Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 71817

unused resident slots; Form Number:

CMS–2552–96 (OMB# 0938–0050); 

Frequency: Annually; Affected Public:

Business or other for-profit, Not-forprofit institutions, and State, Local or 

Tribal Government; Number of 

Respondents: 6,111; Total Annual 

Responses: 6,111; Total Annual Hours:

4,046,782. 

5. Type of Information Collection 

Request: Extension of a currently 

approved collection; Title of 

Information Collection: Application 

Template for Health Insurance 

Flexibility and Accountability (HIFA) 

Section Demonstration Proposal; Use:

The HIFA Initiative affords states an 

opportunity to expand coverage to the 

uninsured under Social Security Act 

Section 1115 demonstrations authority. 

States will be able to use Medicaid and 

State Child Health Insurance Program 

funds in concert with private insurance 

options to expand coverage to lowincome uninsured individuals with a 

focus on those with income at or below 

200 percent of the Federal poverty level. 

The model demonstration application 

will facilitate State efforts in designing 

programs to cover the uninsured; Form 

Number: CMS–10048 (OMB# 0938–

0848); Frequency: Other: renewal every 

5 yrs.; Affected Public: State, Local or 

Tribal Government; Number of 

Respondents: 10; Total Annual 

Responses: 9; Total Annual Hours: 42. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access CMS’ Web Site 

address at http://www.cms.hhs.gov/

regulations/pra/, or E-mail your request, 

including your address, phone number, 

OMB number, and CMS document 

identifier, to Paperwork@cms.hhs.gov, 

or call the Reports Clearance Office on 

(410) 786–1326. 

Written comments and 

recommendations for the proposed 

information collections must be mailed 

within 60 days of this notice directly to 

the CMS Paperwork Reduction Act 

Reports Clearance Officer designated at 

the address below: CMS, Office of 

Strategic Operations and Regulatory 

Affairs, Division of Regulations 

Development, Attention: Melissa 

Musotto, Room C5–14–03, 7500 

Security Boulevard, Baltimore, 

Maryland 21244–1850.

Dated: December 3, 2004. 

John P. Burke, III, 

CMS Paperwork Reduction Act Reports 

Clearance Officer, Office of Strategic 

Operations and Regulatory Affairs, 

Regulations Development Group.

[FR Doc. 04–27145 Filed 12–9–04; 8:45 am] 

BILLING CODE 4120–03–P

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

Notice of Hearing: Reconsideration of 

Disapproval of Oklahoma State Plan 

Amendment (SPA) 03–26

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS.

ACTION: Notice of hearing.

SUMMARY: This notice announces an 

administrative hearing on January 14, 

2005, at 10 a.m., 1301 Young Street, 

Room 1113, Dallas, Texas 75202, to 

reconsider our decision to disapprove 

Oklahoma’s Medicaid State Plan 

Amendment (SPA) 03–26.

DATES: Requests to participate in the 

hearing as a party must be received by 

the presiding officer by December 27, 

2004.

FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes; Presiding 

Officer, CMS, Lord Baltimore Drive; 

Mail Stop LB–23–20, Baltimore, 

Maryland 21244, Telephone: 410–786–

2055.

SUPPLEMENTARY INFORMATION: This 

notice announces an administrative 

hearing to reconsider CMS’ decision to 

disapprove Oklahoma’s Medicaid State 

Plan Amendment (SPA) 03–26. 

Oklahoma submitted SPA 03–26 on 

January 2, 2004. This SPA would 

modify language regarding the ratesetting process for inpatient and 

outpatient hospital services. 

Specifically, this SPA would provide for 

supplemental payments to hospitals 

located in hospital districts pursuant to 

the Oklahoma Hospitals Public Trust 

and Authority Act. 

The Centers for Medicare & Medicaid 

Services (CMS) was unable to approve 

SPA 03–26 because the SPA did not 

comply with sections 1902(a), 1902 

(a)(19), 1903(w), and 1905(b) of the 

Social Security Act (the Act). 

The payments proposed under SPA 

03–26 would be funded through 

transfers from the Tulsa Hospital Public 

Trust Authority (THPTA) that CMS has 

determined are not consistent with the 

provisions of sections 1903(w)(1) and 

1902(a) of the Act. Although the State 

has indicated that State law recognizes 

any such entity as a ‘‘government entity 

* * * with powers of government,’’

State law specifically withholds the 

governmental powers that are 

characteristic of a unit of government. 

THPTA is an association of hospitals 

(formed by the action of hospitals and 

with a board controlled by hospitals) 

that has no powers of taxation, or police 

or business regulation, and is not a subunit of the State government or any 

other local government that exercises 

such powers. While it has the power to 

impose assessments on member 

hospitals, the State has indicated that 

Oklahoma law specifically indicates 

that this power is not taxation. THPTA 

more closely resembles a private 

association that collects dues from its 

members. As a result, CMS has 

concluded that THPTA is not within the 

scope of a ‘‘unit of government,’’ and its 

assessments are not within the scope of 

‘‘state or local taxes’’ as those terms are 

used under section 1903(w)(6) of the 

Act. Transfers of funds made by THPTA 

would thus not qualify for protected 

status under section 1903(w)(6)of the 

Act. Absent protected status, THPTA is 

within the definition of a providerrelated entity under section 1903(w)(7) 

of the Act. As such, the transfers are 

subject to the provider-related donation 

requirements in section 1903(w)(l) of 

the Act and the implementing 

regulations in 42 CFR Part 433. Under 

those provisions, because payment of 

supplemental payments to member 

hospitals (the provider class) is 

contingent upon the receipt of 

donations from a provider-related 

entity, there is a hold harmless 

arrangement and the donation is not 

‘‘bona fide,’’ as set forth in 42 CFR 

433.54. Under section 1903(w)(l) of the 

Act, a donation that is not bona fide 

cannot be recognized as the non-Federal 

share of Medicaid expenditures that is 

required under section 1902(a) of the 

Act. 

Nor is SPA 03–26 consistent with the 

requirement of section 1902(a)(19) of the 

Act that care and services will be 

provided consistent with ‘‘simplicity of 

administration and the best interests of 

the recipients.’’ The best interest of 

recipients is not served by a payment 

structure that is designed primarily to 

divert Medicaid payments from the 

providers to the State, and to shift 

financial burdens from the State to the 

Federal Government. The best interest 

of recipients requires that the full 

amount of Medicaid payments should 

be available to support access to quality 

care and services. 

Finally, section 1905(b) of the Act 

specifies how the Federal medical 

assistance percentage (FMAP) will be 

calculated for states. This section clearly 

illustrates Congress’ intentions as to 

how the financial partnership of the 

Medicaid program should operate. The 

formula in this cite clearly and 

explicitly states that the FMAP for any 

state shall be 100 per centum less the 

state percentage, and then further 

71818 Federal Register / Vol. 69, No. 237 / Friday, December 10, 2004 / Notices 

defines how the state percentage is to be 

determined. Any creative funding 

mechanism that effectively increases the 

FMAP would undermine the clear 

direction of Congress. Since Oklahoma 

proposes to claim Federal matching 

funds for payments that are funded 

through impermissible donations, CMS 

must conclude that effective FMAP 

being paid to Oklahoma is not 

consistent with section 1905(b) of the 

Act, and that the funding of payments 

under Oklahoma’s Attachments 4.19-A 

and 4.19-B of its Medicaid State plan 

does not uphold the basic Federal and 

state financial partnership. 

For these reasons, and after consulting 

with the Secretary as required by 42 

CFR 430.15, CMS disapproved this SPA. 

Section 1116 of the Act and 42 CFR 

Part 430 establish Department 

procedures that provide an 

administrative hearing for 

reconsideration of a disapproval of a 

State plan or plan amendment. CMS is 

required to publish a copy of the notice 

to a State Medicaid agency that informs 

the agency of the time and place of the 

hearing and the issues to be considered. 

If we subsequently notify the agency of 

additional issues that will be considered 

at the hearing, we will also publish that 

notice. 

Any individual or group that wants to 

participate in the hearing as a party 

must petition the presiding officer 

within 15 days after publication of this 

notice, in accordance with the 

requirements contained at 42 CFR 

430.76(b)(2). Any interested person or 

organization that wants to participate as 

amicus curiae must petition the 

presiding officer before the hearing 

begins in accordance with the 

requirements contained at 42 CFR 

430.76(c). If the hearing is later 

rescheduled, the presiding officer will 

notify all participants. 

The notice to Oklahoma announcing 

an administrative hearing to reconsider 

the disapproval of its SPA reads as 

follows:

Mr. Jim Hancock, 

Director, Health Policy Division, Oklahoma 

Health Care Authority, 4545 North 

Lincoln Blvd., Suite 124, Oklahoma City, 

OK 73105.

Dear Mr. Hancock: I am responding to your 

request for reconsideration of the decision to 

disapprove Oklahoma State Plan Amendment 

(SPA) 03–26, which was submitted to the 

Centers for Medicare & Medicaid Services 

(CMS) on January 2, 2004, with a proposed 

effective date of January 19, 2004. This SPA 

would modify language regarding the ratesetting process for inpatient and outpatient 

hospital services. Specifically, this SPA 

would provide for supplemental payments to 

hospitals located in hospital districts 

pursuant to the Oklahoma Hospitals Public 

Trust and Authority Act. CMS reviewed this 

proposal, and for the reasons set forth below, 

was unable to approve SPA 03–26. 

The CMS was unable to approve SPA 03–

26 because the SPA did not comply with 

sections 1902(a), 1902(a)(19), 1903(w), and 

1905(b) of the Social Security Act (the Act).

The payments proposed under SPA 03–26 

would be funded through transfers from the 

Tulsa Hospital Public Trust Authority 

(THPTA) that CMS has determined are not 

consistent with the provisions of sections 

1903(w)(1) and 1902(a) of the Act. Although 

the State has indicated that State law 

recognizes any such entity as a ‘‘government 

entity * * * with powers of government,’’

State law specifically withholds the 

governmental powers that are characteristic 

of a unit of government. THPTA is an 

association of hospitals (formed by the action 

of hospitals and with a board controlled by 

hospitals) that has no powers of taxation, or 

police or business regulation, and is not a 

sub-unit of the State government or any other 

local government that exercises such powers. 

While it has the power to impose 

assessments on member hospitals, the State 

has indicated that Oklahoma law specifically 

indicates that this power is not taxation. 

THPTA more closely resembles a private 

association that collects dues from its 

members. 

As a result, CMS has concluded that 

THPTA is not within the scope of a ‘‘unit of 

government,’’ and its assessments are not 

within the scope of ‘‘state or local taxes’’ as 

those terms are used under section 

1903(w)(6) of the Act. Transfers of funds 

made by THPTA would thus not qualify for 

protected status under section 1903(w)(6) of 

the Act. Absent protected status, THPTA is 

within the definition of a provider-related 

entity under section 1903(w)(7) of the Act. As 

such, the transfers are subject to the providerrelated donation requirements in section 

1903(w)(l) of the Act and the implementing 

regulations in 42 CFR Part 433. 

Under those provisions, because payment 

of supplemental payments to member 

hospitals (the provider class) is contingent 

upon the receipt of donations from a 

provider-related entity, there is a hold 

harmless arrangement and the donation is 

not ‘‘bona fide,’’ as set forth in 42 CFR 

433.54. Under section 1903(w)(l) of the Act, 

a donation that is not bona fide cannot be 

recognized as the non-Federal share of 

Medicaid expenditures that is required under 

section 1902(a) of the Act. 

Nor is SPA 03–26 consistent with the 

requirement of section 1902(a)(19) of the Act 

that care and services will be provided 

consistent with ‘‘simplicity of administration 

and the best interests of the recipients.’’ The 

best interest of recipients is not served by a 

payment structure that is designed primarily 

to divert Medicaid payments from the 

providers to the State, and to shift financial 

burdens from the State to the Federal 

Government. The best interest of recipients 

requires that the full amount of Medicaid 

payments should be available to support 

access to quality care and services. 

Finally, section 1905(b) of the Act specifies 

how the Federal medical assistance 

percentage (FMAP) will be calculated for 

states. This section clearly illustrates 

Congress’ intentions as to how the financial 

partnership of the Medicaid program should 

operate. The formula in this cite clearly and 

explicitly states that the FMAP for any state 

shall be 100 per centum less the state 

percentage, and then further defines how the 

state percentage is to be determined. Any 

creative funding mechanism that effectively 

increases the FMAP would undermine the 

clear direction of Congress. Since Oklahoma 

proposes to claim Federal matching funds for 

payments that are funded through 

impermissible donations, CMS must 

conclude that effective FMAP being paid to 

Oklahoma is not consistent with section 

1905(b) of the Act, and that the funding of 

payments under Oklahoma’s Attachments 

4.19-A and 4.19-B of its Medicaid State plan 

does not uphold the basic Federal and state 

financial partnership. For these reasons, and 

after consulting with the Secretary as 

required by 42 CFR 430.15, CMS disapproved 

this SPA. 

I am scheduling a hearing to be held on 

January 14, 2005, at 10:00 a.m., 1301 Young 

Street, Room 714, Dallas, Texas 75202, to 

reconsider our decision to disapprove 

Oklahoma SPA 03–26. If this date is not 

acceptable, we would be glad to set another 

date that is mutually agreeable to the parties. 

The hearing will be governed by the 

procedures prescribed at 42 CFR, part 430. 

I am designating Ms. Kathleen ScullyHayes as the presiding officer. If these 

arrangements present any problems, please 

contact the presiding officer. In order to 

facilitate any communication which may be 

necessary between the parties to the hearing, 

please notify the presiding officer to indicate 

acceptability of the hearing date that has 

been scheduled and provide names of the 

individuals who will represent the State at 

the hearing. The presiding officer may be 

reached at (410) 786–2055.

Sincerely,

Mark B. McClellan, M.D., Ph.D.

Section 1116 of the Social Security Act 

(42 U.S.C. section 1316); 42 CFR Section 

430.18)

(Catalog of Federal Domestic Assistance 

Program No. 13.714, Medicaid Assistance 

Program)

Dated: December 3, 2004. 

Mark B. McClellan, 

Administrator, Centers for Medicare & 

Medicaid Services.

[FR Doc. 04–27144 Filed 12–9–04; 8:45 am] 

BILLING CODE 4120–03–P