   conformance with the proposed changes
                                                      Under sections 1943(b)(3) of the Act                 CFR 155.320. As described in
                                                   and sections 1413(a) and 1413(c)(2) of                                                                        and revisions described above,
                                                                                                           § 435.945(b) and § 435.948, States may
                                                   the Affordable Care Act, we propose to                                                                        including revisions to § 457.80,
                                                                                                           continue to choose to accept self-
                                                   add new policies at § 457.343 to                                                                              § 457.300, § 457.301, § 457.305 and
                                                                                                           declaration of income, but must also
                                                   implement the data-driven renewal                                                                             § 457.353.
                                                                                                           request information from third-party
                                                   procedures for CHIP proposed for                        data sources in accordance with                       N. FMAP for Newly Eligible Individuals
                                                   Medicaid at § 435.916. For a fuller                     § 435.948 and to continue to comply                   and for Expansion States
                                                   discussion of the proposed renewal                      with program integrity requirements.
                                                   process, which we believe is consistent                                                                          The Affordable Care Act provides for
                                                                                                           States are not required under § 435.948
                                                   with current renewal processes in many                  to request third-party financial                      a significant increase in the FMAP for
                                                   States; see section II.G of this proposed               eligibility information that the State                medical assistance expenditures for
                                                   rule. The proposed data-driven                          determines is not useful to verifying the             individuals determined eligible under
                                                   verification system is also consistent                  financial eligibility of the applicant. For           the adult group in the State and who are
                                                   with the system proposed for the                        other eligibility criteria, we propose in             considered to be ‘‘newly eligible’’, as
                                                   premium tax credit determinations                       § 457.380(a) and (e) to continue to allow             defined in section 1905(y)(2)(A) of the
                                                   conducted by the Exchange.                              CHIPs to develop reasonable verification              Act. The increased FMAP specified in
                                                      In proposed 45 CFR § 155.410 of the                  procedures, including reliance on self-               section 1902(y)(1) of the Act is not
                                                   Exchange proposed rule published on                     declaration or attestation (except when               available for the medical assistance
                                                   July 15, 2011, eligibility begins on the                verifying citizenship or immigration                  expenditures for any individual who is
                                                   first day of the following month for all                status). However, we explicitly provide               not considered newly eligible. Under
                                                   qualified health plan selections made by                that States accept self-attestation of                section 1905(y)(2) of the Act, an
                                                   the 22nd of the previous month, and on                  pregnancy and household membership,                   individual is newly eligible if the
                                                   the first day of the second following                   as proposed for Medicaid in                           individual would not have otherwise
                                                   month for all qualified health plan                     § 435.956(e), unless the State has other              been determined eligible for Medicaid
                                                   selections made between the 23rd and                    information that is not reasonably                    under the eligibility provisions of the
                                                   last day of a given month. Similar to                   compatible with the attestation. We also              Medicaid State plan, demonstrations, or
                                                   Medicaid, we are seeking comment on                     provide standards for verifying age and               waivers in effect in the State as of
                                                   a provision that would continue CHIP                    date of birth.                                        December 1, 2009.
                                                   coverage until the end of the month                        The Affordable Care Act envisions a                1. Availability of FMAP (§ 433.10(c))
                                                   following the end of the appropriate                    data-driven verification system in order
                                                   termination notice period, subject to                   to improve the application experience                   We propose to amend 42 CFR part 433
                                                   certain exceptions. This policy, which                  for families while maintaining strong                 to add new provisions at § 433.10(c) to
                                                   we believe is the policy currently in                   program integrity. Mirroring standards                indicate the increases to the FMAPs as
                                                   operation in most CHIPs, would prevent                  being proposed for Medicaid at                        available to States under the Affordable
                                                   a gap in coverage for an individual or                  § 435.952 and the Exchange at 45 CFR                  Care Act. The following describes these
                                                   family moving from CHIP to the                          155.315, we propose adding § 457.380(f)               new FMAP provisions.
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                                                   Exchange. Further discussion of this                    to clarify that the State may only request            a. Newly Eligible FMAP (§ 433.10(c)(6))
                                                   issue can be found at section II.G. of this             additional information if it is not
                                                   proposed rule.                                          available electronically. Consistent with               In § 433.10, we propose to add a new
                                                                                                           proposed Medicaid regulations at                      paragraph (c)(6) to indicate the
                                                   4. Verification of Eligibility (§ 457.380)              § 435.948(b), we propose in § 457.380(g)              increased FMAP rates available to States
                                                      Consistent with the provisions of                    that States must use the electronic                   beginning January 1, 2014, for the
                                                   section 1413(c)(3)(A) of the Affordable                 service established by the Secretary                  medical assistance expenditures of
                                                   Care Act (applicable to CHIP through                    under proposed § 435.949 if reliable                  individuals determined eligible under
                                                   sections 1943(b)(3) and 2107(e)(1)(O) of                electronic data needed for verification is            the adult group who are considered to


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                                                   be newly eligible, as defined in section                by the Affordable Care Act. This new                  which are not, States must evaluate a
                                                   1905(y)(2)(A) of the Act.                               expansion State FMAP is equal to the                  large group of beneficiaries against the
                                                                                                           base FMAP plus a ‘‘transition                         State’s pre-Affordable Care Act
                                                   b. Expansion State FMAP (§ 433.10(c)(7)
                                                                                                           percentage’’ multiplied by the difference             eligibility rules. To do so on a case-by-
                                                   and § 433.10(c)(8))
                                                                                                           between the Newly Eligible FMAP                       case basis would require States to
                                                      In § 433.10, we propose to add new                   provided to States beginning in CY 2014               operate two eligibility systems or
                                                   paragraphs (c)(7) and (8) to indicate the               and the expansion State’s base FMAP.                  processes—one simplified system for
                                                   availability of additional FMAP rates for               The transition percentage is as follows:              the purpose of determining eligibility,
                                                   expansion States.                                         • 50 percent in CY 2014;                            and another different and more complex
                                                   (1) 2.2 Percentage Point Increase in                      • 60 percent in CY 2015;                            system to assign the appropriate FMAP
                                                   FMAP (§ 433.10(c)(7))                                     • 70 percent in CY 2016;                            rate. The two sets of rules would, in
                                                                                                             • 80 percent in CY 2017;                            turn, require Exchanges as well as State
                                                      Per section 1905(z)(1) of the Act, we                  • 90 percent in CY 2018; and                        Medicaid agencies to collect from
                                                   propose to add § 433.10(c)(7) to indicate                 • 100 percent in CY 2019 and every                  applicants information in excess of what
                                                   the availability of a general 2.2                       year thereafter.                                      is required for States to determine
                                                   percentage point increase to the base                     The following illustrates how the                   eligibility either for Medicaid or
                                                   FMAP of a State (as determined under                    expansion State’s FMAP would be                       premium tax credits available through
                                                   section 1905(b) of the Act) for certain                 calculated:                                           the Exchange.
                                                   expansion States, as defined in section                   Example. In CY 2019, assume the                        Running two distinct eligibility
                                                   1905(z)(3) of the Act. The general 2.2                  expansion State’s base FMAP is 60                     systems would pose challenges to
                                                   percentage increase to the base FMAP is                 percent. In CY 2019 the Newly Eligible                applicants, States, and the Federal
                                                   available only to a State that: (1) Meets               FMAP is 93 percent. Therefore, in this                government. Applicants would have to
                                                   the definition of expansion State; (2)                  example, in CY 2019 the expansion                     report and verify income, assets, and
                                                   does not qualify for any payments for                   State FMAP would be 93 percent,                       deductions under pre-Affordable Care
                                                   the full increased FMAP for individuals                 calculated as follows:                                Act rules, even though that information
                                                   who are newly eligible; and (3) has not                                                                       would no longer be required to
                                                                                                           E = F + (T × (N ¥ F))
                                                   been approved by the Federal                                                                                  determine eligibility. Similarly, States
                                                   government to use amounts of their DSH                  E = Expansion State FMAP                              and the Federal government would have
                                                   allotments for the costs of providing                   F = Expansion State’s Base FMAP
                                                                                                                                                                 to seek and verify information not
                                                   medical assistance or other health                      T = Transition Percentage
                                                                                                           N = Newly Eligible FMAP                               needed for eligibility determinations,
                                                   benefits coverage under a demonstration                 93% = 60% + (100% × (93% ¥ 60%))                      resulting in excess administrative
                                                   that was in effect on July 1, 2009. Only                                                                      burden and inefficiency, a result
                                                   for States that meet these 3 conditions,                  Beginning in 2020 both the expansion                counter to the goals of the Affordable
                                                   the base FMAP would be increased by                     State FMAP and the newly eligible                     Care Act.
                                                   2.2 percentage points for all                           FMAP will be 90 percent.                                 Because a double eligibility system is
                                                   expenditures in CYs 2014 and 2015 (to                   2. Methodology (§ 433.206(a) and                      burdensome and costly to States and the
                                                   which the base FMAP would apply).                       § 433.206(b))                                         Federal government, a barrier to
                                                   Since by definition, the base FMAP plus                                                                       enrollment for eligible individuals and
                                                   2.2 percentage points would only be                        One of the key steps in simplifying                families, and would likely lead to
                                                   available and applicable for                            the eligibility determination process for             inaccurate determinations, we have
                                                   expenditures for individuals who are                    individuals and States involves                       identified possible alternate approaches
                                                   not newly eligible, such general increase               developing a methodology that ensures                 for determining the appropriate FMAP
                                                   would be available for all individuals in               the Federal government will pay the                   rate. Specifically, this proposed rule
                                                   such States.                                            appropriate FMAP rate for both ‘‘newly                discusses the potential revision of
                                                                                                           eligible’’ individuals as well as for                 regulatory provisions in part 433 to
                                                   (2) Expansion State FMAP                                expenditures that are subject to the                  propose three alternative methodologies
                                                   (§ 433.10(c)(8))                                        expansion State FMAP rate. As                         which States could use for claiming
                                                      The increased FMAP discussed in                      discussed above, the Affordable Care                  expenditures at the appropriate FMAPs:
                                                   section II.N.1.a. of this proposed rule is              Act provides for streamlined eligibility              The regular FMAP, the newly eligible
                                                   available for individuals in the adult                  and enrollment policies and processes                 FMAP and the expansion State FMAP
                                                   group who are considered to be newly                    that are a departure from the more                    for individuals eligible for Medicaid
                                                   eligible. We propose to add                             complex pre-Affordable Care Act                       beginning in CY 2014 under the
                                                   § 433.10(c)(8) to indicate an additional                Federal Medicaid eligibility policy, but              provisions in sections
                                                   FMAP rate will be available for                         the pre-Affordable Care Act rules retain              1902(a)(10)(A)(i)(VIII) and 1905(y) and
                                                   expansion States for the expenditures                   relevance for the purposes of                         (z) of the Act as amended by the
                                                   for certain nonpregnant childless adults                determining the appropriate FMAP rate                 Affordable Care Act. The proposed rules
                                                   who are determined eligible under the                   for expenditures beginning in CY 2014.                would not permit FFP for the costs of
                                                   adult group, and who are not considered                 Although the new MAGI rules are used                  maintaining dual eligibility systems for
                                                   to be newly eligible, as defined in                     for purposes of determining eligibility               the adult group. HHS plans to test, with
                                                   section 1905(y)(2)(A) of the Act.                       for the adult group, the newly eligible               States, each of the proposed
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                                                      Beginning in CY 2014 and each year                   FMAP is not available for all                         methodologies and possibly others
                                                   thereafter, the expansion State FMAP                    individuals whose eligibility will be                 suggested through the comment process.
                                                   for medical assistance for individuals                  determined using MAGI; rather the                     Once the rules are finalized, CMS will
                                                   described in the adult group who are                    newly eligible FMAP is only available                 provide technical support to States as
                                                   nonpregnant childless adults is equal to                for those members of the adult group                  they adopt an identified methodology.
                                                   the base FMAP for the State increased                   who are determined to be newly eligible                  In developing the proposed claiming
                                                   by a certain percentage determined in                   as discussed in this regulation. In order             methods, in consultation with States
                                                   accordance with a formula specified in                  for States to determine which                         and subject matter experts, we
                                                   section 1905(z) of the Act, as amended                  beneficiaries are ‘‘newly eligible’’ and              identified and applied certain principles


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                                                   to assure that each method will                         correct FMAP rate in the development                  the process and allow for the provision
                                                   accurately reflect the application of the               of States’ claims for Federal funding in              of appropriate allocation of resources
                                                   appropriate FMAP. These principles are                  Medicaid: (1) Using upper income and                  within the State and at the Federal level.
                                                   also the criteria against which we will                 other thresholds across categorical                   We request comments on this minimum
                                                   measure the feasibility of the                          eligibility groups, taking into account               3-year period.
                                                   approaches proposed in this proposed                    the December 2009 eligibility standards                  As noted above, we are proposing to
                                                   rule and others that may be proposed                    in effect under State plans, waivers or               not provide the option of maintaining
                                                   during the comment period. First, any                   demonstrations and applicable                         double eligibility systems and
                                                   methodology must provide as accurate                    disregards and adjustments, to                        completing a determination for each
                                                   and valid application of the applicable                 approximate, in the aggregate, the                    individual under obsolete eligibility
                                                   FMAPs to actual expenditures as                         December 2009 standards; (2) using a                  rules for purposes of determining the
                                                   possible in the determination of the                    sampling methodology across                           appropriate FMAP because we believe
                                                   appropriate amounts of Federal                          individuals in the adult group and                    that this is neither necessary nor
                                                   payments for such expenditures. The                     related Medicaid expenditures to make                 efficient. Rather, we propose to rely on
                                                   methodology must not include a                          a statistically valid extrapolation of who            one or more alternate methodologies.
                                                   systemic bias in favor of either the                    is newly eligible and their related                   3. Alternative 1: 2009 Eligibility
                                                   States or the Federal government.                       expenditures; or (3) using an                         Standard Threshold
                                                   Second, any allowable methodology                       extrapolation from available data
                                                   should minimize administrative                          sources to determine the proportion of                   The ‘‘threshold methodology’’ would
                                                   burdens and costs to States, the Federal                individuals covered under the new                     allow States to use upper-income
                                                   government, individuals, and the health                 adult group who would not have been                   thresholds, as well as proxies for other
                                                                                                           eligible under the eligibility criteria in            eligibility criteria (such as assets or
                                                   care system. Third, any methodology
                                                                                                           effect under the State plan or applicable             disability status) across categorical
                                                   must be developed and applied
                                                                                                           waiver as of December 1, 2009,                        eligibility groups, taking into account
                                                   transparently by both the Federal
                                                                                                           validating and adjusting the estimate,                the December 1, 2009 eligibility
                                                   government and States. Fourth, any
                                                                                                           based on sampling or some other                       standards, to determine whether an
                                                   method must take into consideration the
                                                                                                           mechanism, going forward. We seek                     individual is considered to be newly
                                                   practical programmatic and operational
                                                                                                           comment on these three approaches.                    eligible for purposes of assigning a
                                                   goals of the Medicaid program. Finally,
                                                                                                              At § 433.206(a), we propose that a                 Federal matching rate. This
                                                   in order to ensure that the States claim
                                                                                                           State may opt to use any of the specified             methodology would use information the
                                                   expenditures at the correct FMAP, any
                                                                                                           alternatives discussed below. As                      individual supplied on their
                                                   methodologies used by the States                                                                              application, and other appropriate data
                                                   should include sufficient data to                       discussed further, these specific options
                                                                                                           may not ultimately be the methods                     sources, subject to appropriate
                                                   identify, associate and reconcile                                                                             verification and documentation
                                                   expenditures with the related eligibility               available, as we expect to modify,
                                                                                                           narrow or combine the proposed                        requirements, to assign the individual to
                                                   group to which the FMAPS apply. With                                                                          one of the categories that the Affordable
                                                   these principles in mind, we propose                    approaches in the final rule depending
                                                                                                           upon public comment and testing for                   Care Act subsumed into the adult group,
                                                   that States work in partnership with the                                                                      such as certain parents and caretaker
                                                   Federal government on technical                         feasibility. We are specifically interested
                                                                                                           in input as to what other options should              relatives, 19 and 20 year olds, and
                                                   support and review as well as ongoing                                                                         childless adults, and to then apply
                                                                                                           be considered, and whether it is
                                                   monitoring, verification, and adjustment                                                                      simplified eligibility criteria based on
                                                                                                           advisable for States to choose from
                                                   by States and the Federal government.                                                                         the rules in effect December 1, 2009 to
                                                                                                           among different methods or for HHS to
                                                   HHS plans to monitor State                                                                                    identify those who would have been
                                                                                                           identify a single method that all States
                                                   implementation and operations closely                                                                         eligible under the December 1, 2009
                                                                                                           would use.
                                                   and could require adjustments and                          If selection is available, we propose at           criteria. This option requires States to
                                                   changes to processes as necessary to                    § 433.206(b) that a State provide notice              apply the December 1, 2009 eligibility
                                                   ensure that systems are implemented in                  to CMS of which methodology it plans                  criteria, but in a simplified manner, to
                                                   an unbiased and accurate way. HHS is                    to use at least two calendar years prior              each Medicaid beneficiary who is
                                                   exploring mechanisms to verify                          to the first day of the calendar year in              included in the adult group. Based on
                                                   methodology results, including on-site                  which the State will use that particular              the threshold combined with proxies,
                                                   reviews, sampling and confirmation                      method, except for 2014 as discussed                  the individual would be determined to
                                                   with outside data sources, which could                  below. For example, a State would                     be newly eligible or an individual who
                                                   identify issues resulting in improper                   provide notice to CMS of the                          would have been eligible based on the
                                                   levels of FMAP being claimed. HHS will                  methodology it plans to use for CY 2017               December 2009 eligibility standards.
                                                   define procedures as needed to ensure                   no later than December 31, 2014. For the                 As previously noted, States will need
                                                   accurate reporting and verification of                  initial year (CY 2014), States would give             to establish income eligibility
                                                   computations to determine the                           notice to CMS no later than one year                  thresholds for MAGI populations to be
                                                   applicable FMAP potentially including                   prior to the beginning of the calendar                eligible for Medicaid under the State
                                                   enhanced monitoring and prospective or                  year, January 1, 2013. This allows States             plan, demonstration or a waiver of the
                                                   retrospective FMAP adjustments. States                  time to determine which method best                   plan using MAGI that are not less than
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                                                   and the Federal government each have                    meets their needs in that context and to              the effective income eligibility levels
                                                   a strong interest in an accurate,                       make preparations for the systems and                 that applied under the State plan,
                                                   simplified system, and we expect to                     eligibility determination modifications               demonstration or waiver on the date of
                                                   undertake these efforts in full                         needed for the initial years. We further              enactment of the Act (‘‘income standard
                                                   partnership with States.                                propose that once a State selects a                   conversion’’). States using the threshold
                                                      Given the principles discussed above,                methodology, it must use that method                  methodology similarly could convert
                                                   we are considering three main                           for a 3-year period, at a minimum,                    the income standards in effect as of
                                                   approaches to identifying newly eligible                subject to necessary monitoring and                   December 1, 2009 for other optional
                                                   individuals for purposes of applying the                adjustment. This will allow stability in              eligibility groups (for example, based on


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                          51175

                                                   disability) to MAGI-equivalent                          no additional proxies for a disability                failed eligibility for a specific group in
                                                   standards, against which the MAGI-                      determination need be applied.                        effect as of December 1, 2009 due to
                                                   based income of an individual eligible                     For the reasons noted, we are also                 possession of assets exceeding the asset
                                                   under the new adult group would be                      proposing that States using the                       limit. For example, if the State had an
                                                   compared for the purpose of                             threshold methodology identify                        optional disability group in December
                                                   determining whether such individual                     thresholds or proxies for estimating                  2009 with a resource test, and 15
                                                   would have been eligible under the                      whether individuals in the adult group                percent of applicants were denied
                                                   optional group and thus is newly                        meet any asset test that was applied to               coverage in that group because their
                                                   eligible or not. CMS will solicit State                 the applicant’s coverage category in                  assets exceeded the resource, the State
                                                   input and providing further guidance                    December 2009. The State would also                   could assume that 15 percent of the
                                                   and technical support on the income                     propose procedures for obtaining the                  disabled individuals with incomes
                                                   standard conversion process.                            information needed to compare the                     below the converted December 2009
                                                      We propose that States employing this                situation of individuals in the adult                 standard in the adult group would also
                                                   threshold methodology would also                        group to the proxy. For example a State               fail the asset test. The State would
                                                   establish, subject to CMS approval,                     might include a few simple questions                  therefore estimate the percentage of
                                                   proxies of eligibility criteria in place                during the application process to enable              individuals who were disabled in the
                                                   prior to CY 2014 that are not related to                comparison against the proxy, for                     adult group would be newly eligible.
                                                   income, such as disability status and                   example, ‘‘Excluding your primary                     We are interested in comments as to
                                                   asset value. For disability, for example,               residence and automobile, are your                    whether States have reliable data upon
                                                   proxies could be based on receipt of                    assets, including any savings or                      which this calculation could be made.
                                                   SSDI, screening questions included in                   checking accounts, stocks, bonds, or                     We also propose that once an
                                                   the application process (for example,                   other liquid assets, greater than X                   individual is determined to be either a
                                                   ‘‘Have you had an accident or illness                   dollars?’’ States could also use                      newly eligible individual or an
                                                   serious enough that it has caused and is                information on tax returns to obtain                  individual who would have been
                                                   still causing you to miss work for an                   information about assets via interest or              eligible under the December 2009
                                                   extended period of time?’’), retroactive                dividend income. We also are interested               standards for FMAP determination
                                                   claims review (to determine individuals                 in comments regarding the feasibility of              purposes, the determination would be
                                                   with significant medical problems),                     using the Asset Verification System                   applicable throughout the 12-month
                                                   some other method, or such methods in                   (AVS), required for all States under                  eligibility period after a person is
                                                   combination (for example, use of both a                 section 1940 of the Act as a tool to                  determined eligible. Our proposal is
                                                   screening question and retrospective                    obtain asset data on individuals in the               based on the observation that changes in
                                                   claims review). States would have to be                 adult group without asking for it                     income occur in both directions and are
                                                   clear with applicants that this                         directly.                                             not biased in one direction or the other.
                                                   information would not be used for an                       We also considered proposing that the              Our proposal is also based on the goal
                                                   eligibility determination purposes. We                  threshold methodology be limited to an                of achieving administrative simplicity,
                                                   are requesting comments on what                         individual’s income and not the assets/               which can best be obtained through a
                                                   methods or proxies could be used by                     resources when comparing the                          single annual FMAP determination for
                                                   States for disability status as well as                 individual against the December 2009                  an individual who remains enrolled in
                                                   whether there are any special                           eligibility criteria. This would allow                Medicaid, whether continuously
                                                   considerations which must be                            States to not collect asset information no            enrolled or not, rather than requiring a
                                                   considered in the identification or use                 longer needed for eligibility purposes                State to potentially make many such
                                                   of appropriate proxies for States that                  and it is consistent with analysis                    determinations over the course of a year.
                                                   apply a more restrictive definition of                  showing that only very small numbers                     Finally, we do not believe that States
                                                   disability than the SSI program.                        of people with income in this range will              need to consider whether an individual
                                                      Although we are looking for proxies                  have disqualifying assets. However,                   would have been eligible under a spend
                                                   for disability determinations to                        without evaluating assets, all                        down for a medically needy category
                                                   determine whether to claim enhanced                     individuals whose incomes are below                   under section 1902(a)(10)(C) of the Act
                                                   FMAP for an individual or not, we are                   the income threshold would not be                     in considering whether someone would
                                                   also considering the possibility of using               newly eligible, even though it is                     have been eligible under standards in
                                                   only actual disability determinations to                possible that some would not have been                effect in December 2009. This is because
                                                   ascertain the appropriate FMAP. Thus,                   eligible under the pre-Affordable Care                we believe that there is inherent
                                                   if an individual underwent an actual                    Act rules. Thus, if assets are not                    uncertainty in determining whether and
                                                   disability determination and was found                  considered there could be individuals                 when a spend down would have been
                                                   to be disabled, and met other criteria                  who would be newly eligible, but for                  met. An individual who is not yet
                                                   associated with a pre-Affordable Care                   whom the State could not claim                        ‘‘medically needy’’ because he or she
                                                   Act optional eligibility category for the               enhanced match. We believe this                       has not yet met the spenddown
                                                   disabled such that he or she would have                 methodology has merit as we recognize                 requirements would not be considered
                                                   been eligible as disabled in December                   there is a burden on States and to                    to be eligible for Medicaid under the
                                                   2009, that individual would not be                      beneficiaries in including an asset proxy             December 2009 standards. However, if
                                                   newly eligible. This proposal would be                  and that a significant portion of low-                an individual does qualify by meeting
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                                                   feasible to the extent that it is                       income individuals do not have assets                 the medically needy income standard
                                                   reasonable to expect that individuals                   in excess of those thresholds. We invite              without a spenddown, the State could
                                                   with disabilities have sufficient                       comment on both approaches.                           not claim enhanced FMAP for that
                                                   incentives to undergo disability                           In lieu of additional questions on an              individual.
                                                   determinations, most likely to obtain                   application for coverage asking about                    The threshold methodology would
                                                   disability-related cash benefits, such                  assets, we are also considering allowing              require ongoing monitoring,
                                                   that a proxy is not necessary. We are                   States to develop an estimate based on                verification, and adjustment. States
                                                   soliciting comments on whether                          actual data on the proportion of                      using the threshold methodology would
                                                   adequate incentives do exist such that                  individuals applying for coverage who                 need to work with CMS to verify this


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                                                   51176                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   methodology for a sample of cases                       time. We also believe that guidance on                entire year for the purpose of FMAP
                                                   within the first 2 years of use to test                 the inclusion of specific demonstration-              determination. Our proposal is based on
                                                   whether the threshold methodology is                    related issues would be best provided                 the observation that switches occur in
                                                   accurate and valid. We propose to                       through subregulatory guidance to allow               both directions and are not biased in
                                                   undertake a periodic review, working                    better consideration of State-specific                one direction and the administrative
                                                   collaboratively with States to evaluate                 issues, as well as to provide an                      simplicity that can be obtained through
                                                   the accuracy of the threshold                           opportunity to refine the specific                    a single annual determination is
                                                   methodologies and make adjustments to                   methodologies and requirements.                       preferred.
                                                   improve the accuracy of the threshold,                     For all individuals selected for the                  The State would pull all medical
                                                   as needed. We propose that adjustments                  sample, the State would perform the                   expenditures for the prior 12 months for
                                                   to the methodology would be                             equivalent of a full eligibility                      the individual. If the individual is
                                                   prospective only. Once a State has an                   determination using the eligibility                   enrolled exclusively in a managed care
                                                   approved methodology, that                              standards in place in that State as of                organization (MCO), for which the State
                                                   methodology would apply unless and                      December 2009. Each individual in the                 makes a capitated monthly payment to
                                                   until a review process indicated that                   sample would be determined to be                      an MCO, the State would consider the
                                                   adjustment was necessary. Finality and                  either a newly eligible individual or an              risk-adjusted monthly payment to the
                                                   certainty are important for the operation               individual who would have been                        MCO as the full medical assistance
                                                   of the program.                                         eligible under the December 2009                      expenditure for that individual for each
                                                                                                           standards. We propose that States                     month the individual is so enrolled.
                                                   4. Alternative 2: Statistically Valid                   should submit their sampling plans to                 Otherwise, the medical expenditures for
                                                   Sampling Methodology (§ 433.210)                        CMS with adequate time for review and                 each individual are equal to the actual
                                                      At § 433.210, we are proposing the                   approval in advance of implementation,                expenditures made to providers for
                                                   standards for States to use sampling to                 preferably not later than the first day of            items and services provided to that
                                                   extrapolate the correct expenditures for                the calendar year for which the State                 individual. It does not include any
                                                   which the State would receive the                       will implement that plan.                             Medicaid supplemental payments that
                                                   FMAP rate for newly eligible                               We propose that the State would pull               are not associated with medical
                                                   individuals established under the                       the claims for each selected individual               assistance payments made for specific
                                                   Affordable Care Act. Sampling is the                    to determine actual expenditures for the              items and services provided to a specific
                                                   statistical practice of selecting a random              sample. The State would determine the                 individual.
                                                   and unbiased subset of Medicaid                         proportion of actual expenditures in the                 We propose that the State complete
                                                   eligible individuals and their related                  sample that were for newly eligible                   the sampling and related expenditure
                                                   expenditures. We believe that a                         individuals and extrapolate this                      analysis no later than 2 years after the
                                                   statistically valid sampling plan is a                  proportion to the population sampled to               completion of the designated year. The
                                                   transparent, and widely accepted                        determine the correct allocation of                   State will retroactively apply the FMAP
                                                   methodology of allocating costs. OMB                    expenditures for which the State would                to the correct year and make any
                                                   Circular A–87 revised establishes                       make a claim at the FMAP rate for                     necessary prior period adjustments to
                                                   principles and standards for                            newly eligible individuals established                the CMS–64 expenditure report to
                                                   determining costs for Federal awards                    under the Affordable Care Act. We                     assure accurate Federal funding. We
                                                   carried out through grants, cost                        believe this methodology would most                   will work with States to meet the
                                                   reimbursement contracts, and other                      accurately determine a weighted                       proposed time frame to ensure their
                                                   agreements with State and local                         expenditure proportion from actual                    ability to claim the enhanced funding.
                                                   governments and Federally-recognized                    claims to apply to the adult group.                      We propose that the State would
                                                   Indian tribal governments. We propose                      We also considered using a                         claim based on the most recent data for
                                                   that States using this methodology                      methodology in which a per capita                     the current year. We understand that the
                                                   would use a statistically valid sampling                expenditure would be determined for                   State will not have accurate data based
                                                   methodology meeting the requirements                    the adult group. States would apply this              on the actual year’s enrollment and
                                                   of OMB A–87.                                            per capita expenditure amount                         expenditures until after the finish of
                                                      To ensure consistency, we propose to                 proportionately to determine the                      that year. Therefore, we propose to
                                                   specify the additional standards States                 appropriate FMAP claiming. We believe                 allow States to make interim claims for
                                                   would need to use to perform a                          this methodology may allow for greater                the FMAP rate for newly eligible
                                                   statistically valid sample of the                       ease of administration, but seek                      individuals established under the
                                                   population of individuals covered under                 comment on whether this would reflect                 Affordable Care Act. These claims
                                                   the new eligibility group created by the                a fair allocation of expenditures to each             would be based on the most recent year
                                                   Affordable Care Act, to determine the                   distinct population.                                  for which a State has statistically valid
                                                   proportion that would not have been                        We propose that States would perform               data. For example, in CY 2020, if a State
                                                   eligible based on the State’s December                  a statistically valid sample for the year             had a completed sample for CY 2018,
                                                   2009 eligibility standards, and therefore               in which the State is claiming. This                  but was finalizing its sample and related
                                                   be newly eligible. We propose to specify                sample would be based on the entire                   extrapolation for CY 2019, the State
                                                   standards within this regulation as well                adult group population, from which the                would use the data from the CY 2018
                                                   as in accompanying guidance relating to                 State would randomly select Medicaid                  sample and apply the FMAP according
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                                                   sample size and specifics of sampling                   eligible individuals on a monthly basis,              to the CY 2018 findings. Once the State
                                                   techniques, etc. We believe this will                   in accordance with CMS’ sampling                      completes the CY 2020 sample, it will
                                                   allow HHS to work with States to refine                 guidelines. Once individuals are                      retroactively adjust the CY 2020
                                                   specific sampling requirements and                      determined in that month of review to                 expenditures claimed on the CMS–64 to
                                                   procedures as we gain experience over                   be either a newly eligible individual or              incorporate the actual data from 2020
                                                   time. For example, we anticipate the                    an individual who would have been                     (the process for CYs 2014 and 2015 is
                                                   sample size requirements may evolve as                  eligible under the December 2009                      discussed below). We solicit comment
                                                   we gain experience with actual data                     standards, the State would apply that                 on this estimation and reconciliation
                                                   becoming available and tested over                      eligibility determination throughout the              process.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                         51177

                                                      We propose that States will continue                 eligible’’ population. The State would                   Under this model, States would use
                                                   to sample on an annual basis for the first              use this information to determine the                 the estimated proportions in claiming
                                                   consecutive three years the State                       appropriate estimated expenditure                     FFP for medical assistance expenditures
                                                   implements a sampling methodology.                      proportions to claim at the respective                for newly eligible individuals. Because
                                                   For all following years, we propose that                FMAP rates for the initial years.                     the model and estimated proportions
                                                   the State would sample on a 3-year                         We propose to allow Federal match                  would be available prior to each year,
                                                   basis.                                                  based on the estimate until the actual                the State would claim expenditures and
                                                      For the initial years (CYs 2014 and                  data became available and sampled in                  draw down Federal funds in real time.
                                                   2015), we propose to allow States to                    accordance with the methodology                       There would be no need for a retroactive
                                                   calculate and apply a reasonable                        established above. The State would                    adjustment. Rather, the verification to
                                                   estimate of the expenditures claimed at                 make a retroactive claims adjustment on               actual claims beginning in CY 2016
                                                   the Newly Eligible and expansion State                  the CMS–64 based on the actual data                   would apply to correcting for future
                                                   FMAP rates established under the                        from CY 2014.                                         years by adjusting the model.
                                                   Affordable Care Act and make the                           Alternatively, in the second option we                We have reviewed current Federal
                                                   retroactive adjustment described above                  propose to allow States to use a CMS                  analytic models created for other
                                                   based on CY 2014 data extrapolated                      established estimate of the proportion                purposes to determine if they could
                                                   using the State’s sampling methodology.                 and per capita expenditures for the                   estimate the potential impact of
                                                   We would allow States to create a                       projected newly eligible for CY 2014                  eligibility changes in the Affordable
                                                   reasonable estimate in one of two ways:                 based on currently available State-                   Care Act. We believe these models may
                                                   (a) Based on a State’s statistically valid              specific data (for example using MEPS                 have merit and may be an appropriate
                                                   sample of low-income populations that                   data, a combination of MEPS and MSIS                  starting point for creating estimates for
                                                   reasonably approximates the expected                    data, or other existing data sources). We             payment purposes beginning CY 2014.
                                                   Medicaid adult group; or (b) based on a                 propose to establish the proportion of
                                                                                                                                                                 We are also considering a model in
                                                   HHS developed estimate of the                           newly eligible individuals and per
                                                                                                                                                                 which HHS develops an algorithm to
                                                   proportion of newly eligibles and per                   capita expenditure amounts that each
                                                                                                                                                                 determine, for each State, the
                                                   capita expenditures for the projected                   State could use in estimating FMAP for
                                                                                                                                                                 appropriate percentages of Medicaid
                                                   newly eligibles that HHS would develop                  the initial years. We would publish the
                                                                                                                                                                 enrollees with a given set of
                                                   and test in collaboration with States by,               estimates for State use for CY 2014 no
                                                                                                                                                                 characteristics (such as income, age,
                                                   for example, using a combination of                     later than January 1, 2013 to ensure
                                                                                                                                                                 assets, family structure, disability
                                                   Medical Expenditure Panel Survey                        States have sufficient time to
                                                                                                                                                                 status) who would be considered newly
                                                   (MEPS) and Medical Statistical                          incorporate the data and create
                                                                                                                                                                 eligible or not newly eligible under the
                                                   Information System (MSIS) data, or                      reasonable estimates.
                                                                                                              We propose to provide Federal match                December 2009 eligibility rules for
                                                   other existing data sources. In the first
                                                                                                           based on the estimate until the actual                purposes or applying the related FMAP.
                                                   option, we propose to allow States to
                                                                                                           data became available and sampled in                  The algorithm would estimate for
                                                   calculate the projected per capita
                                                                                                           accordance with the CMS-established                   example, that 90 percent of the adults
                                                   expenditures for the newly eligible
                                                                                                           sampling requirements established in                  with a child with income between 100
                                                   population based on a sample of the
                                                                                                           this regulation and in future                         percent and 110 percent of the FPL in
                                                   low-income population of those
                                                                                                           subregulatory guidance or validated in                a specific State would not have been
                                                   individuals enrolled in and appearing to
                                                   be potentially eligible for Medicaid as of              another way. If sampling were chosen as               eligible under the old rules. Then, the
                                                   CY 2014. The States would use the                       a validation method, we propose to                    State would count the number of adult
                                                   sampling methodology guidelines                         require that States would implement a                 Medicaid enrollees in CY 2014 who had
                                                   applied to the population of State                      statistically valid sample methodology                a child and whose income was between
                                                   residents (Medicaid enrollees and other                 throughout CYs 2014 and 2015 to                       100 percent and 110 percent of FPL, and
                                                   low-income individuals) that                            determine the correct proportion of                   would receive the Newly Eligible FMAP
                                                   approximated the expected Medicaid                      newly eligibles and expenditures to                   for 90 percent of their expenditures, and
                                                   eligible adult group. We propose that                   claim at the 100 percent FMAP for CYs                 the base FMAP for 10 percent.
                                                   States submit a sampling plan                           2014 and 2015, respectively. The State                   We propose to review, evaluate, and
                                                   demonstrating compliance with OMB                       would make a retroactive adjustment                   potentially expand upon existing
                                                   Circular A–87 and, other requirements                   based on the actual data from CY 2014.                models to develop an acceptable
                                                   specified within this rule and other                       We consider this concept to be similar             estimate to be the basis for determining
                                                   CMS sampling guidance. The                              to an interim rate payment                            FMAP. We are specifically interested in
                                                   methodology must include not only a                     methodology. It allows for the State to               receiving comments on the data sources
                                                   description of the population from                      receive the increased FMAP rate for a                 that should be considered for inclusion
                                                   which the sample will be pulled prior                   reasonable estimate of newly eligible                 in the model. We believe MSIS and
                                                   to CY 2014, but also how the chosen                     individuals and settle to actual                      MEPS data likely to be the most useful
                                                   population approximates the adult                       expenditures when the data is available.              and relevant data sources available
                                                   group. States would complete the                        We are soliciting comments on this                    consistently for all States. We propose
                                                   sample and expenditure extrapolation                    approach.                                             to not limit the data sources we may
                                                   in accordance with a sampling plan                                                                            choose to review and incorporate into a
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                                                                                                           5. Alternative 3: Use of a FMAP                       predictive model as long as the data
                                                   prior to January 1, 2014.
                                                      We propose that States use data from                 Methodology Based on Reliable Data                    sources are relevant, accurate and
                                                   the sample to calculate the projected                   Sources (§ 433.212)                                   available in a timely manner to both the
                                                   proportion of newly eligible                               We are also proposing an option for                Federal government and the State. We
                                                   individuals, as well as per capita                      States to use State specific estimates                believe the modeling process, as well as
                                                   expenditures for such individuals. The                  established by the Secretary using                    the data sources used to create the
                                                   State would use MSIS data and                           reliable data sources such as MEPS data               specific models must be fully tested,
                                                   Medicaid experience to estimate                         or State MSIS data. This option is                    transparent and readily available to
                                                   expenditures for the ‘‘would have been                  described in proposed § 433.212.                      States.


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                                                   51178                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                      We further propose that we would                     stated above in the other data source                 this rule would result in a reduction in
                                                   annually establish a model to                           methodology. While sampling might be                  burden for individuals applying for or
                                                   reasonably predict in an unbiased way                   necessary in the initial years, as                    receiving coverage, as well as for States.
                                                   the appropriate proportion of                           confidence in the accuracy of the other               Although there are short-term burdens
                                                   expenditures (that is, State-specific                   method increased, sampling could be                   associated with implementation of this
                                                   rates) to determine the amount each                     required on a less frequent basis (for                proposed rule, over time the Medicaid
                                                   State could claim using the ‘‘Newly                     example, once every 3 to 5 years),                    program would be made substantially
                                                   Eligible’’ FMAP. We propose to solicit                  thereby diminishing the burden                        easier for States to administer and for
                                                   and integrate public input into the                     otherwise imposed by sampling, or we                  individuals to navigate by streamlining
                                                   development of the final modeling                       could see using the threshold                         Medicaid eligibility, simplifying
                                                   estimate. The State-specific rates would                methodology for simpler, more straight-               Medicaid and CHIP eligibility rules for
                                                   be finalized and made public no later                   forward cases and sampling for more                   most individuals, and creating a
                                                   than October 1 of the year prior to the                 complicated ones. We invite comments                  coordinated process that results in a
                                                   calendar year in which the State would                  on using a hybrid approach.                           seamless enrollment experience across
                                                   implement the methodology. For CY                          In addition, regardless of which                   Medicaid, CHIP, and the new affordable
                                                   2014, we would establish and publish                    approach is ultimately employed, we                   insurance Exchanges.
                                                   the State-specific rates by October 1,                  intend to monitor the effects and impact                 At the same time, CMS is undertaking
                                                   2012.                                                   of that method over time and make                     a number of business process, structural
                                                      We solicit comments on the potential                 refinements as necessary. We are                      and system improvements designed to
                                                   of creating accurate State specific                     interested in assuring that the                       support modernized IT systems and
                                                   estimates given the available data                      alternatives proposed are viable in the               streamline the manner in which it
                                                   sources and the limitations of each. We                 sense that States can implement them in               works with States and to minimize
                                                   also are requesting comments on other                   a meaningful way. We solicit comments                 burdens in review and approval
                                                   possible approaches to compensate for                   on how each method may be                             processes. A new reliance on automated
                                                   the potential limits on State-specific                  operationalized and what challenges or                information sources and data-sharing
                                                   data to create robust accurate estimates                obstacles a State may face in doing so.               across agencies and programs will
                                                   at the State level.                                     We also seek comment on analytical
                                                      Beginning in CY 2016, we propose to                                                                        facilitate enrollment and renewal. In
                                                                                                           approaches that CMS should consider                   addition, the business process,
                                                   integrate validation measures, such as                  using when comparing the relative
                                                   statistically valid sampling                                                                                  structural and data system
                                                                                                           feasibility, validity, and reliability of the         improvements underway at CMS are
                                                   methodologies, into the model to verify                 methods proposed above.
                                                   and assure the data accuracy. This                                                                            designed to create an environment
                                                   verification of actual claims would                     III. Collection of Information                        where a significant proportion of the
                                                   apply to correcting for future years by                 Requirements                                          interactions between States and the
                                                   adjusting the model. For example, we                       Under the Paperwork Reduction Act                  Federal government can take place
                                                   would work with selected States in each                 of 1995, we are required to provide 60-               through a Web-based information portal.
                                                   year to pull a random sample of                         day notice in the Federal Register and                For example, we anticipate that CMS
                                                   Medicaid enrolled individuals in the                    solicit public comment before a                       will have developed a Web-based
                                                   adult group. We would then work with                    collection of information requirement is              system for States to submit the State
                                                   the State to apply the State’s December                 submitted to the Office of Management                 plan amendments that will be needed to
                                                   1, 2009 eligibility standards to                        and Budget (OMB) for review and                       implement the Medicaid and CHIP
                                                   determine the proportion of individuals                 approval. In order to fairly evaluate                 programmatic modifications and that
                                                   that are newly eligible and the                         whether an information collection                     the system itself, for submission,
                                                   proportion that would have been                         should be approved by OMB, section                    review, and approval will be
                                                   eligible under the standards at that time.              3506(c)(2)(A) of the Paperwork                        significantly more streamlined. It is not
                                                   We would then determine actual                          Reduction Act of 1995 requires that we                possible at this point to quantify the
                                                   expenditures for those individuals to                   solicit comment on the following issues:              impact of these changes in terms of
                                                   determine the appropriate proportion of                    • The need for the information                     burden, but we believe that the
                                                   expenditures to be claimed at the Newly                 collection and its usefulness in carrying             estimates included in this collection of
                                                   Eligible FMAP rate. We propose that                     out the proper functions of our agency.               information discussion likely overstate
                                                   such sampling methodology be                               • The accuracy of our estimate of the              the actual burden on States. The
                                                   transparent to States. We further                       information collection burden.                        foundation for this is established
                                                   propose to employ a public notice and                      • The quality, utility, and clarity of             through a final rule that enables States
                                                   comment process to assure the                           the information to be collected.                      to receive a 90 percent Federal matching
                                                   integration of State and other                             • Recommendations to minimize the                  rate for design, development,
                                                   stakeholder concerns into a final                       information collection burden on the                  installation or enhancement of
                                                   verification system.                                    affected public, including automated                  eligibility determination systems
                                                                                                           collection techniques.                                through December 31, 2015, for those
                                                   6. Additional Methodology Approaches                       This proposed rule would implement                 States meeting a series of specified
                                                      We are requesting comments and                       provisions of the Affordable Care Act                 standards and conditions. In addition,
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                                                   suggestions on hybrid approaches that                   that expand access to health coverage                 enhanced funding at a 75 percent
                                                   incorporate all of the alternatives listed.             through improvements in Medicaid and                  Federal matching rate is available for
                                                   We believe that the above-described                     CHIP; ensure coordination between                     States to maintain and operate their
                                                   alternatives could be combined, so as to                Medicaid, CHIP, and the new Affordable                eligibility systems, subject to the
                                                   achieve the benefits, while mitigating                  Insurance Exchanges (which are                        conditions noted above. The estimates
                                                   the downside of each. Thus, sampling                    proposed in a separate NPRM under RIN                 of the impact of these changes and the
                                                   could be used to verify and improve                     0938–AR25); and simplify the                          additional Federal support in this area
                                                   upon the accuracy of the estimates made                 enrollment and renewal processes.                     are discussed in more detail in the final
                                                   under the threshold methodology or as                   Taken together, the policies proposed in              rule published on April 19, 2011 (76 FR


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                           51179

                                                   21950) entitled ‘‘Federal Funding for                   (j); 457.380(a), (c), (d), (e), (f), (g), (h),        States and individuals. The State of
                                                   Medicaid Eligibility Determination and                  and (i); and 457.390;                                 Utah’s eFIND system provides an
                                                   Enrollment Activities.’’                                   Choice of Methodology for                          example of a successfully streamlined
                                                      Information collection requirements                  Determining Expenditures Claimed at                   verification process. eFIND gathers data
                                                   (ICRs) are outlined below that involve                  FMAP Rate for Newly Eligibles:                        from more than 15 Federal and State
                                                   Medicaid and CHIP eligibility                           §§ 433.206(b); 433.208(b); 433.210(a);                sources including wage reporting, SSA,
                                                   determinations and enrollment. We are                   and 433.212(a);                                       the SAVE system, and child support to
                                                   soliciting public comment on each of                       Single, Streamlined Application:                   verify Medicaid eligibility for applicants
                                                   these issues for the following sections of              §§ 435.907 and 457.330;                               in real time. The State has estimated
                                                   the proposed rule that contain ICRs. We                    Collection of Applicant’s Social                   that eFIND has reduced the processing
                                                   used data from the Bureau of Labor                      Security Number: §§ 435.907(e) and                    time for an eligibility determination
                                                   Statistics to derive average costs for all              457.340(b); and                                       from 17 minutes down to 3 minutes,
                                                   estimates of salary in establishing the                    Revisions to CHIP Annual Reporting                 saving the State $2.1 million in the first
                                                   information collection requirements.                    Template System (CARTS): § 435.907(e),                year.
                                                   Salary estimates include the cost of                    § 457.353.                                               The specific burden associated with
                                                   fringe benefits, calculated at 35 percent               A. ICRs Regarding Program Information                 the written agreements for data sharing
                                                   of salary, which is based on the March                  (§§ 435.905 and 457.335)                              is the time and effort necessary for the
                                                   2011 Employer Costs for Employee                                                                              State to modify existing agreements
                                                                                                             Amendments are proposed to
                                                   Compensation report by the U.S. Bureau                                                                        with applicable agencies for the
                                                                                                           § 435.905 for Medicaid and § 457.335 for
                                                   of Labor Statistics.                                                                                          collection of this information. We
                                                                                                           CHIP that would require Medicaid and
                                                      Finally, in calculating the estimates of                                                                   estimate that 53 State Medicaid agencies
                                                                                                           CHIP State agencies to disclose program
                                                   burden on States, it was important to                                                                         (the 50 States, the District of Columbia,
                                                                                                           information to the public electronically.
                                                   take into account the Federal                                                                                 Northern Mariana Islands, and
                                                                                                           These provisions are necessary to
                                                   government’s contribution to the cost of                                                                      American Samoa) will be subject to this
                                                                                                           ensure that Medicaid and CHIP program
                                                   administering the Medicaid and CHIP                                                                           requirement. We estimate it will take
                                                                                                           information is available on the Internet
                                                   programs. The Federal government                                                                              each State an average of 30 hours to
                                                                                                           Web site where individuals and families
                                                   provides funding based on a Federal                                                                           modify agreements with the appropriate
                                                                                                           can explore their coverage options and
                                                   Medical Assistance Percentage (FMAP)                                                                          agencies. For the purpose of the cost
                                                                                                           submit an application.
                                                   that is established for each State based                  In a review of State Web sites, we                  burden, we estimate it will take a health
                                                   on the per capita income in the State as                found that all 50 States and the District             policy analyst 20 hours, at $43 an hour,
                                                   compared to the national average.                       of Columbia have Web sites for                        and a manager 10 hours, at $77 an hour,
                                                   FMAPs range from a minimum of 50                        Medicaid and CHIP and that nearly                     to complete the agreements. The
                                                   percent in States with higher per capita                every State already provides the                      estimated cost burden for each State is
                                                   incomes to a maximum of 76.25 percent                   information specified in this proposed                $1,630 [($43 × 20) + ($77 × 10)], for a
                                                   in States with lower per capita incomes.                rule. We also found that all States offer             total cost burden of $86,390 [$1,630 ×
                                                   States receive an ‘‘enhanced’’ FMAP for                 access to their health insurance                      53] and a total annual hour burden of
                                                   administering their CHIP programs,                      applications online.                                  1,590 hours [30 × 53]. Taking into
                                                   ranging from 65 to 83 percent. All States                 While these provisions are subject to               account the Federal contribution to
                                                   receive a 50 percent FMAP for                           the PRA, we believe that the                          Medicaid and CHIP program
                                                   administration. As noted above, States                  requirement above is a usual and                      administration, the estimated State
                                                   also receive higher Federal matching                    customary practice in keeping with the                share of these costs will be no more than
                                                   rates for certain services and now for                  use of modern technology and,                         $43,195 [$86,390 × 50 percent].
                                                   systems improvements or redesign, so                    therefore, presents no new burden.                    D. ICRs Regarding Renewal (§§ 435.916
                                                   the level of Federal funding provided to                States have always been required to                   and 457.343)
                                                   a State can be significantly higher. As                 assure that applicants, providers, other
                                                   such, in taking into account the Federal                interested parties, and the general                      These provisions discuss the
                                                   contribution to the costs of                            public have access to information about               redetermination process for individuals
                                                   administering the Medicaid and CHIP                     Medicaid and CHIP eligibility                         whose eligibility is based on MAGI.
                                                   programs for purposes of estimating                     requirements, available Medicaid                      These provisions are necessary to
                                                   State burden with respect to collection                 services, and the rights and                          facilitate the accurate and efficient
                                                   of information, we elected to use the                   responsibilities of applicants and                    redetermination of Medicaid and CHIP
                                                   higher end estimate that the States                     beneficiaries.                                        eligibility.
                                                   would contribute 50 percent of the                                                                               We estimate 53 Medicaid agencies
                                                   costs, even though the burden will                      B. ICRs Regarding Verification                        (the 50 States, District of Columbia,
                                                   likely be much smaller.                                 (§§ 435.945, 435.948, 435.956, 457.350,               Northern Mariana Islands, and
                                                      The following provisions will be                     and 457.380)                                          American Samoa) and an additional 43
                                                   addressed through separate PRA notices                    The provisions propose guidelines for               CHIP agencies (States that have a
                                                   and comment processes:                                  verification of certain factors for                   separate or combination CHIP) will be
                                                      Medicaid and CHIP State Plans:                       Medicaid and CHIP eligibility (for                    subject to the provision above, for a total
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                                                   §§ 431.10(c) and (d); 431.11(d);                        example, income, State residency, SSNs,               of 96 agencies.
                                                   435.110(b); 435.116(b); 435.118(b);                     and pregnancy status) and the sharing of                 The burden associated with this
                                                   435.119(b); 435.218(b); 435.403(h) and                  data among agencies. These proposed                   requirement is the time and effort
                                                   (i); 435.603(a); 435.905(a) and (b);                    amendments are necessary to facilitate                necessary for the State to develop and
                                                   435.948(d); 435.949(c); 435.1200(c), (d),               the determination of eligibility with                 automate renewal notices and perform
                                                   (e), (f), and (g); 457.80(c); 457.305(a) and            minimal paper documentation required                  the revised recordkeeping related to
                                                   (b); 457.310(b); 457.320(d); 457.340(a),                from individuals.                                     redetermining eligibility. Individuals
                                                   (b), and (f); 457.343; 457.348(a), (b), (c),              We expect that over the long-term,                  whose eligibility is based on MAGI
                                                   and (d); 457.350(a), (b), (c), (f), (g), and            these guidelines will reduce burden on                would need to provide any additional


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                                                   51180                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   information for the State to complete a                 simplified renewal approach similar to                selection function. We estimate that it
                                                   redetermination of eligibility.                         what is proposed in this rule are able to             will take a health policy analyst 85
                                                      Research has indicated that 33–50                    renew coverage for nearly 80 percent of               hours (at $43 an hour), a senior manager
                                                   percent of people experience a change                   beneficiaries without contacting the                  50 hours (at $77 an hour), and various
                                                   in circumstance that may impact their                   individual or family.                                 network/computer administrators or
                                                   eligibility for coverage (Sommers and                     States will keep records of each                    programmers 185 hours (at $54 an hour)
                                                   Rosenbaum, Health Affairs 2011). Based                  renewal that is processed in Medicaid                 to meet the reporting requirements for
                                                   on this research we conservatively                      and CHIP. The amount of time for                      this subpart. We estimate the total cost
                                                   estimate that of the approximately 51                   recordkeeping will be the same for                    burden for a State to be $17,495 [(85 ×
                                                   million individuals enrolled in                         renewals based on information available               $43) + (50 × $77) + (185 × $54)] for a
                                                   Medicaid and CHIP whose eligibility                     to the agency and renewals that require               total estimated burden of $927,235 [53
                                                   will be based on MAGI, half (25.5                       additional information from                           × $17,495] and a total annual hour
                                                   million individuals) will have their                    individuals. We estimate that it will                 burden of 16,960 hours for all 53
                                                   eligibility redetermined using the                      take the State agency 3 minutes (0.05                 entities [(85 + 50 + 185) × 53]. Taking
                                                   information already available to the                    hour) at a rate of $25 per hour for the               into account the Federal contribution to
                                                   agency. This approach greatly simplifies                average State eligibility worker to                   Medicaid and CHIP systems
                                                   the renewal process and will ultimately                 conduct the required recordkeeping for                development and administration efforts,
                                                   reduce costs for States.                                each of the 51 million renewals. The                  we estimate that the total State share of
                                                      For example, the State of Louisiana                  total estimated annual hour burden is                 costs would be $463,618 [$927,235 × 50
                                                   streamlined its renewal process through                 2,550,000 hours or 26,562.5 hours per                 percent] at most. States that elect to
                                                   a combination of administrative                         agency [2,550,000/96]. At a rate of $25               pursue these activities as part of a larger
                                                   renewal, ex-parte review and                            per hour the total estimated cost burden              systems redesign effort would have
                                                   conducting renewals over the telephone                  for recordkeeping is $63,750,000                      significantly lower costs due to the
                                                   in 2007. As a result, fewer than 10                     [2,550,000 × $25] or $664,063 per                     availability of the 90 percent FMAP.
                                                   percent of families actually complete                   agency [$63,750,000/96]. Taking into                     We estimate that it will take each
                                                   and submit a renewal form in order to                   account the Federal contribution, the                 State entity 16 hours annually to
                                                   remain enrolled in Medicaid or CHIP                     total estimated State share of the costs              develop and automate each of the two
                                                   coverage. The State reports more than                   would be $31,875,000 [$63,750,000 × 50                required notices (32 total hours). For the
                                                   $18 million in savings each year due to                 percent].                                             purpose of the cost burden, we estimate
                                                   these changes.                                                                                                it will take a health policy analyst
                                                      We estimate that it will take each                   E. ICRs Regarding Web Sites (§ 435.1200
                                                                                                                                                                 10 hours, at $43 an hour, and a senior
                                                   Medicaid and CHIP agency 16 hours                       and § 457.335)
                                                                                                                                                                 manager 6 hours, at $77 an hour, to
                                                   annually to develop, automate and                          Sections 435.1200 and 457.335                      complete each notice. The estimated
                                                   distribute the notice of eligibility                    require Medicaid and separate CHIP                    cost burden of two notices for each
                                                   determination based on use of existing                  agencies to have a Web site that                      agency is $1,784 [$892 × 2]. The total
                                                   information. For the purpose of the cost                performs the functions described in this              estimated cost burden is $94,552
                                                   burden, we estimate it will take a health               proposed rule.                                        [$1,784 × 53], and the total annual hour
                                                   policy analyst 10 hours, at $43 an hour,                   We estimate that 53 Medicaid                       burden is 1,696 hours [16 × 2 × 53] for
                                                   and a senior manager 6 hours, at $77 an                 agencies and an additional 43 CHIP                    the notices.
                                                   hour, to complete the notice. The                       agencies (in States that have a separate                 We estimate that it will take network/
                                                   estimated cost burden for each agency is                or combination CHIP) would be subject                 computer administrators or
                                                   $892 [(10 × $43) + (6 × $77)]. The total                to the provisions above. To achieve                   programmers 150 hours (at $54 an hour)
                                                   estimated cost burden is $85,632 [96 ×                  efficiency, we assume that States will                to transmit the application data of
                                                   $892], and the total annual hour burden                 develop only one Web site to perform                  ineligible individuals to the appropriate
                                                   is 1,536 hours [(10 + 6) × 96]. Taking                  the required functions. Therefore, we                 insurance affordability program and
                                                   into account the Federal contribution,                  base our burden estimates on 50 States,               meet this information reporting
                                                   the total estimated State costs would be                the District of Columbia, the Northern                requirement for each State (53). The
                                                   $42,816 [$85,632 × 50 percent].                         Mariana Islands, and American Samoa                   estimated cost burden for each agency is
                                                      The remaining half of the individuals                (53 agencies) and do not include the 43               $8,100 [150 × $54]. The total estimated
                                                   (25.5 million) will need to provide                     separate CHIP programs.                               cost burden for 53 States is $429,300 [53
                                                   additional information to the State so                     The burden associated with this ICR                × $8,100], and the total annual hour
                                                   that their eligibility can be renewed.                  for information disclosure is the time                burden is 7,950 hours [150 × 53]. Taking
                                                   The proposed process is much less                       and effort necessary for the State to                 into account the Federal contribution,
                                                   burdensome than the processes                           develop and disclose information on the               the estimated total State share of costs
                                                   currently in place in many States that                  Web site, develop and automate the                    would be $214,650 [$429,300 × 50
                                                   require individuals to complete a new                   required notices, and transmit (report)               percent].
                                                   application at renewal. We estimate that                the application data to the appropriate                  The total estimated cost burden of the
                                                   it will take an individual 20 minutes to                insurance affordability program.                      provisions described above is
                                                   complete the proposed streamlined                          We know that all States have Web                   $1,451,087 [$927,235 + $94,552 +
                                                   renewal process. The total annual hour                  sites and printable applications online               $429,300], and the total annual hour
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                                                   burden is 8.5 million hours [(20 minutes                and that 19 States have some ability to               burden is 26,606 hours [16,960 + 1,696
                                                   × 25.5 million individuals)/60 minutes]                 enable individuals to renew their                     + 7,950].
                                                   for 25.5 million individuals. We note                   coverage online. We estimate that it will
                                                   that the number of people who need to                   take each State an average of 320 hours               F. ICRs Regarding Medicaid Statement
                                                   provide additional information may be                   to develop the additional functionality               of Expenditures for the Medical
                                                   smaller than our estimate, but we used                  to meet the proposed requirements,                    Assistance Program (CMS–64)
                                                   a higher end estimate to account for the                including developing an online                          This action does not revise or impose
                                                   greatest potential impact on States and                 application, automating the renewal                   any new information collection
                                                   individuals. Some States that employ a                  process and adding a health plan                      requirements or burden that would


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                                                                            Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                                                                                      51181

                                                   require additional OMB review of CMS–                                  CMS–64 under OMB control number
                                                   64. OMB has approved the burden and                                    0938–0067.
                                                   information collection requirements of

                                                                                              TABLE 2—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
                                                                                                                                              Burden per                 Total annual                Labor cost                                            State share
                                                          Regulation                                                                                                                                                             Total cost
                                                                                      Respondents                 Responses                    response                    burden                    of reporting                                            of costs
                                                          section(s)                                                                                                                                                                ($)
                                                                                                                                                (hours)                    (hours)                        ($)                                                   ($)

                                                   §§ 435.945, 435.948,
                                                     435.956, 457.350,
                                                     and 457.380 ...........                             53                           1                     30                         1,590                      1,630                    86,390                     43,195
                                                   §§ 435.916 and
                                                     457.343 ...................                         96                           1                     16                        1,536                          892                  85,632                     42,816
                                                   §§ 435.916 and
                                                     457.343 ...................          25.5 million                                1                          .33           8.5 million         ........................   ........................   ........................
                                                   §§ 435.916 and
                                                     457.343 ...................                         96                           1              26,562.5              1 2.55    million                 664,063                63,750,000                 31,875,000
                                                   §§ 435.1200 and
                                                     457.335 ...................                         53                          1                    502                        26,606                     27,379               1,451,087                      725,543

                                                        Total ....................   ........................   ........................   ..........................   ........................   ........................         65,373,100                32,686,555
                                                      Notes: All proposed collections are new; therefore the OMB Control Number is omitted from the table.
                                                      There are no capital or maintenance costs incurred by the proposed collections; therefore it is omitted from the table. Capital costs resulting
                                                   from the development or improvement of new electronic systems were addressed in the Federal Funding for Medicaid Eligibility Determination
                                                   and Enrollment Activities final rule (76 FR 21950).
                                                      Labor Cost figures are indicated here on a per Respondent basis.
                                                      The 1.4 average responses per Agency (that is, Respondent) are based on the total estimated number of agreements divided by the number
                                                   of respondents. The number of actual agreements will vary by State based on the governance structure of the State’s Medicaid, CHIP, and Ex-
                                                   change programs.


                                                      We have submitted a copy of this                                    with a subsequent document, we will                                          increased Federal medical assistance
                                                   proposed rule to the OMB for its review                                respond to the comments in the                                               percentage (FMAP) rates relating to
                                                   of the rule’s information collection and                               preamble to that document.                                                   ‘‘newly eligible’’ individuals and certain
                                                   recordkeeping requirements. These                                                                                                                   medical assistance expenditures in
                                                                                                                          V. Summary of Preliminary Regulatory
                                                   requirements are not effective until they                                                                                                           expansion States’’ beginning January 1,
                                                                                                                          Impact Analysis                                                              2014.
                                                   have been approved by the OMB.
                                                      To obtain copies of the supporting                                    The summary analysis of benefits and
                                                                                                                          costs included in this proposed rule is                                      C. Summary of Costs and Benefits
                                                   statement and any related forms for the
                                                   proposed paperwork collections                                         drawn from the detailed Preliminary                                            The preliminary impact analysis uses
                                                   referenced above, access CMS’ Web site                                 Regulatory Impact Analysis (PRIA),                                           the estimates of the CMS Office of the
                                                   at http://www.cms.hhs.gov/Paperwork@                                   available at http://www.cms.gov/                                             Actuary (OACT) and the estimates
                                                   cms.hhs.gov, or call the Reports                                       MedicaidEligibility/downloads/CMS-                                           prepared by the Congressional Budget
                                                   Clearance Office at 410–786–1326.                                      2349-P-PreliminaryRegulatory                                                 Office (CBO) and the staff of the Joint
                                                      We invite public comments on these                                  ImpactAnalysis.pdf.                                                          Committee on Taxation. It provides both
                                                   potential information collection                                                                                                                    estimates to illustrate the uncertainty
                                                                                                                          A. Introduction                                                              inherent in projections of future
                                                   requirements. If you comment on these
                                                   information collection and                                                The Office of Management and Budget                                       Medicaid financial operations. Analysis
                                                   recordkeeping requirements, please do                                  has determined that this rule is                                             by OACT indicates that the proposed
                                                   either of the following:                                               ‘‘economically significant’’ for the                                         rule would result in an estimated
                                                      1. Submit your comments                                             purposes of Executive Order 12866.                                           additional 24 million newly eligible and
                                                   electronically as specified in the                                     Therefore, we have prepared a PRIA that                                      currently eligible individuals enrolling
                                                   ADDRESSES section of this proposed rule;                               presents the costs and benefits of this                                      in Medicaid by 2016.1 2 OACT notes that
                                                   or                                                                     rulemaking.                                                                  such estimates are uncertain, since they
                                                      2. Submit your comments to the                                                                                                                   depend on future economic,
                                                                                                                          B. Need for This Regulation                                                  demographic, and other factors that
                                                   Office of Information and Regulatory
                                                   Affairs, Office of Management and                                         This proposed rule would implement
                                                   Budget, Attention: CMS Desk Officer,                                   provisions of the Affordable Care Act                                          1 OACT’s original estimates for the financial

                                                                                                                          related to Medicaid eligibility,                                             impact of the expansion of Medicaid eligibility
                                                   (CMS–2349–P) Fax: (202) 395–6974; or                                                                                                                under the Affordable Care Act are documented in
                                                   E-mail: OIRA_submission@omb.eop.gov.                                   enrollment and coordination with the                                         an April 22, 2010 memorandum, ‘‘Estimated
                                                                                                                          Exchanges, CHIP, and other insurance                                         Financial Effects of the Patient Protection and
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   IV. Response to Comments                                               affordability programs. It also addresses                                    Affordable Care Act, as Amended,’’ available at
                                                     Because of the large number of public                                the current eligibility restrictions and                                     https://www.cms.gov/ActuarialStudies/downloads/
                                                                                                                                                                                                       PPACA_2010-04-22.pdf. These estimates have been
                                                   comments we normally receive on                                        barriers to enrollment in the Medicaid                                       updated using later data, revised participation
                                                   Federal Register documents, we are not                                 program which leave millions of low-                                         assumptions, and later information on policy
                                                   able to acknowledge or respond to them                                 income Americans uninsured, and                                              decisions.
                                                                                                                                                                                                         2 OACT’s estimates include approximately 2–3
                                                   individually. We will consider all                                     which contribute to poor health
                                                                                                                                                                                                       million individuals with primary health insurance
                                                   comments we receive by the date and                                    outcomes, financial stress, and high                                         coverage through employer-sponsored plans who
                                                   time specified in the DATES section of                                 health care and administrative costs. In                                     would enroll in Medicaid for supplemental
                                                   this preamble, and, when we proceed                                    addition, this proposed rule sets out the                                    coverage.



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                                                   cannot be precisely determined in                       same period of time.4 OACT estimates                   consideration of the experience with
                                                   advance. Similarly, the actual behavior                 that State expenditures on behalf of the               health insurance reform in
                                                   of individuals and the actual operation                 additional individuals and families                    Massachusetts and its expectation that
                                                   of the new enrollment processes and                     gaining Medicaid coverage as a result of               the streamlined enrollment process and
                                                   Affordable Insurance Exchanges will                     the Affordable Care Act will total $2.7                enrollment assistance available to
                                                   affect enrollment and costs. The                        billion in FY 2014, $4.0 billion in FY                 people through the Affordable Insurance
                                                   Congressional Budget Office (CBO) has                   2015, and $4.9 billion in FY 2016.5 For                Exchanges will be very effective in
                                                   estimated a net increase of 16 million                  both OACT and CBO, these estimates do                  helping eligible individuals and families
                                                   newly and previously eligible people                    not consider offsetting savings to States              become enrolled. Although CBO used
                                                   enrolled in Medicaid and CHIP in 2016                   that will result, to a varying degree                  similar data and overall methodologies,
                                                   as a result of the new law as                           depending on the State, from less                      and also anticipates that the streamlined
                                                   implemented through this regulation.3                   uncompensated care, less need for State-               enrollment process and Exchange
                                                   Some of the difference between OACT                     financed health services and coverage                  enrollment assistance will improve
                                                   and CBO’s projections can be explained                  programs, and greater efficiencies in the              applicants’ ability to become enrolled,
                                                   by different participation rate                         delivery of care. Indeed, an Urban                     CBO has included a significantly
                                                   assumptions, which are described                        Institute analysis estimates that the                  smaller from this factor than assumed
                                                   further in the more detailed PRIA.                      costs to States will be more fully offset              by OACT.7
                                                      Increased access to medical care and                 by other effects of the legislation, for net
                                                                                                           savings to States of $92 to $129 billion               E. Regulatory Options Considered
                                                   the simplified enrollment process
                                                   proposed by this rule would benefit                     from 2014 to 2019.6                                      Alternative approaches to
                                                   both newly eligible and currently                       D. Methods of Analysis                                 implementing the Medicaid eligibility,
                                                   eligible individuals by improving health                                                                       enrollment and coordination
                                                   outcomes and providing financial                          OACT prepared its estimate using
                                                                                                                                                                  requirements in the Affordable Care Act
                                                   security. Additionally, the proposed                    data on individuals and families,
                                                                                                                                                                  were considered in developing this
                                                   rule would benefit States and providers                 together with their income levels and
                                                                                                           insured status, from the Current                       proposed rule. However, it was
                                                   by reducing uncompensated care costs,                                                                          determined that these alternatives
                                                   shifting spending on either State-funded                Population Survey and the Medical
                                                                                                           Expenditure Panel Survey. In addition,                 would have created substantial
                                                   health coverage or uncompensated care                                                                          administrative burdens for States and
                                                   to the Federal government. Finally, the                 they made assumptions as to the actions
                                                                                                           of individuals in response to the new                  individuals, and created gaps in
                                                   simplified Medicaid eligibility policies                                                                       coverage that would reduce the number
                                                                                                           coverage options under the Affordable
                                                   will over time reduce administrative                                                                           of people with insurance. We welcome
                                                                                                           Care Act and the operations of the new
                                                   burdens on State Medicaid agencies.                                                                            public comment regarding the potential
                                                                                                           enrollment processes and the Affordable
                                                      We anticipate that the proposed rule                                                                        economic effects of the proposed rule.
                                                                                                           Insurance Exchanges. The estimated
                                                   would impose costs on a small number
                                                                                                           Medicaid coverage and financial effects                F. Accounting Statement
                                                   of currently eligible individuals who                   are particularly sensitive to these latter
                                                   will become ineligible for Medicaid                     assumptions. Among those eligible for                     For full documentation and
                                                   coverage under the new eligibility                      Medicaid under the expanded eligibility                discussion of these estimated costs and
                                                   methodology. These individuals would                    criteria established by the Affordable                 benefits, see the detailed PRA, available
                                                   bear the cost of purchasing subsidized                  Care Act, and who would not otherwise                  at http://www.cms.gov/Medicaid
                                                   insurance in the Exchanges, though                      have health insurance, OACT assumed                    Eligibility/downloads/CMS-2349-P-
                                                   these costs may be offset by premium                    that 95 percent would enroll. This                     PreliminaryRegulatoryImpact
                                                   tax credits.                                            assumption, which is significantly                     Analysis.pdf.
                                                      OACT estimates that Federal                          higher than current enrollment
                                                   spending on Medicaid for newly and                      percentages, reflects OACT’s                             7 CBO’s specific take-up assumptions are not
                                                   currently eligible individuals who                                                                             available. Researchers at the Urban Institute have
                                                   enroll as a result of the changes made                    4 CBO. Analysis of the Major Health Care             approximated the participation rate assumed by
                                                   by the Affordable Care Act would                        Legislation Enacted in March 2010. Statement of        CBO. The Kaiser Family Foundation has
                                                                                                           Douglas W. Elmendorf. March 30, 2011—http://           characterized this assumption as follows: ‘‘These
                                                   increase by a total of $202 billion from                                                                       results assume moderate levels of participation
                                                                                                           www.cbo.gov/ftpdocs/121xx/doc12119/03-30-
                                                   2012 through 2016. Reflecting                           HealthCareLegislation.pdf.                             similar to current experience among those made
                                                   somewhat different participation                          5 OACT estimates total gross additional State        newly eligible for coverage and little additional
                                                   assumptions and other projection                        expenditures of approximately $80 billion for FYs      participation among those currently eligible. This
                                                   factors, CBO estimates an increase in                   2012 through 2021, offset by $35 billion in lower      scenario assumes 57 percent participation among
                                                                                                           State costs as a result of the transitional FMAP for   the newly eligible uninsured and lower
                                                   federal spending of $162 billion over the                                                                      participation across other coverage groups.’’ J.
                                                                                                           expansion States, for a net total increase of $45
                                                                                                           billion. For comparison, CBO estimates net             Holohan and I. Headen, ‘‘Medicaid coverage and
                                                      3 CBO. Analysis of Major Health Care Legislation     additional State expenditures of about $60 million     spending in health reform: National and State-by-
                                                   Enacted in March 2010. Statement of Douglas W.          for the same time frame.                               State results for adults at or below 133% FPL,’’
                                                   Elmendorf. March 30, 2011—http://www.cbo.gov/             6 M. Buettgens et al., ‘‘Consider savings as well    Kaiser Commission on Medicaid and the
                                                   ftpdocs/121xx/doc12119/03-30-;                          as costs: State governments would spend at least       Uninsured, May 2010, available online at http://
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   HealthCareLegislation.pdf The CBO estimates             $90 billion less with the ACA than without it from     www.kff.org/healthreform/upload/Medicaid-
                                                   exclude individuals with primary coverage through       2014 to 2019,’’ The Urban Institute, July 2011.        Coverage-and-Spending-In-Health-Reform-
                                                   employer-sponsored plans who enroll in Medicaid         Available at http://www.urban.org/uploadedpdf/         National-and-State-By-State-Results-for-Adults-at-
                                                   for supplemental coverage.                              412361-consider-savings.pdf.                           or-Below-133-FPL.pdf.




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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                                       51183

                                                          TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED NET COSTS, FROM FY 2012 TO FY 2016
                                                                                                                               [In millions]

                                                                                                                                                                       Transfers

                                                                                 Category                                                Year dollar                     Units discount rate
                                                                                                                                                                                                       Period covered
                                                                                                                                            2012                          7%             3%

                                                   Annualized Monetized Transfers from Federal Government to                 Primary Estimate .....................      $35,564        $37,324     FYs 2012–2016
                                                     States on Behalf of Beneficiaries.
                                                   Annualized Monetized Transfers from States on Behalf of                   Primary Estimate .....................         2,131          2,235    FYs 2012–2016
                                                     Beneficiaries.
                                                   Annualized Monetized Transfers from Federal Government to                 Primary Estimate .....................         1,577          1,657    FYs 2012–2016
                                                     States.
                                                      Source: CMS Office of the Actuary.


                                                   G. Unfunded Mandates Reform Act                         2. Private Sector and Tribal                               will bear between 92 and 95 percent of
                                                      Section 202 of the Unfunded                          Governments                                                the overall costs of the new coverage
                                                   Mandates Reform Act of 1995 (UMRA)                        We do not believe this proposed rule                     provided as a result of the Affordable
                                                   requires that agencies assess anticipated               would impose any unfunded mandates                         Care Act, with the States shouldering
                                                   costs and benefits before issuing any                   on the private sector. As we explain in                    the remaining five to eight percent of
                                                   rule whose mandates require spending                    more detail in the Regulatory Flexibility                  the costs.8 To the extent that States
                                                   in any 1 year of $100 million in 1995                   Act analysis, the provisions of the                        require counties to share in these costs,
                                                   dollars, updated annually for inflation.                Affordable Care Act implemented by the                     some small jurisdictions could be
                                                   In 2011, that threshold is approximately                proposed rule deal with eligibility and                    affected by the requirements of this
                                                   $136 million. It is important to                        enrollment for the Medicaid and CHIP                       proposed rule. However, nothing in this
                                                   understand, however, that the UMRA                      programs, and as such are directed                         rule would constrain States from
                                                   does not address the total cost of a rule.              toward State governments rather than                       making changes to alleviate any adverse
                                                   Rather, it focuses on certain categories                toward the private sector. Since the                       effects on small jurisdictions. The
                                                   of cost, mainly costs resulting from (A)                proposed rule would impose no                              Department has no way of estimating
                                                   imposing enforceable duties on State,                   mandates on the private sector, we                         the impact of this proposed rule on
                                                   local, or tribal governments, or on the                 conclude that the cost of any possible                     small jurisdictions and requests public
                                                   private sector, or (B) increasing the                   unfunded mandates would not meet the                       comment on this issue.
                                                   stringency of conditions in, or                         threshold amounts discussed previously                        Because this proposed rule is focused
                                                   decreasing the funding of, State, local,                that would otherwise require an                            on eligibility and enrollment in public
                                                   or tribal governments under entitlement                 unfunded mandate analysis for the                          programs, it does not contain provisions
                                                   programs.                                               private sector. We also conclude that an                   that would have a significant direct
                                                      We believe that States can take                      unfunded mandate analysis also is not                      impact on hospitals, and other health
                                                   actions that will largely offset the                    needed for tribal governments since the                    care providers that are designated as
                                                   increased medical assistance spending                   proposed rules would not impose                            small entities under the RFA. However,
                                                   for newly enrolled persons. Because the                 mandates on tribal governments.                            the provisions in this proposed rule may
                                                   net effects are uncertain and the overall                                                                          have a substantial, positive indirect
                                                                                                           H. Regulatory Flexibility Act (RFA)                        effect on hospitals and other health care
                                                   costs significant, we have drafted the
                                                   PRIA to meet the requirements for                          The RFA requires agencies to analyze                    providers due to the substantial increase
                                                   analysis imposed by UMRA, together                      options for regulatory relief of small                     in the prevalence of health coverage
                                                   with the rest of the preamble. The                      entities if a proposed rule would have                     among populations who are currently
                                                   extensive consultation with States we                   a significant economic impact on a                         unable to pay for needed health care,
                                                   describe later in this analysis was aimed               substantial number of small entities.                      leading to lower rates of uncompensated
                                                   at the requirements of both UMRA and                    Few of the entities that meet the                          care at hospitals. Again, the Department
                                                   Executive Order 13132 on Federalism.                    definition of a small entity as that term                  cannot determine whether this proposed
                                                   We invite comment on these issues from                  is used in the RFA (for example, small                     rule would have a significant economic
                                                   States and local governments as well as                 businesses, nonprofit organization, and                    impact on a substantial number of small
                                                   any other interested parties.                           small governmental jurisdictions with a                    entities, and we request public comment
                                                                                                           population of less than 50,000) would                      on this issue.
                                                   1. State and Local Governments                          be impacted directly by this proposed                         Section 1102(b) of the Act requires us
                                                     Our discussion of the potential                       rule. Individuals and States are not                       to prepare a regulatory impact analysis
                                                   expected impact on States is provided                   included in the definition of a small                      if a proposed rule may have a significant
                                                   in the benefits, costs, and transfers                   entity. There are some States in which                     economic impact on the operations of a
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   section of the preliminary regulatory                   counties or cities share in the costs of                   substantial number of small rural
                                                   impact analysis. As noted previously,                   Medicaid. OACT has estimated that                            8 J. Holahan and I. Headen, ‘‘Medicaid coverage
                                                   the Affordable Care Act requires States                 between 2014 and 2021 the Federal                          and spending in health reform: National and State-
                                                   that participate in the Medicaid program                government would pay about 94 percent                      by-State results for adults at or below 133% FPL,’’
                                                   to cover adults with incomes below 133                  of the costs of benefits for new Medicaid                  Kaiser Commission on Medicaid and the
                                                   percent of the Federal poverty level, and               enrollees with the States paying the                       Uninsured, May 2010, available online at http://
                                                                                                                                                                      www.kff.org/healthreform/upload/Medicaid-
                                                   provides substantial new Federal                        remaining 6 percent. An Urban Institute                    Coverage-and-Spending-in-Health-Reform-
                                                   support to nearly offset the costs of                   and Kaiser Family Foundation study                         National-and-State-By-State-Results-for-Adults-at-
                                                   covering that population.                               estimated that the Federal government                      or-Below-133-FPL.pdf.



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                                                   hospitals. This analysis must conform to                particular, we have had discussions                     (ii) Make rules and regulations that it
                                                   the provisions of section 603. For                      with the Eligibility TAG (E–TAG) and                  follows in administering the plan or that
                                                   purposes of section 1102(b) of the Act,                 the Children’s Coverage TAG.                          are binding upon State or other agencies
                                                   we define a small rural hospital as a                   The E–TAG is a group of State Medicaid                that administer the plan.
                                                   hospital that is located outside of a                   officials with specific expertise in the              *      *     *     *     *
                                                   metropolitan statistical area and has                   field of eligibility policy under the                   (c) * * *
                                                   fewer than 100 beds. We are not                         Medicaid program. The Children’s                        (1) The plan must specify whether the
                                                   preparing an analysis for section 1102(b)               Coverage TAG is a combination of                      entity that determines eligibility for
                                                   of the Act because the Secretary has                    Medicaid and CHIP officials that                      families, adults, and for individuals
                                                   determined that this proposed rule                      convene to discuss issues that affect                 under 21 is—
                                                   would not have a direct economic                        children enrolled in those programs.                  *      *     *     *     *
                                                   impact on the operations of a substantial               Through consultations with these TAGs,                  (iii) A government-operated Exchange
                                                   number of small rural hospitals. As                     we have been able to get input from                   established under sections 1311(b)(1) or
                                                   indicated in the preceding discussion,                  States specific to issues surrounding the             1321(c)(1) of the Affordable Care Act
                                                   there may be indirect positive effects                  changes in eligibility groups and rules               (Pub. L. 111–148).
                                                   from reductions in uncompensated care.                  that will become effective in 2014.                   *      *     *     *     *
                                                   I. Federalism                                           List of Subjects                                        (3) The single State agency is
                                                                                                                                                                 responsible for assuring and enforcing
                                                      Executive Order 13132 establishes                    42 CFR Part 431                                       that—
                                                   certain requirements that an agency                                                                             (i) Eligibility determinations are made
                                                   must meet when it promulgates a                           Grant programs—health, Health
                                                                                                           facilities, Medicaid, Privacy, Reporting              consistent with its rules and if there is
                                                   proposed rule (and subsequent final                                                                           a pattern of incorrect determinations
                                                   rule) that imposes substantial direct                   and recordkeeping requirements.
                                                                                                                                                                 that corrective actions are instituted
                                                   effects on States, preempts State law, or               42 CFR Part 433                                       and/or the delegation is terminated;
                                                   otherwise has Federalism implications.                                                                          (ii) There is no conflict of interest by
                                                   As discussed previously, the Affordable                   Administrative practice and
                                                                                                           procedure, Child support Claims, Grant                any agency delegated the responsibility
                                                   Care Act and this proposed rule have                                                                          to make eligibility determinations; and
                                                   significant direct effects on States.                   programs—health, Medicaid, Reporting
                                                                                                                                                                   (iii) Eligibility determinations will be
                                                      The Affordable Care Act requires                     and recordkeeping requirements.
                                                                                                                                                                 made in the best interest of applicants
                                                   major changes in the Medicaid and                       42 CFR Part 435                                       and beneficiaries and that the single
                                                   CHIP programs, which would require                                                                            State agency will guard against
                                                   changes in the way States operate their                   Aid to Families with Dependent
                                                                                                           Children, Grant programs—health,                      improper incentives and/or outcomes.
                                                   individual programs. While these                                                                                (d) Agreement with Federal or State
                                                   changes are intended to benefit                         Medicaid, Reporting and recordkeeping
                                                                                                                                                                 and local agencies. The plan must
                                                   beneficiaries and enrollees by                          requirements, Supplemental Security
                                                                                                                                                                 provide for written agreements between
                                                   improving coordination between                          Income (SSI), Wages.
                                                                                                                                                                 the Medicaid agency and the Federal or
                                                   programs, they are also designed to                     42 CFR Part 457                                       other State or local agencies that
                                                   reduce the administrative burden on                                                                           determine eligibility for Medicaid,
                                                   States by simplifying and streamlining                    Administrative practice and
                                                                                                           procedure, Grant programs—health,                     stating—
                                                   systems.                                                                                                        (1) The relationships and respective
                                                      We have consulted with States to                     Health insurance, Reporting and
                                                                                                                                                                 responsibilities of the agencies;
                                                   receive input on how the various                        recordkeeping requirements.
                                                                                                                                                                   (2) The quality control and oversight
                                                   Affordable Care Act provisions codified                   For the reasons set forth in the                    plans by the single State agency to
                                                   in this proposed rule would affect                      preamble, the Centers for Medicare &                  review determinations made by the
                                                   States. We have participated in a                       Medicaid Services proposes to amend                   delegee;
                                                   number of conference calls and in                       42 CFR chapter IV as set forth below:                   (3) The reporting requirements from
                                                   person meetings with State officials in                                                                       the delegee making Medicaid eligibility
                                                   the months before and since the law was                 PART 431—STATE ORGANIZATION                           determinations to the single State
                                                   enacted. These discussions have                         AND GENERAL ADMINISTRATION                            agency.
                                                   enabled the States to share their                                                                               (4) The confidentiality and security
                                                                                                             1. The authority citation for part 431
                                                   thinking and questions about how the                                                                          requirements in accordance with
                                                                                                           continues to read as follows:
                                                   Medicaid changes in the legislation                                                                           sections 1902(a)(7) and 1942 of the Act
                                                   would be implemented. The conference                     Authority: Sec. 1102 of the Social Security          for all applicant and beneficiary data;
                                                   calls also furnished opportunities for                  Act, (42 U.S.C. 1302).
                                                                                                                                                                 and
                                                   CMS to explore these implementation                                                                             (5) That merit protection principles
                                                                                                           Subpart A—Single State Agency
                                                   issues together with States and also                                                                          are employed by the agency responsible
                                                   provide information on an informal                         2. Section 431.10 is amended by—                   for the Medicaid eligibility
                                                   basis about implementation plans to the                    A. Revising paragraph (b)(2)(ii) and               determination.
                                                   State Medicaid Directors, and for the                   the introductory text of paragraph (c)(1).              (e) * * *
                                                   Directors to comment informally on                         B. Adding paragraphs (c)(1)(iii) and                 (3) If other Federal, State or local
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2




                                                   what they heard in the course of those                  (c)(3).                                               agencies or offices perform services for
                                                   conversations.                                             C. Revising paragraphs (d) and (e)(3).             the Medicaid agency, they must not
                                                      We continue to engage in ongoing                        The revisions and additions read as                have the authority to change or
                                                   consultations with Medicaid and CHIP                    follows:                                              disapprove any administrative decision
                                                   Technical Advisory Groups (TAGs),                                                                             of, or otherwise substitute their
                                                   which have been in place for many                       § 431.10    Single State agency.                      judgment for that of, the Medicaid
                                                   years and serve as a staff level policy                 *       *    *       *       *                        agency for the application of policies,
                                                   and technical exchange of information                       (b) * * *                                         rules and regulations issued by the
                                                   between CMS and the States. In                              (2) * * *                                         Medicaid agency.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                           51185

                                                     3. Section 431.11 is amended by                       amounts expended by a State for                          (C) 70 percent, for calendar quarters
                                                   revising paragraph (d) to read as                       medical assistance for newly eligible                 in CY 2016;
                                                   follows:                                                individuals in accordance with the                       (D) 80 percent, for calendar quarters
                                                                                                           requirements of the methodology                       in CY 2017;
                                                   § 431.11    Organization for administration.            selected by the State under § 422.206 of                 (E) 90 percent, for calendar quarters in
                                                   *     *     *      *     *                              this chapter.                                         CY 2018; and
                                                     (d) Eligibility determined by other                      (7)(i) During the period January 1,                   (F) 100 percent, for calendar quarters
                                                   agencies. If eligibility is determined by               2014 through December 31, 2015, under                 in CY 2019 and all subsequent calendar
                                                   Federal or State agencies other than the                section 1905(z)(1) of the Act for a State             years.
                                                   Medicaid agency or by local agencies                    described in paragraph (c)(7)(ii) of this                (iii) A State is an expansion State if,
                                                   under the supervision of other State                    section, the FMAP determined under                    on the March 23, 2010, the State offered
                                                   agencies, the plan must include a                       paragraph (b) of this section will be                 health benefits coverage Statewide to
                                                   description of the staff designated by                  increased by 2.2 percentage points.                   parents and nonpregnant, childless
                                                   those other agencies and the functions                     (ii) A State qualifies for the general             adults whose income is at least 100
                                                   they perform in carrying out their                      increase in the FMAP under paragraph                  percent of the poverty line, that
                                                   responsibilities.                                       (c)(7)(i) of this section, if the State:              includes inpatient hospital services, is
                                                                                                              (A) Is an expansion State, as described            not dependent on access to employer
                                                   Subpart M—Relations With Other                          in paragraph (c)(8)(iii) of this section;             coverage, employer contribution, or
                                                   Agencies                                                   (B) Does not qualify for any payments
                                                                                                                                                                 employment and is not limited to
                                                                                                           on the basis of the increased FMAP
                                                   § 431.636    [Removed]                                                                                        premium assistance, hospital-only
                                                                                                           under paragraph (c)(6) of this section, as
                                                       4. Remove § 431.636.                                                                                      benefits, a high deductible health plan,
                                                                                                           determined by the Secretary; and
                                                                                                                                                                 or alternative benefits under a
                                                                                                              (C) Has not been approved by the
                                                   PART 433—STATE FISCAL                                                                                         demonstration program authorized
                                                                                                           Secretary to divert a portion of the
                                                   ADMINISTRATION                                                                                                under section 1938 of the Act. A State
                                                                                                           Disproportionate Share Hospital
                                                                                                                                                                 that offers health benefits coverage to
                                                     5. The authority citation for part 433                Allotment for the State to the costs of
                                                                                                                                                                 only parents or only nonpregnant
                                                   continues to read as follows:                           providing medical assistance or other
                                                                                                                                                                 childless adults described in the
                                                     Authority: Section 1102 of the Social
                                                                                                           health benefits coverage under a
                                                                                                                                                                 preceding sentence will not be
                                                   Security Act (42 U.S.C. 1302).                          demonstration that is in effect on July 1,
                                                                                                                                                                 considered to be an expansion State.
                                                                                                           2009.
                                                                                                              (iii) The increased FMAP under                        (iv) For amounts expended by an
                                                   Subpart A—Federal Matching and                                                                                expansion State as defined in paragraph
                                                   General Administration Provisions                       paragraph (c)(7)(i) of this section is
                                                                                                           available for amounts expended by the                 (c)(8)(iii) of this section for medical
                                                      6. Section 433.10 is amended by—                     State for medical assistance for                      assistance for individuals described in
                                                      A. In paragraph (a), removing the                    individuals that are not newly eligible               section 1902(a)(10)(A)(i)(VIII) of the Act
                                                   phrase ‘‘and 1905(b),’’ and adding in its               as defined in § 433.204 of this part.                 who are newly eligible as defined in
                                                   place the phrase ‘‘1905(b), 1905(y), and                   (8)(i) Beginning January 1, 2014,                  § 433.201, and who are non-pregnant
                                                   1905(z)’’                                               under section 1905(z) of the Act, the                 childless adults for whom the State may
                                                      B. Adding new paragraphs (c)(6),                     FMAP for an expansion State defined in                require enrollment in benchmark
                                                   (c)(7), and (c)(8).                                     paragraph (c)(8)(iii) of this section, for            coverage under section 1937 of the Act,
                                                      The additions read as follows:                       amounts expended by such State for                    the FMAP is as specified in paragraph
                                                                                                           medical assistance for individuals                    (c)(6) of this section.
                                                   § 433.10 Rates of FFP for program
                                                   services                                                described in section                                     7. Subpart E is added to part 433 to
                                                                                                           1902(a)(10)(A)(i)(VIII) of the Act who                read as follows:
                                                   *       *     *     *    *
                                                      (c) * * *                                            are not newly eligible as defined in                  Subpart E—Methodologies for Determining
                                                      (6)(i) Beginning January 1, 2014,                    § 433.204 of this part and who are                    Federal Share of Medicaid Expenditures for
                                                   under section 1905(y) of the Act, the                   nonpregnant childless adults for whom                 Mandatory Group
                                                   FMAP for a State that is one of the 50                  the State may require enrollment in                   Sec.
                                                   States or the District of Columbia, for                 benchmark coverage under section 1937                 433.202 Scope.
                                                   amounts expended by such State for                      of the Act, will be determined in                     433.204 Definitions.
                                                   medical assistance for newly eligible                   accordance with the following formula:                433.206 Choice of methodology.
                                                                                                           F + (T × (N¥F))                                       433.208 Threshold methodology.
                                                   individuals, as defined in § 433.204 of                                                                       433.210 Statistically-valid sampling
                                                   this part, will be an increased FMAP                    F = The base FMAP for the State
                                                                                                                                                                      methodology.
                                                   equal to:                                                     determined under paragraph (b) of               433.212 CMS established FMAP proportion.
                                                      (A) 100 percent, for calendar quarters                     this section, subject to paragraph
                                                   in calendar years (CYs) 2014 through                          (c)(7) of this section.                         Subpart E—Methodologies for
                                                   2016;                                                   T = The transition percentage specified               Determining Federal Share of Medicaid
                                                      (B) 95 percent, for calendar quarters                      in paragraph (c)(8)(ii) of this                 Expenditures for Mandatory Group
                                                   in CY 2017;                                                   section.
                                                      (C) 94 percent for calendar quarters in              N = The Newly Eligible FMAP                           § 433.202   Scope.
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                                                   CY 2018;                                                      determined under paragraph (c)(6)                  This subpart sets forth the
                                                      (D) 93 percent for calendar quarters in                    of this section.                                requirements and procedures under
                                                   CY 2019;                                                   (ii) For purposes of paragraph (c)(8)(i)           which States may claim for the higher
                                                      (E) 90 percent for calendar quarters in              of this section, the transition percentage            Federal share of expenditures for newly
                                                   CY 2020; and                                            is equal to:                                          eligible individuals specified in
                                                      (F) 90 percent for calendar quarters in                 (A) 50 percent, for calendar quarters              § 433.204 of this subpart.
                                                   all other CYs after 2020.                               in CY 2014;
                                                      (ii) The FMAP specified in paragraph                    (B) 60 percent, for calendar quarters              § 433.204   Definitions.
                                                   (c)(6)(i) of this section will apply to                 in CY 2015;                                              As used in this subpart:


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                                                   51186                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                     Newly Eligible Individual means an                    other adjustments that were in place as               that eligibility determination throughout
                                                   individual eligible for Medicaid in                     of December 1, 2009.                                  the entire year.
                                                   accordance with the requirements of the                    (2) Incorporates any enrollment caps                 (3) Be verified by, and adjusted
                                                   new adult group and who would not                       under section 1115 demonstration                      prospectively to include results of, any
                                                   have been eligible for Medicaid under                   programs that were in place in the State              evaluations conducted by CMS in
                                                   the State’s eligibility standards and                   on December 1, 2009.                                  conjunction with the State(s) of the
                                                   methodologies for the Medicaid State                       (3) Is applied to each individual                  accuracy of the threshold.
                                                   plan, waiver or demonstration programs                  applicant determined eligible for
                                                   in effect in the State as of December 1,                Medicaid under the adult group.                       § 433.210 Statistically valid sampling
                                                                                                              (4) Is used to determine whether each              methodology.
                                                   2009.
                                                                                                           individual is newly eligible so that the                 (a)(1) A State choosing to implement
                                                   § 433.206    Choice of methodology.                     State may claim the FMAP described in                 a statistically-valid sampling
                                                      (a) Beginning January 1, 2014, the                   § 433.10(c) of this subpart for all                   methodology to determine the
                                                   State must determine the expenditures                   expenditures for such individuals.                    proportion of expenditures to which the
                                                   which may be claimed at the FMAP rate                      (b) To implement the threshold                     FMAP specified in § 433.10(c) of this
                                                   described in § 433.10 of this part using                methodology, the State must submit a                  subpart will apply, must submit to CMS
                                                   one of the following methods:                           methodology and receive CMS approval                  a methodology that details the sampling
                                                      (1) Applying eligibility thresholds and              of such methodology prior to its                      plan prior to making such claims which
                                                   proxies in accordance with § 433.208 of                 application to new FMAP                               demonstrates compliance with the
                                                   this part; or                                           determinations.                                       requirements established in this section
                                                      (2) Conducting a statistically valid                    (1) Such methodology will specify                  as well as all additional requirements
                                                   sample in accordance with § 433.210 of                  how the State will determine the                      that CMS issues in subregulatory
                                                   this part; or                                           population within the adult group and                 guidance.
                                                      (3) Electing to utilize the CMS                      describe in a format provided by CMS                     (2) The methodology with the
                                                   established FMAP proportion rate                        how it is approximating the December 1,               sampling plan must be submitted to
                                                   established in accordance with                          2009 standards and methodologies, as                  CMS on or before January 1 of the
                                                   § 433.212 of this part.                                 well as how the State will apply the                  calendar year in which the State will
                                                      (b) The State must provide to CMS for                                                                      claim expenditures using the sampling
                                                                                                           established criteria.
                                                   approval a methodology that provides                       (2) Subject to approval by CMS, a                  methodology.
                                                   the description of the method it will use               State may use criteria including but not                 (3) The State may not implement the
                                                   to determine the appropriate FMAP                       limited to:                                           sampling methodology until CMS has
                                                   claim for medical assistance                               (i) Self-declaration.                              reviewed and approved the State’s
                                                   expenditures for newly eligible                            (ii) Claims history.                               sampling plan.
                                                   individuals including all of the                           (iii) Receipt of Social Security                      (b) A State must verify that its
                                                   following requirements:                                 Disability Income.                                    sampling plan follows all relevant
                                                      (1) Except as provided in paragraph                     (iv) Disability determination by SSA.              requirements established in the most
                                                   (b)(2) of this section, at least 2 years                   (v) Information from the Asset                     current OMB Circular A–87.
                                                   prior to the year in which the State will               Verification System established under                    (c) The State must implement the plan
                                                   implement that method.                                  the DRA.                                              as specified in the CMS-approved
                                                      (2) For CY 2014, the State must notify                  (vi) Information from tax returns.                 sampling plan for the year in which it
                                                   CMS of such method no later than                           (vii) Application of a proportion                  claims expenditures based on the
                                                   December 31, 2012.                                      derived from historical data of the                   sampling plan.
                                                      (3) Changing claiming methodologies:                 actual proportion of individuals within                  (d) A State must draw a statistically
                                                      (i) The State must use the chosen                    specific eligibility groups that were                 valid sample from the population of
                                                   methodology for at least 3 consecutive                  ineligible for Medicaid due to assets or              Medicaid applicants who are eligible for
                                                   years before changing to another                        eligible for Medicaid due to disability               Medicaid under the adult group.
                                                   methodology;                                            status using the eligibility standards in                (e) The State must evaluate each
                                                      (ii) The State must notify CMS of any                                                                      individual randomly selected to be
                                                                                                           place as of December 1, 2009.
                                                   change in methodology in accordance                        (viii) Other disability and asset data             included in the sample to determine
                                                   with paragraphs (b)(1) and (b)(2) of this               sources.                                              whether:
                                                   section.                                                   (c) The threshold methodology must:                   (1) The individual is newly eligible;
                                                      (c) To implement each methodology—                      (1) Not be biased in such a manner as              or
                                                      (1) The State must first determine
                                                                                                           to overestimate or over report                           (2) The individual would have been
                                                   those individuals eligible under section
                                                                                                           individuals as newly eligible who were                eligible under the standards in place to
                                                   1902(a)(10)(A)(i)(VIII) of the Act.
                                                      (2) The State may apply a CMS                        actually individuals who would have                   determine eligibility under the
                                                   approved methodology only to                            been eligible using the State’s December              Medicaid State plan and/or
                                                   expenditures for such individuals.                      1, 2009 eligibility standards.                        demonstration program as of December
                                                      (d) Nothing in this section impacts the                 (2) Provide an accurate estimation of              1, 2009, including any enrollment caps
                                                   timing or approval of an individual’s                   which individuals would have been                     under section 1115 demonstration
                                                   eligibility for Medicaid.                               eligible in accordance with the                       programs that were in place in the State
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                                                                                                           December 1, 2009 eligibility standards                on December 1, 2009.
                                                   § 433.208    Threshold methodology.                     to be used for the designated year, by                   (f) The State will attribute all actual
                                                     (a) Beginning January 1, 2014, States                 incorporating simplified assessments of               medical assistance expenditures in that
                                                   may elect to apply a CMS-approved                       asset and disability requirements in                  calendar year for each newly eligible
                                                   State specific threshold methodology                    place at that time. Once individuals are              individual in the sample and for each
                                                   that meets all of the following                         determined to be either a newly eligible              individual in the sample who would
                                                   requirements:                                           individual or an individual who would                 have been eligible under the December
                                                     (1) Incorporates State eligibility                    have been eligible under the December                 1, 2009 standards. The State will
                                                   standards, including disregards and                     2009 standards, the State would apply                 extrapolate and apply the proportion of


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                              51187

                                                   Medicaid expenditures attributed to the                 eligibility criteria using data sources                 9a. Remove the term ‘‘family income’’
                                                   newly eligible in the sample to the                     including, but not limited to MEPS and                wherever it appears in part 435 and add
                                                   expenditures of the population.                         MSIS data.                                            in its place the term ‘‘household
                                                      (g) The State will consider the amount                  (c) CMS will meet all of the following             income.’’
                                                   determined in accordance with                           requirements:
                                                   paragraph (f) of this section to be the                    (1) Solicit and incorporate comments               Subpart A—General Provisions and
                                                   expenditures of the newly eligible                      on the development of rates.                          Definitions
                                                   individuals and receive the FMAP rate                      (2) Annually establish a model to                     9b. Section 435.4 is amended by—
                                                   described in § 433.10(c) of this subpart                predict in an unbiased way the                           A. Adding the definitions of
                                                   for such expenditures when the State                    appropriate proportion of expenditures                ‘‘Advance payments of the premium tax
                                                   claims on the CMS–64.                                   for which each State would claim the                  credit,’’ ‘‘Affordable Insurance Exchange
                                                      (h) The State may claim and receive                  FMAP rate described in § 433.10(c) of                 (Exchange),’’ ‘‘Agency,’’ ‘‘Caretaker
                                                   the FMAP described in § 433.10(c) of                    this subpart for newly eligible                       relative,’’ ‘‘Dependent child,’’ ‘‘Effective
                                                   this subpart for an estimated proportion                individuals taking into account any                   income level,’’ ‘‘Electronic account,’’
                                                   on an interim basis as follows:                         enrollment caps under demonstration                   ‘‘Household income,’’ ‘‘Insurance
                                                      (1) States may claim expenditures in                 programs that were in place in the State              affordability program,’’ ‘‘MAGI-based
                                                   current years based on an interim FMAP                  on December 1, 2009.                                  income,’’ ‘‘Minimum essential
                                                   proportion determined by the most                          (3) Publish the State-specific rates by            coverage,’’ ‘‘Modified adjusted gross
                                                   recent year for which data is available.                October 1 of the preceding year. For CY               income (MAGI),’’ ‘‘Pregnant woman,’’
                                                      (2) States must make a retroactive                   2014, the model must be published no                  ‘‘Secure electronic interface,’’ and ‘‘Tax
                                                   adjustment to claims on the CMS–64 for                  later than January 1, 2013.                           dependent’’ in alphabetical order.
                                                   the current year once that expenditure                     (4) Incorporate results from a                        B. Revising the definition of ‘‘Families
                                                   information is finalized under the                      validation methodology in accordance                  and children.’’
                                                   provisions of paragraph (f) of this                     with § 433.212(e) of this subpart such as                The revisions read as follows:
                                                   section.                                                a statistically valid sampling of State
                                                      (3)(i) Results of a statistically-valid              data of actual individuals eligible for               § 435.4    Definitions and use of terms.
                                                   sampling methodology for any given                      and enrolled in Medicaid in accordance                *     *     *     *     *
                                                   year must be finalized and applied, and                 with section 1902(a)(10)(A)(i)(VIII) of                  Advance payments of the premium
                                                   adjustments to claims on the CMS–64                     the Act.                                              tax credit means payments of the tax
                                                   must be made, within 2 years from the                      (5) Provide technical assistance to                credit specified in section 36B of the
                                                   date of the actual expenditure.                         States on applying the rates established.             Internal Revenue Code of 1986, which
                                                      (ii) If the State does not have                         (d) States will apply the CMS                      provide premium assistance on an
                                                   supporting documentation at the end of                  published State-specific proportion of                advance basis to support enrollment of
                                                   the second year following the year at                   expenditures attributed to the newly                  an eligible individual in a qualified
                                                   issue, the State must make a decreasing                 eligible to expenditures for all                      health plan through the Exchange.
                                                   adjustment on the CMS–64 to refund the                  individuals eligible for and enrolled in              *     *     *     *     *
                                                   higher FMAP rates, and such claims                      Medicaid in accordance with section                      Affordable Insurance Exchange
                                                   will be regarded as untimely under 45                   1902(a)(10)(A)(i)(VIII) of the Act. The               (Exchange) means a governmental
                                                   CFR 95.7 if resubmitted.                                State will consider the amount                        agency or non-profit entity that meets
                                                      (iii) A State must implement the                     determined in accordance with this                    the applicable requirements and makes
                                                   statistically valid sampling methodology                section to be the expenditures of the                 qualified health plans available to
                                                   in accordance with this section on an                   newly eligible individuals and receive                qualified individuals and qualified
                                                   annual basis for the initial 3 consecutive              the FMAP rate described in § 433.10(c)                employers. Unless otherwise identified,
                                                   years.                                                  of this part for such expenditures when               this term refers to State Exchanges,
                                                      (A) States that have completed the                   the State claims expenditures on the                  regional Exchanges, subsidiary
                                                   requirements for 3 consecutive years,                   CMS–64.                                               Exchanges, and a Federally-facilitated
                                                   are required thereafter to verify using a                  (e) Validation measures such as                    Exchange.
                                                   sampling methodology in accordance                      statistical sampling must be                             Agency means a State Medicaid
                                                   with this section every 3 years.                        incorporated into the estimate:                       agency.
                                                      (B) Any State that meets the                            (1) On an annual basis beginning in                *     *     *     *     *
                                                   requirements of paragraph (h)(3)(iii)(A)                CY 2016, to include expenditures                         Caretaker relative means a relative of
                                                   of this section may retroactively apply                 related to CY 2014, and continue                      a dependent child by blood, adoption,
                                                   results of the sample to the rates of the               through CY 2021;                                      or marriage with whom the child is
                                                   calendar year expenditures for the years                   (2) After CY 2021, validation will be              living, who assumes primary
                                                   prior to the sample up to the last year                 completed, and results incorporated                   responsibility for the child’s care (as
                                                   in which the State completed and                        into the model, on a 3-year basis;                    may, but is not required to, be indicated
                                                   applied the results of a sampling                          (3) After CY 2030, validation will be              by claiming the child as a tax dependent
                                                   methodology.                                            completed, and results incorporated                   for Federal income tax purposes),
                                                                                                           into the model, on a 5-year basis.                    including the child’s natural, adoptive,
                                                   § 433.212 CMS established FMAP
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                                                   proportion.                                             PART 435—ELIGIBILITY IN THE                           or step parent; another relative of the
                                                      (a) Beginning January 1, 2014, States                STATES, DISTRICT OF COLUMBIA,                         child based on blood (including those of
                                                   may elect to apply a CMS determined                     THE NORTHERN MARIANA ISLANDS,                         half-blood), adoption, or marriage; and
                                                   proportion to medical assistance                        AND AMERICAN SAMOA                                    the spouse of such parent or relative,
                                                   expenditures for individuals eligible for                                                                     even after the marriage is terminated by
                                                   Medicaid in the adult group.                              8. The authority citation for part 435              death or divorce.
                                                      (b) CMS will publish State-specific                  continues to read as follows:                         *     *     *     *     *
                                                   estimated FMAP proportions of                            Authority: Sec. 1102 of the Social Security             Dependent child means a child who is
                                                   eligibility under the December 2009                     Act (42 U.S.C. 1302).                                 under the age of 18, or is age 18 and a


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                                                   51188                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   full-time student, and who is deprived                  section 36B(d)(2) of the Internal                       12. Revise the undesignated center
                                                   of parental support by reason of the                    Revenue Code of 1986.                                 heading that is immediately before
                                                   death, absence from the home, or                        *     *    *     *     *                              § 435.116 to read as follows:
                                                   unemployment of at least one parent,                      Pregnant woman means a woman                        Mandatory Coverage of Pregnant
                                                   unless the State has elected in its State               during pregnancy and the post partum                  Women, Children Under 19, and
                                                   plan to eliminate such deprivation                      period, which extends until the last day              Newborn Children
                                                   requirement. A parent is considered to                  of the month in which a 60-day period,
                                                   be unemployed if he or she is working                   beginning on the date the pregnancy                     13. Section 435.116 is revised to read
                                                   less than 100 hours per month, or such                  terminates, ends.                                     as follows:
                                                   higher number of hours as the State may                   Secure electronic interface means an                § 435.116   Pregnant women.
                                                   elect in its State plan.                                interface which allows for the exchange                  (a) Basis. This section implements
                                                      Effective income level means the                     of data between Medicaid and other                    sections 1902(a)(10)(A)(i)(III) and (IV);
                                                   income standard applicable under the                    insurance affordability programs and                  1902(a)(10)(A)(ii)(I), (IV), and (IX); and
                                                   State plan for an eligibility group, after              adheres to the requirements in part 433,              1931(b) and (d) of the Act.
                                                   taking into consideration any disregard                 subpart C of this chapter.                               (b) Scope. The agency must provide
                                                   of a block of income.                                   *     *    *     *     *                              Medicaid to pregnant women whose
                                                      Electronic account means an                            Tax dependent means an individual                   household income is at or below the
                                                   electronic file that includes all                       for whom another individual properly                  income standard established by the
                                                   information collected and generated by                  claims a deduction for a personal                     agency in its State plan, in accordance
                                                   the State regarding each individual’s                   exemption under section 151 of the                    with paragraph (c) of this section.
                                                   Medicaid eligibility and enrollment,                    Internal Revenue Code of 1986 for a                      (c) Income standard. The agency must
                                                   including all documentation required                    taxable year.                                         establish in its State plan the income
                                                   under § 435.913.                                                                                              standard as follows:
                                                      Families and children means                          Subpart B—Mandatory Coverage                             (1) The minimum income standard is
                                                   individuals whose eligibility for                                                                             the higher of:
                                                                                                             10. The heading for subpart B is                       (i) 133 percent FPL for a household of
                                                   Medicaid is determined based on being                   revised as set forth above.
                                                   a pregnant woman, a child younger than                                                                        the applicable family size; or
                                                                                                             11. Section 435.110 is revised to read                 (ii) Such higher income standard up
                                                   age 21, or a parent or other caretaker                  as follows:
                                                   relative of a dependent child. It does not                                                                    to 185 percent FPL, if any, as the State
                                                   include individuals whose eligibility is                § 435.110 Parents and other caretaker                 had established as of December 19, 1989
                                                   based on other factors, such as                         relatives.                                            for determining eligibility for pregnant
                                                   blindness, disability, being aged (65 or                   (a) Basis. This section implements                 women, or, as of July 1, 1989, had
                                                   more years old), or a need for long-term                sections 1931(b) and (d) of the Act.                  authorizing legislation to do so.
                                                   care services.                                                                                                   (2) The maximum income standard is
                                                                                                              (b) Scope. The agency must provide
                                                                                                                                                                 the higher of—
                                                      Household income has the meaning                     Medicaid to parents and other caretaker                  (i) The highest effective income level
                                                   provided in § 435.603(d).                               relatives, as defined in § 435.4, and if              in effect under the Medicaid State plan
                                                      Insurance affordability program                      applicable the spouse of the parent or                for coverage under the sections
                                                   means:                                                  other caretaker relative, whose                       specified at paragraph (a) of this section,
                                                      (1) A State Medicaid program under                   household income is at or below the                   or waiver of the State plan covering
                                                   title XIX of the Act;                                   income standard established by the                    pregnant women, as of March 23, 2010
                                                      (2) A State children’s health insurance              agency in the State plan, in accordance               or December 31, 2013, if higher,
                                                   program (CHIP) under title XXI of the                   with paragraph (c) of this section.                   converted to a MAGI-equivalent
                                                   Act;                                                       (c) Income standard. The agency must               standard in accordance with guidance
                                                      (3) A State basic health program                     establish in its State plan the income                issued by the Secretary under section
                                                   established under section 1331 of the                   standard as follows:                                  1902(e)(14)(A) and (E) of the Act; or
                                                   Affordable Care Act;                                       (1) The minimum income standard is                    (ii) 185 percent FPL.
                                                                                                           a State’s AFDC income standard in                        (d) Covered services.
                                                      (4) Coverage in a qualified health plan
                                                                                                           effect as of May 1, 1988 for a household                 (1) Pregnant women are covered
                                                   through the Exchange with advance
                                                                                                           of the applicable family size.                        under this section for the full Medicaid
                                                   payments of the premium tax credit
                                                                                                              (2) The maximum income standard is                 coverage described in paragraph (d)(2)
                                                   established under section 36B of the
                                                                                                           the higher of—                                        of this section, except that the agency
                                                   Internal Revenue Code of 1986; or
                                                                                                              (i) The effective income level in effect           may provide only pregnancy-related
                                                      (5) Coverage in a qualified health plan              for section 1931 low-income families
                                                   through the Exchange with cost-sharing                                                                        services described in paragraph (d)(3) of
                                                                                                           under the Medicaid State plan or waiver               this section for pregnant women whose
                                                   reductions established under section                    of the State plan as of March 23, 2010
                                                   1402 of the Affordable Care Act.                                                                              income exceeds the applicable income
                                                                                                           or December 31, 2013, if higher,                      limit established by the agency in its
                                                      MAGI-based income has the meaning                    converted to a MAGI-equivalent
                                                   provided in § 435.603(e).                                                                                     State plan, in accordance with
                                                                                                           standard in accordance with guidance                  paragraph (d)(4) of this section.
                                                   *      *     *     *     *                              issued by the Secretary under section                    (2) Full Medicaid coverage—
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                                                      Minimum essential coverage means                     1902(e)(14)(A) and (E) of the Act; or                    (i) Consists of all services which the
                                                   coverage defined in section 5000A(f) of                    (ii) A State’s AFDC income standard                State is required to cover under
                                                   subtitle D of the Internal Revenue Code                 in effect as of July 16, 1996 for a                   § 440.210(a)(1) of this chapter and all
                                                   of 1986, as added by section 1401 of the                household of the applicable family size,              services which it has opted to cover
                                                   Affordable Care Act, and implementing                   increased by no more than the                         under § 440.225 of this chapter; and
                                                   regulations of such section issued by the               percentage increase in the Consumer                      (ii) May include, at State option,
                                                   Secretary of the Treasury.                              Price Index for all urban consumers                   enhanced pregnancy-related services in
                                                      Modified adjusted gross income                       between July 16, 1996 and the effective               accordance with § 440.250(p) of this
                                                   (MAGI) has the meaning provided in                      date of such increase.                                chapter.


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                           51189

                                                      (3) Pregnancy-related services—                      March 23, 2010 or December 31, 2013,                    (i) Are under age 65;
                                                      (i) Consist at least of services, as                 if higher, converted to a MAGI-                         (ii) Are not eligible for and enrolled
                                                   defined by the agency, related to                       equivalent standard in accordance with                for mandatory coverage under a State’s
                                                   pregnancy (including prenatal, delivery,                guidance issued by the Secretary under                Medicaid State plan in accordance with
                                                   postpartum, and family planning                         section 1902(e)(14)(A) and (E) of the                 subpart B of this part;
                                                   services) and other conditions which                    Act; or                                                 (iii) Are not otherwise eligible for and
                                                   may complicate pregnancy; and                              (iii) For infants under age 1, 185                 enrolled for optional coverage under a
                                                      (ii) May include, at State option,                   percent FPL.                                          State’s Medicaid State plan in
                                                   enhanced pregnancy-related services in                     15. Revise the undesignated center                 accordance with subpart C of this part,
                                                   accordance with § 440.250(p) of this                    heading that is before § 435.119 to read              based on information available to the
                                                   chapter).                                               as follows:                                           State from the application filed by or on
                                                      (4) Applicable income limit for full                    Mandatory Coverage for Individuals                 behalf of the individual; and
                                                   Medicaid coverage of pregnant women.                    Age 19 through 64                                       (iv) Have household income that
                                                   For purposes of paragraph (d)(1) of this                   16. Section 435.119 is revised to read             exceeds 133 percent FPL, but is at or
                                                   section—                                                as follows:                                           below the income standard elected by
                                                      (i) The minimum applicable income                                                                          the agency and approved in its
                                                                                                           § 435.119 Coverage for individuals age 19
                                                   limit is the State’s AFDC income                        or older and under age 65 at or below 133             Medicaid State plan, for a household of
                                                   standard in effect as of May 1, 1988 for                percent FPL.                                          the applicable family size.
                                                   a household of the applicable family                       (a) Basis. This section implements                   (2) Limitations.
                                                   size.                                                                                                           (i) A State may not, except as
                                                                                                           section 1902(a)(10)(A)(i)(VIII) of the Act.
                                                      (ii) The maximum applicable income                      (b) Eligibility. The agency must                   permitted under an approved phase-in
                                                   limit is the highest effective income                   provide Medicaid to individuals who:                  plan adopted in accordance with
                                                   level for coverage under section                           (1) Are age 19 or older and under age              paragraph (b)(3) of this section, provide
                                                   1902(a)(10)(A)(i)(III) of the Act or under              65;                                                   Medicaid to higher income individuals
                                                   section 1931(b) and (d) of the Act in                      (2) Are not pregnant;                              described in paragraph (b)(1) of this
                                                   effect under the Medicaid State plan or                    (3) Are not entitled to or enrolled for            section without providing Medicaid to
                                                   waiver of the State plan as of March 23,                Medicare benefits under part A or B of                lower income individuals described in
                                                   2010 or December 31, 2013, if higher,                   title XVIII of the Act;                               such paragraph.
                                                   converted to a MAGI-equivalent                             (4) Are not otherwise eligible for and               (ii) The limitation on coverage of
                                                   standard.                                               enrolled for mandatory coverage under                 parents and other caretaker relatives
                                                      14. Section 435.118 is added to read                 a State’s Medicaid State plan in                      specified in § 435.119(c) also applies to
                                                   as follows:                                             accordance with subpart B of this part;               coverage under this section.
                                                                                                           and                                                     (3) Phase-in plan. A State may phase
                                                   § 435.118    Infants and children under age                (5) Have household income that is at               in coverage to all individuals described
                                                   19.                                                                                                           in paragraph (b)(1) of this section under
                                                                                                           or below 133 percent FPL for a
                                                      (a) Basis. This section implements                   household of the applicable family size.              a phase-in plan submitted in a State
                                                   sections 1902(a)(10)(A)(i)(III), (IV), (VI),               (c) Coverage for dependent children.               plan amendment to and approved by the
                                                   and (VII); 1902(a)(10)(A)(ii)(IV) and (IX);                (1) A State may not provide Medicaid               Secretary.
                                                   and 1931(b) and (d) of the Act.                         to a parent or other caretaker relative
                                                      (b) Scope. The agency must provide                   living with a dependent child if the                  Subpart E—General Eligibility
                                                   Medicaid to children under age 19                       child is under the age specified in                   Requirements
                                                   whose household income is at or below                   paragraph (c)(2) of this section, unless                 19. Section 435.403 is amended by—
                                                   the income standard established by the                  such child is receiving benefits under                   A. Redesignating paragraphs (h) and
                                                   agency in its State plan, in accordance                 Medicaid, the Children’s Health                       (i) as paragraphs (i) and (h),
                                                   with paragraph (c) of this section.                     Insurance Program under subchapter D                  respectively.
                                                      (c) Income standard.                                 of this chapter, or otherwise is enrolled                B. Revising newly redesignated
                                                      (1) The minimum income standard is                   in other minimum essential coverage as                paragraphs (h)(1) and (h)(4)
                                                   the higher of—                                          defined in § 435.4 of this part.                         C. Revising newly redesignated
                                                      (i) 133 percent FPL for a household of                  (2) For the purpose of paragraph (c)(1)            paragraphs (i)(1) and (i)(2).
                                                   the applicable family size; or                          of this section, the age specified is                    D. Removing newly redesignated
                                                      (ii) For infants under age 1, such                   under age 19, unless the State had                    paragraph (i)(3).
                                                   higher income standard up to 185                        elected as of March 23, 2010 to provide                  E. Further redesignating newly
                                                   percent FPL, if any, as the State had                   Medicaid to individuals under age 20 or               redesignated paragraph (i)(4) as
                                                   established as of December 19, 1989 for                 21 under § 435.222 of this part, in which             paragraph (i)(3).
                                                   determining eligibility for infants, or, as             case the age specified is such higher age.               F. Amending paragraph (l)(2) by
                                                   of July 1, 1989 had authorizing                                                                               removing ‘‘paragraph (h)’’ and adding
                                                   legislation to do so.                                   Subpart C—Options for Coverage                        ‘‘paragraph (i)’’ in its place.
                                                      (2) The maximum income standard                                                                               The revisions and addition read as
                                                                                                             17. The heading for subpart C is
                                                   for each of the age groups of infants                                                                         follows:
                                                                                                           revised to read as set forth above.
                                                   under age 1, children age 1 through age
                                                                                                             18. Section 435.218 is added to read
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                                                   5, and children age 6 through age 18 is                                                                       § 435.403   State residence.
                                                                                                           as follows:
                                                   the higher of—                                                                                                *       *    *     *     *
                                                      (i) 133 percent FPL;                                 § 435.218    Individuals above 133 percent               (h) Individuals age 21 and over.
                                                      (ii) The highest effective income level              FPL.                                                     (1) For an individual not residing in
                                                   for each age group in effect under the                    (a) Basis. This section implements                  an institution as defined in paragraph
                                                   Medicaid State plan for coverage under                  section 1902(a)(10)(A)(ii)(XX) of the Act.            (b) of this section, the State of residence
                                                   the applicable sections of the Act listed                 (b) Eligibility.                                    is the State where the individual—
                                                   at § 435.118(a), or waiver of the State                   (1) Criteria. The agency may provide                   (i) Intends to reside, including
                                                   plan covering such age group, as of                     Medicaid to individuals who:                          without a fixed address or, if incapable


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                                                   of stating intent, where the individual is                 (b) Definitions. For purposes of this                 (i) Distributions from Alaska Native
                                                   living; or                                              section—                                              Corporations and Settlement Trusts;
                                                      (ii) Has entered the State with a job                   Code means the Internal Revenue                       (ii) Distributions from any property
                                                   commitment or seeking employment                        Code of 1986.                                         held in trust, or that is subject to Federal
                                                   (whether or not currently employed).                       Family size means the number of                    restrictions, or otherwise under the
                                                   *       *    *    *     *                               persons counted as members of an                      supervision of the Secretary of the
                                                      (4) For any other institutionalized                  individual’s household. In the case of                Interior.
                                                   individual, the State of residence is the               determining the family size of a                         (iii) Distributions resulting from real
                                                   State where the individual intends to                   pregnant woman, the pregnant woman                    property ownership interests related to
                                                   reside or, if incapable of stating intent,              is counted as 2 persons. In the case of               natural resources and improvements—
                                                   where the individual is living.                         determining the family size of other                     (A) Located on or near a reservation
                                                      (i) Individuals under age 21.                        individuals who have a pregnant                       or within the most recent boundaries of
                                                      (1) For an individual under age 21                   woman in their household, the pregnant                a prior Federal reservation; or
                                                   who is capable of indicating intent and                 woman is counted, at State option, as                    (B) Resulting from the exercise of
                                                   who is emancipated from his or her                      either 1 or 2 person(s).                              Federally-protected rights relating to
                                                   parent or who is married, the State of                     Tax dependent has the meaning                      such real property ownership interests;
                                                   residence is determined in accordance                   provided in § 435.4 of this part.                        (iv) Payments resulting from
                                                   with paragraph (h)(1) of this section.                     (c) Basic rule. Except as specified in             ownership interests in or usage rights to
                                                      (2) For an individual under age 21 not               paragraph (i) of this section, the agency             items that have unique religious,
                                                   described in paragraph (i)(1) of this                   must determine financial eligibility for              spiritual, traditional, or cultural
                                                   section, not living in an institution as                Medicaid based on ‘‘household income’’                significance or rights that support
                                                   defined in paragraph (b) of this section                as defined in paragraph (d) of this                   subsistence or a traditional lifestyle
                                                   and not eligible for Medicaid based on                  section.                                              according to applicable Tribal Law or
                                                   receipt of assistance under title IV–E of                  (d) Household income.                              custom;
                                                                                                              (1) Except as provided in paragraphs                  (v) Student financial assistance
                                                   the Act, as addressed in paragraph (g) of
                                                                                                           (d)(2) and (d)(3) of this section,                    provided under the Bureau of Indian
                                                   this section, the State of residence is the
                                                                                                           household income is the sum of the                    Affairs education programs.
                                                   State:
                                                      (i) Where the individual resides,                    MAGI-based income, as defined in                         (f) Household.
                                                                                                           paragraph (e) of this section, of every                  (1) Basic rule for taxpayers not
                                                   including with a custodial parent or
                                                                                                           individual included in the individual’s               claimed as a tax dependent. In the case
                                                   caretaker or without a fixed address; or
                                                                                                           household, minus an amount equivalent                 of an individual filing a tax return for
                                                      (ii) Where the individual’s parent or
                                                                                                           to 5 percentage points of the Federal                 the taxable year in which an initial
                                                   caretaker has entered the State with a
                                                                                                           poverty level for the applicable family               determination or redetermination of
                                                   job commitment or seeking employment
                                                                                                           size.                                                 eligibility is being made, and who is not
                                                   (whether or not currently employed).
                                                                                                              (2) The MAGI-based income of an                    claimed as a tax dependent by another
                                                   *       *    *    *     *                               individual who is included in the                     taxpayer, the household consists of the
                                                                                                           household of his or her natural, adopted              taxpayer and all tax dependents.
                                                   Subpart G—General Financial
                                                                                                           or step parent and is not required to file               (2) Basic rule for individuals claimed
                                                   Eligibility Requirements and Options
                                                                                                           a tax return under section 6012 of the                as a tax dependent. In the case of an
                                                     20. Section 435.603 is added to read                  Code for the taxable year in which                    individual who is claimed as a tax
                                                   as follows:                                             eligibility for Medicaid is being                     dependent by another taxpayer, the
                                                                                                           determined, is not included in                        household is the household of the
                                                   § 435.603 Application of modified adjusted              household income whether or not the                   taxpayer claiming such individual as a
                                                   gross income (MAGI).
                                                                                                           individual files a tax return.                        tax dependent, except that the
                                                      (a) Basis, scope, and implementation.                   (3) In the case of individuals                     household must be determined in
                                                      (1) This section implements section                  described in paragraph (f)(2)(i) of this              accordance with paragraph (f)(3) of this
                                                   1902(e)(14) of the Act.                                 section, household income also includes               section in the case of—
                                                      (2) Effective January 1, 2014, the                   actually available cash support provided                 (i) Individuals other than a spouse or
                                                   agency must apply the financial                         by the person claiming such individual                a biological, adopted or step child who
                                                   methodologies set forth in this section                 as a tax dependent.                                   are claimed as a tax dependent by
                                                   in determining the financial eligibility                   (e) MAGI-based income. For the                     another taxpayer;
                                                   of all individuals for Medicaid, except                 purposes of this section, MAGI-based                     (ii) Individuals under age 21 living
                                                   for individuals identified in paragraph                 income means income calculated using                  with both parents, if the parents are not
                                                   (i) of this section and as provided in                  the same financial methodologies used                 married; and
                                                   paragraph (a)(3) of this section.                       to determine modified adjusted gross                     (iii) Individuals under age 21 claimed
                                                      (3) In the case of determining ongoing               income as defined in section                          as a tax dependent by a non-custodial
                                                   eligibility for beneficiaries determined                36B(d)(2)(B) of the Code, except that,                parent.
                                                   eligible for Medicaid on or before                      notwithstanding the treatment of the                     (3) Rules for individuals who neither
                                                   December 31, 2013 and receiving                         following under the Code—                             file a tax return nor are claimed as a tax
                                                   Medicaid as of January 1, 2014,                            (1) An amount received as a lump                   dependent. In the case of individuals
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                                                   application of the financial                            sum is counted as income only in the                  who do not file a Federal tax return and
                                                   methodologies set forth in this section                 month received.                                       are not claimed as a tax dependent, the
                                                   must not be applied until March 31,                        (2) Scholarships or fellowship grants              household consists of the individual
                                                   2014 or the next regularly-scheduled                    used for education purposes and not for               and, if living with the individual—
                                                   redetermination of eligibility for such                 living expenses are excluded from                        (i) The individual’s spouse;
                                                   individual under § 435.916, whichever                   income.                                                  (ii) The individual’s natural, adopted
                                                   is later, if the individual otherwise                      (3) American Indian/Alaska Native                  and step children under age 19 or, if
                                                   would lose eligibility as a result of the               exceptions. The following are excluded                such child is a full-time student, under
                                                   application of these methodologies.                     from income:                                          age 21; and


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                                                      (iii) In the case of individuals under               apply. The financial methodologies                    to all applicants and other individuals
                                                   age 19, or, in the case of full-time                    described in this section are not applied             who request it:
                                                   students, under age 21 the individual’s                 in determining the eligibility for                      (1) The eligibility requirements;
                                                   natural, adopted and step parents and                   individuals whose eligibility for                       (2) Available Medicaid services; and
                                                   adoptive and step siblings under age 19                 Medicaid is being determined on the                     (3) The rights and responsibilities of
                                                   or, if such sibling is a full-time student,             following bases or under the following                applicants and beneficiaries.
                                                   under age 21.                                           eligibility groups. For individuals                     (b) Such information must be
                                                      (4) Married couples. In the case of a                described in paragraphs (i)(3) through                provided in simple and understandable
                                                   married couple living together, each                    (i)(6) of this section, the agency must               terms and in a manner that is accessible
                                                   spouse will be included in the                          use the financial methods described in                to persons who are Limited English
                                                   household of the other spouse,                          § 435.601 and § 435.602 of this subpart.              Proficient (LEP) and individuals living
                                                   regardless of whether they file a joint                    (1) Individuals whose eligibility for              with disabilities.
                                                   tax return under section 6013 of the                    Medicaid does not require a                             22. Section 435.907 is revised to read
                                                   Code or whether one spouse is claimed                   determination of income by the State                  as follows:
                                                   as a tax dependent by the other spouse.                 Medicaid agency, including, but not
                                                      (g) No resource test or income                       limited to, individuals deemed to be                  § 435.907   Application.
                                                   disregards. In the case of individuals                  receiving Supplemental Security                          (a) The agency must require an
                                                   whose financial eligibility for Medicaid                Income (SSI) benefits and eligible for                application from the applicant, an
                                                   is determined in accordance with this                   Medicaid under § 435.120, individuals                 authorized representative, or someone
                                                   section, the agency must not—                           receiving SSI benefits and eligible for               acting responsibly for the applicant.
                                                      (1) Apply any assets or resources test;              Medicaid under § 435.135, § 435.137 or                   (b) The application must be—
                                                   or                                                      § 435.138 of this subpart and                            (1) The single, streamlined
                                                      (2) Apply any income or expense                      individuals for whom the State relies on              application for all insurance
                                                   disregards under sections 1902(r)(2) or                 a finding of income made by an Express                affordability programs developed by the
                                                   1931(b)(2)(C), or otherwise under title                 Lane agency, in accordance with section               Secretary in accordance with section
                                                   XIX, of the Act.                                        1902(e)(13) of the Act.                               1413(b)(1)(A) of the Affordable Care Act;
                                                      (h) Budget period.                                      (2) Individuals who are age 65 or                  or
                                                      (1) Applicants and new enrollees.                    older.                                                   (2) An alternative single, streamlined
                                                   Financial eligibility for Medicaid for                     (3) Individuals whose eligibility is               application for all insurance
                                                   applicants and other individuals not                    being determined on the basis of being                affordability programs developed by a
                                                   receiving Medicaid benefits at the point                blind or disabled, or on the basis of                 State and approved by the Secretary in
                                                   at which eligibility for Medicaid is                    being treated as being blind or disabled,             accordance with section 1413(b)(1)(B) of
                                                   being determined must be based on                       including, but not limited to,                        the Affordable Care Act. The alternative
                                                   current monthly household income and                    individuals eligible under § 435.121,                 application must be no more
                                                   family size.                                            § 435.232 or § 435.234 of this part or                burdensome than the single streamlined
                                                      (2) Current beneficiaries. For                       under section 1902(e)(3) of the Act.                  application described in paragraph
                                                   individuals who have been determined                       (4) Individuals whose eligibility is               (b)(1) of this section and ensure
                                                   financially-eligible for Medicaid using                 being determined on the basis of the                  coordination across insurance
                                                   the MAGI-based methods set forth in                     need for long-term care services,                     affordability programs.
                                                   this section, a State may elect in its                  including nursing facility services or a                 (c) For individuals applying for
                                                   State plan to base financial eligibility                level of care in any institution                      coverage, or who may be eligible, on a
                                                   either on current monthly household                     equivalent to such services; home and                 basis other than the applicable modified
                                                   income and family size or projected                     community-based services under                        adjusted gross income standard in
                                                   annual household income for the                         section 1915 or under a demonstration                 accordance with § 435.911, the agency
                                                   current calendar year.                                  under section 1115 of the Act; or                     may use either the single, streamlined
                                                      (3) In determining current monthly or                services described in sections 1905(a)(7)             application and supplemental forms to
                                                   projected annual household income                       or (24) or in sections 1905(a)(22) and                collect additional information needed to
                                                   under paragraph (h)(1) or (h)(2) of this                1929 of the Act.                                      determine eligibility on such other basis
                                                   section, the agency may adopt a                            (5) Individuals who are being                      or an alternative application form
                                                   reasonable method to include a prorated                 evaluated for eligibility for Medicare                approved by the Secretary.
                                                   portion of reasonably predictable future                cost sharing assistance under section                    (d) The agency must establish
                                                   income, to account for a reasonably                     1902(a)(10)(E) of the Act, but only for               procedures to enable an individual, or
                                                   predictable decrease in future income,                  purposes of determining eligibility for               other authorized person acting on behalf
                                                   or both, as evidenced by a signed                       such assistance.                                      of the individual, to submit an
                                                   contract for employment, a clear history                   (6) Individuals who are being                      application—
                                                   of predictable fluctuations in income, or               evaluated for coverage as medically                      (1) Via the Internet Web site described
                                                   other clear indicia of such future                      needy under subparts D and I of this                  in § 435.1200(d) of this part;
                                                   changes in income. Such future increase                 part.                                                    (2) By telephone;
                                                   or decrease in income must be verified                                                                           (3) Via mail;
                                                   in the same manner as other income, in                  Subpart J—Eligibility in the States and                  (4) In person; or
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                                                   accordance with the income and                          District of Columbia Applications                        (5) Via facsimile.
                                                   eligibility verification requirements at                  21. Section 435.905 is revised to read                 (e) Information related to non-
                                                   § 435.940 et seq., including by self-                   as follows:                                           applicants.
                                                   attestation if reasonably compatible                                                                             (1) The agency may not require an
                                                   with other electronic data obtained by                  § 435.905 Availability of program                     individual who is not applying for
                                                   the agency in accordance with such                      information.                                          benefits for himself or herself (a ‘‘non-
                                                   sections.                                                 (a) The agency must furnish the                     applicant’’) to provide an SSN or
                                                      (i) Eligibility Groups for which                     following information in electronic and               information regarding such individual’s
                                                   modified MAGI-based methods do not                      paper formats, and orally as appropriate,             citizenship, nationality, or immigration


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                                                   status on any application or                               (iv) The income standard established               § 435.911(c)(1)must be redetermined
                                                   supplemental form.                                      under § 435.218(b)(1)(iv) of this part, if            once every 12 months.
                                                      (2) The agency may request that a                    the State has elected to provide coverage                (2) The agency must make a
                                                   household member who is a non-                          under such section and, if applicable,                redetermination of eligibility without
                                                   applicant provide an SSN, only if—                      coverage under the State’s phase-in plan              requiring information from the
                                                      (i) Provision of the SSN to the agency               has been implemented for the                          individual if able to do so based on
                                                   is voluntary and the agency permits the                 individual whose eligibility is being                 reliable information contained in the
                                                   completion of the application without                   determined.                                           individual’s account or other more
                                                   such information;                                          (2) [Reserved]                                     current information available to the
                                                      (ii) The SSN from a non-applicant is                    (c) For each individual who has                    agency, including but not limited to
                                                   used to determine an applicant’s                        submitted an application described                    information accessed through any data
                                                   eligibility for Medicaid or for a purpose               § 435.907 and who meets the non-                      bases accessed by the agency under
                                                   directly connected to the administration                financial requirements for eligibility (or            § 435.948, § 435.949 and § 435.956 of
                                                   of the State plan; and                                  for whom the agency is providing a                    this part.
                                                      (iii) The agency clearly notifies the                                                                         (i) Individuals redetermined eligible
                                                                                                           reasonable opportunity to provide
                                                   non-applicant that the provision of an                                                                        on the basis of information available to
                                                                                                           documentation of citizenship or
                                                   SSN is voluntary and informs the                                                                              the agency.
                                                                                                           immigration status, in accordance with
                                                   individual how the SSN will be used, at                                                                          (A) If the agency determines, on the
                                                                                                           sections 1903(x), 1902(ee) or 1137(d) of
                                                   the time it is requested.                                                                                     basis of information available to the
                                                      (f) The initial application must be                  the Act), the State Medicaid Agency
                                                                                                           must comply with the following—                       agency that the individual remains
                                                   signed under penalty of perjury.                                                                              eligible for Medicaid, consistent with
                                                   Electronic, including telephonically                       (1) Eligibility determination for
                                                                                                           mandatory coverage on basis of                        the requirements of this subpart and
                                                   recorded, signatures and handwritten                                                                          subpart E of part 431 the agency must
                                                   signatures transmitted by fascimile or                  modified adjusted gross income. For
                                                                                                           each such individual who is under age                 notify the individual—
                                                   other electronic transmission must be                                                                            (1) Of the eligibility determination,
                                                   accepted.                                               19, pregnant, or age 19 or older and
                                                                                                           under age 65 and not entitled to or                   and basis therefore; and
                                                      23. Section 435.908 is revised to read                                                                        (2) That the individual must inform
                                                   as follows:                                             enrolled for Medicare benefits under
                                                                                                                                                                 the agency, through any of the modes
                                                                                                           part A or B or title XVIII of the Act, and
                                                   § 435.908 Assistance with application and                                                                     permitted for submission of applications
                                                                                                           whose household income is at or below
                                                   redetermination.                                                                                              under § 435.907(d) of this subpart, if any
                                                                                                           the applicable modified adjusted gross
                                                     (a) The agency must allow                                                                                   of the information contained in such
                                                                                                           income standard, the agency must
                                                   individual(s) of the applicant or                                                                             notice is inaccurate.
                                                                                                           promptly and without undue delay
                                                   beneficiary’s choice to assist in the                                                                            (B) Such individuals must not be
                                                                                                           furnish Medicaid benefits to such
                                                   application process or during a                                                                               required to sign and return the notice.
                                                                                                           individual in accordance with parts 440                  (ii) Individuals not redetermined
                                                   redetermination of eligibility.                         and 441 of this chapter.
                                                     (b) The agency must provide                                                                                 eligible on basis of information
                                                                                                              (2) Eligibility on basis other than                available to agency. If the agency cannot
                                                   assistance to any individual seeking                    applicable modified adjusted gross
                                                   help with the application or                                                                                  determine, on the basis of information
                                                                                                           income standard. For each such                        available to it, that the individual
                                                   redetermination process in person, over                 individual not determined eligible for
                                                   the telephone, and online, and in a                                                                           remains eligible for Medicaid, or if it
                                                                                                           Medicaid in accordance with paragraph                 otherwise needs additional information
                                                   manner that is accessible to individuals                (c)(1) of this section, the agency must
                                                   with disabilities and those who are                                                                           to complete the redetermination, the
                                                                                                           collect additional information as                     agency must comply with the
                                                   limited English proficient.                             needed, consistent with § 435.907(c),
                                                     24. Redesignate § 435.911 through                                                                           requirements in paragraph (a)(3) of this
                                                                                                           to—                                                   section.
                                                   § 435.914 as § 435.912 through § 435.915                   (i) Determine whether such individual
                                                   respectively.                                                                                                    (3) Use of a pre-populated renewal
                                                                                                           is eligible for Medicaid on any other                 form. For individuals not redetermined
                                                     25. Add new § 435.911 to read as                      basis.
                                                   follows:                                                                                                      eligible under paragraph (a)(2) of this
                                                                                                              (ii) Promptly and without undue                    section, the agency must—
                                                   § 435.911    Determination of eligibility.              delay furnish Medicaid to each such                      (i) Provide the individual with—
                                                      (a) Statutory basis. This section                    individual determined eligible, in                       (A) A renewal form containing
                                                   implements sections 1902(a)(4), (a)(8),                 accordance with parts 440 and 441 of                  information available to the agency that
                                                   (a)(10)(A), (a)(19), and (e)(14) and                    this chapter; and                                     is needed to renew eligibility, as
                                                   section 1943 of the Act.                                   (iii) Comply with the requirements set             specified by the Secretary;
                                                      (b)(1) Applicable modified adjusted                  forth in § 435.1200(g).                                  (B) At least 30 days from the date of
                                                   gross income standard means 133                            26. Section 435.916 is revised to read             the renewal form to respond and
                                                   percent of the Federal poverty level or,                as follows:                                           provide necessary information;
                                                   if higher—                                                                                                       (C) Notice of the agency’s decision
                                                      (i) In the case of parents and other                 § 435.916 Periodic redeterminations of                concerning eligibility in accordance
                                                                                                           Medicaid eligibility.                                 with this subpart and subpart E of part
                                                   caretaker relatives described in
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                                                   § 435.110(b), the income standard                          (a) Redetermination of individuals                 431 of this chapter; and
                                                   established in accordance with                          whose Medicaid eligibility is based on                   (D) The ability to respond to the
                                                   § 435.110(c);                                           modified adjusted gross income.                       renewal form through any of the modes
                                                      (ii) In the case of pregnant women, the                 (1) Except as provided in paragraph                permitted for submission of applications
                                                   income standard established in                          (d) of this section, the eligibility of               under § 435.907(d), and if required, sign
                                                   accordance with § 435.116(c);                           Medicaid beneficiaries whose financial                the renewal electronically.
                                                      (iii) In the case of individuals under               eligibility is based on the applicable                   (ii) Verify any information provided
                                                   age 19, the income standard established                 modified adjusted gross income                        by the beneficiary in accordance with
                                                   in accordance with § 435.118(c);                        standard in accordance with                           § 435.945 through § 435.956.


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                                                      (iii) Reconsider in a timely manner                  § 435.940    Basis and scope.                         information available to it under this
                                                   the eligibility of an individual who is                   The income and eligibility                          subpart to verify income and eligibility
                                                   terminated for failure to respond to the                verification requirements set forth at                or for other purposes directly connected
                                                   renewal form, if the individual                         § 435.940 through § 435.960 of this                   to the administration of the State plan.
                                                   subsequently responds to the agency                     subpart are based on sections 1137,                      (g) The agency must report
                                                   within a reasonable period after the date               1902(a)(4), 1902(a)(19), 1903(r)(3) and               information as prescribed by the
                                                   of termination without the need for the                 1943(b)(3) of the Act and section 1413                Secretary for purposes of determining
                                                   individual to file a new application.                   of the Affordable Care Act.                           compliance with § 431.305, subpart P of
                                                      (4) Transmission of data on                            28. Section 435.945 is revised to read              part 431, § 435.910, § 435.913, and
                                                   individuals no longer eligible for                      as follows:                                           § 435.940 through § 435.965 of this
                                                   Medicaid. If an individual is determined                                                                      chapter and of evaluating the
                                                   ineligible for Medicaid, the agency must                § 435.945    General requirements.
                                                                                                                                                                 effectiveness of the income and
                                                   assess the individual for eligibility for                  (a) Nothing in these regulations in this           eligibility verification system.
                                                   other insurance affordability programs                  subpart should be construed as limiting                  (h) Information exchanged
                                                   and transmit the electronic account and                 the State’s program integrity measures                electronically between the State
                                                   any relevant information used to make                   or affecting the State’s obligation to                Medicaid agency and any other agency
                                                   the eligibility determination to the                    ensure that only eligible individuals                 or program must be sent and received
                                                   appropriate program in accordance with                  receive benefits, consistent with part                via secure electronic interfaces as
                                                   the requirements set forth in                           455 of this subchapter.                               defined in § 435.4 of this part.
                                                   § 435.1200(g) of this part.                                (b) Except with respect to citizenship
                                                                                                                                                                    (i) The agency must execute written
                                                      (b) Redetermination of individuals                   and immigration status information, and
                                                                                                                                                                 agreements with other agencies before
                                                   whose Medicaid eligibility is determined                subject to the verification requirements
                                                                                                                                                                 releasing data to, or requesting data
                                                   on a basis other than modified adjusted                 set forth in this subpart, the agency may
                                                                                                                                                                 from, those agencies. Such agreements
                                                   gross income. The agency must                           accept attestation without requiring
                                                                                                                                                                 must provide for appropriate safeguards
                                                   redetermine the eligibility of Medicaid                 further paper documentation (either
                                                                                                                                                                 limiting the use and disclosure of
                                                   beneficiaries excepted from modified                    self-attestation by the applicant or
                                                                                                                                                                 information as required by Federal or
                                                   adjusted gross income under                             beneficiary or by a parent, caretaker or
                                                                                                                                                                 State law or regulations.
                                                   § 435.603(i) of this part, for                          other person acting responsibly on
                                                                                                                                                                    29. Section 435.948 is revised to read
                                                   circumstances that may change, at least                 behalf of an applicant or beneficiary) of
                                                                                                                                                                 as follows:
                                                   every 12 months. The agency may—                        all information needed to determine the
                                                      (1) Consider blindness as continuing                 eligibility of an applicant or beneficiary            § 435.948   Verifying financial information.
                                                   until the reviewing physician under                     for Medicaid.                                            (a) The agency must request
                                                   § 435.531 of this part determines that a                   (c) The agency must request and use
                                                                                                                                                                 information relating to financial
                                                   beneficiary’s vision has improved                       information relevant to verifying an
                                                                                                                                                                 eligibility from other agencies in the
                                                   beyond the definition of blindness                      individual’s eligibility for Medicaid in
                                                                                                                                                                 State and other States and Federal
                                                   contained in the plan; and                              accordance with § 435.948 through
                                                                                                                                                                 programs in accordance with this
                                                      (2) Consider disability as continuing                § 435.956 of this subpart.
                                                                                                                                                                 section. To the extent the agency
                                                   until the review team, under § 435.541                     (d) The agency must furnish, in a
                                                                                                                                                                 determines such information is useful to
                                                   of this part, determines that a                         timely manner, income and eligibility
                                                                                                                                                                 verifying the financial eligibility of an
                                                   beneficiary’s disability no longer meets                information needed for verifying
                                                                                                                                                                 individual, the agency must request:
                                                   the definition of disability contained in               eligibility for the following programs:
                                                                                                              (1) To other agencies in the State and                (1) Information related to wages, net
                                                   the plan.
                                                      (c) Procedures for reporting changes.                other States and to the Federal programs              earnings from self-employment,
                                                   The agency must have procedures                         both listed in § 435.948(a) of this                   unearned income and resources from
                                                   designed to ensure that beneficiaries                   subpart and identified in section                     the State Wage Information Collection
                                                   make timely and accurate reports of any                 1137(b) of the Act;                                   Agency (SWICA), the Internal Revenue
                                                   change in circumstances that may affect                    (2) Other insurance affordability                  Service, the Social Security
                                                   their eligibility and that such changes                 programs;                                             Administration, the agencies
                                                   may be reported in accordance with the                     (3) The child support enforcement                  administering the State unemployment
                                                   modes required for submission of                        program under part D of title IV of the               compensation laws, the State-
                                                   applications under § 435.907(d) of this                 Act; and                                              administered supplementary payment
                                                   subpart.                                                   (4) SSA for OASDI under title II and               programs under section 1616(a) of the
                                                      (d) Agency action on information                     for SSI benefits under title XVI of the               Act, and any State program
                                                   about changes. Consistent with the                      Act.                                                  administered under a plan approved
                                                   requirements of § 435.952 of this                          (e) The agency must, as required                   under Titles I, X, XIV, or XVI of the Act;
                                                   subpart—                                                under section 1137(a)(7) of the Act, and              and
                                                      (1) The agency must promptly                         upon request, reimburse another agency                   (2) Information related to eligibility or
                                                   redetermine eligibility when it receives                listed in § 435.948(a) of this subpart or             enrollment from the Public Assistance
                                                   information about changes in a                          paragraph (d) of this section for                     Reporting Information System (PARIS),
                                                   beneficiary’s circumstances that may                    reasonable costs incurred in furnishing               the Supplemental Nutrition Assistance
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                                                   affect his or her eligibility.                          information, including new                            Program, and other insurance
                                                      (2) If the agency has information                    developmental costs associated with                   affordability programs.(Note: all
                                                   about anticipated changes in a                          furnishing the information to another                 eligibility determination systems must
                                                   beneficiary’s circumstances that may                    agency.                                               conduct data matching through PARIS).
                                                   affect his or her eligibility, it must                     (f) Prior to requesting information for               (b) To the extent that the information
                                                   redetermine eligibility at the                          an applicant or beneficiary from another              identified in paragraph (a) is available
                                                   appropriate time based on such changes.                 agency or program under this subpart,                 through the electronic service
                                                      27. Section 435.940 is revised to read               the agency must inform the individual                 established in accordance with
                                                   as follows:                                             that the agency will obtain and use                   § 435.949 of this subpart, the agency


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                                                   51194                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                   must obtain the information through                     § 435.952 Use of information and requests             other reasonable verification procedures
                                                   such service.                                           of additional information from individuals.           consistent with the requirements in
                                                      (c)(1) If the information identified in                 (a) The agency must promptly                       § 435.952 of this subpart.
                                                   paragraph (a) of this section is not                    evaluate information received or                         (2) A document that provides
                                                   available through the electronic service                obtained by it in accordance with                     evidence of immigration status may not
                                                   established in accordance with                          regulations under § 435.940 through                   be used alone to determine State
                                                   § 435.949 of this subpart, the agency                   § 435.960 of this subpart to determine                residency.
                                                   may obtain the information directly                     whether such information may affect the                  (d) Social Security numbers. The
                                                   from the appropriate agency or program                  eligibility of an individual or the                   agency must verify Social Ssecurity
                                                   consistent with the requirements in                     benefits to which he or she is entitled.              numbers (SSNs) in accordance with
                                                   § 435.945 of this subpart.                                 (b) If information provided by or on               § 435.910(f) and (g) of this subpart.
                                                                                                           behalf of an individual (on the                         (e) Pregnancy and household size.
                                                      (2) The agency must request the                      application or renewal form or                        The agency must accept self-attestation
                                                   information by SSN, or if a SSN is not                  otherwise) is reasonably compatible                   of pregnancy and the individuals that
                                                   available, using other personally                       with information obtained by the agency               comprise an individual’s household, as
                                                   identifying information in the                          in accordance with § 435.948, § 435.949               defined in 435.603(f), unless the state
                                                   individual’s account, if possible.                      or § 435.956 of this subpart, the agency              has information that is not reasonably
                                                      (d) Flexibility in information                       must determine or redetermine                         compatible with such attestation,
                                                   collection and verification. Subject to                 eligibility based on such information.                subject to the requirements of § 435.952
                                                   approval by the Secretary, the agency                      (c) An individual must not be                      of this subpart.
                                                   may request and use income                              required to provide additional                          (f) Age and date of birth. The agency
                                                   information from a source or sources                    information or documentation unless                   may verify date of birth in accordance
                                                   alternative to those listed in paragraph                information needed by the agency in                   with § 435.945(b) of this subpart or
                                                   (a) of this section provided that such                  accordance with § 435.948, § 435.949 or               through other reasonable verification
                                                   alternative source will reduce the                      § 435.956 of this subpart cannot be                   procedures consistent with the
                                                   administrative costs and burdens on                     obtained electronically or the                        requirements in § 435.952 of this
                                                   individuals and States while                            information obtained electronically is                subpart.
                                                   maximizing accuracy, minimizing                         not reasonably compatible with                          35. Subpart M is added to read as
                                                   delay, meeting applicable requirements                  information provided by or on behalf of               follows:
                                                   relating to the confidentiality,                        the individual.
                                                   disclosure, maintenance, or use of                         (1) In such cases, the agency may seek             Subpart M—Coordination of Eligibility
                                                   information, and promoting                              additional information, including a                   and Enrollment Between Medicaid,
                                                   coordination with other insurance                       statement which reasonably explains                   CHIP, Exchanges and Other Insurance
                                                   affordability programs.                                 the discrepancy or other additional                   Affordability Programs
                                                      30. Section 435.949 is added to read                 information (including paper                          § 435.1200 Medicaid agency
                                                   as follows:                                             documentation), from the individual.                  responsibilities.
                                                                                                              (2) The agency must provide the                       (a) Statutory basis. This section
                                                   § 435.949 Verification of information                   individual a reasonable period to                     implements sections 1943 and
                                                   through an electronic service.                          furnish such additional information.                  2102(b)(3)(B) and (c)(2) of the Act.
                                                     (a) The Secretary will establish an                      (d) The agency may not deny or                        (b) Definitions. As used in this
                                                   electronic service through which States                 terminate eligibility or reduce benefits              subpart:
                                                   may verify certain information with, or                 for any individual on the basis of                       Applicable modified adjusted gross
                                                   obtain such information from, Federal                   information received in accordance with               income (MAGI) standard is defined as
                                                   agencies, including the Social Security                 regulations under § 435.940 through                   provided in § 435.911(b)(1) of this part.
                                                   Administration, the Department of                       § 435.960 of this subpart unless the                     Application means the single
                                                   Treasury, the Department of Homeland                    agency has sought additional                          streamlined application described in
                                                   Security and any other Federal offices                  information from the individual in                    § 435.907(b) submitted by or on behalf
                                                   that maintain records containing                        accordance with paragraph (c) of this                 of an individual.
                                                   information related to eligibility for                  section, and provided proper notice and                  Exchange is defined as provided in
                                                   Medicaid or other minimum essential                     hearing rights to the individual in                   § 435.4 of this part.
                                                   coverage.                                               accordance with this subpart and                         Insurance Affordability Program is
                                                                                                           subpart E of part 431.                                defined as provided in § 435.4 of this
                                                     (b) To the extent that information is
                                                   available through the electronic service                § 435.953    [Removed]                                part.
                                                   established by the Secretary, States must                                                                        Secure electronic interface is defined
                                                                                                             32. Section 435.953 is removed.
                                                   obtain the information through such                                                                           as provided in § 435.4 of this part.
                                                   service, subject to the requirements in                 § 435.955    [Removed]                                   (c) General requirements. The State
                                                   subpart C of part 433 of this chapter.                    33. Section 435.955 is removed.                     Medicaid Agency must —
                                                                                                             34. Section 435.956 is added to read                   (1) Participate in and comply with the
                                                     (c) The Secretary may provide for, or                                                                       coordinated eligibility and enrollment
                                                                                                           as follows:
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                                                   approve a request from a State to utilize,                                                                    system described in section 1943 of the
                                                   an alternative mechanism through                        § 435.956 Verification of other non-                  Act to ensure that the agency fulfills the
                                                   which States may collect and verify                     financial information.                                responsibilities set forth in paragraphs
                                                   such information, if the Secretary                        (a) [Reserved]                                      (e) through (g) of this section in
                                                   determines that such alternative                          (b) [Reserved]                                      partnership with other insurance
                                                   mechanism meets the criteria set forth                    (c) State residency.                                affordability programs.
                                                   in § 435.948(d) of this subpart.                          (1) The agency may verify State                        (2) Consistent with § 431.10(d) of this
                                                     31. Section 435.952 is revised to read                residency in accordance with                          chapter, enter into one or more
                                                   as follows:                                             § 435.945(b) of this subpart or through               agreements with the Exchange and the


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                             51195

                                                   agencies administering other insurance                  obtained or verified by the insurance                 of Medicaid eligibility is still pending;
                                                   affordability programs, as defined in                   affordability program;                                and
                                                   § 435.4 of this part, as are necessary to                  (2) The agency may not request                        (ii) Notify the appropriate insurance
                                                   fulfill each of the requirements of this                information or documentation from the                 affordability program(s) of the agency’s
                                                   section.                                                individual that is already contained in               final determination of eligibility or
                                                      (3) In accordance with the Medicaid                  the electronic account;                               ineligibility.
                                                   State plan, certify the criteria, including                (3) The agency determines the
                                                   but not limited to applicable MAGI                      Medicaid eligibility of the individual,               PART 457—ALLOTMENTS AND
                                                   standards as defined in § 435.911(b) of                 promptly and without undue delay, in                  GRANTS TO STATES
                                                   this subpart and satisfactory                           accordance with § 435.911(c) of this part               36a. The authority citation for part
                                                   immigration status, necessary for the                   in the same manner as if the application              457 continues to read as follows:
                                                   Exchange to determine Medicaid                          had been submitted directly to, and
                                                   eligibility.                                                                                                    Authority: Section 1102 of the Social
                                                                                                           processed by, the agency, except that                 Security Act (42 U.S.C. 1302).
                                                      (d) Internet Web site. The State                     the agency must not verify eligibility
                                                   Medicaid agency must make available to                  criteria already verified by the insurance               36b. In part 457, remove the term
                                                   current and prospective Medicaid                        affordability program.                                ‘‘family income’’ wherever it appears
                                                   applicants and beneficiaries a Web site                    (4) The agency notifies the insurance              and add in its place the term
                                                   that:                                                   affordability program of the final                    ‘‘household income.’’
                                                      (1) Supports applicant and beneficiary               determination of the individual’s                        37. In part 457 remove ‘‘SCHIP’’
                                                   activities, including accessing                         eligibility or ineligibility for Medicaid.            wherever it appears and add in its place
                                                   information on the insurance                               (g) Evaluation of eligibility for the              ‘‘CHIP.’’
                                                   affordability programs available in the                 Exchanges and other insurance
                                                   State, applying for and renewing                                                                              Subpart A—Introduction; State Plans
                                                                                                           affordability programs.                               for Child Health Insurance Programs
                                                   coverage, and other activities as
                                                                                                              (1) Individuals determined not eligible            and Outreach Strategies
                                                   appropriate; and
                                                                                                           for Medicaid. For individuals who
                                                      (2) Is accessible to people with                                                                              38. Section § 457.10 is amended by—
                                                                                                           submit an application which includes
                                                   disabilities in accordance with the                                                                              A. Removing the definition of
                                                                                                           sufficient information to determine
                                                   Americans with Disabilities Act and                                                                           ‘‘Medicaid applicable income level.’’
                                                                                                           Medicaid eligibility, and whom the
                                                   section 504 of the Rehabilitation Act                                                                            B. Adding the following definitions in
                                                                                                           agency determines are not eligible for
                                                   and provides meaningful access for                                                                            alphabetical order: ‘‘Affordable
                                                                                                           Medicaid, the agency must establish
                                                   persons who are limited English                                                                               Insurance Exchange (Exchange),’’
                                                                                                           procedures to assess such individuals
                                                   proficient.                                                                                                   ‘‘Electronic account,’’ ‘‘Household
                                                      (e) Provision of Medicaid for                        for potential eligibility for other
                                                                                                           insurance affordability programs and                  income,’’ ‘‘Insurance affordability
                                                   individuals found eligible for Medicaid                                                                       program,’’ ‘‘Secure electronic interface,’’
                                                   by the Exchange. For each individual                    promptly and without undue delay
                                                                                                           transfer such individuals’ electronic                 and ‘‘Single, streamlined application.’’
                                                   found eligible for Medicaid by the                                                                               The additions read as follows:
                                                   Exchange based on the applicable MAGI                   accounts to any other program(s) for
                                                   standard, the agency must establish                     which they may be eligible. The                       § 457.10   Definitions and use of terms.
                                                   procedures—                                             electronic account must include all
                                                                                                                                                                 *     *     *     *     *
                                                      (1) To receive, via secure electronic                information provided on the application                 Affordable Insurance Exchange
                                                   interface, the electronic account                       and any information obtained or                       (Exchange) is defined as provided in
                                                   containing the finding of Medicaid                      verified by the agency, including the                 § 435.4 of this chapter.
                                                   eligibility, all information provided on                determination of Medicaid ineligibility.
                                                                                                              (2) Individuals undergoing a Medicaid              *     *     *     *     *
                                                   the application, and any information                                                                            Electronic account means an
                                                   obtained or verified by the Exchange in                 eligibility determination on a basis other
                                                                                                                                                                 electronic file that includes all
                                                   making such finding; and                                than MAGI. In the case of an individual
                                                                                                                                                                 information collected and generated by
                                                      (2) To furnish Medicaid to the                       with household income, as defined in
                                                                                                                                                                 the State regarding each individual’s
                                                   individual promptly and without undue                   § 435.603(d) of this part, greater than the
                                                                                                                                                                 CHIP eligibility and enrollment,
                                                   delay in accordance with parts 440 and                  applicable MAGI standard and for
                                                                                                                                                                 including all documentation required
                                                   441 of this chapter, to the same extent                 whom the agency is determining
                                                                                                                                                                 under § 457.380 of this part.
                                                   and in the same manner as if such                       eligibility on the basis of being blind or
                                                                                                           disabled, the agency must establish                   *     *     *     *     *
                                                   individual had been determined eligible
                                                                                                           procedures to—                                          Household income is defined as
                                                   for Medicaid by the agency.
                                                                                                              (i) Assess the individual for potential            provided in § 435.603(d) of this chapter.
                                                      (f) Transfer of applications from other
                                                                                                           eligibility for coverage under other                    Insurance affordability program is
                                                   insurance affordability programs to the
                                                                                                           insurance affordability programs and,                 defined as provided in § 435.4 of this
                                                   State Medicaid agency. The agency
                                                                                                           promptly and without undue delay,                     chapter.
                                                   must adopt procedures to ensure that it
                                                   promptly and without undue delay                        provide the individual’s electronic                   *     *     *     *     *
                                                   determines the Medicaid eligibility of                  account to any such program for which                   Secure electronic interface is defined
                                                   individuals determined to be potentially                the individual may be eligible. The                   as provided in § 435.4 of this chapter.
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                                                   eligible for Medicaid by other insurance                electronic account must be transmitted                *     *     *     *     *
                                                   affordability programs. The procedures                  via secure electronic interface and must                Single, streamlined application means
                                                   must ensure that—                                       include all information provided on the               the single, streamlined application form
                                                      (1) The agency accepts, via secure                   application and any information                       that is used by the State in accordance
                                                   electronic interface, the electronic                    obtained or verified by the agency, along             with § 435.907(b) of this chapter and 45
                                                   account for the individual screened as                  with the determination that the                       CFR 155.405 for individuals to apply for
                                                   potentially Medicaid eligible, including                individual is not Medicaid eligible on                coverage for all insurance affordability
                                                   all information provided on the                         the basis of the applicable MAGI                      programs.
                                                   application and any information                         standard, but that a final determination              *     *     *     *     *


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                                                     39. Section § 457.80 is amended by                    Federal poverty level and converted to                disregards as specified under
                                                   revising paragraph (c)(3) to read as                    a modified adjusted gross income                      § 435.603(g) of this chapter.
                                                   follows:                                                equivalent level in accordance with                   *     *     *     *    *
                                                                                                           guidance issued by the Secretary under                  44. Section 457.315 is added to read
                                                   § 457.80 Current State child health
                                                                                                           section 1902(e)(14)(A) and (E) of the                 as follows:
                                                   insurance coverage and coordination.
                                                                                                           Act) specified under the policies of the
                                                   *     *    *     *    *                                 State plan under title XIX of the Act                 § 457.315 Application of modified adjusted
                                                     (c) * * *                                             (including for these purposes, a section              gross income and household definition.
                                                     (3) Ensure coordination with other                    1115 waiver authorized by the Secretary                  Effective January 1, 2014, the CHIP
                                                   insurance affordability programs in the                 or under the authority of section                     agency shall apply the financial
                                                   determination of eligibility and                        1902(r)(2) of the Act) as of March 31,                methodologies set forth in paragraphs
                                                   enrollment in coverage to ensure that                   1997 for the child to be eligible for                 (b) through (h) of § 435.603 of this
                                                   there are no unnecessary gaps in                        Medicaid under either section 1902(l)(2)              chapter in determining the financial
                                                   coverage, including through use of the                  or 1905(n)(2) of the Act.                             eligibility of all individuals for CHIP.
                                                   procedures described in § 457.305,                                                                            The exception to application of such
                                                   § 457.350 and § 457.353.                                *      *    *     *     *
                                                                                                              42. Section 457.305 is revised to read             methods for individuals for whom the
                                                                                                           as follows:                                           State relies on a finding of income made
                                                   Subpart C—State Plan Requirements:
                                                                                                                                                                 by an Express Lane agency at
                                                   Eligibility, Screening, Applications,                   § 457.305    State plan provisions.                   § 435.603(i)(1) also applies.
                                                   and Enrollment
                                                                                                              The State plan must include a                         45. Section 457.320 is amended by—
                                                     40. Section 457.300 is amended by—                    description of—                                          A. Removing paragraphs (a)(4) and
                                                     A. Republishing paragraph (a)                            (a) The standards, consistent with                 (a)(6).
                                                   introductory text.                                      § 457.310 and § 457.320 of this subpart,                 B. Redesignating paragraphs (a)(5),
                                                     B. Adding paragraphs (a)(4) and (a)(5).               and financial methodologies consistent                (a)(7), (a)(8), (a)(9), and (a)(10) as
                                                     C. Revising paragraph (c).                            with § 457.315 of this subpart used to                paragraphs (a)(4), (a)(5), (a)(6), (a)(7),
                                                     The addition and revision reads as                    determine the eligibility of children for             and (a)(8), respectively.
                                                   follows:                                                coverage under the State plan.                           C. Revising paragraph (d).
                                                                                                              (b) The State’s policies governing                    D. Removing and reserving paragraph
                                                   § 457.300    Basis, scope, and applicability.
                                                                                                           enrollment and disenrollment;                         (e)(2).
                                                     (a) Statutory basis. This subpart                     processes for screening applicants for                   The revisions and additions read as
                                                   interprets and implements—                              and, if eligible, facilitating their                  follows:
                                                   *      *     *    *      *                              enrollment in other insurance
                                                     (4) Section 2107(e)(1)(O) of the Act,                                                                       § 457.320   Other eligibility standards.
                                                                                                           affordability programs; and processes
                                                   which relates to coordination of CHIP                   for implementing waiting lists and                    *       *    *     *     *
                                                   with the Exchanges and the State                        enrollment caps (if any).                                (d) Residency.
                                                   Medicaid agency.                                           43. Section 457.310 is amended by—                    (1) Residency for a non-
                                                     (5) Section 2107(e)(1)(F) of the Act,                    A. Republishing paragraph (b)                      institutionalized child who is not a
                                                   which relates to income determined                      introductory text.                                    ward of the State must be determined in
                                                   based on modified adjusted gross                           B. Revising paragraphs (b)(1)(i),                  accordance with § 435.403(i) of this
                                                   income.                                                 (b)(1)(ii), (b)(1)(iii) introductory text,            chapter.
                                                   *      *     *    *      *                              and (b)(1)(iii)(B).                                      (2) A State may not—
                                                     (c) Applicability. The requirements of                   C. Adding paragraph (b)(1)(iv).                       (i) Impose a durational residency
                                                   this subpart apply to child health                         The revisions and addition read as                 requirement;
                                                   assistance provided under a separate                    follows:                                                 (ii) Preclude the following individuals
                                                   child health program. Regulations                                                                             from declaring residence in a State—
                                                                                                           § 457.310    Targeted low-income child.                  (A) An institutionalized child who is
                                                   relating to eligibility, screening,
                                                   applications and enrollment that are                    *      *    *      *     *                            not a ward of a State, if the State is the
                                                   applicable to a Medicaid expansion                         (b) Standards. A targeted low-income               State of residence of the child’s
                                                   program are found at § 435.4, § 435.229,                child must meet the following                         custodial parent or caretaker at the time
                                                   § 435.905 through § 435.908, § 435.1102,                standards:                                            of placement; or
                                                   § 435.940 through § 435.958, § 435.1200,                  (1) * * *                                              (B) A child who is a ward of a State,
                                                                                                             (i) Has a household income, as                      regardless of where the child lives
                                                   § 436.3, § 436.229, and § 436.1102 of
                                                                                                           determined in accordance with                            (3) In cases of disputed residency, the
                                                   this chapter.
                                                     41. Section 457.301 is amended by—                    § 457.315, at or below 200 percent of the             State must follow the process described
                                                     A. Adding the definitions of ‘‘Family                 Federal poverty level for a family of the             in § 435.403(m) of this chapter.
                                                   size’’ and ‘‘Medicaid applicable income                 size involved;                                           (e) * * *
                                                   level’’ in alphabetical order.                            (ii) Resides in a State with no                        (2) [Reserved]
                                                     B. Removing the definition of ‘‘Joint                 Medicaid applicable income level;                        46. Section 457.330 is added to read
                                                   application.’’                                            (iii) Resides in a State that has a                 as follows:
                                                     The additions read as follows:                        Medicaid applicable income level and
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                                                                                                           has a household income that either—                   § 457.330   Application.
                                                   § 457.301    Definitions and use of terms.              *      *    *      *     *                               The State shall use the single,
                                                   *     *    *     *     *                                  (B) Does not exceed the income level                streamlined application used by the
                                                     Family size is defined as provided in                 specified for such child to be eligible for           State in accordance with § 435.907(b) of
                                                   § 435.603(b) of this chapter.)                          medical assistance under policies of the              this chapter, and otherwise comply with
                                                     Medicaid applicable income level                      State plan under title XIX on June 1,                 the provisions of such § 435.907 of this
                                                   means, for a child, the effective income                1997; or                                              chapter, except that the terms of
                                                   level (expressed as a percentage of the                   (iv) Is not eligible for Medicaid as a              § 435.907(c) of this chapter (relating to
                                                                                                           result of the elimination of income                   applicants seeking coverage on a basis


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                                             51197

                                                   other than modified adjusted gross                      screening individuals for other                       agency. A State may accept
                                                   income) do not apply.                                   insurance affordability programs and                  determinations of CHIP eligibility made
                                                     47. Section 457.335 is added to read                  transmitting such individuals’                        by another insurance affordability
                                                   as follows:                                             electronic account and other relevant                 program in the same manner that it
                                                                                                           information to the appropriate program.               accepts Exchange determinations of
                                                   § 457.335 Availability of program                          50. Section 457.348 is added to read               CHIP eligibility under paragraph (a) of
                                                   information and Internet Web site.
                                                                                                           as follows:                                           this section.
                                                     The terms of § 435.905 and                                                                                     (d) Certification of eligibility criteria.
                                                   § 435.1200(d) of this chapter apply                     § 457.348 Determinations of Children’s                The State must certify for the Exchange
                                                   equally to the State in administering a                 Health Insurance Program eligibility from             the criteria necessary to determine CHIP
                                                   separate CHIP.                                          other applicable health coverage programs.
                                                                                                                                                                 eligibility, including but not limited to
                                                     48. Section 457.340 is amended by                        (a) Exchange determinations of CHIP                the income standard adopted for its
                                                   revising the section heading and                        eligibility.                                          separate CHIP program and the criteria
                                                   paragraphs (a), (b) and (f) to read as                     (1) For each individual found eligible             related to satisfactory immigration
                                                   follows:                                                for CHIP by the Exchange based on the                 status, as set forth in the State plan in
                                                                                                           applicable MAGI standard, the State                   accordance with § 457.305 of this part.
                                                   § 457.340    Application for and enrollment in          must establish procedures—                               51. Section 457.350 is amended by—
                                                   CHIP.                                                      (i) To receive, via secure electronic                 A. Revising the section heading.
                                                     (a) Application assistance. A State                   interface, the electronic account                        B. Revising paragraphs (a), (b), (c),
                                                   must afford families an opportunity to                  containing the finding of CHIP                        and (f).
                                                   apply for CHIP without delay and must                   eligibility and all information provided                 C. Removing and reserving paragraph
                                                   provide assistance to families in                       on the application and/or verified by the             (d).
                                                   understanding and completing                            Exchange which made such finding; and                    D. Adding paragraphs (i), (j), and (k).
                                                   applications and in obtaining any                          (ii) To furnish CHIP to the individual                The additions and revisions read as
                                                   required documentation. Such                            promptly and without undue delay in                   follows:
                                                   assistance must be made available to                    accordance with § 457.340 of this                     § 457.350 Eligibility screening and
                                                   applicants and enrollees in person, over                subpart, to the same extent and in the                enrollment in other insurance affordability
                                                   the telephone, and online, and must be                  same manner as if such individual had                 programs.
                                                   provided in a manner that is accessible                 been determined by the State to be                       (a) State plan requirement. The State
                                                   to individuals living with disabilities                 eligible for CHIP in accordance with                  plan shall include a description of the
                                                   and those who are limited English                       such section.                                         coordinated eligibility and enrollment
                                                   proficient.                                                (2) [Reserved].                                    procedures used, at intake and any
                                                     (b) Use of Social Security number. A                     (b) Screening for potential CHIP                   follow-up eligibility determination,
                                                   State must require each individual                      eligibility by other insurance                        including any periodic redetermination,
                                                   applying for CHIP to provide a Social                   affordability programs. The State must                to ensure that:
                                                   Security number (SSN) in accordance                     adopt procedures to ensure that it                       (1) Only targeted low-income children
                                                   with § 435.910 and cannot require non-                  promptly and without undue delay                      are furnished CHIP coverage under the
                                                   applicants to provide an SSN consistent                 determines the CHIP eligibility of                    plan; and
                                                   with the requirements at § 435.907(e) of                individuals determined to be potentially                 (2) Enrollment is facilitated for
                                                   this chapter.                                           eligible for CHIP, by other insurance                 applicants found to be potentially
                                                   *     *      *    *     *                               affordability programs. The procedures                eligible for other insurance affordability
                                                     (f) Effective date of eligibility. A State            must ensure that—                                     programs in accordance with this
                                                   must specify a method for determining                      (1) The State accepts, via secure                  section.
                                                   the effective date of eligibility for CHIP,             electronic interface, the electronic                     (b) Screening objectives. A State must
                                                   which can be determined based on the                    account for the individual screened as                identify any applicant, beneficiary, or
                                                   date of application or through any other                potentially CHIP eligible, including all              other individual applying for coverage
                                                   reasonable method that ensures                          information provided on the application               on the single, streamlined application
                                                   coordinated transition of children                      and any information obtained or                       who is potentially eligible for:
                                                   between programs as family                              verified by the insurance affordability                  (1) Medicaid on the basis of having
                                                   circumstances change and avoids gaps                    program;                                              household income at or below the
                                                   or overlaps in coverage.                                   (2) The State may not request                      applicable modified adjusted gross
                                                     49. Section 457.343 is added to read                  information or documentation from the                 income standard, as defined in
                                                   as follows:                                             individual that is already contained in               § 435.911(b) of this chapter;
                                                                                                           the electronic account;                                  (2) Medicaid on a basis other than
                                                   § 457.343 Periodic redetermination of CHIP                 (3) The State determines the CHIP                  having household income at or below
                                                   eligibility.                                            eligibility of the individual, promptly               the applicable modified adjusted gross
                                                      The redetermination procedures                       and without undue delay, in accordance                income standard; or
                                                   described in § 435.916 of this chapter                  with § 457.340 in the same manner as if                  (3) Eligibility for other insurance
                                                   apply equally to the State in                           the application had been submitted                    affordability programs, including
                                                   administering a separate CHIP, except                   directly to, and processed by, the State,             eligibility for advanced payments for
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                                                   that the State shall verify information                 except that the State must not verify                 premium tax credits based on having
                                                   needed to renew CHIP eligibility in                     eligibility criteria already verified by the          household income above the income
                                                   accordance with § 457.380 of this                       insurance affordability program.                      standard in the State for CHIP or the
                                                   subpart, shall provide notice regarding                    (4) The State notifies the insurance               applicable modified adjusted gross
                                                   the State’s determination of renewed                    affordability program of the final                    income standard in the State for
                                                   eligibility or termination in accordance                determination of the individual’s                     Medicaid, as appropriate, or for
                                                   with § 457.340(e) of this subpart and                   eligibility or ineligibility for CHIP.                enrollment in a qualified health plan
                                                   shall comply with the requirements set                     (c) Option to accept CHIP eligibility              through an Exchange without advanced
                                                   forth in § 457.350 of this subpart for                  determinations from the Medicaid                      payments for a premium tax credit.


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                                                   51198                Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules

                                                      (c) Income eligibility test. To identify                (1) Promptly transmit the electronic               has information that is not reasonably
                                                   the individuals described in paragraphs                 account, and any other relevant                       compatible with such attestation. The
                                                   (b)(1) and (b)(3) of this section, a State              information obtained through the                      State may verify date of birth in
                                                   must apply the methodologies used to                    application to the Medicaid agency                    accordance with § 435.945(b) or through
                                                   determine household income described                    using secure electronic interfaces; and               other reasonable verification procedures
                                                   in § 457.315 of this part.                                 (2) Complete the determination of                  consistent with the requirements in
                                                      (d) [Reserved].                                      eligibility for CHIP in accordance with               § 435.952.
                                                   *       *    *     *     *                              § 457.340 of this subpart; and
                                                                                                              (3) Disenroll the beneficiary from                    (f) Requesting information.
                                                      (f) Applicants found potentially
                                                   eligible for Medicaid based on modified                 CHIP if the State is notified in                         (1) The State must use electronic
                                                   adjusted gross income. If the screening                 accordance with § 435.1200(f)(4) of this              sources of data, if available, before
                                                   process reveals that the applicant is                   chapter that the applicant has been                   requesting additional information,
                                                   potentially eligible for Medicaid based                 determined eligible for Medicaid.                     including paper documentation, from an
                                                   on modified adjusted gross income, the                     (k) A State may enter into an                      individual.
                                                   State must—                                             arrangement with the Exchange to make
                                                                                                                                                                    (2) An individual shall not be
                                                      (1) Promptly transmit the electronic                 eligibility determinations for advanced
                                                                                                                                                                 required to provide additional
                                                   account, and any other relevant                         premium tax credits in accordance with
                                                                                                                                                                 information or documentation unless
                                                   information obtained through the                        Section 1943(b)(2) of the Act.
                                                                                                              52. Section 457.353 is revised to read             information needed by the State cannot
                                                   application, to the Medicaid agency via                                                                       be obtained electronically or
                                                   secure electronic interface; and                        as follows:
                                                                                                                                                                 information obtained electronically is
                                                      (2) Except as provided in § 457.355 of               § 457.353 Monitoring and evaluation of                not reasonably compatible with
                                                   this subpart, find the applicant                        screening process.                                    information provided by or on behalf of
                                                   ineligible, provisionally ineligible, or
                                                                                                              States must establish a mechanism                  the individual. In such cases, the State
                                                   suspend the applicant’s application for
                                                                                                           and monitor to evaluate the screen and                may seek additional information,
                                                   CHIP unless and until the Medicaid
                                                                                                           enroll process described at § 457.350 of              including a statement which reasonably
                                                   application for the applicant is denied;
                                                                                                           this subpart to ensure that children who              explains the discrepancy and/or paper
                                                   and
                                                                                                           are:                                                  documentation, from the individual.
                                                      (3) Determine or redetermine
                                                                                                              (a) Screened as potentially eligible for           The State must provide the individual a
                                                   eligibility for CHIP, consistent with the
                                                                                                           other insurance affordability programs                reasonable period to furnish such
                                                   timeliness standards established under
                                                                                                           are enrolled in such programs, if                     information.
                                                   § 457.340(d) of this subpart, if—
                                                                                                           eligible; or
                                                      (i) The State is notified, in accordance                                                                      (g) Electronic service. To the extent
                                                                                                              (b) Determined ineligible for other
                                                   with § 435.1200(f)(4) of this chapter that                                                                    that information sought under this
                                                                                                           insurance affordability programs are
                                                   the applicant has been found ineligible                                                                       section is available through the
                                                                                                           enrolled in CHIP, if eligible.
                                                   for Medicaid; or                                           53. Section 457.380 is revised to read             electronic service established by the
                                                      (ii) The State is notified prior to the                                                                    Secretary at § 435.949 of this chapter,
                                                                                                           as follows:
                                                   final Medicaid eligibility determination
                                                                                                                                                                 the State shall access the information
                                                   that the applicant’s circumstances have                 § 457.380    Eligibility verification.
                                                                                                                                                                 through that service.
                                                   changed and another screening shows                        (a) General requirements. Except with
                                                   that the applicant is not likely to be                  respect to verification of citizenship and               (h) Interaction with program integrity
                                                   eligible for Medicaid.                                  immigration status, and subject to the                requirements. Nothing in this section
                                                   *       *    *     *     *                              verification requirements set forth in                should be construed as limiting the
                                                      (i) Applicants found potentially                     paragraph (d) of this section, the State              State’s program integrity measures or
                                                   eligible for other insurance affordability              may accept attestation of all information             affecting the State’s obligation to ensure
                                                   programs. If the screening process                      needed to determine the eligibility of an             that only eligible individuals receive
                                                   reveals that an applicant is not eligible               applicant or beneficiary for CHIP.                    benefits.
                                                   for CHIP, is not screened as potentially                   (b) [Reserved]                                        (i) Flexibility in information collection
                                                   eligible for Medicaid on the basis of                      (c) State Residents. If the State does             and verification. Subject to approval by
                                                   modified adjusted gross income, and is                  not accept self-attestation of residency,             the Secretary, the State may modify the
                                                   potentially eligible for enrollment in a                the State must verify residency in                    methods to be used for collection of
                                                   qualified health plan through the                       accordance with § 435.956(c) of this                  information and verification of
                                                   Exchange or other insurance                             chapter.                                              information as set forth in this section,
                                                   affordability programs, the State must                     (d) Income. The State must verify the              provided that such alternative source
                                                   promptly transmit the electronic                        income of an individual by using the
                                                                                                                                                                 will reduce the administrative costs and
                                                   account, and other relevant information                 data sources and following the
                                                                                                                                                                 burdens on individuals and States while
                                                   obtained through the application to the                 standards and procedures for
                                                   applicable program using secure                         verification of financial eligibility                 maximizing accuracy, minimizing
                                                   electronic interfaces.                                  described in § 435.945(b), § 435.948 and              delay, meeting applicable requirements
                                                      (j) Applicants potentially eligible for              § 435.952 of this chapter.                            relating to the confidentiality,
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                                                   Medicaid on a basis other than modified                    (e) Verification of other factors of               disclosure, maintenance, or use of
                                                   adjusted gross income. If, based on                     eligibility. For eligibility requirements             information, and promoting
                                                   information obtained through the single,                not described in paragraphs (b), (c) or               coordination with other insurance
                                                   streamlined application, the applicant is               (d) of this section, a State may adopt                affordability programs.
                                                   not screened as potentially eligible for                reasonable verification procedures,                   (Catalog of Federal Domestic Assistance
                                                   Medicaid on the basis of modified                       except that the State must accept self-               Program No. 93.778, Medical Assistance
                                                   adjusted gross income but may be                        attestation of pregnancy and the                      Program)
                                                   eligible for Medicaid on another basis,                 individuals that comprise an
                                                   the State must—                                         individual’s household unless the state


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                                                                        Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules                          51199

                                                     Dated: June 29, 2011.
                                                   Donald M. Berwick,
                                                   Administrator, Centers for Medicare &
                                                   Medicaid Services.
                                                     Approved: August 10, 2011.
                                                   Kathleen Sebelius,
                                                   Secretary, Department of Health and Human
                                                   Services.
                                                   [FR Doc. 2011–20756 Filed 8–12–11; 8:45 am]
                                                   BILLING CODE 4120–01–P
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