[Federal Register Volume 88, Number 233 (Wednesday, December 6, 2023)]
[Rules and Regulations]
[Pages 84713-84737]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-26640]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 430 and 435

Office of the Secretary

45 CFR Part 16

[CMS-2447-IFC]
RIN 0938-AV26


Medicaid; CMS Enforcement of State Compliance With Reporting and 
Federal Medicaid Renewal Requirements Under Section 1902(tt) of the 
Social Security Act

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with request for comments (IFC) 
implements reporting requirements and enforcement authorities in the 
Social Security Act (the Act) that were added by the Consolidated 
Appropriations Act, 2023 (CAA, 2023). CMS will use these new 
enforcement authorities as described in this rule if States fail to 
comply with the new reporting requirements added by the CAA, 2023 or 
with Federal Medicaid eligibility redetermination requirements during a 
timeframe that is generally aligned with the period when States are 
restoring eligibility and enrollment operations following the end of 
the Medicaid continuous enrollment condition under the Families First 
Coronavirus Response Act (FFCRA). The new enforcement authorities 
include requiring States to submit a corrective action plan, suspending 
disenrollments from Medicaid for procedural reasons, and imposing civil 
money penalties (CMPs). They also include applying a reduction to the 
State-specific Federal Medical Assistance Percentage (FMAP) for failure 
to meet reporting requirements.

DATES: These regulations are effective on December 6, 2023.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, by February 2, 2024.

ADDRESSES: In commenting, please refer to file code CMS-2447-IFC.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-2447-IFC, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-2447-IFC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Abby Kahn, (410) 786-4321, 
<a href="/cdn-cgi/l/email-protection#cf8eada6a8aea6a3e184aea7a18faca2bce1a7a7bce1a8a0b9"><span class="__cf_email__" data-cfemail="c081a2a9a7a1a9acee8ba1a8ae80a3adb3eea8a8b3eea7afb6">[email protected]</span></a>, or Anna Bonelli, (443) 615-1268, 
<a href="/cdn-cgi/l/email-protection#3c7d52525d127e5352595050557c5f514f1254544f125b534a"><span class="__cf_email__" data-cfemail="4809262629660a27262d242421082b253b6620203b662f273e">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following 
website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on Regulations.gov public 
comments that make threats to individuals or institutions or suggest 
that the commenter will take actions to harm an individual. CMS 
continues to encourage individuals not to submit duplicative comments. 
We will post acceptable comments from multiple unique commenters even 
if the content is identical or nearly identical to other comments.

[[Page 84714]]

I. Background

A. Enforcement Authorities Under Section 1902(tt) of the Social 
Security Act

    Section 1902(tt)(2) of the Social Security Act (the Act) (added by 
section 5131(b) of Subtitle D of Title V of Division FF of the 
Consolidated Appropriations Act, 2023 (CAA, 2023), Public Law 117-328, 
enacted December 29, 2022) includes new enforcement authority for CMS 
to use if it determines that a State is not in compliance with the 
reporting requirements under section 1902(tt)(1) of the Act, Federal 
eligibility redetermination requirements,\1\ or both.
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    \1\ Medicaid regulations use both terms ``redetermination'' and 
``renewal.'' For purposes of this rule, we interpret the reference 
to all Federal requirements applicable to eligibility 
redeterminations in section 1902(tt)(2)(B)(i) of the Act to include 
Federal renewal requirements outlined in 42 CFR 435.916, as newly 
defined at Sec.  430.5 in this rule.
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    First, if CMS determines that a State is not in compliance with the 
reporting requirements under section 1902(tt)(1) of the Act for any 
fiscal quarter that occurs during the period that begins on July 1, 
2023, and ends on June 30, 2024, section 1902(tt)(2)(A) of the Act 
requires CMS to reduce the Federal Medical Assistance Percentage (FMAP) 
as determined for the State for the quarter under section 1905(b) of 
the Act by the number of percentage points (not to exceed 1 percentage 
point) equal to the product of 0.25 percentage points and the number of 
fiscal quarters during such period for which the State has failed to 
satisfy such requirements. Per section 1902(tt)(2)(A) of the Act, the 
FMAP reduction is for fiscal quarters occurring in the period beginning 
on July 1, 2023, and ending on June 30, 2024. Therefore, CMS will not 
apply the FMAP reduction under section 1902(tt)(2)(A) of the Act to the 
quarter from April 1, 2023, to June 30, 2023, and CMS will not evaluate 
State-reported data reflecting activities during these months for 
purposes of the FMAP reduction.
    Second, if CMS determines that a State is not in compliance with 
Federal eligibility redetermination requirements, the reporting 
requirements under section 1902(tt)(1) of the Act, or both, section 
1902(tt)(2)(B) of the Act authorizes CMS to require a State to submit a 
corrective action plan (CAP) to address the noncompliance. If the State 
fails to submit or implement an approved CAP in accordance with section 
1902(tt)(2)(B)(ii) of the Act, then, under section 1902(tt)(2)(B)(iii) 
of the Act, CMS may require the State to suspend some or all 
terminations of Medicaid eligibility that are for procedural reasons 
(hereinafter referred to as ``procedural disenrollments'') and may also 
impose civil money penalties (CMPs) of up to $100,000 for each day a 
State is not in compliance. In this rule, CMS defines procedural 
disenrollments in Sec.  430.5 to mean, for the purposes of Sec.  430.49 
and 45 CFR part 16, a termination of a beneficiary's Medicaid 
eligibility after providing advance notice required under 42 CFR part 
431, subpart E for reasons that are unrelated to a State's 
determination of whether the individual meets eligibility criteria to 
qualify for coverage, including for failure to return a renewal form or 
documentation needed by the State to make a determination of 
eligibility. This new authority under section 1902(tt)(2)(B) of the Act 
is in addition to any FMAP reduction that may also be applicable under 
section 1902(tt)(2)(A) of the Act or any other enforcement authority 
available to the Secretary. This new enforcement authority under 
section 1902(tt)(2)(B) of the Act relates to State conduct occurring 
during the period that began on April 1, 2023, and ends on June 30, 
2024.
    Both the new enforcement authorities in section 1902(tt)(2)(A) of 
the Act and in section 1902(tt)(2)(B) of the Act took effect on April 
1, 2023. As noted above, the enforcement authority in section 
1902(tt)(2)(A) of the Act does not apply to State conduct during the 
period from April 1, 2023, to June 30, 2023.

B. New Enforcement Needs and Considerations Given the Ending of the 
Medicaid Continuous Enrollment Condition

    Section 1902(tt) of the Act applies during a period when States are 
conducting an unprecedented volume of Medicaid eligibility 
redeterminations. Under section 6008(b)(3) of the FFCRA (Pub. L. 116-
127, originally enacted March 18, 2020), States were able to claim a 
temporary 6.2 percentage point increase in their FMAP provided that 
they met several conditions, including that they not disenroll most 
persons enrolled in Medicaid as of or after March 18, 2020, until the 
last day of the month in which the COVID-19 Public Health Emergency 
(PHE) ended. This provision is known as the Medicaid continuous 
enrollment condition. As of April 1, 2023, 50 States, the District of 
Columbia, and the five U.S. Territories (referred to as ``States'' 
throughout, consistent with section 1101(a) of the Act), were claiming 
the FFCRA FMAP increase, so this condition applied to all States.
    Section 5131(a) of Subtitle D of Title V of Division FF of the CAA, 
2023 made several changes to section 6008 of the FFCRA. As relevant 
here, section 5131(a)(2)(C) of Subtitle D of Title V of Division FF of 
the CAA, 2023 separated the end of the continuous enrollment condition 
from the end of the COVID-19 PHE by amending section 6008(b)(3) of the 
FFCRA to end continuous Medicaid enrollment as a condition for claiming 
the FFCRA temporary FMAP increase on March 31, 2023.\2\ This means 
that, beginning April 1, 2023, all 56 States claiming the temporary 
FMAP increase were no longer required to comply with the continuous 
enrollment condition. Accordingly, States must conduct a full renewal 
of eligibility for each beneficiary (as part of a process referred to 
as ``unwinding''), in accordance with 42 CFR 435.916 and as described 
in State Health Official (SHO) letter #22-001, ``RE: Promoting 
Continuity of Coverage and Distributing Eligibility and Enrollment 
Workload in Medicaid, the Children's Health Insurance Program (CHIP), 
and Basic Health Program (BHP) Upon Conclusion of the COVID-19 Public 
Health Emergency'' (March 2022 SHO letter).\3\
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    \2\ Section 5131(a) of Subtitle D of Title V of Division FF of 
the CAA, 2023 also amended section 6008 of the FFCRA to revise the 
conditions States must meet to claim the temporary FMAP increase for 
each quarter beginning April 1, 2023, to extend the availability of 
the temporary FMAP increase until December 31, 2023, and to 
gradually phase down the amount of the increase for each quarter 
from April 1, 2023, to December 31, 2023.
    \3\ https://www.medicaid.gov/Federal-policy-guidance/downloads/sho22001.pdf.
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    CMS previously released guidance describing specific requirements 
and recommendations for States related to unwinding from the continuous 
enrollment condition. As a result of the policies described in these 
guidance documents, State unwinding periods vary and do not necessarily 
overlap with the compliance period for the new enforcement tools 
created under section 1902(tt) of the Act. As discussed in SHO letter # 
23-002, ``RE: Medicaid Continuous Enrollment Condition Changes, 
Conditions for Receiving the FFCRA Temporary FMAP Increase, Reporting 
Requirements, and Enforcement Provisions in the Consolidated 
Appropriations Act, 2023'' (January 2023 SHO letter),\4\ beginning as 
early as February 1, 2023, States have up to 12 months to initiate, and 
14 months to complete, a renewal for all individuals enrolled in 
Medicaid, a period commonly referred to as a State's

[[Page 84715]]

``unwinding period.'' \5\ Starting on or after April 1, 2023, States 
claiming the temporary FFCRA FMAP increase may disenroll persons 
determined to be ineligible by a renewal initiated during the State's 
unwinding period. Likewise, the March 2022 SHO letter outlines CMS' 
expectations for renewals during unwinding. As also discussed in the 
January 2023 SHO letter, States had the option to initiate the first 
cohort of renewals to begin their unwinding period in February, March, 
or April 2023.\6\
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    \4\ https://www.medicaid.gov/federal-policy-guidance/downloads/sho23002.pdf.
    \5\ While the requirements of section 6008 of the FFCRA do not 
apply to separate CHIPs or the Basic Health Program (BHP), CMS 
recognizes some States elected to apply certain provisions of 
section 6008 to their separate CHIP program or BHP. In those 
circumstances, subject to exceptions noted and other Federal 
requirements, much of CMS' guidance related to unwinding from the 
FFCRA continuous enrollment condition also applies to CHIP and BHP. 
However, neither section 1902(tt) of the Act, nor this rule, applies 
to separate CHIPs or BHPs.
    \6\ For additional guidance about State renewals of eligibility 
following the end of the continuous enrollment condition see 
www.medicaid.gov/unwinding.
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    Section 1902(tt) of the Act took effect on April 1, 2023, the day 
after the continuous enrollment condition expired. It imposes new 
reporting requirements on States during a period that generally 
overlaps with States' unwinding periods. It also provides CMS with new 
authority to take enforcement action if States fail to comply with 
Federal requirements related to eligibility redetermination or the new 
reporting requirements. Notably, these new reporting requirements and 
CMS' authority to enforce redetermination and data reporting 
requirements apply to all 56 States, regardless of whether a State is 
continuing to claim the FFCRA FMAP increase. This rule implements the 
new reporting requirements in section 1902(tt)(1) of the Act and the 
enforcement authorities in section 1902(tt)(2) of the Act (which are 
further discussed in the section II).

C. Monitoring Eligibility Redetermination Activities

    Section 1902(tt) of the Act authorizes CMS to closely monitor and 
enforce Federal redetermination requirements during a period that 
generally aligns with States' unwinding periods, and thus, these 
authorities better position CMS to take actions to prevent unauthorized 
disenrollments during this critical period. Section 1902(tt)(1) of the 
Act requires that, for each month occurring during the period beginning 
on April 1, 2023, and ending on June 30, 2024, States must submit on a 
timely basis to CMS, and CMS must make public, certain monthly data 
about activities related to eligibility redeterminations conducted 
during that same period. The January 2023 SHO letter discussed these 
reporting requirements under section 1902(tt)(1) of the Act in further 
detail and explained that all the data States must report under these 
new reporting requirements are included in existing data sources, 
including the Unwinding Data Report and State-based Exchanges (SBE) 
priority metrics.\7\
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    \7\ See the January 2023 SHO Letter. See also CMS, 
``Consolidated Appropriations Act, 2023: FMAP Reduction for Failure 
to Meet Reporting Requirements under Section 1902(tt)(1) of the 
Social Security Act, Frequently Asked Questions for State Medicaid 
and CHIP Agencies,'' (June 30, 2023) (``June 2023 FAQs'') (Available 
at: https://www.medicaid.gov/federal-policy-guidance/downloads/fmap-rdctn-repot-medcid-chip-agncs-06302023.pdf).
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    Based on the timeframe when the reporting requirements under 
section 1902(tt)(1) of the Act apply, and the title of section 
1902(tt)(1) of the Act, which refers to the ``transition from [the 
FFCRA] FMAP increase,'' CMS interprets the statutory data collection 
and reporting requirements to be a means to help CMS monitor States' 
work unwinding from the Medicaid continuous enrollment condition and 
returning to regular eligibility and enrollment operations. Under our 
interpretation, the reporting requirements under section 1902(tt)(1) of 
the Act will help us monitor whether States are compliant--during a 
timeframe that generally aligns with their return to regular 
eligibility and enrollment operations--with Federal eligibility 
redetermination requirements (including renewal requirements at 42 CFR 
435.916, strategies authorized under section 1902(e)(14) of the Act, or 
alternative strategies authorized by CMS, including alternative or 
mitigation strategies CMS has authorized States to implement under 
section 6008(f)(2)(A) of the FFCRA, which was added by section 5131 of 
Subtitle D of Title V of Division FF of the CAA, 2023). Additionally, 
because section 1902(tt) of the Act also includes the new enforcement 
authorities in section 1902(tt)(2)(B) of the Act, CMS interprets the 
data collection and reporting requirements under section 1902(tt)(1) to 
be a tool CMS can use to monitor State compliance with Federal 
eligibility redetermination requirements during a period that generally 
aligns with States' unwinding periods.
    CMS has also been monitoring States' implementation of other 
amendments made by section 5131 of Subtitle D of Title V of Division FF 
of the CAA, 2023, which create new conditions for States seeking to 
receive the FFCRA temporary FMAP increase through December 31, 2023. 
These new conditions for receiving the FFCRA temporary FMAP increase 
also give CMS ways to incentivize States to minimize the disruption in 
coverage resulting from procedural disenrollments during States' 
unwinding periods. Specifically, the CAA, 2023 added to the FFCRA new 
section 6008(f)(2)(A), which conditions receipt of the FFCRA FMAP 
increase after April 1, 2023, on State compliance with Federal 
redetermination requirements, including renewal strategies authorized 
under section 1902(e)(14)(A) or other alternative processes and 
procedures approved by the Secretary. New FFCRA section 6008(f)(2)(B) 
conditions receipt of the FFCRA FMAP increase after April 1, 2023, on 
States' maintaining up-to-date contact information for a beneficiary 
before redetermining eligibility for such beneficiary, and new section 
6008(f)(2)(C) conditions receipt of the FFCRA FMAP increase after April 
1, 2023, on States' undertaking a good faith effort to contact an 
individual using more than one modality prior to terminating their 
enrollment on the basis of returned mail. The January 2023 SHO letter 
outlines these new conditions for receiving the FFCRA FMAP increase in 
greater detail. Because the same section of the CAA, 2023 that added 
new section 1902(tt) to the Act also included both these conditions for 
receiving the FFCRA FMAP increase, CMS interprets the entirety of the 
changes made in section 5131 of subtitle D of division FF of the CAA, 
2023 to give CMS a range of enforcement mechanisms and incentives that, 
taken together, can be used to help minimize the disenrollment of 
people who otherwise continue to meet the substantive eligibility 
criteria and whose enrollment would be retained but for their failure 
to meet a procedural requirement during States' unwinding periods. One 
key purpose of section 1902(tt) is thus to enhance CMS' ability to take 
enforcement action against noncompliant States during this critical 
timeframe.
    CMS takes seriously its responsibility to hold States accountable 
for resuming routine eligibility and enrollment operations and plans to 
fully exercise the new authorities at section 1902(tt) of the Act when 
appropriate to do so. Since the FFCRA was enacted, CMS has been 
preparing for the eventual unwinding of the FFCRA continuous enrollment 
condition. CMS has explained to States the conditions of the FFCRA FMAP 
increase, gauged States'

[[Page 84716]]

ability to resume redeterminations on an unprecedented scale, and 
provided States with technical assistance to address challenges that 
might lead to preventable loss of coverage for procedural reasons among 
beneficiaries. If CMS identifies a violation of Federal redetermination 
requirements, then, consistent with section 6008(f)(2)(A) of the FFCRA, 
CMS will communicate to the State that its FFCRA FMAP increase will be 
withheld if the State does not ensure the issue is fully resolved or 
does not implement appropriate mitigations until full compliance can be 
achieved.
    The new enforcement tools outlined at section 1902(tt) of the Act, 
which allow CMS to enforce existing Federal redetermination 
requirements as well as the reporting requirements at section 
1902(tt)(1) of the Act, are a key part of the suite of CMS enforcement 
mechanisms and incentives added through the CAA, 2023 to minimize the 
disenrollment of eligible individuals during States' unwinding periods. 
These new enforcement tools are critical to enabling CMS to effectively 
monitor for, and take action to protect against, States conducting 
renewals that do not adhere to Federal redetermination requirements and 
to support continued enrollment for those individuals who remain 
eligible. Nothing in this rule affects other authorities that exist 
outside of this new enforcement framework or precludes CMS from 
pursuing additional enforcement action under section 1904 of the Act, 
including withholding Federal financial participation (FFP), or 
limiting payments, for States that fail to comply with requirements of 
the Medicaid statute.

D. Pre-Compliance Engagement With States

    When CMS becomes aware of a potential violation of Federal 
requirements, we first attempt to work collaboratively with the State 
to understand the nature and scope of the problem and to identify 
appropriate alternative processes and procedures that the State can 
adopt to avoid or minimize beneficiary harm until the State can fix the 
problem and come into full compliance with Federal requirements, 
consistent with our authority to enforce compliance with section 1902 
under section 1904 of the Act and 42 CFR 430.35. Consistent with this 
practice, as discussed in section II.A of this rule, CMS will provide 
technical assistance to States facing unusual circumstances that 
interfere with their ability to comply fully with section 1902(tt)(1) 
of the Act reporting requirements and will consider approving 
alternative timelines and processes for meeting those requirements. The 
statute does not give CMS the discretion to avoid taking an FMAP 
reduction under section 1902(tt)(2)(A) of the Act for a quarter in the 
period beginning July 1, 2023, and ending June 30, 2024, if a State 
ultimately fails to report each of the metrics required under section 
1902(tt)(1) of the Act for that quarter. However, CMS will consider 
mitigating circumstances before taking additional enforcement action 
under section 1902(tt)(2)(B) of the Act if a State fails to meet the 
reporting requirements under section 1902(tt)(1) of the Act during the 
period from April 1, 2023, to June 30, 2024.
    If CMS' efforts to work collaboratively with States are successful, 
and the State takes necessary steps to address beneficiary harm and 
prevent future harm (such as reinstating eligibility for affected 
beneficiaries and suspending procedural disenrollments, where 
appropriate), CMS might not initiate compliance action under section 
1902(tt)(2)(B) of the Act. However, if CMS determines that a State 
violated the section 1902(tt)(1) of the Act reporting requirements or 
Federal redetermination requirements, CMS will consider exercising the 
enforcement authorities in section 1902(tt)(2)(B) of the Act, as 
implemented in this rule.

II. Provisions of the Interim Final Rule With Comment

    This rule adds new 42 CFR 430.49 and 435.927 and 435.928 to the CFR 
and amends Sec. Sec.  430.3, 430.5, and 45 CFR part 16. New Sec.  
430.49 of this rule interprets and implements section 1902(tt)(2)(B) of 
the Act, which authorizes CMS to do the following: (1) require States 
to submit and implement a CAP for noncompliance with Federal 
requirements applicable to eligibility redeterminations and the 
reporting requirements described in section 1902(tt)(1) of the Act; and 
(2) if the State fails to submit or implement an approvable CAP in 
accordance with section 1902(tt)(2)(B)(ii), require the State to 
suspend some or all disenrollments from Medicaid for procedural reasons 
until the State takes appropriate corrective action, impose CMPs of not 
more than $100,000 for each day the State is not in compliance, or 
both. New Sec.  435.927 interprets and implements section 1902(tt)(1) 
of the Act, which requires that, for each month occurring during the 
period beginning on April 1, 2023, and ending on June 30, 2024, States 
must submit on a timely basis to CMS, and CMS must make public, certain 
monthly data about activities related to eligibility redeterminations 
conducted during that same period.
    New Sec.  435.928 specifies how CMS will implement the FMAP 
reduction required under section 1902(tt)(2)(A) of the Act. If a State 
does not satisfy the reporting requirements described in section 
1902(tt)(1) of the Act for any fiscal quarter in the period that begins 
on July 1, 2023 and ends on June 30, 2024, section 1902(tt)(2)(A) of 
the Act requires CMS to reduce the FMAP determined for the State for 
the quarter under section 1905(b) of the Act by the number of 
percentage points (not to exceed 1 percentage point) equal to the 
product of 0.25 percentage points and the number of fiscal quarters 
during such period for which the State has failed to satisfy such 
requirements.
    The provisions of this rule apply to the States, District of 
Columbia, and all 5 territories--Guam, Puerto Rico, the Virgin Islands, 
the Northern Mariana Islands, and American Samoa. While the regulations 
in part 435 apply only to the States, the District of Columbia, the 
Northern Mariana Islands and American Samoa, Sec.  436.901 provides 
that with one exception (not relevant here), the requirements of part 
435, subchapter J, which includes Sec. Sec.  435.927 and 435.928 
through this rulemaking, apply to Guam, Puerto Rico, and the Virgin 
Islands.
    The new enforcement authority granted to CMS under section 
1902(tt)(2)(A) and (B) of the Act will improve State accountability for 
complying with Federal renewal requirements while also minimizing 
disruptions to coverage for eligible people during a period that 
generally aligns with States' unwinding activities. The additional 
enforcement activities authorized in section 1902(tt)(2) of the Act 
will reinforce and augment the routine monitoring and compliance action 
that CMS is already undertaking to promote State compliance with 
Federal enrollment and eligibility requirements, described in section 
I.C and D of this rule. These authorities will also help ensure that 
States remain accountable to CMS by requiring them to submit certain 
data to CMS and will increase public transparency about eligibility 
redeterminations between April 1, 2023, and June 30, 2024, by requiring 
CMS to publicly report the data.
    Finally, the rule amends Sec.  430.5 to add new definitions of the 
terms Federal redetermination requirements and procedural disenrollment 
for purposes of Sec.  430.49, and (with respect to the definition of 
procedural disenrollment only) for purposes of 45 CFR part 16. And this 
rule creates reconsideration

[[Page 84717]]

and appeal rights for States under new Sec.  430.49(f) and 
corresponding amendments to Sec.  430.3 and 45 CFR part 16, to ensure 
States have clear avenues for appealing CMS decisions to require 
suspension of procedural disenrollments and/or impose CMPs under the 
new authorities in section 1902(tt)(2)(B)(iii) of the Act.
    We have also included severability clauses at new Sec. Sec.  
430.49(g), 435.927(e), and 435.928(c) to emphasize our intent that, to 
the extent a reviewing court holds that any provision of these rules is 
unlawful, the remaining provisions should take effect and be given the 
maximum effect permitted by law. The severability clauses provide that 
any provision of these sections that is held to be invalid or 
unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further agency action, shall be 
severable from the relevant section and shall not affect the remainder 
thereof or the application of the provision to persons not similarly 
situated or to dissimilar circumstances.

A. Reporting Requirements (Sec.  435.927)

    Section 1902(tt)(1) of the Act requires that, for each month 
occurring during the period that begins on April 1, 2023, and ends on 
June 30, 2024, each State submits to CMS, and that CMS make public, a 
report on the activities of the State relating to eligibility 
redeterminations conducted during such period.
    New Sec.  435.927 implements and interprets the reporting 
requirements in section 1902(tt)(1) of the Act. The required reporting 
will help CMS and others to monitor State actions during the unwinding 
period and beyond because it includes reporting on metrics such as the 
number of individuals disenrolled from Medicaid or CHIP and certain 
information about transitions from Medicaid or CHIP coverage to 
coverage through an Exchange. Reviewing and publishing these monthly 
data will give CMS and the public information to help hold States 
accountable for following redetermination requirements and will promote 
transparency.
    CMS interprets section 1902(tt)(1) of the Act to require that 
States report data representing the activities conducted during each 
month of the designated time period.\8\ However, CMS does not believe 
the provision requires that States must submit all the required monthly 
reports by June 30, 2024, because it will take States time to assemble, 
review, and submit data from the months for which they are reporting. 
For example, States must report on activities occurring in June 2024, 
but the submission of that monthly report could occur after June 30, 
2024, to allow the State time to collect, review, and submit the 
data.\9\ This is reflected in new Sec.  435.927(c), which requires 
States to report certain data representing activities conducted by a 
State during the time period beginning April 1, 2023, and ending June 
30, 2024.
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    \8\ See the January 2023 SHO, and the June 2023 FAQs.
    \9\ See the June 2023 FAQs.
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    To help ensure that CMS and the public can use and understand the 
data, avoid redundancy, and for purposes of practicality, CMS is 
interpreting the data elements required under section 1902(tt)(1) of 
the Act differently in Sec.  435.927(d) depending on the element. 
Section 1902(tt)(1) of the Act directs the Secretary to make public 
reports with data ``relating to eligibility redeterminations,'' but CMS 
is not interpreting all the reporting elements listed in the subsequent 
subparagraphs to be limited to data related to such redeterminations. 
Specifically, CMS is interpreting the reporting elements listed in 
section 1902(tt)(1)(A), (B) and (D) of the Act to represent only those 
individuals who are subject to Medicaid or CHIP redeterminations but is 
not interpreting the elements listed in section 1902(tt)(1)(C) or (E) 
of the Act to be limited to reporting on such individuals.
    Paragraphs (A) and (B) of section 1902(tt)(1) of the Act require 
States to report on certain data elements for persons with coverage for 
medical assistance, child health assistance, or pregnancy-related 
assistance, which CMS interprets to refer to people with Medicaid or 
CHIP coverage, including pregnancy-related coverage in both programs. 
The data elements required under paragraphs (A) and (B) are as follows: 
the number of eligibility renewals initiated, beneficiaries renewed on 
a total and ex parte basis (that is, based on available reliable 
information without contacting the individual consistent with Sec.  
435.916(a)(2)), individuals who were disenrolled for any reason, and 
the number of individuals disenrolled for procedural reasons. These 
data points are all the direct result of Medicaid or CHIP eligibility 
redetermination actions and thus new Sec.  435.927(d)(1) through (5) 
require States to report this information only for people undergoing 
Medicaid or CHIP redeterminations.
    Similarly, paragraph (D) of section 1902(tt)(1) of the Act requires 
States to report the number of individuals whom a Federal or State-
based Exchange determined eligible for a qualified health plan or a 
Basic Health Program (BHP),\10\ as well as the number of individuals 
who selected a qualified health plan or enrolled in a BHP (section 
1902(tt)(1)(D)(i) and (ii) of the Act specifically require data related 
to BHPs). Paragraph (D) of section 1902(tt)(1) of the Act does not 
specify that these data be limited only to numbers of individuals whose 
eligibility had been redetermined by the Medicaid program. However, 
these data elements are only useful to CMS in understanding ``the 
activities of the State relating to eligibility redeterminations,'' as 
directed by section 1902(tt)(1) of the Act if the data are limited to 
Medicaid and CHIP beneficiaries who have undergone an eligibility 
redetermination. These data will help demonstrate if beneficiaries 
found ineligible for Medicaid and CHIP during the redetermination 
process are able to find other coverage on Exchanges or BHPs and will 
also help CMS and other interested parties identify States in which 
transitions to Exchange coverage are relatively successful and States 
in which such transitions may not be as successful. These data will be 
most useful for oversight of States' redetermination processes if they 
are limited to the numbers of individuals' accounts that were 
transferred to an Exchange or BHP because of a redetermination under 
Medicaid or CHIP. To include other transfers (those of consumers who 
were not enrolled in Medicaid or CHIP at the time and who newly apply 
directly with their State agency and are determined ineligible) would 
not help to illuminate ``eligibility redeterminations,'' because new 
applicants are not in a position to lose Medicaid or CHIP coverage. 
Therefore, in new Sec.  435.927(d)(10) and (11), we require the 
reported data described in section 1902(tt)(1)(D) of the Act to reflect 
Medicaid/CHIP redeterminations.
---------------------------------------------------------------------------

    \10\ The Basic Health Program (BHP) is a program for specified 
individuals who do not qualify for Medicaid but whose household 
income does not exceed 200 percent of the Federal poverty level 
(FPL).
---------------------------------------------------------------------------

    In previous guidance,\11\ we listed the reporting elements under 
section 1902(tt)(1) of the Act related to Exchanges and the anticipated 
data sources for obtaining the data for these elements. Specifically, 
in the January 2023 SHO letter, in the first column of ``Table 2: 
Reporting Elements Under Section 1902(tt)(1) for the Period from April 
1, 2023, through June 30, 2024, and Corresponding Data Sources,'' we 
stated that for States with Exchanges

[[Page 84718]]

that use the Federal Exchange eligibility and enrollment platform 
(including Federally-facilitated Exchanges (FFEs) and SBEs on the 
Federal platform (SBE-FPs)) we anticipated that CMS would report these 
data on behalf of States and that we intended to limit the data to 
information that is the result of a Medicaid or CHIP redetermination 
(which would exclude data resulting from a new Medicaid or CHIP 
application). In contrast, for SBEs with their own platforms that use 
either a non-integrated or integrated eligibility system, we 
inadvertently did not make such a distinction.\12\ Rather, column one 
in Table 2 of the January 2023 SHO letter suggests that the reporting 
elements would apply to Exchange activity resulting from all Medicaid 
or CHIP applications. However, in the ``SBE Priority Metrics: Medicaid/
Children's Health Insurance Program (CHIP) Continuous Enrollment 
Condition Unwinding Overview and Template 1.0 User Guide (version 1.0, 
5/19/2023),'' which is cited in guidance that we released on June 30, 
2023,\13\ we specified that SBEs will report only those required data 
elements that result from Medicaid or CHIP redeterminations. As a 
result, although the labeling in the first column of the table in the 
January 2023 SHO letter is inconsistent, the definitions of the 
required State data are consistent across types of Exchanges, and 
therefore the data collected and reported will be consistent across 
types of Exchanges, and in all cases, including for SBEs not using the 
Federal platform, will be limited to information related to Medicaid or 
CHIP redeterminations. Section 435.927(d)(10) and (11) reflect this.
---------------------------------------------------------------------------

    \11\ See the January 2023 SHO Letter, and the June 2023 FAQs.
    \12\ States with SBEs that operate an integrated eligibility 
platform have a shared operating system between the SBE and the 
Medicaid/CHIP agency that conducts eligibility determinations 
related to new and renewal applications for certain Medicaid and 
CHIP programs and qualified health plans. In contrast, States with 
SBEs that operate a non-integrated eligibility platform have 
separate operating systems for the SBE and the Medicaid/CHIP agency. 
Accounts are transferred between the separate operating systems 
depending on the initial eligibility determination or assessment for 
the programs made by either the SBE or the Medicaid/CHIP agency.
    \13\ The June 2023 FAQs, in Table 1, cites to CMS, ``State-Based 
Exchanges (SBE) Priority Metrics: Medicaid/Children's Health 
Insurance Program (CHIP) Continuous Enrollment Condition Unwinding; 
Overview and Template 1.0 User Guide,'' released May 5, 2023, 
https://www.medicaid.gov/resources-for-states/downloads/sbe-medicaid-chip-con-unwind-metrics-reprt-guide.pdf. ``The priority 
metrics include indicators that are specific to Medicaid/CHIP 
continuous enrollment unwinding activities. For those metrics, SBEs 
should count activities that were initiated through the Medicaid/
CHIP agency's renewal process, in which a consumer was determined 
ineligible for limited or full benefit Medicaid or CHIP.''
---------------------------------------------------------------------------

    As noted, in the January 2023 SHO letter, CMS identified the 
reporting requirements under section 1902(tt)(1) of the Act that relate 
to Exchanges. Consistent with CMS' stated expectations in that SHO 
letter, CMS will report data on behalf of States with Exchanges that 
use the Federal eligibility and enrollment platform (including FFEs and 
SBE-FPs) since CMS operates the Federal eligibility and enrollment 
platform. Therefore, States do not have to report the data, and we are 
not including in this rule any provisions implementing the requirements 
under section 1902(tt)(1) of the Act that apply to States with 
Exchanges that use the Federal eligibility and enrollment platform. 
Section 435.927(d)(10) and (11) describe the reporting requirements 
that apply to States with SBEs that do not use the Federal platform.
    Section 435.927(d)(10) and (11) also reflect certain practical and 
operational differences between SBEs based on whether the Exchange 
eligibility system is integrated with the State's Medicaid and/or CHIP 
eligibility systems. Specifically, some SBEs have integrated 
eligibility systems but others do not. As Congress recognized in 
section 1902(tt)(1)(D)(i) and (ii) of the Act, there is no need for an 
Exchange with an integrated eligibility system to report account 
transfers from the Medicaid and/or CHIP agency to the Exchange, whereas 
that data point is relevant for Exchanges without integrated 
eligibility systems.
    In contrast to how we are interpreting section 1902(tt)(1)(A), (B), 
and (D) of the Act, we are not interpreting section 1902(tt)(1)(E) of 
the Act to be limited to describing only information about a Medicaid 
or CHIP redetermination. States are required under section 
1902(tt)(1)(E) of the Act to report data on total call center volume, 
average wait times, and average abandonment rate. For these reporting 
elements, it is impractical to limit the measures only to data related 
to eligibility redeterminations. States do not always identify the 
purpose of individual calls to call centers, calls can address multiple 
purposes and beneficiaries, and reprogramming call trees and retraining 
staff could take months for States to operationalize, if required. As 
the period for which States are required to report these data under 
section 1902(tt)(1)(E) of the Act has already begun and is time-
limited, it is impractical to limit the collection of the call center 
data required under 1902(tt)(1)(E) of the Act to only those calls 
related to individuals' eligibility redeterminations. Furthermore, 
these call center metrics are useful because they illustrate the extent 
to which all beneficiaries, including those whose eligibility is being 
redetermined, can access assistance. Accordingly, new Sec.  
435.927(d)(7) through (9) are not limited to just call center 
information related to redeterminations.
    CMS is also not interpreting section 1902(tt)(1)(C) of the Act to 
be limited to describing only information about a Medicaid or CHIP 
redetermination. Section 1902(tt)(1)(C) of the Act requires States to 
report on the number of individuals enrolled in a separate CHIP program 
under section 2101(a)(1) of the Act. Broadening the data collected 
under paragraph (C) to include the total number of enrollees in a 
separate CHIP, not just those enrolling subject to a Medicaid or CHIP 
eligibility redetermination, provides useful information. In addition 
to being new data that is not publicly reported elsewhere, the data 
helps CMS and others identify whether separate CHIP programs' total 
enrollment levels are changing during the applicable period, which 
might indicate whether individuals are transitioning to CHIP from the 
Medicaid program. New Sec.  435.927(d)(6) therefore refers to reporting 
on total enrollment in separate CHIPs.
    Despite not being limited to information on redeterminations, data 
elements reported under section 1902(tt)(1)(C) and (E) of the Act are 
still useful for purposes of providing transparency on States' 
activities to conduct redeterminations. State Medicaid agency 
operational data on call center activity--call volume, average wait 
times, and average abandonment rates--help illuminate beneficiaries' 
access to information and ability to receive assistance from the State, 
as well as the eligibility process generally. Information on the 
enrollment levels for separate CHIP programs helps identify trends in 
enrollment that could signal whether a State is not performing 
redeterminations or transitioning eligible individuals from Medicaid to 
CHIP.
    All the data States must report under the requirements of section 
1902(tt)(1) of the Act are already being reported through existing data 
reports collected by CMS. For efficiency and to improve standardization 
(and hence, comparability) of the data, and because the applicable 
statutes, regulations, and other guidance governing CMS' use of the 
data collected through those existing data sources permit this, CMS is 
not requiring States to submit separate or

[[Page 84719]]

additional reports to CMS to comply with section 1902(tt)(1) of the 
Act.\14\ Rather, CMS believes the requirements of section 1902(tt)(1) 
of the Act can be met through compliance with the following existing, 
CMS-approved data reporting processes: the Unwinding Eligibility and 
Enrollment Data Reporting (also referred to as the Unwinding Data 
Report), Medicaid and CHIP Eligibility and Enrollment Performance 
Indicator Data (PI data), the Transformed Medicaid Statistical 
Information System (T-MSIS), and SBE Priority Metrics.\15\ 
Additionally, as described previously, the required data under section 
1902(tt)(1) of the Act that apply to States with Exchanges that use the 
Federal eligibility and enrollment platform will be reported by CMS. 
Under section 1902(tt)(1) of the Act, CMS will publish all required 
data after a period of time to allow for data quality and validation 
reviews.
---------------------------------------------------------------------------

    \14\ See sections 1902(a)(4), 1902(a)(6), 1902(a)(75), 
1903(r)(1)(F), and 2107(b)(1) of the Act; see also 42 CFR 431.16, 42 
CFR 433.112(b)(15), 45 CFR 155.260(a)(1)(ii). See also https://www.federalregister.gov/documents/2019/02/06/2019-01157/privacy-act-of-1974-system-of-records and https://www.federalregister.gov/documents/2013/10/23/2013-24861/privacy-act-of-1974-report-of-an-altered-cms-system-of-records-notice.
    \15\ See the January 2023 SHO Letter, and the June 2023 FAQs.
---------------------------------------------------------------------------

    Section 1902(tt)(1) of the Act requires States to submit the 
required monthly data on a timely basis but does not include a 
definition of timely or standards for completeness and accuracy. CMS 
already collects the required data via existing processes, and the 
timeliness, completeness, and quality specifications for data submitted 
via those existing processes have generally been defined 
previously.\16\ Under this regulation, States will generally submit 
data in accordance with these existing timelines and specifications 
unless CMS has approved an alternative process or timeline for 
reporting, in which case the State must submit the data according to 
any alternative specifications CMS approved as part of the alternative 
process or timeline.
---------------------------------------------------------------------------

    \16\ See the January 2023 SHO Letter, and the June 2023 FAQs.
---------------------------------------------------------------------------

    As specified in Sec.  435.927(b)(1), CMS will consider data to be 
timely when it is submitted by the deadline outlined in the applicable 
existing reporting process specifications, with some variations for T-
MSIS data and to permit States to submit data according to alternative 
processes and timelines approved by CMS. CMS will approve these 
alternative processes and timelines when, as discussed below, a State 
is making a good faith effort to meet the requirements despite facing 
significant challenges that interfere with its ability to do so. As an 
example of how a deadline outlined under other existing reporting 
process specifications might apply here, the specifications for PI data 
generally require States to submit data by the 8th of each month; \17\ 
thus under Sec.  435.927(b)(1), States would report these PI data on a 
timely basis under section 1902(tt)(1) of the Act if they reported them 
by the 8th of each month. The rule also, however, includes a variation 
on how the existing T-MSIS reporting timeline would apply for purposes 
of section 1902(tt)(1) of the Act data because, in order for T-MSIS 
data to be useful for section 1902(tt)(1) of the Act purposes, these 
data must be reported under a different timeline. Specifically, to 
publicly report data under section 1902(tt)(1)(D)(i) of the Act, CMS 
will use T-MSIS data to match the records of Medicaid and CHIP 
beneficiaries to data from the FFEs and SBEs-FPs and identify the 
number of accounts that are received at these Exchanges due to a 
Medicaid/CHIP redetermination. Using these data, CMS can determine the 
other metrics listed under section 1902(tt)(1)(D)(i) of the Act, such 
as the total numbers of these individuals who apply for and are 
determined eligible for a qualified health plan. CMS will also use T-
MSIS data to publicly report data on the number of separate CHIP 
enrollees for each State, as required under section 1902(tt)(1)(C) of 
the Act. CMS already requires that States maintain current data 
submissions by submitting T-MSIS data monthly before the last day of 
the subsequent month, although States are not considered to be out of 
compliance for T-MSIS reporting until data submissions are behind by 2 
or more months. As reflected in Sec.  435.927(b)(1)(ii), due to the 
time-sensitive nature of these calculations and the need for up-to-date 
data, States that do not submit T-MSIS data monthly by the last day of 
the subsequent month may be subject to the FMAP reduction under section 
1902(tt)(2)(A) of the Act or other corrective action under section 
1902(tt)(2)(B) of the Act. For example, T-MSIS data reflecting March 
2024 activities will be due by the end of April 2024, under Sec.  
435.927(b)(1)(ii).
---------------------------------------------------------------------------

    \17\ CMS, ``Medicaid and Children's Health Insurance Program 
Eligibility and Enrollment Data Specifications for Reporting During 
Unwinding,'' updated December 2022. Available at https://www.medicaid.gov/sites/default/files/2022-12/unwinding-data-specifications-dec-2022.pdf.
---------------------------------------------------------------------------

    CMS recognizes that some States might encounter unusual 
circumstances that interfere with reporting using existing CMS-approved 
processes or that impede a State's ability to meet the deadlines in 
Sec.  435.927(b)(1)(i) and (ii). For example, States may experience 
unforeseeable or unavoidable challenges such as a natural disaster or 
unplanned systems outages, or may be working to resolve significant 
foreseeable challenges, such as a known and reported major operational 
or systems issue that impacts the State's ability to submit timely and 
accurate data and that the State is working to remediate but needs 
additional time to fix. As reflected in Sec.  435.927(b)(1)(iii), 
(b)(3)(ii), (b)(4), and (c)(2), CMS would consider approving 
alternative timelines and processes for reporting required data if a 
State is making a good faith effort to submit the required data. For 
example, CMS would consider allowing such a State to submit certain 
summary data via email. As specified in Sec.  435.927(b)(4), a good-
faith effort means that (1) the State is experiencing significant, 
unforeseeable, or unavoidable challenges in complying with the 
reporting requirements of Sec.  435.927(c), or is experiencing 
significant foreseeable challenges in complying and is working to 
remediate these challenges but needs additional time to address them; 
(2) the State requested and obtained approval from CMS to submit the 
data via an alternative process or timeline, and (3) the approved 
alternative process for submitting the data or timeline is sufficient 
to ensure CMS can obtain and use the data to meet CMS' obligations to 
report the data publicly per section 1902(tt)(1) of the Act. CMS will 
work with such a State to ensure that CMS has all the data it needs in 
order to meet its requirement to publicly report data under section 
1902(tt)(1) of the Act and will only approve alternative timelines or 
reporting processes that permit CMS to meet this requirement.
    States that are ultimately unable to submit required data or that 
submit data via an unapproved process or according to an unapproved 
timeline will be subject to the enforcement actions in section 
1902(tt)(2) of the Act. Because section 1902(tt)(2)(A) requires CMS to 
take an FMAP reduction if States fail to meet the section 1902(tt)(1) 
of the Act reporting requirements for a quarter in the period beginning 
July 1, 2023, and ending June 30, 2024, CMS does not have the authority 
to exempt States from FMAP reductions for failure to meet the section 
1902(tt)(1) of the Act reporting requirements during that timeframe. 
However, as indicated in Sec.  430.49, CMS will consider certain 
mitigating circumstances before taking the various

[[Page 84720]]

additional enforcement actions described in section 1902(tt)(2)(B) of 
the Act.
    The regulation also provides in Sec.  435.927(b)(2) that in order 
to be considered ``complete'' for purposes of public reporting under 
section 1902(tt)(1) of the Act, States must submit every data element 
(although in some cases, as noted above, certain elements may be 
submitted on a different or later timeframe than others, subject to CMS 
approval). A State that ultimately fails to report one or more required 
data elements would be subject to the FMAP reduction under section 
1902(tt)(2)(A) of the Act if the State's noncompliance was for a 
quarter during the period from July 1, 2023, through June 30, 2024. 
Such a State might also be subject to other enforcement actions under 
section 1902(tt)(2)(B) of the Act; these are discussed in section II. 
of this rule.
    Furthermore, in Sec.  435.927(b)(3), the regulation provides that 
to be considered of ``sufficient quality,'' the State must report data 
that adheres to specifications outlined in previously existing 
regulation or guidance for each of the CMS-approved processes, or data 
that adheres to the specifications outlined in an alternative process 
approved by CMS. Existing reporting processes are governed by detailed 
instructions that outline how and what States should report and help 
ensure that States are reporting consistent data that CMS can publicly 
report, consistent with requirements under section 1902(tt)(1) of the 
Act.
    New section Sec.  435.927(c) implements the reporting requirements 
in section 1902(tt)(1) of the Act in light of the interpretations that 
are discussed above and reflected in the other paragraphs of Sec.  
435.927. Section 435.927(c) specifies that States must submit to CMS 
the data described in Sec.  435.927(d), and those data must be timely, 
complete, and of sufficient quality (as those terms are defined in 
Sec.  435.927(b)). It further provides that States must submit the 
required data via existing CMS-approved processes or through 
alternative processes approved by CMS when a State is making a good 
faith effort as defined in Sec.  435.927(b)(4).

B. Application of the FMAP Reduction (Sec.  435.928)

    If a State does not satisfy the reporting requirements in section 
1902(tt)(1) of the Act for any fiscal quarter that occurs during the 
period that begins on July 1, 2023, and ends on June 30, 2024, section 
1902(tt)(2)(A) of the Act requires CMS to reduce the FMAP determined 
for the State for the quarter under section 1905(b) of the Act by the 
number of percentage points (not to exceed 1 percentage point) equal to 
the product of 0.25 percentage points and the number of fiscal quarters 
during such period for which the State has failed to satisfy such 
requirements. We are implementing this FMAP reduction along with our 
interpretation of how it is to be applied in new Sec.  435.928.\18\ In 
Sec.  435.928(b)(1), CMS interprets the statutory reference to the FMAP 
determined for the State under section 1905(b) of the Act to mean the 
State-specific FMAP defined in the first sentence of section 1905(b) of 
the Act.\19\ In Sec.  435.928(b)(4), CMS interprets the statutory 
language regarding the amount of the reduction to mean that when States 
are noncompliant in multiple quarters, the FMAP reduction will increase 
by 0.25 percentage points for each successive quarter of noncompliance, 
regardless of whether the noncompliant quarters are consecutive. For 
example, if a State were out of compliance for three quarters, the 
reduction would be: a 0.25 percentage point FMAP reduction in the first 
quarter of noncompliance; a 0.50 percentage point FMAP reduction in the 
second quarter of noncompliance; and a 0.75 percentage point FMAP 
reduction in the third quarter of noncompliance. In no case, however, 
would the FMAP reduction for any single quarter exceed 1 percentage 
point.
---------------------------------------------------------------------------

    \18\ For additional discussion about the application of the FMAP 
reduction, see the January 2023 SHO Letter, and the June 2023 FAQs.
    \19\ In the June 2023 FAQs, CMS explained how such a decrease 
would be applied to expenditures that are matched at FMAPs 
articulated elsewhere in statute, because they use the 1905(b) 
State-specific FMAP as a base.
---------------------------------------------------------------------------

    We acknowledge that the language of the statute would allow for an 
alternative interpretation that would require CMS to apply the same 
percentage point reduction to all of the quarters in which a State 
failed to comply with the reporting requirements. For example, if a 
State were out of compliance for three quarters, CMS could apply a 0.75 
percentage point reduction to the State's FMAP in all three of the 
applicable quarters. To come to that conclusion, CMS would have to 
interpret the statute as requiring CMS either to apply the reduction to 
the relevant quarters multiple times, or to wait until the end of the 
period to apply the reduction. Neither of these alternative approaches 
supports transparency, as the total amount of the reduction would not 
be known until up to three quarters after the State is found to be 
noncompliant, making it difficult for States to budget for the amount 
of State share they would need for the four-quarter period.
    As specified in Sec.  435.928(b)(3), States that fail to report 
data according to the requirements in Sec.  435.927 for a single month 
within a quarter will be subject to the FMAP reduction for the entire 
quarter. Section 1902(tt)(1) of the Act specifies that the FMAP 
reduction should be applied for each fiscal quarter. As such, the 
statute does not give CMS the authority to reduce a State's FMAP for a 
single month.\20\
---------------------------------------------------------------------------

    \20\ See, the January 2023 SHO Letter, and the June 2023 FAQs.
---------------------------------------------------------------------------

C. Corrective Action Plans (Sec.  430.49(b))

    As noted in section I.A. of this rule, section 1902(tt)(2) of the 
Act includes new enforcement authority for CMS to use if it determines 
that a State is not in compliance with the reporting requirements in 
section 1902(tt)(1) of the Act, Federal eligibility redetermination 
requirements, or both. New Sec.  430.49(b) provides guidelines for how 
CMS will exercise the CAP authority created by section 1902(tt)(2)(B) 
of the Act. Specifically, Sec.  430.49(b)(1) provides that if CMS 
determines that, during the period between April 1, 2023, and June 30, 
2024, a State has been out of compliance with the reporting 
requirements in section 1902(tt)(1) of the Act (as implemented in Sec.  
435.927 of this rule) or Federal eligibility redetermination 
requirements (as defined at Sec.  430.5, as amended by this rule), 
then, after considering whether mitigating circumstances (discussed in 
section II.E. and Sec.  430.49(d) of this rule) apply, CMS will 
determine whether to require the State to submit and implement a CAP.
    New Sec.  430.49(b)(2) specifies that CMS will issue a written 
notice to the State informing the State of CMS' finding of 
noncompliance and the requirement to submit and implement a CAP, or to 
revise and resubmit an existing approved CAP to address newly 
identified violations of the Federal reporting and/or redetermination 
requirements, unless consideration of certain mitigating circumstances 
has led CMS to delay or forgo requiring a CAP. The notice will: (1) 
explain the violation of Federal redetermination or reporting 
requirements that CMS has identified and the basis for CMS' finding; 
(2) inform the State of the requirement to submit and implement a new 
CAP or to revise and resubmit an existing CAP, with instructions on the 
method and deadline by which the State must submit a CAP to CMS; and 
(3) explain the additional enforcement actions that CMS may pursue if 
the State fails to

[[Page 84721]]

submit or implement the CAP, including if CMS disapproves the State's 
submitted CAP or if the State fails to meet the requirements set forth 
in the approved CAP, in accordance with the requirements at section 
1902(tt)(2)(B)(ii) of the Act, as interpreted in this rule and 
discussed in section II.D. and at Sec.  430.49(b) of this rule.
    As set forth in new Sec.  430.49(b)(3), a CAP must include specific 
content to be approved by CMS. First, the CAP must identify actions the 
State will take immediately, which means as soon as feasible, if needed 
to prevent further harm or risk of harm to beneficiaries while it 
implements the CAP. Harm to beneficiaries in this context includes 
increased burden for beneficiaries in completing the renewal process, 
loss of coverage at renewal for individuals who continue to meet the 
substantive eligibility criteria and whose eligibility should otherwise 
be retained but for failure to meet a procedural requirement, and 
delays in access to coverage or care. Actions to prevent harm, or risk 
of harm, to beneficiaries could include, if needed and appropriate, 
reinstatement of coverage for impacted individuals, suspension of 
procedural disenrollments, and adoption of alternative processes or 
procedures under section 1902(e)(14)(A) of the Act or other alternative 
strategies approved by CMS.
    Next, the CAP must detail steps the State will take to ensure 
compliance with Federal redetermination and/or reporting requirements, 
such as new policies, procedures, operational processes, or systems 
changes it will implement. The CAP must also include key milestones and 
a detailed timeline for achieving compliance, as well as a plan for 
communicating the steps in the CAP to: (1) State staff, including State 
Medicaid agency staff and staff of any agency or other entity that is 
determining eligibility under a delegation of authority under Sec.  
431.10(c)(1)(i), (2) CMS, and (3) beneficiaries, as applicable. CMS 
believes that an approvable CAP must include these elements because 
they will allow CMS to assess at the outset whether the State's CAP 
appears sufficient to resolve the noncompliance and to monitor whether 
the State is making sufficient progress in its implementation. 
Additionally, these elements are consistent with those that CMS has 
historically required when requesting CAPs under section 1904 of the 
Act and Sec.  430.35 for failure to administer the State Plan in 
compliance with the provisions in section 1902 of the Act, violations 
of which may result in withholding of FFP.
    New Sec.  430.49(b)(4) of this rule implements section 
1902(tt)(2)(B)(ii) of the Act by requiring the following timeline for 
submission, approval, and implementation of a CAP after the State 
receives notice that CMS is requiring it to implement a CAP:
    (1) The State must submit a CAP that includes the minimum elements 
described in Sec.  430.49(b)(3) to CMS not later than 14 calendar days 
after receiving CMS' written notice.
    (2) CMS must approve or disapprove the proposed CAP within 21 
calendar days of the date the CAP is submitted by the State. If CMS 
does not approve or disapprove the CAP within 21 calendar days of 
submission, the CAP will be deemed approved.
    (3) The State must begin implementation of the CAP not later than 
14 calendar days after receiving CMS approval or after the CAP is 
deemed approved.
    We interpret the statute to refer to calendar days and to authorize 
CMS to provide that CAPs not expressly approved or disapproved within 
21 calendar days will be deemed approved. (Henceforth in this rule, 
``days'' refers to calendar days unless otherwise noted.) CMS is 
providing for deemed approval so that CMS and States can take quick 
action to implement any strategies or system changes needed to correct 
identified violations of the reporting or redetermination requirements 
to promote sustained compliant operations and beneficiary coverage.
    Section 430.49(b)(5) provides that CMS will consider the following 
in determining whether to approve a CAP submitted by a State: (1) 
whether the CAP will promptly eliminate or minimize any harm or risk of 
harm to beneficiaries, including increased burden for beneficiaries in 
completing the renewal process, loss of coverage at renewal for 
individuals who continue to meet the substantive eligibility criteria 
and whose eligibility should otherwise be retained but for failure to 
meet a procedural requirement, and delays in access to coverage or 
care, due to the noncompliance to be addressed by the plan; and (2) 
whether the CAP will result in the State achieving compliance in a 
reasonable time, taking into account systems challenges and 
circumstances faced by the agencies involved. Systems challenges that 
could impact the timeframe in which a State can achieve compliance 
could include, for example, the timeframe needed to update coding for a 
State's eligibility system, the need to create policy manuals to guide 
workers on use of new system functionality, training workers on new 
system changes, and/or the creation and implementation of new forms or 
functions to receive or track information in the renewal process.
    As discussed further in section II.E. and Sec.  430.49(d)(1) and 
(2), CMS will consider certain mitigating circumstances before issuing 
a notice directing a State to submit a CAP in accordance with the 
requirements at Sec.  430.49(b).

D. Suspension of Procedural Disenrollments and Civil Money Penalties 
(Sec.  430.49(c))

    Under section 1902(tt)(2)(B)(iii) of the Act, as implemented at 
Sec.  430.49(c) of this rule, if a State fails to submit or implement 
an approved CAP, including if CMS disapproves the State's submitted CAP 
or if the State fails to meet the requirements set forth in the 
approved CAP, in accordance with section 1902(tt)(2)(B)(ii) of the Act, 
the Secretary may, after consideration of any mitigating circumstances 
described in section II.E. of this rule and at new Sec.  430.49(d)(3), 
and in addition to any reduction applied to the FMAP under section 
1902(tt)(2)(A) of the Act, take either or both of the following 
actions: (1) require the State to suspend making some or all 
disenrollments from Medicaid that are for procedural reasons until the 
State takes appropriate corrective action; (2) impose CMPs of not more 
than $100,000 for each day a State is not in compliance.
    Under new Sec.  430.49(c)(2), prior to taking either or both of 
these enforcement actions, CMS will issue a notice to the State. Such 
notice will include: (1) a description of the enforcement actions CMS 
is taking and the basis for such action(s); (2) whether CMS is 
requiring suspension of some or all procedural disenrollments, and in 
the case of a partial suspension, the affected populations; (3) the 
date on which the State must begin suspending procedural 
disenrollments, if applicable; (4) the daily amount of any CMPs 
imposed, the date that assessment of the CMPs will begin, the timeline 
for payment (including information on how the timeline for payment 
would be affected by an appeal), and instructions on how to submit 
payment; (5) the steps the State must take to cure its noncompliance 
and for CMS to lift the enforcement action(s); (6) information on the 
State's appeal rights as described in section II.G and at new Sec.  
430.49(f) of this rule, including the deadline to submit an appeal 
request and the effect of requesting an appeal on the applicability of 
any enforcement actions pending the decision in such appeal.

[[Page 84722]]

The notice must also provide that the decision outlined in the notice 
is final unless it is timely appealed as described in Sec.  430.49(f). 
Section 430.49(c)(2)(ii) also provides that CMS may issue additional 
notices to take additional actions (for example, increasing CMPs or 
adding or increasing the scope of a suspension of procedural 
disenrollments) if CMS identifies additional violations of a CAP's 
provisions. Such notices will meet the requirements outlined in Sec.  
430.49(c)(2)(i).
    Suspension of Procedural Disenrollments. As noted in this rule, if 
CMS finds that a State has failed to submit or implement an approved 
CAP in accordance with the requirements in section 1902(tt)(2)(B) of 
the Act, section 1902(tt)(2)(B)(iii) of the Act provides that CMS may 
require the State to suspend either some or all procedural 
disenrollments of Medicaid eligibility. We believe it is appropriate to 
target any procedural disenrollment suspension to protect those 
beneficiaries impacted by the State's noncompliance. If CMS requires 
the State to suspend procedural disenrollments, the scope of that 
requirement will be based upon the impact of the noncompliance that led 
to the requirement for the CAP. Accordingly, under Sec.  
430.49(c)(3)(i), if the impact of the noncompliance requiring a CAP 
affects a substantial number of (meaning all or nearly all) individuals 
in the State who are or should have been found eligible for Medicaid, 
CMS may require the State to suspend all procedural disenrollments. If 
the impact of the noncompliance is limited, for example to a specific 
population or geographic area, CMS may limit the suspension only to the 
affected population(s). In cases where CMS initially limits the 
requirement to suspend procedural disenrollments to an affected 
population or area, CMS may later opt to require the State to suspend 
all procedural disenrollments if CMS subsequently determines that the 
impact of the noncompliance is greater than was initially determined or 
if the State fails to comply with the initial requirement to suspend 
procedural disenrollments for a targeted population or area in 
accordance with the notice issued under Sec.  430.49(c)(2). In these 
circumstances, CMS will issue a subsequent notice under Sec.  
430.49(c)(2).
    CMS believes that suspension of procedural disenrollments is an 
effective and necessary enforcement tool to protect beneficiaries from 
harm due to a State's noncompliance and, except in one limited 
circumstance discussed in section II.E of this rule, will always 
require States that have failed to submit an approvable CAP or to 
implement an approved CAP to suspend some or all procedural 
disenrollments.
    After CMS requires a State to suspend procedural disenrollments, 
the State must continue suspending procedural disenrollments until CMS 
determines that the State has taken appropriate corrective action. Once 
CMS is satisfied that the State has taken appropriate corrective 
action, CMS will inform the State of the date on which it may resume 
procedural disenrollments. See section II.F of this rule for a 
discussion of the circumstances under which CMS will lift enforcement 
actions taken pursuant to an enforcement notice issued in accordance 
with Sec.  430.49(c).
    Civil Money Penalties. If CMS finds that a State has failed to 
submit or implement an approved CAP, including if CMS disapproves the 
State's submitted CAP or if the State fails to meet the requirements 
set forth in the approved CAP, in accordance with the requirements in 
1902(tt)(2)(B)(ii) of the Act and as interpreted at Sec.  430.49(b) of 
this rule, CMS may also issue notice to the State in accordance with 
Sec.  430.49(c)(2) indicating that CMS will impose CMPs.
    The CMPs authorized under section 1902(tt)(2)(B)(ii) are a tool to 
compel State compliance with corrective action as quickly as possible, 
given the urgency of preventing unauthorized loss of coverage for 
beneficiaries during a period that generally aligns with States' 
unwinding periods. For this reason, CMS is adopting a penalty formula 
that will impose a lower penalty for States with a shorter timeframe of 
noncompliance and increase the penalty over time for States that do not 
return to compliance. CMPs will start accruing 5 days after the date of 
the notice and become payable 60 days after the date of the notice, if 
not timely appealed, or 60 days after issuance of a final determination 
at the conclusion of any appeals pursuant to Sec.  430.49(f). Under 
Sec.  430.49(c)(3)(ii)(B) of this rule, CMS will impose CMPs for 
failure to submit or implement an approved CAP according to the 
following formula: Days 1-30 (after 5-day delay as specified in the 
enforcement notice): $25,000/day; Days 31-60: $50,000/day; and Days 61-
until State comes into compliance with CAP requirements: $100,000/day. 
All CMP amounts provided in this rule will be adjusted annually in 
accordance with 45 CFR part 102.
    New Sec.  430.49(c)(2)(ii) provides that CMS may issue additional 
notices to take additional actions (including increasing CMPs or 
imposing or broadening the scope of a suspension of procedural 
disenrollments) if CMS identifies additional violations of CAP 
provisions. Such notices will meet the requirements in 430.49(c)(2)(i).
    Noncompliant States will be charged CMPs daily until the State 
takes appropriate action to cure the noncompliance with the CAP 
requirements as outlined in Sec.  430.49(e) and discussed in section 
II.F. of this rule. Under Sec.  430.49(e)(2), once CMS is satisfied 
that the State has taken appropriate action to cure the noncompliance 
with the CAP requirements, CMS will inform the State of the total 
amount of CMPs that have accrued, the balance owed if the State has 
already begun payment, and the last day CMPs under the enforcement 
notice were imposed.
    As provided in Sec.  430.49(c)(4), if the State fails to suspend 
procedural disenrollments as required pursuant to a notice described in 
Sec.  430.49(c)(2) or to pay CMPs as specified in that notice, or both, 
CMS may issue a subsequent notice under Sec.  430.49(c)(2) to increase 
the CMPs to the maximum allowable daily amount, if not already reached, 
or may pursue additional enforcement action under section 1904 of the 
Act, including withholding some or all FFP for the period of 
noncompliance.
    CMS intends to issue additional guidance following the issuance of 
this rule providing additional information regarding the process CMS 
will use to collect CMPs and any operational requirements for States to 
remit payment of CMPs.

E. Mitigating Circumstances (Sec.  430.49(d))

    As described previously, section 1902(tt)(2)(B) of the Act, as 
implemented in new Sec.  430.49, gives CMS the authority to require 
States to submit a CAP for failure to meet reporting or Federal 
redetermination requirements and, if the State fails to submit or 
implement such CAP, including if CMS disapproves the State's submitted 
CAP or if the State fails to meet the requirements set forth in the 
approved CAP, in accordance with section 1902(tt)(2)(B)(ii) of the Act, 
to suspend procedural disenrollments, impose CMPs of up to $100,000 per 
day, or take both actions. While section 1902(tt)(2)(B) of the Act 
empowers CMS to require CAPs, suspend procedural disenrollments, and 
impose CMPs, the statute also gives the Secretary discretion to use 
this authority or not and to determine the amount of CMPs up to the 
statutory maximum.\21\
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    \21\ Section 1902(tt)(2)(B)(iii) of the Act provides (emphasis 
added): If a State fails to submit or implement an approved 
corrective action plan in accordance with clause (ii), the Secretary 
may . . . require the State to suspend making all or some 
terminations of eligibility for medical assistance from the State 
plan under this title (including any waiver of such plan) that are 
for procedural reasons until the State takes appropriate corrective 
action, as determined by the Secretary, and may impose a civil money 
penalty of not more than $100,000 for each day a State is not in 
compliance.

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[[Page 84723]]

    CMS interprets the enforcement authorities in section 1902(tt)(2) 
of the Act as tools to promote State accountability for compliance with 
the reporting requirements in section 1902(tt)(1) of the Act and 
Federal redetermination requirements, as defined in Sec.  430.5 of this 
rule, and to maximize accurate eligibility redeterminations to promote 
retention of coverage for eligible people to the greatest extent 
feasible. CMS recognizes that the scope or impact of different 
violations of the reporting or redetermination requirements may vary, 
and there also may be an emergency or other extraordinary circumstances 
preventing a State from complying with a given requirement or 
submitting or implementing a CAP. Thus, consistent with the discretion 
allowed under section 1902(tt)(2)(B) of the Act, CMS will take into 
consideration certain mitigating circumstances related to the State's 
noncompliance when determining whether to require the State to submit a 
CAP or require suspension of procedural disenrollments or impose CMPs. 
These circumstances are set forth at Sec.  430.49(d) of this rule.\22\
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    \22\ CMS has also used its discretion in setting the amount of 
the CMPs that will apply in certain circumstances, based on the 
duration of the CAP violation involved, as discussed above in 
section II.D.
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    Mitigating Circumstances Impacting Decision to Require a CAP. In 
the case of State noncompliance with Federal redetermination 
requirements, Sec.  430.49(d)(1) provides that CMS may elect to not 
require or to delay requiring submission of a CAP if either or both of 
the following circumstances exist:
    1. No Harm or Substantial Risk of Harm Occurred: The noncompliance 
caused neither actual harm nor a substantial risk of harm to 
beneficiaries, including increased burden for beneficiaries in 
completing the renewal process, loss of coverage at renewal for 
individuals who continue to meet the substantive eligibility criteria 
and whose eligibility should otherwise be retained but for failure to 
meet a procedural requirement, or delays in access to coverage or care.
    2. Extraordinary Circumstances Exist: There is an emergency or 
there are other extraordinary circumstances preventing the State's 
compliance--for example, a natural disaster or catastrophic systems 
outage.
    In addition, in the case of noncompliance with the reporting 
requirements in Sec.  435.927, Sec.  430.49(d)(2) provides that CMS may 
delay requiring or elect not to require a State to submit a CAP if CMS 
has determined that the State implementing a CAP is not necessary to 
ensure that the noncompliance is remedied. For example, CMS might not 
require a CAP if a State's noncompliance is due to an error that the 
State commits to correcting and does immediately correct. As with 
violations relating to Federal redetermination requirements, CMS may 
also delay requiring or elect not to require a State to submit a CAP 
relating to a violation of reporting requirements if CMS determines 
that there is an emergency or other extraordinary circumstances 
preventing the State's compliance.
    Mitigating Circumstances Impacting Decision to Suspend Procedural 
Disenrollments or Impose CMPs. If a State fails to submit an approvable 
CAP or to implement an approved CAP, including if CMS disapproves the 
State's submitted CAP or if the State fails to meet the requirements 
set forth in the approved CAP, new Sec.  430.49(d)(3) provides that CMS 
will consider whether any of the following mitigating circumstances 
exist when deciding whether to require a suspension of procedural 
disenrollments, impose CMPs, or take both actions:
    1. Extraordinary Circumstances Exist: Regardless of the type of 
violation that gave rise to the requirement of a CAP, CMS will consider 
whether there is an emergency or other extraordinary circumstance that 
occurred after the violation resulting in the requirement of a CAP that 
significantly impeded the State's ability to submit or implement the 
CAP. If such circumstances exist, CMS may delay or forgo imposition of 
CMPs but will not delay requiring a suspension of procedural 
disenrollments (beyond the one-month delay described below in the case 
of reporting violations that do not impede CMS' oversight of procedural 
disenrollments).
    2. Reporting Violation Does Not Impede CMS' Oversight of Procedural 
Disenrollments: When a State fails to submit or implement an approved 
CAP that was required based on the State's violation of reporting 
requirements under section 1902(tt)(1) of the Act, CMS will consider 
whether the underlying reporting violation impedes CMS' oversight of 
procedural disenrollments. If so, CMS will suspend procedural 
disenrollments and impose CMPs. If not, CMS will delay requiring a 
suspension of procedural disenrollments for 1 month to allow the State 
an opportunity to comply with the data reporting requirements but will 
immediately impose CMPs (unless extraordinary circumstances exist, as 
discussed above).
    Although all data reporting under section 1902(tt)(1) of the Act is 
important to support CMS oversight of State redetermination processes 
during a period that generally aligns with States' unwinding periods, 
we believe that in most cases it would be too punitive to suspend 
procedural disenrollments immediately if the State fails to submit or 
implement a CAP related to an underlying reporting requirement 
violation that does not impede CMS' understanding of the State's 
procedural disenrollment rate. In contrast, where a State fails to 
submit or implement a CAP related to an underlying reporting violation 
that impedes CMS' oversight of procedural disenrollments in that State, 
CMS will take immediate action to require suspension of procedural 
disenrollments, in addition to imposing CMPs (if not delayed or forgone 
by CMS due to the existence of extraordinary circumstances), to 
mitigate possible harm to beneficiaries at risk of disenrollment.
    For example, if a State fails to submit or implement an approved 
CAP that CMS required based upon the State's failure to report data on 
the volume of calls it is receiving at a call center, CMS will examine 
the circumstances of the underlying reporting violation and may find 
that the lack of these data does not impede its oversight of procedural 
disenrollments and, if so, will delay requiring the State to suspend 
procedural disenrollments for 1 month, pending the submission or 
implementation of a CAP or the correction of the underlying reporting 
violation, but will impose CMPs according to Sec.  430.49(c)(3)(ii) 
without delay (unless there has been an extraordinary circumstance 
after the violation occurred that prevented the State from submitting 
or implementing the CAP).

F. Lifting of CAP Enforcement Actions (Sec.  430.49(e))

    Under Sec.  430.49(e)(1) of this rule, CMS will lift any 
requirement to suspend procedural disenrollments and/or stop charging 
any CMPs imposed pursuant to Sec.  430.49(c) when the State cures its 
noncompliance by submitting an approvable CAP (where the violation was 
a failure to submit a CAP) or initiating or resuming implementation

[[Page 84724]]

of an approved CAP (where the violation was a failure to implement 
according to the terms of the CAP). In cases where the State had 
received a notice imposing CMPs due to failure to submit an approved 
CAP, CMS will continue the accrual of CMPs from the date that a State 
submits a CAP for CMS review in accordance with Sec.  
430.49(e)(1)(i)(A), until CMS determines whether the CAP is approvable. 
If CMS determines the CAP is approvable, CMS will retroactively end the 
accrual of CMPs on the day the CAP was submitted and cease charging 
CMPs prospectively. If CMS determines that the CAP is not approvable, 
CMS will continue charging CMPs imposed under the terms of the 
enforcement notice without interruption from the date specified in the 
original notice provided to the State under Sec.  430.49(c)(2) and will 
continue charging such CMPs until an approvable CAP is submitted. Under 
Sec.  430.49(e)(2), once CMS is satisfied that the State has taken 
appropriate action to cure the noncompliance with the CAP requirements, 
CMS will inform the State of the total amount of CMPs that have 
accrued, the balance owed, and the last day CMPs were imposed as well 
as the date on which the State may resume procedural disenrollments.
    CMS may again require suspension of procedural disenrollments and 
impose CMPs that have been lifted in accordance with Sec.  430.49(e)(1) 
if CMS subsequently determines that the State is not complying with the 
terms of the approved CAP. In such a situation, CMS will issue a new 
notice pursuant to Sec.  430.49(c)(2).

G. State Reconsideration and Appeal Rights (42 CFR 430.3, 430.49(f), 
and 45 CFR Part 16)

    Under new Sec.  430.49(f) and amendments to Sec.  430.3 and 45 CFR 
part 16, States will be able to appeal CMS' decision to require a State 
to suspend procedural disenrollments and/or pay CMPs under section 
1902(tt)(2)(B)(iii) of the Act and new Sec.  430.49(c). The rule amends 
Sec.  430.3 and 45 CFR part 16, Appendix A, to provide that States can 
appeal these CMS decisions to the Departmental Appeals Board (Board) in 
accordance with procedures set forth in 45 CFR part 16.
    The rule creates a new 42 CFR 430.49(f)(1), providing that a State 
dissatisfied with CMS' determination under Sec.  430.49(c) that the 
State must suspend procedural disenrollments or pay CMPs will have 30 
days (as counted consistent with the protocol for counting days 
outlined under 45 CFR 16.19) from receipt of the notice described in 
Sec.  430.49(c)(2) to appeal CMS's decision to the Board. The appeal 
request must comply with 45 CFR 16.7, and the appeals process will be 
governed by 45 CFR part 16. That means that the expedited appeal 
procedures outlined in 45 CFR 16.12 might be available, if the 
conditions in 45 CFR 16.12 are met. If the State does not submit an 
appeal request within that 30-day timeframe, then the decision 
described in the notice received by the State under Sec.  430.49(c)(2) 
is the final decision of the Secretary and is final agency action 
within the meaning of 5 U.S.C. 704.
    At new 42 CFR 430.49(f)(2), we give any party to the appeal that is 
dissatisfied with the Board's decision under 430.49(f)(1) an 
opportunity to request that the CMS Administrator reconsider it, and we 
outline the process that will govern the Administrator's 
reconsideration. In particular, new Sec.  430.49(f)(2)(i) specifies 
that any party to the appeal that is dissatisfied with the Board's 
decision on an appeal brought by a State under Sec.  430.49(f)(1) may 
request reconsideration of that decision within 15 days of receiving 
notice of the decision under 45 CFR 16.21. The process for such 
reconsiderations is provided under new Sec.  430.49(f)(2)(i)(A) through 
(D). Under new Sec.  430.49(f)(2)(i)(A), we are providing that 
reconsideration requests must be filed with the Administrator, and must 
include a copy of the Board's decision, a brief statement of why the 
party believes it was wrong, and a statement of the amount of any CMPs 
in dispute. New Sec.  430.49(f)(2)(i)(B) requires that the party 
requesting reconsideration send a copy of the request for 
reconsideration to all other parties to the appeal and other 
participants in the appeal (as described in 45 CFR 16.16) at the same 
time the request is filed. New Sec.  430.49(f)(2)(i)(C) provides that 
any other party to the appeal, or other participant in the appeal, may 
respond to the request for reconsideration in writing and file such 
response with the Administrator within 15 days of the date the request 
for reconsideration is filed with the Administrator. Under new Sec.  
430.49(f)(2)(i)(D), the Administrator will review the Board's decision 
and any additional information submitted by the parties and other 
participants, and either affirm the Board's decision or issue a new 
decision within 60 days after the Board issues notice of its decision 
under 45 CFR 16.21. Under new Sec.  430.49(f)(2)(ii), the Administrator 
may, within 60 days after the Board issues notice of its decision under 
45 CFR 16.21, also modify or reverse the Board's decision without 
receiving a request for reconsideration under Sec.  430.49(f)(2). In 
cases where the Administrator opts to review the Board's decision 
without a request for reconsideration, such decision must be provided 
within 60 days of the Board's issuance of its notice of decision under 
45 CFR 16.21.
    New Sec.  430.49(f)(2)(iii) states that if there is no request for 
reconsideration filed under Sec.  430.49(f)(2)(i) and the Administrator 
does not modify or reverse the decision within the 60-day period 
described in Sec.  430.49(f)(2)(ii), then the Board's decision will be 
the final determination of the Secretary and final agency action, and 
the Administrator will provide notice to all parties and other 
participants of such decision as described in Sec.  430.49(f)(2)(iv). 
New Sec.  430.49(f)(2)(iv) provides that the Administrator will provide 
a notice to all parties and other participants of the final decision 
that communicates that it is the final determination of the Secretary 
and final agency action and Sec.  430.49(f)(2)(v) provides that the 
determination of the Administrator pursuant to Sec. Sec.  
430.49(f)(2)(i)(D) or 430.49(f)(2)(ii) constitutes final agency action 
within the meaning of 5 U.S.C. 704.
    Under amendments in the rule to 45 CFR 16.22, any suspensions of 
procedural disenrollments under 42 CFR 430.49(c) will continue in 
effect and CMPs imposed on a State under 430.49(c) will continue to 
accrue pending an appeal to the Board under Sec.  430.49(f).
    Appeals of CMS decisions to take the FMAP reduction under section 
1902(tt)(2)(A) of the Act will follow a different process that is 
governed by already existing regulations. If CMS finds that a State is 
noncompliant with reporting requirements under Sec.  435.927, CMS will 
calculate the amount of the FMAP reduction under Sec.  435.928 and 
request that the State make a voluntary adjustment to the Form CMS-64 
to return the funds to CMS. If the State does not do so, CMS will 
initiate disallowance proceedings, which will be governed by existing 
regulations at Sec.  430.42. States may request reconsideration or 
appeal disallowance decisions per these existing CMS regulations at 
Sec.  430.42. Under Sec.  430.42, States wishing to request a 
reconsideration of the Administrator's decision to impose a 
disallowance must request such reconsideration within 60 days of 
receiving the notice of disallowance described in Sec.  430.42(a).
    We are adding new Sec.  430.49(f) and amending Sec.  430.3 and 45 
CFR part 16 as outlined in this section to provide States

[[Page 84725]]

with a fair and reasonable administrative process for appealing CMS' 
decisions to suspend procedural disenrollments or impose CMPs and to 
ensure that accountability for those decisions is vested in a principal 
officer. These changes also will provide States with accurate 
information about the availability of administrative review if they are 
dissatisfied with a CMS decision under 42 CFR 430.49(c). These 
provisions also clarify when agency decisions are final agency action 
for purposes of 5 U.S.C. 704.

H. Definitions (Sec.  430.5)

    This rule adds two new definitions to Sec.  430.5 that apply to the 
provisions at Sec.  430.49. One of the two new definitions will also 
apply to related amendments to 45 CFR part 16. First, the rule defines 
a ``procedural disenrollment'' for purposes of 42 CFR 430.49 and 45 CFR 
part 16 as a termination of eligibility and disenrollment from Medicaid 
for reasons that are unrelated to a State's determination of whether 
the individual meets eligibility criteria to qualify for coverage, 
including for failure to return a renewal form or documentation needed 
by the State to make a determination of eligibility. And second, the 
rule defines ``Federal redetermination requirements'' for purposes of 
42 CFR 430.49 as Federal requirements applicable to eligibility 
redeterminations outlined in Sec.  435.916, including renewal 
strategies authorized under section 1902(e)(14)(A) or other alternative 
processes and procedures approved by CMS under section 1902(e)(14)(A) 
of the Act or section 6008(f)(2)(A) of the FFCRA.

III. Good Cause

    The Administrative Procedure Act (APA), at 5 U.S.C. 553(b), 
requires the agency to publish a notice of the proposed rule in the 
Federal Register that includes a reference to the legal authority under 
which the rule is proposed and the terms and substance of the proposed 
rule or a description of the subjects and issues involved. Section 
553(c) further requires the agency to give interested parties the 
opportunity to participate in the rulemaking through public comment 
before the provisions of the rule take effect. Section 553(b)(B) 
provides an exception to notice-and-comment requirements, however, if 
the agency for good cause finds that notice-and-comment is 
impracticable, unnecessary, or contrary to the public interest and 
incorporates a statement of the finding and its reasons in the rule 
issued.
    Section 553(d) ordinarily requires a 30-day delay in the effective 
date of a final rule from the date of its publication in the Federal 
Register. However, similar to the good cause exception for notice-and-
comment requirements, section 553(d)(3) excepts a rule from the 30-day 
delay requirement if the agency for good cause finds that the delay is 
impracticable, unnecessary, or contrary to the public interest. 
Similarly, the Congressional Review Act (CRA) also allows an agency to 
issue a rule that would otherwise be subject to a 60-day delayed 
effective date requirement with an immediate effective date in 
circumstances where a delay is impractical, unnecessary, or contrary to 
the public interest (5 U.S.C. 808(2)). CMS is forgoing the usual 
notice-and-comment procedures and delay in the effective date for this 
rule because, for the reasons discussed in this section, following such 
requirements would be impracticable and contrary to the public 
interest.
    Recent data on unwinding-related renewals indicates that of the 7.1 
million Medicaid and CHIP beneficiaries whose eligibility was due for 
renewal in July 2023, more than 1.6 million had been disenrolled.\23\ 
The vast majority of these disenrolled individuals (71 percent) were 
disenrolled due to a procedural reason such as failure to return 
paperwork, not because of a determination that the person no longer 
satisfied Medicaid's substantive eligibility criteria. While we are 
unable to determine the proportion of individuals who were procedurally 
disenrolled but continued to meet substantive eligibility criteria, the 
high rate of procedural disenrollments suggests that the options and 
strategies that CMS has been working with States to implement through 
their mitigation plans may not be sufficient to protect the continued 
enrollment of individuals who continue to meet substantive eligibility 
criteria. For this reason, the enforcement authorities established 
under this rule are needed to protect access to Medicaid coverage. Any 
delay in implementing the enforcement tools in this rule would thwart 
CMS's ability to take an array of possible enforcement actions against 
noncompliant States under section 1902(tt) of the Act and could result 
in serious harm to beneficiaries.
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    \23\ Medicaid and CHIP National Summary of Renewal Outcomes--
March Through July 2023 Data; published October 2023; available at 
https://www.medicaid.gov/sites/default/files/2023-10/july-2023-national-summary-renewal-outcomes.pdf.
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    In anticipating the likely impact of unwinding, the Assistant 
Secretary for Planning and Evaluation (ASPE) in HHS estimated that in 
the period between April 1, 2023, and June 1, 2024, 6.8 million people 
will lose Medicaid coverage despite still meeting substantive 
eligibility criteria.\24\ ASPE estimated that 82.7 percent of enrollees 
would be determined eligible, and their eligibility would be renewed, 
while 17.5 percent would be disenrolled. Of those disenrolled, ASPE 
estimated 54 percent would be disenrolled because they were determined 
ineligible, and 45 percent (6.8 million) would be disenrolled for 
procedural reasons despite still meeting substantive eligibility 
criteria. Early unwinding data from May and June 2023 renewals show a 
higher percentage of renewals resulting in disenrollment (nearly 38 
percent in May and just over 25 percent in June) and a significantly 
higher percentage of disenrollments occurring for procedural reasons 
(77 percent in May and 73 percent in June) compared to ASPE's 
estimates. While these early data are limited, if disenrollments 
continue at the June 2023 rates, the number of individuals who lose 
Medicaid coverage for procedural reasons will be much higher than 
ASPE's estimates, and many of those individuals may still meet 
substantive Medicaid eligibility criteria. If CMS is unable to take all 
actions within its authority to enforce Federal redetermination 
requirements, the number of individuals negatively impacted may 
increase.
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    \24\ ASPE (August 19, 2022). Unwinding the Medicaid Continuous 
Enrollment Provision: Projected Enrollment Effects and Policy 
Approaches. (Available at https://aspe.hhs.gov/sites/default/files/documents/404a7572048090ec1259d216f3fd617e/aspe-end-mcaid-continuous-coverage_IB.pdf).
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    Analyses indicate that Medicaid coverage loss could have 
significant detrimental consequences, resulting in forgone medical 
care, including preventive care, that could result in refilling 
prescriptions less often, more emergency department visits, and 
increased morbidity and mortality.<SUP>25 26</SUP> Preventable coverage 
loss could result from States' failure to follow Federal requirements, 
which CMS cannot fully enforce without this rulemaking. Loss of 
coverage by individuals who still meet substantive eligibility 
criteria, which is likely followed by re-enrollment at a later point in 
time, is often referred to as ``churning.'' Because churning can lead 
to deferred or delayed care, it can result in greater health care 
costs; such disruptions in care and medication

[[Page 84726]]

adherence create negative health outcomes that make care more costly 
down the road.\27\
---------------------------------------------------------------------------

    \25\ ASPE (April 11, 2021). Medicaid Churning and Continuity of 
Care. (Available at https://aspe.hhs.gov/reports/medicaid-churning-continuity-care).
    \26\ Abdus, S. (August 2014). Part-year Coverage and Access to 
Care for Nonelderly Adults. (Available at https://journals.lww.com/lww-medicalcare/Fulltext/2014/08000/Part_year_Coverage_and_Access_to_Care_for.6.aspx).
    \27\ Sommers, B.D., Gourevitch, R., Maylone, B., Blendon, R.J., 
Epstein, A.M. (2016). Insurance churning rates for low-income adults 
under health reform: Lower than expected but still harmful for many. 
Health Affairs, 35(10), 1816-1824.
---------------------------------------------------------------------------

    By contrast, continuous enrollment permits individuals to maintain 
a regular source of care, including preventive care and ongoing 
treatment of chronic conditions. A review of the research available on 
continuous enrollment of children found it is related to reductions in 
unmet health care needs, increases in coordination of care, including 
monitoring and regular treatment adjustments as conditions change, and 
greater patient/provider engagement in treatment planning, which can 
lead to better health outcomes.\28\ In fact, a study of health care 
outcomes in States that provided continuous eligibility to children 
prior to the FFCRA's continuous enrollment condition found reductions 
in insurance gaps, lower probability of children being in fair or poor 
health, and, for children with serious health care needs, increased 
access to preventive and specialty care.\29\ This evidence suggests 
that protecting access to coverage leads to better outcomes for 
enrollees. The availability of these enforcement tools is critically 
important to ensure that CMS can act quickly, if needed, to address 
State noncompliance. Delaying CMS' access to the full range of the 
enforcement tools it could employ to require States to follow Federal 
eligibility redetermination requirements and the new reporting 
requirements in section 1902(tt)(1) of the Act, could thus cause actual 
harm to beneficiaries.
---------------------------------------------------------------------------

    \28\ Guevara, J.P., Moon, J., Hines, E.M., Fremont, E., Wong, 
A., Forrest, C.B., Silber, H.H., & Pati, S. (2014). Continuity of 
public insurance coverage: A systematic review of the literature. 
Medical Care Research and Review, 71(2), 115-137.
    \29\ Brantley, E., Ku, L. (2022). Continuous eligibility for 
Medicaid associated with improved child health outcomes. Medical 
Care Research and Review, 79(3), 404-413.
---------------------------------------------------------------------------

    As discussed, State submission of renewal data is critically 
important to our ability to monitor State renewal processes and take 
action when needed to prevent unauthorized disenrollments. CMS must be 
able to use the compliance tools under section 1902(tt) of the Act to 
obtain data from States that will help us to continue to quickly 
identify problems with the redetermination process during the period 
from April 1, 2023, through June 30, 2024, and, if needed, to take 
timely action to require States to fix problems including, if 
appropriate, requiring States to halt procedural disenrollments from 
Medicaid.
    This rule provides critical guidance to help States ensure that 
they are complying with the data reporting requirements under section 
1902(tt)(1) of the Act and that they understand how CAPs and CMPs will 
be administered in the event that a State does not take all actions 
necessary for compliance. For example, the rule provides States with 
certainty regarding how CMS will interpret the requirement to report 
certain data under section 1902(tt)(1) of the Act on a timely basis. A 
delay in the issuance of guidance resulting from the notice-and-comment 
process would forestall States' ability to be compliant with Federal 
requirements that protect beneficiaries.
    CMS sees the enforcement authorities--CAPs, suspensions of 
procedural disenrollments, and CMPs--as tools to promote State 
accountability for compliance with the reporting and redetermination 
requirements, and we recognize that the scope or impact of different 
violations of these requirements may vary. Thus, we believe it is 
important to consider certain mitigating circumstances when determining 
whether to require a State to submit a CAP or to require a suspension 
of procedural disenrollments or impose CMPs. This rule gives States 
additional information about the factors that CMS will weigh in 
deciding whether to require CAPs, to require States to suspend 
procedural disenrollments, or to impose CMPs. CMS needs to be able to 
focus its limited enforcement resources on the most serious 
noncompliance. Without this flexibility, CMS would be required to tie 
up our limited resources on enforcement actions in situations where 
mitigating circumstances would weigh against such action. This could 
seriously inhibit or even prevent CMS from taking truly needed 
enforcement action if a situation were to arise involving serious 
noncompliance causing harm or a substantial risk of harm.
    Recognizing the importance of the guidance in this rule, CMS has 
moved as quickly as possible within existing constraints to complete 
rulemaking. Section 1902(tt) of the Act was enacted via the CAA, 2023, 
on December 29, 2022, took effect 3 months later, on April 1, 2023, and 
applies to a time-limited period, from April 1, 2023, to June 30, 2024, 
that began on the day that the statutory language took effect. In other 
words, the effective date of section 1902(tt) of the Act is the same 
date as the start of the compliance period, and there was only a 3-
month timeframe between the passage of the CAA, 2023 and the effective 
date. Given the short timeframe and the evolving landscape of State 
needs relating to implementation, it was not feasible for CMS to have 
issued a final rule (with or without notice-and-comment) in that 3-
month timeframe, because, as is discussed in more detail below, CMS' 
notice-and-comment rulemaking process ordinarily takes at least 18 
months.
    Moreover, given the evolving landscape of Federal guidance and 
State needs before and after the end of the Medicaid continuous 
enrollment condition, it would not have been feasible for CMS to begin 
the rulemaking process earlier. When the CAA, 2023 was enacted on 
December 29, 2022, CMS was immersed in efforts to support States as 
they prepared operations for the end of the Medicaid continuous 
enrollment condition. This included working with all 56 States 
individually on assessing the need for and implementing temporary 
strategies or plans to ensure State compliance with Federal Medicaid 
redetermination requirements (often referred to as mitigation plans) 
and issuing new guidance and flexibilities to enable States to maximize 
their capacity to maintain the enrollment of eligible beneficiaries at 
renewal during the unwinding of the Medicaid continuous enrollment 
condition.
    Accelerating the rulemaking process was also not a viable option 
for CMS given resource constraints, even if doing so would have been 
feasible. Since enactment of the CAA, 2023, CMS has devoted an 
extraordinary amount of internal resources to the development of 
materials, review of readiness, and availability of technical 
assistance for States as they prepared for and began to return to 
normal eligibility operations following the end of the FFCRA continuous 
enrollment condition. We created a series of new resources designed to 
assist States in protecting the enrollment of eligible individuals as 
they restarted routine Medicaid renewals, met with every State to 
assess its planning for unwinding and compliance with Medicaid renewal 
requirements, and developed new options and strategies through which 
States could address areas of noncompliance and mitigate negative 
impacts on eligible individuals. These efforts did not stop when the 
unwinding process began, and they continue to strain Federal agency 
resources. During roughly the same timeframe, CMS was also engaged in 
an unprecedented amount of work to support States, health care 
providers, and Medicare, Medicaid, and CHIP beneficiaries in the

[[Page 84727]]

transition back to regular operations when numerous access-related 
policies and flexibilities ended on May 11, 2023, when the COVID-19 PHE 
(as declared by the Secretary under section 319 of the Public Health 
Service Act) ended. This included waivers under section 1135 of the Act 
that were in place for the more than 3 years of that COVID-19 PHE.\30\ 
Notwithstanding this unusual, extraordinary workload throughout most of 
2023, CMS has developed and issued this rule as soon as was practicable 
under the circumstances.
---------------------------------------------------------------------------

    \30\ See https://www.cms.gov/files/document/frequently-asked-questions-cms-waivers-flexibilities-and-end-covid-19-public-health-emergency.pdf, and https://www.medicaid.gov/sites/default/files/2023-08/cib050823.pdf.
---------------------------------------------------------------------------

    Had CMS proceeded through notice-and-comment rulemaking, the 
resulting delay would have been significant, thereby increasing the 
risk that beneficiaries would be harmed by losing coverage due to 
States' violation of Federal redetermination requirements. CMS' 
rulemaking cycle from proposed rulemaking to final rule typically takes 
at least 18 months. This includes drafting the proposed rule and 
engaging in a rigorous clearance process that concludes with CMS, HHS, 
and the Office of Information and Regulatory Affairs leadership 
approval. A proposed rule is typically published in the Federal 
Register with a 60-day public comment period, and then CMS must review, 
categorize, and consider the public comments received, which may number 
in the thousands. Then the final rule can be drafted and enter the same 
rigorous clearance process. If this process began immediately upon 
enactment of the CAA, 2023 (December 29, 2022) and extended 18 months, 
when combined with the usual 30- or 60-day delay in effective date 
following publication in the Federal Register, the rule would not have 
taken effect until the beginning of August 2024 at the earliest, 1 
month after the compliance period ended. In the meantime, CMS would 
have been significantly hampered in its efforts to enforce Federal 
redetermination requirements and to enforce the reporting requirements 
that help CMS quickly become aware of possible State violations of 
those redetermination requirements.
    Based on CMS' early and still ongoing work with States and the 
information States have already reported, CMS has already observed 
renewal issues and has been working with States to develop mitigation 
plans to address them. As that work continues and new issues are 
uncovered, it is important for CMS to be able to draw upon the full 
range of its enforcement tools. Additionally, other issues may arise in 
the coming months that could require CMS to take swift action to the 
full extent of its enforcement authority under section 1902(tt) of the 
Act. For example, States might fail to comply with requirements to 
provide appropriate notice informing beneficiaries of the renewal 
process and the steps needed to renew eligibility, may fail to use 
available and reliable information sources to assess beneficiaries' 
eligibility on an ex parte basis, may make a determination of 
ineligibility that is inconsistent with eligibility criteria, or may 
fail to appropriately notify the individual of the eligibility 
determination and the beneficiary's right to a fair hearing. In any of 
these circumstances, a major State violation of requirements could lead 
to a substantial number of beneficiaries being unlawfully disenrolled 
from coverage, creating an immediate need for CMS to require States to 
take corrective action to restore lost benefits to prevent further harm 
to beneficiaries. Although States and CMS have collaboratively worked 
to mitigate these risks in preparing for and implementing the end of 
the Medicaid continuous enrollment condition, if a State in the future 
is unwilling or unable to comply with Federal renewal or reporting 
requirements, CMS will have an urgent need to be able to enforce these 
Federal requirements using the enforcement authority implemented by 
this rule. And waiting to use that enforcement authority until August 
2024 would significantly undermine CMS's ability to prevent more 
immediate harm to beneficiaries.
    In addition, unless the rule is issued without delay, States would 
not have administrative channels to pursue an appeal before any 
judicial review of the actions CMS is authorized to take under section 
1902(tt)(2)(B)(iii) of the Act. Setting forth a clear administrative 
appeals process benefits both States and CMS by providing both parties 
an opportunity to resolve disputes administratively and thus 
potentially avoid the need for additional judicial review, and to 
generate a clear record for any further judicial review in Federal 
court, should it be necessary to resolve the dispute.
    For all the reasons cited previously in this rule and summarized in 
Table 1, which follows, CMS believes good cause exists to exempt this 
rule from the notice-and-comment and delay in effective date 
requirements and is proceeding with this rulemaking on an expedited 
basis, to be effective upon publication.

                           Table 1--Good Cause
------------------------------------------------------------------------
   Title  (regulatory citation)                   Rationale
------------------------------------------------------------------------
Reporting Requirements (Sec.        Notice-and-comment rulemaking for
 435.927).                           Sec.   435.927 is impracticable and
                                     contrary to the public interest for
                                     the following reasons:
                                    <bullet> The timeline for such
                                     rulemaking would extend beyond the
                                     time period during which the
                                     reporting requirements implemented
                                     by Sec.   435.927 are in effect.
                                    <bullet> Any delay in issuing clear
                                     reporting guidance will negatively
                                     impact States' ability to comply
                                     with Federal requirements and will
                                     negatively impact CMS's ability to
                                     monitor States' redetermination
                                     processes.
                                    <bullet> These reporting
                                     requirements will help CMS to
                                     determine whether States are
                                     meeting Federal redetermination
                                     requirements. Unless CMS has this
                                     information promptly, during the
                                     applicable period, CMS will be less
                                     able to take swift enforcement
                                     action to prevent unauthorized
                                     coverage loss (or gaps in coverage)
                                     for eligible individuals. Coverage
                                     loss can lead to forgone care and
                                     adverse health outcomes.
FMAP Reduction (Sec.   435.928)...  Notice-and-comment rulemaking for
                                     Sec.   435.928 is impracticable and
                                     contrary to the public interest for
                                     the following reasons:
                                    <bullet> The timeline for such
                                     rulemaking would extend beyond the
                                     time period (July 1, 2023, through
                                     June 30, 2024) during which State
                                     noncompliance could trigger the
                                     FMAP reduction described in this
                                     section.

[[Page 84728]]

 
                                    <bullet> The FMAP reduction
                                     implemented in Sec.   435.928 is an
                                     important component of the tools
                                     available to ensure that States
                                     comply with the reporting
                                     requirements. Without proper
                                     reporting, CMS may be unable to
                                     effectively monitor States'
                                     compliance with redetermination
                                     requirements during the reporting
                                     period and will be less able to
                                     take swift enforcement action to
                                     prevent unauthorized coverage loss.
                                     This may lead to disenrollment of
                                     eligible individuals (and/or gaps
                                     in their coverage) and result in
                                     adverse health outcomes.
Corrective Action Plans (Sec.       Notice-and-comment rulemaking for
 Sec.   430.5, 430.49(b)).           Sec.   430.49(b) (along with the
                                     definitions at Sec.   430.5 that
                                     are applicable to this provision)
                                     is impracticable and contrary to
                                     the public interest for the
                                     following reasons:
                                    <bullet> The timeline for such
                                     rulemaking would extend beyond the
                                     time period (April 1, 2023, to June
                                     30, 2024) during which State
                                     noncompliance with either the
                                     reporting requirements described at
                                     Sec.   435.927 or Federal renewal
                                     requirements could arise and
                                     thereafter be subjected to the CAPs
                                     implemented in 430.49(b).
                                    <bullet> The CAP provisions
                                     implemented at Sec.   430.49(b) are
                                     an important component of the tools
                                     available to ensure that States
                                     comply with both the reporting
                                     requirements and the Federal
                                     redetermination requirements. A
                                     delay in implementing these
                                     provisions would limit CMS'
                                     authority to quickly minimize
                                     preventable loss of coverage or
                                     gaps in coverage for eligible
                                     individuals when they are
                                     identified, which may result in
                                     forgone care and adverse health
                                     outcomes.
Suspension of Procedural            Notice-and-comment rulemaking for
 Disenrollments and Civil Money      Sec.   430.49(c) (along with the
 Penalties (Sec.  Sec.   430.5,      definitions at Sec.   430.5 that
 430.49(c)).                         are applicable to this provision)
                                     is impracticable and contrary to
                                     the public interest for the
                                     following reasons:
                                    <bullet> The timeline for such
                                     rulemaking would extend beyond the
                                     time period (April 1, 2023, to June
                                     30, 2024) during which State
                                     noncompliance could arise and
                                     thereafter be subjected to the
                                     enforcement actions implemented in
                                     430.49(c).
                                    <bullet> A delay in implementing
                                     this statutory authority would
                                     limit CMS' authority to quickly
                                     minimize preventable loss of
                                     coverage for eligible individuals,
                                     which may result in forgone care
                                     and adverse health outcomes.
Mitigating Circumstances (Sec.      Notice-and-comment rulemaking for
 Sec.   430.5, 430.49(d)).           Sec.   430.49(d) (along with the
                                     definitions at Sec.   430.5 that
                                     are applicable to this provision)
                                     is impracticable and contrary to
                                     the public interest, as it would
                                     prevent CMS from exercising
                                     discretion with respect to the
                                     enforcement authority provided by
                                     section 1902(tt) of the Act,
                                     minimizing its usefulness for
                                     enforcing State compliance. CMS
                                     needs to be able to focus its
                                     limited enforcement resources on
                                     the most serious noncompliance.
                                     Tying up CMS's limited enforcement
                                     resources on enforcement actions in
                                     situations where mitigating
                                     circumstances would weigh against
                                     such action could seriously inhibit
                                     or even prevent CMS from taking
                                     truly needed enforcement action in
                                     situations involving serious
                                     noncompliance causing harm or a
                                     substantial risk of harm.
State Reconsideration and Appeal    Notice-and-comment rulemaking for
 Rights (Sec.   430.3, 430.49(f),    State reconsideration and appeal
 and corresponding amendments to     rights is impracticable and
 45 CFR part 16).                    contrary to the public interest for
                                     the following reasons:
                                    <bullet> The timeline for such
                                     rulemaking would extend beyond the
                                     time period (April 1, 2023, to June
                                     30, 2024) during which State
                                     noncompliance could arise and
                                     thereafter be subjected to the
                                     enforcement actions implemented by
                                     this rule.
                                    <bullet> A delay in establishing
                                     appeal rights would impede States'
                                     ability to seek administrative
                                     resolution to resolve disputes
                                     regarding the enforcement actions
                                     in this rule without necessitating
                                     review in Federal court.
------------------------------------------------------------------------

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), we are required to provide 60-day notice in the Federal Register 
and solicit public comment before a ``collection of information'' 
requirement is submitted to OMB for review and approval. For the 
purpose of the PRA and this section of the preamble, collection of 
information is defined under 5 CFR 1320.3(c) of the PRA's implementing 
regulations.
    To fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA requires that we 
solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of the agency.
    <bullet> The accuracy of the estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of the section 
3506(c)(2)(A)-required issues for the following information collection 
requirements.

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2021 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, the following table presents the BLS' 
mean hourly wage, our estimated cost of fringe benefits and overhead 
(calculated at 100 percent of salary), and our adjusted hourly wage.

                                Table 2--National Occupational and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                              Fringe benefit    Adjusted hourly
          Occupation title             Occupation code    Mean hourly wage      (at 100%)             wage
----------------------------------------------------------------------------------------------------------------
Database Administrators.............            15-1242             $49.29             $49.29             $98.58
General and Operations Manager......            11-1021              59.07              59.07             118.14
Management Analyst..................            13-1111              50.32              50.32             100.64

[[Page 84729]]

 
Project Management Specialists......            13-1082              48.85              48.85              97.70
----------------------------------------------------------------------------------------------------------------

    Wages for State Governments. As indicated, we are adjusting our 
employee hourly wage estimates by a factor of 100 percent to estimate 
the cost of providing fringe benefits. This is necessarily a rough 
adjustment, both because fringe benefits and overhead costs vary 
significantly from employer to employer, and because methods of 
estimating these costs vary widely from study to study. Nonetheless, we 
believe that doubling the hourly wage to estimate the total cost 
including fringe benefits is a reasonably accurate estimation method.
    Cost to State Governments. To estimate State costs, it was 
important to take into account the Federal government's contribution to 
the cost of administering the Medicaid program. The Federal government 
provides Medicaid matching funds at a rate established in statute. All 
State Medicaid programs generally receive a 50 percent Federal matching 
rate for qualifying administrative activities. As noted previously, 
States also receive higher Federal Medicaid matching rates for certain 
activities, such as certain systems design and development, and for 
systems maintenance and operations, so the level of Federal Medicaid 
funding provided to a State can be significantly higher. As such, 
taking into account the Federal contribution to the costs of 
administering the Medicaid program for purposes of estimating State 
burden with respect to collection of information, we elected to use a 
conservative estimate that the States would contribute 50 percent of 
the costs, even though the burden will likely be much smaller.

B. Information Collection Requirements (ICRs)

1. ICRs Related to Reporting Requirements (Sec.  435.927)
    The following changes will be submitted to OMB for approval under 
control number 0938-TBD (CMS-10875). At this time the control number 
has yet to be determined, but it will be assigned by OMB upon their 
approval of this IFC's collection of information request. The public 
can monitor OMB's issuance of the control number (and the control 
number's expiration date) at reginfo.gov.
    Under Sec.  435.927, States are required to submit certain monthly 
data to CMS. The data are already collected by States and reported to 
CMS under existing requirements that are approved by OMB under control 
numbers 0938-1119 (CMS-10371), 0938-0345 (CMS-R-284), 0938-1140 (CMS-
10387), and 0938-1148 (CMS-10398 #64). However, recognizing that some 
States might encounter unusual circumstances that interfere with 
reporting using existing CMS-approved processes, CMS would consider 
approving alternative processes and timelines for States to report 
required data if a State is making a good faith effort to submit the 
required data, as specified in Sec.  435.927(b)(4). For example, CMS 
would consider allowing States experiencing special circumstances to 
submit certain summary data via email rather than via T-MSIS, if T-MSIS 
is the existing process.
    Based on CMS' ongoing work with States to report the required data, 
we estimate that eight States will request that CMS approve an 
alternative process for submitting data under Sec.  435.927(c)(2) 
during the compliance period of April 1, 2023, through June 30, 2024. 
We estimate that for each of the eight States that request and receive 
approval to use an alternative process to submit required data, it will 
take a Project Management Specialist 8 hours at $97.70/hour and a 
Database Administrator 15 hours at $98.58/hour to develop an 
alternative process, reach agreement with CMS, and submit the required 
data, for an aggregate of 184 hours (8 States x 23 hours) and $18,082 
[(($97.70 x 8 hours) + ($98.58 x 15 hours)) x 8 States]. Taking into 
account the 50 percent Federal contribution to Medicaid program 
administration, the estimated State share would be $9,041.
2. ICRs Related to Corrective Action Plans (CAPs) (Sec.  430.49(b))
    The following changes will be submitted to OMB for approval under 
control number 0938-TBD (CMS-10875). At this time the control number 
has yet to be determined, but it will be assigned by OMB upon their 
approval of this IFC's collection of information request. The public 
can monitor OMB's issuance of the control number (and the control 
number's expiration date) at reginfo.gov.
    This rule authorizes CMS to require States to submit a CAP to CMS 
if the State is out of compliance with the reporting requirements in 
section 1902(tt)(1) of the Act or Federal eligibility redetermination 
requirements (including any alternative processes and procedures 
approved by CMS, such as renewal strategies authorized under section 
1902(e)(14)(A))) of the Act during the compliance period between April 
1, 2023 and June 30, 2024.
    Based on CMS' ongoing work with States to unwind from the 
continuous enrollment condition, we estimate that 3 States will be out 
of compliance with data reporting requirements and 5 States will be out 
of compliance with Federal redetermination requirements during the 
compliance period of April 1, 2023, to June 30, 2024. Some States may 
be out of compliance with both sets of requirements and required to 
submit just one CAP addressing both issues, but for purposes of 
estimating State burden, we will assume they are mutually exclusive 
sets of States for a total of 8 States. We will also assume for 
purposes of estimating State burden that CMS will require a CAP from 
all of the 8 noncompliant States (and will not exercise its discretion 
not to require a CAP from any of them). We recognize that, if our 
assumptions are incorrect, the aggregate burden may be less or more 
than estimated here.
    We estimate that for each of the 8 States required to submit a CAP 
to CMS, it will take a Management Analyst 20 hours at $100.64/hour and 
a General and Operations Manager 8 hours at $118.14/hour to write, 
clear, and submit a CAP that includes the criteria at Sec.  
430.49(b)(3) for an aggregate of 224 hours (8 States x 28 hours) and 
$23,663 [(($100.64 x 20 hours) + ($118.14 x 8 hours)) x 8 States]. 
Taking into account the 50 percent Federal contribution to Medicaid 
program administration, the estimated State share would be $11,832.

[[Page 84730]]



                                                                          Table 3--Summary of Proposed Burden Estimates
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                      Total
                                                                           Number of                  Time per   Total    Labor    Total      Total        Total       non-
       Regulation section(s)          OMB  control No. (CMS   Number of    responses   Hourly  labor  response    time     cost    state   beneficiary  beneficiary   labor        Frequency
                                             ID No.)         respondents      per      cost  ($/hr)    (hours)  (hours)    ($)     share      burden      cost ($)     cost
                                                                          respondent                                                ($)      (hours)                   ($)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   435.927.....................  0938-TBD (CMS-10875)..            8           1  varies........        23      184   18,082    9,041          n/a          n/a      n/a  One-Time.
Sec.   430.49(b)...................  0938-TBD (CMS-10875)..            8           1  varies........        28      224   23,663   11,832          n/a          n/a      n/a  One-Time.
                                                            ------------------------------------------------------------------------------------------------------------------------------------
    Total..........................  0938-TBD (CMS-10875)..  ...........  ..........  ..............  ........      408   41,745   20,873          n/a          n/a      n/a  One-Time.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

C. Submission of PRA-Related Comments

    We have submitted a copy of this rule to OMB for its approval of 
the rule's information collection requirements. The requirements are 
not effective until they have been approved by OMB.
    To obtain copies of the supporting statement and any related forms 
for the collections previously discussed in this rule, please visit the 
CMS website at https://www.cms.hhs.gov/PaperworkReductionActof1995, or 
call the Reports Clearance Office at (410) 786-1326.
    If you comment on these information collection requirements, please 
submit your comments electronically as specified in the DATES and 
ADDRESSES sections of this interim final rule.

V. Response to Comments

    Because of the large number of public comments normally received on 
Federal Register documents, the Department is not able to acknowledge 
or respond to them individually. We will consider all comments we 
receive by the date and time specified in the DATES section of this 
preamble, and, if we proceed with a subsequent document, we will 
respond to the comments in the preamble to that document.

VI. Regulatory Impact Analysis

A. Statement of Need

    We have learned through working with States as they unwind from the 
continuous enrollment condition under the FFCRA and return to normal 
operations that States face challenges in processing an unprecedented 
volume of redeterminations. Through routine monitoring and technical 
assistance, CMS is working with States to address and mitigate policy 
and operational barriers to meeting all Federal eligibility and 
enrollment requirements. Congress has given CMS new tools to hold 
States accountable when States fail to meet Federal redetermination 
requirements during the period from April 1, 2023, to June 30, 2024.
    In this rulemaking, we implement State reporting requirements and 
CMS' enforcement authorities under section 1902(tt) of the Act. We 
interpret and implement statutory language and specify parameters 
related to when States will be required to submit certain data. We also 
specify how CMS interprets and will calculate the FMAP reduction 
required under section 1902(tt)(2)(A) of the Act for a State's failure 
to comply with the reporting requirements in section 1902(tt)(1) of the 
Act for a quarter during the period from July 1, 2023, through June 30, 
2024. We also specify parameters related to when States that are 
noncompliant with reporting requirements in section 1902(tt)(1) of the 
Act or with Federal eligibility redetermination requirements must 
submit a CAP, and when they will be required to suspend some or all 
disenrollments of eligibility for procedural reasons, and/or pay CMPs. 
We also specify the conditions under which CMS would lift requirements 
to suspend procedural disenrollments and CMPs as States come into 
compliance with Federal redetermination and reporting requirements via 
submission or implementation of their approved CAPs. Together, the 
changes in this rule will give States clear guidance about how to 
comply with the new reporting requirements and how CMS will take 
enforcement action for failure to comply with these new reporting 
requirements and Federal eligibility redetermination requirements. The 
new enforcement tools in section 1902(tt) of the Act are expected to 
help CMS prevent loss of coverage for eligible beneficiaries.

B. Overall Impact

    We have examined the impacts of this rule as required by E.O. 12866 
on Regulatory Planning and Review (September 30, 1993), E.O. 13563 on 
Improving Regulation and Regulatory Review (January 18, 2011), 
Executive Order 14094 entitled ``Modernizing Regulatory Review'' (April 
6, 2023), the Regulatory Flexibility Act (RFA) (September 19, 1980, 
Pub. L. 96354), section 1102(b) of the Act, section 202 of the Unfunded 
Mandates Reform Act (UMRA) of 1995 (March 22, 1995; Pub. L. 104-4), 
E.O. 13132 on Federalism (August 4, 1999), and the Congressional Review 
Act (CRA) (5 U.S.C. 804(2)). OMB has determined that this rule is non-
major under 5 U.S. Code Sec.  801, and therefore, is not subject to the 
CRA and has also determined that this rule is not significant under 
3(f)(1) of E.O. 12866.
    We have estimated the potential impacts of this rule on Medicaid 
enrollment and expenditures. Overall, the rule's impact is expected to 
be limited. States are already aware of Federal redetermination 
requirements and, as noted in sections I.C. and I.D of this rule, CMS 
provides advice and technical assistance to help States comply with 
these requirements and the new reporting requirements in section 
1902(tt)(1) of the Act. When CMS becomes aware of a potential violation 
of Federal requirements, we first attempt to work collaboratively with 
the State to understand the nature and scope of the problem and to 
identify appropriate alternative processes and procedures that the 
State can adopt to avoid or minimize beneficiary harm until the State 
can fix the problem and come into full compliance with Federal 
requirements, consistent with our authority to enforce compliance with 
section 1902 of the Act under section 1904 of the Act and Sec.  430.35. 
In addition, the new enforcement authorities in this rule are only 
applicable to State activities that occur during a time-limited period, 
generally from April 1, 2023, to June 30, 2024.
    This rule implements new enforcement tools that CMS can use to 
address violations of Federal Medicaid redetermination or reporting 
requirements that occur during a period that generally aligns with 
States' unwinding periods. Beginning with the analysis of 
redetermination requirements, we start with an assumption that in most 
cases redeterminations would be accurate and follow required processes 
and, thus, that the new enforcement tools implemented

[[Page 84731]]

through this rule will not be widely needed. Even though the Federal 
government and States already have processes in place to ensure 
redeterminations are done correctly and States are already required to 
do so, the new enforcement authorities will give CMS additional tools 
to enforce compliance with these requirements. As noted in section I.D. 
and above, CMS attempts to work collaboratively with a State first to 
understand the nature and scope of any potential violation of Federal 
requirements and to identify appropriate alternative processes and 
procedures that the State can adopt to avoid or minimize beneficiary 
harm until the State can fix the problem and come into full compliance 
with Federal requirements. However, notwithstanding those efforts, it 
is possible that a few States might still be noncompliant, thus making 
it necessary for CMS to use the enforcement tools implemented in this 
rule.
    It is possible that in the course of States coming into compliance 
with the requirements enforceable through section 1902(tt) of the Act 
absent this rule, some eligible individuals would remain enrolled who 
might have otherwise been disenrolled for procedural reasons due to a 
State's failure to comply with redetermination requirements. The 
impacts estimated in this section depend on the effectiveness of this 
rule at ensuring that eligibility redeterminations are done correctly, 
as well as the assumptions about how many unauthorized procedural 
disenrollments would have occurred absent this rule.
    In the Mid-Session Review of the President's FY 2024 Budget,\31\ 
CMS projected that Medicaid enrollment would decline by about 18 
million enrollees due to the unwinding of the Medicaid continuous 
enrollment condition through the end of fiscal year 2024 (or about 19 
percent as measured from the peak of Medicaid enrollment in March-April 
2023). This does not include individuals who newly enroll over this 
period.
---------------------------------------------------------------------------

    \31\ https://www.whitehouse.gov/wp-content/uploads/2023/07/msr_fy2024.pdf.
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    To develop the estimates, we started with the following 
assumptions. First, we assumed that a maximum of five States would be 
out of compliance with the Federal redetermination requirements under 
this rule and be subject to CAPs and suspensions of procedural 
disenrollments and/or CMPs if they did not submit or implement an 
approvable CAP. We assumed that all States would take the appropriate 
steps to submit or implement CAPs and, thus, that CMS would require no 
suspensions of procedural disenrollments and impose no CMPs. Second, we 
assumed that States out of compliance with Federal redetermination 
requirements would have about 5 percent more individuals found 
ineligible and that those individuals would still be eligible and would 
have remained enrolled if redeterminations were done accurately. Third, 
we assumed that about 40 percent of enrollees who would have been 
disenrolled would have ultimately re-enrolled within 12 months. We 
assumed that this rule would bring all States into compliance and that 
individuals wrongly disenrolled would be re-enrolled; in future cases, 
this rule would also prevent those incorrect disenrollments from 
occurring. We assume that any such effects would start by early 2024.
    We estimate that the rule would increase Medicaid enrollment by 
about 7,000 individuals in fiscal year 2024 and 13,000 individuals in 
fiscal year 2025 (average annual enrollment). We estimate that total 
Medicaid spending due to increased enrollment would be about $50 
million higher in fiscal year 2024 ($36 million Federal) and about $93 
million higher annually in fiscal year 2025 and subsequent years ($66 
million Federal).
    Actual impacts could be greater than or less than estimated here. 
Future spending and enrollment could grow faster or slower than 
projected. More or fewer States could be out of compliance than we have 
assumed, and the number of unauthorized procedural disenrollments could 
also be higher or lower than we have assumed. This rule could also be 
more or less effective than we expect. Moreover, if one or more States 
did not comply with these requirements, those States could be assessed 
CMPs that would result in a transfer from States to CMS and could lead 
to additional actions.
    This rule also implements a statutory FMAP reduction for 
noncompliance with reporting requirements under section 1902(tt)(1) of 
the Act. States out of compliance with these reporting requirements 
between July 1, 2023, and June 30, 2024, would be assessed a reduction 
in FMAP of 0.25 percentage points for each quarter they are out of 
compliance, and this would increase by 0.25 percentage points for each 
additional quarter they are out of compliance. States that fail to 
comply with reporting requirements may also be required to submit a 
CAP, and if the reporting violations impeded CMS oversight of 
procedural disenrollments, States that fail to submit or implement an 
approvable CAP will be required to suspend procedural disenrollments 
and will also be subject to CMPs. If the reporting violation did not 
impede CMS' oversight of procedural disenrollments, CMS will delay 
suspension of procedural disenrollments for 1 month but will still 
impose CMPs (except in extraordinary circumstances, as discussed in 
section II.E. of this rule). We assume that at most an additional three 
States would be out of compliance with reporting requirements for one 
quarter each. Although States that are noncompliant are at risk of 
additional enforcement action, we estimate that most States will 
correct violations without a CAP or, if a CAP is imposed, will 
implement the CAP to address any violations and not be subject to 
additional enforcement actions. We estimate that the impact of the 
States that are noncompliant with reporting requirements would result 
in a FMAP reduction of $30 million, which would be a transfer from 
those States to the Federal government.
    In total and consistent with the assumptions noted above, the 
estimated net effects of this rule would be Federal costs of about $6 
million in fiscal year 2024 ($36 million in costs for additional 
enrollment, and $30 million in collections from States assessed an FMAP 
reduction) and $66 million in fiscal year 2025. For States, the 
estimated effects are $44 million in costs in fiscal year 2024 ($14 
million in costs for additional enrollment, and $30 million in payments 
related to the FMAP reduction) and $27 million in fiscal year 2025.
    The actual impact could be more or less than we have estimated. The 
key uncertainties are the number of States out of compliance, which 
States those would be (as Federal spending varies significantly across 
States, depending on the Medicaid population and spending levels and 
the FMAP rates for each State), and the number of quarters those States 
are out of compliance. We anticipate that States would quickly remedy 
any issues that would result in an FMAP reduction, and thus would be 
unlikely to be assessed an FMAP reduction in more than one quarter.
    Executive Orders 12866 and 13563 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). Executive 
Order 14094 amends section 3(f) of Executive Order 12866. The amended 
section 3(f) of Executive Order 12866 defines a ``significant

[[Page 84732]]

regulatory action'' as an action that is likely to result in a rule: 
(1) having an annual effect on the economy of $200 million or more in 
any 1 year (adjusted every 3 years by the Administrator of the Office 
of Information and Regulatory Affairs (OIRA) for changes in gross 
domestic product), or adversely affect in a material way the economy, a 
sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, territorial, or 
tribal governments or communities; (2) creating a serious inconsistency 
or otherwise interfering with an action taken or planned by another 
agency; (3) materially altering the budgetary impacts of entitlement 
grants, user fees, or loan programs or the rights and obligations of 
recipients thereof; or (4) raise legal or policy issues for which 
centralized review would meaningfully further the President's 
priorities or the principles set forth in this Executive order, as 
specifically authorized in a timely manner by the Administrator of OIRA 
in each case.
    A regulatory impact analysis (RIA) must be prepared for rules that 
are significant under section 3(f)(1) of Executive Order 12866 as 
amended by Executive Order 14094 ($200 million or more in any 1 year). 
Based on our analysis, OIRA has designated this rule as not significant 
under section 3(f)(1). In reviewing the economic effect of this rule, 
we have assumed that States will generally meet reporting requirements 
and requirements for Medicaid eligibility redeterminations and continue 
to meet the conditions for the temporary FFCRA FMAP increase, and thus 
will not be subject to FMAP reductions, suspensions of procedural 
disenrollments, CMPs, or loss of Federal matching funds that would rise 
to the level of $200 million or more in any one year. While we assume 
that only a handful of States would have failed to comply absent this 
interim final rule, even in those hypothetical cases, we assume States 
will come into compliance promptly and avoid the enforcement actions 
described in this interim final rule, further minimizing the rule's 
economic impact. For example, we assumed States will use existing 
contracts to modify systems to ensure data are reported to CMS timely.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $9.0 million to $47.0 million in any one year. Individuals 
and States are not included in the definition of a small entity. The 
good cause exception of the APA applicable to this rule allows CMS to 
waive the regulatory impact analysis typically required under the RFA.
    In addition, section 1102(b) of the Act requires CMS to prepare an 
RIA 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 a Metropolitan Statistical Area and has fewer than 
100 beds. This rule applies to State Medicaid and CHIP agencies and 
will not add requirements for rural hospitals or other small providers. 
Therefore, we are not preparing an analysis for section 1102(b) of the 
Act because we have determined, and the Secretary certifies, that this 
rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    Section 202 of the UMRA also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose mandates 
require spending in any one year of $100 million in 1995 dollars, 
updated annually for inflation. In 2023, that is approximately $177 
million. We believe that this rule will not mandate spending by State, 
local, or tribal governments nor by private sector entities over this 
level.

C. Administrative Burden

    We do not anticipate this rule will significantly impact 
administrative spending by the Federal Government.

D. Alternatives Considered

    In developing this final rule, the following alternatives were 
considered:
1. Not Finalizing the Rule
    We considered not finalizing this rule and considering the 
provisions of section 1902(tt) of the Act to be self-implementing. 
However, we believe the authority to require State reporting under 
section 1902(tt)(1) of the Act, to impose CAPs on States that fail to 
meet Federal redetermination requirements or the reporting requirements 
under section 1902(tt)(1) of the Act, and to suspend procedural 
disenrollments and impose CMPs on States that fail to submit or 
implement a required CAP, required regulation in order to enable CMS to 
exercise its full statutory enforcement authority fairly and uniformly. 
For example, we believe the mitigating circumstances outlined in this 
rule, which memorialize when and how CMS will exercise its discretion 
to take enforcement action under section 1902(tt)(2)(B) of the Act, 
necessitated regulation.
2. Implementing Section 1902(tt) of the Act Through Subregulatory 
Guidance
    We considered not promulgating a regulation but instead 
implementing section 1902(tt) of the Act through subregulatory 
guidance. However, CMS believes that the policy interpretations in this 
rule are different enough from the statutory language to necessitate 
regulation. For example, while the statute gives CMS discretion 
regarding whether to require a State to submit a CAP and regarding 
whether to require suspension of procedural disenrollments or impose 
CMPs if a State fails to submit or implement that CAP, the rule 
outlines in detail how CMS will exercise this discretion.
3. Promulgating a Proposed Rule
    We considered promulgating a proposed rule rather than an IFC to 
implement these same provisions. However, as outlined in section III. 
of this rule, we believe notice-and-comment procedures and a delay in 
the effective date of this rule are impracticable and/or contrary to 
the public interest.
E. Limitations of the Analysis
    As described previously, we have assumed that all but three States 
would comply with the reporting requirements, and all but five States 
would comply with Federal redetermination requirements referenced in 
this interim final rule and be subject to the CAP requirements at 
430.49(b). It is possible that one or more of these States would fail 
to comply with the CAP requirements, and thus be ineligible for the 
temporary FFCRA FMAP increase, or be subject to the other penalties 
discussed in this rule, including suspension of procedural 
disenrollments and CMPs, and thus that the economic impact of the rule 
would be greater. In those cases, we would also assume more individuals 
would be disenrolled than would occur if the State complied with these 
requirements. We have not attempted to quantify the non-administrative 
program impact (that is, changes in enrollment and/or spending on 
benefits, not the costs associated with training/hiring workers, 
programming systems, or printing notices, for example) of a State 
failing to comply with the CAP requirements in the interim final rule.
    In accordance with the provisions of Executive Order 12866, this 
regulation

[[Page 84733]]

was reviewed by the Office of Management and Budget.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on September 27, 2023.

List of Subjects

42 CFR Part 430

    Administrative practice and procedure, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements.

42 CFR Part 435

    Aid to Families with Dependent Children, Grant programs--health, 
Medicaid, Reporting and recordkeeping requirements, Supplemental 
Security Income (SSI), Wages.

45 CFR Part 16

    Procedures of the Departmental Grants Appeals Board.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services and the Department of Health and Human Services 
amend 42 CFR chapter IV and 45 CFR subtitle A, subchapter A, as set 
forth below:

Title 42

PART 430--GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS

0
1. The authority citation for part 430 continues to read as follows--

    Authority:  Sec. 1102 of the Social Security Act, (42 U.S.C. 
1302).


0
2. Section 430.3 is amended by revising the introductory text and 
adding paragraph (d) to read as follows:


Sec.  430.3   Appeals under Medicaid.

    Four distinct types of disputes may arise under Medicaid.
* * * * *
    (d) Imposition of suspensions of procedural disenrollments and 
civil money penalties under section 430.49 of this part. Disputes that 
pertain to CMS' imposition of suspensions of procedural disenrollments 
and civil money penalties under Sec.  430.49(c) of this part are heard 
by the Board in accordance with procedures set forth in 45 CFR part 16.

0
3. Section 430.5 is amended by adding definitions for ``Federal 
redetermination requirements'' and ``Procedural disenrollment'' in 
alphabetical order to read as follows:


Sec.  430.5   Definitions.

* * * * *
    Federal redetermination requirements means, for the purposes of 
Sec.  430.49, Federal requirements applicable to eligibility 
redeterminations outlined in 42 CFR 435.916, including renewal 
strategies authorized under section 1902(e)(14)(A) of the Social 
Security Act or other alternative processes and procedures approved by 
CMS under section 1902(e)(14)(A) of the Act or section 6008(f)(2)(A) of 
the Families First Coronavirus Response Act.
    Procedural disenrollment means, for the purposes of Sec.  430.49 
and 45 CFR part 16, a termination of a beneficiary's Medicaid 
eligibility after advance notice under subpart E of part 431 for 
reasons that are unrelated to a State's determination of whether the 
individual meets eligibility criteria to qualify for coverage, 
including for failure to return a renewal form or documentation needed 
by the State to make a determination of eligibility.
* * * * *

0
4. Section 430.49 is added to subpart C to read as follows:


Sec.  430.49   Corrective action plans, suspensions of procedural 
disenrollments, and civil money penalties.

    (a) Statutory basis. This section interprets and implements section 
1902(tt)(2)(B) of the Social Security Act.
    (b) Corrective action plans--(1) Basis for corrective action. After 
consideration of any mitigating circumstances in accordance with 
paragraph (d) of this section and notwithstanding whether an FMAP 
reduction has been imposed under Sec.  435.928 of this subchapter, CMS 
will determine whether to require the State to submit a corrective 
action plan if CMS finds that the State is not in compliance during the 
period beginning on April 1, 2023, through June 30, 2024, with either 
of the following requirements:
    (i) The requirement to submit data required under section 
1902(tt)(1) of the Act in accordance with Sec.  435.927 of this 
subchapter; or
    (ii) Federal redetermination requirements described at Sec.  430.5.
    (2) Notice of need for corrective action plan. If, after 
considering mitigating circumstances as described in paragraph (d) of 
this section, the Administrator decides to require the State to submit 
and implement a corrective action plan for noncompliance described in 
paragraph (b)(1) of this section or to revise or resubmit such a plan, 
the Administrator will provide the State with a written notice 
directing the State to submit a corrective action plan to correct the 
identified areas of noncompliance. Such notice will--
    (i) Explain the violation of Federal redetermination or reporting 
requirements that CMS has identified and the basis for CMS' finding;
    (ii) Inform the State of the requirement to submit and implement a 
corrective action plan:
    (iii) Include instructions on the method and deadline by which the 
State must submit a corrective action plan to CMS; and
    (iv) Explain the enforcement actions that CMS may pursue if the 
State fails to submit or implement an approved corrective action plan, 
including if CMS disapproves the State's submitted CAP or if the State 
fails to meet the requirements set forth in the approved CAP, in 
accordance with this section.
    (3) Content of corrective action plan. A corrective action plan 
must describe in detail--
    (i) The actions the State will take immediately, if needed to 
prevent further harm or risk of harm to beneficiaries while it 
implements the corrective action plan, including to prevent increased 
burden for beneficiaries in completing the renewal process, loss of 
coverage at renewal for individuals who continue to meet the 
substantive eligibility criteria and whose eligibility should otherwise 
be retained but for failure to meet a procedural requirement, and 
delays in access to coverage or care;
    (ii) The steps the State will take to ensure compliance with 
Federal requirements, including but not limited to new policies, 
procedures, operational processes or systems changes it will implement;
    (iii) Key milestones and a detailed timeline for achieving 
compliance; and
    (iv) A plan for communicating the steps the State will take to 
prevent actual harm or risk of harm to beneficiaries and to ensure 
compliance with Federal requirements per paragraphs (b)(3)(i) and (ii) 
of this section to State staff, including staff of non-Medicaid 
agencies or entities to which the agency has delegated authority to 
conduct redeterminations of eligibility in accordance with Sec.  
431.10(c)(1)(i) of this subchapter; CMS; and beneficiaries, as 
applicable.
    (4) Timeframes for submission, approval, and implementation of 
corrective action plan--(i) Submission. A State that receives a notice 
described in paragraph (b)(2) of this section must submit a corrective 
action plan, including the elements in paragraph (b)(3) of this 
section, not later than 14 calendar days from the date of the notice of 
noncompliance.
    (ii) Approval. CMS must approve or disapprove a corrective action 
plan submitted by the State within 21 calendar days of the date it is 
submitted.

[[Page 84734]]

If CMS does not approve or disapprove the corrective action plan within 
21 calendar days of submission, the corrective action plan will be 
deemed approved.
    (iii) Implementation. A State must begin implementation of the 
corrective action plan not later than 14 calendar days after the date 
that either the State receives CMS approval, or the corrective action 
plan is deemed approved.
    (5) Approval or disapproval of corrective action plan. A corrective 
action plan will be approved if CMS determines that the plan-
    (i) Meets the requirements at paragraph (b)(3) of this section;
    (ii) Promptly eliminates or minimizes any harm or risk of harm to 
beneficiaries, including increased burden for beneficiaries in 
completing the renewal process, loss of coverage at renewal for 
individuals who continue to meet the substantive eligibility criteria 
and whose eligibility should otherwise be retained but for failure to 
meet a procedural requirement, and delays in access to coverage or care 
due to the noncompliance to be addressed by the plan; and
    (iii) Results in the State achieving compliance in a reasonable 
time, taking into account systems challenges and circumstances faced by 
the agencies involved.
    (c) Suspensions of procedural disenrollments and civil money 
penalties. (1) After considering any applicable mitigating 
circumstances in accordance with paragraph (d) of this section and 
notwithstanding whether the State is subject to an FMAP reduction under 
Sec.  435.928 of this subchapter, CMS may take one or both of the 
following actions if the State fails to submit or implement an approved 
corrective action plan, including if CMS disapproves the State's 
submitted corrective action plan due to the State's failure to include 
required elements in accordance with the requirements described in 
paragraph (b) of this section, or if the State fails to meet the 
requirements set forth in the approved corrective action plan:
    (i) Require the State to suspend some or all procedural 
disenrollments, in accordance with paragraph (c)(3)(i) of this section; 
and
    (ii) Impose civil money penalties in accordance with paragraph 
(c)(3)(ii) of this section.
    (2) Notice. (i) Prior to requiring the State to suspend procedural 
disenrollments of Medicaid eligibility or imposing civil money 
penalties, CMS will issue a notice to the State. Such notice will 
include--
    (A) A description of the enforcement action(s) CMS is taking and 
the basis for such action(s);
    (B) Whether CMS is requiring the State to suspend some or all 
procedural disenrollments and, in the case of a partial suspension, the 
affected populations;
    (C) The date on which the State must begin suspending procedural 
disenrollments, if applicable;
    (D) The daily amount owed for any civil money penalties imposed, 
the date the penalties will begin to be charged, the timeline for 
payment (including information on how the timeline for payment would be 
affected by an appeal), and instructions on how to submit payment;
    (E) The steps the State must take to cure its noncompliance and for 
CMS to lift the enforcement action(s); and
    (F) Information on the State's appeal rights as described in 
paragraph (f) of this section, including the deadline to submit an 
appeal request, and the effect of requesting an appeal on the 
applicability of any enforcement actions pending the decision in such 
appeal. The notice must also provide that the decision outlined in the 
notice is final unless it is timely appealed as described in paragraph 
(f) of this section.
    (ii) CMS may issue additional notices requiring a State to take 
additional actions (including paying increased civil money penalties or 
implementing or broadening the scope of a required suspension of 
procedural disenrollments) if CMS identifies additional violations of 
corrective action plan provisions. Such notices will meet the 
requirements outlined in paragraph (c)(2)(i) of this section.
    (3) Scope of actions--(i) Suspensions of procedural disenrollments. 
(A) If the noncompliance determined by CMS under paragraph (b)(1) of 
this section impacts a substantial number of (meaning all or nearly 
all) individuals who are or should have been found eligible for 
Medicaid, CMS will require the State to suspend all procedural 
disenrollments.
    (B) If the impact of the noncompliance is limited (for example, to 
a specific population or geographic area), CMS may limit the suspension 
of procedural disenrollments to the impacted population(s). After 
requiring a limited suspension of procedural disenrollments, CMS may 
later opt to require the State to suspend all procedural disenrollments 
if CMS subsequently determines that the impact of the noncompliance is 
greater than was initially determined, or if the State fails to comply 
with the initial requirement to suspend some procedural disenrollments 
in accordance with the notice issued under paragraph (c)(2) of this 
section. In these circumstances, CMS will issue a subsequent notice 
under paragraph (c)(2).
    (ii) Civil money penalties. CMS may require the State to pay a 
civil money penalty of not more than $100,000, as adjusted annually 
under 45 CFR part 102, for each day that the State has not submitted or 
implemented an approved corrective action plan in accordance with the 
requirements described in paragraph (b) of this section or has failed 
to meet the requirements of the approved plan, until the penalty is 
lifted due to the State meeting the conditions described in paragraph 
(e) of this section.
    (A) Civil money penalties will start accruing five (5) calendar 
days after the date of the initial notice described in paragraph (c)(2) 
of this section and become payable 60 calendar days after the date of 
the notice, if not timely appealed, or 60 calendar days after issuance 
of a final determination at the conclusion of any appeal pursuant to 
paragraph (f) of this section.
    (B) The amount of any applicable civil money penalties for failure 
to submit or implement a corrective action plan, including if CMS 
disapproves the State's submitted corrective action plan or if the 
State fails to meet the requirements set forth in the approved 
corrective action plan, will be determined according to the following 
formula, after the date specified in paragraph (c)(3)(ii)(A) of this 
section: Days 1-30 of noncompliance: $25,000/day; Days 31-60 of 
noncompliance: $50,000/day; and Days 61 or more of noncompliance until 
lifted in accordance with paragraph (e) of this section: $100,000/day. 
Each of these amounts is adjusted annually under 45 CFR part 102.
    (C) Consistent with paragraph (c)(2)(ii) of this section, if CMS 
identifies additional violations of corrective action plan provisions, 
CMS may issue additional notices to increase civil money penalties more 
quickly than provided for by the formula in paragraph (c)(3)(ii)(B) of 
this section.
    (4) Noncompliance with requirements to suspend procedural 
disenrollments or pay civil money penalties. If the State fails to 
suspend procedural disenrollments as required pursuant to a notice 
described in paragraph (c)(2) of this section, or to pay civil money 
penalties as specified in that notice, or both, CMS may issue an 
additional notice pursuant to paragraph (c)(2) of this section to 
increase the civil money penalties to the maximum allowable

[[Page 84735]]

daily amount, if not already reached, or may pursue additional 
enforcement action under section 1904 of the Act and Sec.  430.35 of 
this subpart, including withholding some or all Federal financial 
participation.
    (d) Mitigating circumstances. CMS will consider the following 
mitigating circumstances when deciding whether to take the following 
enforcement actions:
    (1) Requirement to submit corrective action plan for violation of 
redetermination requirements. In the case of noncompliance relating to 
a violation of Federal redetermination requirements, CMS may delay 
requiring, or determine not to require, a State to submit a corrective 
action plan under paragraph (b) of this section if--
    (i) The noncompliance caused neither actual harm nor a substantial 
risk of harm to beneficiaries, including increased burden for 
beneficiaries in completing the renewal process, loss of coverage at 
renewal for individuals who continue to meet the substantive 
eligibility criteria and whose eligibility should otherwise be retained 
but for failure to meet a procedural requirement, and delays in access 
to coverage or care to beneficiaries; or
    (ii) CMS determines that there is an emergency or other 
extraordinary circumstances preventing the State's compliance.
    (2) Requirement to submit corrective action plan for violation of 
reporting requirements. In the case of noncompliance relating to a 
violation of the reporting requirements under Sec.  435.927 of this 
subchapter, CMS may delay requiring, or determine not to require, a 
State to submit a corrective action plan under paragraph (b) of this 
section if--
    (i) CMS has determined that the State implementing a corrective 
action plan is not necessary to ensure that the noncompliance is 
remedied; or
    (ii) CMS determines that there is an emergency or other 
extraordinary circumstances preventing the State's compliance.
    (3) Suspensions of procedural disenrollments and imposition of 
civil money penalties. (i) In the case of a State that has failed to 
submit or implement an approved corrective action plan relating to a 
violation of either the reporting requirements under Sec.  435.927 of 
this subchapter or Federal redetermination requirements, CMS may delay 
or forgo imposing civil money penalties if CMS determines that the 
State faces an emergency or other extraordinary circumstances that--
    (A) Occurred after the violation resulting in CMS' requirement of a 
CAP for noncompliance with Federal redetermination requirements or 
reporting requirements under Sec.  435.927; and
    (B) Has significantly impeded the State's ability to submit or 
implement a corrective action plan.
    (ii) In the case of a State's failure to submit or implement a 
corrective action plan relating to a violation of the reporting 
requirements under Sec.  435.927 of this subchapter in which the 
underlying reporting violation does not impede CMS' oversight of the 
State's procedural disenrollments, CMS will:
    (A) Delay suspension of procedural disenrollments for 1 month; and
    (B) Impose civil money penalties, except in cases where there are 
also extraordinary circumstances as described in paragraph (d)(3)(i) of 
this section.
    (e) Lifting of enforcement actions. (1) In cases where CMS had sent 
a State a notice under paragraph (c)(2) of this section for failure to 
submit or implement an approved corrective action plan--
    (i) The State will be required to continue any suspension of 
procedural disenrollments required pursuant to such notice, and any 
civil money penalties imposed in accordance with the terms of such 
notice will continue to be charged, until--
    (A) For a State that failed to submit a corrective action plan, the 
State submits a corrective action plan that CMS determines is 
approvable consistent with paragraph (b)(5) of this section.
    (B) For a State that failed to implement an approved corrective 
action plan, the State has implemented or resumed implementation of 
such plan.
    (ii) CMS will continue the accrual of civil money penalties from 
the date specified in the original notice provided to the State under 
paragraph (c)(2) of this section until CMS determines whether the plan 
is approvable. If CMS determines that the plan is approvable, CMS will 
retroactively end the accrual of the civil money penalties on the day 
the CAP was submitted and cease charging civil money penalties 
prospectively. If CMS determines that the plan is not approvable, CMS 
will continue charging civil money penalties imposed under the terms of 
the enforcement notice without interruption until the State submits an 
approvable plan.
    (2) Where a State has met the conditions under paragraph (e)(1)(i) 
of this section, CMS will notify the State that the enforcement actions 
are being lifted. For States that were required to suspend procedural 
disenrollments, such notice will include the date on which the State 
may resume such disenrollments. For States that were subject to civil 
money penalties, such notice will include the date on which such civil 
money penalties stopped accruing, the total number of days for which 
civil money penalties accrued and the amount(s) of such civil money 
penalties, and the total amount of civil money penalties owed.
    (f) Administrative review--(1) Appeal to the Departmental Appeals 
Board. A State that is dissatisfied with CMS's determination under 
paragraph (c) of this section that the State must suspend procedural 
disenrollments or pay civil money penalties because the State has 
failed to submit or implement an approvable corrective action plan may 
appeal, pursuant to 45 CFR part 16, the imposition of such suspensions 
of procedural disenrollments or civil money penalties to the 
Departmental Appeals Board (the Board) within 30 days after receipt of 
a notice described in paragraph (c)(2) of this section. The appeal 
request must comply with 45 CFR 16.7, and the process for counting days 
to submit an appeal will follow the provisions under 45 CFR 16.19. The 
appeals process is governed by 45 CFR part 16. If the State does not 
submit an appeal request within the 30-day timeframe provided for an 
appeal to the Board, then the decision described in the notice received 
by the State under paragraph (c)(2) of this section is the final 
decision of the Secretary and is final agency action within the meaning 
of 5 U.S.C. 704.
    (2) Reconsiderations by the Administrator. (i) If any party to the 
appeal is dissatisfied with the Board's decision under paragraph (f)(1) 
of this section, it may seek the Administrator's reconsideration of 
that decision within 15 calendar days of receiving notice of the 
decision pursuant to 45 CFR 16.21.
    (A) The request for reconsideration must be filed with the 
Administrator and must include a copy of the Board's decision, a brief 
statement of why the party believes the decision was wrong, and a 
statement of the amount of any civil money penalties in dispute.
    (B) The party requesting reconsideration must send a copy of the 
request described in paragraph (f)(2)(i)(A) of this section to all 
other parties to the appeal and other participants in the appeal (as 
described in 45 CFR 16.16) at the same time that the request is filed 
with the Administrator.
    (C) Any other party to the appeal, or other participant in the 
appeal, may respond to the request for reconsideration in writing and 
file their

[[Page 84736]]

response with the Administrator within 15 calendar days of the date the 
request for reconsideration is filed with the Administrator.
    (D) The Administrator will review the Board's decision and any 
additional information submitted by the parties and other participants 
under paragraphs (f)(2)(i)(A) or (C) of this section and, within 60 
calendar days after the Board issues notice of its decision under 45 
CFR 16.21, will either affirm the Board's decision or issue a new 
decision.
    (ii) Within the 60-day period that is described in paragraph 
(f)(2)(i)(D) of this section, the Administrator may also modify or 
reverse the Board's decision even if no party to the appeal has 
requested reconsideration of that decision.
    (iii) If no request for reconsideration is filed under paragraph 
(f)(2)(i) of this section and the Administrator does not modify or 
reverse the Board's decision within the 60-day period described in 
paragraph (f)(2)(ii) of this section, then the decision of the Board is 
the final determination of the Secretary and is final agency action, as 
described in paragraph (f)(2)(v) of this section, and the Administrator 
will provide notice to all parties and other participants of such 
decision as described in paragraph (f)(2)(iv) of this section.
    (iv) The Administrator will provide a notice to all parties and 
other participants of the final decision together with a notice 
indicating that this is the final determination of the Secretary and is 
final agency action, as described in paragraph (f)(2)(v) of this 
section.
    (v) The determination of the Administrator pursuant to paragraph 
(f)(2)(i)(D) or (f)(2)(ii) of this section is the final determination 
of the Secretary and is final agency action within the meaning of 5 
U.S.C. 704.
    (g) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further State action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.

PART 435--ELIGIBILITY IN THE STATES, DISTRICT OF COLUMBIA, THE 
NORTHERN MARIANA ISLANDS, AND AMERICAN SAMOA

0
5. The authority citation for part 435 continues to read as follows--

    Authority:  42 U.S.C. 1302.


0
6. Sections 435.927 and 435.928 are added to subpart J to read as 
follows:


Sec.  435.927   Requirements for States to submit certain data on 
redeterminations.

    (a) Basis. This section implements section 1902(tt)(1) of the 
Social Security Act.
    (b) Definitions. As used in this section--
    (1) Timely means the following:
    (i) Data submitted according to an existing process governed by CMS 
regulation or guidance (other than data submitted through the 
Transformed Medicaid Statistical Information System (T-MSIS)) are 
timely if they are reported by the deadline specified in the applicable 
CMS regulation or guidance.
    (ii) Data submitted under the existing process for the T-MSIS are 
timely if they are submitted on a monthly basis, before the last day of 
the subsequent month.
    (iii) Data that States submit according to an alternative process 
approved by CMS or an alternative timeline approved by CMS under the 
circumstances specified in paragraph (b)(4) of this section are timely 
if they are submitted on the deadline CMS specifies when it approves 
the alternative process or timeline.
    (2) Complete means that all required elements are reported.
    (3) Sufficient quality means the following:
    (i) For data submitted according to an existing process governed by 
CMS regulation or guidance, the data adhere to specifications outlined 
in the applicable CMS regulation or guidance.
    (ii) For data submitted according to an alternative process 
approved by CMS under the circumstances specified in paragraph (b)(4) 
of this section, the data adheres to the specifications approved by CMS 
when it approves the alternative process.
    (4) Good faith effort means that--
    (i) The State is experiencing significant, unforeseeable, or 
unavoidable challenges in complying with the reporting requirements of 
paragraph (c) of this section, or is experiencing significant 
foreseeable challenges in complying and is working to remediate these 
challenges but needs additional time to address them;
    (ii) The State requested, and CMS approved an alternative process 
for submitting the data or an alternative timeline; and
    (iii) The approved alternative process for submitting the data or 
timeline is sufficient to ensure CMS can obtain and use the data to 
meet CMS' obligations to report the data publicly per section 
1902(tt)(1) of the Act.
    (c) Reporting requirement. For data representing activities 
conducted by a State during the time period beginning April 1, 2023, 
and ending June 30, 2024, each State must submit to CMS the data 
described in paragraph (d) of this section, and those data must be 
timely, complete, and of sufficient quality (as those terms are defined 
in paragraph (b) of this section). To meet this requirement, a State 
must:
    (1) Submit data via existing CMS-approved processes; or
    (2) Submit data through alternative processes approved by CMS, 
under the circumstances specified in paragraph (b)(4) of this section.
    (d) Required data elements. States must submit the following data 
to CMS in accordance with paragraph (c) of this section:
    (1) Total number of Medicaid and Children's Health Insurance 
Program (CHIP) beneficiaries for whom a renewal was initiated.
    (2) Total number of Medicaid and CHIP beneficiaries whose Medicaid 
or CHIP coverage is renewed.
    (3) Of the Medicaid and CHIP beneficiaries whose Medicaid or CHIP 
coverage is renewed, the total number whose coverage is renewed on an 
ex parte basis.
    (4) Total number of individuals whose coverage for Medicaid or CHIP 
was terminated.
    (5) Total number of individuals whose coverage for Medicaid or CHIP 
was terminated for procedural reasons.
    (6) Total number of beneficiaries who were enrolled in a separate 
CHIP.
    (7) For each State call center, total call center volume.
    (8) For each State call center, average wait times.
    (9) For each State call center, average abandonment rate.
    (10) For States with State-based Exchanges (SBEs) using a Non-
Integrated Eligibility System and not using the Federal Exchange 
eligibility and enrollment platform:
    (i) Total number of individuals whose accounts are received by the 
SBE or Basic Health Program (BHP) due to a Medicaid/CHIP 
redetermination.
    (ii) Total number of individuals who apply for coverage due to a 
Medicaid/CHIP redetermination who are determined eligible for a QHP or 
a BHP.
    (iii) Total number of individuals who apply for coverage due to a 
Medicaid/CHIP redetermination who are determined eligible for a QHP or 
a BHP, and who make a QHP plan selection or are enrolled in a BHP.
    (11) For States with SBEs with an Integrated Eligibility System and 
not using the Federal Exchange eligibility and enrollment platform:
    (i) Total number of individuals who apply for coverage due to a 
Medicaid/

[[Page 84737]]

CHIP redetermination who are determined eligible for a QHP or a BHP.
    (ii) Total number of individuals who apply for coverage due to a 
Medicaid/CHIP redetermination who are determined eligible for a QHP or 
BHP, and who make a QHP plan selection or are enrolled in a BHP.
    (e) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further State action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.


Sec.  435.928   Reduction in FMAP for failure to submit certain data.

    (a) Basis. This section implements section 1902(tt)(2)(A) of the 
Social Security Act.
    (b) Application of the FMAP reduction. (1) FMAP means the State-
specific Federal medical assistance percentage as defined in the first 
sentence of section 1905(b) of the Act.
    (2) If CMS finds that, for a fiscal quarter in the period beginning 
on July 1, 2023, and ending on June 30, 2024, the State was 
noncompliant with the requirements of Sec.  435.927, CMS will reduce 
the State's Federal medical assistance percentage (FMAP) for that 
fiscal quarter as described in paragraph (b)(4) of this section.
    (3) A State is noncompliant in a fiscal quarter if it has failed to 
comply with the reporting requirements described in Sec.  435.927 for 
one or more months of the quarter.
    (4) The FMAP reduction under paragraph (b)(2) of this section will 
equal the product of 0.25 percentage points and the number of the 
fiscal quarters during the period from July 1, 2023, through June 30, 
2024, in which the State is noncompliant with the reporting 
requirements described in Sec.  435.927. When States are noncompliant 
in multiple quarters during that period, the FMAP reduction will 
increase by 0.25 percentage points for each successive quarter of 
noncompliance, even if nonconsecutive, but in no case will the 
reduction for any single quarter exceed 1 percentage point.
    (c) Severability. Any provision of this section held to be invalid 
or unenforceable by its terms, or as applied to any person or 
circumstance, or stayed pending further State action, shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated 
or to dissimilar circumstances.

Title 45

PART 16--PROCEDURES OF THE DEPARTMENTAL GRANT APPEALS BOARD

0
7. The authority for part 16 continues to read as follows:

    Authority:  5 U.S.C. 301 and secs. 1, 5, 6, and 7 of 
Reorganization Plan No. 1 of 1953, 18 FR 2053, 67 Stat. 631 and 
authorities cited in the Appendix.


0
8. Section 16.22 is amended by revising paragraphs (b)(3) and (4) and 
adding paragraph (b)(5) to read as follows:


Sec.  16.22   The effect of an appeal.

* * * * *
    (b) * * *
    (3) In programs listed in appendix A, B.(a)(1), to this part 
implement a decision to disallow Federal financial participation 
claimed in expenditures reported on a statement of expenditures, by 
recovering, withholding or offsetting payments, if the decision is 
issued before the reported expenditures are included in the calculation 
of a subsequent grant;
    (4) Take other action to recover, withhold, or offset funds if 
specifically authorized by statute or regulation; or
    (5) Take action to require a State to suspend procedural 
disenrollments, as defined at 42 CFR 430.5, or continue the accrual of 
the civil money penalties a State owes under 42 CFR 430.49(c).

0
9. Appendix A of part 16 is amended in section B by adding paragraph 
(a)(7) to read as follows:

Appendix A to Part 16--What Disputes the Board Reviews

* * * * *
    B. * * *
    (a) * * *
    (7) Decisions relating to suspensions of procedural 
disenrollments and civil money penalties under 42 CFR 430.49(c).
* * * * *

Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2023-26640 Filed 12-4-23; 4:15 pm]
BILLING CODE 4120-01-P


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