[Federal Register Volume 77, Number 38 (Monday, February 27, 2012)]
[Rules and Regulations]
[Pages 11678-11700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-4354]
[[Page 11677]]
Vol. 77
Monday,
No. 38
February 27, 2012
Part III
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Part 431
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Department of the Treasury
31 CFR Part 33
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Department of Health and Human Services
45 CFR Part 155
Medicaid Program; Review and Approval Process for Section 1115
Demonstrations; Application, Review, and Reporting Process for Waivers
for State Innovation; Final Rules
Federal Register / Vol. 77 , No. 38 / Monday, February 27, 2012 /
Rules and Regulations
[[Page 11678]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 431
[CMS-2325-F]
RIN 0938-AQ46
Medicaid Program; Review and Approval Process for Section 1115
Demonstrations
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule will implement provisions of section 10201(i)
of the Patient Protection and Affordable Care Act of 2010 that set
forth transparency and public notice procedures for experimental,
pilot, and demonstration projects approved under section 1115 of the
Social Security Act relating to Medicaid and the Children's Health
Insurance Program (CHIP). This final rule will increase the degree to
which information about Medicaid and CHIP demonstration applications
and approved demonstration projects is publicly available and promote
greater transparency in the review and approval of demonstrations. It
will also codify existing statutory requirements pertaining to seeking
advice from Indian health care providers and urban Indian organizations
for section 1115 demonstration projects, and for the first time impose
as regulatory requirements tribal consultation standards that were
previously only published as guidance documents.
DATES: These regulations are effective on April 27, 2012.
FOR FURTHER INFORMATION CONTACT: Steven Rubio, (410) 786-1782; or
Jessica Schubel, (410) 786-3032.
SUPPLEMENTARY INFORMATION:
I. Background
A. Section 1115 Demonstrations
1. Overview
Section 1115 of the Social Security Act (the Act) allows the
Secretary of the Department of Health and Human Services (the
Secretary) to waive selected provisions of section 1902 of the Act for
experimental, pilot, or demonstration projects (demonstrations), and to
provide Federal Financial Participation (FFP) for demonstration costs
which would not otherwise be considered as expenditures under the
Medicaid State plan, when the Secretary finds that the demonstrations
are likely to assist in promoting the objectives of Medicaid. Section
2107(e) of the Act states that the waiver authorities in section 1115
of the Act apply to the Children's Health Insurance Program (CHIP) in
title XXI of the Act in the same manner as they apply to the Medicaid
program in title XIX of the Act.
States have used section 1115 demonstrations for different reasons.
Some States have tested new approaches to providing coverage or
improving the scope or quality of benefits in ways that would not
otherwise be permitted under the statute. For example, some States have
used section 1115 demonstrations to expand eligibility to individuals
who would not otherwise qualify for benefits, or to establish
innovative service delivery systems. Other demonstrations have
constrained eligibility or benefits in ways not otherwise permitted by
statute. For example, some demonstrations have provided for a more
limited set of benefits than the statute requires for a specified
population, implemented cost-sharing at levels that exceed statutory
requirements, or included enrollment limits. Some demonstrations have
involved financing approaches that are not contemplated in titles XIX
or XXI of the Act.
As such, demonstrations can have a significant and varied impact on
beneficiaries, providers, States, Tribes and local governments. They
can also influence policy making at the State, Tribal and Federal
level, by introducing new approaches that can be a model for other
States and lead to programmatic changes nationwide. In light of the
impact demonstration projects can have, the Congress has determined
that the process by which States apply for and the Federal government
reviews demonstrations should assure public input. From time to time
that process has come under criticism. In recent years, the Congress,
the Government Accountability Office (GAO), and the stakeholders
representing a range of interests affected by the Medicaid and CHIP
programs have raised concerns regarding the need for greater
transparency in the submission, review, and approval of demonstration
applications.
2. Prior Guidance Related to Public Notice
In the September 17, 2010 Federal Register (75 FR 56946), we
published the ``Review and Approval Process for Section 1115 Medicaid
Demonstrations'' proposed rule. In the September 17, 2010 proposed
rule, we detailed the prior guidance that we have provided including
the September 27, 1994 Federal Register notice entitled ``Medicaid
Programs; Demonstration Proposals Pursuant to Section 1115(a) of the
Social Security Act; Policies and Procedures''(59 FR 49249) that
provided general principles and guidelines governing demonstration
projects and provided for a public notice process that was designed to
ensure that interested parties would have an opportunity to provide
input into the design and review of a State demonstration application.
In 2002, we issued a letter to State Medicaid directors, State
Medicaid Director Letter (SMDL) 02-007, to encourage States to
facilitate public participation in the development of demonstration
applications in an effort to ensure adherence to the public notice
procedures outlined in the September 27, 1994 Federal Register notice.
In 2002, the GAO issued a report entitled ``Medicaid and SCHIP--
Recent HHS Approvals of Demonstration Waiver Projects Raise Concerns,''
finding that HHS had not consistently followed its September 27, 1994
Federal Register notice process. GAO specifically noted that, since
1998, HHS had not complied with the Federal Register notice procedures.
GAO recommended that the HHS Secretary provide for a public process
that, at a minimum, included publishing notices of demonstrations in
the Federal Register and a 30-day comment period.
In a subsequent 2007 report entitled ``Medicaid Demonstration
Waivers: Lack of Opportunity for Public Input during the Federal
Approval Process Still a Concern,'' the GAO examined demonstration
projects in two States and found that HHS did not provide opportunity
for public input at the Federal level during the Federal review
process. It determined that the States that submitted the demonstration
applications made efforts to obtain public input to comply with HHS'
September 27, 1994 Federal Register notice, but that stakeholders in
those States reported lacking access to information during the Federal
review process about parts of the demonstration applications that had a
significant impact on beneficiaries or having inadequate time to review
and comment on the applications. GAO reiterated its longstanding
concerns about the lack of public input into section 1115
demonstrations and restated its recommendation for a process that
assures public input.
In a January 21, 2009 Memorandum to the Heads of Executive
Departments and Agencies, President Obama established
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the Federal government's commitment to transparency, participation, and
collaboration. Noting that public input can promote efficiency,
effectiveness, and accountability in government, the President
committed Federal agencies to disseminating information quickly and
accessibly, and to ensure increased opportunities for the public to
participate in policymaking. The Memorandum required each Federal
agency to establish an Open Government plan, and on April 7, 2010, HHS
announced its plan to achieve transparency, participation, and
collaboration. HHS is committed to timely and responsive administration
of the Medicaid and CHIP programs and seeks to assure transparency,
input, and collaboration, while also being mindful of the need to avoid
duplicative processes and unnecessary administrative burdens and
delays.
In May 2010, we met with more than 20 representatives of
stakeholder organizations including organizations advocating on behalf
of the elderly, people with disabilities and other low income
populations, as well as organizations representing health care
providers regarding transparency in the demonstration approval process.
We also held a listening session open to officials from all 50 States,
the District of Columbia, and U.S. Territories.
3. Guidance Related to Tribal Consultation and Seeking Advice From
Indian Health Care Providers and Urban Indian Organizations
To foster greater notice and a meaningful opportunity for input, in
2000, the Administration issued Executive Order 13175 regarding
``Consultation and Coordination with Indian and Tribal governments.''
This Executive Order applies to the programs operated by the Federal
government and, since States administer Medicaid and CHIP, we have
issued guidance to States to conduct consultation with Tribes prior to
implementing 1115 demonstration or 1915 waiver requests. Executive
Order 13175 mandated the establishment of regular and meaningful
consultation and collaboration with tribal officials in the development
of Federal policies that have ``tribal implications,'' which are
defined as policies or actions ``with substantial direct effects on one
or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes.'' On
November 5, 2009, President Obama issued a Memorandum for the Heads of
Executive Departments and Agencies reiterating the importance of
Executive Order 13175 and requiring a detailed plan for compliance with
its provisions.
In July 2001, we issued a letter to State Medicaid Directors (SMDL
01-024) that provided direction to States to allow federally-
recognized Tribes to participate in the planning and development of
Medicaid and CHIP demonstration applications and extensions through a
consultation process. The guidance encouraged States to provide
information to tribal governments at least 60 days prior to
implementation and to provide 30 days for tribes to comment on a
State's planned demonstration request. The letter also articulated
principles of consultation, such as respect for the sovereign rights of
Tribes. In this final rule, we establish consultation procedures that
allow States to meet simultaneously both the new statutory requirements
pertaining to Indian health care providers and urban Indian
organizations, as well as the new statutory requirements that pertain
to the public at large under the Affordable Care Act.
4. Changes Made by the Recovery Act and the Affordable Care Act
Section 5006 of the American Recovery and Reinvestment Act of 2009
(Recovery Act) (Pub. L. 111-5, enacted on February 17, 2009), among
other protections for Indian beneficiaries in Medicaid and CHIP,
required States to seek advice from Indian health programs and urban
Indian health organizations concerning Medicaid and CHIP policies
before submitting a Medicaid or CHIP State plan amendment,
demonstration request or application that would directly affect Indian
health programs and urban Indian health organizations. This provision
was effective July 1, 2009, and was summarized in a letter to State
Medicaid Directors dated January 22, 2010 (SMDL 10-001).
Section 10201(i) of the Patient Protection and Affordable Care Act
of 2010 (Pub. L 111-148, enacted March 23, 2010) (the Affordable Care
Act) amended section 1115 of the Act by adding a new subsection (d) to
require the Secretary to issue regulations that would ensure the public
has adequate opportunities to provide meaningful input into the
development of State demonstration projects, as well as in the Federal
review and approval of State demonstration applications and renewals.
The Affordable Care Act also requires periodic evaluations and
implementation reports to ensure that information on the outcomes of
demonstration projects is available to the public.
Specifically, new section 1115(d) of the Act provides that these
procedural requirements must include review standards pertaining to the
goals of demonstration programs, the impact of the demonstration
project on costs and coverage, and the plans of the State to ensure
that the demonstration will comply with applicable requirements
specified in title XIX and XXI of the Act. The statute requires the
establishment of a process to provide for public notice and comment on
the State level and at the Federal level once an application for a
demonstration is received by the Secretary. These public notice and
comment processes are meant to ensure a meaningful level of public
input. The statute also requires the Secretary to implement reporting
requirements for States with approved demonstrations, and to establish
a process for the periodic evaluation of demonstration projects. Under
section 1115(d)(3) of the Act, the Secretary is required to report
annually to the Congress on actions taken for applications for
demonstration projects.
In the September 17, 2010 proposed rule, we proposed to implement
section 1115(d) of the Act to ensure transparency at each stage of the
demonstration development and review process without interfering with
the timely submission and review of demonstration proposals. We also
proposed to codify the requirements of section 5006 of the Recovery Act
that apply to demonstrations.
5. Findings Related to Section 1115 Demonstration Evaluations
We recognize the importance of public availability and
understanding of information about the impact and operations of health
insurance and health insurance programs, including Medicaid and CHIP.
Because demonstration projects are approved to pilot or experiment with
new approaches, it is particularly important to evaluate such projects
and to share lessons learned. Demonstration evaluations can document
policies that succeed or fail and the degree to which they do so
informs decisions about the demonstration at issue, as well as the
policy efforts of other States and at the Federal level. In particular,
evaluations of the impact of demonstration program features that depart
from the statutory requirements can inform future decisions with regard
to new approaches to coverage and care.
More public involvement, understanding, and access to demonstration
project evaluations will
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also provide greater understanding of demonstration effectiveness, and
compliance. Public involvement can benefit all aspects of the
evaluation process, including the process for submission of evaluation
designs, approval of demonstration evaluations, and the submission of
evaluation reports. Therefore, we are, as part of this transparency
rule, codifying our existing policies to ensure greater transparency,
communication, and collaboration in the evaluation aspect of the
section 1115 demonstration process.
II. Summary of the Provisions of the Proposed Rule and Analysis of and
Responses to Public Comments
The September 17, 2010 proposed rule addressed the Affordable Care
Act provisions requiring transparency in the process of developing and
approving demonstrations. We received a total of 33 timely comments on
the September 17, 2010 (75 FR 56946) proposed rule.
A. Basis and Purpose (Sec. 431.400)
To incorporate the policies and implement the statutory provisions
described above, we proposed to add a new subpart G under 42 CFR part
431 to implement the provisions of section 1115(d) of the Act, as
amended by section 10201 of the Affordable Care Act. Subpart G includes
guidance related to the development of demonstration applications,
public notice for States and the Department, monitoring, compliance,
evaluation of demonstration projects, and the submission of reports to
the Secretary.
We did not receive any comments opposing this new subpart, see no
other reason to change our proposed additions, and therefore, we are
finalizing these provisions subject to the changes described below.
B. Definitions (Sec. 431.404)
In Sec. 431.404, we define the terms ``demonstration,'' ``Indian
health program,'' ``public notice,'' and ``section 1332 waiver'' that
are used in new subpart G under 42 CFR part 431.
We received the following comment concerning the proposed
Definitions:
Comment: One commenter requested that CMS include the definition of
``Indian Health Program'' under the Indian Health Care Improvement Act
(IHCIA).
Response: We have included the IHCIA definition of ``Indian Health
Program'' in the final rule.
C. State Public Notice Process (Sec. 431.408)
We recognize that demonstrations can have a significant impact on
beneficiaries, providers, and States. Demonstrations can also influence
policy making at the State and Federal level, by testing new approaches
that can be models for programmatic changes nationwide or in other
States. For these reasons and under section 10201(i) of the Affordable
Care Act, in Sec. 431.408, we proposed to establish a process that
promotes transparency, facilitates public involvement and input, and
encourages sound decision-making as demonstration applications are
designed at the State level. We are also mindful that States have
developed their own State-specific procedures for public involvement in
policy and program decision-making. Furthermore, Medicaid is a jointly
administered Federal/State program. Accordingly, we have attempted to
craft our requirements in ways that assure achievement of these
statutory objectives while minimizing administrative burden.
We received the following comments concerning the proposed State
public notice and comment period.
1. State Public Notice and Comment Period
Comment: While several commenters expressed support for the 30-day
public notice period before the section 1115 demonstration application
is submitted to CMS, many commenters stated that the period should be
expanded to 45 or 60 days. One commenter suggested as an alternative
providing a 60-day comment period for new demonstration applications
and a 30-day comment period for extensions of existing demonstrations.
Response: One of the goals of this regulation is to balance the
need for transparency with the need for timely development, review, and
approval of demonstrations. While we appreciate the commenters'
suggestions regarding the length of the State comment period, we
believe that 30 days strikes an appropriate balance between providing
for increased transparency and ensuring timely submission of
demonstration applications. In addition, we note that the
Administrative Procedure Act has for many decades used 30 days as the
normal minimum length for comments on proposed Federal rules. Moreover,
our standards are minimums and States may exceed them at their
discretion.
Comment: One commenter expressed concern that 20 days is not enough
time for States to hold hearings and then analyze and incorporate the
comments raised at the hearing into the demonstration application.
Response: The timeframes included in the final rule are the minimum
timeframes that the State must follow. Our intention was to provide the
State with as much flexibility as possible during the public notice
process while maintaining our goal of increased transparency and timely
procession of applications.
Comment: One commenter was concerned as to how States should
discuss differing opinions between a local chapter and the National
chapter of a stakeholder association in the document of consultation
activities under Sec. 431.408(b).
Response: The State should include a summary of all comments aired
in the consultation process, and may describe this type of situation in
its report addressing the key issues raised in that process and how it
took those comments into consideration, including comment on both sides
of the issue, when finalizing its application. Neither Federal nor
State governments are bound to follow public comments, but simply to
consider them before making final decisions.
Comment: One commenter requested that the State produce a summary
report on comments it received and how the comments influenced the
content of the application, if at all.
Response: The information that the commenter wanted in a summary
report was included in the proposed rule as part of the application
submitted to CMS at Sec. 431.412(a)(1)(viii). Since this application
is publicly available, the commenter will have access to this
information and an additional required report is unnecessary.
2. Statement of Public Notice and State Public Input Procedures
Comment: One commenter recommended that CMS revise the regulation
to bring it into compliance with the cost-sharing provisions of the
Medicaid Act, as amended by the Deficit Reduction Act (DRA) of 2005.
Response: This comment is beyond the scope of this rulemaking
document, and therefore, we are not addressing it in this final rule.
Comment: One commenter recommended that CMS require the State to
publish its public notice in both the State Register and local
newspapers.
Response: By requiring the demonstration application and hearing
notice to be posted on the main page of the State's Web site, we
believe it is unnecessary to also require notice in both the State
Administrative Register and newspapers with significant circulation. We
have accordingly retained State discretion to choose either its
Administrative Register or newspaper (or both) as vehicles to
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provide public notice in addition to requiring notice on the main page
of the State's Web site. We have also required States to use additional
approaches, such as electronic mailing lists to provide public notice.
Of course, it is likely that news media, other media, and advocacy
organizations will use their own means to spread this information.
Comment: One commenter recommended that CMS require States to seek
input from providers; similar to the tribal consultation requirement.
Response: While we understand the commenter's concern, we did not
revise the language in this rule to require States to seek input from
providers similar to the manner in which they conduct tribal
consultation. There are specific requirements to seek advice from
Indian health providers and urban Indian organizations outlined in the
statute, and therefore, this rule needs to meet the statutory ARRA
protections. Other providers will have an opportunity to offer their
views in the process for public input along with other interested
parties. The purpose of the public comment process is to provide all
stakeholders an ample opportunity to comment.
Comment: Many commenters recommended that States be required to
include a list of waiver and expenditure authorities in their
applications, and requested that this list be included in the State's
public notice as well.
Response: We are accepting this recommendation but we note that the
public notice will not be considered deficient if the waivers and
expenditure authorities granted to facilitate the demonstration are
different than those the State contemplates. The actual waivers and
expenditure authorities awarded will be based on CMS analysis of the
waivers and expenditure authorities that are actually needed to
accomplish demonstration objectives.
Comment: One commenter requested that CMS clarify that the
financial analysis of changes to the demonstration requested by the
State is for renewal applications only.
Response: We agree with this comment, and have included language to
this effect in the final rule. The distinction was clear in the
proposed Sec. 431.412 and we have revised the final rule at Sec.
431.408 to be consistent.
Comment: One commenter noted that it is unclear in the regulation
whether the entire public notice document, that is, all the elements
prescribed in Sec. 431.408(a)(1), must be published, or whether it can
be an abbreviated notice referencing a Web site where the full document
can be found.
Response: We have revised the language in Sec. 431.408(a)(2)(ii)
to clarify that the public notice document published in either the
State's Administrative Record or significant newspapers may be
abbreviated, that is, the notice may include a summary of the elements
found in Sec. 431.408(a)(1) for purposes of publication; however, the
abbreviated notice must provide an active link to a Web site where the
public notice may be viewed in its entirety.
Comment: Several commenters noted that public input would be more
meaningful if it occurred before the State completed the process of
drafting a complete demonstration application, and recommended that CMS
allow the State to not post a complete application. The commenters
noted that the 30-day Federal comment period would provide a full
opportunity for public comment on the complete application once it had
been submitted to CMS.
Response: While we appreciate the commenter's concern about
ensuring the public has the opportunity to provide input on a proposed
demonstration project, we believe that the public must have a specific
proposal to respond to to provide meaningful input. We have outlined
the required application content in Sec. 431.412(a)(1). The State may
also post a draft application that contains sufficient information for
the public to provide meaningful input. To provide a full opportunity
for public review, there must be at least a 30-day period for public
input before the draft application is submitted to CMS. This
opportunity for input prior to submission of an application to CMS
allows the public to participate in the State's process for developing
the application. That opportunity is separate from the opportunity for
public comment on the final application under consideration in the
Federal review process.
Comment: One commenter requested that CMS require the State to
provide summaries of quality data that do not contain patient
information and that are detailed enough to allow for public analysis
and comment, as well as to provide information on historical
expenditures.
Response: The information requested by the commenter is already
included in the regulations at Sec. 431.428(a)(4). We do not believe
it is necessary to include this information in the public notice
requirement.
Comment: One commenter requested that the State include specific
Federally-Qualified Health Center (FQHC) related waivers, and the
rationale and justification for such waivers in the public notice.
Response: FQHCs play a critical role in serving Medicaid
beneficiaries. We are accommodating the commenter's concern in the
revision discussed above requiring the State to identify specific
waiver and expenditure authorities, as well as requiring a broad
program description. We believe this information is sufficient to
initiate a dialogue between the State and interested FQHCs on the
rationale and justification for the State's proposal.
Comment: One commenter suggested that CMS include language in Sec.
431.408(a)(1)(iii) expressly referring to a time period of at least 30
days for the submission of comments.
Response: We agree with this comment, and have included such
language in the final rule.
Comment: One commenter recommended that Medicaid providers affected
by the proposed demonstration be required to post information in a
conspicuous location so that affected individuals would have an
opportunity to comment.
Response: While we appreciate the commenter's desire to involve the
provider community, we believe this suggestion would cause an undue
administrative burden on providers.
Comment: One commenter requested that CMS require the State to
include a link to CMS' Web site on the Web page containing information
on the demonstration application.
Response: We agree with this comment, and have included such a
requirement in the final rule.
3. Language Requirements
Comment: Several commenters requested further guidance on how CMS
plans to ensure that beneficiaries with limited English proficiency
will be able to access published information regarding the proposed
demonstration. One commenter recommended that CMS utilize the
Department of Health and Human Services' Limited English Proficiency
(LEP) guidance in selecting languages for translations of published
information.
Response: States are subject to various civil rights requirements
regarding communication, for both language and disability. These
include Title VI of the Civil Rights Act of 1964, Section 504 of the
Rehabilitation Act, and the Americans with Disabilities Act. There are
regulations under each of these statutes and, in the case of Title VI,
detailed guidance published by the Department of Health and Human
Services regarding services to individuals with Limited English
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Proficiency. We agree with the commenter that this guidance establishes
reasonable practices that States are expected to follow.
Comment: One commenter requested that CMS clarify that all
documents posted to both the State and CMS Web sites be accessible to
individuals with disabilities.
Response: As stated above, there are long-standing regulations in
place that govern State practices not only for the activities addressed
by this regulation, but also for all programs and activities performed
by States and other recipients of Federal financial assistance and, in
the case of the Americans with Disabilities Act, State programs and
services regardless of Federal financial assistance. States are
responsible for compliance and knowing their responsibilities as it
relates to accessibility of information and documents for individuals
with disabilities. Other Federal agencies (the HHS Office for Civil
Rights and the Department of Justice) are responsible for any necessary
clarification and enforcement.
4. Electronic Mailing List
Comment: One commenter requested clarification that the electronic
mailing lists' purpose is to provide notification that a demonstration
application is available for public review and comment.
Response: The electronic mailing lists' purpose is to provide
notification that a demonstration application is available for public
comment.
Comment: Several commenters expressed concern regarding how an
interested party could sign up for the electronic mailing list at the
State and Federal levels, as well as how the State and CMS would ensure
notification to all interested parties, including Medicaid and CHIP
beneficiaries.
Response: The use of such services will depend on State decisions.
It is usual practice for links for, or instructions on how to, register
for electronic mailing lists to be included, in appropriate places, on
State Web sites so that individuals and advocacy groups may easily
register for the electronic mailing lists. We will establish
notification procedures on our Web site and other venues such as press
notifications, as appropriate.
Comment: One commenter requested that the State explain how the
electronic mailing list would work while another commenter suggested
that the State's Web site provide a way for interested persons to be
added to a mailing list. Another commenter expressed concern that the
requirement to publish a notice in the newspaper of widest circulation
(in each city or county with a population of 50,000 or more) appears to
be optional if the State uses an electronic mailing list to notify
interested parties. The commenter stated that many people with low-
incomes and/or disabilities do not have access to email.
Response: We have revised Sec. 431.408(a)(2)(ii) to clarify that
the State must publish its public notice in the newspaper of widest
circulation in each region of the State that contains a city with a
population of 100,000 or more or in the State's Register, and that it
must also utilize a mechanism such as an electronic mailing list to
notify interested parties. It is important to ensure that the public
notice is not entirely Web-based because there are individuals who may
have limited access to, or facility with, Web-based information. On the
other hand, there are large numbers of persons who use the Internet who
do not subscribe to newspapers. We understand that any of these
mechanisms are not necessarily going to reach all consumers and
encourage the State, providers and advocacy groups to appropriately
transmit the information to affected consumers.
Comment: One commenter recommended that the State's primary care
association be automatically included in CMS' electronic mailing list.
Response: As we discuss below, we intend to automatically include
all interested national organizations in the Federal electronic mailing
list for the Federal public notice process. We would also like to
clarify that regional, State and local organizations may request to be
included on the notification mechanism at any time.
5. Public Hearings
Comment: While several commenters expressed support for the public
hearings, the commenters requested that CMS clarify language to ensure
the public has an opportunity to speak at the hearings.
Response: We agree with this comment, and have included language at
Sec. 431.408(a)(3).
Comment: One commenter expressed concern that two public hearings
may not be adequate for larger States, and recommended that CMS require
four public hearings with the option of waiving two hearings for
smaller States.
Response: We appreciate, and agree with, the commenter's concern
that all interested parties across the State are afforded the same
opportunity to provide input on a proposed demonstration project. In
lieu of adding two additional public hearings, however, we have revised
the language in the rule to require the State to utilize technology,
that is, telephonic and/or Web conferencing capabilities, to ensure
statewide access to the public hearing, including in rural areas of the
State. States remain free, of course, to conduct additional hearings,
decisions that we expect will vary widely depending on geography, law,
and customary practice in each State.
Comment: One commenter requested that CMS clarify what constitutes
two public hearings, that is, the commenter questioned if the hearings
have to be held in separate locations, separate dates and times, and if
the State utilizes teleconferencing. Another commenter requested that
CMS require the State to teleconference the hearing to at least five
separate locations.
Response: We have included clarifying language in this final rule
outlining that the two public hearings must be held on different dates
and in different locations, and that the State must utilize telephonic
and/or Web conferencing capabilities that normally provide essentially
unlimited geographic access. While we agree that interested parties in
rural portions of a State should be afforded the opportunity to provide
meaningful input on a proposed demonstration project, we will not
prescribe the number of locations to which the State must
teleconference the hearing if for some reason it is infeasible to cover
the entire State.
Comment: One commenter recommended that CMS require the State to
ensure that the State's primary care association and at least two FQHCs
have the opportunity to speak.
Response: While we understand the commenter's concern that the
State's primary care association and FQHCs have the opportunity to
speak, we believe that any interested party should be afforded the
opportunity to provide comments on the demonstration. We have also
clarified in Sec. 431.408(a)(3) that the public must have an
opportunity to speak and provide meaningful input at the public
hearings.
6. Tribal Consultation
Comment: While we received general support for tribal consultation,
one commenter stated that it is not clear what CMS means by
``publication'' when requiring States to conduct tribal consultation at
least 60 days prior to ``publication'' or submission of an application.
The commenter also noted that the inclusion of both ``publication'' and
submission is confusing. If ``publication'' refers to the date of State
[[Page 11683]]
public notice, then the reference to the ``submission'' date is
unnecessary because submission will occur after the public notice.
Response: We agree with the commenter's concern, and have clarified
the language in Sec. 431.408(b)(1) to read ``submission'' rather than
``publication or submission of an application.''
Comment: One commenter requested that CMS define acceptable
consultation activities.
Response: We have clarified the language in Sec. 431.408(b)(2) by
including a reference to SMDL 01-024 which outlines
acceptable tribal consultation activities. We also believe that States
and tribes can determine how best to conduct such consultation, if they
enter into agreements acceptable to both the State and the tribes. We
think it likely that details will vary not only from State to State
(reflecting the huge diversity among States as to tribal and Indian
health presence), but also from demonstration to demonstration. We note
that States are required in their applications to present information
on their consultations, on issues raised, and on State decisions as to
what to propose to CMS. We can and will reject applications that fail
to provide appropriate consultation.
Comment: One commenter requested that CMS define ``direct impact,''
and another commenter requested that CMS change ``direct impact'' to
``direct effect,'' as well as include a definition for ``direct
effect.''
Response: We have changed ``direct impact'' to ``direct effect'' in
Sec. 431.408(b)(1) to be more consistent with the language specified
in section 5006(e) of ARRA. We also acknowledge that States may work
with tribes, Indian health providers and urban Indian organizations to
define direct effect in a manner that meets the needs of all the
parties when they have entered into a formal consultation policy with
tribes or when they have defined direct effect in the State plan which
outlines the process for seeking advice from Indian health providers
and urban Indian organizations in the State.
D. Application Procedures
In reviewing section 1115 demonstration applications, CMS requests
information from States to determine the nature, scope, and impact of
the demonstration request. In this rule, we are requiring application
components consistent with current practice both for new demonstrations
and for the extension of an existing demonstration, in an effort to
make the application process consistent and transparent.
Under Sec. 431.412(a), we define when a State request for a new
demonstration will be considered complete for the purposes of
initiating the Federal review process described below.
Section 431.412(b) describes the application procedures that States
must follow when submitting an application for a new demonstration or a
request to extend an existing demonstration under section 1115 of the
Act. This provision establishes a process for the State to submit an
application, and for CMS to confirm that the application is complete,
which in turn initiates the Federal comment and decision-making period.
We developed these procedures because they represent a standardized
approach that will be helpful to States, stakeholders, and CMS in the
review of section 1115 demonstrations. While it is not a requirement
for an initial section 1115 demonstration request, we strongly
encourage that the Governor submit the demonstration request to the
Secretary.
Generally, demonstrations may be extended up to 3 years under
sections 1115(a), 1115(e), and 1115(f) of the Act; however, section
1915(h), as amended by section 2601 of the Affordable Care Act, allows
section 1115 demonstrations to be extended up to 5 years at the
Secretary's discretion if the demonstration provides medical assistance
to dually eligible beneficiaries. As sections 1115(e) and (f) of the
Act provide for a substantially streamlined Federal review process, the
timeframes constrain Federal review of the demonstration and
consequently the time under which CMS can consider public input. In
Sec. 431.412(c), at least 30 days prior to a State's submission of a
request for review under those sections, the State will issue public
notice of its intent to seek an extension under those sections and
receive public comment on the proposed extension of the demonstration
for at least 30 days. In addition, the State must provide a written
summary to CMS of the issues raised in the public comment period and
how the State considered those issues when developing the demonstration
extension application.
The application prerequisites for the extension of a demonstration,
codify current practice guidelines employed by CMS in the review of an
existing section 1115 demonstration, which are consistent with the
required timeframes in section 1115(e) and 1115 (f) of the Act. In
Sec. 431.412(c), a demonstration extension request will be considered
only if it is submitted no later than 12 months prior to the expiration
date of the demonstration when requesting an extension under section
1115(e) of the Act or 6 months (or in some cases longer) when
requesting an extension under a section 1115(a) or (f) of the Act.
In Sec. 431.412(c), a demonstration extension request or phase out
plan will be sent from the Governor of the State to the Secretary of
HHS, as required by the statute, to extend a demonstration under
sections 1115(e) and (f) of the Act. However, if an extension
application includes substantial changes to the existing demonstration,
CMS may, at our discretion, treat the application as an application for
a new demonstration.
We received the following comments on the proposed application
procedures.
1. Concept Paper
Comment: One commenter requested that the language outlined in the
background section regarding the submission of a pre-application
concept paper to CMS be included in the final rule.
Response: We agree with this comment, and have included language in
the final rule.
Comment: One commenter requested further guidance regarding the
process of submitting to CMS a pre-application concept paper and/or
conferring with CMS about intent to seek a demonstration prior to
submitting a completed application.
Response: The purpose of a concept paper is to engage both the
State and CMS in early dialogue on a potential demonstration project.
We will not be issuing further guidance on this topic as our intent is
not to be prescriptive on the process.
2. Application Templates
Comment: One commenter requested that CMS develop and provide
standard demonstration applications for States to use.
Response: We appreciate the commenter's suggestion, and may
consider it outside of the content of rulemaking.
3. Application Content--Initial Demonstration Applications
Comment: While several commenters were in support of the proposed
application content, several other commenters requested that the
demonstration applications should include demographic information on
the demonstration population, as well as information on how the
demonstration population will be impacted, particularly if the
demonstration population is comprised of vulnerable or medically-
underserved individuals. One commenter suggested that CMS require the
State to provide details on how it will mitigate adverse health
[[Page 11684]]
consequences, including outreach and education efforts to assist the
vulnerable and medically-underserved populations in obtaining services
and to raise awareness.
Response: The State is required to include a description of how
current or new beneficiaries will be impacted by the demonstration, as
well to describe how the individuals will be impacted by the various
programmatic features of the demonstration in its public notice as
outlined in Sec. 431.408(a)(1)(i)(A) and (B).
Comment: One commenter requested that demonstration applications
proposing to reduce eligibility or benefits should contain explanations
of the benefit/eligibility limit(s), the number of people affected and
consequences of the reduction.
Response: We believe that we have already addressed the commenter's
concern in Sec. 431.412(a)(1)(ii) of this final rule.
Comment: Regarding the inclusion of financial data, one commenter
requested that States determine per capita cost per value and how the
demonstration would change the total costs and revenues for the State's
Medicaid program.
Response: To support analysis needed to establish budget
neutrality, we require States to submit historical Medicaid expenditure
data for all populations that will be affected by a proposed
demonstration. In most cases, States must show on the basis of
reasonable with- and without-waiver cost projections that the proposed
demonstration will not cost the Federal government more than the
program could have cost in the demonstration's absence. Once the
demonstration is operational, we require States to report their actual
expenditures, which are tracked and compared to the without-waiver
estimates (which may be adjusted to account for caseload changes), to
ensure that the demonstration remains budget neutral. Any Federal
funding received by the State in excess of the without-waiver estimate
must be returned to CMS.
Comment: One commenter requested that the State describe specific
FQHC related waivers, the rationale and justification for such waivers,
if/why such waivers are necessary for the project to achieve its goal,
how the demonstration would be adversely affected if the FQHC waiver
was not approved, the financial impact on the FQHCs and their ability
to provide services, and the written responses and testimony provided
by FQHCs during the State public notice process.
Response: FQHCs play a critical role in serving Medicaid
beneficiaries. We believe that the current language in the regulation
addresses the commenter's request by requiring the State to include
information in its application related to the specific expenditure and
waiver authorities it is requesting, a narrative description of the
proposed project, and identification of key issues, such as those
discussed by the commenter, raised during the State's public comment
period.
4. Application Submission--Initial Demonstration Applications
Comment: One commenter requested that the date of electronic
submission be deemed as the official submission date.
Response: The official submission date is the date in which the
State's application was received by the Secretary. We have revised the
language in the final rule incorporating this change.
5. Application Procedures--Initial Demonstration Applications
Comment: One commenter requested clarification regarding when CMS
would use its discretion to direct an additional 30-day public comment
period.
Response: Each demonstration application is unique, and as such, we
cannot provide specifics on when we would require an additional 30-day
period. We would decide this on a case-by-case basis, but intend to
only direct an additional 30-day period when the State has made
significant changes to the demonstration relative to the proposal it
provided for public input prior to submitting it to CMS.
Comment: One commenter noted that the application procedures
section addressed new demonstration applications and extensions, and
requested clarification on which notice and comment requirements apply
to renewals of existing demonstration projects.
Response: We use ``renewal of an existing demonstration'' and
``extension of an existing demonstration'' interchangeably. In order to
prevent additional confusion, we have revised the language in the final
rule to make it more consistent, by using the word ``extension'' rather
than ``renewal.''
6. Application Content--Demonstration Extension Requests
Comment: One commenter stated that the implementation date of a
demonstration program is subject to the Federal approval date of the
Demonstration and of an information system's Advance Planning Document
(APD). The commenter requested that CMS use the implementation date
rather than the approval date when requiring a demonstration extension
request.
Response: While we appreciate the commenter's suggestion, APDs are
not generally associated with section 1115 demonstrations. Approval
dates and implementation dates sometimes differ because a State may
need Federal approval before moving forward with steps toward
implementation. Generally, when the implementation date is different
from the approval date, the Special Terms and Conditions will indicate
the implementation date. For demonstration extensions, an APD would be
less likely because the State has already implemented the
demonstration. The extension, and the timing for the extension
application request, would need to date from the expiration of the
prior approval period, to avoid a gap in approved operation.
Comment: One commenter expressed concern that important issues
would not be included in the State's report of key issues raised during
the public comment period. The commenter recommended that CMS delete
the word ``key'' as it is subjective.
Response: We have revised the language by deleting the word ``key''
in Sec. 431.412(a)(1) and Sec. 431.412(c)(2).
Comment: One commenter requested greater flexibility when providing
the summaries of various quality reports to prevent the submission of
irrelevant reports.
Response: We are committed to ensuring that Medicaid beneficiaries
receive quality care, and as such, believe the current quality
reporting requirements reflect our commitment to quality care.
Comment: One commenter requested that States include their 416
EPSDT/CHIP reports when submitting their demonstration extension
requests.
Response: We agree with the commenter, and have revised the
language in the final rule.
7. Application Submission--Demonstration Extension Requests
Comment: Several commenters requested clarification regarding the
availability of short-term extensions of existing demonstrations, even
if initiated less than 12 months prior to the expiration of an existing
demonstration. One of these commenters suggested adding language
authorizing the Secretary to consider extension requests during the
period when a successor demonstration project is under review.
Response: We agree with the commenters, and have incorporated
clarifying language into this final rule.
[[Page 11685]]
Comment: Several commenters expressed concern over the requirement
for States to submit demonstration extension requests 12 months prior
to expiration. One commenter suggested that this timeframe be reduced
to 6 months.
Response: While we understand the commenter's concern over the
timeframe, the 12-month requirement is currently included in the
Special Terms and Conditions (STCs) in the majority of the existing
demonstrations. The 12-month period gives both the State and CMS
adequate time for review. However, we have amended our regulatory
language to allow States to submit an extension request 6 months prior
to the expiration of a demonstration when requesting an extension under
section 1115(a) or (f) of the Act when the Special Terms and conditions
do not impose a longer requirement.
Comment: One commenter requested that CMS incorporate language to
allow the submitting party of a demonstration extension to include a
Governor's designee.
Response: We need to have an assurance that the demonstration is
fully supported by State law and State executive authority. As a
result, it is our current policy to require the State Governor to
submit all new demonstration applications and demonstration extension
requests.
8. Demonstration Approval
Comment: One commenter requested that CMS provide an explanation as
to the considerations and conclusions reached by CMS that resulted in
the agency granting waivers relating to FQHCs and particularly the
conclusions reached by CMS as to the impact such waivers would have on
the viability of the FQHCs and their continuing capacity to serve
Medicaid beneficiaries.
Response: While we understand the commenter's concern regarding the
granting of waivers impacting FQHCs, each individual section 1115
demonstration is the product of extensive discussion between the State
and CMS about the particular circumstances of the State. We expect the
public comments will inform these discussions, but do not believe it is
feasible to explain considerations regarding conclusions reached with
respect to a particular component of a demonstration.
9. Stakeholder Involvement
Comment: One commenter proposed language for CMS to add to ensure
States include a description of current or anticipated mechanisms for
stakeholder involvement beyond the comment periods outlined in the
rule.
Response: While we appreciate the commenter's suggestion to require
States to include how they will continue stakeholder involvement in the
demonstration project, we believe the new post-implementation public
forum, as well as already established forums such as Medical Care
Advisory Committees (MCAC) that are required for each State to advise
the Medicaid agency according to Sec. 431.12, provide sufficient level
of stakeholder involvement. We encourage States to use these and any
additional steps they find most useful to ensure stakeholder
involvement.
E. Federal Public Notice and Approval Process (Sec. 431.416)
We proposed timeframes and action steps to communicate to States
and concerned stakeholders the current status and sequential steps in
the demonstration review process. This approach standardizes and
improves transparency in the section 1115 demonstration review process.
In addition, by clearly communicating this process, we will minimize
confusion around the demonstration review process, satisfy key
stakeholders' need for information and improve communication at the
Federal level.
In Sec. 431.416(a), within 15 days of receipt of a complete
demonstration application for a new demonstration project or an
extension of an existing demonstration project, we proposed we would
send the State a written notice.
In Sec. 431.416(b)(2), we proposed to create and solicit
subscription to an electronic mailing list for the widespread
distribution of information to individuals and organizations interested
in demonstration applications.
Under Sec. 431.416(d), we proposed to publish all comments
electronically. We will review and consider all comments, but will not
provide written responses to public comments.
Under Sec. 431.416(e), we proposed to not render a final decision
on a demonstration application until at least 45 days after notice of
receipt of a completed application.
Under Sec. 431.416(f), we proposed to maintain, and publish on our
Web site, an administrative record.
To ensure that States and the Federal Government are able to
respond quickly to emergencies and unanticipated disasters, in Sec.
431.416(g) we proposed to provide a good cause exception to bypass, in
whole or in part, the Federal and State notice and comment processes to
expedite a decision on a proposed demonstration application or renewal.
We received the following comments concerning the Federal public
notice and approval process:
1. Federal Receipt of Demonstration Application
Comment: One commenter recommends that CMS publish the notification
of receipt of a State's application to its Web site within the same 15-
day timeframe in which the State will be notified of receipt for the
public to have access to the information at approximately the same time
as the State.
Response: We agree with this comment, and have revised the language
in this final rule.
2. Federal Review of Demonstration Applications
Comment: Many commenters expressed support for the 45-day Federal
review timeframe; however, some commenters sought clarification
regarding a maximum Federal review timeframe and asked whether CMS had
a defined process to extend waivers pending review.
Response: Although CMS endeavors to review demonstration requests
expeditiously, given the complex and individual nature of each
demonstration application, we do not have a maximum allowed timeframe
for review. We intend to continue our current practice of providing
temporary extensions of existing demonstrations should additional time
be required to renew an existing demonstration.
3. Federal Public Comment Period and Process
Comment: One commenter requested clarification on CMS' intended use
of any public comment it receives on a State's demonstration
application, and whether CMS will make that public comment available to
the State prior to publishing those comments on the Web site.
Response: We intend to use the Federal comment period to allow the
public the opportunity to provide meaningful input on a State's
demonstration application, as well as to ensure that the State has
addressed all public comments raised during its public notice period.
We will not provide the State with advance notice of the comments prior
to publishing them on our Web site.
Comment: Several commenters believed that the Federal comment
period should be longer than 30 days. Some commenters suggested
expanding the period to 45 or 60 days while other
[[Page 11686]]
commenters suggested that CMS increase the comment period on an
individual basis.
Response: One of the goals of this regulation is to balance the
need for transparency with the need for timely review and approval.
While we appreciate the commenters' suggestions regarding the length of
the Federal comment period, we believe that 30 days strikes the
appropriate balance between transparency and timeliness. The public may
submit comments after the Federal comment period has ended; however, we
cannot assure that late comments will be considered in the Federal
review process. We encourage the public to ensure all comments are
submitted during the Federal comment period to ensure that we have an
opportunity to review such comments before we render a final decision
on a State's demonstration application. We will not render a final
decision until 45 days after receipt of a State's demonstration
application, and will attempt to ensure that comments submitted after
the Federal comment period had ended are considered in the final
decision.
Comment: One commenter recommended that CMS publish the State's
plan for accepting public comments at the same time that the
application and associated concept papers, that is, the start of the
Federal comment period, is published.
Response: The State's application will already include the public
comments received during its public comment period and how the State
took those comments into consideration at the start of the Federal
comment period.
Comment: Many commenters acknowledged that CMS would not be able to
provide an individualized written response to each comment; however,
they requested that CMS provide a summary report of the public comments
received and how they have been addressed. One commenter urged CMS to
reconsider its position of not responding to individual comments.
Another commenter requested that CMS provide written response to public
comments relating to waivers of FQHC service and payment protections.
Response: We will post on the CMS Web site page for the application
a list of the issues raised during the Federal public notice process as
outlined in Sec. 431.416(c)(2). We may include a summary report of
frequently raised issues in our regular status updates.
Comment: One commenter requested that providers have direct access
to CMS during the Federal public comment period.
Response: While we understand the commenter's concern that
providers have the opportunity to provide written comments to CMS, we
believe that the Federal public comment period outlined in this rule
affords all interested parties the same opportunity to provide
comments. We currently meet with interested parties regarding a State's
demonstration application, and expect to continue to do so to the
extent we deem appropriate and feasible. The Federal Government's own
rulemaking procedures under the Administrative Procedure Act emphasize
written comments for many reasons, among them the value of written
comments in allowing the sharing of commenters' precise views and
rationale for those views among the various officials involved in
various stages of review, the value of a written record, and the
desirability of members of the public having access to the views of all
other commenters.
4. Public Disclosure
Comment: Several commenters requested that when CMS publishes
updates on State submissions that it posts all materials that the State
has submitted as part of the application process. One commenter
recommended that CMS clarify that it will post this information on a
regular basis, and that the information will include submissions that
are pending or have been rejected and not limited to those that have
been approved.
Response: We are committed to promoting greater transparency during
the demonstration review process, and will post the demonstration
application per Sec. 431.416(b), as well as status updates on all
submissions on a regular basis.
Comment: One commenter proposed draft language to ensure that CMS
post copies of requests from CMS to the State for additional
information and the State's responses to those requests, along with
timeframes for the public to comment, as well as draft STCs.
Response: While we are committed to promoting greater transparency
during the demonstration review process, we also need to protect frank
and candid discussions between the State and CMS. While a demonstration
application is under review, we believe that publication of these
discussions would inhibit the free flow of information. As detailed
under Sec. 431.416(f), we will maintain, and publish on our public Web
site, an administrative record that will include sufficient
documentation to address substantive issues relating to the approval.
Comment: One commenter requested that CMS clarify that all
documents posted to both the State and CMS Web sites be accessible to
individuals with disabilities.
Response: Individuals with disabilities will have access to
demonstration materials. The Federal Government's Web sites are subject
to specific accessibility responsibilities and practices dictated by
section 508 of the Rehabilitation Act. States are subject to other
statutes, including section 504 of the Rehabilitation Act, the
Americans with Disabilities Act, and in many cases State-specific
statutes. Clarification of those statutes, if needed, is the
responsibility of the agencies that administer those statutes. We are
committed to ensuring that individuals with disabilities have access to
demonstration materials, and believe that the current language in the
final rule accomplishes this goal. We intend to issue specific guidance
on electronic formats that will be accessible to individuals with
disabilities.
Comment: One commenter requested that the State include a link to
the CMS Web site on its Web site.
Response: We agree with this comment, and have revised this final
rule accordingly.
5. Administrative Record
Comment: Several commenters requested that we include, at a
minimum, the following information in the administrative record:
State's application; public comments received during the Federal
comment period and CMS' responses; and specific requirements related to
the approved demonstration, such as implementation reviews, complaints,
documents regarding suspensions or terminations, and evaluations on how
the demonstration is impacting beneficiaries. One commenter requested
that all information regarding the demonstration be posted as the
administrative record given that it can be obtained through a Freedom
of Information Act request. Another commenter suggested that we amend
the proposed language to require the inclusion of evidence that the
Secretary properly considered and accounted for the impact of the
demonstration project on the human participants.
Response: We appreciate the commenters' suggestions regarding the
content of the administrative record, and we believe we have set forth
documentation that should comprehensively set forth the basis, purpose,
and conditions for the approved demonstration. Regarding the impact of
a demonstration project on
[[Page 11687]]
human participants, relevant regulations at 45 CFR 46.101(b)(5) contain
an exemption for research and demonstration projects that are approved
by agency heads, and are designed to study, evaluate, or otherwise
examine: a public benefit or service programs; procedures for obtaining
benefits or services under those programs; possible changes in or
alternatives to those programs or procedures; or possible changes in
methods or levels of payment for benefits or services under those
programs. We believe most, if not all, section 1115 demonstration
projects will fit within this exception. Entities that may receive
Medicaid funding under section 1115 demonstration projects will still
have to review whether the human subject protection regulations are
applicable to them. For example, while a State might not be subject to
these regulations when conducting a demonstration to pay for services
furnished through clinical trials, a research institution conducting
such trials may be subject to these regulations.
Comment: One commenter requested clarification that the
administrative record will be publicly accessible on CMS' Web site.
Response: Yes, the administrative record will be publicly available
on our Web site. We have revised the regulatory language to clarify our
intent.
6. Disaster Exemption
Comment: Many commenters requested that CMS limit the public notice
exception to natural or man-made disasters such as earthquakes, floods,
or terrorist attacks or a public health disaster and not extend beyond
these events. One commenter suggested that CMS post an explanation of
the reasons for the exception on the CMS Web site, along with a
timeline for accepting public comments on emergency measures.
Response: We have revised the language in the final rule to clarify
that the public notice exemption applies only to natural disasters,
public health emergencies, or other emergency threats to human lives.
Should we approve a State's disaster exemption request, we will post
the approval letter on our Web site within 15 days of approval and the
revised timeline for public comment, if applicable.
Comment: Several commenters requested that CMS incorporate proposed
language excluding demonstration applications seeking to restrict
eligibility and/or reduce benefits or increase cost-sharing for
beneficiaries from a disaster exception.
Response: We understand the commenters' concern on this issue;
however, the purpose in providing an exception to public notice during
a disaster is to enable the State to move nimbly during the response
period. In most disaster cases, we grant authorities to States allowing
them to expedite processes to ensure coverage to populations impacted
by the disaster. We expect that in such cases States will seek to
maintain or expand affordable coverage for affected populations.
Comment: Several commenters requested that CMS provide greater
flexibility when providing exceptions to address legislative activities
and the State legislature's schedule. One commenter expressed concern
at potentially having to repeat the public notice process when the
nature of the demonstration changes as a result of legislative action.
Response: We understand that demonstration projects may be impacted
by legislative changes; however, we believe the language in the final
rule provides States flexibility in the public notice process should a
change occur. Changes that do not substantially change the nature and
scope of the demonstration project will not cause the State to repost
the application for additional public comment. We may, at our
discretion, require the State to repost for an additional 30-day public
comment period should the revised demonstration application contain
substantial changes to the initial application. We believe that the
additional 30-day comment period is necessary if the State takes action
to substantially delay the approval process.
F. Monitoring and Compliance (Sec. 431.420)
As section 1115 demonstrations have a significant impact on
beneficiaries, States and the Federal government, we are establishing
processes and methodologies to assure we have adequate and appropriate
information regarding the effectiveness of section 1115 demonstrations.
Under Sec. 431.420(a), we proposed that States must comply with all
applicable Federal laws, regulations, policy statements and
Departmental guidance unless a law or regulation has specifically been
waived or determined not applicable under the demonstration. Under
section 1115 CMS has no authority to waive requirements that are not
contained in parts of the Social Security Act specifically enumerated
in that section, or otherwise delegated to CMS for this purpose. For
example, CMS has no authority to exempt a State from laws or
regulations administered by another Federal Department or agency. We
have reworded the language to clarify this and to emphasize the limited
scope of section 1115 demonstrations.
Under Sec. 431.420(b), as part of the special terms and conditions
of any demonstration project, we proposed that States will conduct
periodic reviews related to the implementation of the demonstration.
Under Sec. 431.420(c), we proposed that States will publish the
date, time, and location of the public forum in a prominent location on
the State's public Web site at least 30 days prior to the date of the
planned public forum.
Under Sec. 431.420(d), we proposed to affirm the Secretary's right
to suspend or terminate a demonstration, in whole or in part, any time
before the date of expiration, whenever it determines that the State
has materially failed to comply with the terms of the demonstration
project.
In Sec. 431.420(f), should we undertake an independent evaluation
of any component of the demonstration, we proposed the State must
cooperate fully with CMS or the independent evaluator selected by CMS.
The State must submit all necessary data and information to CMS or the
independent evaluator.
We received the following comments concerning monitoring and
compliance:
1. Implementation Reviews
Comment: One commenter requested additional detail concerning the
implementation review, that is, what the review should entail, how such
a review is to be conducted and reported, etc.
Response: The State must comply with the implementation review
requirement as outlined in the demonstration's STCs.
Comment: One commenter noted that the regulation does not address
quarterly reports, and asked if the implementation reviews replaced
these reports.
Response: States will be required to comply with requirements, such
as the submission of quarterly reports, found in their STCs.
Implementation reviews will not replace these requirements.
2. Complaints
Comment: One commenter asked if complaints will be shared with the
State or if the State would be given the opportunity to respond to such
complaints. The commenter recommended that CMS share all complaints
received with the State as outlined in Sec. 431.420(b)(2).
Response: We believe it is in the best interests of States, the
Federal government, providers and beneficiaries
[[Page 11688]]
to share such complaints with the State to ensure that any appropriate
corrective action occurs. As such, we have revised the language in the
final rule to reflect this.
Comment: One commenter proposed language to the monitoring and
compliance section clarifying that CMS will publish information on its
Web site explaining how to file a complaint and that documented
complaints will be reviewed by CMS.
Response: While it is current practice for complaints to be
submitted, reviewed and responded to by the Regional Office which works
most closely with the State in question, we are committed to ensuring
that all documented complaints are reviewed and responded to by CMS. We
will provide guidance on our Web site on how the public can file
complaints with CMS.
3. Post Award Public Forum
Comment: While many commenters expressed support for the post award
public forum, the commenters requested that CMS clarify language to
ensure the public has opportunity to speak at the post award public
forum.
Response: We agree with this comment, and have included language in
the final rule.
Comment: One commenter stated that the post-award public forum is
onerous, particularly in combination with the periodic implementation
review requirement, and recommended that CMS allow States to utilize
forums already established to receive comments from the public
regarding the Medicaid programs.
Response: We believe that the post-award public forum is important
in accomplishing greater transparency, ensuring meaningful public input
into the implementation process, and is an important aspect of the
evaluation component established by the law. The final rule allows the
State to use already established forums to comply with this
requirement.
Comment: One commenter noted that the proposed rule is inconsistent
with the Medical Care Advisory Committee (MCAC) regulations at Sec.
431.12 which requires each State to have a MCAC and to assure that the
MCAC has the opportunity to participate in policy development. As such,
the commenter recommended that CMS remove the optional use of the
State's MCAC in Sec. 431.408(a)(3) and Sec. 431.420(c), and require
the State to include its MCAC in the development of the State's
demonstration application.
Response: We disagree with the commenter. We believe that it is
more appropriate to give the State the choice of venue in holding the
public forum. States have different ways in which they structure and
organize their oversight and advisory structures. In some States, the
MCAC meetings are not open to the public but other types of panels are
open to public comment. This regulation does not in any way limit the
MCAC's role in policy development.
Comment: One commenter expressed concern that 6 months may not be
enough time to see the impact and outcomes of a demonstration, and
recommended that CMS require the forum to be held 12 months after
implementation rather than 6 months.
Response: Our intent in requiring the forum within 6 months of
implementation is to allow the public to provide initial feedback on
implementation. This is beneficial to both the State and the
beneficiaries as it will allow the State to address any problems
associated with the initial implementation of the demonstration.
Comment: One commenter requested that CMS require States to
summarize the comments imparted at the forum and immediately submit the
summary for CMS review.
Response: We believe that the current requirement is sufficient and
accomplishes our goal of balancing transparency with minimal
administrative burden to the State. We have revised language in Sec.
431.420(c) requiring the State to provide a summary of the forum in the
quarterly report associated with the quarter in which the forum was
held, as well as in the State's annual report.
4. General
Comment: While we did receive several comments supporting the
monitoring and compliance provisions of this rule, we also received
several comments requesting the deletion of Sec. 431.420(a)(2) as it
conflicts with Sec. 431.420(d).
Response: We agree with this comment, and have revised the language
in the final regulation.
Comment: One commenter requested that CMS define ``interpretive
policy statement'' and ``interpretive guidance'' as specified in Sec.
431.420(a)(1).
Response: These terms have the same meaning, and we are revising
the rule to use only the term ``interpretive guidance'' to refer to HHS
or CMS guidance on the Federal interpretation of applicable Federal
laws and regulations that have been communicated to the State through
CMS manuals, letters to State Medicaid Directors, or other
communications giving State notice of the Federal interpretation.
Comments: One commenter requested that a State receive advance
notification of monitoring and compliance issues, with a chance for the
State to appeal any finds for noncompliance, termination, or
suspension.
Response: We will promptly notify the State of any monitoring and
compliance issues. To the extent that there are consequences for the
State, and available appeal processes, the special terms and conditions
will describe those details.
Comment: A few commenters requested that CMS clarify that
demonstrations may be terminated only if the State fails to materially
comply with the agreed upon terms and conditions.
Response: We have clarified the language in the rule to provide
that the Secretary may suspend or terminate a demonstration if the
State fails to materially comply with the agreed upon terms and
conditions. We also added language clarifying that the Secretary may
also withdraw waivers or expenditure authorities based on a finding
that the demonstration project is not likely to achieve the statutory
purposes. The terms and conditions for the demonstration will detail
any notice and appeal rights for the State for a termination,
suspension or withdrawal of waivers or expenditure authorities.
G. Evaluation Requirements (Sec. 431.424)
In Sec. 431.424(a), we proposed that the Secretary may use a broad
range of evaluation strategies developed by States but subject to
Secretarial approval in the application of evaluation techniques for
measuring the effectiveness and usefulness of demonstration projects as
models that help shape health care delivery and policy.
In Sec. 431.424(b), we proposed the criteria that should be
included in demonstration evaluations.
In Sec. 431.424(c), we proposed that States submit and receive CMS
approval of a design for an evaluation of the demonstration (or
extension) and publish to the State's public Web site the draft
demonstration evaluation design within 30 days of CMS approval.
In Sec. 431.424(d), in the event the State submits a request to
extend the demonstration beyond the current approval period under the
authority of sections 1115(a), (e), or (f) of the Act, we proposed that
the State shall include an interim evaluation report as part of the
State's request for each subsequent renewal. State evaluations must be
[[Page 11689]]
published on the State's public Web site within 30 days of submission
to CMS.
In Sec. 431.424(e), we proposed that States will publish the
approved demonstration evaluation design on the State's public Web site
within 30 days of CMS approval.
In Sec. 431.424(f) regarding Federal evaluations, we proposed that
States must comply with all requirements set forth in this subpart.
In Sec. 431.424(g), we proposed that we will post, or provide a
link to the State's public Web site, all evaluation materials,
including research and data collection, on our Web site for purposes of
sharing findings with the public within 30 days of receipt of
materials.
We received the following comments on the evaluation requirements.
1. Evaluation Design Plan
Comment: Several commenters suggested that the evaluation design
plan could be strengthened by incorporating some of the components
referenced in the section governing annual reports. In particular, the
commenters stated that the evaluation designs should evaluate how the
demonstration impacts the outcome of care, quality of care, cost of
care, and access to care for demonstration populations, where
appropriate.
Response: While we appreciate the commenters' suggestion, we
believe that the State should have flexibility, subject to CMS
approval, in determining which indicators that it would like to
evaluate when designing the demonstration's evaluation plan in light of
the different kinds of demonstrations that are approved. Additionally,
we believe that the indicators mentioned in the commenters' suggestion
are inherent to an evaluation design plan.
Comment: Several commenters requested that language protecting
beneficiaries' privacy be included in Sec. 431.424(a)(2).
Response: We agree with this comment, and have included language in
the final rule. We note that existing Federal statutes, most notably
the Privacy Act and HIPAA, prevent disclosure of protected personal
information. In addition, the release, disclosure, or use of personal
information is governed by the requirements 42 CFR 431, subpart F.
Comment: Due to the fact that some information required in the
evaluation section is contingent upon the selection of potential
contractors, one commenter requested that the evaluation information be
submitted to CMS at a conceptual level including as much information as
is available with more detailed information following selection of the
contracting entity. The commenter recommended that an exemption
allowance be considered for demonstration projects that will be
implemented by contracted staff.
Response: We understand the commenter's concern, and it is current
practice to allow States to revise their evaluation design plans once a
contractor has been selected, if necessary. We do not believe such a
procedure is inconsistent with the proposed regulations, and thus we
are not making any revisions to these final regulations. On the issue
of the ``exemption allowance,'' we do not see any basis for a broad
exemption from evaluation requirements.
2. General
Comment: Given the fact that data necessary to fully evaluate a
demonstration may not be available until well after the demonstration
ends, one commenter questioned if CMS would consider extending the
evaluation's due date beyond the waiver expiration in such cases.
Response: It is our practice to include language in the STCs
requiring the State to submit an evaluation 120 days after the
expiration of the demonstration. We will decide on a case-by-case basis
to extend this timeframe should a State need additional time to comply.
Comment: One commenter expressed concern over the difficulty in
isolating the effects of the demonstration from other changes occurring
in the State at the same time, and would need to exclude some
demonstration participants from the ``other changes.'' The commenter
believed that this would result in a more complicated evaluation design
that would be difficult and expensive to implement, and requested that
the evaluation requirement be deleted from the final rule.
Response: The purpose of a demonstration is to test new approaches
to coverage, delivering care, improving quality, etc. Evaluation is
required to measure the effectiveness and usefulness of the
demonstration as a model to help shape health care delivery and policy.
Comment: One commenter requested that data collection comply with
the Office of Management and Budget's (OMB) 1997 revised standards for
the collection of race and ethnicity data.
Response: We will ensure that data collected during the evaluation
of the demonstration project complies with OMB's 1997 revised standards
for the collection of race and ethnicity data, as appropriate. As a
technical matter, these standards apply only to data collection by the
Federal government itself, and of course they can only be used when
feasible, which is not always the case in research and evaluation
activities, such as studies using medical or administrative records
that do not use the OMB categories.
Comment: One commenter stated that while it is helpful for the
public to comment on the evaluation parameters, CMS should require the
State to provide opportunity for public review and comment on the
State's evaluation design.
Response: The public is afforded the opportunity to comment on the
evaluation design plan as the State must publish its application on its
Web site or a demonstration specific Web page as outlined in Sec.
431.412(a)(2)(i). The evaluation design plan is a required component of
the State's application.
Comment: One commenter requested that CMS include a deadline for
publishing the evaluation design and reports on both the State and CMS
Web sites.
Response: We agree with this comment, and have included language in
the final rule.
H. Reporting Requirements (Sec. 431.428)
In order for CMS to effectively monitor the implementation of a
demonstration, we proposed that States will submit an annual report, as
described in Sec. 431.428(a).
In Sec. 431.428(b), we proposed that States will submit a draft
annual report to CMS no later than 90 days after the end of each
demonstration year. Within 60 days of receipt of comments from CMS, the
State will submit a final annual report for the demonstration year to
CMS. The draft and final annual reports are to be published on the
State's public Web site.
We received the following comments concerning annual reporting:
1. Annual Reports
Comment: One commenter requested that we clarify the ``grievances
and appeals'' component of the annual report. The commenter requested
clarification of what information is required under the ``grievances
and appeals'' component, and whether the reference is intended to mean
appeals under 42 CFR part 431, subpart E and/or 42 CFR part 438,
subpart F relating to the waivers and expenditure authorities granted
as part of the demonstration project.
Response: The State should provide a summary of the types of
grievances and appeals, and include any trends discovered, the
resolution of the grievances and appeals, and any actions
[[Page 11690]]
taken, or to be taken, to prevent other occurrences.
Comment: Several commenters requested clarification regarding CMS'
intent to require the State to publish draft annual reports on its Web
site. One commenter recommended that CMS remove this requirement from
the final regulation, and only require the State to publish a final
annual report.
Response: The overarching goal of this regulation is to increase
the degree to which information about section 1115 demonstrations is
publicly available. By requiring the State to publish the draft annual
report on its Web site, we believe this requirement is in line with the
goal of this final rule.
Comment: One commenter expressed concern over conducting annual
beneficiary satisfaction surveys as they are costly and time consuming.
The commenter requested that CMS consider biannual member satisfaction
surveys.
Response: While we did not specifically request an annual
beneficiary satisfaction survey, we have clarified the language
regarding this requirement. An annual survey is not required.
Comment: Many commenters recommended that CMS post the State's
annual report on its Web site.
Response: The State's annual report will be included in the
administrative record as outlined in Sec. 431.416(f). We will also
provide a link to the State's public Web site to assure public access
to the State's annual report.
Comment: One commenter requested that CMS specify a timeframe for
it to provide comments on the annual report.
Response: Given the complex and individual nature of each
demonstration application, we do not have a specified timeframe for
review.
Comment: One commenter expressed concern about the lack of
flexibility for annual recordkeeping and reporting, as well as the
discrepancies in timeframes between existing STCs and this rule.
Response: We have revised the language to clarify that States may
also follow the timeframes for submitting their annual reports as
specified in their STCs.
Comment: One commenter requested that CMS remove quality as a
distinct requirement in the annual report.
Response: We are committed to ensuring that Medicaid beneficiaries
receive quality care, and as such, believe the current quality
reporting requirements are in line with our commitment to quality care.
I. General Comments
1. Demonstration Amendments
Comment: Several of the commenters requested clarification on
whether the regulation would apply to section 1115 demonstration
amendments. One commenter suggested that if the regulation did apply to
amendments, CMS should establish a threshold for the types of changes
that would require public notice.
Response: This regulation and the statutory changes that it
implements, do not address section 1115 demonstration amendments. We
will provide further guidance in a separate issuance on when a State
must solicit public input on demonstration amendments, including
whether a demonstration amendment would result in a new demonstration
project.
Comment: One commenter recommended that CMS require advance notice
and opportunity for public comment if the State proposes substantive
changes to an approved waiver demonstration.
Response: While we appreciate the commenter's concern for
additional public notice on demonstration amendments, this regulation
does not apply to section 1115 demonstration amendments.
2. American Recovery and Reinvestment Act (ARRA)
Comment: The commenter requested additional regulatory action to
codify section 5006(e) of ARRA for all Medicaid and CHIP policy
changes.
Response: We have addressed the requirements in section 5006(e) of
ARRA to seek advice from Indian health providers and urban Indian
organizations for section 1115 demonstrations, but the overall
implementation of consultation requirements is beyond the scope of this
rulemaking document, and therefore, we are not addressing it in this
final rule. Regardless, the ARRA provides States appropriate
flexibility in the methods they choose to use, as is appropriate given
the wide array of situations among the States where there are
Federally-recognized tribes, Indian health providers, or urban Indian
organizations.
3. Current CMS Web Site
Comment: Several commenters requested that CMS provide the public
with more information on its Web site about section 1115 demonstrations
that are currently being considered for extensions and new section 1115
demonstrations that have been submitted.
Response: We appreciate the commenters' suggestion, and are
reviewing our current Web site operating procedures to ensure we meet
the requirements of the regulation.
4. Operational Protocols
Comment: One commenter expressed concern that the public will not
be able to comment on operational protocols as these are sometimes used
to make significant changes to the demonstration. The commenter
requested that CMS provide the public opportunity to comment on these
protocols should it allow states to make changes to the demonstration
through the submission of these protocols.
Response: We no longer require States to submit operational
protocols; it is our current practice to include all operational
requirements in the special terms and conditions upon which approval of
the demonstration project is contingent. Therefore, this comment is
beyond the scope of this rulemaking.
5. General/Unrelated
Comment: While several commenters expressed support for the
proposed regulation, several others expressed concern that the
regulation would be too cumbersome by requiring additional staff time
and resources, which are under considerable strain due to current State
fiscal pressures.
Response: One of the goals of this regulation is to balance the
need for transparency with respect to administrative burden. While we
understand the commenters' concerns regarding the additional staff time
and resources, we believe that this regulation strikes an appropriate
balance between transparency and administrative burden by providing the
State with flexibility in the manner in which it publishes its public
notice, as well as the venues it selects to hold the public hearings.
In addition, by making public documents available on the Web, States
and the Federal Government are likely to have fewer requests for public
documents, and therefore, can expect a reduction in staff time devoted
to such activities.
Comment: One commenter recommended that CMS grandfather operational
section 1115 demonstrations that were in place prior to the issuance of
these regulations, and only require them to comply with the new
regulation upon renewal.
Response: We intend to apply the procedural requirements in these
regulations to extensions of current operational section 1115
demonstrations, and would not require States with current operational
1115
[[Page 11691]]
demonstrations to meet public process requirements prior to the next
extension.
Comment: Several commenters provided instances where there were
typographical or referencing errors in the proposed rule.
Response: We agree with these comments, and have made the
appropriate changes to the final rule.
Comment: One commenter urged that CMS apply the principles of this
regulation to Medicare demonstrations.
Response: This comment is beyond the scope of this rulemaking
document, and therefore, we are not addressing it in this final rule.
Comment: One commenter recommended that the Department of Health
and Human Services should align procedures for public notice and
comment as required by the section 1332(a)(4)(B) of the Affordable Care
Act.
Response: Section 1332(a)(5) of the Affordable Care Act requires
coordination of the application process for demonstration projects
under that section with the existing application process under section
1115 (and certain other waiver authorities).
Comment: One commenter urged that CMS apply the principles of this
regulation to State Plan Amendment approvals.
Response: This comment is beyond both the scope of this rulemaking
document and statute, and therefore, we are not addressing in this
final rule. Moreover, the review of State plan amendments is entirely
different than the review of a proposed demonstration. Approval of
State plan amendments that comply with the regulatory framework is non-
discretionary and there is a regulatory timeframe for federal review.
In contrast, approval of section 1115 demonstration projects, including
the timeframe, is discretionary with the Secretary.
III. Provisions of the Final Regulations
For the most part, this final rule incorporates the provisions of
the proposed rule. Those provisions of this final rule that differ from
the proposed rule are as follows:
A. Coordination With Section 1332 Waivers (Sec. 431.402)
We have deleted this provision from the final rule, but we plan to
work closely with the States considering submitting multiple waivers to
promote coordination across them to meet a State's specific
circumstances and minimize administrative complexity while ensuring
that the integrity of the review and approval processes is maintained.
B. Definitions (Sec. 431.404)
We have added the definition of ``Indian Health Program'' to make
it consistent with the definition found in the Indian Health Care
Improvement Act.
C. State Public Notice Process (Sec. 431.408)
We have amended Sec. 431.408(a)(1)(i) to clarify that a
demonstration application or extension request contains sufficient
level of detail to ensure meaningful input from the public.
We have further clarified in Sec. 431.408(a)(1)(i)(C) that a
financial analysis of changes to the demonstration must be included in
a demonstration extension request.
We have added Sec. 431.408(a)(1)(i)(E) requiring the State to
include in its public notice specific waiver and expenditure
authorities that the State believes to be necessary to authorize the
demonstration.
We have amended Sec. 431.408(a)(1)(iii) clarifying that comments
need only be accepted by the State within a minimum 30-day time period.
We have amended Sec. 431.408(a)(2)(i) requiring the State to
include a link to relevant Medicaid demonstration page(s) on the CMS
Web site on its Web site, and have clarified language that the State
may publish an abbreviated notice in a newspaper or the State's
Register.
We have clarified in Sec. 431.408(a)(2)(ii) that the State must
also publish an abbreviated public notice which must include a summary
description of the demonstration, the location and times of the two
public hearings, and an active link to the full public notice document
on the State's Web site in either the State's Administrative Record or
significant newspaper. We have amended language requiring the State to
publish its notice in the newspaper of widest circulation in each city
with a population of 100,000 or more. We have added Sec.
431.408(a)(2)(iii) requiring the State to utilize a mechanism, such as
an electronic mailing list, to notify interested parties of a
demonstration application in addition to publishing an abbreviated
public notice in either the State's Administrative Record or
significant newspapers.
We have amended Sec. 431.408(a)(3) to clarify that the two public
hearings must be held on separate dates and at separate locations, and
must provide the public throughout the State an opportunity to provide
comments. We further clarify that the State must use telephonic and/or
Web conference capabilities for at least one public hearing to ensure
statewide accessibility to the hearing unless it can document that it
has met this requirement.
We have added a technical amendment to Sec. 431.408(a)(3)(i)
revising the CFR citation that governs the Medical Care Advisory
Committee to read ``Sec. 431.12.''
We have amended language in Sec. 431.408(b)(1) to clarify that,
for a new demonstration project, or an extension of an existing
demonstration, that has or would have a direct effect on tribes,
Indians, Indian health programs, or urban Indian health organizations,
the State must undertake a consultation process with Tribes and seek
advice from affected Indian health providers and urban Indian health
organizations that includes advance notice of the application with the
anticipated effect on tribes and Indian health providers, and an
opportunity for input in a timeframe that allows adequate time for
State consideration of any issues raised. This process should be
consistent with the guidance set forth in the State Medicaid Director
Letter dated July 17, 2001 (01-024) unless the State has a
different established policy with the tribes and/or a different process
for seeking advice from the Indian health providers and urban Indian
organizations any State process under its approved Medicaid State plan.
We have revised, in Sec. 431.408(b)(3), the term ``a renewal of a
previously approved demonstration project'' to read ``an extension of
an existing demonstration project.''
D. Application Procedures (Sec. 431.412)
We have amended language in Sec. 431.412(a)(1)(viii) deleting the
word ``key'' as well as clarifying that the State must provide written
evidence on how it considered public comments when developing the
demonstration application.
To ensure flexibility, we have deleted specific reference to
``Section 508 of the American with Disabilities Act'' and substituted
language requiring that State submissions be in formats that are
accessible to individuals with disabilities.
We have added a new Sec. 431.412(a)(3) to clarify that this
section does not preclude a State from submitting a pre-application
concept paper to CMS or from conferring with CMS about its intent to
seek a demonstration prior to submitting a completed application.
We have amended Sec. 431.412(b)(1) to clarify that we will include
the date in which the Secretary received the State's demonstration
application in the written notice informing the State receipt of the
submitted application.
[[Page 11692]]
We have amended Sec. 431.412(c) to clarify that States must submit
an extension request 12 months prior to the expiration date of a
demonstration when requesting an extension under section 1115(e) of the
Act or 6 months prior to the expiration date of a demonstration when
requesting an extension under section 1115(a) or (f) of the Act, unless
a longer time frame is specified in the Special Terms and Conditions
for the original demonstration.
We have revised Sec. 431.412(c)(2)(iv) to include the CMS 416
EPSDT/CHIP report as an example of other documentation regarding access
to care, in its extension request.
We have revised Sec. 431.412(c)(2)(vii) deleting the word ``key''
as well as clarifying that the State must provide written evidence on
how it considered public comments when developing the demonstration
application.
We have added a new Sec. 431.412(c)(4) clarifying that the
Secretary may extend an existing demonstration project on a temporary
basis for the period during which a successor demonstration is under
review, without regard to the date when the application was submitted.
E. Federal Public Notice and Approval Process (Sec. 431.416)
We have amended Sec. 431.416(a)(i) to clarify that we will include
the State's official demonstration application submission date received
by the Secretary in the written notice informing the State of receipt
of the submitted application. We will also publish the written notice
on our Web site within the 15-day timeframe.
We have amended Sec. 431.416(d) to clarify that we will publish
all written comments.
We have amended Sec. 431.416(f)(2) to clarify that we will publish
the administrative record on our Web site, or provide a link to the
State's public Web site to ensure public access to all demonstration
documents.
We have added another administrative record element in the new
paragraph Sec. 431.416(f)(1)(ii) to include the State's disaster
exception request, the CMS' response letter, and revised public notice
timeline, if applicable.
We have clarified in Sec. 431.416(f)(1)(iii) that written public
comments will be included in the administrative record.
We have added another administrative record element in Sec.
431.416(f)(1)(vi) to include any written request(s) for additional
information that CMS sends to the State.
We have clarified in Sec. 431.416(f)(1)(v) that if an application
is approved, the final State response to written CMS requests for
additional information will be included in the administrative record.
We have added Sec. 431.416(f)(1)(vi) to include the disapproval
letter sent to the State should its application be denied.
We added in Sec. 431.416(f)(1)(vii) the phrase ``as applicable.''
We have clarified Sec. 431.416(f)(1)(viii) to include specific
requirements related to the approved and agreed upon terms and
conditions, such as implementation reviews, evaluation design,
quarterly progress reports, annual reports, and interim and/or final
evaluation reports.
We have added another administrative record element in Sec.
431.416(f)(1)(ix) to include any applicable notices of the
demonstration's suspension or termination.
We have added Sec. 431.416 paragraph (f)(2) to clarify that we
will provide a link to the State's public Web site to ensure the public
has access to all demonstration related documentation.
We have revised, in Sec. 431.416(g), the term ``demonstration
renewal'' to read ``demonstration extension request.'' We have also
deleted the term ``economic'' from Sec. 431.416(g).
We have revised Sec. 431.416(g)(i) to read ``The State acted in
good faith, and in a diligent, timely, and prudent manner.''
F. Monitoring and Compliance (Sec. 431.420)
We have amended Sec. 431.420(a)(1) to delete ``policy statement''
and change ``policy'' to ``guidance.''
We have amended Sec. 431.420(a)(2) to clarify that the States must
comply with the terms and conditions set forth by the Secretary, and to
make the paragraph more consistent with Sec. 431.420(d).
We have added Sec. 431.420(b)(3) clarifying that we will promptly
share with the State complaints that it has received, and that we will
notify the State of any applicable monitoring and compliance issues.
We have amended Sec. 431.420(c) to clarify that the public forum
must allow the public an opportunity to provide comments, as well as to
require the State to include a summary report of the public forum in
the quarterly report associated with the quarter in which the forum was
held. We also clarify that the public forum must be held within 6
months after the demonstration's implementation date.
We have amended Sec. 431.420(c)(1)(i) revising the CFR citation
that governs the Medical Care Advisory Committee to read Sec. 431.12.
We have amended Sec. 431.420(d) to clarify that the Secretary may
suspend or terminate a demonstration, and that the Secretary may also
withdraw waivers or expenditures authorities based on a finding that
demonstration project is not likely to achieve the statutory purposes.
G. Evaluation Requirements (Sec. 431.424)
We have revised Sec. 431.424(b)(2) requiring the State to ensure
that the evaluation process protects beneficiary privacy.
We have amended Sec. 431.424(c)(1) requiring the State to publish
its evaluation design plan on its Web site within 30 days of CMS
approval.
We have amended Sec. 431.424(d) requiring the State to publish its
evaluations on its Web site within 30 days of submission to CMS.
We have clarified in Sec. 431.424(g) that we will post all
evaluation materials, or provide a link to the State's public Web site,
within 30 days of receipt.
H. Reporting Requirements (Sec. 431.428)
We have amended Sec. 431.428(a)(2) to include that any issues and/
or complaints made by beneficiaries must be included in the annual
report.
We have amended Sec. 431.428(a)(5) to clarify that the results of
beneficiary satisfaction survey, if conducted during the reporting
year, should be included in the annual report.
We have amended Sec. 431.428(b) requiring the State to publish its
draft annual report on its public Web site within 30 days of submission
to CMS.
We have amended Sec. 431.428(b)(2) requiring the State to publish
its final annual report on its Web site within 30 days of approval by
CMS.
IV. Collection of Information Requirements
Under the Paperwork Reduction Act of 1995, we are required to
provide 30-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
the Office of Management and Budget (OMB) for review and approval. In
order to fairly evaluate whether an information collection should be
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act
of 1995 requires that we solicit comment on the following issues:
The need for the information collection and its usefulness
in carrying out the proper functions of our agency.
The accuracy of our estimate of the information collection
burden.
The quality, utility, and clarity of the information to be
collected.
Recommendations to minimize the information collection
burden on the
[[Page 11693]]
affected public, including automated collection techniques.
A. ICRs Regarding State Public Notice Process (Sec. 431.408)
Section 431.408 provides for a State to provide a public notice and
comment period regarding applications for a demonstration project, or
an extension of an existing demonstration project the State intends to
submit to CMS for review and consideration. Section 431.408(a)(1)
specifies that prior to submitting an application to CMS for a new
demonstration project, or an extension of an existing demonstration
project, the State must provide public notice, and a comment period for
at least 30 days. The public notice must address the information
requirements listed at Sec. 431.408(a)(1)(i) through (iv).
The burden estimate associated with this requirement is the time
and effort necessary to develop and publish notice with a comment
period that complies with the aforementioned information requirements.
We estimate that, on average, each of the 15 States submitting
applications for new demonstration projects, and extension of a
previously approved demonstration project will require 80 hours to
comply with the requirements in this section. The estimated annual
burden associated with this section is 1200 hours at a cost of
$120,000.
Section 431.408(a)(2) provides that States establish and maintain a
readily identifiable link to a demonstration Web page on the public Web
site of the State agency responsible for making applications for
demonstrations, and provide a link to the appropriate demonstration Web
page on the CMS Web site. The State public notice must appear in a
prominent location on the demonstration Web page of the State's public
Web site throughout the entire review process; and the public notice
must appear in at least one of the publications listed in Sec.
431.408(a)(2)(i) and (ii).
The burden associated with this is the time and effort necessary to
develop a notice and to publish it both on the Web site for State
agency responsible for submitting demonstration applications and in at
least one of the publications listed in Sec. 431.408(a)(2)(i) and
(ii). While these requirements are subject to the PRA, we believe we
addressed the burden estimates in our discussion of Sec.
431.408(a)(1).
Section 431.408(a)(3) requires that at least 20 days prior to
submitting an application for new demonstration projects, or an
extension of a previously approved demonstration project to CMS for
review, the State must have conducted at least two public hearings
regarding the State's demonstration application using at least two of
the following public forums contained in this section. The two public
hearings must be held on separate dates and in separate locations, and
must afford the public an opportunity to provide comments.
Additionally, the State must utilize teleconferencing or Web
capabilities for at least one of the public hearings to ensure
statewide accessibility. The burden associated with this is the time
and effort necessary for a State to conduct at least two public
hearings 20 days prior to submitting an application for a
demonstration. While this requirement is subject to the PRA, we believe
the associated burden is exempt under 5 CFR 1320.3(h)(4). Facts or
opinions submitted in response to general solicitations of comments
from the public, published in the Federal Register or other
publications, regardless of the form or format thereof, provided that
no person is required to supply specific information pertaining to the
commenter, other than that necessary for self-identification, as a
condition of the agency's full consideration of the comment are not
subject to the PRA.
Section 431.408(b) requires States with Federally-recognized Indian
tribes, Indian health programs, urban Indian health organizations or
all three of the aforementioned entities, to consult with the Indian
tribes, and seek advice from Indian Health programs and urban Indian
health organizations in the State, before submitting a demonstration
application that has direct effects on Indians and/or these entities
and organizations. Section 431.408(b)(2) specifies that consultation
activities must be conducted in a manner consistent with the State
Medicaid Director Letter 01-024 regarding consultation with
tribes and the approved State Plan Amendments for seeking advice from
Indian health providers and urban Indian organizations. Section
431.408(b)(3) further specifies that when there is a direct effect on
Indians, Indian tribes, Indian health providers or urban Indian
organizations, the State must submit evidence to CMS that these
requirements have been met. Section 431.408(b)(4) explains that
documentation of the State's consultation activities must be included
in the demonstration application, which must describe the notification
process, the entities they sought advice from or consulted with, the
date and location of these consultation or how advice was sought,
issues raised, and the potential resolution for such issues.
The burden associated with the requirements in this section is both
the time and effort necessary for a State to seek advice and/or conduct
its tribal consultations and the time and effort necessary to notify
CMS of the State's compliance with Sec. 431.408(b). We estimate that
this requirement applies to 37 States but that no more than, on
average, 15 States would be subject to this requirement in a given
year. We further estimate that it will take each State a total of 40
hours to both conduct its tribal consultations, and seek advice from
Indian health programs and urban Indian health organizations prior to
submitting an application for a new demonstration project, or an
extension of an existing demonstration project and to submit the
aforementioned evidence to CMS. The estimated annual burden associated
with these requirements is 600 hours at a cost of $60,000.
B. ICRs Regarding Application Procedures (Sec. 431.412)
Section 431.412(a) discusses the application process for Medicaid
demonstration projects. A State's application for approval of a new
demonstration project or an extension of an existing demonstration
project must be submitted to CMS as both printed and electronic
documents. Electronic documents should be in formats accessible to
individuals with disabilities. Section 431.412(b) further explains that
applications for the initial approval of a demonstration will not be
considered complete if they do not comply with the requirements
contained at Sec. 431.412(b) and Sec. 431.408.
The burden associated with the requirements in Sec. 431.412 is the
time and effort necessary for a State to develop and submit a complete
initial application for a demonstration. We estimate that we will
receive, on average, five applications annually. Similarly we estimate
that it will take 400 hours for a State to develop and submit a
complete demonstration application. The total estimated annual burden
associated with the requirements in Sec. 431.412(b) is 2000 hours at a
cost of $200,000.
Section 431.412(c) specifies that a State must submit a request to
extend an existing demonstration under section 1115(e) of the Act at
least 12 months prior to the expiration date of the demonstration or 6
months prior to the expiration date of the demonstration when
requesting an extension under section 1115(a) or (f) of the Act, unless
a longer time frame is specified in the Special Terms and Conditions
for the
[[Page 11694]]
original demonstration. An extension application, including an
extension for the purpose of phasing out a demonstration, must be sent
from the Governor of the State to the Secretary. Section 431.412(c)(2)
further specifies that an application to extend an existing
demonstration will be considered complete when the State provides the
required information listed at Sec. 431.412(c)(2)(i) through (vii).
The burden associated with the requirements in Sec. 431.412(c) is the
time and effort necessary for a State to develop and submit a
demonstration extension application. CMS estimates that, on average, 10
States will apply for extensions annually. We further estimate that it
will take each State approximately 320 hours to develop and submit a
demonstration extension application. The total estimated annual burden
is 3200 hours at a cost of $320,000.
C. ICRs Regarding Monitoring and Compliance (Sec. 431.420)
According to Section 431.420(b), States will periodically perform
reviews of the implementation of the demonstration. We estimate that it
will take each State 80 hours annually to periodically review the
demonstration's implementation. We also estimate that, on average, 15
States must comply with this requirement. The total estimated annual
burden associated with this requirement is 1200 hours at a cost of
$120,000.
Section 431.420(c) states that at least 6 months after the
implementation date of the demonstration and annually thereafter, the
State must hold a public forum to solicit comments on the progress of a
demonstration project. Section 431.420(c)(3)(i) through (iii) further
specifies that the public forum to solicit feedback on the progress of
a demonstration project, must occur at a Medical Care Advisory
Committee, or a commission, or other similar process, where meetings
are open to members of the public, and would afford an interested party
the opportunity to learn about and comment on the demonstration's
progress. Additionally, as stated in Sec. 431.420(c)(3)(iii), the
State must publish the date, time, and location of the public forum in
a prominent location on the State's public Web site, at least 30 days
prior to the date of the planned public forum.
The burden associated with these provisions includes the time and
effort necessary to conduct public meeting and the time and effort
necessary for a State to publish the date, time, and location of the
public forum in a prominent location on the State's public Web site, at
least 30 days prior to the date of the planned public forum. While
these requirements are subject to the PRA, we believe the associated
burden is exempt from the PRA. As discussed previously in this final
rule, facts or opinions submitted in response to general solicitations
of comments from the public, published in the Federal Register or other
publications, regardless of the form or format thereof, provided that
no person is required to supply specific information pertaining to the
commenter, other than that necessary for self-identification, as a
condition of the agency's full consideration of the comment are not
subject to the PRA. Therefore, the burden associated with the annual
public hearing requirement is exempt. Similarly, we believe the time
and effort necessary to a State to publish the date, time, and location
of the public forum in a prominent location on the State's public Web
site is a burden that would be incurred in the course of usual and
customary State business practices and is therefore exempt from the PRA
under 5 CFR 1320.3(b)(3).
D. ICRs Regarding Evaluation Requirements (Sec. 431.424)
As required in Sec. 431.424(c)(1), simultaneous to receiving CMS'
approval of a new demonstration project, or a extension of a previously
existing demonstration project, the State must receive CMS approval of
a design for an evaluation of the demonstration project and publish
this document to the State's public Web site within 30 days of
submission to CMS. The draft evaluation must include information
established in Sec. 431.424(c)(2). The burden associated with this
requirement is the time and effort necessary to design an evaluation
for a new demonstration. We estimate that it will take each State 160
hours to develop an evaluation. Similarly, we estimate that, on
average, 15 States must comply with this requirement. We further
estimate that the total estimated annual burden associated with this
requirement is 2,400 hours at a cost of $240,000.
Section 431.424(d) specifies that in the event that the State
requests to extend the demonstration beyond the current approval period
under the authority of section 1115(a), (e), or (f) of the Act, the
State must submit an interim evaluation report as part of the State's
request for a subsequent extension of the demonstration. The burden
associated with this is the time and effort necessary for a State to
develop and submit an interim evaluation report. We estimate that each
State will take 160 hours to comply with this requirement. Similarly,
we estimate that, on average, 10 States must comply with this
requirement. We further estimate that the total estimated annual burden
associated with this requirement is 1,600 hours at a cost of $160,000.
Section 431.424(e) established that States will publish CMS-
approved demonstration evaluation designs on their State public Web
site within 30 days of CMS approval. We estimate that it will take 70
hours for each State to comply with this disclosure process. We further
estimate that, on average, 15 States must comply with this provision.
We further estimate that the total estimated annual burden associated
with this requirement is 1,050 hours at a cost of $105,000.
E. ICRs Regarding Reporting Requirements (Sec. 431.428)
Section 431.428 establishes that States will submit annual reports
to CMS documenting the information listed in Sec. 431.428(a) (1)
through (11). As part of the submission process, Sec. 431.428(b)
requires States to submit draft annual reports to CMS no later than 90
days after the end of each demonstration year. The burden associated
with this reporting requirement is the time and effort necessary to
submit draft annual reports to CMS. We estimate that, on average, 15
States must comply with this. We estimate that it will take 40 hours
for each State to comply with this reporting requirement. We further
estimate that the total estimated annual burden associated with this
requirement is 600 hours at a cost of $60,000.
In Sec. 431.428(b)(1) establishes that within 60 days of receipt
of comments from CMS, the State must submit to CMS the final annual
report for the demonstration year. While this requirement is subject to
the PRA, we believe the associated burden is exempt under 5 CFR
1320.3(h)(9). Facts or opinions obtained or solicited through non-
standardized follow-up questions designed to clarify responses to
approved collections of information are not subject to the PRA.
Section Sec. 431.428(b)(2) states that the draft and final annual
reports must be published on the State's public Web site within 30 days
of submission and approval to CMS, respectively. The burden associated
with this is the time and effort it takes for a State to post the
aforementioned information on the State's public Web site. We estimate
that, on average, each of the 15 States will require 4 hours to comply
with this requirement. The total estimated annual burden associated
with this requirement is 60 hours at a cost of $6,000.
[[Page 11695]]
Table 1--Estimated Annual Recordkeeping and Reporting Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Hourly
Burden per Total labor cost Total labor Total
Regulation section(s) OMB Control Respondents Responses response annual of cost of capital/ Total cost
No. (hours) burden reporting reporting maintenance ($)
(hours) ($) ($) costs ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 431.408(a)(1).......... 0938-New...... 15 1 80 1,200 100 120,000 0 120,000
Sec. 431.408(b)............. 0938-New...... 15 1 40 600 100 60,000 0 60,000
Sec. 431.412(a) & (b)....... 0938-New...... 5 1 400 2,000 100 200,000 0 200,000
Sec. 431.412(c)............. 0938-New...... 10 1 320 3,200 100 320,000 0 320,000
Sec. 431.420................ 0938-New...... 15 1 80 1,200 100 120,000 0 120,000
Sec. 431.424(c)............. 0938-New...... 15 1 160 2,400 100 240,000 0 240,000
Sec. 431.424(d)............. 0938-New...... 10 1 160 1,600 100 160,000 0 160,000
Sec. 431.424(e)............. 0938-New...... 15 1 70 1,050 100 105,000 0 105,000
Sec. 431.428(b)............. 0938-New...... 15 1 40 600 100 60,000 0 60,000
Sec. 431.428(b)(2).......... 0938-New...... 15 1 4 60 100 6,000 0 6,000
---------------------------------------------------------------------------------------------------------
Total..................... .............. 130 10 ........... 13,910 ........... 1,391,000 ............ 1,391,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
If you comment on these information collection and recordkeeping
requirements, please submit your comments to the Office of Information
and Regulatory Affairs, Office of Management and Budget, Attention: CMS
Desk Officer, [CMS-2325-F], Fax: (202) 395-6974; or Email: [email protected].
V. Regulatory Impact Statement
A. Statement of Need
Under Executive Order 12866 (58 FR 51735), a Federal agency should
publish only such regulations as are required by law, are necessary to
interpret the law, or are made necessary by compelling need. This final
rule implements statutorily required provisions of section 10201(i) of
the Affordable Care Act, and of section 5006 of the American Recovery
and Investment Act. This final rule will increase the degree to which
information about Medicaid and CHIP demonstration applications and
approved demonstration projects is publicly available and promote
greater transparency in the review and approval of demonstrations.
B. Overall Impact
We have examined the impact of this rule as required by Executive
Order 13563 on Improving Regulation and Regulatory Review (January 18,
2011), Executive Order 12866 on Regulatory Planning and Review
(September 1993), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), Executive Order
13132 on Federalism (August 4, 1999), and the Congressional Review Act
(5 U.S.C. 804(2)).
Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). We
believe that the total costs of this rule, including information
collection costs, will be at least several million dollars annually,
but are unlikely to exceed ten million dollars annually. Therefore,
this rule does not reach the economic threshold and thus is not
considered a major rule.
The RFA requires agencies to analyze options for regulatory relief
for small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Individuals and States are not included in
the definition of a small entity. We are not preparing an analysis for
the RFA because we have determined, and the Secretary certifies, that
this final rule will not have a significant impact on a substantial
number of small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis, if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of Core-Based
Statistical Area (for Medicaid) and outside of a Metropolitan
Statistical Area (for Medicare) and has fewer than 100 beds. We are not
preparing an analysis for section 1102(b) of the Act because we have
determined, and the Secretary certifies, that this final rule will not
have a significant impact on the operations of a substantial number of
small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
(Pub. L. 104-4) also requires that agencies assess anticipated costs
and benefits before issuing any rule whose mandates require spending in
any 1 year of $100 million in 1995 dollars, updated annually for
inflation. In 2011, that threshold is approximately $136 million.
Because this rule does not mandate State participation in using section
1115 demonstrations, there is no obligation for the State to make any
change to their existing programs. As a result, there is no mandate for
the State. Therefore, we estimate this rule will not mandate
expenditures in the threshold amount of $136 million in any 1 year.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a proposed rule (and subsequent
final rule) that imposes substantial direct requirement costs on State
and local governments, preempts State law, or otherwise has Federalism
implications. This rule will not have a substantial direct effect on
State or local governments, preempt States, or otherwise have a
Federalism implication. We have sought in this rule to respect State's
own processes for notifying the public of important policy changes and
for obtaining public comment.
In accordance with the provisions of Executive Order 12866, this
regulation was reviewed by the Office of Management and Budget.
List of Subjects in 42 CFR Part 431
Grant programs--health, Health facilities, Medicaid, Privacy,
Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR chapter IV as set forth below:
PART 431--STATE ORGANIZATION AND GENERAL ADMINISTRATION
0
1. The authority citation for part 431 continues to read as follows:
Authority: Sec. 1102 of the Social Security Act, (42 U.S.C.
1302).
[[Page 11696]]
0
2. Subpart G is added to part 431 to read as follows:
Subpart G--Section 1115 Demonstrations
Sec.
431.400 Basis and purpose.
431.404 Definitions.
431.408 State public notice process.
431.412 Application procedures.
431.416 Federal public notice and approval process.
431.420 Monitoring and compliance.
431.424 Evaluation requirements.
431.428 Reporting requirements.
Subpart G--Section 1115 Demonstrations
Sec. 431.400 Basis and purpose.
(a) Basis. This subpart implements provisions in section 1115(d) of
the Act, which requires all of the following:
(1) The establishment of application requirements for Medicaid and
CHIP demonstration projects that provide for:
(i) A process for public notice and comment at the State level,
including public hearings, sufficient to ensure a meaningful level of
public input and that does not impose requirements that are in addition
to, or duplicative of, requirements imposed under the Administrative
Procedure Act, or requirements that are unreasonable or unnecessarily
burdensome with respect to State compliance.
(ii) Requirements relating to all of the following:
(A) The goals of the program to be implemented or renewed under the
demonstration project.
(B) Expected State and Federal costs and coverage projections of
the State demonstration project.
(C) Specific plans of the State to ensure the demonstration project
will be in compliance with titles XIX or XXI of the Act.
(2) A process for public notice and comment after a demonstration
application is received by the Secretary that is sufficient to ensure a
meaningful level of public input.
(3) A process for the submission of reports to the Secretary by a
State relating to the implementation of a demonstration project.
(4) Periodic evaluation of demonstration projects by the Secretary.
(b) Purpose. This subpart sets forth a process for application and
review of Medicaid and CHIP demonstration projects that provides for
transparency and public participation.
Sec. 431.404 Definitions.
For the purposes of this subpart:
Demonstration means any experimental, pilot, or demonstration
project which the Secretary approves under the authority of section
1115 of the Act because, in the judgment of the Secretary, it is likely
to assist in promoting the statutory objectives of the Medicaid or CHIP
program.
Indian Health Program means a program as defined at section 4(12)
of the Indian Health Care Improvement Act, (Pub. L. 94-437).
Public notice means a notice issued by a government agency or
legislative body that contains sufficient detail to notify the public
at large of a proposed action, consistent with the provisions of Sec.
431.408 of this subpart.
Sec. 431.408 State public notice process.
(a) General. A State must provide at least a 30-day public notice
and comment period regarding applications for a demonstration project,
or an extension of an existing demonstration project that the State
intends to submit to CMS for review and consideration.
(1) Public notice and comment period. Prior to submitting an
application to CMS for a new demonstration project or an extension of a
previously approved demonstration project, the State must provide at
least a 30-day public notice and comment period, and the public notice
shall include all of the following information:
(i) A comprehensive description of the demonstration application or
extension to be submitted to CMS that contains a sufficient level of
detail to ensure meaningful input from the public, including:
(A) The program description, goals, and objectives to be
implemented or extended under the demonstration project, including a
description of the current or new beneficiaries who will be impacted by
the demonstration.
(B) To the extent applicable, the proposed health care delivery
system and the eligibility requirements, benefit coverage and cost
sharing (premiums, co-payments, and deductibles) required of
individuals that will be impacted by the demonstration, and how such
provisions vary from the State's current program features.
(C) An estimate of the expected increase or decrease in annual
enrollment, and in annual aggregate expenditures, including historic
enrollment or budgetary data, if applicable. This includes a financial
analysis of any changes to the demonstration requested by the State in
its extension request.
(D) The hypothesis and evaluation parameters of the demonstration.
(E) The specific waiver and expenditure authorities that the State
believes to be necessary to authorize the demonstration.
(ii) The locations and Internet address where copies of the
demonstration application are available for public review and comment.
(iii) Postal and Internet email addresses where written comments
may be sent and reviewed by the public, and the minimum 30-day time
period in which comments will be accepted.
(iv) The location, date, and time of at least two public hearings
convened by the State to seek public input on the demonstration
application.
(2) Statement of public notice and public input procedures. (i) The
State shall publish its public notice process, public input process,
planned hearings, the demonstration application(s), and a link to the
relevant Medicaid demonstration page(s) on the CMS Web site in a
prominent location on either the main page of the public Web site of
the State agency responsible for making applications for demonstrations
or on a demonstration-specific Web page that is linked in a readily
identifiable way to the main page of the State agency's Web site. The
State must maintain and keep current the public Web site throughout the
entire public comment and review process.
(ii) The State shall also publish an abbreviated public notice
which must include a summary description of the demonstration, the
location and times of the two or more public hearings, and an active
link to the full public notice document on the State's Web site in the
State's administrative record in accordance with the State's
Administrative Procedure Act, provided that such notice is provided at
least 30 days prior to the submission of the demonstration application
to CMS or in the newspapers of widest circulation in each city with a
population of 100,000, or more, provided that such notice is provided
at least 30 days prior to the submission of the demonstration
application to CMS, or both.
(iii) The State must also utilize additional mechanisms, such as an
electronic mailing list, to notify interested parties of the
demonstration application(s).
(3) Public hearings. At least 20 days prior to submitting an
application for a new demonstration project or extension of an existing
demonstration project to CMS for review, the State must have conducted
at least two public hearings, on separate dates and at separate
locations, regarding the State's demonstration application at which
members of the public throughout the State have an opportunity to
provide comments. The State must use telephonic and/or Web conference
capabilities for at least one of the two
[[Page 11697]]
required public hearings to ensure statewide accessibility to the
public hearing unless it can document it has afforded the public
throughout the State the opportunity to provide comment, such as
holding the two public hearings in geographically distinct areas of the
State. The State must use at least two of the following public forums:
(i) The Medical Care Advisory Committee that operates in accordance
with Sec. 431.12 of this subpart; or
(ii) A commission or other similar process, where meetings are open
to members of the public; or
(iii) A State legislative process, which would afford an interested
party the opportunity to learn about the contents of the demonstration
application, and to comment on its contents; or
(iv) Any other similar process for public input that would afford
an interested party the opportunity to learn about the contents of the
demonstration application, and to comment on its contents.
(b) Tribal consultation and seeking advice from Indian health
providers and urban Indian organizations. A State with Federally-
recognized Indian tribes, Indian health programs, and/or urban Indian
health organizations shall include a process to consult with the Indian
tribes, and seek advice from Indian Health programs and urban Indian
health organizations in the State, prior to submission of an
application to CMS for a new demonstration project, or an extension of
a previously approved demonstration project, that has or would have a
direct effect on Indians, tribes, on Indian health programs, or on
urban Indian health organizations.
(1) For initial applications and applications extending existing
demonstration projects that have a direct effect on Indians, tribes,
Indian health programs, and urban Indian health organizations in the
State, the State must demonstrate that it has conducted consultation
activities with tribes and sought advice from Indian health programs
and urban Indian health organizations prior to submission of such
application.
(2) Consultation with Federally-recognized Indian tribes and
solicitation of advice from affected Indian health providers and urban
Indian organizations must be conducted in accordance with the
consultation process outlined in the July 17, 2001 letter or the
State's formal tribal consultation agreement or process and the process
for seeking advice from Indian Health providers must be conducted as
outlined in the State's approved Medicaid State Plan.
(3) Documentation of the State's consultation activities must be
included in the demonstration application, which must describe the
notification process, the entities involved in the consultation(s), the
date(s) and location(s) of the consultation(s), issues raised, and the
potential resolution for such issues.
Sec. 431.412 Application procedures.
(a) Initial demonstration application content. (1) Applications for
initial approval of a demonstration will not be considered complete
unless they comply with the public notice process set forth in Sec.
431.408(a) of this subpart, and include the following:
(i) A comprehensive program description of the demonstration,
including the goals and objectives to be implemented under the
demonstration project.
(ii) A description of the proposed health care delivery system,
eligibility requirements, benefit coverage and cost sharing (premiums,
copayments, and deductibles) required of individuals who will be
impacted by the demonstration to the extent such provisions would vary
from the State's current program features and the requirements of the
Act.
(iii) An estimate of the expected increase or decrease in annual
enrollment, and in annual aggregate expenditures, including historic
enrollment or budgetary data, if applicable.
(iv) Current enrollment data, if applicable, and enrollment
projections expected over the term of the demonstration for each
category of beneficiary whose health care coverage is impacted by the
demonstration.
(v) Other program features that the demonstration would modify in
the State's Medicaid and CHIP programs.
(vi) The specific waiver and expenditure authorities that the State
believes to be necessary to authorize the demonstration.
(vii) The research hypotheses that are related to the
demonstration's proposed changes, goals, and objectives, a plan for
testing the hypotheses in the context of an evaluation, and, if a
quantitative evaluation design is feasible, the identification of
appropriate evaluation indicators.
(viii) Written documentation of the State's compliance with the
public notice requirements set forth in Sec. 431.408 of this subpart,
with a report of the issues raised by the public during the comment
period, which shall be no less than 30 days, and how the State
considered those comments when developing the demonstration
application.
(2) CMS may request, or the State may propose application
modifications, as well as additional information to aid in the review
of the application. If an application modification substantially
changes the original demonstration design, CMS may, at its discretion,
direct an additional 30-day public comment period.
(3) This section does not preclude a State from submitting to CMS a
pre-application concept paper or from conferring with CMS about its
intent to seek a demonstration prior to submitting a completed
application.
(b) Demonstration application procedures. A State application for
approval of a new demonstration project or an extension of an existing
demonstration project must be submitted to CMS as both printed and
electronic documents. Electronic documents must be submitted in a
format that will be accessible to individuals with disabilities.
(1) Consistent with Sec. 431.416(a) of this subpart, within 15
days of receipt of a complete application, CMS will send the State a
written notice informing the State of receipt of the submitted
application, the date in which the Secretary received the State's
demonstration application and the start date of the 30-day Federal
public notice process set forth in Sec. 431.416 of this subpart. The
written notice--
(i) Is provided for purposes of initiating the Federal-level public
comment period and does not preclude a determination that, based on
further review, further information is required to supplement or
support the application, or that the application cannot be approved
because a required element is missing or insufficient.
(ii) Does not prevent a State from modifying its application or
submitting any supplementary information it determines necessary to
support CMS' review of its application.
(2) Within 15 days of receipt of a demonstration application that
CMS determines is incomplete, CMS will send the State a written notice
of the elements missing from the application.
(3) CMS will publish on its Web site at regular intervals the
status of all State submissions, including information received from
the State while the State works with CMS to meet the demonstration
application process set forth in this section.
(c) Demonstration extension request. A request to extend an
existing demonstration under sections 1115(a), (e), and (f) of the Act
will be considered only if it is submitted at least 12 months
[[Page 11698]]
prior to the expiration date of the demonstration when requesting an
extension under section 1115(e) of the Act or 6 months prior to the
expiration date of the demonstration when requesting an extension under
section 1115(a) or (f) of the Act, unless a longer time frame is
specified in the Special Terms and Conditions for the original
demonstration. An extension application, including an extension for the
purpose of phasing out a demonstration, must be sent from the Governor
of the State to the Secretary.
(1) Changes to existing demonstration. If an extension application
includes substantial changes to the existing demonstration, CMS may, at
its discretion, treat the application as an application for a new
demonstration.
(2) Demonstration extension application. An application to extend
an existing demonstration will be considered complete, for purposes of
initiating the Federal-level public notice period, when the State
provides the following:
(i) A historical narrative summary of the demonstration project,
which includes the objectives set forth at the time the demonstration
was approved, evidence of how these objectives have or have not been
met, and the future goals of the program.
(ii) If changes are requested, a narrative of the changes being
requested along with the objective of the change and the desired
outcomes.
(iii) A list and programmatic description of the waivers and
expenditure authorities that are being requested for the extension
period, or a statement that the State is requesting the same waiver and
expenditure authorities as those approved in the current demonstration.
(iv) Summaries of External Quality Review Organization (EQRO)
reports, managed care organization (MCO) and State quality assurance
monitoring, and any other documentation of the quality of and access to
care provided under the demonstration, such as the CMS Form 416 EPSDT/
CHIP report.
(v) Financial data demonstrating the State's historical and
projected expenditures for the requested period of the extension, as
well as cumulatively over the lifetime of the demonstration. This
includes a financial analysis of changes to the demonstration requested
by the State.
(vi) An evaluation report of the demonstration, inclusive of
evaluation activities and findings to date, plans for evaluation
activities during the extension period, and if changes are requested,
identification of research hypotheses related to the changes and an
evaluation design for addressing the proposed revisions.
(vii) Documentation of the State's compliance with the public
notice process set forth in Sec. 431.408 of this subpart, including
the post-award public input process described in Sec. 431.420(c) of
this subpart, with a report of the issues raised by the public during
the comment period and how the State considered the comments when
developing the demonstration extension application.
(3) CMS may request, or the State may propose application
modifications, as well as additional information to aid in the review
of an application to extend a demonstration. If an application
modification substantially changes the original demonstration design,
CMS may, at its discretion, direct an additional 30-day public comment
period.
(4) Upon application from the State, the Secretary may extend
existing demonstration projects on a temporary basis for the period
during which a successor demonstration is under review, without regard
to the date when the application was submitted.
(d) Approvals. Approval of a new demonstration or a demonstration
extension will generally be prospective only and Federal Financial
Participation (FFP) will not be available for changes to the
demonstration that have not been approved by CMS.
Sec. 431.416 Federal public notice and approval process.
(a) General. Within 15 days of receipt of a complete application
from the State for a new demonstration project or an extension of a
previously approved demonstration project, CMS will:
(1) Send the State a written notice informing the State of receipt
of the demonstration application, the date in which the Secretary
received the State's demonstration application, the start dates of the
30-day Federal public notice process, and the end date of the 45-day
minimum Federal decision-making period.
(2) Publish the written notice acknowledging receipt of the State's
completed application on its Web site within the same 15-day timeframe.
(b) Public comment period. Upon notifying a State of a completed
application, CMS will solicit public comment regarding such
demonstration application for 30 days by doing the following:
(1) Publishing the following on the CMS Web site:
(i) The written notice of CMS receipt of the State's complete
demonstration application.
(ii) Demonstration applications, including supporting information
submitted by the State as part of the complete application, and
associated concept papers, as applicable.
(iii) The proposed effective date of the demonstration.
(iv) Addresses to which inquiries and comments from the public may
be directed to CMS by mail or email.
(2) Notifying interested parties through a mechanism, such an
electronic mailing list, that CMS will create for this purpose.
(c) Public disclosure. CMS will publish on its Web site, at regular
intervals, appropriate information, which may include, but is not
limited to the following:
(1) Relevant status update(s);
(2) A listing of the issues raised through the public notice
process.
(d) Publishing of comments. (1) CMS will publish written comments
electronically through its Web site or an alternative Web site.
(2) CMS will review and consider all comments received by the
deadline, but will not provide written responses to public comments.
While comments may be submitted after the deadline, CMS cannot assure
that these comments will be considered.
(e) Approval of a demonstration application. (1) CMS will not
render a final decision on a demonstration application until at least
45 days after notice of receipt of a completed application, to receive
and consider public comments.
(2) CMS may expedite this process under the exception to the normal
public notice process provisions in Sec. 431.416(g) of this subpart.
(f) Administrative record. (1) CMS will maintain, and publish on
its public Web site, an administrative record that may include, but is
not limited to the following:
(i) The demonstration application from the State.
(ii) The State's disaster exemption request and CMS' response, if
applicable.
(iii) Written public comments sent to the CMS and any CMS
responses.
(iv) If an application is approved, the final special terms and
conditions, waivers, expenditure authorities, and award letter sent to
the State.
(v) If an application is denied, the disapproval letter sent to the
State.
(vi) The State acceptance letter, as applicable.
(vii) Specific requirements related to the approved and agreed upon
terms and conditions, such as implementation reviews, evaluation
design, quarterly progress reports, annual reports, and interim and/or
final evaluation reports.
[[Page 11699]]
(viii) Notice of the demonstration's suspension or termination, if
applicable.
(2) To ensure that the public has access to all documentation
related to the demonstration project, including the aforementioned
items, we will also provide a link to the State's public Web site.
(g) Exemption from the normal public notice process. (1) CMS may
waive, in whole or in part, the Federal and State public notice
procedures to expedite a decision on a proposed demonstration or
demonstration extension request that addresses a natural disaster,
public health emergency, or other sudden emergency threats to human
lives.
(2) The Secretary may exempt a State from the normal public notice
process or the required time constraints imposed in this section or
Sec. 431.408(a) of this subpart when the State demonstrates to CMS the
existence of unforeseen circumstances resulting from a natural
disaster, public health emergency, or other sudden emergency that
directly threatens human lives that warrant an exception to the normal
public notice process.
(i) The State is expected to discharge its basic responsibilities
in submitting demonstration applications to the Secretary as required
in Sec. 431.412 of this subpart.
(ii) Such applications will be posted on the CMS Web site.
(3) A State must establish (or meet) all of the following criteria
to obtain such an exemption from the normal public notice process
requirements:
(i) The State acted in good faith, and in a diligent, timely, and
prudent manner.
(ii) The circumstances constitute an emergency and could not have
been reasonably foreseen.
(iii) Delay would undermine or compromise the purpose of the
demonstration and be contrary to the interests of beneficiaries.
(4) CMS will publish on its Web site any disaster exemption
determinations within 15 days of approval, as well as the revised
timeline for public comment or post-award processes, if applicable.
Sec. 431.420 Monitoring and compliance.
(a) General. (1) Any provision of the Social Security Act that is
not expressly waived by CMS in its approval of the demonstration
project are not waived, and States may not stop compliance with any of
these provisions not expressly waived. Waivers may be limited in scope
to the extent necessary to achieve a particular purpose or to the
extent of a particular regulatory requirement implementing the
statutory provision.
(2) States must comply with the terms and conditions of the
agreement between the Secretary and the State to implement a State
demonstration project.
(b) Implementation reviews. (1) The terms and conditions will
provide that the State will perform periodic reviews of the
implementation of the demonstration.
(2) CMS will review documented complaints that a State is failing
to comply with requirements specified in the special terms and
conditions and implementing waivers of any approved demonstration.
(3) CMS will promptly share with the State complaints that CMS has
received and will also provide notification of any applicable
monitoring and compliance issues.
(c) Post award. Within 6 months after the implementation date of
the demonstration and annually thereafter, the State must hold a public
forum--
(1) To solicit comments on the progress of a demonstration project.
(2) At which members of the public have an opportunity to provide
comments and in such time as to include a summary of the forum in the
quarterly report associated with the quarter in which the forum was
held, as well as in its annual report to CMS.
(3) The public forum to solicit feedback on the progress of a
demonstration project must occur using one of the following:
(i) A Medical Care Advisory Committee that operates in accordance
with Sec. 431.412 of this subpart.
(ii) A commission or other similar process, where meetings are open
to members of the public, and would afford an interested party the
opportunity to learn about the demonstration's progress.
(iii) The State must publish the date, time, and location of the
public forum in a prominent location on the State's public Web site, at
least 30 days prior to the date of the planned public forum.
(4) [Reserved]
(d) Terminations and suspensions. (1) The Secretary may suspend or
terminate a demonstration in whole or in part, any time before the date
of expiration, whenever it determines that the State has materially
failed to comply with the terms of the demonstration project.
(2) The Secretary may also withdraw waivers or expenditure
authorities based on a finding that the demonstration project is not
likely to achieve the statutory purposes.
(3) The terms and conditions for the demonstration will detail any
notice and appeal rights for the State for a termination, suspension or
withdrawal of waivers or expenditure authorities.
(e) Closeout costs. When a demonstration is terminated, suspended,
or if waivers or expenditure authority are withdrawn, Federal funding
is limited to normal closeout costs associated with an orderly
termination of the demonstration or expenditure authority, including
service costs during any approved transition period, and administrative
costs of disenrolling participants.
(f) Federal evaluators. (1) The State must fully cooperate with CMS
or an independent evaluator selected by CMS to undertake an independent
evaluation of any component of the demonstration.
(2) The State must submit all requested data and information to CMS
or the independent evaluator.
Sec. 431.424 Evaluation requirements.
(a) General. States are permitted and encouraged to use a range of
appropriate evaluation strategies (including experimental and other
quantitative and qualitative designs) in the application of evaluation
techniques with the approval of CMS.
(b) Demonstration evaluations. Demonstration evaluations will
include the following:
(1) Quantitative research methods. (i) These methods involve the
empirical investigation of the impact of key programmatic features of
the demonstration.
(ii) CMS will consider alternative evaluation designs when
quantitative designs are technically infeasible or not well suited to
the change made by the demonstration.
(2) Approaches that minimize beneficiary impact. The evaluation
process must minimize burden on beneficiaries and protect their privacy
in terms of implementing and operating the policy approach to be
demonstrated while ensuring the impact of the demonstration is
measured.
(c) Evaluation design plan. (1) The State will submit and receive
CMS approval of a design for an evaluation of the demonstration project
and publish this document to the State's public Web site within 30 days
of CMS approval.
(2) The draft demonstration evaluation design must include all of
the following:
(i) A discussion of the demonstration hypotheses that are being
tested including monitoring and reporting on the progress towards the
expected outcomes.
(ii) The data that will be utilized and the baseline value for each
measure.
(iii) The methods of data collection.
(iv) A description of how the effects of the demonstration will be
isolated
[[Page 11700]]
from those other changes occurring in the State at the same time
through the use of comparison or control groups to identify the impact
of significant aspects of the demonstration.
(v) A proposed date by which a final report on findings from
evaluation activities conducted under the evaluation plan must be
submitted to CMS.
(vi) Any other information pertinent to the State's research on the
policy operations of the demonstration operations.
(d) Evaluations for demonstration extensions. (1) In the event that
the State requests to extend the demonstration beyond the current
approval period under the authority of section 1115(a), (e), or (f) of
the Act, the State must submit an interim evaluation report as part of
the State's request for a subsequent renewal of the demonstration.
(2) State evaluations must be published on the State's public Web
site within 30 days of submission to CMS.
(e) Approved evaluation designs. The State must publish the CMS-
approved demonstration evaluation design on the State's public Web site
within 30 days of CMS approval.
(f) Federal evaluations. The State must comply with all
requirements set forth in this subpart.
(g) Federal public notice. CMS will post, or provide a link to the
State's public Web site, all evaluation materials, including research
and data collection, on its Web site for purposes of sharing findings
with the public within 30 days of receipt of materials.
Sec. 431.428 Reporting requirements.
(a) Annual reports. The State must submit an annual report to CMS
documenting all of the following:
(1) Any policy or administrative difficulties in the operation of
the demonstration.
(2) The status of the health care delivery system under the
demonstration with respect to issues and/or complaints identified by
beneficiaries.
(3) The impact of the demonstration in providing insurance coverage
to beneficiaries and uninsured populations.
(4) Outcomes of care, quality of care, cost of care and access to
care for demonstration populations.
(5) The results of beneficiary satisfaction surveys, if conducted
during the reporting year, grievances and appeals.
(6) The existence or results of any audits, investigations or
lawsuits that impact the demonstration.
(7) The financial performance of the demonstration.
(8) The status of the evaluation and information regarding progress
in achieving demonstration evaluation criteria.
(9) Any State legislative developments that may impact the
demonstration.
(10) The results/impact of any demonstration programmatic area
defined by CMS that is unique to the demonstration design or evaluation
hypothesis.
(11) A summary of the annual post-award public forum, including all
public comments received regarding the progress of the demonstration
project.
(b) Submitting and publishing annual reports. States must submit a
draft annual report to CMS no later than 90 days after the end of each
demonstration year, or as specified in the demonstration's STCs. The
State must publish its draft annual report on its public Web site
within 30 days of submission to CMS.
(1) Within 60 days of receipt of comments from CMS, the State must
submit to CMS the final annual report for the demonstration year.
(2) The final annual report is to be published on the State's
public Web site within 30 days of approval by CMS.
Authority: Catalog of Federal Domestic Assistance Program No.
93.778, Medical Assistance Program.
Dated: March 9, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: July 15, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2012-4354 Filed 2-22-12; 11:15 am]
BILLING CODE 4120-01-P