Friday, 

April 30, 2010 

Part III 

Department of 

Health and Human 

Services 

Centers for Medicare & Medicaid Services 

42 CFR Part 440 

Medicaid Program; State Flexibility for 

Medicaid Benefit Packages; Final Rule 


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23068 Federal Register / Vol. 75, No. 83 / Friday, April 30, 2010 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Part 440 

[CMS–2232–F4] 

RIN 0938–AP72 

Medicaid Program; State Flexibility for 

Medicaid Benefit Packages 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This rule revises the final rule 

published on December 3, 2008 to 

implement provisions of section 6044 of 

the Deficit Reduction Act of 2005, 

which amends the Social Security Act 

by adding a new section 1937 related to 

the coverage of medical assistance 

under approved State plans. That rule 

provides States increased flexibility 

under an approved State plan to define 

the scope of covered medical assistance 

by offering coverage of benchmark or 

benchmark-equivalent benefit packages 

to certain Medicaid-eligible individuals. 

In addition, this final rule responds to 

public comments on the February 22, 

2008 proposed rule and comments 

received in response to rules published 

subsequently that delayed the effective 

date of the December 3, 2008 final rule 

until July 1, 2010. 

DATES: Effective Date: These regulations 

are effective on July 1, 2010. 

FOR FURTHER INFORMATION CONTACT: Fran 

Crystal, (410) 786–1195. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Regulatory History 

On December 3, 2008, we published 

a final rule in the Federal Register 

entitled ‘‘Medicaid Program; State 

Flexibility for Medicaid Benefit 

Packages’’ (73 FR 73694), hereafter 

referred to as the December 3, 2008 rule. 

The December 2008 rule was to 

implement provisions of section 6044 of 

the Deficit Reduction Act (DRA) of 

2005, (Pub. L. 109–171), enacted on 

February 8, 2006, which amends the 

Social Security Act (the Act) by adding 

a new section 1937 related to the 

coverage of medical assistance under 

approved State plans. 

Subsequent to the publication of the 

December 3, 2008 rule, and in 

accordance with the memorandum of 

January 20, 2009 from the Assistant to 

the President and the Chief of Staff, 

entitled ‘‘Regulatory Review,’’ we 

published an interim final rule with 

comment period (74 FR 5808) on 

February 2, 2009 in the Federal Register 

to temporarily delay for 60 days the 

effective date of the December 3, 2008 

rule entitled, ‘‘Medicaid Program; State 

Flexibility for Medicaid Benefit 

Packages.’’ The February 2, 2009 interim 

final rule also reopened the comment 

period on the policies set out in the 

December 3, 2008 rule. We received 

nine timely items of correspondence in 

response to the February 2, 2009 interim 

final rule. 

On April 3, 2009, we published a 

second interim final rule (74 FR 15221) 

in the Federal Register effectively 

delaying implementation of the 

December 3, 2008 rule until December 

31, 2009. The second interim final rule 

was published in order to allow time to 

incorporate provisions of the Children’s 

Health Insurance Program 

Reauthorization Act (CHIPRA) of 2009 

(Pub. L. 111–3) enacted on February 4, 

2009, which corrected language in the 

DRA as if these amendments were 

included in the DRA, and subsequently 

amended section 1937 of the Act ‘‘State 

Flexibility for Medicaid Benefit 

Packages’’. This delay also allowed for 

sufficient time to fully consider all of 

the public comments received on this 

regulation. In response to the April 3, 

2009 interim final rule with a 30-day 

comment period, we received seven 

timely items of correspondence. 

Upon further review and 

consideration of the new provisions of 

the American Recovery and 

Reinvestment Act (ARRA) of 2009 (Pub. 

L. 111–5), enacted on February 17, 

2009), CHIPRA, and the public 

comments received during the reopened 

comment period, we believed it 

necessary to revise a substantial portion 

of the December 3, 2008 rule. Therefore, 

on October 30, 2009, we published a 

proposed rule in the Federal Register 

(74 FR 56151) to solicit public 

comments on further delaying the 

effective date of the December 3, 2008 

rule until July 1, 2010. We proposed to 

further delay the effective date of the 

December 3, 2008 rule from December 

31, 2009 to July 1, 2010 to allow us 

sufficient time to revise a substantial 

portion of the final rule based on our 

review and consideration of the new 

provisions of CHIPRA, ARRA, and the 

public comments received during the 

reopened comment periods. To allow 

time to make these revisions, the 

Department determined that several 

more months were needed to fully 

consider necessary changes to the rule. 

In the proposed rule, we noted that 

the comments received during the 

reopened comment periods were 

complex and presented numerous 

policy issues which require extensive 

consultation, review and analysis. 

Additionally, because both CHIPRA and 

ARRA contain provisions that impact 

the American Indian and Alaska Native 

community, we stated that the 

development of the final rule required 

collaboration with other HHS agencies 

and the Tribal governments. We 

believed that this time period would 

allow sufficient time to further consider 

public comments, analyze the impact of 

the revisions on affected stakeholders, 

and develop appropriate revisions to the 

regulation. 

We received one timely item of 

correspondence in response to the 

October 30, 2009 proposed rule. The 

comment did not directly address our 

proposal to delay the effective date of 

the December 3, 2008 rule until July 1, 

2010. The comment was limited to the 

exemption of the benchmark and benchmark equivalent packages from the 

assurance of transportation 

requirements. Because the comment was 

outside the scope of the proposed rule 

on the delay of the effective date of the 

December 3, 2008 rule, but instead 

addresses the issue of revisions that are 

needed to comply with statutory 

changes, we have addressed the 

comment in the revisions to the final 

rule. 

On November 30, 2009, we published 

a final rule in the Federal Register (74 

FR 62501) delaying the effective date of 

the December 3, 2008 final rule until 

July 1, 2010. 

B. General Provisions 

Under title XIX of the Act, the 

Secretary is authorized to provide funds 

to assist States in furnishing medical 

assistance to needy individuals, whose 

income and resources are insufficient to 

meet the costs of necessary medical 

services, including families with 

dependent children and individuals 

who are aged, blind, or disabled. To be 

eligible for funds under this program, 

States must submit a State plan, which 

must be approved by the Secretary. 

Programs under title XIX are jointly 

financed by Federal and State 

governments. Within broad Federal 

guidelines, each State determines the 

design of its program, eligible groups, 

benefit packages, payment levels for 

coverage and administrative and 

operating procedures. 

Before the passage of the DRA, States 

were required to offer at minimum a 

standard benefit package to eligible 

populations identified in section 

1902(a)(10)(A) of the Act (with some 

specific exceptions, for example, for 

certain pregnant women, who could be 


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limited to pregnancy-related services). 

Under section 1902(a)(10)(A) of the Act, 

this standard benefit package had to 

include certain specific benefits 

identified in the definition of ‘‘medical 

assistance’’ at section 1905(a) of the Act. 

These identified benefits include 

inpatient and outpatient hospital 

services, physician services, medical 

and surgical services furnished by a 

dentist, rural health clinic services, 

federally qualified health center 

services, laboratory and X-ray services, 

nursing facility services, early and 

periodic screening, diagnostic and 

treatment (EPSDT)services for 

individuals under age 21, family 

planning services and supplies to 

individuals of child-bearing age, nursemidwife services, certified pediatric 

nurse practitioner, and certified family 

nurse practitioner services. Under 

section 1902(a)(10)(D) of the Act, the 

standard benefit package is also 

required to include home health 

services. 

Section 6044 of the DRA amended the 

Act by adding a new section 1937 that 

allows States to amend their Medicaid 

State plans to provide for the use of 

benefit packages other than the standard 

benefit package, namely benchmark 

benefit packages or benchmarkequivalent packages, for certain 

populations. The statute delineates what 

benefit packages qualify as benchmark 

packages and what would constitute a 

benchmark-equivalent package. The 

statute also specifies those exempt 

populations that may not be required to 

enroll in a benchmark coverage plan. To 

be eligible for funds under this new 

provision, States must submit a State 

plan amendment, which must be 

approved by the Secretary. On March 

31, 2006, we issued a State Medicaid 

Director letter providing guidance on 

the implementation of section 6044 of 

the DRA. 

C. CHIPRA Technical Corrections 

On February 4, 2009, CHIPRA was 

enacted. Section 611 of CHIPRA made 

technical corrections to the Benchmark 

Benefit provisions in section 1937 of the 

Act, which were originally established 

under the DRA. The CHIPRA technical 

correction changes take effect as if 

included in the DRA. 

Section 611(a)(1)(C) and section 

611(a)(3) of CHIPRA require States to 

assure that children under the age of 21, 

rather than those under 19 as originally 

specified in the DRA, who are included 

in benchmark or benchmark-equivalent 

plans, have access to full EPSDT 

services (that is, those found in sections 

1905(a)(4)(B), 1905(r), and 1902(a)(43) of 

the Act). These EPSDT services may be 

provided through a benchmark or 

benchmark-equivalent plan and/or as an 

additional benefit to those plans under 

section 1937 of the Act. 

Section 611(a)(1)(A)(i) of CHIPRA 

changed the ‘‘Notwithstanding any other 

provision of this title * * *’’ language in 

section 1937(a)(1)(A) of the Act to 

‘‘Notwithstanding section 1902(a)(1) 

(relating to statewideness), section 

1902(a)(10)(B) (relating to 

comparability) and any other provision 

of this title which would be directly 

contrary to the authority under this 

section and subject to [subparagraph] 

(E)’’. One effect of this CHIPRA change 

is to clarify the requirement, under 42 

CFR 431.53 and section 1902(a)(4) of the 

Act, to assure transportation for 

Medicaid beneficiaries in order for them 

to have access to covered State plan 

services is applicable, regardless of 

whether beneficiaries are or are not 

enrolled in benchmark or benchmarkequivalent plans. 

These two sections in CHIPRA affect 

the implementation of benchmark and 

benchmark-equivalent plans and thus 

the ‘‘Analysis of and Responses to 

Public Comments’’ in section III of this 

final rule, as well as the regulation, 

reflect these changes. 

Section 611(a)(2) of CHIPRA changed 

the heading of section 1937(a)(1)(C) of 

the Act to replace the term ‘‘WrapAround’’ with ‘‘Additional’’ and to 

accordingly strike the term ‘‘wraparound’’ in the text of section 

1937(a)(1)(C) of the Act. 

Section 611(b) of CHIPRA clarifies the 

reference to children receiving foster 

care under section 1937(a)(2)(B)(viii) to 

apply to individuals receiving ‘‘child 

welfare services,’’ not ‘‘aid’’ or 

‘‘assistance’’. 

Section 611(c) of CHIPRA requires the 

Secretary to post on the CMS Web site 

and publish in the Federal Register, 

with respect to benchmark and 

benchmark-equivalent plans approved 

by the Secretary, those provisions of 

title XIX of the Act which were 

determined by the Secretary as not 

applicable to the State’s benchmark 

and/or benchmark-equivalent plan, as 

well as the reason for such 

determinations. 

II. Provisions of the Proposed 

Regulations 

We published a proposed rule in the 

Federal Register on February 22, 2008 

(73 FR 9714) that implemented the 

provisions of the DRA of 2005, which 

amends the Act by adding a new section 

1937 related to the coverage of medical 

assistance under approved State plans. 

Under this new provision, States have 

increased flexibility under an approved 

State plan to define the scope of covered 

medical assistance by offering coverage 

of benchmark or benchmark-equivalent 

benefit packages to certain Medicaideligible individuals. For a complete and 

full description of the States’ Medicaid 

Benefit Packages provisions as required 

by the DRA, see the February 2008 State 

Flexibility for Medicaid Benefit 

Packages proposed rule. In the February 

2008 proposed rule, we proposed to add 

a new subpart C beginning with 

§ 440.300 as follows: 

A. Subpart C—Benchmark Packages: 

General Provisions § 440.300, § 440.305, 

and § 440.310 Basis, Scope, and 

Applicability 

At proposed § 440.300 (Basis), 

§ 440.305 (Scope), and § 440.310 

(Applicability), the regulations would 

reflect the statutory authority for States 

to provide medical assistance to 

individuals, within one or more groups 

of Medicaid eligible individuals 

specified by the State, through 

enrollment in benchmark coverage or 

benchmark-equivalent coverage. A State 

may only require that individuals obtain 

benefits by enrolling in that coverage if 

they are a ‘‘full benefit eligible’’ whose 

eligibility is based on an eligibility 

category under section 1905(a) of the 

Act that would have been covered under 

the State’s plan on or before February 8, 

2006, and are not within exempted 

categories under the statute. The 

proposed regulatory definition of full 

benefit eligible individuals would 

include individuals who would 

otherwise be eligible to receive the 

standard full Medicaid benefit package 

under the approved Medicaid State 

plan, but would not include individuals 

who are within the statutory 

exemptions, who are determined 

eligible by the State for medical 

assistance under section 1902(a)(10)(C) 

of the Act or by reason of section 1902(f) 

of the Act, or who are otherwise eligible 

based on a reduction of income due to 

costs incurred for medical or other 

remedial care (other medically needy 

and spend-down populations). 

B. Section 440.315 Exempt Individuals 

Proposed § 440.315 would reflect 

statutory limitations on mandatory 

enrollment of specified categories of 

individuals. A State may not require 

enrollment in a benchmark or 

benchmark-equivalent benefit plan by 

the following individuals: 

• An individual who is a pregnant 

woman who is required to be covered 

under the State plan under section 

1902(a)(10)(A)(i) of the Act. 

• An individual who qualifies for 

medical assistance under the State plan 


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on the basis of being blind or disabled 

(or being treated as being blind or 

disabled) without regard to whether the 

individual is eligible for SSI benefits 

under title XVI on the basis of being 

blind or disabled and including an 

individual who is eligible for medical 

assistance on the basis of section 

1902(e)(3) of the Act. 

• An individual who is entitled to 

benefits under any part of Medicare. 

• An individual who is terminally ill 

and is receiving benefits for hospice 

care under title XIX. 

• An individual who is an inpatient 

in a hospital, nursing facility, 

intermediate care facility for the 

mentally retarded, or other medical 

institution, and is required, as a 

condition of receiving services in such 

institution under the State plan, to 

spend for costs of medical care all but 

a minimal amount of the individual’s 

income required for personal needs. 

• An individual who is medically 

frail or otherwise an individual with 

special medical needs (as described by 

the Secretary in section 440.315(f)). For 

purposes of this section, we proposed 

that individuals with special needs 

includes those groups defined by 

Federal regulations at § 438.50(d)(1) and 

§ 438.50(d)(3) of the managed care 

regulations (that is, dual eligibles and 

certain children under age 19 who are 

eligible for SSI; eligible under section 

1902(e)(3) of the Act, TEFRA children; 

children in foster care or other out of 

home placement; or children receiving 

foster care or adoption assistance). We 

did not propose a definition for 

medically frail populations but we 

invited public comments to assist us in 

defining this term in the final 

regulation. 

• An individual who qualifies for 

Medicaid based on medical condition 

for medical assistance for long-term care 

services described in section 

1917(c)(1)(C) of the Act. 

• An individual who receives aid or 

assistance under part B of title IV for 

children in foster care or an individual 

with respect to whom adoption or foster 

care assistance is made available under 

part E of title IV, without regard to age. 

• An individual who qualifies for 

medical assistance on the basis of 

eligibility to receive assistance under a 

State plan funded under part A of title 

IV (as in effect on or after the welfare 

reform effective date defined in section 

1931(i) of the Act). This provision 

includes those individuals who qualify 

for Medicaid solely on the basis of 

qualification under the Temporary 

Assistance for Needy Families (TANF) 

rules (that is, the State links Medicaid 

eligibility to TANF eligibility). 

• An individual who is a woman 

receiving medical assistance by virtue of 

the application of sections 

1902(a)(10)(ii)(XVIII) and 1902(a) of the 

Act. This provision relates to those 

individuals who are eligible for 

Medicaid based on the breast or cervical 

cancer eligibility provisions. 

• An individual who qualifies for 

medical assistance as a TB-infected 

individual on the basis of section 

1902(a)(10)(A)(ii)(XII) of the Act. 

• Individuals who are only eligible 

for Medicaid coverage of the care and 

services necessary for the treatment of 

an emergency medical condition in 

accordance with section 1903(v) of the 

Act. 

C. Section 440.320 State Plan 

Requirements: Optional Enrollment for 

Exempt Individuals 

At proposed § 440.320, we would 

allow States to offer exempt individuals 

specified in § 440.315 the option to 

enroll into a benchmark or benchmarkequivalent benefit plan. The State 

would identify in its State plan the 

exempt groups for which this coverage 

is available. There may be instances in 

which an exempt individual may 

benefit from enrolling in a benchmark or 

benchmark-equivalent benefit package. 

States would be permitted to elect in the 

State plan to offer exempt individuals a 

benchmark or benchmark-equivalent 

package, but States may not require 

them to enroll in one. For example, in 

some States the State employee 

benchmark coverage may be more 

generous than the State Medicaid plan. 

Secretary-approved coverage may offer 

the opportunity for disabled individuals 

to obtain integrated coverage for acute 

care and community-based long-term 

care services. Additionally, States may 

be able to improve the integration of 

disease management programs to 

provide better coordinated care that 

targets the specific needs of individuals 

with special health needs. 

D. Section 440.325 State Plan 

Requirements: Coverage and Benefits 

At proposed § 440.325, we set forth 

the conditions under which a State may 

offer enrollment to exempt individuals 

specified in § 440.315. When a State 

offers exempt individuals the option to 

enroll in a benchmark or benchmarkequivalent benefit package, the State 

would inform the individuals that 

enrollment is voluntary and that the 

individual may disenroll from the 

benchmark or benchmark-equivalent 

benefit package at any time and regain 

immediate eligibility for the standard 

full Medicaid program under the State 

plan. The State would inform the 

individual of the benefits available 

under the benchmark or benchmarkequivalent benefit package and provide 

a comparison of how they differ from 

the benefits available under the 

standard full Medicaid program. The 

State would document in the 

individual’s eligibility file that the 

individual was informed in accordance 

with this paragraph and voluntarily 

chose to enroll in the benchmark or 

benchmark-equivalent benefit package. 

At proposed § 440.325, a State would 

have the option to choose the 

benchmark or benchmark-equivalent 

coverage packages offered under the 

State’s Medicaid plan. A State may 

select one or all of the benchmark plans 

described in § 440.330 or establish 

benchmark-equivalent plans described 

in § 440.335, respectively. 

E. Section 440.330 Benchmark Health 

Benefits Coverage 

At proposed § 440.330, benchmark 

coverage is described as any one of the 

following: 

• Federal Employees Health Benefit 

Plan Equivalent Coverage (FEHBP— 

Equivalent Health Insurance Coverage). 

A benefit plan equivalent to the 

standard Blue Cross/Blue Shield 

preferred provider option service benefit 

plan that is described in and offered to 

Federal employees under 5 U.S.C. 

8903(1). 

• State employee coverage. A health 

benefits plan that is offered and 

generally available to State employees 

in the State involved. 

• Health Maintenance Organization 

(HMO) plan. A health insurance plan 

that is offered through an HMO (as 

defined in section 2791(b)(3) of the 

Public Health Service Act) that has the 

largest insured commercial, nonMedicaid enrollment in the State. 

• Secretary-approved coverage. Any 

other health benefits coverage that the 

Secretary determines, upon application 

by a State, provides appropriate 

coverage for the population proposed to 

be provided that coverage. As proposed, 

States wishing to opt for Secretarialapproved coverage should submit a full 

description of the proposed coverage 

and include a benefit-by-benefit 

comparison of the proposed plan to one 

or more of the three benchmark plans 

specified above or to the State’s 

standard full Medicaid coverage 

package under section 1905(a) of the 

Act, as well as a full description of the 

population that would be receiving the 

coverage. In addition, the State should 

submit any other information that 

would be relevant to a determination 

that the proposed health benefits 

coverage would be appropriate for the 


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proposed population. The scope of a 

Secretary approved health benefits 

package will be limited to benefits 

within the scope of the categories 

available under a benchmark coverage 

package or the standard full Medicaid 

coverage package under section 1905(a) 

of the Act. 

A State may select one or more 

benchmark coverage plan options. The 

State may also specify the benchmark 

plan for any specific individual. For 

example, one individual may be 

enrolled in the FEHBP-equivalent and 

another may be enrolled into State 

Employee Coverage at the option of the 

State. 

F. Section 440.335 BenchmarkEquivalent Health Benefits Coverage 

At proposed § 440.335, we proposed 

to provide that if a State designs or 

selects a benchmark plan other than 

those specified in § 440.330, the State 

must provide coverage that is equivalent 

to benchmark coverage. Coverage that 

meets the following requirements will 

be considered to be benchmarkequivalent coverage: 

• Required Coverage. Benchmarkequivalent coverage includes benefits 

for items and services within each of the 

following categories of basic services 

and must include coverage for the 

following categories of basic services: 

+ Inpatient and outpatient hospital 

services. 

+ Physicians’ surgical and medical 

services. 

+ Laboratory and x-ray services. 

+ ‘‘Well-baby’’ and ‘‘well-child’’ care, 

including age-appropriate 

immunizations. 

+ Other appropriate preventive 

services, as designated by the Secretary. 

• Aggregate actuarial value equivalent 

to benchmark coverage. Benchmarkequivalent coverage must have an 

aggregate actuarial value, determined in 

accordance with proposed § 440.340, 

that is at least equivalent to coverage 

under one of the benchmark packages 

outlined in § 440.330. 

• Additional coverage. In addition to 

the categories of services set forth above, 

benchmark-equivalent coverage may 

include coverage for any additional 

services included in the benchmark 

plan or described in section 1905(a) of 

the Act. 

• Application of actuarial value for 

benchmark-equivalent coverage that 

includes prescription drugs, mental 

health, vision, and hearing services. 

Where the benchmark coverage package 

used by the State as a basis for 

comparison in establishing the aggregate 

actuarial value of the benchmarkequivalent package includes any or all 

of the following four categories of 

services: Prescription drugs; mental 

health services; vision services; and 

hearing services; then the actuarial 

value of the coverage for each of these 

categories of service in the benchmarkequivalent coverage package must be at 

least 75 percent of the actuarial value of 

the coverage for that category of service 

in the benchmark plan used for 

comparison by the State. 

If the benchmark coverage package 

does not cover one of the four categories 

of services mentioned above, then the 

benchmark-equivalent coverage package 

may, but is not required to, include 

coverage for that category of service. 

G. Section 440.340 Actuarial Report 

for Benchmark-Equivalent Health 

Benefit Coverage 

In accordance with 1937(a)(3) of the 

Act, at § 440.340, we proposed to 

require a State, as a condition of 

approval of benchmark-equivalent 

coverage, to provide an actuarial report, 

with an actuarial opinion that the 

benchmark-equivalent coverage meets 

the actuarial requirements of § 440.335. 

At § 440.340, we proposed to require 

the actuarial report to obtain approval 

for benchmark-equivalent health benefit 

coverage and to meet all the provisions 

of the statute. The actuarial report must 

state the following: 

• The actuary issuing the opinion is 

a member of the American Academy of 

Actuaries (AAA) (and meets Academy 

standards for issuing an opinion). 

• The actuary used generally 

accepted actuarial principles and 

methodologies of the AAA, standard 

utilization and price factors and a 

standardized population representative 

of the population involved. 

• The same principles and factors 

were used in analyzing the value of 

different coverage (or categories of 

services) without taking into account 

differences in coverage based on the 

method of delivery or means of cost 

control or utilization used. 

• The report should also state if the 

analysis took into account the State’s 

ability to reduce benefits because of the 

increase in actuarial value of health 

benefits coverage offered under the State 

plan that results from the limitations on 

cost sharing (with the exception of 

premiums) under that coverage. 

• The actuary preparing the opinion 

must select and specify the standardized 

set of utilization and pricing factors as 

well as the standardized population. 

• The actuary preparing the opinion 

must provide sufficient detail to explain 

the basis of the methodologies used to 

estimate the actuarial value or, if 

requested by CMS, to replicate the 

State’s result. 

H. Section 440.345 EPSDT Services 

Requirement 

At § 440.345, we proposed to require 

States to make available EPSDT services 

as defined in section 1905(r) of the Act 

that are medically necessary for those 

individuals under age 19 who are 

covered under the State plan. We 

expected that most benchmark or 

benchmark-equivalent plans will offer 

the majority of EPSDT services. To the 

extent that any medically necessary 

EPSDT services are not covered through 

the benchmark or benchmark-equivalent 

plan, States are required to supplement 

the benchmark or benchmark-equivalent 

plan in order to ensure access to these 

services. As proposed, individuals 

mandated into a benchmark or 

benchmark-equivalent plan and entitled 

to have access to EPSDT services cannot 

disenroll from the benchmark or 

benchmark-equivalent plan just to 

receive these services. While, as 

proposed, individuals are required to 

have access to such medically necessary 

services first under the benchmark or 

benchmark-equivalent plan, the State 

may provide wrap-around or additional 

coverage for medically necessary 

services not covered under such plan. 

Any wrap-around benefits must be 

sufficient so that, in combination with 

the benchmark or benchmark-equivalent 

benefits package, an individual would 

have coverage for his or her medically 

necessary services consistent with the 

requirements under section 1905(r) of 

the Act. The State plan would include 

a description of how wrap-around 

benefits or additional services will be 

provided to ensure that these 

individuals have access to full EPSDT 

services under section 1905(r) of the 

Act. 

In addition, as proposed, individuals 

would need to first seek coverage of 

EPSDT services through the benchmark 

or benchmark-equivalent plan before 

seeking coverage of such services 

through other options established by the 

State for receiving wrap-around benefits 

under section 1937 of the Act. 

I. Section 440.350 Employer 

Sponsored Insurance Health Plans 

At § 440.350, we proposed that the 

use of benchmark or benchmarkequivalent benefit coverage would be at 

the discretion of the State and may be 

used in conjunction with employer 

sponsored health plans as a coverage 

option for individuals with access to 

private health insurance. Additionally, 

the use of benchmark or benchmarkequivalent coverage may be used for 


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individuals with access to private health 

insurance coverage. For example, if an 

individual has access to employer 

sponsored coverage and that coverage is 

determined by the State to be 

benchmark or benchmark-equivalent, a 

State may, at its option, provide 

premium payments on behalf of the 

individual to purchase the employer 

coverage. Additionally, a State could 

create a benchmark or benchmarkequivalent plan combining employer 

sponsored insurance and wrap-around 

benefits to that employer sponsored 

insurance benefit package. The 

premium payments would be 

considered medical assistance and the 

State could require the non-exempt 

individual to enroll in the group health 

plan. 

J. Section 440.355 Payment of 

Premiums 

At § 440.355, we proposed that 

payment of premiums by the State, net 

of beneficiary contributions, to obtain 

benchmark or benchmark-equivalent 

benefit coverage on behalf of 

beneficiaries under this section will be 

treated as medical assistance under 

section 1905(a) of the Act. 

K. Section 440.360 State Plan 

Requirement for Providing Additional 

Wrap-Around Services 

At § 440.360, we proposed that a State 

may at its option provide additional 

wrap-around services to the benchmark 

or benchmark-equivalent plans. The 

wrap-around services do not need to 

include all State plan services. 

However, the State plan would be 

required to describe the populations 

covered and the payment methodology 

for assuring those services. Such 

additional or wrap-around services must 

be within the scope of categories of 

services covered under the benchmark 

plan, or described in section 1905(a) of 

the Act. 

L. Section 440.365 Coverage of Rural 

Health Clinic and Federally Qualified 

Health Center (FQHC) Services 

At § 440.365, we proposed that a State 

that provides benchmark or benchmarkequivalent coverage to individuals must 

assure that the individual has access, 

through that coverage or otherwise, to 

rural health clinic services and FQHC 

services as defined in subparagraphs (B) 

and (C) of section 1905(a)(2) of the Act. 

Payment for these services must be 

made in accordance with the payment 

provisions of section 1902(bb) of the 

Act. 

M. Section 440.370 Cost Effectiveness 

At § 440.370, we proposed that 

benchmark or benchmark-equivalent 

coverage and any additional benefits 

must be provided in accordance with 

Federal upper payment limits, 

procurement requirements and other 

economy and efficiency principles that 

would otherwise be applicable to the 

services or delivery system through 

which the coverage and benefits are 

obtained. 

N. Section 440.375 Comparability 

At § 440.375, we proposed that a State 

may at its option amend its State plan 

to provide benchmark or benchmarkequivalent coverage to individuals 

without regard to comparability. 

O. Section 440.380 Statewideness 

At § 440.380, we proposed that a State 

may at its option amend its State plan 

to provide benchmark or benchmarkequivalent coverage to individuals 

without regard to statewideness. 

P. Section 440.385 Freedom of Choice 

At § 440.385, we proposed that a State 

may at its option amend its State plan 

to provide benchmark or benchmarkequivalent coverage to individuals 

without regard to freedom of choice. 

States may restrict individuals to 

obtaining services from (or through) 

selectively procured provider plans or 

practitioners that meet, accept, and 

comply with reimbursement, quality 

and utilization standards under the 

State Plan, to the extent that the 

restrictions imposed meet the following 

requirements: 

(+) Do not discriminate among classes 

of providers on grounds unrelated to 

their demonstrated effectiveness and 

efficiency in providing the benchmark 

benefit package. 

(+) Do not apply in emergency 

circumstances. 

(+) Require that all provider plans are 

paid on a timely basis in the same 

manner as health care practitioners 

must be paid under § 447.45 of the 

chapter. 

Q. Section 440.390 Assurance of 

Transportation 

At § 440.390, we proposed that a State 

may at its option amend its State plan 

to provide benchmark or benchmarkequivalent coverage to individuals 

without regard to the assurance of 

transportation to medically necessary 

services requirement specified in 

§ 431.53. 

III. Analysis of and Responses to Public 

Comments 

In response to the February 2008 

proposed rule, we received over 1,100 

timely items of correspondence. In 

response to the February 2, 2009 interim 

final rule with a 30-day comment period 

(the first temporary delay of the 

December 3, 2008 final rule), we 

received nine timely items of 

correspondence. In response to the 

April 3, 2009 interim final rule with a 

30-day comment period (the second 

temporary delay of the December 3, 

2008 final rule), we received seven 

timely items of correspondence. In 

response to the October 30, 2009 

proposed rule on delaying the effective 

date of the final rule to July 1, 2010, we 

received one timely item of 

correspondence. 

The majority of the comments 

received on the proposed rule 

represented transportation providers, 

medical providers, and Medicaid 

beneficiaries, particularly Medicaid 

beneficiaries who rely on dialysis 

treatments. Other comments represented 

State and local advocacy groups, 

national associations that represent 

various beneficiary sub-groups, State 

Medicaid agency senior officials, and 

human services agencies. In this section, 

we provide a discussion of the public 

comments we received on the February 

22, 2008 proposed rule, the February 2, 

2009 interim final rule with a 30-day 

comment period (the first temporary 

delay of the December 3, 2008 final rule) 

and the April 2, 2009 final rule with a 

30-day comment period (the second 

temporary delay of the December 3, 

2009 final rule), as well as the one 

comment that we received in response 

to our October 30, 2009 proposed rule 

delaying the effective date of the 

December 3, 2008 final rule, which 

addressed the issue of revisions 

required to comply with statutory 

changes. Comments related to the 

impact of this rule are addressed in the 

‘‘Collection of Information 

Requirements’’ section of this regulation. 

Additionally, we published a 

proposed rule in the Federal Register on 

February 22, 2008 (73 FR 9727) titled, 

‘‘Medicaid Program: Premiums and Cost 

Sharing’’ (CMS–2244–P). Comments on 

CMS–2244–P were also due March 24, 

2008 similar to this rule. Some 

comments for CMS–2244–P were 

forwarded as comments to this rule 

(CMS–2232–P). Consistent with the 

Administrative Procedures Act, CMS is 

not responding to those comments in 

this regulation, but we addressed the 

issues raised by otherwise timely 


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comments in our publication of CMS– 

2244–F. 

A. General Comments 

Comments: A few commenters 

supported the proposed rule and a few 

commenters strongly supported certain 

provisions of the December 3, 2008 rule. 

However, most commenters oppose 

either the February 22, 2008 proposed 

rule or certain sections of the December 

3, 2008 rule. Many commenters are 

concerned that the benchmark or 

benchmark-equivalent benefit packages 

are inadequate benefit packages for, 

among others, individuals with mental 

illness, children with serious emotional 

disturbance, the disabled and elderly, 

individuals with end stage renal 

disease, and American Indians. Many of 

the commenters believe that to enroll 

Medicaid beneficiaries in benchmark or 

benchmark-equivalent benefit packages 

without the assurance of transportation 

could lead to poorer health outcomes, 

costlier care because individuals will be 

forced into hospital emergency rooms, 

and shifts in costs to the Emergency 

Medical Services. 

Response: We acknowledge and 

appreciate the views of the commenters 

who both supported and opposed the 

February 22, 2008 proposed rule and the 

December 3, 2008 rule. Those who 

opposed the rule generally raised 

concerns about the underlying wisdom 

of the statutory provision at section 

1937 of the Act, which this final rule 

implements. CMS is charged with 

implementing the statute. We address 

comments relating to restrictive 

interpretations below in the discussion 

of specific proposed provisions that 

arguably were not required by the 

statutory provision. 

Comment: Several commenters 

believe that the accelerated pace of the 

short comment period for the proposed 

rule, given the broad implications, will 

lead to a short-sighted, onerous rule that 

has dangerous health impacts for the 

poor. The proposed rule was issued in 

the Federal Register on February 22, 

2008. The deadline for submission of 

comments was March 24, 2008. The 

commenters stated that other 

rulemaking has taken a longer period 

and that given the impact of the 

provisions, a longer time period is 

warranted. 

Some commenters stated that the 30- 

day comment period in the proposed 

rule was not sufficient for Tribes to 

comment on a regulation that could 

potentially have a significant impact on 

Tribal communities. 

Other commenters noted that while 

the Department views the proposed rule 

as merely formalizing its earlier policy 

statements delivered only to State 

Medicaid Directors, a 30-day public 

comment period is too short for 

meaningful public review, analysis, and 

comment. Some commenters believe 

that the 30-day comment period is 

discouraging of full review and 

consideration by States. 

One commenter requests that the 

public comment period be extended by 

60 days for a total of a 90-day comment 

period. Additional time is needed to 

provide sufficient time for stakeholders 

to be able to adequately assess the 

potential effects of the proposed rule. 

Response: As described in the 

‘‘Background’’ in section I of this 

regulation under ‘‘Regulatory History,’’ 

in section I.A. of this regulation a 30- 

day public comment period on the 

February 22, 2008 proposed rule was 

provided and two additional 30-day 

public comment periods were provided 

on the December 3, 2008 rule. We 

believe that these comment periods 

allowed sufficient time for public 

comment. 

B. Section 440.300 Basis 

Comment: One commenter believed 

that the proposed limitations on 

eligibility groups who can be provided 

alternative benefit packages are overly 

restrictive. The commenter suggested 

that the rule should allow application to 

any eligibility category the State had the 

option to implement on or before the 

date of enactment of section 1937 

(February 8, 2006). The commenter 

reasoned that States are continually 

adding and changing eligibility 

requirements and these program 

changes are inherent in Medicaid 

programs. The commenter asserted that, 

if the rule is considered beneficial for 

individuals in eligibility categories that 

existed before February 8, 2006, it is 

logical to suppose it would also be 

beneficial for those created after that 

date. 

Response: The language in section 

1937(a)(1)(B) of the Act specifies that 

the State may only exercise the option 

to offer benchmark or benchmarkequivalent coverage for an individual 

eligible under an eligibility category that 

had been established under the State 

plan on or before February 8, 2006. We 

have interpreted this statutory term to 

mean any eligibility category listed 

under section 1905(a) of the Act. Thus, 

all individuals within a category 

covered or potentially covered under 

the State’s Medicaid plan could be 

eligible to participate in a benchmark or 

benchmark-equivalent plan at the 

State’s option, unless specifically 

excluded by statute, even when the 

State makes modifications to the income 

and resource eligibility levels or 

methodologies, ages covered, etc. for a 

group or category after February 8, 2006. 

C. Section 440.305 Scope 

Comment: Numerous commenters 

believed that offering benchmark and 

benchmark-equivalent benefit packages 

to certain Medicaid individuals will 

deter those individuals, including 

children, from receiving appropriate 

care. Commenters indicated that 

individuals with low incomes are likely 

to forego needed treatment if all 

medically necessary services and 

transportation are not included in the 

benchmark program. Most commenters 

believed that our most vulnerable 

populations, those with chronic medical 

needs, will be required to choose to 

provide for their basic needs like food 

and shelter rather than obtain necessary 

medical health care because of the rigor 

created by following a private health 

insurance model of benefits and the 

need to provide their own method of 

transportation. 

Response: The benchmark and 

benchmark-equivalent coverage was 

authorized by the statute. Under the 

statute, the benchmark flexibility is an 

option that States can choose to use in 

redesigning their current Medicaid 

benefit program. It should be noted that 

as a result of the CHIPRA changes to the 

DRA, this option is not as broad as it 

had been and we have revised the 

regulations to comply with CHIPRA by 

stating that States must comply with all 

requirements of title XIX other than 

sections 1902(a)(1) and 1902(a)(10(B) of 

the Act, unless such requirement can be 

shown to be directly contrary to the 

authority under section 1937 of the Act. 

For example, under the CHIPRA 

changes transportation is a required 

service and benchmark plans utilizing 

managed care delivery systems must 

meet managed care rules. 

Comment: Other commenters 

indicated that the DRA does not require 

that States offer the same Medicaid 

benefits statewide, meaning States could 

design different benefit packages for 

rural and urban areas. States may also 

‘‘tailor’’ packages for different 

populations, although the commenter 

acknowledges, certain groups are 

exempt from mandatory changes to their 

Medicaid benefits package. In States 

where this has already been done, there 

have been some reports that the changes 

have been unsatisfactory. Several 

commenters believed that allowing 

States to ‘‘tailor’’ benefit packages would 

mean that individuals may not have 

access to the services they need. Benefit 

packages designed outside the 

important consumer protections in 


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traditional Medicaid may fail to meet 

beneficiaries’ needs, and will not save 

money if these individuals experience 

significant unmet needs that escalate 

into problems that require treatment in 

emergency rooms. 

One commenter mentioned that 

private health plans, such as those listed 

as benchmarks under the law, 

frequently have limited coverage of 

mental health services. The commenter 

asserted that few cover any of the 

intensive community services that are 

covered by Medicaid under the 

rehabilitation category or the home and 

community-based services option. The 

commenter noted that, under the DRA, 

these limited mental health benefits can 

be further reduced by 25 percent of their 

actuarial value. Other commenters 

expressed concern that the reliance on 

commercial benefit plans is 

inappropriate for Medicaid individuals. 

Those commenters are concerned that 

many private insurance plans do not 

provide adequate mental health 

services. Other commenters noted that 

benchmark coverage is likely to prove 

entirely inadequate for individuals who 

need mental health services. The 

commenters noted that children with 

serious mental and/or physical 

disorders often qualify for Medicaid on 

a basis of family income and are not, for 

various reasons, receiving Supplemental 

Security Income (SSI) benefits or 

otherwise recognized as children with 

disabilities and would not be exempt 

from mandatory enrollment. In addition, 

the commenters noted that many lowincome parents on Medicaid have been 

found to have serious depression, which 

could not be adequately treated with a 

very limited mental health benefit. 

Similarly, many commenters believed 

that the proposed rule has the potential 

to become the behavioral healthcare 

Medicaid ‘‘Trojan horse’’: It appears 

harmless but it will reverse hard fought 

progress won over years of struggle that 

brought about equitable, decent care for 

Medicaid-eligible individuals 

experiencing mental illness or who have 

a developmental disability. The 

commenters asserted that, in the end, 

these rules will have costlier results and 

not the desired economizing while also 

negatively impacting peoples’ lives, 

their well-being and care, and our 

society. 

Another commenter believed that it is 

critical for beneficiaries with lifethreatening conditions such as HIV/ 

AIDS to maintain access to the 

comprehensive range of medical and 

support services required to effectively 

manage HIV disease. The commenter 

stated that allowing States to ‘‘tailor’’ 

benefit packages in ways that essentially 

eliminate coverage for critical health 

services places the health of Medicaid 

beneficiaries with HIV/AIDS in serious 

jeopardy. 

Response: The DRA created section 

1937 in response to States’ desire for 

more flexibility in designing their 

Medicaid programs and adopting benefit 

programs tailored to the needs of the 

varied populations they serve. The DRA 

provides that States can provide 

alternative benchmark or benchmarkequivalent benefit packages at their 

option; that is, States are not required to 

implement these provisions. We have 

incorporated elements in this regulation 

that are designed to protect vulnerable 

populations and to help assure that 

individuals enrolled in a benchmark 

benefit plan will have access to services 

that are appropriate to their individual 

needs to the extent permitted by the 

statute. 

To protect individuals with 

disabilities we have included in this 

rule a basic minimum definition of 

medically frail and special medical 

needs to insure that people with 

disabilities and special health care 

needs are not mandatorily enrolled in 

benchmark benefit plans. Rather, they 

can only be voluntarily enrolled after 

being fully informed of the differences 

between the benchmark benefit plan 

and the traditional State plan. We have 

added language at § 440.305(b)(2) that 

requires States electing to offer 

benchmark benefit plans or wishing to 

substantively change an approved 

benchmark benefit plan to provide 

advance public notice with an 

opportunity to comment. Before 

submitting to CMS a State plan 

amendment to implement a benchmark 

benefit plan or an amendment to 

substantially modify the benefits or 

eligibility provisions of an approved 

benchmark benefit plan, the State must 

first provide the public the opportunity 

to review the proposed change and 

comment on it. 

We acknowledge and agree with the 

commenters on the importance of 

providing adequate mental health 

benefits and will be separately 

addressing how post DRA-enactments, 

specifically the Paul Wellstone and Pete 

Domenici Mental Health Parity and 

Addiction Equity Act of 2008 relate to 

benchmark benefits. 

The new benefit option provides 

States with additional tools to provide 

care to maximize health outcomes for 

certain individuals. These tools may be 

used in conjunction with other 

Medicaid and Children’s Health 

Insurance Program (CHIP) authorities to 

strategically align the Medicaid program 

with the current health care 

environment and expand access to care 

by leveraging existing benefit and 

coverage options to improve quality and 

coordination of care. 

States seeking to use benchmark and 

benchmark-equivalent plans to provide 

coverage for children and adults with 

special medical needs, individuals with 

HIV/AIDS, and long-term care and 

community-based service options, must 

design a benchmark benefit package that 

is appropriate to meet the health care 

needs of the population being served, 

including coverage that may be more 

generous than a State’s Medicaid plan. 

We think it is important to note that 

States are required to provide children 

under the age of 21 with EPSDT services 

either as an additional service and or as 

part of the benchmark or benchmarkequivalent benefit plan. States are 

required to inform families about how 

and where to access these services 

particularly if the benchmark or 

benchmark-equivalent benefit does not 

identify the full range of EPSDT services 

needed by the beneficiary as being 

covered. States must assure that these 

services are provided in the most 

seamless way possible and the families 

understand how to access such services 

through the Medicaid State plan. 

Moreover, certain groups cannot be 

included in a mandatory enrollment for 

an alternative benefit package—among 

others, pregnant women, dual eligibles, 

terminally ill individuals receiving 

hospice, inpatients in institutional 

settings, and individuals who are 

medically frail or have special medical 

needs. These individuals may be offered 

a choice to enroll and, in considering 

the choice, must be provided a 

comparison of benchmark benefits 

versus the traditional Medicaid State 

plan benefit. Their decision to enroll is 

voluntary and individuals must be 

provided the opportunity to revert back 

to traditional Medicaid at any time. 

Comment: One commenter noted that 

the preamble language refers to meeting 

the ‘‘* * * needs of today’s Medicaid 

populations and the health care 

environment.’’ The commenter believed 

the preamble should describe these 

needs in some detail so that there is a 

shared understanding of the types of 

needs this new flexibility is intended to 

address. 

Response: We agree that it is 

important to understand the needs of 

today’s Medicaid populations and the 

health care environment. Congress has 

provided States with the flexibility to 

align Medicaid benefit packages for 

certain populations with commercial 

insurance plans. States now have the 

ability to provide additional services 

that are uniquely designed to meet the 


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needs of targeted populations. For 

example, individuals with asthma and 

chronic obstructive pulmonary disease 

who reside in a certain area of the State 

may be offered disease management 

services which are not otherwise 

available under the traditional State 

plan to all individuals with asthma and 

chronic obstructive pulmonary disease. 

A State may elect to provide 

beneficiaries with incentives for healthy 

behavior by offering additional services. 

For example, a State could offer certain 

(enhanced) preventive services not 

available under the regular State plan, 

such as smoking cessation counseling or 

nutritional/dietary management, to 

beneficiaries with certain medical 

conditions and/or in certain parts of the 

State. Prior to the enactment of the DRA, 

a State that wanted to tailor its Medicaid 

program to meet the unique needs of its 

beneficiaries would have to utilize a 

demonstration or waiver program. 

Comment: One commenter stated that 

the proposed rule, read together with 

other CMS rules like the citizenship 

documentation requirement and CMS’s 

Children’s Health Insurance Program 

(CHIP) crowd-out directive of August 

17, 2007, create major barriers to access 

to appropriate health care, and that the 

proposed rule has a devastating impact 

on the low income populations. In 

particular, some commenters raised 

concerns about requirements for 

American Indians and Alaska Natives to 

prove both citizenship and identity in 

order to obtain Medicaid services. 

Commenters also raised concerns about 

the CHIP review strategy outlined in an 

August 17, 2007 letter sent to State 

Health Officials. Commenters also 

asserted that other proposed rules 

released by CMS like the Rehabilitation 

Rule and the Targeted Case Management 

Rule coupled with this rule will have a 

devastating effect on individuals in 

need of transportation since these rules 

also eliminate non-emergency medical 

transportation services. 

Response: We agree that the DRA 

benchmark rules can create some risk 

that beneficiaries may not be able to 

access needed care, and we will 

implement the rules mindful of this 

possibility and consistent with the 

Federal law. Additionally, CHIPRA 

included two significant technical 

changes to the DRA that amended 

section 1937 of the Act. In order to 

reflect these changes, we modified the 

regulation at § 440.390 to clarify that 

States must assure necessary 

transportation to and from providers 

and at § 440.345 to clarify that States 

must assure that children under the age 

of 21 who are enrolled in alternative 

benefit plans must have full access to 

EPSDT services. Additionally, we 

expanded paragraph (b)(5) in § 440.335, 

which lists the mandatory services that 

benchmark-equivalent plans must 

provide, to include family planning 

services and supplies as a required 

preventive service. 

Citizenship documentation 

requirements and the rehabilitation and 

case management requirements are not 

part of this rule and we do not address 

them here. This regulation implements 

the statutory provisions of section 1937 

of the Act. However, it should be noted 

that the August 17, 2007 State Health 

Officials letter on CHIP eligibility levels 

and crowd out was withdrawn on 

February 4, 2009, at the direction of 

President Obama. The CHIPRA, signed 

into law on that same day, provides new 

flexibility to States for streamlining 

citizenship documentation. CHIPRA 

also includes technical amendments to 

the DRA which clarify documentation 

requirements, provide for a reasonable 

opportunity period for individuals to 

submit such documentation, and 

expand the list of documents that are 

acceptable for verifying citizenship. 

Comment: Several comments were 

provided by organizations that have an 

interest in how the benchmark and 

benchmark-equivalent benefit packages 

impact American Indians/Alaska 

Natives. The commenters believed that 

alternative benefit packages serve as a 

substantial barrier to American Indians/ 

Alaska Natives enrollment in the 

Medicaid program. They noted that, 

because of the Federal government’s 

trust responsibility to provide health 

care to American Indians/Alaska 

Natives, implementing benchmark and 

benchmark-equivalent benefit packages 

have specific tribal implications that 

were not addressed in the proposed 

rule. Several commenters believed that 

American Indians/Alaska Natives 

should be exempt from mandatory 

enrollment in benchmark and 

benchmark-equivalent benefit programs 

entirely. 

Response: In Medicaid, there is no 

statutory basis to exempt American 

Indians/Alaska Natives from Medicaid 

alternative benefit provisions. Section 

1937 of the Act does not provide for 

such an exemption. Section 1937 does 

provide some specific exemptions from 

mandatory enrollment in benchmark or 

benchmark-equivalent benefit packages 

and it is possible that some American 

Indians/Alaska Natives would fit into 

one of these exempt groups. Section 

1937 does not however give CMS 

authority to identify additional exempt 

groups. 

To address the unique needs of the 

American Indians/Alaska Natives 

population, we expect States to ensure 

that alternative benefit packages 

recognize the unique services offered by 

IHS and tribal providers, and the unique 

health needs of the American Indians/ 

Alaska Natives population. To ensure 

this, section 5006 of ARRA requires 

States to consult with Indian Health 

Programs or Urban Indian Organizations 

that furnish health care services on 

matters that are likely to have a direct 

effect on these health programs. It also 

requires that services provided to 

Indians through managed care 

organizations provide access to IHS 

providers. 

Comment: One commenter contended 

that there are no provisions to require 

States to ensure that American Indians/ 

Alaska Natives continue to have access 

to culturally competent health services 

through the Indian Health Service (IHS) 

or tribally operated health programs. 

The commenter stated that the proposed 

rules allow States to offer coverage 

without regard to comparability, 

statewideness, freedom of choice, the 

assurance of transportation to medically 

necessary services, and other 

requirements. There are large disparities 

between American Indians/Alaska 

Natives’ health care status and the 

health care status of the rest of the 

country. The commenter added that for 

American Indians/Alaska Natives, the 

patient should always have the option 

of the provider being an Indian Health 

Service or tribal health program. 

Response: State Medicaid programs 

provide health care services to many 

diverse populations including American 

Indians/Alaska Natives individuals. We 

believe that culturally competent 

services are important for all Medicaid 

beneficiaries and access to care and 

facilities in remote parts of the country, 

where it is especially difficult to find 

providers who will agree to participate 

in the Medicaid program, is paramount. 

Section 1937 of the Act does not 

provide any special protections for 

benefit packages applicable to American 

Indians/Alaska Natives individuals, but 

this does not mean that benefit packages 

will be deficient. 

Section 5006(e) of the ARRA, which 

was signed on February 17, 2009 and 

became effective July 1, 2009, requires 

that in the case of any State in which 

one or more Indian Health Program or 

Urban Indian Organization furnishes 

health care services, the Medicaid State 

plan specify a process under which the 

State seeks advice from designees of 

such programs or organizations on 

matters that are likely to have a direct 

effect on these health programs. 

As noted previously, to address the 

unique needs of the American Indians/ 


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Alaska Natives population, we expect 

States to work with Indian Health 

Programs or Urban Indian Organizations 

that furnish health care services to 

ensure that alternative benefit packages 

recognize the unique services offered by 

IHS and tribal providers, and the unique 

health needs of the American Indians/ 

Alaska Natives population. 

With regard to the assurance of 

transportation and freedom of choice of 

providers, CHIPRA amended the 

‘‘notwithstanding any other provisions 

of this title’’ language. This change in 

the law clarifies that the authority under 

section 1937 of the Act to deviate from 

otherwise applicable Medicaid 

requirements is limited. Therefore, we 

revised the regulation at § 440.390 to 

require States to assure necessary 

transportation to and from providers for 

individuals enrolled in benchmark and 

benchmark-equivalent plans and at 

§ 440.385 by removing the option to 

provide benchmark and benchmarkequivalent coverage without regard to 

freedom of choice of providers. While 

we do not anticipate that there will be 

many requirements of title XIX that 

would be contrary to implementing a 

benchmark benefit plan, States may 

request an exemption from a provision 

of title XIX if they can demonstrate how 

the provision would be directly contrary 

to section 1937 of the Act. 

Comment: Another commenter stated 

on behalf of American Indians/Alaska 

Natives, the Indian and tribal health 

care system is woefully under-funded 

and tribal providers rely on Medicaid 

revenues to supplement that meager 

funding. Forcing American Indians/ 

Alaska Natives into benchmark plans, 

which may have dramatically reduced 

coverage or payments, would thus 

jeopardize Indian health, injure tribal 

health systems, and thereby violate the 

Federal trust obligation to care for the 

health needs of Indian people. 

Response: We acknowledge that 

benchmark plans could reduce covered 

benefits. To date, however, CMS has 

approved ten benchmark benefit 

programs, and most offer State plan 

services plus additional services like 

preventive care, personal assistance 

services, or disease management 

services. For individuals under the age 

of 21, section 1937 of the Act ensures 

that all needed services will be available 

through the requirement that EPSDT 

services must be provided either in 

addition to, or as part of, the benchmark 

or benchmark-equivalent plan. 

Section 1937 of the Act does not 

provide a basis to exclude IHS or tribal 

health providers from participation in 

the delivery system for alternative 

benefits. Futhermore, CMS does not 

determine IHS funding levels. 

In an effort to reach out to Tribes we 

held several discussions with Tribes 

about the changes made to the DRA and 

section 1937 of the Act by section 611 

of CHIPRA. These discussions took 

place during the All Tribes call on July 

2, 2009, and during two face to face 

open consultation meetings held with 

Tribes on July 8th and July 10th, 2009. 

We covered all CHIPRA related issues, 

including the changes made to section 

1937 of the Act during all of these 

meetings. Also, on June 29, 2009 we 

covered section 611 of CHIPRA during 

the Tribal Technical Advisory Group 

(T–TAG) meeting CMSO had with the 

T–TAG policy advisors. CMS is 

committed to enhancing communication 

with Tribes and to assuring that the 

obligation of States to consult with 

American Indians/Alaska Natives on all 

issues affecting Indian health services 

are followed by State Medicaid 

agencies. 

Comment: Some commenters believed 

that the proposed rule did not comply 

with the Department of Health and 

Human Services’ Tribal Consultation 

policy, since CMS did not consult with 

Tribes in the development of these 

regulations before they were 

promulgated. 

These commenters noted that CMS 

did not obtain advice and input from 

the CMS Tribal Technical Advisory 

Group (TTAG), even though the TTAG 

meets on a monthly basis through 

conference calls and holds quarterly 

face to face meetings in Washington, 

DC. They also noted that CMS did not 

utilize the CMS TTAG Policy 

Subcommittee, which was specifically 

established by CMS for the purpose of 

obtaining advice and input in the 

development of policy guidance and 

regulations. 

These commenters also noted that the 

proposed rule does not contain a Tribal 

summary impact statement describing 

the extent of the tribal consultation or 

lack thereof, nor an explanation of how 

the concerns of Tribal officials have 

been met. Several commenters request 

that these regulations not be made 

applicable to American Indians/Alaska 

Natives Medicaid beneficiaries until 

Tribal consultation is conducted, or be 

modified to specifically require State 

Medicaid programs to consult with 

Indian Tribes before the development of 

any policy which would require 

mandatory enrollment of American 

Indians/Alaska Natives in benchmark or 

benchmark-equivalent plans. One 

commenter suggested that this 

consultation should be similar to the 

way in which consultation takes place 

with Indian Tribes in the development 

of waiver proposals. And, a commenter 

urged that, after appropriate tribal 

consultation and revision reflecting 

these and other comments, the rule be 

republished with a longer public 

comment period. 

One Tribe commented that the 

proposed rule does not honor treaty 

obligations for health services that are 

required by the Federal government’s 

unique legal relationship with Tribal 

governments. 

Response: CMS currently operates 

under the Department of Health and 

Human Services’ Tribal Consultation 

Policy. The Departmental guidelines 

provide information as to the regulatory 

activities that rise to the level that 

require consultation (include prior 

notification of rulemaking). We have 

considered the Departmental guidelines. 

Though the effect on American Indians/ 

Alaska Natives individuals results from 

the statute itself, and not this rule, CMS 

did consult with the Tribes about the 

changes made to the DRA and section 

1937 of the Act by section 611 of 

CHIPRA as described in the previous 

response. 

Section 5006(e) of ARRA, which was 

signed on February 17, 2009 and 

became effective July 1, 2009, provides 

American Indians/Alaska Natives 

individuals with new protections 

because it requires that Medicaid State 

plans specify a process under which the 

State seeks advice from designees of 

Indian Health Programs or Urban Indian 

Organizations that furnish health care 

services on matters that are likely to 

have a direct effect on these health 

programs. States that elect to implement 

alternative benefit packages must 

consult with Tribes and notify them 

about State plan amendments that will 

directly affect the Tribes. These 

regulations implement section 1937 of 

the Act, as enacted by Congress, and do 

not address treaty rights of American 

Indians. These regulations neither 

diminish nor increase such treaty rights. 

Questions about the Indian Health 

Services budget should be directed to 

Indian Health Services. 

Comment: Several commenters 

believed that States should not have the 

ability to create benchmarks that allow 

for increases in cost sharing. 

Specifically, States can establish a 

benchmark coverage package that 

requires co-pays for health care access, 

whereby the cost sharing will actually 

be a limitation on coverage. However, if 

the selected benchmark plan indicates 

that it provides coverage for only half of 

the cost of mental health services, CMS 

views that as a coinsurance requirement 

rather than as a limitation on coverage. 


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Premiums and cost sharing act as a 

deterrent to those receiving health care 

and may cause low income populations 

to choose between healthcare and basic 

needs such as food. The commenter 

indicated that American Indians/Alaska 

Natives and other low-income groups 

should be exempt from premiums and 

cost-sharing requirements. 

Response: States have the option to 

impose cost sharing in Medicaid but are 

limited by the requirements of sections 

1916 and 1916A of the Act. To the 

extent that these benchmark packages 

impose premiums or cost sharing, this 

final regulation stipulates that any cost 

sharing and premiums for individuals 

may not exceed cost sharing limits 

applicable under sections 1916 and 

1916A of the Act. In a State that 

imposes cost sharing under either 1916 

or 1916A the State would be permitted 

to apply different cost sharing 

requirements for individuals enrolled in 

the benchmark or benchmark-equivalent 

plan than it imposes for those not 

enrolled in such plans. In some cases 

individuals enrolled in benchmark or 

benchmark-equivalent plans may 

actually have lower cost sharing than is 

required of individuals enrolled in the 

traditional State plan benefit package. 

Under section 1916A of the Act, there 

are tiered individual service limits 

based on family income, and an 

aggregate cap of five percent of family 

income. These limits apply to all 

individuals enrolled in benchmark 

plans. 

Section 5006 of ARRA added new 

protections for American Indians/ 

Alaska Native related to: premiums and 

cost sharing; exclusion of certain 

American Indians/Alaska Natives 

specific property from estate recovery in 

Medicaid; new rules regarding 

American Indians/Alaska Natives, 

Indian Health Providers and Indian 

Managed Care entities in Medicaid; and 

new consultation requirements for 

Medicaid, CHIP and other health care 

programs funded under the Act 

involving Indian Health programs and 

Urban Indian organizations. 

It is important to note that alternative 

benefit package programs are provided 

at the State’s option. However, we 

recognize the concerns raised by these 

commenters. 

Numerous Medicaid eligibility 

categories are exempt from mandatory 

enrollment in alternative benefit 

packages and can only select the 

alternative benefit package voluntarily. 

Such individuals must be provided a 

comparison of the benchmark option 

versus the State plan option before they 

choose to enroll. That comparison must 

include information on the cost-sharing 

obligations of beneficiaries. In choosing 

the benchmark option over the State 

plan option, these individuals would 

thus have actively made an informed 

choice. Finally, exempt individuals 

must be able to revert back to traditional 

Medicaid at any time. States electing to 

offer an alternative benefit package and 

choosing to allow voluntary enrollment 

for exempt populations must 

demonstrate how the State will 

operationalize the disenrollment 

provisions as well as provide detailed 

information on how informed choice 

will occur. 

Comment: One commenter urged 

CMS to add provisions to provide 

special protections for individuals with 

disabilities, dual eligibles, and persons 

with other chronic medical conditions 

to ensure access to benchmark packages 

that are uniquely designed to address 

physical impairments and rehabilitation 

needs. 

Another commenter believed CMS 

should require State Medicaid agencies 

to provide access to care management 

and care coordination services to 

Medicaid individuals who are incapable 

of managing their benchmark plan 

services. The commenter further 

believed that home health services 

should be included in all benchmark 

plan packages. 

Several commenters recommended 

that all State programs include 

prevention services and promote health, 

wellness, and fitness. Physical 

therapists are involved in prevention by 

promoting health, wellness and fitness, 

and in performing screening activities. 

One commenter is concerned that the 

managed care model is better suited for 

a ‘‘well’’ population as opposed to 

children with chronic special health 

care needs and adults with disabilities. 

Response: To the extent that the 

commenter is concerned that alternative 

benefit packages will result in a 

reduction in services, we acknowledge 

that this is a possibility. However, for 

the benchmark State plan amendments 

implemented to date, most offer 

traditional State plan services as well as 

additional services like prevention and 

disease management. 

States can consider benchmarkequivalent coverage as long as the 

coverage includes mandatory services 

such as inpatient and outpatient 

hospital services, physicians’ surgical 

and medical services, laboratory and xray services, emergency services, wellbaby and well-child care including ageappropriate immunizations, and other 

appropriate preventive services. We 

have determined that other appropriate 

preventive services must include family 

planning services and supplies. 

Benchmark-equivalent plans may also 

include care management, care 

coordination, and/or home health 

services, but it is possible that some 

plans will not include these services. 

We do not agree that a requirement that 

States include these specific services 

would be consistent with the statute. 

An important protection for children 

enrolled in alternative benefit packages 

is the requirement to ensure full access 

to the EPSDT benefit for children under 

the age of 21. If services are not 

provided as part of the benchmark or 

benchmark-equivalent plan, these 

services must be provided by the State 

as additional benefits. States electing 

the benchmark benefit option must 

provide CMS with information 

describing how it will inform families of 

the availability of such services and 

how the State will coordinate access to 

those services when they must be 

provided outside of the benchmark 

plan. Furthermore, States, at their 

option, can provide for additional 

services to benchmark or benchmarkequivalent programs. 

Additionally, exempt individuals 

must make an informed choice before 

they elect to voluntarily enroll in 

benchmark or benchmark-equivalent 

plans. This includes the requirement 

that States must provide exempt 

individuals with a comparison of the 

benefits included in the benchmark or 

benchmark-equivalent plan versus the 

benefits included in traditional State 

plan coverage. The exempt individual 

has the right to return to State plan 

coverage at any time. For example, if the 

exempt individual is in need of services 

not offered in the benchmark plan, the 

individual can return to the regular 

Medicaid benefit package immediately. 

In order to assure that exempt 

individuals voluntarily choose to enroll 

in a benchmark benefit plan, we revised 

§ 440.320 to require States to track the 

number of voluntary enrollments and 

disenrollments in benchmark benefit 

plans by exempt individuals. Section 

440.320 also requires States to act 

promptly on requests from exempt 

individuals for disenrollment and to 

ensure that these individuals have full 

access to standard State plan services 

while disenrollment requests are being 

processed. 

Comment: One commenter said the 

provisions of the regulation on 

exempting populations and covering 

benefits should be consistent with the 

Americans with Disabilities Act (ADA). 

Response: While exempt populations 

under this regulation are specified in 

section 1937 of the Act and CMS does 

not have authority under the statute to 

expand the definition of exempt 


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populations through the regulatory 

process, we would consider any 

implications of the ADA when 

reviewing a benchmark plan 

amendment and in monitoring 

implementation of the option by a State. 

Comment: One commenter believed 

current regulations governing managed 

care in Medicaid that describe the 

information States must provide and 

how that information should be 

provided should be incorporated in the 

rule governing benchmark benefit plans. 

The information should include a 

comparison of features between 

Medicaid and the benchmark plan, 

whenever they differ. 

Other commenters urged CMS to 

allow States to deviate from the lock-in 

provisions of Medicaid managed care 

regulations at 42 CFR part 438. They 

assert that, if beneficiaries covered by an 

alternative benefit package, rather than 

full Medicaid benefits, can pick and 

choose benefits during an enrollment 

period by plan-hopping, plans will have 

no way to establish cost-effective 

premiums tied to the limited benefit 

package. The commenters requested that 

CMS allow States providing alternate 

benefit packages to offer as little as a 30- 

day change period after initial 

assignment, and differences in covered 

benefits be excluded as a justifiable 

cause for beneficiaries to switch health 

plans after the change period. 

Response: In light of the statutory 

changes made by CHIPRA, we revised 

the regulation at § 440.305 to 

incorporate compliance with Medicaid 

managed care requirements at section 

1932 of the Act and at 42 CFR part 438 

of Federal regulations. Thus, in 

providing information to beneficiaries 

who are offered managed care plans to 

obtain alternate benefit coverage, States 

are required to comply with the 

requirements at 42 CFR 438.10, and 

therefore must provide all enrollment 

notices, informational materials, and 

instructional materials relating to the 

enrollees and potential enrollees in a 

manner and format that may be easily 

understood. This informational material 

must include, among other things, 

information concerning enrollment 

rights and protections; any restrictions 

on freedom of choice among providers; 

procedures for obtaining benefits 

including prior authorization 

requirements; information on grievances 

and fair hearings procedures; 

information on physicians, the amount, 

duration, and scope of benefits; cost 

sharing, if any, and the process and 

procedures for obtaining emergency 

services. 

With regard to deviating from the 

lock-in provisions of Medicaid managed 

care regulations at 42 CFR part 438, we 

believe that the disenrollment 

provisions of § 438.56, which provide 

for a 90-day period after initial 

enrollment in which a managed care 

enrollee may change plans is consistent 

with the requirements of section 

1932(a)(4) of the Act and represents a 

reasonable time period for enrollees to 

decide whether the plan in which they 

are enrolled will best meet their needs. 

This trial period of enrollment is even 

more critical when the plan is offering 

a benchmark or benchmark-equivalent 

benefit package. We are not convinced 

that this limited period of time provides 

an incentive for enrollees to plan-hop in 

order to access specific benchmark 

benefits. 

Further, CMS has specified three 

circumstances where cause for 

disenrollment exists and permitted 

States to develop other reasons, 

including but not limited to, the 

examples in § 438.56(d)(iv). Beyond 

these requirements, States have the 

flexibility to create additional causes for 

disenrollment as best serves their 

beneficiaries and the Medicaid Program. 

Comment: Some commenters believed 

that CMS should require that all nonmanaged care plans ensure adequate 

access to providers that accept 

assignment of benefits and bill 

benchmark plans directly. 

Response: Access standards apply to 

all aspects of the Medicaid program, 

including benchmark and benchmarkequivalent plans. If States choose to 

offer benchmark or benchmarkequivalent plans to Medicaid 

beneficiaries, States must assure that 

access to providers and claims payment 

are in compliance with current Federal 

regulations. 

Comment: One commenter raised the 

potential problems of billing alternate 

benefit insurers. The commenter 

believed CMS should ensure that 

benchmark plan options should impose 

no additional administrative burdens on 

participating Medicaid providers. 

Providers should not be depended upon 

to refund payments and re-bill plans in 

the event that a plan is billed for a 

Medicaid individual who is 

retroactively enrolled into a different 

plan. Individual plan requirements 

should be streamlined into the existing 

system to minimize complexity to the 

already complex billing requirements. 

Response: Provider billing procedures 

will vary among the States based on the 

particular health care delivery system in 

the State at issue. We do not anticipate 

that provider billing under an 

alternative benefit program will 

necessarily differ from the way in which 

providers currently bill for Medicaid 

services, or that providers will have to 

establish new processes and systems to 

calculate, track, bill, and report 

benchmark services. Moreover, because 

most States already offer managed care 

enrollment, they already have 

experience ensuring coordination of 

provider claims among different 

managed care entities. Thus, we do not 

believe that the offering of alternate 

benefit packages will impose significant 

administrative burdens on providers. 

Comment: One commenter stated the 

regulation should require plan to plan 

reconciliations of payment in instances 

where beneficiaries have switched from 

one benefit plan to another, and in order 

to minimize confusion about plan 

enrollment and benefits, benchmark 

plans should be required to coordinate 

the receipt of beneficiary ID cards with 

the beneficiary’s effective date of 

enrollment. 

Response: We acknowledge the 

commenter’s concern regarding 

coordination of beneficiary enrollment 

in a plan and reconciliation of payment 

to providers. These are implementation 

and administrative issues that are, at 

least initially, best addressed by the 

State. We expect the State to 

appropriately coordinate enrollment 

and payment processes in a fashion that 

minimizes confusion and we expect the 

State to ameliorate coordination of 

payment issues so that providers are 

paid appropriately and in a timely 

fashion. However, we believe that these 

issues need not be addressed in 

regulation at this time, and that most 

States already have systems in place to 

coordinate enrollment and provider 

payments between managed care plans. 

Should there be evidence of problems 

CMS will revisit this issue. 

Comment: One commenter asserted 

that the final rule should require States 

to provide an exceptions process in 

which beneficiaries can obtain services 

not covered by a benchmark plan when 

they are medically necessary, and to 

educate beneficiaries about how to 

pursue this essential safeguard. 

Similarly, States should also be 

required to provide hardship 

exemptions if beneficiaries are unable to 

meet cost sharing requirements in 

benchmark plans and should review 

each beneficiary’s eligibility category to 

ensure they meet statutory requirements 

for assignment to benchmark plans. 

Response: CMS agrees with the 

commenter that States should review 

each beneficiary’s eligibility category to 

ensure they meet statutory requirements 

for assignment to benchmark plans. The 

requirements for when mandatory 

enrollment can occur are outlined in 

§ 440.431 and specify that only certain 


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groups of full benefit eligibles can be 

mandatorily enrolled in benchmark 

benefit packages. We are requiring in 

§ 440.320 that exempt individuals be 

fully informed regarding the choice for 

enrollment in benchmark or benchmarkequivalent plans and that they 

affirmatively enroll in benchmark and 

benchmark-equivalent plans. We are 

also requiring that States comply with 

the Medicaid managed care regulations 

including the information requirements 

for enrollees and potential enrollees. 

We are not requiring that States 

provide a process for beneficiaries to 

obtain services not covered by a 

benchmark plan when they are 

medically necessary, except with 

respect to children, because such a 

process is not authorized by section 

1937 of the Act. Benchmark or 

benchmark-equivalent plans offered to 

beneficiaries constitute the individual’s 

medical assistance health care coverage. 

Children must be provided access to the 

full range of EPSDT services, as defined 

in section 1905(r). While section 1905(r) 

of the Act specifically requires that 

States provide children necessary health 

care, diagnostic services, treatment and 

other measures described in section 

1905(a) related to conditions discovered 

by a screening service, we believe that 

any encounter with a health 

professional practicing within the scope 

of his or her practice should be 

considered to be a screening service for 

the purpose of the EPSDT requirement. 

It is important to note that for those 

who voluntarily enroll in benchmark or 

benchmark-equivalent plans, such 

individuals must be permitted to revert 

to traditional Medicaid coverage at any 

time. Requests by individuals to 

disenroll must be acted upon promptly. 

Furthermore, we included at § 440.320 a 

requirement for States to have a process 

in place to ensure that any 

disenrollment request is processed 

promptly and the individual is 

immediately able to access services 

described in the standard Medicaid 

State plan while the State is processing 

the individual’s disenrollment request. 

In terms of cost sharing, States are 

required to ensure that benchmark or 

benchmark-equivalent plans comply 

with the cost-sharing requirements at 

sections 1916 and 1916A of the Act, 

which includes the provision that 

premiums and/or cost sharing not 

exceed 5 percent of the family’s income. 

Consistent with section 5006 of the 

ARRA, States are required to ensure that 

eligible Indians are neither charged 

premiums nor required to participate in 

cost sharing for services provided by 

IHS providers or through contract health 

services through IHS providers. The Act 

also provides that States may implement 

undue hardship provisions for 

premiums and may permit providers to 

waive cost sharing on a case-by-case 

basis. 

Comment: One commenter believed 

alternative plans should include a 

provision for mandatory cost sharing, 

where applicable, in return for 

treatment or services. Uncollected costsharing places an unfair financial 

burden on providers. 

Response: States are required to 

ensure that benchmark or benchmarkequivalent plans comply with the costsharing requirements at sections 1916 

and 1916A of the Act. These sections 

provide that States can impose 

premiums and cost sharing on certain 

Medicaid beneficiaries, and Section 

1916A provides for enforcement of such 

premiums and cost sharing on certain 

Medicaid beneficiaries (certain 

limitations do apply). The enforcement 

of premiums and cost sharing through 

the denial of medically necessary 

services is at a State’s option. CMS is 

not requiring that cost sharing be 

mandated in return for treatment or 

services, since this would be 

inconsistent with the statutory language 

provided by Congress in the DRA and 

could impose considerable hardship 

and result in the denial of necessary 

health service for beneficiaries. 

Comment: One commenter mentioned 

that because of the potential for harm to 

beneficiaries, this rule should mandate 

strong requirements for meaningful 

public input at both the Federal and 

State level when States propose use of 

alternative benefit packages. Only a full 

open process in which all stakeholders 

can participate will provide the 

thorough, thoughtful analysis needed to 

determine whether specific changes will 

foster genuine efficiency or threaten 

beneficiaries’ access to appropriate care. 

These commenters noted that the 

State plan amendment process provides 

almost no meaningful opportunity for 

public input. They noted that States can 

implement changes the day after 

publishing a notice, with no 

requirement to acknowledge or address 

comments. 

The commenter suggested that 

meaningful opportunities for public 

comment could include well-publicized 

and easily accessible public hearings, 

ample opportunity for stakeholders to 

provide written comments, and a 

requirement that State and Federal 

officials provide written responses to 

comments. 

Response: We agree that States must 

seek public input concerning plans to 

offer alternative benefit packages. Thus, 

we are requiring in § 440.305 ‘‘Scope’’ 

that States secure public input prior to 

any submission to CMS of a proposed 

State plan amendment that would 

provide for an alternative benefit 

package. We are not requiring any 

specific process to secure public input, 

in order to permit States flexibility to 

design and use a public input process 

that meets State needs, but we intend 

these processes to be meaningful and 

will be reviewing how they are 

conducted to assure compliance with 

the law. 

Comment: One commenter suggested 

that CMS require States to include in 

Medicaid contracts with alternative 

benefit packages provisions that require 

fair reimbursement for providers at rates 

no less than rates paid under the 

traditional Medicaid program, including 

a reasonable dispensing fee for 

pharmacy providers. 

Further, the commenter believed that 

CMS should prohibit States from 

procuring contracts that contain mail 

order prescription requirements for 

Medicaid-eligible individuals. The 

commenter asserts that Medicaideligible individuals who are required to 

enroll in benchmark plans should have 

the option of receiving pharmacy 

services in a retail pharmacy setting. 

CMS should also require that contracts 

contain an assurance that allows 

extended quantities of medications from 

retail pharmacies for Medicaid-eligible 

individuals receiving treatment for 

chronic illnesses. 

Response: States are required to 

submit State plan amendments to 

establish rates and rate methodologies 

for all fee-for-service institutional and 

non-institutional services as part of their 

approved Medicaid State plan. 

Benchmark plans that utilize fee-forservice delivery systems must follow the 

State plan reimbursement process. This 

process is detailed at § 447.200 and 

§ 447.201 and includes a public notice 

requirement detailed at § 447.205. We 

published general rate setting 

regulations for drugs at 42 CFR part 447 

subpart I and for managed care entities 

at § 438.6(c), and we expect States to 

follow these rules when setting rates for 

benchmark and benchmark-equivalent 

plans. 

With regard to benchmark benefit 

plans that use managed care as the 

delivery system, the requirements for 

actuarial soundness at part 438 apply in 

the same way they apply to any 

Medicaid managed care entity, but we 

do not have statutory authority to 

review or approve reimbursement rates 

to contracted providers under managed 

care arrangements once the premium 

has been certified as actuarially 

appropriate for the populations and 


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services in the contract. We do however, 

have the authority and responsibility to 

review the provider network to 

determine that individuals have 

adequate access to all medically 

necessary services. 

With regard to mail order 

prescriptions, section 1937 did not 

address or limit the use of mail order 

prescription requirements, or otherwise 

address or limit the coverage of, or 

payment for, prescription drugs. 

Comment: One commenter 

recommended that CMS include in its 

rule an evaluation of the impact on 

beneficiaries of the benchmark benefit 

packages. 

Response: CMS points the commenter 

to the ‘‘Regulatory Impact Analysis’’ in 

section VI.B ‘‘Anticipated Effects’’ of this 

regulation. 

D. 440.310 Applicability 

Comment: One commenter disagreed 

that the medically needy population 

should be exempt from participating in 

benchmark plans. The commenter 

believed the rule should permit 

voluntary enrollment of medically 

needy into benchmark plans in States 

such as Minnesota which provide full 

benefits across the board to both 

categorically and medically needy. 

Section 1937 of the Act only expressly 

prohibits required participation by the 

medically needy but is silent as to 

whether they can be voluntarily 

enrolled. It is illogical for CMS to 

interpret Congressional intent to permit 

scaled back benefit coverage for the 

categorically needy, while shielding the 

medically needy from scaled back 

benefit packages. 

Response: We agree with the 

commenter’s suggestion that medically 

needy populations may be offered 

voluntary enrollment in an alternative 

benefit package. Thus, we revised the 

rule at § 440.315 ‘‘Exempt Individuals’’ 

to indicate that benchmark and 

benchmark-equivalent benefits can be 

offered as a voluntary option to 

medically needy or those eligible as a 

result of a reduction of countable 

income based on costs incurred for 

medical care. We recognize that 

applying benchmark benefit plans to 

medically needy individuals can be 

cumbersome depending on the 

arrangements for benchmark coverage. If 

the State administers its own 

benchmark benefit plan, enrolling and 

disenrolling these individuals would be 

no more problematic than standard 

Medicaid enrollment. 

E. Section 440.315 Exempt Individuals 

Comment: One commenter believed 

that these alternative benefit packages 

should provide exemptions to 

additional Medicaid coverage groups. 

Other commenters suggested that CMS 

use its discretion to expand the 

categories of exempt individuals to 

include adults with serious mental 

illness and children with serious 

emotional disturbances. 

Some commenters believed that all 

people with mental illness should be 

exempt. 

Response: The statute does not 

authorize CMS to exempt additional 

categories of individuals from 

mandatory enrollment in alternate 

benefit package. We have included the 

medically needy with the list of exempt 

populations because the medically 

needy population is effectively 

exempted from mandatory enrollment 

by exclusion from the definition of ‘‘full 

benefit eligible’’. 

We have defined ‘‘medically frail’’ and 

‘‘special medical needs’’ individuals 

who are exempt from mandatory 

enrollment. At a minimum, States must 

include children with serious emotional 

disturbances, individuals with disabling 

mental disorders, individuals with 

serious and complex medical 

conditions, and individuals with 

physical and or mental disabilities that 

significantly prevent them from 

performing one or more activities of 

daily living. Accordingly, we revised 

the regulation at § 440.315(f) to reflect 

this change. These are minimum 

standards and States have the flexibility 

to expand this definition. 

Comment: One commenter requested 

a definition for exempt individuals 

‘‘who qualify for Medicaid solely on the 

basis of qualification under the State’s 

TANF rules.’’ The commenter noted that 

no individual can qualify to receive 

Medicaid benefits solely on the basis of 

their TANF eligibility, since TANF is 

not linked to Medicaid. 

Response: In the proposed rule we 

published on February 22, 2008, we 

stated that we interpreted the exemption 

from mandatory enrollment in section 

1937(a)(2)(B)(ix) of the Act to apply only 

to those individuals who qualify for 

Medicaid because the State has elected 

to link Medicaid eligibility to TANF 

eligibility. Under the law, since passage 

of the Personal Responsibility and Work 

Opportunity Reconciliation Act of 1996 

(PRWORA), Medicaid eligibility is not 

tied to TANF eligibility. While many 

States automatically enroll people 

receiving TANF in Medicaid they do so 

because the design of the TANF and 

Medicaid rules means that, in fact, all 

TANF individuals qualify under the 

Medicaid rules. There is no direct 

eligibility link under law, however, 

between TANF and Medicaid. 

We have determined that our 

proposed regulation did not adequately 

take into account the references in 

section 1937 to title IV–A, and section 

1931 of the Act. Section 

1902(a)(10)(A)(i)(I) of the Act still 

requires States to cover, in their 

Medicaid programs, individuals 

receiving cash assistance under part A 

of title IV. However, section 1931 of the 

Act provides the rules for determining 

whether an individual is treated as a 

recipient of title IV–A assistance for 

purposes of Medicaid eligibility. Under 

section 1931 of the Act, references to 

title IV–A must be considered to be 

references to the IV–A State plan that 

was in effect prior to the date that title 

I of PRWORA took effect. In other 

words, the AFDC cash assistance rules 

are carried over to Medicaid eligibility 

under section 1931, (States may adopt 

less restrictive rules under section 

1931(b)(2) of the Act), but actual 

eligibility for or receipt of cash 

assistance is not a requirement under 

section 1931. Accordingly, we are 

revising our regulation at § 440.315(i) to 

provide that parents or caretakers who 

qualify for medical assistance on the 

basis of eligibility to receive assistance 

under a State plan funded under part A 

of title IV, as determined under section 

1931 of the Act, are exempt from the 

requirement to enroll in benchmark or 

benchmark-equivalent coverage. These 

are the parents who, at a minimum, 

States must cover under section 1931. 

We are also clarifying that we interpret 

the reference to ‘‘parents’’ in section 

1937(a)(2)(B)(ix) to include caretakers, 

as defined in section 1931. We are not 

requiring that parents or caregivers who 

qualify for Medicaid on the basis of 

more liberal income or resource 

methodologies which a State uses 

pursuant to the option available under 

section 1931(b)(2)(C) be exempt from 

mandatory enrollment in benchmark or 

benchmark-benefit plans, although 

States may, at their option, exempt some 

or all such individuals. 

Comment: A commenter stated the 

proposed rule defines the exempt 

‘‘special medical needs’’ group to 

include two of the three groups that are 

also exempt from mandatory enrollment 

in managed care plans under section 

1932(a)(2) of the Act: ‘‘Dual eligibles’’ 

and certain children. However, the 

proposed rule does not exempt the third 

group that is exempt from mandatory 

enrollment in managed care plans, 

American Indians/Alaska Natives. 

Several commenters believed that the 

same compelling policy reasons for 

excluding American Indians/Alaska 

Natives from mandatory managed care 


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support excluding them from mandatory 

enrollment in benchmark plans, and 

requested that we revise the rule to be 

consistent with current policy described 

in the Medicaid managed care rule of 

2002. 

Response: In the proposed rule we 

mistakenly confused two distinct groups 

in our definition of ‘‘individuals with 

special needs’’ and included individuals 

eligible for Medicare as a special needs 

population when it is identified in 

section 1937 as a separate exempt 

population. We have therefore deleted 

that reference. Section 1937(a)(2)(iii) of 

the Act exempts individuals entitled to 

Medicare benefits (dual eligibles), 

regardless of medical need, from 

mandatory enrollment in an alternative 

benefit package. There is a separate 

statutorily exempt category at section 

1937(a)(2)(vi) of the Act for individuals 

who are medically frail or have special 

medical needs. This final regulation 

includes both of these groups 

separately. 

Specifically, in the proposed rule, we 

specified that ‘‘individuals with special 

needs’’ means the populations identified 

in § 438.50(d)(1) and § 438.50(d)(3). The 

reference to § 438.50(d)(1) was an 

erroneous reference to the dual eligible 

population discussed above. The 

reference to § 438.50(d)(3) was made 

because that population was a preexisting definition of the statutory term 

‘‘children with special medical needs’’ 

contained at section 1932(a)(2)(A) of the 

Act. We did not include a separate 

definition of adults with special medical 

needs in the proposed rule. 

After reviewing public comment, we 

have determined that States should be 

allowed flexibility to adopt reasonable 

definitions of ‘‘individuals with special 

medical needs’’ as long as that definition 

includes, at a minimum, the children 

specified in § 438.50(d)(3), children 

with serious emotional disturbances, 

individuals with disabling mental 

disorders, individuals with serious and 

complex medical conditions and 

individuals with physical, and/or 

mental disabilities that significantly 

impair their ability to perform one or 

more activities of daily living. 

We recognize that Congress included 

special protections for American 

Indians under the managed care 

provisions at section 1932(a)(2)(C) of the 

Act, but those special protections were 

not included under section 1937 of the 

Act. It is possible that the managed care 

protections were based on the fact that 

American Indians have access to the 

IHS and tribal health care delivery 

system, and there was concern about 

mandating enrollment in a managed 

care plan that would not be consistent 

with that health care delivery system. 

While American Indians/Alaska 

Natives are not a statutory group that is 

exempt from enrollment in an 

alternative benefit package, they remain 

exempt from mandatory enrollment in 

managed care when such an option is 

utilized under section 1932 of the Act. 

As a result, a State that operates an 

alternative benefit package through 

managed care providers must provide 

American Indians/Alaska Natives with a 

health care delivery system that is 

consistent with the special protections 

related to managed care enrollment 

contained in section 1932(a)(2)(C) of the 

Act as well as section 1932(h) of the 

Act, added by ARRA, that addresses the 

requirement that American Indians/ 

Alaska Natives enrolled in managed 

care have access to IHS providers. 

Comment: One commenter believed 

that States may be discouraged from 

pursuing the benchmark option because 

of the extra work required for 

determining eligibility, along with the 

fact that potential savings may be 

limited. The commenter asked that CMS 

not impose any additional definition of 

sub-groups that must be identified and 

carved out of benchmark plans. 

Response: The benchmark benefit is 

an option that States may elect to utilize 

within their Medicaid State plan when 

the State determines its value for a 

defined population. The additional 

steps needed in determining eligibility 

are necessary to assure that the benefit 

plan is targeted appropriately. The 

ultimate value of a benchmark benefit 

plan to both the State and beneficiaries 

is dependent upon the clear definition 

of eligibility for the defined benefit 

package. The exempt categories were 

established by statute and must be 

evaluated as a condition of providing a 

benchmark or benchmark-equivalent 

benefit. 

Comment: One commenter asked for 

additional clarification of the phrase ‘‘or 

being treated as being blind or disabled’’ 

in § 440.315 of this regulation. 

Response: This phrase needs to be 

interpreted in light of the particular 

eligibility conditions in that State. For 

example, the phrase could refer to States 

that qualify under section 209(b) of the 

Act, since States with this classification 

can have a more restrictive definition of 

blindness or disability. The term could 

also refer to one of the working disabled 

groups, since one group has a 

categorical requirement that the person 

have a medically determinable severe 

impairment, which does not exactly 

match the criteria for a determination of 

‘‘disabled.’’ Additionally, Territories 

operate on a different definition of 

blindness and disability than the 50 

States. 

Comment: Some commenters stated 

that the proposed rule exempts from 

mandatory enrollment the ‘‘medically 

frail.’’ Several commenters suggested 

this term be given specific meaning in 

the rule. They suggested it include 

anyone who is eligible for or is receiving 

Medicare or Medicaid services for home 

health, hospice, personal care, 

rehabilitation or home and communitybased waivers, or who is at imminent 

risk of need for these types of services. 

Another commenter suggested this 

group be defined as individuals with 

multiple medical conditions and/or a 

chronic illness. 

Response: After considering public 

comment on the issue, we have 

included in the text at § 440.315(f) 

guidance on how States must, at a 

minimum, define ‘‘medically frail.’’ 

Additionally, we will require that States 

offering alternative benefit packages 

inform CMS as to their definition of 

‘‘medically frail.’’ States will be required 

to include information regarding which 

population groups will be mandatorily 

enrolled in the benchmark program and 

will need to ensure that enrollment is 

optional for exempt populations, 

including individuals defined by the 

State as ‘‘medically frail.’’ Additionally, 

the required public input process 

should include informing interested 

parties of the State’s proposed definition 

of ‘‘medically frail.’’ 

Comment: Another commenter 

suggested CMS use the existing 

definition of children with special 

health care needs which is defined by 

the Department of Health and Human 

Services, Health Resources and Services 

Administration, Maternal and Child 

Health Bureau (MCHB) as: ‘‘Children 

with special health care needs:’’ 

‘‘Children who have or are at increased 

risk for a chronic physical, 

developmental, behavioral, or emotional 

condition and who also require health 

and related services of a type or amount 

beyond that required by children 

generally.’’ 

Other commenters believed the 

definition of ‘‘special medical needs 

individuals’’ should include adults who 

meet the Federal definition of an 

individual with serious mental illness 

and children who meet the Federal 

definition of children with serious 

emotional disturbance, as promulgated 

by the Substance Abuse and Mental 

Health Services Administration 

(SAMHSA). The SAMHSA definition 

would include some individuals who, 

for one reason or another, are not 

eligible as persons with a disability, but 


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nevertheless are significantly impaired 

by their mental disorder. 

Response: In the February 22, 2008 

proposed rule, we defined ‘‘individuals 

with special medical needs’’ to be 

consistent with § 438.50(d)(3), which 

implements and interprets the term 

‘‘children with special medical needs’’ 

used in section 1932(a)(2)(A) of the Act. 

This definition refers to children under 

age 19 who are eligible for SSI, section 

1902(e)(3) of the Act, TEFRA children, 

children in foster care or receiving other 

out of home placement, children 

receiving foster care or adoption 

assistance services or who are receiving 

services through a community based 

coordinated care system. 

We appreciate commenters’ 

suggestions of additional populations of 

children and adults for inclusion in the 

definition of special medical needs. In 

this final rule, we are allowing States 

the flexibility to adopt a reasonable 

definition of the term ‘‘special medical 

needs’’ and we expect States to consider, 

at a minimum, all of these individuals 

for inclusion in the definition of 

‘‘individuals with special medical 

needs.’’ 

To maintain State flexibility, we have 

provided guidance to States in our 

discussion of these terms and in the 

regulation at § 440.315(f) and we are 

requiring that the exempt population 

include, at a minimum, those children 

identified in § 438.50(d)(3), children 

with serious emotional disturbances, 

individuals with disabling mental 

disorders, individuals with serious and 

complex medical conditions and 

individuals with physical and or mental 

disabilities that significantly impair 

their ability to perform one or more 

activities of daily living. 

Also, as stated previously, CMS will 

require that States offering alternative 

benefit packages inform CMS as to their 

definition of ‘‘medically frail’’ and 

‘‘special medical needs.’’ States will be 

required to ensure that exempt 

populations, including individuals with 

‘‘special medical needs’’ or who are 

‘‘medically frail’’ are not mandatorily 

enrolled in alternative benefit packages, 

but are instead offered an informed 

choice. Additionally, CMS will interpret 

the required public input process to 

include informing interested parties as 

to the proposed definition of ‘‘special 

medical needs.’’ 

F. Section 440.320 State Plan 

Requirements—Optional Enrollment for 

Exempt Individuals 

Comment: One commenter supported 

our regulation at § 440.320 and 

appreciated the willingness of CMS to 

provide for optional enrollment of 

otherwise exempt individuals. Several 

other commenters urged CMS to require 

States to provide more information and 

assistance to exempt individuals who 

are given the option to enroll in 

alternative coverage. 

Response: We agree with the 

commenter that if States plan to offer 

enrollment in a benchmark plan to 

exempt individuals, the State must 

provide information and assistance to 

exempt individuals or their legal 

guardians/caregivers who are given the 

option to enroll in alternative coverage 

plans so they can make an informed 

choice. We proposed in § 440.320 that 

States must inform the individuals that 

enrollment is voluntary and that the 

individual may disenroll from the 

benchmark or benchmark-equivalent 

benefit package at any time and regain 

immediate access to the standard full 

Medicaid program under the State plan 

while the State processes their 

disenrollment request. We also 

proposed that States must inform the 

individual of the benefits available 

under the benchmark or benchmarkequivalent benefit package and provide 

a comparison of how the benefits, and 

if relevant, the cost share differ from the 

benefits and cost share available under 

the standard full Medicaid program. We 

also required that the State document in 

the individual’s eligibility file that the 

individual was informed and 

voluntarily chose to enroll in the 

benchmark or benchmark-equivalent 

benefit package. 

After considering public concerns as 

to the importance of the informed 

choice process, we revised the 

regulation at § 440.320(a) to require the 

State to effectively inform exempt 

individuals about the voluntary nature 

of their enrollment, and that they may 

choose to disenroll at any time from the 

benchmark or benchmark-equivalent 

plan in order to have immediate and full 

access to the standard Medicaid 

benefits, the benefits available under the 

benchmark benefit plan, the cost 

associated with the benchmark benefit 

plan, and to provide a comparison 

between the benefits available under the 

benchmark benefit plan and cost share, 

to the benefits and cost share provided 

by the standard, full Medicaid program. 

To support these requirements we have 

also included the requirement that the 

State document in the individual’s 

eligibility file that the individual elected 

to enroll in the benchmark plan after 

receiving such information regarding 

benefits and disenrollment rights. 

As part of the State Plan Amendment 

(SPA) approval process whereby States 

receive approval from CMS to 

implement new benefits under their 

State plan, States must define their 

disenrollment process and include a 

specific time period for disenrolling a 

beneficiary and assuring full access to 

standard Medicaid coverage. To the 

extent that the informed choice process 

continues to raise concerns, we will 

consider the development of additional 

guidance as to what processes are 

necessary to insure that the informed 

choice process is effective. 

Comment: One commenter said that 

‘‘exempt’’ populations should not be 

allowed to enroll in an alternative 

benefit plan at all. 

Response: The statute states that 

exempt individuals may not be required 

to enroll in an alternative benefit plan, 

and with the protections noted, it is 

reasonable to give such individuals the 

opportunity to enroll in such plans. 

Alternative benefit plans may in fact 

have richer benefits than traditional 

State plan services and be targeted to 

the specific needs of exempt 

individuals. We are aware, however, 

that the benchmark plan may not 

provide all the services as the 

traditional plan and that exempt groups 

should not in any way be enrolled in 

such plans involuntarily, or without full 

knowledge of the consequences. 

Accordingly, this regulation provides 

new protections to assure that exempted 

individuals are fully informed about 

their options for enrolling and 

disenrolling from an alternative benefit 

plan. 

Comment: One commenter believed 

the proposed rule was silent on the 

requirement that the State provide 

information in plain language that is 

understood by the individual, parent, or 

guardian including clear instructions on 

how to access EPSDT services not 

provided by the benchmark plan and 

how to disenroll from the benchmark 

plan. One commenter suggested that 

CMS establish literacy and translation 

standards for benefit information sheets 

and another commenter requested that 

at a minimum, information should be 

provided in the beneficiary’s spoken 

language and at an appropriate reading 

level. 

Response: We agree that it is 

important to provide information in 

plain language and individuals should 

be provided clear instructions on how to 

access EPSDT services not provided by 

benchmark plans. Furthermore, 

individuals should also receive 

information on how to disenroll from 

benchmark plans. We are requiring in 

§ 440.320 that States effectively inform 

exempt individuals of the choice, and 

provide sufficient information in order 

to make an informed choice, including 

a comparison of benefits and any cost 


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sharing. Exempt individuals must be 

afforded the opportunity to disenroll 

from benchmark or benchmarkequivalent coverage promptly and 

without any loss of access to the full 

standard Medicaid benefits, if they 

determine that the coverage is not 

meeting their health care needs. 

Comment: Some commenters stated 

that the rules should provide for 

immediate revocation of any voluntary 

election at the discretion of those 

exempt individuals who elect an 

alternative plan. These commenters 

urged that revocation be permitted 

through telephone, in writing, in 

person, by electronic communication, or 

by a designee, so as to make revocation 

as simple as possible and as quick as 

possible for beneficiaries. The 

commenters also asserted that the State 

should be required to provide 

immediate notification to such 

individuals of the right to revoke their 

election if they fall into an excluded 

category. The commenters urged that 

coverage and payment should not be 

interrupted during changes in election 

and marketing should not be permitted 

by alternate plans to excluded groups. 

These commenters asked that the 

disenrollment process from benchmark 

plans allow a seamless transition to and 

from the selected program and minimize 

the administrative burden on the 

provider while ensuring care delivery is 

not interrupted. 

Response: We agree that coverage and 

payment should not be interrupted 

during changes in election. It is 

important that coordination of care 

continue during any time of transition 

either from one Medicaid eligibility 

group to another or from one benefit 

program to another. Thus, in 

considering the commenters’ 

suggestions, we have provided in 

§ 440.320 that, for individuals who 

voluntarily enroll and later determine 

they want to return to traditional 

Medicaid and/or for individuals who 

are later determined eligible for an 

exempted group, disenrollment requests 

must be acted upon promptly and States 

must have a process in place to ensure 

full access to standard Medicaid State 

plan services while disenrollment 

requests are being processed. 

Furthermore, we expect that for 

individuals who voluntarily enroll and 

later decide to return to traditional 

Medicaid and/or for individuals who 

are later determined eligible for an 

exempted group, the State will process 

disenrollment requests consistent with 

the managed care regulations at 

§ 438.56(e), and the effective date of 

disenrollment must be no later than the 

first day of the second month following 

the month in which the enrollee files 

the request. 

Comment: Some commenters 

recommended that CMS enhance the 

proposed rule to include a section on 

CMS oversight containing a requirement 

that CMS approve State informational 

materials that provide comparative 

information and information on choice. 

Other commenters were concerned that 

inappropriate marketing activities such 

as those they believe are being used by 

some Medicare Advantage plans, may 

be adopted by benchmark plans. These 

commenters urged CMS to be aware of 

the potential for inappropriate 

marketing tactics, require States to 

oversee marketing activities, and impose 

limits on marketing to ensure 

individuals are not enrolled under false 

pretenses. 

Response: To the extent that 

benchmark and benchmark-equivalent 

benefit packages are provided through 

managed care plans, States must comply 

with the Medicaid managed care rules at 

42 CFR part 438. Marketing 

requirements for managed care plans are 

described in § 438.104. States must 

consider these requirements in 

contracting with these entities. 

We will monitor implementation to 

determine if additional measures are 

needed. 

Comment: Other commenters 

indicated that CMS should require 

strong beneficiary protections for 

people, including frail older and 

disabled beneficiaries, who have the 

opportunity to voluntarily enroll in 

benchmark plans. The commenters 

indicated that these protections should 

include objective counseling to make 

sure they understand the potential for 

higher costs and make truly informed 

decisions, a ban on aggressive and 

coercive marketing such as door-to-door 

sales, a requirement to document 

network adequacy for additional 

populations, and ongoing monitoring to 

ensure that these beneficiaries are 

getting the care they need. Some 

commenters indicated that, even with 

full information, individuals who 

voluntarily enroll may be likely to make 

an inappropriate election. They 

suggested a professional counselor 

independent of the plan be available to 

review their plan selection. 

Response: We believe a professional 

counselor or enrollment broker would 

be a reasonable administrative 

protection that could be adopted by a 

State, but we are not requiring it. This 

is an operational issue that may depend 

on the circumstances of a particular 

State’s program. States who contract 

with an enrollment broker can receive 

administrative match from CMS at the 

50 percent match rate. To the extent that 

the State offers alternative benefits 

through managed care plans, enrollment 

brokers must operate consistently with 

the requirements at § 438.810. 

Consistent with the managed care rules 

at § 438.10, States are encouraged to 

provide information at least annually as 

to an individual’s enrollment choice 

under the benchmark option or the 

traditional State plan option. This could 

be accomplished at the point of redetermining eligibility for enrollees. 

Additionally, if a change in eligibility 

status has occurred (for example, nonpregnant female mandatorily enrolled in 

the benchmark plan becomes pregnant 

and is no longer eligible for mandatory 

enrollment), the State will have to 

provide such individuals with 

information about their benefit options 

as soon as the State becomes aware of 

the change in eligibility. If the 

individual chooses to disenroll, the 

individual must have full access to 

standard Medicaid State plan services 

that may not be available in the 

benchmark plan while the State 

implements the disenrollment process. 

Comment: Several commenters 

believed exempt individuals will be 

automatically enrolled without their 

expressed consent and wanted an 

assurance that this will not occur. These 

commenters urged CMS to safeguard 

exempt individuals from being enrolled 

in benchmark or benchmark-equivalent 

plans without their prior informed 

consent by more expressly prohibiting 

States from taking an automatic 

enrollment or default enrollment 

approach to their enrollment. They 

suggested that the proposed language 

could allow or even encourage States to 

adopt an automatic or default 

enrollment approach without further 

clarification because the language could 

be read to allow States to initially enroll 

all exempt persons who do not 

affirmatively choose not to enroll. These 

commenters indicated that failure to 

clarify this point would be construed as 

approval of opt-out practices and would 

not protect against any form of 

automatic or ‘‘presumed voluntary’’ 

enrollment. 

Response: Section 1937 of the Act 

provides that exempt individuals cannot 

be mandatorily enrolled in benchmark 

or benchmark-equivalent plans. We 

proposed to permit States to offer 

exempt individuals a voluntary option 

to enroll, based on informed choice. In 

order for exempt individuals not to be 

mandatorily enrolled and to have made 

an ‘‘informed choice’’ about enrollment, 

the choice must take place before 

enrollment in the benchmark or 

benchmark-equivalent plan. We have 


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amended the final rule to make this 

clear and to require the State to inform 

the exempt individual of the benefits 

available under the benchmark or 

benchmark-equivalent package and the 

cost of such a package. Furthermore, 

these actions should occur before the 

receipt of services in a benchmark or 

benchmark-equivalent plan. We 

mentioned earlier that we require that 

the individual’s file be documented to 

reflect that an exempt individual is fully 

informed and has chosen to be enrolled 

in a benchmark or benchmarkequivalent plan. CMS, in response to 

these comments, has made it clear that 

individuals cannot be enrolled until an 

informed election is made. 

In terms of CMS monitoring, we 

provide in Federal regulations at 

§ 430.32 for program reviews of State 

and local administration of the 

Medicaid program. In order to 

determine whether the State is 

complying with the Federal 

requirements and the provisions of its 

Medicaid plan, we may conduct reviews 

that include analysis of the State’s 

policies and procedures, on-site review 

of selected aspects of agency operation, 

and examination of individual case 

records. We also require in § 440.320 

that the State track and maintain the 

total number of individuals that have 

voluntarily enrolled in a benchmark 

benefit plan and the total number of 

individuals that have elected to 

disenroll from the benchmark benefit 

plan. 

Comment: One commenter believed 

that the rule should describe the level 

of detail required in the State’s 

description of the difference between 

State Plan benefits and benchmarkequivalent plan benefits because the 

commenter believed it is important that 

there be a detailed, written comparison. 

Response: We agree with the 

commenter on the importance of the 

benefit comparison. We have required 

that if the State chooses to offer 

benchmark or benchmark-equivalent 

benefit options to individuals exempt 

from mandatory enrollment such 

individuals must be given, prior to 

benchmark enrollment, a comparison of 

traditional State plan benefits and the 

benefits offered in the benchmark or 

benchmark-equivalent benefit package, 

as well as any differences in cost 

sharing. In order for exempt individuals 

to make an informed choice, the 

information must be fully detailed by 

the State in a format that is 

understandable by the beneficiary. 

Comment: A commenter believed 

CMS should prohibit States from 

implementing procedures that make it 

more difficult for beneficiaries to stay in 

the regular Medicaid program than to 

enroll in benchmark benefit plans. 

Beneficiaries should not be asked to 

make a choice without being afforded a 

reasonable time to evaluate the options. 

Another commenter was concerned that 

a State could reduce its standard 

Medicaid State plan services in order to 

force exempt beneficiaries to enroll in a 

benchmark or benchmark-equivalent 

plan. 

Response: We agree that individuals 

should be given a reasonable time to 

evaluate the options in considering 

traditional Medicaid benefits versus 

benchmark or benchmark-equivalent 

options. In order for individuals to make 

an informed choice, individuals must 

have ample time to consider the options 

available. Therefore, we have revised 

the regulatory provision at 

§ 440.320(a)(3) to require that the State 

document that the individual had ample 

time for an informed choice. We are not 

prescribing standards for what 

constitutes ‘‘ample time’’ because we 

believe this may vary based on the 

circumstances and/or individual 

involved. With regard to States reducing 

their standard Medicaid State plan 

services, section 1937 of the Act does 

not change State flexibility to reduce or 

add optional 1905(a) medical services. 

However, if such changes are done for 

the purpose of coercing exempt 

individuals to enroll in benchmark 

plans, such action may not be consistent 

with the requirement that exempt 

individuals must be permitted to make 

a fully voluntary decision to enroll in a 

benchmark plan. 

Comment: Another commenter 

believed CMS should require States to 

institute expedited processes to 

transition out of benchmark plans those 

individuals who become eligible for 

exempted categories. 

Response: We agree with the 

commenter that States should provide 

for timely transition of individuals if 

they become eligible for exempt 

categories and thus are not required to 

be mandatorily enrolled in a benchmark 

plan. Congress clearly identified 

individuals who are exempt from 

mandatory enrollment in benchmark or 

benchmark-equivalent plans. 

As mentioned previously, we have 

revised the final rule at § 440.320 to 

require that States inform exempt 

individuals that they may disenroll at 

any time and provide them with 

information about the disenrollment 

process. We have also revised § 440.320 

to require that disenrollment requests be 

acted upon promptly and that States 

have a process in place to ensure full 

access to standard Medicaid State plan 

services while any disenrollment 

requests are being processed. We further 

revised § 440.320 to include a 

requirement for States to maintain data 

that tracks the number of voluntary 

enrollments in benchmark and 

benchmark-equivalent benefit plans and 

the number of disenrollments from 

these plans. 

These requirements also apply to 

individuals who become part of an 

exempt population for which no 

mandatory enrollment can occur. It is 

incumbent upon the State to ensure that 

procedures are in place to notify these 

individuals of their change in status and 

to provide them with information 

explaining their right to disenroll from 

the benchmark or benchmark-equivalent 

benefit plan and return to the traditional 

Medicaid State plan. We believe that 

States should not rely on the 

individual’s ability to recognize that 

their change in status permits them to 

revert back to traditional Medicaid and 

that they are entitled to the full range of 

Medicaid benefits. It is therefore the 

responsibility of the State to assure that 

these individuals have the choice to 

receive benchmark plan benefits, or the 

benefits available under the traditional 

Medicaid State plan. 

Comment: One commenter asked for 

clarification on whether the benchmark 

or benchmark-equivalent benefit 

packages would apply to ‘‘unqualified 

individuals’’ who fall under the ‘‘exempt 

category’’ and who could be offered 

optional enrollment in a benchmark 

benefit package. 

Response: We wish to clarify that 

unqualified individuals (aliens who are 

not lawfully admitted for permanent 

residence in the United States or 

otherwise do not meet the Medicaid 

eligibility requirements for aliens) for 

example, aliens who are residing in the 

U.S. illegally, are exempt individuals 

who cannot be mandatorily enrolled in 

benchmark plans because in most cases 

they are only eligible for emergency 

services under Medicaid. 

Unqualified or undocumented 

individuals who are otherwise eligible 

for Medicaid (for example, meet income 

or residency requirements) are only 

covered for emergency medical services 

under section 1903(v) of the Act. 

Generally, the determination that such 

an individual has received an 

emergency medical service is made 

retrospectively by the State. Therefore, 

it is unlikely that a State would decide 

to offer the benchmark or benchmarkequivalent benefit option for these 

individuals, even if enrollment were 

voluntary. 


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G. Section 440.330 Benchmark Health 

Benefits Coverage 

Comment: A few commenters 

questioned the coverage standards of a 

Secretary approved benefit package. 

They contended that under this option, 

CMS could approve coverage of any 

kind, one that may include or exclude 

any benefits the State chooses. They 

asserted that this failure to recognize 

any minimum set of required benefits in 

Medicaid could limit access to critical 

health care services. They argued that 

allowing States even greater flexibility, 

by not requiring that coverage meet 

benchmark levels, is inappropriate and 

is likely to result in more beneficiaries 

going without health care services until 

they become sick and require emergency 

treatment. 

Another commenter agreed and stated 

that the proposed rule says, ‘‘Secretaryapproved coverage is any other health 

benefits coverage that the Secretary 

determines * * * provides appropriate 

coverage for the population proposed to 

be provided this coverage.’’ The 

commenter finds this statement 

troublesome. This provision gives the 

Secretary the wide discretion to approve 

a number of plans that are more flexible 

than the benchmark plan requirements 

as articulated in this rule. This 

provision would give States the option 

to craft qualifying plans that include or 

exclude any benefits that the State 

chooses. 

The commenters urged CMS to 

remove this fourth option for Secretaryapproved benchmark packages from the 

proposed rule. 

Response: The statute provides States 

with the option of Secretary-approved 

coverage, and we believe we have 

provided for sufficient protections to 

ensure that this option will be 

consistent with the statutory purpose of 

meaningful health benefits coverage 

while also allowing State flexibility. In 

this final rule, we have articulated the 

general standard that Secretaryapproved coverage must be appropriate 

coverage to meet the needs of the 

population provided that coverage. The 

regulations also provide a number of 

documentation requirements so that 

CMS can determine that this standard 

has been met. States are required to 

submit a full description of the 

proposed coverage. The State must 

include a benefit-by-benefit comparison 

of the proposed plan to one or more of 

the three benchmark plans specified in 

§ 440.330 or to the State’s standard full 

Medicaid coverage package under 

section 1905(a) of the Act, as well as a 

full description of the population that 

would receive the coverage. 

Additionally, States will be providing to 

CMS any other information that would 

be relevant in making a determination 

that the proposed coverage would be 

appropriate for the proposed 

population. In considering Secretaryapproved coverage, we will review 

individual State designs on a case-bycase basis. To the extent that State 

designs deviate from the other options 

for benchmark coverage (for example, 

State employees coverage, etc.) or 

traditional Medicaid State plan 

coverage, we will consider the 

information provided as a result of the 

public input process and any other 

information States submit that would be 

relevant to a determination that the 

proposed coverage would be 

appropriate for the proposed 

population. 

We believe that Secretary-approved 

coverage can be appropriate to meet the 

needs of the targeted population 

provided that coverage. To date, the 

majority of the approved benchmark 

plans are Secretary-approved 

benchmark plans and most of these 

include not only all regular Medicaid 

State plan services but provide for 

additional services like disease 

management and/or preventive services. 

Comment: Some commenters believed 

that to allow States to establish 

alternative health benefit programs that 

do not include family planning services 

is counter-productive to ensuring the 

health of Americans and maintaining 

the sustainability of the Medicaid 

program. Also, a benchmark or 

benchmark-equivalent plan would not 

be appropriate for individuals of 

childbearing age if it did not include 

access to family planning services. The 

commenter believed that no health 

benefits package would be ‘‘appropriate’’ 

for individuals of childbearing age if it 

did not include access to family 

planning services and supplies, and 

asked CMS to revise the proposed rule 

to clarify that, in order to be considered 

‘‘appropriate,’’ a benchmark or 

benchmark-equivalent plan must 

include coverage of family planning 

services and supplies. 

The commenter also urged CMS to 

amend the rule to allow beneficiaries to 

disenroll from any such alternative 

benefit plan and reenroll in traditional 

Medicaid if the plan does not cover 

family planning services and supplies. 

Several commenters noted that family 

planning is basic preventive health care 

for women and that ensuring a woman’s 

freedom of choice is critical in the 

delivery of these services. The 

commenters stated that birth control, 

the main component of family planning 

coverage, is the most effective way to: 

(1) Prevent unwanted pregnancies, (2) 

safely space pregnancies in the interest 

of the mother and child’s health, and (3) 

keep women in the workforce. 

Furthermore, the commenters believed 

that birth control enables preventive 

behaviors and allows for the early 

detection of disease by getting women 

into doctor’s offices for regular health 

screenings. 

One commenter believed that the 

legislation authorizes the Secretary to 

approve benchmark plans that provide 

‘‘appropriate coverage for the population 

proposed to be provided that coverage.’’ 

Similarly, the legislation requires 

benchmark-equivalent coverage to 

include ‘‘other appropriate preventive 

services, as designated by the 

Secretary.’’ Coverage offered to women 

of reproductive age cannot be 

considered ‘‘appropriate’’ if it excludes 

coverage of family planning services 

and supplies. 

Some commenters asserted that 

permitting some plans to exclude 

coverage of family planning runs 

directly counter to three of the major 

goals articulated by the legislation’s 

supporters: reducing Medicaid costs, 

promoting personal responsibility and 

improving enrollees’ health. 

Other commenters believed that 

approximately half of all pregnancies in 

the United States are unplanned and 

there is a strong correlation between 

unintended pregnancies and failure to 

obtain timely prenatal care. They stated 

that guaranteeing coverage of family 

planning services for women enrolled in 

Medicaid benchmark plans increases 

the likelihood that these women will be 

under the care of a health professional 

before pregnancy, and that when they 

do become pregnant they will obtain 

timely prenatal care as recommended by 

the American College of Obstetricians 

and Gynecologists. 

The commenters urged the 

Department to revise § 440.330 to clarify 

that in order for Secretary-approved 

coverage to be considered appropriate 

coverage for women of reproductive age, 

it must include family planning services 

and supplies. In addition, the 

commenters urged the Department to 

modify § 440.335 to designate family 

planning services and supplies as a 

required preventive service that must be 

included in all benchmark-equivalent 

plans offered to women of reproductive 

age. 

Response: If one of the statutorilyspecified benchmark packages (that is, 

FEHB, State Employees plan, and 

commercial HMO plan) did not contain 

family planning services and supplies, 

the statute permitted States to base an 

alternative benefit package on that 


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specific benchmark plan. CMS had no 

authority to disapprove the use of a 

statutorily-specified benchmark plan as 

the basis for an alternative benefit 

package. However, at the time that this 

regulation was being revised the Patient 

Protection and Affordable Care Act 

(PPACA), (Pub. L. 111–148), had not yet 

been enacted. That law has now 

amended section 1937(b) of the Act to 

add additional requirements affecting 

benchmark and benchmark-equivalent 

coverage, including the requirements for 

coverage of family planning services 

and supplies. We intend to issue a 

second final rule implementing the 

changes made by PPACA with a 

shortened effective date to bring the 

provisions of this regulation into 

conformity with the statute. 

Consequently, we are revising 

§ 440.375 to update the title and revise 

the regulation at this section to indicate 

that States can provide benchmark or 

benchmark-equivalent coverage to 

individuals without regard to the 

requirements relating to the scope of 

coverage that would otherwise apply 

under traditional Medicaid benefit 

packages. The scope of coverage would 

still need to be consistent with the 

requirements for the scope of coverage 

contained in this subpart, which are 

based on the statutory benchmark or 

benchmark-equivalent coverage 

provisions. 

With respect to Secretary-approved 

coverage, we agree with the commenters 

that if such a benchmark benefit plan is 

provided to individuals of child bearing 

age that does not include family 

planning services and supplies, it would 

not be appropriate to meet the needs of 

the population it serves and would have 

to therefore include these services. 

Additionally, if a non-Secretary 

approved benchmark plan such as a 

commercial HMO plan does not include 

family planning services and supplies, 

States have the option of adding family 

planning services to the benchmark, at 

the enhanced FMAP rate established for 

these services. 

With respect to benchmark-equivalent 

coverage in § 440.335, we have added 

family planning services and supplies as 

required services. In addition we have 

added emergency services as other 

required appropriate preventive services 

designated by the Secretary, consistent 

with the strong emphases the Medicaid 

statute places on these preventive 

services. 

Comment: Other commenters believed 

that one reason States may wish to 

design a plan under the option for 

benchmark-equivalent or Secretaryapproved plans is to offer beneficiaries 

important services that are not 

otherwise covered by Medicaid or a 

standard benchmark plan. The 

commenters stated that this rule does 

not permit this. CMS should allow 

States to submit proposals that include 

other services and judge the overall plan 

proposed by the State to assess its 

efficiency. 

Response: Section 1937 provides that 

benchmark-equivalent or Secretaryapproved plans can be offered as 

benchmark plans, so long as the 

identified basic services are provided as 

part of the benchmark-equivalent 

benefits and the benefit package is 

appropriate to meet the needs of the 

population it serves for Secretaryapproved coverage. The rule is 

consistent with the statute. The rule 

provides that the scope of a Secretary 

approved health benefits package or any 

additional benefits will be limited to 

benefits within the scope of the 

categories available under a benchmark 

coverage package or the standard full 

Medicaid coverage under section 

1905(a) of the Act. This provision 

allows States flexibility to offer 

additional health care services that 

would not otherwise be offered. 

Additional services are limited to those 

in categories offered under a benchmark 

plan or section 1905(a) of the Act 

because section 1937 of the Act did not 

expressly authorize coverage beyond the 

defined scope of medical assistance, and 

these limits ensure that additional 

services will be of the type generally 

considered as health care services. 

H. Section 440.335 BenchmarkEquivalent Health Benefits Coverage 

Comment: One commenter urged 

CMS to clarify that plans cannot use 

actuarial methods that further reduce 

benefits because of cost-sharing limits. 

Another commenter noted that the 

preamble of the proposed rule indicates 

that even if the benchmark plan has 50 

percent coinsurance, the State would 

have to ensure that cost sharing does not 

exceed the applicable limits in 

Medicaid, which are substantially 

lower. 

However, § 440.340 specifies that the 

actuarial report ‘‘should also state if the 

analysis took into account the state’s 

ability to reduce benefits because of the 

increase in actuarial value of health 

benefits coverage offered under the State 

plan that results from the limitations on 

cost sharing * * * under that coverage.’’ 

The commenter strongly urged CMS to 

clarify that this language does not allow 

States to reduce mental health benefits 

below 75 percent of the value of the 

benchmark benefits because there are 

lower co-payments in the benchmarkequivalent plan. Congress intended that 

individuals would get 75 percent of the 

value of the benefit; they did not intend 

to reduce the value of this benefit 

through cost-sharing limitations. 

Response: We agree that clarification 

is needed in terms of using actuarial 

methods to further reduce benefits 

because of cost-sharing limits. We have 

specified in § 440.340 that, as a 

condition of approval of benchmarkequivalent coverage, States must 

provide an actuarial report with an 

actuarial opinion that the benchmarkequivalent coverage meets the actuarial 

requirements for coverage specified in 

§ 440.335. We have also specified in 

§ 440.340 that the actuarial report 

must— 

• Be prepared by a member of the 

American Academy of Actuaries and 

must meet the standards of this 

Academy; 

• Use generally accepted actuarial 

principles and methodologies of the 

Academy, standard utilization and price 

factors, and a standardized population 

representative of the population 

involved; 

• Use the same principles and factors 

in analyzing the value of different 

coverage (or categories of services) 

without taking into account differences 

in coverage based on the method of 

delivery or means of cost control or 

utilization use; 

• Indicate if the analysis took into 

account the state’s ability to reduce 

benefits because of the increase in 

actuarial value of health benefits 

coverage offered under the State plan 

that results from the limitations on cost 

sharing under that coverage; 

• Select and specify the standardized 

set of utilization and pricing factors as 

well as the standardized population; 

and 

• Provide sufficient detail to explain 

the basis of the methodologies used to 

estimate the actuarial value. 

In considering the actuarial value, we 

expect that the States and the actuaries 

making the determination of actuarial 

equivalence will account for changes in 

cost sharing between the benchmarkequivalent plan and the benchmark plan 

as well as account for any differences in 

income and assets between Medicaid 

beneficiaries and the enrollees in the 

benchmark plan. Cost sharing for the 

Medicaid benchmark-equivalent plan is 

still subject to the limitations set forth 

in this rule and in sections 1916 and 

1916A of the Act. The determination of 

actuarial equivalence should provide an 

aggregate actuarial value that is at least 

equal to the value of one of the 

benchmark benefit packages, or if 

prescription drugs, mental health 

services, vision and/or hearing services 


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are included in the benchmark plan, an 

aggregate actuarial value that is at least 

75 percent of the actuarial value of 

prescription drugs, mental health 

services, vision and/or hearing services 

of one of the benchmark benefit 

packages. Changes to the benchmarkequivalent plans, including changes in 

the cost-sharing structure that would 

result in expected benefit amounts less 

than under the benchmark plan or less 

than 75 percent of the actuarial value of 

prescription drugs, mental health 

services, vision and/or hearing services, 

would not be allowed under this rule. 

Comment: Several commenters note 

that the standard for adopting a 

benchmark-equivalent coverage package 

is set at 75 percent of the actuarial value 

of that category of services in the 

benchmark plan and wants to 

understand if the percentage is set in 

statute. The commenters believe that if 

this percentage is not a statutory 

provision, it would be important to 

describe the basis for this standard. 

Response: The DRA provides for this 

standard. Section 1937(b)(2)(C) of the 

Act specifies that the benchmarkequivalent coverage with respect to 

prescription drugs, mental health 

services, vision services, and/or hearing 

services must have an actuarial value 

equal to at least 75 percent of the 

actuarial value of the coverage of that 

category of services in the benchmark 

plan. We have maintained this standard 

in the rule consistent with the statutory 

provision. 

Comment: One commenter requested 

that benchmark-equivalent plans be 

required to provide the full continuum 

of care including the care required by 

individuals with cancer. 

Another commenter pointed out that 

the benchmark-equivalent plans are 

allowed to provide 75 percent of the 

actuarial value of mental health and 

prescription drugs. The commenter is 

concerned that if the plan used as a 

benchmark does not cover mental health 

treatment or prescription drugs, the new 

Medicaid benefit package does not have 

to provide this coverage. 

Other commenters are concerned 

about language indicating that a 

benchmark-equivalent coverage package 

is not required to include coverage for 

prescription drugs, mental health 

services, vision services, or hearing 

services. The commenter believed all of 

these services are necessary medical 

services. 

Response: Section 1937 of the Act 

does not specifically require that 

benchmark or benchmark-equivalent 

plans provide a full continuum of care, 

nor does it guarantee all services that 

might be considered medically 

necessary. 

Furthermore, while all services 

described under section 1905(a) of the 

Act are provided based on medical 

necessity, not all of those services are 

considered mandatory Medicaid 

services that States must include in the 

standard Medicaid plan. Prescription 

drugs, certain mental health services, 

vision services, and hearing services are 

not mandatory services under the State 

plan for adults. The DRA specifies that 

if coverage for prescription drugs, 

mental health, vision and/or hearing is 

provided in the benchmark plan, the 

benchmark-equivalent plan must 

provide at least 75 percent of the 

actuarial value of the coverage. If 

coverage is not provided under the 

benchmark plan, the benchmarkequivalent plan is also not required to 

provide the coverage. In calculating the 

actuarial value of the benchmarkequivalent, the actuarial value would be 

calculated based only on the services 

included in the specified benchmark 

plan and not calculated based on 

services that are not included in that 

plan. This rule is consistent with the 

statutory provision. 

Comment: Some commenters 

questioned how the State will assure the 

aggregate actuarial value is equivalent if 

there is lesser coverage in prescription 

drugs, mental health, vision, and/or 

hearing services. 

Response: Section 1937(b)(2)(C) of the 

Act specifies that, in considering a 

benchmark-equivalent benefit, if 

prescription drugs, mental health, 

vision, and/or hearing are provided in 

the benchmark plan, the benchmarkequivalent must provide at least 75 

percent of the actuarial value of that 

coverage. This section specifies the 

minimum coverage levels but does not 

specify the maximum level. Thus, States 

have the option to cover these services 

at higher than 75 percent of the actuarial 

value. To assure that the aggregate 

actuarial value is equivalent, we 

required in § 440.340 that, as a 

condition of approval of benchmarkequivalent coverage, States must 

provide an actuarial report that 

provides, among other things, sufficient 

detail as to the basis of the 

methodologies used to estimate the 

actuarial value of the benchmarkequivalent coverage. 

Comment: Another commenter 

suggested that rehabilitation services 

should be added to the list of services 

included at § 440.335. 

Response: The DRA specifies that 

benchmark-equivalent coverage must 

include certain basic services; that is, 

inpatient and outpatient hospital 

services; physicians’ surgical and 

medical services; laboratory and x-ray 

services; well-baby and well-child care 

including age-appropriate 

immunizations; and other appropriate 

preventive services. We have also 

specified the inclusion of emergency 

services, and within the context of 

preventive services, family planning 

services and supplies, but have left 

States with the flexibility to define other 

appropriate preventive services. 

It is important to note, however, that 

States, at their option, can provide 

additional services to benchmark or 

benchmark-equivalent plans. The 

inclusion of rehabilitation services may 

be appropriate for some populations as 

determined by the State based on the 

requirements of the population utilizing 

the benchmark plan. Additional services 

are discussed in § 440.360 of this rule. 

We did not receive any additional 

comments to § 440.340, Actuarial report. 

Therefore, in this final rule, § 440.340 

will be adopted as written in the 

proposed rule of February 22, 2008. 

I. Section 440.345 EPSDT Services 

Requirement 

Comment: Some commenters 

supported the proposed regulation that 

would require individuals to first seek 

coverage of EPSDT services through the 

benchmark or benchmark-equivalent 

plan before seeking coverage of services 

through wrap-around benefits. Some 

commenters believed that when 

individuals need to access additional 

services as a wrap-around either for 

children or adults, States should be 

required to ensure they continue to be 

able to receive services from the same 

provider. 

Response: It is important for 

individuals to receive services from the 

same provider whenever possible and 

we believe that an individual’s 

physician is in the best position to 

‘‘manage’’ an individual’s care. If an 

individual is entitled to additional 

services, the treating physician should 

be responsible for providing and/or 

coordinating the individual’s care and 

should be aware of any additional 

services the individual needs. To ensure 

that individuals under the age of 21 

receive full EPSDT services we revised 

§ 440.345 to require States to not only 

include a description of how additional 

benefits will be provided, but also how 

access to additional benefits will be 

coordinated and how beneficiaries and 

providers will be informed of these 

processes. 

Comment: Some commenters objected 

to the provision in the proposed rule 

that stipulates that individuals must 

first seek coverage of EPSDT services 


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through the benchmark plan before 

seeking coverage of these services 

through wrap-around benefits. These 

commenters asserted that Congress 

intended to allow States the option of 

providing these benefits directly to 

Medicaid beneficiaries or to provide 

benefits in whole or in part by the 

benchmark provider. They indicated 

that CMS provides no justification as to 

why children must first wrestle with the 

administrators of the benchmark benefit 

package before accessing EPSDT 

services. One commenter asked that the 

rule be amended to eliminate the 

requirement that a family first seek 

coverage of EPSDT services through the 

benchmark plans. 

Response: We believe that children 

enrolled in a benchmark benefit plan 

should have a medical provider that 

serves as the ‘‘medical home’’ for the 

child and that this medical provider 

will coordinate the child’s care and 

facilitate access to specialists and 

necessary support services. 

It is the responsibility of the State 

Medicaid program to assure that 

individuals enrolled in benchmark and 

benchmark-equivalent benefit plans 

receive EPSDT services that can be 

accessed in the most beneficial and 

seamless manner possible, and that 

individuals under 21 and their parent, 

guardian or care giver are informed and 

understand how and where to gain 

access to these services. We therefore 

revised § 440.345 by removing the 

requirement that individuals must first 

seek coverage of EPSDT services 

through the benchmark plan before 

seeking coverage of these services 

through additional benefits. 

Additionally, to further ensure that 

these individuals have access to the full 

EPSDT benefit, we revised the 

requirement to include a description of 

how the additional benefits will be 

provided, how access to additional 

benefits will be coordinated and how 

beneficiaries and providers will be 

informed of these processes. States must 

ensure that information is given to the 

providers either through the State or 

through the managed care entity in 

order to ensure that providers are aware 

of the child’s right to additional 

services, as necessary, through the 

EPSDT benefit so that they can assist 

individuals with accessing necessary 

care. 

Comment: One commenter believed 

that families are unlikely to realize that 

their children have access to more 

coverage than that provided through the 

benchmark. Even if they understood, 

they may not know how to request such 

a service. The commenter suggested that 

this section be strengthened by 

requiring States to explain, in detail, 

how a family will be informed of their 

rights under EPSDT once they are 

enrolled in a benchmark plan and to 

explain the specific process the State 

will then go through to approve or 

disapprove these services. States should 

also explain timelines for consideration 

of EPSDT requests in emergency, urgent 

and routine cases. 

The commenter goes on further to say 

the preamble to the proposed rule 

stated, ‘‘the State may provide wraparound * * * under such plan.’’ The 

commenter urged that CMS clarify that 

the word ‘‘may’’ should be replaced with 

‘‘must’’ because the word ‘‘may’’ 

inaccurately suggested that States are 

not required to provide these services. 

The commenter noted that, in other 

areas of the proposed rule, CMS 

correctly stated that EPSDT services 

must wrap-around benchmark plans. 

Response: We agree that States should 

be required to inform families of their 

rights under EPSDT. The commenter is 

correct that children enrolled in 

benchmark or benchmark-equivalent 

plans may be entitled to additional 

services. It should be noted that 

CHIPRA underscored that full EPSDT 

services must be provided. Therefore, 

we are clarifying that States must ensure 

that information is provided to all 

EPSDT eligibles and/or their families 

about the benefits of preventive health 

care, what services are available under 

the EPSDT benefit, where and how to 

access those services, that transportation 

and scheduling assistance are available, 

and that services are available at no 

cost. This is consistent with the 

requirements of section 1902(a)(43)(A) 

of the Act and current policy outlined 

in Section 5121 of the State Medicaid 

Manual. Information must be given to 

individuals no later than within 60 days 

of the individual’s initial Medicaid 

eligibility determination, and annually 

thereafter if they have not utilized 

EPSDT services. We believe most States 

have booklets to inform individuals of 

their benefits, rights, responsibilities, 

etc. This information is typically 

presented to families by the eligibility 

worker at the time of application and/ 

or sent to individuals as part of an 

enrollment packet from the managed 

care plan. These types of documents 

must clearly explain the benchmark and 

additional benefits available to EPSDT 

eligibles under the age of 21. 

Additionally, we agree with the 

commenter that the word ‘‘may’’ was 

inaccurate in the preamble to the 

proposed rule. The law specifically 

requires States to provide additional 

services (if the full range of EPSDT 

services is not provided as part of the 

benchmark or benchmark-equivalent 

plan) to assure that all EPSDT services 

are available to eligible individuals. We 

are providing clarification here in 

response to the comment; however, we 

are not revising the regulation text, 

since the language in § 440.345 clearly 

indicates that this is a requirement 

rather than a choice. 

Comment: One commenter stated that 

the rule was silent on the requirement 

that the state provide information in 

plain language that is understood by the 

individual, parent or guardian including 

clear instructions on how to access 

EPSDT services not provided by the 

benchmark plan and how to disenroll. 

Response: We agree that it is 

important that individuals be provided 

with clear instructions in plain language 

on how to access EPSDT services not 

provided by the benchmark plan and 

how to disenroll. This is already 

required by the EPSDT outreach 

provisions of section 1902(a)(43) of the 

Act, which are applicable to alternative 

benefit packages. To the extent that 

alternative benefit packages are 

delivered through managed care plans, 

States must also comply with managed 

care rules at 42 CFR part 438. According 

to § 438.10, information provided must 

be in an easily understood language and 

format. 

Comment: One commenter noted that 

proposed § 440.350 failed to specify that 

under the employer-sponsored 

insurance plan option States must still 

ensure that children have access to the 

wrap-around EPSDT benefit. This 

section should be amended to note this 

requirement. 

Response: The requirement to provide 

EPSDT benefits to children under the 

age of 21 applies to benchmark and 

benchmark-equivalent coverage. We 

have provided that States can offer 

premium assistance for employer 

sponsored insurance if the insurance is 

considered a benchmark or benchmarkequivalent plan. Additionally, we have 

indicated in § 440.350(b) that the State 

must assure that employer sponsored 

plans meet the requirements of 

benchmark or benchmark-equivalent 

coverage, including the economy and 

efficiency requirements at § 440.370. By 

requiring that employer sponsored plans 

meet the requirements of benchmark or 

benchmark-equivalent coverage, and 

given that benchmark or benchmarkequivalent coverage must provide 

EPSDT to children under the age of 21 

either as part of or in addition to the 

benchmark or benchmark-equivalent 

plan, we are requiring that any 

employer sponsored insurance coverage 

provide EPSDT services to children 

under the age of 21. We believe this is 


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clear in the regulation, so we have not 

revised the regulation text in this regard. 

Comment: Another commenter 

believed that limiting the mandatory 

EPSDT benefit to children under age 19 

rather than under age 21 denies 19 and 

20 years olds access to critical health 

care services. The commenter stated that 

this provision is inconsistent with the 

title XIX definition of EPSDT. Removing 

EPSDT for 19 and 20 years olds may 

exacerbate existing health disparities for 

minority adolescents, compromise 19 

and 20 years olds’ ability to transition 

successfully into adulthood, and 

impede identification of physical and 

mental conditions. 

Response: Section 611 of CHIPRA 

raised the age for mandatory EPSDT 

coverage from 19 to 21 years of age. We 

have changed the regulation text 

accordingly. 

Comment: One State Medicaid official 

suggested, instead of the current 

language in the published proposed rule 

on (73 FR 9727) of the Federal Register 

regarding EPSDT, the following 

amendment be made to be consistent 

with Federal laws: ‘‘(a) The State must 

ensure access to EPSDT services, 

through benchmark * * * for any child 

under 19 years of age eligible under the 

State plan in a category under section 

1902(a)(10)(A) of the Act.’’ 

Response: We have revised the rule to 

effectuate the clarification provided by 

section 611(a)(1)(C) and 611(a)(3) of 

CHIPRA which requires States to assure 

that children under the age of 21, rather 

than those under 19 as originally 

specified in the DRA, have access to the 

full range of EPSDT services. 

I. Section 440.350 EmployerSponsored Insurance Health Plans 

Comment: One commenter requested 

information about enrollment in 

commercial plans and suggested a 

discussion of how such arrangements 

might actually be operationalized; that 

is, how premiums would be paid and 

tracked, and the level of Medicaid 

contribution to such plans. 

Response: Benchmark or benchmarkequivalent benefit coverage may be 

offered through employer sponsored 

insurance health plans for individuals 

with access to private health insurance. 

If an individual has access to employer 

sponsored coverage and that coverage is 

determined by the State to offer a 

benchmark or benchmark-equivalent 

benefit package (either alone or in 

addition to services covered separately 

under Medicaid), a State may elect to 

provide premium payments on behalf of 

the individual to purchase the employer 

coverage. Non-exempt individuals can 

be required to enroll in employer 

sponsored insurance, and the premium 

payments would be considered medical 

assistance. The requirement for children 

under the age of 21 to receive EPSDT 

either as an additional service or as part 

of the benchmark coverage would still 

be applicable. The premium payments 

and any other cost-sharing obligations 

by beneficiaries would be subject to the 

premium and cost-sharing requirements 

outlined in sections 1916 and 1916A of 

the Act, including the requirement that 

cost sharing not exceed the aggregate 

limit of 5 percent of the family’s 

income, as applied on a monthly or 

quarterly basis specified by the state. 

If the employer plan is economical 

and efficient, States have the flexibility 

to take advantage of the coverage, 

without requiring a uniform employer 

contribution. It is likely that a 

substantial employer contribution 

would be necessary in order to meet the 

economy and efficiency requirement. 

States must identify the specific 

minimum contribution level that they 

are requiring of participating employers. 

We have not approved any Medicaid 

benchmark programs at this time that 

provide for employer sponsored 

coverage; however, we have approved 

section 1115 demonstrations in which 

States have provided premium 

assistance payments and employer 

sponsored insurance coverage to 

Medicaid beneficiaries. For these 

section 1115 demonstration programs, 

some States have required beneficiaries 

to provide proof of premium assistance 

payments. Then, after such proof is 

received, the state reimburses the 

beneficiary directly. Some States use a 

voucher system in which they provide 

a monthly voucher directly to the 

beneficiary for the premium payment in 

purchasing the employer sponsored 

insurance. We are not specifying the 

way in which States operationalize 

employer sponsored insurance 

benchmark plans; however, we provide 

this information for consideration. 

Comment: One commenter supported 

the inclusion of wrap-around services in 

general and wrap-around services for 

employer sponsored insurance plans as 

an option available to States, but did not 

support a requirement for additional 

wrap-around services. The commenter 

requested that language be added to 

describe the permissibility of various 

types of market innovations in coverage 

such as high deductible plans, health 

savings accounts, consumer-directed 

plans and wellness plans or that there 

be language added indicating such 

market innovations are acceptable as 

‘‘Secretary-approved coverage’’ through 

a State plan amendment. 

Response: Section 1937(a)(1)(C) of the 

Act provides that additional benefits are 

options that can be added by the State 

to benchmark or benchmark-equivalent 

coverage. Any services that are added 

do not need to include all State plan 

services; however, these additional 

services must be coverable under the 

benefit categories under the benchmark 

plan or under section 1905(a) of the Act. 

The only requirement for additional 

services is at section 1937(a)(1)(A)(ii) of 

the Act, which provides that if children 

under the age of 21 are receiving 

services in a benchmark or benchmarkequivalent benefit plan, they are entitled 

to EPSDT services as defined in section 

1905(r) of the Act and so must receive 

medically necessary services consistent 

with EPSDT either as services provided 

in the benchmark or as additional 

services to the benchmark plan. 

We have further provided in § 440.330 

that Secretary-approved coverage can be 

offered as benchmark coverage, 

consistent with the DRA. This coverage 

must be appropriate to meet the needs 

of the targeted population. We have 

required that States wishing to opt for 

Secretary-approved coverage should 

submit a full description of the 

proposed coverage and include a 

benefit-by-benefit comparison of the 

proposed plan to one or more of the 

other benchmark options listed in this 

section or to the State’s standard full 

Medicaid coverage package under 

section 1905(a) of the Act, as well as a 

full description of the population that 

would be receiving the coverage. In 

addition, the State should submit any 

other information that would be 

relevant to a determination that the 

proposed health benefits coverage 

would be appropriate for the proposed 

population. The scope of the Secretaryapproved health benefits package will 

be limited to benefits within the benefit 

categories available under a benchmark 

coverage package or under the standard 

full Medicaid coverage package under 

section 1905(a) of the Act. 

To the extent that a benchmark 

coverage plan that is used as the 

comparison for the Secretary-approved 

benchmark plan provides for market 

innovations such as high deductible 

health plans, health savings accounts, 

consumer-directed plans, and/or 

wellness plans, we would consider 

these on a case by case basis as 

components included in a Secretaryapproved benchmark option. It should 

be noted that CMS has approved ten 

State benchmark programs. Of these ten, 

eight have been approved as Secretaryapproved programs. We did not receive 

any additional comments related to 

§ 440.355 ‘‘Payment of premiums.’’ 


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Therefore, in this final rule, § 440.355 

will be adopted as written in the 

proposed rule of February 22, 2008. 

J. Section 440.360 State Plan 

Requirement for Providing Additional 

Services 

Comment: A dental provider 

indicated that the proposed rules give 

States the ability to create new benefit 

packages tailored to different 

populations and that States have the 

flexibility to provide ‘‘wrap-around’’ and 

‘‘additional benefits.’’ The commenter 

noted that CMS cited in a press release 

‘‘dental coverage’’ as an example of 

‘‘additional benefits’’ but, in the actual 

language of the proposed rule there are 

no examples or reference to ‘‘dental 

coverage.’’ Further, the commenter 

noted that the conference report to the 

DRA includes guidance to States by 

explaining that both benchmark and 

benchmark-equivalent coverage would 

include ‘‘qualifying child benchmark 

dental coverage.’’ The commenter also 

noted that in the context of employer 

group health plans, stand-alone dental 

arrangements are very often offered as a 

supplemental coverage that is separate 

from medical care coverage. The 

commenter indicated that this option 

would align Medicaid more closely with 

private market insurance options and 

give States more control over their 

Medicaid benefit packages. 

The commenter requested that CMS 

provide guidance to the States with 

respect to ‘‘additional benefits’’ such as 

‘‘dental coverage.’’ The commenter 

recommended the rule be amended to 

include an additional paragraph that 

would provide that States have the 

option to provide additional benefits 

that specifically include dental benefits 

that may be offered as a supplement to 

medical care coverage. 

Response: The DRA House 

Conference Report 109–362 provided for 

the language that benchmark or 

benchmark-equivalent coverage would 

include ‘‘qualifying child benchmark 

dental coverage.’’ The conference 

agreement removed this reference. Thus, 

the final provisions of section 1937 of 

the Act include no such requirement for 

the inclusion of dental coverage as 

additional services nor does section 

1937 of the Act provide examples of 

additional coverage. The rule provides 

that additional services do not need to 

include all State plan services but 

would be health benefits that are of the 

same type as those covered under the 

benchmark plan or considered to be 

health benefits under section 1905(a) of 

the Medicaid statute. 

We do agree that dental coverage 

could be added to benchmark or 

benchmark-equivalent benefit plans. 

Further, it is possible that, because of 

the plan options that have been 

identified by Congress as benchmark 

coverage, dental services may already be 

covered services in these plans. 

If the commenter is concerned that 

children will not receive dental 

coverage, we wish to point out that 

children under the age of 21 must 

receive EPSDT services, including all 

medically necessary dental services, 

consistent with section 1905(r) of the 

Act either as part of, or as additional 

services to, the benchmark or 

benchmark-equivalent plan. Therefore, 

medically necessary dental coverage 

must be provided to children under the 

age of 21 enrolled in benchmark plans 

regardless of whether or not the actual 

benchmark plan includes such coverage. 

K. Section 440.365 Coverage of Rural 

Health Clinic and Federally Qualified 

Health Center (FQHC) Services 

Comment: One commenter was 

concerned that the proposed rule 

stipulated that States with benchmark 

plans need only assure that these 

individuals have access through such 

coverage and that FQHCs are to be 

reimbursed for such services as 

provided under the FQHC 

reimbursement requirements found in 

section 1902(bb) of the Act. The 

commenter indicated further concern 

that CMS did not elaborate further on 

these requirements, and particularly, 

that it did not lay out minimum steps 

a State must take to assure that these 

patient and health center protections are 

effectively implemented. The 

commenter believed it is important that 

the final rule and preamble make clear 

that there are minimum steps a State 

must take to be in compliance with 

these FQHC statutory requirements. 

Specifically, the commenter asked 

that it should be clear that individuals 

who are mandatorily or voluntarily 

enrolled in a benchmark plan: (1) 

Remain eligible to receive from an 

FQHC all of the services included in the 

definition of the services of an FQHC, as 

provided in section 1902(a)(2)(C); and 

(2) must be informed that one or several 

of the providers by whom they may 

choose to be treated under this coverage 

is (or are) an FQHC. The commenter 

asserted that, to the extent these same 

individuals receive benchmark 

coverage, both the State and the 

benchmark plans must be encouraged to 

contract with FQHCs as providers of 

services to these enrolled Medicaid 

populations. These FQHC(s) must be 

identified by name. The commenter 

further stated that, in the event the 

benchmark plans identified do not 

contract with an FQHC, enrollees must 

be informed that they still may receive 

Medicaid covered services from FQHCs. 

In the preamble and final rule, the 

commenter provided that CMS should 

underline to the States the importance 

of full compliance with the FQHC 

reimbursement requirements of section 

1937(b)(4) of the Act and § 440.365. The 

commenter added that adoption of these 

recommendations is important to assure 

that the requirements of section 

1937(b)(4) of the Act are met. 

Response: We agree with the 

commenters and we have required in 

§ 447.365 that if a State provides 

benchmark or benchmark-equivalent 

coverage to individuals, it must assure 

that the individual has access, through 

that coverage or otherwise, to rural 

health clinic services and FQHC 

services and that payment for these 

services must be made in accordance 

with the payment provisions of section 

1902(bb) of the Act. We also agree that 

individuals always have access to FQHC 

services, even if the State does not 

contract with an FQHC to provide such 

services, and we encourage States to 

contract with FQHCs as providers. 

We did not receive any comments to 

§ 440.370. Therefore, we will adopt 

§ 440.370 as written in the proposed 

rule of February 22, 2008 with the 

change of the title to ‘‘Economy and 

Efficiency’’ which more appropriately 

reflects Medicaid payment principles. 

L. Section 440.375 Comparability 

Comment: One commenter 

encouraged CMS to require 

comparability across traditional 

Medicaid and Medicaid benchmark 

alternatives. 

Response: The language included in 

the rule allowing States to offer 

benchmark or benchmark-equivalent 

health care coverage without regard to 

comparability is based on the DRA 

language providing that 

‘‘notwithstanding any other provision of 

Title XIX’’ States can offer medical 

assistance to certain Medicaid 

beneficiaries through benchmark or 

benchmark-equivalent benefit packages. 

Section 611 of CHIPRA clarified and 

narrowed the ‘‘notwithstanding’’ 

provision but did specifically mention 

comparability.’’ Therefore, it is clear that 

States may offer benchmark or 

benchmark-equivalent coverage to 

certain specified Medicaid populations. 

This regulation provision gives meaning 

to the statutory language permitting 

States to offer benchmark or benchmarkequivalent coverage to certain, but not 

all, Medicaid populations. 

We would note that States can design 

disease management services without 


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relying on DRA benchmark or 

benchmark-equivalent plans, as 

outlined in the March 31, 2006 State 

Medicaid Director letter, which 

provided guidance on the 

implementation of section 6044 of the 

DRA but this benchmark option offers 

another way for States to meet the needs 

of their Medicaid populations. 

M. Section 440.380 Statewideness 

Comment: One commenter is 

concerned that States are given the 

option to amend their State plan to 

provide benchmark plan coverage to 

Medicaid individuals without regard to 

statewideness. This proposed regulation 

would likely result in health care 

disparities among individuals living in 

different parts of the State, has no basis 

in the statute, and should therefore be 

excluded from the final regulations. The 

commenter stated that the proposed 

§ 440.380 should be revised to ensure 

that beneficiaries across the State are 

not subject to disparities in health care 

services. 

Response: The language included in 

the rule allowing for States to offer 

benchmark or benchmark-equivalent 

health care coverage without regard to 

statewideness is based on the DRA 

language providing that 

‘‘notwithstanding any other provision of 

title XIX’’ and the more narrow and 

explicit language in CHIPRA which 

specifically states ‘‘Notwithstanding 

statewideness * * *’’. It is therefore 

clear that States could offer different 

benchmark or benchmark-equivalent 

coverage to Medicaid individuals in 

different regions within the State. This 

provision also gives meaning to the 

language permitting States to offer 

benchmark or benchmark-equivalent 

coverage to certain, but not all, 

Medicaid populations. 

For example, States can test new 

benefit concepts in pilot areas before 

expanding the benchmark program to 

the entire State. We believe that this is 

consistent with Congressional intent in 

allowing flexibility regarding 

statewideness for benchmark benefit 

options. 

N. Section 440.385 Freedom of Choice 

Comment: One commenter noted that 

CMS protects the free choice of 

emergency services providers but failed 

to do so for family planning services 

providers. The commenter urged CMS 

to preserve the free choice of family 

planning services providers by 

amending the rule to include a 

provision preserving the free choice of 

family planning providers. The 

commenter believes that this has been a 

long-standing policy of the Congress 

and the Medicaid program. 

The commenter added that the 

proposed rules would permit States to 

deny freedom of choice of a provider for 

managed care enrollees seeking family 

planning services and supplies. The 

commenter argued that this provision 

lacks any basis in the statute and is 

contrary to the clear, repeated 

articulated intent of Congress. 

The commenter asserted that provider 

freedom of choice is critical because of 

the potentially sensitive nature of the 

service. The commenter argued that, if 

unable to obtain confidential services 

from the provider of their choice, some 

managed care enrollees may forgo 

obtaining family planning services 

entirely. This would threaten 

beneficiaries’ access to high quality, 

confidential reproductive health care 

and set a precedent of inequity between 

beneficiaries in fee-for-service programs 

and beneficiaries in managed care plans. 

The commenter noted that Congress 

has clearly indicated that while States 

may require Medicaid beneficiaries to 

enroll in managed care plans and obtain 

care from providers affiliated with those 

plans, an exception should be made for 

individuals seeking family planning. 

The commenter also noted that Federal 

regulations at § 431.51 state, ‘‘A 

recipient enrolled in a primary care case 

management system, a Medicaid MCO, 

or other similar entity will not be 

restricted in freedom of choice of 

providers of family planning services.’’ 

The commenters urged the Department 

to revise § 440.385 to reflect that 

provider freedom of choice for family 

planning should be retained. 

Response: Section 1937(a)(1) of the 

Act, as amended by section 611 of 

CHIPRA, narrowed the flexibility States 

have and we amended § 440.385 by 

removing the option to provide 

benchmark benefit plans without regard 

to the requirements for free choice of 

providers at § 431.51 of this chapter. 

CHIPRA also made it clear that 

benchmark benefit programs may vary 

only from the requirements for 

statewideness, comparability, and ‘‘any 

other provision of this title which 

would be directly contrary to the 

authority under this section and subject 

to subsection (E).’’ Title XIX permits 

States the option to offer Medicaid 

through managed care entities. Thus, 

requiring States to comply with 

Medicaid managed care statutes and 

regulations would not be directly 

contrary to the authority of section 1937 

of the Act. We have therefore revised 

the regulation at § 440.385 to clarify that 

States wishing to deliver benchmark 

and benchmark-equivalent packages 

through a managed care entity may do 

so but must comply with the 

requirements of section 1932 of the Act, 

42 CFR part 438, and any other 

provisions of title XIX or the regulations 

pertaining to managed care. 

Comment: One commenter requested 

that CMS explain the concept of 

‘‘selective contracting’’ and provide 

more detail as to how this would be 

operationalized under benchmark plans. 

Response: Selective contracting is a 

term usually referred to in the context 

of section 1915(b)(4) waiver programs or 

1932(a) under the State plan. Selective 

contracting provides States with the 

opportunity to contract with certain 

providers, practitioners or managed care 

entities so long as certain other criteria 

are maintained. Specifically, the State 

must ensure that in order to selectively 

contract with providers, practitioners or 

managed care entities the selective 

process does not restrict providers in 

emergency situations or providers of 

family planning services and supplies; 

is based on reimbursement, quality and 

utilization standards under the State 

plan; and does not discriminate among 

classes of providers on grounds 

unrelated to their demonstrated 

effectiveness and efficiency in providing 

benchmark benefit packages. 

Section 1937(a)(1) of the Act as 

amended by section 611 of CHIPRA 

allows selective contracting through 

benchmark or benchmark-equivalent 

plans when provision of free choice of 

providers would be directly contrary to 

efficient and effective operation of the 

proposed benchmark benefit program. 

Comment: One commenter noted that 

CMS should include an ‘‘any willing 

provider’’ provision in Medicaid 

contracts for alternate plans that allow 

Medicaid participating providers the 

opportunity to continue serving those 

who are required by the State to enroll 

in a benchmark plan. 

Response: Based on changes made by 

CHIPRA to section 1937 of the Act 

States must comply with all freedom of 

choice requirements under title XIX 

except to the extent the State can 

demonstrate that freedom of choice 

would be contrary to the effective and 

efficient implementation of a 

benchmark or benchmark-equivalent 

plan. We therefore revised § 440.385 by 

striking the option for States to provide 

benchmark benefit plans without regard 

to the requirements for freedom of 

choice. This revision eliminates the 

need to include an ‘‘any willing 

provider’’ provision. 


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O. Section 440.390 Assurance of 

Transportation 

In responding in this final rule to all 

of the comments received we took into 

consideration the numerous remarks on 

the subject of transportation which 

generally disagreed with the provision 

in the proposed rule and the rule 

published December 3, 2008 that would 

allow States the option to exclude nonemergency medical transportation 

(NEMT) as a benefit under benchmark 

and benchmark-equivalent plans. In 

addition to considering these comments 

we now must also consider the new 

CHIPRA legislation which clarifies that 

the authority under section 1937 to 

deviate from otherwise applicable 

Medicaid requirements is limited. 

It is true that benchmark benefit 

packages such as Federal Employees 

Health Benefit Plan coverage, State 

Employees Health Benefit coverage, and 

coverage offered by an HMO in the State 

with the largest insured commercial 

non-Medicaid population, generally do 

not cover non-emergency medical 

transportation (NEMT) to and from 

medical providers. However, pursuant 

to section 1902(a)(4) of the Act and 42 

CFR 431.53 there is a general 

requirement that the State plan assure 

necessary transportation to and from 

providers for beneficiaries when needed 

to access Medicaid covered services. 

The CHIPRA amendment to the DRA 

made it clear that Medicaid provisions 

that are not directly contrary to the 

provision of services under benchmark 

or benchmark-equivalent plans continue 

to apply under the DRA benchmark 

provisions. Therefore, in accordance 

with the changes made to the DRA by 

CHIPRA, and since this assurance of 

NEMT would not directly conflict with 

the offering of benchmark or 

benchmark-equivalent benefit packages 

as authorized by section 1937 of the Act, 

the assurance of necessary 

transportation to and from providers 

remains applicable when a State elects 

the 1937 option, and regardless of 

whether it is or is not a covered benefit 

under a benchmark or benchmarkequivalent benefit plan. 

Thus, we have revised the regulation 

at § 440.390 to require States to assure 

necessary transportation to and from 

providers for beneficiaries enrolled in 

benchmark and benchmark-equivalent 

plans, even if the plans themselves do 

not include transportation. 

States have several options when 

assuring necessary transportation for 

beneficiaries enrolled in a benchmark or 

benchmark-equivalent plan. States may 

provide transportation and 

transportation-related services under a 

benchmark plan as provided at 

§ 440.330 (FEHB plan, State Employees 

plan, Commercial HMO plan or 

Secretary-approved plan); under a 

benchmark-equivalent plan as an 

additional service as provided at 

§ 440.335; or as an additional service as 

provided at § 440.360, and receive 

Federal financial participation (FFP) at 

the Federal matching rate designated for 

that State for covered Medicaid services 

(FMAP rate). 

If transportation and transportationrelated services or some portion of the 

transportation provided for beneficiaries 

enrolled in a benchmark or benchmarkequivalent plan is not covered under 

section 1937 of the Act, then such 

transportation and transportationrelated services must be claimed as an 

administrative expense at the 50 percent 

Federal matching rate. If transportation 

and transportation-related services are 

claimed as a medical service under 

section 1937 of the Act, the State must 

adhere to the general Medicaid 

requirements which pertain to claiming 

transportation as a medical service, such 

as only claiming direct vendor 

payments. 

Our responses to the following 

comments received on transportation 

reflect the changes made by section 611 

of CHIPRA, which clarifies that the 

authority under section 1937 to deviate 

from otherwise applicable Medicaid 

requirements is limited and therefore 

the assurance of transportation remains 

applicable even when the State has 

elected the section 1937 option. 

Comment: One commenter agreed 

with the interpretation of the 

‘‘notwithstanding’’ language to ‘‘bypass’’ 

the assurance of transportation, 

including the elimination of nonemergency medical transportation 

(NEMT). The commenter noted that the 

ability of States to exclude NEMT 

services in their benchmark benefits is 

evident not only from the broad 

language of the statute but also from 

Congressional intent. The commenter 

noted that one of the stated purposes of 

section 6044 of the DRA is to allow 

States to offer benefit packages that 

mirror commercial packages. 

Response: The benchmark options 

that Congress specified, Federal 

Employees Health Benefit Plan 

equivalent coverage, State employees 

coverage, and coverage offered by an 

HMO in the State with the largest 

insured commercial non-Medicaid 

population, generally do not pay for 

NEMT to and from medical providers in 

all instances. However, section 

611(a)(1)(A)(i) of CHIPRA changed the 

‘‘notwithstanding any other provision of 

this title’’ language and this change in 

the law clarifies that the authority under 

section 1937 to deviate from otherwise 

applicable Medicaid requirements such 

as those specified in section 1902(a)(4) 

of the Act and 42 CFR 431.53, which 

require States to assure that 

beneficiaries have access to covered 

medical services, is limited. 

Accordingly, we have revised the 

regulation at § 440.390 to require States 

to assure necessary transportation to 

and from providers. 

Comment: A preponderance of 

commenters disagreed with the 

provision in the rule that would allow 

States the option to exclude NEMT as a 

benefit under a benchmark and 

benchmark-equivalent plan. Generally, 

these comments were submitted by 

transportation providers, medical 

providers, and Medicaid beneficiaries, 

particularly Medicaid beneficiaries who 

rely on dialysis treatments. 

Most of the commenters believed that 

the goals of the Medicaid program 

would be undermined if needy 

individuals were unable to get to and 

from healthcare services and such an 

option would create a barrier to care. 

They asserted that assurance of 

transportation is a vital component of 

the Medicaid program and is of 

particular importance to mentally and 

physically disabled and elderly patients. 

They expressed concern that vulnerable 

populations might not receive medically 

necessary and often life sustaining 

services because of the difficulty in 

accessing needed care and provided 

examples of the negative impact on the 

Medicaid program that would be created 

by not assuring transportation. For 

example, patients with End-Stage Renal 

Disease (ESRD), would be unable to 

access dialysis services. 

Many of the commenters focused on 

the impact that the proposed regulation 

would have on dialysis patients who 

require 3 weekly trips to and from 

dialysis facilities in order to survive. 

They noted that effective care of ESRD 

patients requires meticulous 

coordination of dialysis treatment and 

drug therapy with frequent and 

specialized care. Dialysis patients often 

have multiple co-morbidities and, 

therefore, require frequent 

transportation to multiple services. The 

severity of the complications that 

develop due to missed treatments is 

often life threatening. Elimination of 

transportation services would make it 

very difficult and often impossible for 

beneficiaries with ESRD to consistently 

access the frequent dialysis services that 

sustain their lives. 

Many commenters stated that 

individuals with physical or mental 

disabilities have difficulty using public 


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transportation and require specialized 

transportation that would otherwise not 

be available should State Medicaid 

programs be allowed to stop providing 

transportation. For many beneficiaries, 

the cost of frequent trips in specialized 

vehicles would be unaffordable. Often 

beneficiaries live in rural areas where 

the only available transportation to and 

from medical appointments is provided 

through the Medicaid program. Without 

Medicaid transportation services, many 

beneficiaries would be unable to access 

needed care and ultimately would 

require more costly services, costly 

emergency care, and expensive 

emergency ambulance services and/or 

expensive non-medical wheelchair van 

care. 

Other commenters indicated that cooccurring physical health conditions 

such as diabetes or heart disease, as well 

as mental health conditions such as 

depression and anxiety affect an 

individual’s ability to drive. 

Several commenters indicated that 

people suffering with HIV/AIDS, some 

in wheelchairs, others who are 

extremely fragile or elderly, have 

monthly office visits where they are 

assessed and treated. To remove their 

only means of free transportation will 

take away their compliance with 

medical office treatment. 

Response: In light of these comments 

and because CHIPRA amended section 

1937 of the Act by clarifying that the 

authority to deviate from otherwise 

applicable Medicaid requirements is 

limited, we have revised the regulation 

at § 440.390 to require States to assure 

necessary transportation to and from 

providers. Thus, the frail, elderly, 

disabled and those with ESRD will be 

entitled to receive transportation to and 

from medical providers. 

Comment: Several commenters noted 

that elimination of the requirement to 

provide transportation would actually 

drive up Medicaid costs because 

medical visits would become less 

frequent, resulting in a higher incidence 

of more serious and costly medical 

problems, an increase in the use of 

emergency medical services, and an 

increase in long term nursing home 

admissions. A number of these 

commenters cited a 2006 Cost Benefit 

Analysis conducted by the Marketing 

Institute of Florida State University 

College of Business as proof of the cost 

effectiveness of providing NEMT to 

Medicaid beneficiaries. Another 

commenter cited several studies that 

compared Medicaid individuals 

residing in States that do provide access 

to NEMT. The commenter stated that 

these studies found that access to nonemergency transportation produces cost 

savings and increased health care 

results. For many beneficiaries, the cost 

of frequent trips in specialized vehicles 

would be unaffordable. Often 

beneficiaries live in rural areas where 

the only available transportation to and 

from medical appointments is provided 

through the Medicaid program. Without 

Medicaid transportation services, many 

beneficiaries would be unable to access 

needed care and ultimately would 

require more costly services, costly 

emergency care, and expensive 

emergency ambulance services and/or 

expensive non-medical wheelchair van 

care. 

One commenter indicated that 

coordinating transportation would 

reduce the cost of providing 

transportation. Another commenter 

indicated that CMS requires States to 

comply with economy and efficiency 

principles in offering benchmark or 

benchmark-equivalent benefit packages 

to Medicaid beneficiaries, but does not 

require non-emergency medical 

transportation in benchmark or 

benchmark-equivalent plans, when 

according to several studies it has been 

proven that providing this service is 

cheaper overall and leads to better 

health outcomes for Medicaid 

beneficiaries. 

Response: CHIPRA amended section 

1937 of the Act by clarifying that the 

authority to deviate from otherwise 

applicable Medicaid requirements is 

limited and we have therefore revised 

the regulation at § 440.390 to require 

States to assure necessary transportation 

to and from providers. 

Comment: One commenter suggested 

that this rule sets up a system that 

would limit mileage payments to drivers 

for non-emergency doctor visits. The 

commenter indicated that medical 

mileage is funded in part to drivers who 

transport people for medical care on a 

non-emergency basis. 

Response: We do not understand the 

relevance of this comment to the 

provision of benchmark and benchmarkequivalent benefit plans and are 

therefore unable to respond. 

Comment: One commenter stated that 

the number one reason that dentists and 

doctors do not wish to accept Medicaid 

patients is that Medicaid beneficiaries 

do not show-up for appointments or are 

late for appointments. If CMS does not 

require transportation benefits, noshows will increase and the result will 

be that fewer providers will participate 

in Medicaid. 

Response: As we previously stated, 

CHIPRA amended section 1937 of the 

Act by clarifying that the authority to 

deviate from otherwise applicable 

Medicaid requirements is limited and 

we have revised the regulation at 

§ 440.390 to require States to assure 

necessary transportation to and from 

providers. Therefore, the commenter’s 

concern about the lack of transportation 

contributing to missed appointments 

and late appointments has been 

addressed. 

Comment: Many commenters stated 

that the possible elimination of 

transportation will not only decrease 

access to healthcare but would imperil 

the financial stability of ambulance 

services across the Emergency Medical 

Services (EMS) community. EMS 

providers depend on reimbursement 

from non-emergency transports to 

sustain operational costs and maintain 

optimal readiness standards for 

emergency transports. Without adequate 

reimbursement from Medicaid for nonemergency transports, many ambulance 

providers, especially those in rural 

areas, would cease to stay in business, 

causing a serious reduction in the 

overall availability of ambulance 

services. Many commenters stated the 

provision would likely cause overutilization of emergency ambulance 

services, since beneficiaries would need 

to rely more frequently on more 

expensive emergency ambulance 

transport. 

One commenter suggested that CMS 

implement the same ‘‘medically 

necessary transportation’’ guidelines for 

the Medicaid program that already exist 

and govern non-emergency ambulance 

transportation for Medicare patients, 

because commercial insurance almost 

universally uses these guidelines as the 

benchmark for reimbursement for nonemergency ambulance transportation. 

One commenter noted that the GAO 

has found that the current Medicare 

rates for ambulance transportation is on 

average 6 percent below the cost of 

providing care. Medicaid rates are 

currently even less. Ambulance 

transportation is a vital service for 

Medicaid beneficiaries, and ambulance 

companies are currently operating 

under a fee schedule that does not 

compensate them for the cost of 

providing that care. To further reduce 

the overall reimbursement to the 

ambulance providers while leaving 

benefits intact for hospitals, physicians, 

and labs is unfair. Ambulance transport 

is a vital link between the patient and 

these other services, and should not be 

relegated to non-payment. 

Response: CHIPRA clarified that the 

requirement to assure necessary 

transportation applies to benchmark and 

benchmark-equivalent benefit plans. 

With regard to the comment that CMS 

require for benchmark and benchmarkequivalent benefit plans the same 


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ambulance transportation guidelines 

used by commercial insurance, we 

disagree with this comment because 

there is no authority under section 1937 

of the Act to do so. 

Comment: Many commenters 

indicated that the proposed rule would 

shift financial responsibility for 

Medicaid non-emergency transportation 

to non-profit and municipal fire servicebased emergency medical systems 

(EMS), ADA paratransit programs, 

beneficiaries, beneficiaries’ families, 

and other segments of the population 

who often do not have sufficient funds 

to pay for trips to and from providers. 

The commenters believed that the 

proposed cuts in transportation conflict 

with the protections afforded to the 

disabled under the Americans with 

Disabilities Act. Some commenters 

stated the shifting of the financial 

burden for Medicaid non-emergency 

transportation to ADA paratransit 

services and local transit programs 

without any additional funding 

constitutes an unfunded mandate. 

Response: Because CHIPRA clarified 

that the assurance of necessary 

transportation is applicable to 

benchmark and benchmark-equivalent 

benefit plans, we revised the regulation 

in § 440.390 to require States to assure 

necessary transportation. Therefore, we 

do not believe that the responsibility for 

Medicaid NEMT will be shifted to 

municipal EMS systems, ADA 

paratransit programs, or beneficiaries. 

Consistent with Federal regulations, 

States are required to assure nonemergency transportation when the 

beneficiary has no other means of 

transportation. 

Comment: Several commenters stated 

that under section 1937 of the Act, a 

benchmark-equivalent package must 

offer a specific range of services set forth 

in § 440.335(b)(1)–(5) of the proposed 

regulation and that the majority of 

qualifying benchmark plans cover 

emergency ambulance services. To 

ensure that enrollees in benchmarkequivalent plans receive coverage that is 

qualitatively equivalent to benchmark 

plans that provide emergency 

ambulance transportation, CMS should 

require benchmark-equivalent plans to 

cover emergency ambulance 

transportation. 

Response: CHIPRA clarified that the 

assurance of necessary transportation is 

applicable to benchmark and 

benchmark-equivalent plans. We 

therefore revised the regulation at 

§ 440.390 to require States to assure all 

necessary transportation. 

Comment: One commenter noted that 

instead of saving money by eliminating 

non-emergency transportation, CMS 

should do a better job of policing the 

system to reduce fraud and abuse. 

Response: The reduction of fraud and 

abuse should always be considered by 

States when designing or implementing 

their State Medicaid program and we 

expect States to implement policies that 

reduce fraud and abuse. CMS will 

review the provision of these services 

consistent with our responsibility to 

work with States to reduce fraud and 

abuse in the program. 

Comment: One commenter believed 

that during the DRA process CMS 

attempted to end the Medicaid 

transportation service. This attempt was 

turned back by Congress with the clear 

intention that transportation was 

essential for adequate access to health 

services and it is clear that the proposed 

rule is contrary to the intent of 

Congress. 

Response: CMS did not attempt to end 

the requirement for States to assure 

Medicaid non-emergency 

transportation. On August 23, 2007, 

CMS published a rule on the ‘‘State 

Option to Establish a Non-Emergency 

Medical Transportation Program’’ which 

intended to enhance the ability of States 

to provide NEMT by offering an 

additional option for providing more 

cost effective non-emergency 

transportation as a medical service 

through a brokerage program. 

Furthermore, we have revised the 

regulation at § 440.390 to require States 

to assure necessary transportation for 

beneficiaries enrolled in benchmark and 

benchmark-equivalent plans. 

Comment: One commenter noted the 

proposed rule on the ‘‘State Option to 

Establish a Non-Emergency Medical 

Transportation Program’’ providing 

guidance on section 6083 of the DRA 

and wonders how CMS on one hand is 

providing guidance regarding nonemergency medical transportation and 

encouraging use of a brokerage program, 

while on the other hand proposing 

elimination of non-emergency medical 

transportation in benchmark or 

benchmark-equivalent plans. 

Additionally, the commenter believed 

that the transportation benefit currently 

operates in a fiscally sound manner. As 

currently structured, the commenter 

asserted that the transportation benefit 

is cost effective in most States. The 

commenter noted that States generally 

limit reimbursement for transportation 

to the least costly form of transport that 

is medically appropriate based on the 

beneficiary’s condition. Moreover, 

Medicaid beneficiaries are generally 

required to use free transportation 

resources before the program will 

provide reimbursement for 

transportation. The commenter stated 

that, consequently, patients who receive 

transportation under state Medicaid 

programs are required, as a condition of 

coverage, to have no other means of 

getting to or from providers of medical 

care. 

Response: Because CHIPRA clarified 

that the requirement for States to assure 

necessary transportation is applicable to 

section 1937 of the Act, we revised the 

regulation in § 440.390 to require States 

to assure necessary transportation for 

beneficiaries enrolled in alternative 

benefit plans. Therefore, the brokerage 

program option for delivering nonemergency medical transportation and 

the benchmark or benchmark-equivalent 

benefits option do not contravene each 

other as the commenter suggests. 

Comment: A few commenters stated 

that in the proposed rule CMS proposed 

to create more ‘‘flexibility’’ for States by 

allowing them to craft more mainstream 

packages like those found in the private 

health insurance market, and private 

health plans do not offer transportation 

as a covered benefit for enrollees. These 

commenters disagreed with this 

assumption because it presumes that 

Medicaid patients are of equal financial 

standing with enrollees of private health 

care plans in their ability to assume the 

cost of transportation to and from health 

care services and that private health 

plans do not provide non-emergency 

ambulance transportation, when in fact 

they do. 

Response: The changes made to 

section 1937 of the Act by the CHIPRA 

legislation make it clear that regardless 

of whether NEMT and emergency 

ambulance services are included in the 

benchmark or benchmark-equivalent 

plan the State has chosen to offer 

Medicaid beneficiaries, the requirement 

to assure necessary transportation for 

eligible Medicaid beneficiaries remains 

applicable. 

Comment: One commenter stated that 

CMS did not conduct an analysis of the 

impact that excluding the transportation 

benefit would have on the populations 

affected or on the States. The 

commenter also noted that in the 

‘‘Regulatory Impact Analysis,’’ CMS 

states that they are under no obligation 

to assess anticipated costs and benefits 

of this rule, even if the rule may result 

in expenditures by the State, local, or 

tribal governments of the private sector, 

because States are not mandated to 

participate in the benchmark plans. This 

precludes any discussion of the shift in 

costs to other agencies that may result 

from the exclusion of transportation 

benefits. The commenter stated that in 

the proposed rule CMS says that shifting 

the financial burden to the vulnerable 

Medicaid populations is simply a matter 


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of personal responsibility. The 

commenter believed that the 

elimination of transportation is a 

scenario for less effective, more 

expensive health care because fewer 

people will seek preventive care since 

they won’t have transportation and will 

therefore end up needing more 

expensive medical services. 

Response: We revised the regulation 

in § 440.390 to require States to assure 

necessary transportation for 

beneficiaries enrolled in benchmark and 

benchmark-equivalent benefit plans and 

have therefore revised the ‘‘Regulatory 

Impact Analysis,’’ to account for the 

impact of providing transportation. 

Comment: Several commenters noted 

the lack of definition addressing the 

difference between emergency and nonemergency transportation. Several other 

commenters requested that CMS 

provide a universal definition of nonemergency transportation, because 

without this guidance there would be 

chaos and an inability to adjudicate 

issues and disputes over what is and is 

not non-emergency transportation. 

One commenter urged CMS to require 

that benchmark and benchmarkequivalent plans cover emergency 

ambulance transportation and do so by 

clarifying that the reference to 

‘‘emergency services’’ in proposed 

§ 440.335 include emergency ambulance 

services. Several commenters stated the 

regulation fails to make a distinction 

between emergency and non-emergency 

transport and CMS assumes that ‘‘to and 

from providers’’ means non-emergency 

medical transportation however this 

may not always be the case. According 

to the commenter, transport is often 

required for Medicaid patients who 

develop critical conditions that require 

immediate care beyond the scope of the 

initial facility, resulting in the patient 

being transported to another facility for 

care. If States are no longer required to 

ensure necessary transportation for 

individuals to and from providers, the 

State will likely not cover this type of 

transport under a benchmark or 

benchmark-equivalent plan. This type of 

transport fits the parameters of the 

regulation because it is from one 

provider to another, but the regulation 

does not make the distinction that it 

must be a non-emergency transport. 

Other commenters believed 

ambulance service, whether considered 

non-emergency or emergency 

transportation should be required in all 

benchmark or benchmark-equivalent 

plans. 

Response: Since CHIPRA clarified 

that the assurance of necessary 

transportation is a mandatory State plan 

requirement that applies to section 1937 

of the Act, we have revised the 

regulation at § 440.390 to require States 

to assure necessary transportation. 

Therefore, the commenter’s concerns 

regarding the provision of emergency 

transportation services and the need for 

States to properly distinguish between 

emergency and non-emergency 

transportation services have been 

addressed. 

Comment: A number of commenters 

disagreed with the assumption that nonemergency transportation is not covered 

by private health insurance. They stated 

that many private health insurance 

plans do provide coverage for nonemergency ambulance transportation 

when medically necessary. One 

commenter stated that CMS is ignoring 

the fact that many commercial plans 

have provided services to Medicaid 

beneficiaries and are thus equipped to 

provide the transportation benefit. The 

same commenter requested that if the 

provision on non-emergency 

transportation remains in the final 

regulation, CMS should require that no 

benchmark or benchmark-equivalent 

plan be allowed to require emergency 

ambulance services to join a network as 

a condition of obtaining necessary 

information for billing or as a condition 

of prompt payment, and that benchmark 

and benchmark-equivalent plans be 

required to pay for emergency 

ambulance transportation at a rate not 

less than the State Medicaid approved 

rate. One commenter noted that if CMS 

intends to make this a rationale for the 

elimination of Medicaid benefits, it 

should first study this issue and release 

its findings. 

Response: In accordance with changes 

made by CHIPRA to section 1937 of the 

Act and the clarification these changes 

provided we revised the regulation at 

§ 440.390 to require States to assure 

necessary transportation. 

Comment: Many of the commenters 

voiced concerns that CMS has 

overreached in its rationale for allowing 

States to opt-out of the transportation 

requirements, and that CMS did not 

support its rationale. Several 

commenters stated that CMS did not 

have the legal authority to allow States 

to choose not to provide non-emergency 

transportation. One commenter stated 

that § 440.390 exceeds the Department’s 

administrative authority, results in an 

impermissible legislative action by the 

agency, and violates the separation of 

powers doctrine of the Constitution. 

Generally, an executive agency’s 

authority is limited to implementing 

laws and to clarifying ambiguities in 

statutes passed by Congress. The 

commenter cites Chevron U.S.A. v. 

Natural Resources Defense Council, 467 

U.S. 837 (1984). 

A number of commenters noted that 

CMS’s interpretation of the language in 

section 1937 of the Act is ‘‘overbroad’’ 

because it permits CMS too much 

discretion. Several commenters also 

stated that in believing that it could 

change a long standing Medicaid policy 

on the assurance of transportation, CMS 

wrongly interpreted the statute and had 

not supported its rationale for allowing 

States to waive the provider-to-provider 

transportation requirement. A number 

of commenters believed that allowing 

States to choose not to provide 

transportation was inconsistent with 

Medicaid’s mission of increasing access 

to healthcare. Many commenters 

indicated that exempting States from the 

transportation requirement set forth in 

§ 431.53 ‘‘renders those provisions to 

mere surplusage’’ and that CMS’s 

interpretation affords CMS the 

unfettered ability to make ad hoc 

determinations about what laws and 

regulations will apply to benchmark and 

benchmark-equivalent plans. Many 

commenters stated that the 

requirements in § 431.53 exist to protect 

beneficiaries and to ensure that they 

receive access to healthcare. Also, CMS 

should not be permitted to allow States 

to deprive Medicaid individuals of 

necessary transportation based upon an 

illogical interpretation of a provision of 

the Act. 

Several commenters stated that CMS 

is providing sufficient flexibility to 

States through the option to provide 

benchmark or benchmark-equivalent 

coverage without regard to 

comparability, statewideness, and 

freedom of choice. The commenter did 

not see how relieving the State of the 

requirement to assure transportation to 

and from providers offers any additional 

flexibility. 

Response: Section 611(a)(1)(C) of 

CHIPRA amended the ‘‘notwithstanding 

any other provision of this title * * *’’ 

language. This change in the law 

clarifies that the authority under section 

1937 to deviate from otherwise 

applicable Medicaid requirements is 

limited. Therefore, we have revised the 

regulation at § 440.390 to require States 

to assure necessary transportation to 

and from providers. 

Comment: Several commenters 

mentioned earlier that CMS offered a 

definition of ‘‘special medical needs’’ 

but pointed out that CMS did not offer 

a definition of ‘‘medically frail.’’ The 

commenters urged CMS, in considering 

transportation, to include in any 

definition of ‘‘medically frail’’ an 

individual who might require medically 

necessary ambulance transportation due 


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to their physical or mental condition, 

illness, injury, disability, in a bed 

confined or wheelchair confined state, 

such that transportation by any means 

other than ambulance would likely 

jeopardize the patient’s health or safety. 

Response: As stated earlier, while 

CMS wishes to maintain some State 

flexibility in defining the term 

medically frail we have provided further 

guidance on the characteristics of 

medically frail and special needs 

individuals. We expect States to take 

this guidance into consideration when 

determining what type of transportation 

is needed by these individuals. 

Comment: Several commenters stated 

the proposed elimination of 

transportation was discriminatory 

because individuals with special needs 

are not able to access transportation 

services and will be de facto denied the 

medical services that other Medicaid 

individuals receive. Also, the 

commenters asserted that the statutory 

provision authorizing use of benchmark 

and benchmark-equivalent plans, 

‘‘notwithstanding any other provision of 

this title’’ will not pass a challenge in 

the court system because it 

discriminates against disabled 

individuals. 

Response: Section 611(a)(1)(C) of 

CHIPRA amended the ‘‘notwithstanding 

any other provision of this title’’ 

language. This change in the law 

clarifies that the authority under section 

1937 to deviate from otherwise 

applicable Medicaid requirements is 

limited. Accordingly, we revised the 

regulation at § 440.390 to require States 

to assure necessary transportation to 

and from providers for individuals, 

including those with special needs, who 

are enrolled in benchmark and 

benchmark-equivalent benefit plans. 

Comment: Several commenters noted 

that Executive Order 13330 requires 

coordination for elderly and 

handicapped transportation programs 

among Federal agencies. Creating 

Federal DHHS standards for appropriate 

service levels would promote this 

coordination effort and in the interests 

of quality services, lower costs and 

enhanced coordination, DHHS should 

develop parallel standards that would 

drive cost savings derived by 

competitive procurement instead of 

denying services to those who need it 

the most. Removing an essential 

element such as transportation in order 

to save money will ultimately result in 

greater reliance on institutional care at 

a much higher cost. One commenter 

believed that CMS should withdraw the 

regulation and allow the Coordinating 

Council on Access and Mobility, which 

was established by Executive Order 

13330, to develop the benchmark policy 

on non-emergency transportation. 

Response: Section 611(a)(1)(C) of 

CHIPRA amended the ‘‘notwithstanding 

any other provision of this title’’ 

language. This change in the law 

clarifies that the authority under section 

1937 to deviate from otherwise 

applicable Medicaid requirements is 

limited. Accordingly, we revised the 

regulation at § 440.390 to require States 

to assure necessary transportation to 

and from providers. We do not believe 

that Executive Order 13330, which 

relates to the coordination of 

transportation among Federal agencies, 

is relevant to this rule as this rule 

pertains to the provision of 

transportation by States under State 

Medicaid programs. 

Comment: One commenter, 

submitting on behalf of the Alaska 

Natives (ANs) Tribal Health 

Consortium, wrote that in Alaska nearly 

40 percent of the Medicaid eligible 

populations are ANs. The vast majority 

of AN villages are accessible only by 

plane, boat, snow-machine, or dog-sled. 

Due to the extreme poverty found in AN 

villages, Congress authorized tribal 

health programs to bill the Medicare 

and Medicaid programs for covered 

services. Tribal health services rely 

heavily on Medicaid and Medicare 

payments. The commenter is 

profoundly concerned that the proposed 

rule would allow States to curtail 

Medicaid coverage of crucial health 

services currently provided to ANs and 

would eliminate coverage of 

transportation needed by ANs to access 

medical services. 

Response: We recognize the important 

value of Medicaid transportation 

services to the AN population. As stated 

previously CHIPRA amended the 

‘‘notwithstanding any other provision of 

this title * * *’’ language and this 

change in the law clarifies that the 

authority under section 1937 to deviate 

from otherwise applicable Medicaid 

requirements is limited. Therefore, we 

have revised the regulation at § 440.390 

to require States to assure necessary 

transportation to and from providers for 

those enrolled in benchmark and 

benchmark-equivalent benefit plans. 

IV. Provisions of the Final Regulations 

In general, this final rule incorporates 

the provisions of the February 2008 

proposed rule and the changes made by 

CHIPRA. The provisions of this final 

rule that differ from the February 2008 

proposed rule are as follows: 

Scope (§ 440.305) 

We added a new paragraph (d) at 

§ 440.305 to require public input before 

States submit a State plan amendment 

under this section of the law. We 

removed the exception at § 440.305(e) to 

the managed care rules that existed in 

the February 22, 2008 proposed rule 

because section 611(a) of CHIPRA 

required adherence to all rules except 

those directly contrary to the authority 

under this section. By removing this 

exception to the managed care rules all 

benchmark and benchmark-equivalent 

benefit plans that are delivered through 

a managed care entity must comply with 

managed care rules. 

Exempt Individuals (§ 440.315) 

We revised paragraph (f) at § 440.315 

to indicate that States will have 

flexibility in adopting definitions of 

individuals who are ‘‘medically frail’’ 

and/or individuals with special medical 

needs, but that these definitions must at 

least include those individuals 

described in § 438.50(d)(3), children 

with serious emotional disturbances, 

individuals with disabling mental 

disorders, individuals with serious and 

complex medical conditions, and 

individuals with physical and or mental 

disabilities that prevent them from 

performing one or more activities of 

daily living. Further, we deleted the 

reference to § 438.50(d)(1) for 

individuals entitled to Medicare 

benefits as these individuals are already 

exempt individuals who cannot be 

required to enroll in benchmark or 

benchmark-equivalent plans because of 

the requirement in section 1937(a)(2)(iii) 

of the Act. 

We revised paragraph (h) of § 440.315 

to clarify that exempt individuals 

include ‘‘an individual with respect to 

whom child welfare services are made 

available under part B of title IV to 

children in foster care and individuals 

with respect to whom adoption or foster 

care assistance is made available under 

part E of title IV, without regard to age.’’ 

We have revised paragraph (i) at 

§ 440.315 to state that parents and 

caretaker relatives whom States are 

required to cover under section 1931 of 

the Act, are considered exempt 

individuals. This provision reverses the 

prior rule which limited the exemption 

to individuals who were eligible for 

Medicaid based on the eligibility for 

TANF; eligibility for Medicaid is not 

based, under Federal laws, on eligibility 

for TANF. 

We added a new paragraph (m) in 

§ 440.315 to include medically needy or 

those eligible as a result of a reduction 

of countable income based on costs 

incurred for medical care in the list of 

populations who are exempt from 

mandatory enrollment in benchmark or 

benchmark-equivalent plans. 


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Section 440.320 State Plan 

Requirements: Optional Enrollment for 

Exempt Individuals 

We revised paragraphs (a)(1), (a)(2), 

and (a)(3) at § 440.320 to require that a 

State that chooses to offer enrollment in 

a benchmark or benchmark-equivalent 

plan to exempt individuals must 

effectively inform such individuals 

prior to enrollment that the individual 

is exempt and that enrollment is 

voluntary. The State must inform the 

individual of the benefits in the 

benchmark or benchmark-equivalent 

plan and provide a comparison of how 

they differ from traditional Medicaid 

State plan coverage, and document in 

the individual’s eligibility file that prior 

to enrollment the beneficiary was 

provided a comparison of the 

benchmark or benchmark-equivalent 

benefit package to the State plan 

package, was given ample time to make 

an informed choice as to enrollment and 

voluntarily choose to enroll in the 

benchmark or benchmark-equivalent 

plan. 

We added a new paragraph (a)(4) to 

clarify that States must comply with the 

requirements of § 440.320(a)(1), (a)(2), 

and (a)(3) within 30 days after a 

determination is made that an 

individual has become part of an 

exempt group while enrolled in 

benchmark or benchmark-equivalent 

coverage. 

We added new paragraphs (b)(1) and 

(b)(2) in § 440.320 to clarify the 

disenrollment process for exempt 

individuals and require that States act 

upon disenrollment requests promptly 

for those exempt individuals who 

choose to disenroll from benchmark or 

benchmark-equivalent coverage and to 

require that the State have a process in 

place to ensure continuous access to all 

standard State plan services while 

requests to disenroll from benchmark or 

benchmark-equivalent coverage are 

being processed. States must also 

maintain data to track the number of 

exempt individuals who enroll in, and 

dissenroll from benchmark or 

benchmark-equivalent plans. 

Benchmark-Equivalent Health Benefits 

Coverage (§ 440.335) 

We revised paragraph (b) in § 440.335, 

which lists the mandatory services that 

benchmark-equivalent plans must 

provide. In the December 3, 2008 final 

rule, emergency services was included 

in the description of other appropriate 

preventive services designated by the 

Secretary. To clarify that benchmark 

equivalent coverage must include 

emergency services we made emergency 

services a separate and distinct 

requirement in paragraph (b)(5) and 

renumbered the paragraph relating to 

preventive services as (b)(6) in 

§ 440.335. We also added family 

planning services and supplies to the 

description of required preventive 

services. 

Actuarial Report for BenchmarkEquivalent Coverage (§ 440.340) 

We revised § 440.340(b)(7) to require 

States to take into account the impact of 

cost sharing limitations when 

calculating actuarial equivalency. 

EPSDT Services Requirement 

(§ 440.345) 

We revised paragraph (a) in § 440.345 

to reflect the new requirements in 

CHIPRA to cover 19 and 20 year olds for 

full EPSDT services. This section 

requires that ‘‘The State must assure 

access to early and periodic screening, 

diagnostic and treatment (EPSDT) 

services through benchmark or 

benchmark-equivalent plan benefits or 

as additional benefits to those plans for 

any child under 21 years of age eligible 

under the State plan in a category under 

section 1902(a)(10)(A) of the Act.’’ 

We removed the term ‘‘wrap-around’’ 

and replaced it with ‘‘additional’’ in 

paragraphs (a)(1) and (a)(2) in § 440.345 

of this regulation, and the words 

‘‘through wrap-around,’’ and replaced 

them with ‘‘additional’’ in § 440.345(b) 

of this regulation. We have also revised 

the ‘‘sufficiency’’ provision. Together 

these modifications are intended to 

make it clear that EPSDT services must 

in all circumstances be provided by the 

State Medicaid program; either through 

the benchmark or benchmark-equivalent 

plan or as an ‘‘additional’’ service. We 

have also added a statutory cite ‘‘under 

section 1937 of the Act’’ after the word 

‘‘benefits’’ in § 440.345(b) of this 

regulation. 

Employer-Sponsored Insurance Health 

Plans (§ 440.350) 

We removed the language ‘‘the 

additional or wrap-around’’ and 

replaced it with ‘‘additional’’ in 

§ 440.350(a) of this regulation. 

We replaced the term ‘‘costeffectiveness’’ with ‘‘economy and 

efficiency’’ in § 440.350(b) of this 

regulation to be consistent with the new 

section heading of § 440.370. 

State Plan Requirement for Providing 

Additional Services (§ 440.360) 

We removed the term ‘‘wrap-around’’ 

in the section heading in § 440.360 of 

this regulation. We also revised 

§ 440.360 by removing the language ‘‘or 

wrap-around’’. 

Economy and Efficiency (§ 440.370) 

We removed the section heading 

‘‘Cost-effectiveness’’ and replaced it with 

‘‘Economy and efficiency’’ in § 440.370 

of this regulation. 

Comparability (§ 440.375) 

We removed the section heading 

‘‘Comparability and scope of coverage’’ 

and replaced it with ‘‘Comparability’’ in 

§ 440.370 of this regulation. We also 

revised § 440.375 by removing the 

language ‘‘or requirements relating to the 

scope of coverage other than those 

contained in this subpart’’. 

Delivery of Benchmark and BenchmarkEquivalent Coverage Through Managed 

Care Entities (§ 440.385) 

We replaced the title ‘‘Freedom of 

choice’’ with ‘‘Delivery of benchmark 

and benchmark-equivalent coverage 

through managed care entities.’’ We 

revised this section by removing the 

option to provide benchmark or 

benchmark-equivalent benefit plans 

without regard to the requirements for 

freedom of choice in § 431.51 of this 

chapter. Section 611(a) of CHIPRA 

clarified that benchmark and benchmark 

equivalent plans must comply with all 

requirements of title XIX other than 

1902(a)(1) and 1902(a)(10)(B). We 

therefore revised the title and text of 

440.385 to provide that States wishing 

to deliver benchmark and benchmarkequivalent benefit packages through a 

managed care entity may do so but must 

comply with the requirements of section 

1932 of the Act and 42 CFR part 438. 

Assurance of Transportation (§ 440.390) 

We revised § 440.390 to specify that if 

a benchmark or benchmark-equivalent 

plan does not include transportation to 

and from medically necessary covered 

Medicaid services, the State must 

nevertheless assure that emergency and 

non-emergency transportation is 

covered for beneficiaries enrolled in the 

benchmark and benchmark-equivalent 

plan, as required under § 431.53 of this 

chapter. 

V. Collection of Information 

Requirements 

The following requirements are 

subject to the Paperwork Reduction Act 

(PRA). While some elements contained 

in the sections listed below are 

approved under OMB control number 

0938–0993, the current information 

collection will need to be revised to 

reflect changes contained in this final 

rule. CMS is revising this PRA package 

to make necessary updates and to 

incorporate any new requirements not 

currently approved by OMB. The 

revised package will be published in a 


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60-day Federal Register notice seeking 

public comment. 

Section 440.320 State Plan 

Requirements: Optional Enrollment for 

Exempt Individuals 

Section 440.320(a) requires a State to: 

(1) Inform the individuals that the 

enrollment is voluntary and that the 

individual may disenroll from the 

benchmark or benchmark-equivalent 

coverage at any time and regain 

immediate access to standard full 

Medicaid coverage under the State plan; 

(2) Inform the exempt individual of the 

benefits available under the benchmark 

or benchmark-equivalent benefit 

package and provide a comparison of 

how they differ from the benefits 

available under the standard full 

Medicaid program; and, (3) Document 

in the exempt individual’s eligibility file 

that the individual was informed in 

accordance with this section and 

voluntarily chose to enroll in the 

benchmark or benchmark-equivalent 

benefit package. 

Section 440.330 Benchmark Health 

Benefits Coverage 

Section 440.330(d) requires States 

wishing to opt for Secretarial-approved 

coverage to submit a full description of 

the proposed coverage and include a 

benefit-by-benefit comparison of the 

proposed plan to one or more of the 

three other benchmark plans specified. 

Section 440.340 Actuarial Report for 

Benchmark-Equivalent Coverage 

Section 440.340 requires a State trying 

to obtain approval for benchmarkequivalent health benefits coverage 

described in § 440.335 to submit, as part 

of its State Plan Amendment, an 

actuarial report. The report must 

provide sufficient detail to explain the 

basis of the methodologies used to 

estimate the actuarial value or, if 

requested by CMS, to replicate the 

State’s result. 

Section 440.345 Requirement To 

Provide EPSDT Services 

Section 440.345(a)(2) requires a State 

to include a description in their State 

Plan of how the additional services will 

be provided to ensure that all 

individuals under 21 receive full EPSDT 

services. The description must describe 

the populations covered and the 

procedures for assuring those services. 

Section 440.350 Employer-Sponsored 

Insurance Health Plans 

Section 440.350(b) requires a State to 

set forth in the State plan the criteria it 

will use to identify individuals who 

would be required to enroll in an 

available group health plan to receive 

benchmark or benchmark-equivalent 

coverage. 

Section 440.360 State Plan 

Requirement for Providing Additional 

Services 

This section requires States opting to 

provide additional services to the 

benchmark-equivalent plans, to describe 

the populations covered and the 

payment methodology for these services 

in their State plan. 

Section 440.390 Assurance of 

Transportation 

A State must assure medically 

necessary transportation for 

beneficiaries enrolled in a benchmark or 

benchmark-equivalent plan even if 

transportation is not a service provided 

in the benchmark or benchmarkequivalent plan. 

VI. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Act, section 202 

of the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4), Executive Order 

13132 on Federalism (August 4, 1999), 

and the Congressional Review Act (5 

U.S.C. 804(2)). 

Executive Order 12866 directs 

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). A regulatory impact 

analysis (RIA) must be prepared for 

rules with economically significant 

effects of $100 million or more in any 

1 year. As a result, since there is an 

economic impact of more than $100 

million in any 1 year, this final rule is 

categorized as economically significant 

and thus is consequentially a major rule 

under the Congressional Review Act. 

The regulatory impact analysis in this 

final rule incorporates provisions of the 

Children’s Health Insurance Program 

Authorization Act (CHIPRA) of 2009, 

enacted on February 4, 2009, which 

corrected language in the DRA and 

subsequently amended section 1937 

‘‘State Flexibility for Medicaid Benefit 

Packages.’’ In addition, this final rule 

incorporates provisions of the American 

Recovery and Reinvestment Act (ARRA) 

of 2009 related to the temporary 

increase in the Federal matching 

percentage (FMAP) for Medicaid, 

enacted on February 17, 2009. The 

estimated aggregate Federal savings for 

fiscal years 2006 through 2014, as 

shown in Table 1, is estimated to be 

$4.97 billion. Also, the estimated 

aggregate State savings for fiscal years 

2006 through 2014, as shown in Table 

2, is $3.36 billion. 

In the December 3, 2008 ‘‘final rule,’’ 

we estimated aggregate impacts for 

fiscal years 2006 through 2010 of $2.28 

billion in Federal savings and $1.72 

billion in State savings. In this final 

rule, the updated aggregate impacts, for 

the same time period of fiscal years 

2006 through 2010, are $1.84 billion in 

Federal savings and $1.05 in State 

savings. As a result, relative to the 

December 3, 2008 final rule, this yields 

a reduction in the aggregate impacts of 

$440 million in Federal savings and 

$670 million in State savings, for fiscal 

years 2006 through 2010. We estimated 

the impact of this rule by analyzing the 

potential Federal savings related to 

lower per capita spending that may be 

achieved if States choose to enroll 

beneficiaries in eligible populations in 

plans that are less costly than projected 

Medicaid costs. To do this, we 

developed estimates based on the 

following assumptions: 

• The number of eligible beneficiaries 

and the Federal Medicaid costs of these 

beneficiaries are based on 2003 

Medicaid Statistical Information System 

(MSIS) data; 

• Projections of the number of eligible 

beneficiaries and their associated 

Federal Medicaid costs were made using 

assumptions from the President’s 

Budget 2007, including enrollment 

growth rates and per capita spending 

growth rates; 

• The relative costs of the new plans 

allowed under this rule to current 

Medicaid spending were estimated 

based on reviews of Medicaid spending 

data and the plans described in this 

rule. Additionally, we have assumed 

that not all States would immediately 

use the options made available through 

this rule; therefore, we assume that State 

use of these plans will continue to 

increase through 2011. We assumed that 

use in 2006 will be about 10 percent of 

2011-level of use; 40 percent in 2007; 60 

percent in 2008; 80 percent in 2009; and 

90 percent in 2010. We do not assume 

any further expansion beyond 2011. 

These estimates assume that there 

will be a negligible impact on State 

administration costs. As States already 

have experience in dealing with 

alternative plan designs, including 

through waivers or managed care plans, 

we assumed States are equipped to 


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implement these plans and will be part 

of their normal administrative spending. 

Also, these estimates are subject to a 

substantial amount of uncertainty and 

actual experience may be significantly 

different. The range of possible 

experience is greater than under most 

other rules for the following two 

reasons. First, this rule provides the 

option for States to use alternative 

plans; to the extent that States 

participate more or less than assumed 

here (both the number of States that 

participate and the extensiveness of 

States’ use of these plans), Federal 

savings may be greater than or less than 

estimated. Second, this rule also 

provides a wide range of options for 

States in designing these plans; to the 

extent that States use plans that are 

relatively more or less costly than 

assumed here, Federal savings may be 

less than or greater than estimated. 

TABLE 1—ESTIMATED ANNUAL FEDERAL SAVINGS DISCOUNTED AT 0 PERCENT, 3 PERCENT AND 7 PERCENT—FROM FY 

2006 TO FY 2014 

[In $millions] 

Discount rate 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total savings 

2006–2014 

0% ........................................................ $50 $210 $340 $570 $670 $710 $740 $810 $870 $4,970 

3% ........................................................ 49 198 311 506 578 595 602 639 667 4,145 

7% ........................................................ 47 183 278 435 478 473 461 471 473 3,299 

We anticipate that States will phase in 

alternative benefit programs, and 

changes will not be fully realized until 

2010. The majority of savings will be 

achieved through cost avoidance of 

future anticipated costs by providing 

appropriate benefits based on a 

population’s health care needs, 

appropriate utilization of services, and 

through gains in efficiencies through 

contracting. States will be able to take 

greater advantage of marketplace 

dynamics within their State. We also 

anticipate that a number of States will 

use this flexibility to create programs 

that are more similar to their CHIP 

programs. Because States are no longer 

tied to statewideness and comparability 

rules for individuals who are not 

disabled, not aged, or not blind, they 

will be able to offer individuals and 

families different types of plans 

consistent with their needs and 

available delivery systems. 

TABLE 2—ESTIMATED ANNUAL STATE SAVINGS DISCOUNTED AT 0 PERCENT, 3 PERCENT AND 7 PERCENT—FROM FY 

2006 TO FY 2014 

[In $millions] 

Discount rate 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total savings 

2006–2014 

0% ........................................................ $40 $160 $250 $280 $320 $480 $560 $610 $660 $3,360 

3% ........................................................ 39 151 229 249 276 402 455 482 506 2,788 

7% ........................................................ 37 140 204 214 228 320 349 355 359 2,206 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a rule has a significant 

impact on a substantial number of small 

entities. For purposes of the RFA, small 

entities as that term is used in the RFA 

(include small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). The great majority of 

hospitals and most other health care 

providers and suppliers are small 

entities, either by being nonprofit 

organizations or by meeting the SBA 

definition of a small business (having 

revenues of less than $7 million to $34.5 

million in any 1 year). (For details, see 

the Small Business Administration’s 

final rule that set forth size standards for 

health care industries, at 65 FR 69432, 

November 17, 2000.) Individuals and 

States are not included in the definition 

of a small entity. The Secretary has 

determined that this provision applies 

to States only and will not affect small 

entities. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis, if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. This analysis must conform to 

the provisions of section 604 of the 

RFA. For purposes of section 1102(b) of 

the Act, we define a small rural hospital 

as a hospital that is located outside of 

a metropolitan statistical area and has 

fewer than 100 beds. The Secretary has 

determined that this rule would not 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

(Pub. L. 104–4) also requires that 

agencies assess anticipated costs and 

benefits before issuing any rule whose 

mandates require spending in any 1 year 

of $100 million in 1995 dollars, updated 

annually for inflation. In 2010, that 

threshold is approximately $135 

million. Because this rule does not 

mandate State participation in using 

these benchmark plans, there is no 

obligation for the State to make any 

change to their Medicaid program. As a 

result, there is no mandate for the State. 

Therefore, we estimate this final will 

not mandate expenditures in the 

threshold amount of $135 million in any 

1 year. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This final rule will not impose direct 

cost on States or local governments or 

preempt State law. The rule will 

provide States the option to implement 

alternative Medicaid benefits through a 

Medicaid State plan amendment. 

Comment: One commenter questioned 

the validity of CMS’s Regulatory Impact 

Analysis, believing that the proposed 

rule will cause additional 

administrative effort in order for 

American Indians/Alaska Natives 

beneficiaries to participate. 


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Response: CMS is required by 

Executive Order 12866 (September 

1993, Regulatory Planning and Review), 

the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Act, the 

Unfunded Mandates Reform Act of 1995 

(Pub. L. 104–4), and Executive Order 

13132 on Federalism, and the 

Congressional Review Act (5 U.S.C. 

804(2)) to conduct a regulatory analysis 

of the impact of any regulatory revision 

to the Medicare, Medicaid, and/or 

Children’s Health Insurance Program 

before adoption of any rule. A 

Regulatory Impact Analysis was 

completed for this rule. We believe 

there is negligible impact on State 

administrative costs since States already 

have experience in dealing with 

alternative plan designs, including 

through waivers or managed care plans. 

Thus, we have assumed States are 

equipped to implement these plans and 

that costs will be part of their normal 

administrative spending. We believe 

this would be true for any State that 

chooses to offer benchmark or 

benchmark-equivalent plans to the 

Medicaid beneficiaries including 

American Indians/Alaska Natives 

Medicaid beneficiaries. 

B. Anticipated Effects 

Before section 6044 of the DRA 

became effective on March 31, 2006, 

State Medicaid programs generally were 

required to offer at minimum the same 

standard benefit package to each 

individual, regardless of income, 

eligibility category, or geographic 

location. Some States offered alternative 

benefit packages to certain individuals 

under section 1115 demonstration 

waivers approved by the Centers for 

Medicare & Medicaid Services. This 

provision allows for similar program 

alternatives under the State plan. 

Without a waiver, States may form 

larger pools by combining Medicaid 

individuals with their public 

employees. 

C. Alternatives Considered 

This rule finalizes requirements for 

States to elect alternative Medicaid 

benefit programs through the adoption 

of a Medicaid State plan amendment. 

The final requirements in this rule were 

designed to permit State flexibility 

while assuring that beneficiaries will get 

quality care that meets their needs. 

Under this rule, we will allow States to 

define the alternative benefit packages 

by reference to the benchmark or 

benchmark-equivalent standard, while 

making it clear that children under 21 

are eligible for the full range of 

Medicaid benefits under EPSDT. We 

will also permit States to combine an 

alternative benefit package with 

alternative benefit delivery methods, 

such as through managed care or 

employer-based coverage, although 

compliance with all Medicaid rules 

other than comparability or 

statewideness is required unless directly 

contrary to this statute. An alternative 

might have been to require the State to 

document any deviation from otherwise 

applicable State plan requirements, 

much as is required under section 1115 

demonstration waivers, 1915(b) waivers, 

1915(c) waivers, or any combination 

thereof. We have not elected this 

alternative because it would be 

cumbersome for States, it will not be 

consistent with the statutory use of 

benchmark and benchmark-equivalent 

coverage as reference points for 

permissible benefit packages, and it will 

not improve the clarity of the State plan. 

Another alternative might have been to 

limit State flexibility under this 

provision to variation in the amount, 

duration and scope of benefits without 

providing authority for an integrated 

approach combining alternative benefits 

with alternative benefit delivery 

methods. We have not elected this 

alternative because an integrated 

approach allows greater State flexibility 

to tailor both benefits and delivery 

methods to the eligible groups of 

individuals being served. 

D. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/circulars/ 

a004/a-4.pdf), in Table 3 below, we 

have prepared an accounting statement 

showing the classification of the 

expenditures associated with the 

provisions of this rule. This table 

provides our best estimate of the 

decrease in Medicaid payments as a 

result of the changes presented in this 

rule. All savings are classified as 

transfers to the Federal Government, as 

well as to States. 

TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED EXPENDITURES, FROM FY 2006 TO FY 2014 

[In $millions] 

Category 

Transfers 

Year dollar 

Units discount rate 

Period covered 

7% 3% 0% 

Annualized Monetized Transfers ...................................... 2006 ¥$506.3 ¥$532.3 ¥$552.22 FYs 2006–2014 

From Whom To Whom? ................................................... Federal Government to beneficiaries, providers 

Annualized Monetized Transfers ...................................... 2006 ¥338.5 ¥358.1 ¥373.33 FYs 2006–2014 

From Whom to Whom? .................................................... State Governments to beneficiaries, providers 

Column 1: Category—Contains the 

description of the different impacts of 

the rule; it could include monetized, 

quantitative but not monetized, or 

qualitative but not quantitative or 

monetized impacts; it also may contain 

unit of measurement (such as, dollars). 

In this case, the Federal and State 

annualized monetized impacts of the 

rule are presented. 

Column 2: Year Dollar—Contains the 

year to which dollars are normalized; 

that is, the first year that dollars are 

discounted in the estimate. 

Column 3: Unit Discount Rate— 

Contains the discount rate or rates used 

to estimate the annualized monetized 

impacts. In this case, three rates are 

used: 7 percent; 3 percent; 0 percent. 

Column 4: Primary Estimate— 

Contains the quantitative or qualitative 

impact of the rule for the respective 

category of impact. Monetized amounts 

are generally shown in real dollar terms. 

In this case, the federalized annualized 

monetized primary estimate represents 

the equivalent amount that, if paid 

(saved) each year over the period 

covered, would result in the same net 


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present value of the stream of costs 

(savings) estimated over the period 

covered. 

Column 5: Period Covered—Contains 

the years for which the estimate was 

made. 

Rows: The rows contain the estimates 

associated with each specific impact 

and each discount rate used. 

Estimated Savings—The following 

table shows the discounted costs 

(savings) for each discount rate over the 

period covered. The monetized figures 

represent the net present value of the 

impact in the year the rule takes effect. 

These numbers represent the 

anticipated annual reduction in Federal 

and State Medicaid spending under this 

rule. 

‘‘From Whom to Whom?’’—In the case 

of a transfer (as opposed to a change in 

aggregate social welfare as described in 

the OMB Circular), this section 

describes the parties involved in the 

transfer of costs. In this case, the 

expenditures represent a reduction in 

Federal and State governments spending 

on behalf of beneficiaries. 

E. Conclusion 

We estimate that the use of 

benchmark plans under this rule will 

result in total Federal savings of $4.97 

billion and State savings of $3.36 billion 

for fiscal years 2006 through 2014. This 

translates to an annualized Federal 

savings of $506.3 million and $532.3 

million at the 7 percent and 3 percent 

discount rates. Also, this yields an 

annualized State savings of $338.5 

million and $358.1 million at the 7 

percent and 3 percent discount rates 

over the same time period of fiscal years 

2006 through 2014. These savings 

would arise as States use the plans 

described by this rule to manage the 

costs of their Medicaid program by 

modifying plan benefits for targeted 

beneficiaries. The actual savings will 

heavily depend on the number of States 

that ultimately implement these plans, 

the number of beneficiaries States cover 

with these plans, and the specific design 

and selection of benchmark plans. 

For reasons stated above, we are not 

preparing analyses for either the RFA or 

section 1102(b) of the Act because we 

have determined that this rule will not 

have a significant economic impact on 

a substantial number of small entities or 

a significant impact on the operations of 

a substantial number of small rural 

hospitals. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects in 42 CFR Part 440 

Grant programs—health, Medicaid. 

■ For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services amends 42 CFR 

chapter IV as set forth below: 

PART 440—SERVICES: GENERAL 

PROVISIONS 

■ 1. The authority citation for part 440 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C.1302). 

■ 2. Subpart C, consisting of § 440.300 

through § 440.390, is revised to read as 

follows: 

Subpart C—Benchmark Benefit and 

Benchmark-Equivalent Coverage 

Sec. 

440.300 Basis. 

440.305 Scope. 

440.310 Applicability. 

440.315 Exempt individuals. 

440.320 State plan requirements: Optional 

enrollment for exempt individuals. 

440.325 State plan requirements: Coverage 

and benefits. 

440.330 Benchmark health benefits 

coverage. 

440.335 Benchmark-equivalent health 

benefits coverage. 

440.340 Actuarial report for benchmarkequivalent coverage. 

440.345 EPSDT services requirement. 

440.350 Employer-sponsored insurance 

health plans. 

440.355 Payment of premiums. 

440.360 State plan requirement for 

providing additional services. 

440.365 Coverage of rural health clinic and 

federally qualified health center (FQHC) 

services. 

440.370 Economy and efficiency. 

440.375 Comparability. 

440.380 Statewideness. 

440.385 Delivery of benchmark and 

benchmark-equivalent coverage through 

managed care entities. 

440.390 Assurance of transportation. 

Subpart C—Benchmark Benefit and 

Benchmark-Equivalent Coverage 

§ 440.300 Basis. 

This subpart implements section 1937 

of the Act, which authorizes States to 

provide for medical assistance to one or 

more groups of Medicaid-eligible 

individuals, specified by the State under 

an approved State plan amendment, 

through enrollment in coverage that 

provides benchmark or benchmarkequivalent health care benefit coverage. 

§ 440.305 Scope. 

(a) General. This subpart sets out 

requirements for States that elect to 

provide medical assistance to certain 

Medicaid eligible individuals within 

one or more groups of individuals 

specified by the State, through 

enrollment of the individuals in 

coverage, identified as ‘‘benchmark’’ or 

‘‘benchmark-equivalent.’’ 

(b) Limitations. A State may only 

apply the option in paragraph (a) of this 

section for an individual whose 

eligibility is based on an eligibility 

category under section 1905(a) of the 

Act that could have been covered under 

the State’s plan on or before February 8, 

2006. 

(c) A State may not require but may 

offer enrollment in benchmark or 

benchmark-equivalent coverage to the 

Medicaid eligible individuals listed in 

§ 440.315. States allowing individuals to 

voluntarily enroll must be in 

compliance with the rules specified at 

§ 440.320. 

(d) Prior to submitting to the Centers 

for Medicare and Medicaid Services for 

approval a State plan amendment to 

establish a benchmark or benchmarkequivalent benefit plan or an 

amendment to substantially modify an 

existing benchmark or benchmarkequivalent benefit plan, a State must 

have provided the public with advance 

notice of the amendment and reasonable 

opportunity to comment with respect to 

such amendment, and have included in 

the notice a description of the method 

for assuring compliance with § 440.345 

of this subpart related to full access to 

EPSDT services, and the method for 

complying with the provisions of 

section 5006(e) of the American 

Recovery and Reinvestment Act of 2009. 

§ 440.310 Applicability. 

(a) Enrollment. The State may require 

‘‘full benefit eligible’’ individuals not 

excluded in § 440.315 to enroll in 

benchmark or benchmark-equivalent 

coverage. 

(b) Full benefit eligible. An individual 

is a full benefit eligible if determined by 

the State to be eligible to receive the 

standard full Medicaid benefit package 

under the approved State plan if not for 

the application of the option available 

under this subpart. 

§ 440.315 Exempt individuals. 

Individuals within one (or more) of 

the following categories are exempt 

from mandatory enrollment in 

benchmark or benchmark-equivalent 

coverage. 

(a) The individual is a pregnant 

woman who is required to be covered 

under the State plan under section 

1902(a)(10)(A)(i) of the Act. 

(b) The individual qualifies for 

medical assistance under the State plan 

on the basis of being blind or disabled 

(or being treated as being blind or 

disabled) without regard to whether the 


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individual is eligible for Supplemental 

Security Income benefits under title XVI 

on the basis of being blind or disabled 

and including an individual who is 

eligible for medical assistance on the 

basis of section 1902(e)(3) of the Act. 

(c) The individual is entitled to 

benefits under any part of Medicare. 

(d) The individual is terminally ill 

and is receiving benefits for hospice 

care under title XIX. 

(e) The individual is an inpatient in 

a hospital, nursing facility, intermediate 

care facility for the mentally retarded, or 

other medical institution, and is 

required, as a condition of receiving 

services in that institution under the 

State plan, to spend for costs of medical 

care all but a minimal amount of the 

individual’s income required for 

personal needs. 

(f) The individual is medically frail or 

otherwise an individual with special 

medical needs. For these purposes, the 

State’s definition of individuals who are 

medically frail or otherwise have special 

medical needs must at least include 

those individuals described in 

§ 438.50(d)(3) of this chapter, children 

with serious emotional disturbances, 

individuals with disabling mental 

disorders, individuals with serious and 

complex medical conditions, and 

individuals with physical and/or mental 

disabilities that significantly impair 

their ability to perform one or more 

activities of daily living. 

(g) The individual qualifies based on 

medical condition for medical 

assistance for long-term care services 

described in section 1917(c)(1)(C) of the 

Act. 

(h) The individual is an individual 

with respect to whom child welfare 

services are made available under part 

B of title IV to children in foster care 

and individuals with respect to whom 

adoption or foster care assistance is 

made available under part E of title IV, 

without regard to age. 

(i) The individual is a parent or 

caretaker relative whom the State is 

required to cover under section 1931 of 

the Act. 

(j) The individual is a woman who is 

receiving medical assistance by virtue of 

the application of sections 

1902(a)(10)(ii)(XVIII) and 1902(aa) of the 

Act. 

(k) The individual qualifies for 

medical assistance on the basis of 

section 1902(a)(10)(A)(ii)(XII) of the Act. 

(l) The individual is only covered by 

Medicaid for care and services 

necessary for the treatment of an 

emergency medical condition in 

accordance with section 1903(v) of the 

Act. 

(m) The individual is determined 

eligible as medically needy or eligible 

because of a reduction of countable 

income based on costs incurred for 

medical or other remedial care under 

section 1902(f) of the Act or otherwise 

based on incurred medical costs. 

§ 440.320 State plan requirements: 

Optional enrollment for exempt individuals. 

(a) General rule. A State plan that 

offers exempt individuals as defined in 

§ 440.315 the option to enroll in 

benchmark or benchmark-equivalent 

coverage must identify in its State plan 

the exempt groups for which this 

coverage is available, and must comply 

with the following provisions: 

(1) In any case in which the State 

offers an exempt individual the option 

to obtain coverage in a benchmark or 

benchmark-equivalent benefit package, 

the State must effectively inform the 

individual prior to enrollment that the 

enrollment is voluntary and that the 

individual may disenroll from the 

benchmark or benchmark-equivalent 

coverage at any time and regain 

immediate access to standard full 

Medicaid coverage under the State plan. 

(2) Prior to any enrollment in 

benchmark or benchmark-equivalent 

coverage, the State must inform the 

exempt individual of the benefits 

available under the benchmark or 

benchmark-equivalent benefit package 

and the costs under such a package and 

provide a comparison of how they differ 

from the benefits and costs available 

under the standard full Medicaid 

program. The State must also inform 

exempt individuals that they may 

disenroll at any time and provide them 

with information about the process for 

disenrolling. 

(3) The State must document in the 

exempt individual’s eligibility file that 

the individual was informed in 

accordance with this section prior to 

enrollment, was given ample time to 

arrive at an informed choice, and 

voluntarily and affirmatively chose to 

enroll in the benchmark or benchmarkequivalent benefit package. 

(4) For individuals who the State 

determines have become exempt 

individuals while enrolled in 

benchmark or benchmark-equivalent 

coverage, the State must comply with 

the requirements in paragraphs (a)(1) 

through (a)(3) of this section above 

within 30 days after such determination. 

(b) Disenrollment Process. (1) The 

State must act upon requests promptly 

for exempt individuals who choose to 

disenroll from benchmark or 

benchmark-equivalent coverage. 

(2) The State must have a process in 

place to ensure that exempt individuals 

have access to all standard State plan 

services while disenrollment requests 

are being processed. 

(3) The State must maintain data that 

tracks the total number of beneficiaries 

that have voluntarily enrolled in a 

benchmark plan and the total number of 

individuals that have disenrolled from 

the benchmark plan. 

§ 440.325 State plan requirements: 

Coverage and benefits. 

Subject to requirements in § 440.345 

and § 440.365, States may elect to 

provide any of the following types of 

health benefits coverage: 

(a) Benchmark coverage in accordance 

with § 440.330. 

(b) Benchmark-equivalent coverage in 

accordance with § 440.335. 

§ 440.330 Benchmark health benefits 

coverage. 

Benchmark coverage is health benefits 

coverage that is equal to the coverage 

under one or more of the following 

benefit plans: 

(a) Federal Employees Health Benefit 

Plan Equivalent Coverage (FEHBP— 

Equivalent Health Insurance Coverage). 

A benefit plan equivalent to the 

standard Blue Cross/Blue Shield 

preferred provider option service benefit 

plan that is described in and offered to 

Federal employees under 5 U.S.C. 

8903(1). 

(b) State employee coverage. Health 

benefits coverage that is offered and 

generally available to State employees 

in the State. 

(c) Health maintenance organization 

(HMO) plan. A health insurance plan 

that is offered through an HMO, (as 

defined in section 2791(b)(3) of the 

Public Health Service Act) that has the 

largest insured commercial, nonMedicaid enrollment in the State. 

(d) Secretary-approved coverage. Any 

other health benefits coverage that the 

Secretary determines, upon application 

by a State, provides appropriate 

coverage to meet the needs of the 

population provided that coverage. 

States wishing to elect Secretarial 

approved coverage should submit a full 

description of the proposed coverage, 

(including a benefit-by-benefit 

comparison of the proposed plan to one 

or more of the three other benchmark 

plans specified above or to the State’s 

standard full Medicaid coverage 

package under section 1905(a) of the 

Act), and of the population to which the 

coverage would be offered. In addition, 

the State should submit any other 

information that would be relevant to a 

determination that the proposed health 

benefits coverage would be appropriate 

for the proposed population. The scope 


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of a Secretary-approved health benefits 

package will be limited to benefits 

within the scope of the categories 

available under a benchmark coverage 

package or the standard full Medicaid 

coverage package under section 1905(a) 

of the Act. 

§ 440.335 Benchmark-equivalent health 

benefits coverage. 

(a) Aggregate actuarial value. 

Benchmark-equivalent coverage is 

health benefits coverage that has an 

aggregate actuarial value, as determined 

under § 440.340, that is at least 

actuarially equivalent to the coverage 

under one of the benchmark benefit 

packages described in § 440.330 for the 

identified Medicaid population to 

which it will be offered. 

(b) Required coverage. Benchmarkequivalent health benefits coverage 

must include coverage for the following 

categories of services: 

(1) Inpatient and outpatient hospital 

services. 

(2) Physicians’ surgical and medical 

services. 

(3) Laboratory and x-ray services. 

(4) Well-baby and well-child care, 

including age-appropriate 

immunizations. 

(5) Emergency services. 

(6) Family planning services and 

supplies and other appropriate 

preventive services, as designated by the 

Secretary. 

(c) Additional coverage. (1) In 

addition to the categories of services of 

this section, benchmark-equivalent 

coverage may include coverage for any 

additional services in a category 

included in the benchmark plan or 

described in section 1905(a) of the Act. 

(2) If the benchmark coverage package 

used by the State for purposes of 

comparison in establishing the aggregate 

actuarial value of the benchmarkequivalent package includes any of the 

following four categories of services: 

Prescription drugs; mental health 

services; vision services; and hearing 

services; then the actuarial value of the 

coverage for each of these categories of 

service in the benchmark-equivalent 

coverage package must be at least 75 

percent of the actuarial value of the 

coverage for that category of service in 

the benchmark plan used for 

comparison by the State. 

(3) If the benchmark coverage package 

does not cover one of the four categories 

of services in paragraph (c)(2) of this 

section, then the benchmark-equivalent 

coverage package may, but is not 

required to, include coverage for that 

category of service. 

§ 440.340 Actuarial report for benchmarkequivalent coverage. 

(a) A State plan amendment that 

would provide for benchmarkequivalent health benefits coverage 

described in § 440.335, must include an 

actuarial report. The actuarial report 

must contain an actuarial opinion that 

the benchmark-equivalent health 

benefits coverage meets the actuarial 

requirements set forth in § 440.335. The 

report must also specify the benchmark 

coverage used for comparison. 

(b) The actuarial report must state that 

it was prepared according to the 

following requirements: 

(1) By an individual who is a member 

of the American Academy of Actuaries 

(AAA). 

(2) Using generally accepted actuarial 

principles and methodologies of the 

AAA. 

(3) Using a standardized set of 

utilization and price factors. 

(4) Using a standardized population 

that is representative of the population 

involved. 

(5) Applying the same principles and 

factors in comparing the value of 

different coverage (or categories of 

services). 

(6) Without taking into account any 

differences in coverage based on the 

method of delivery or means of cost 

control or utilization used. 

(7) Taking into account the ability of 

the State to reduce benefits by 

considering the increase in actuarial 

value of health benefits coverage offered 

under the State plan that results from 

the limitations on cost sharing (with the 

exception of premiums) under that 

coverage. 

(c) The actuary preparing the opinion 

must select and specify the standardized 

set of factors and the standardized 

population to be used in paragraphs 

(b)(3) and (b)(4) of this section. 

(d) The State must provide sufficient 

detail to explain the basis of the 

methodologies used to estimate the 

actuarial value or, if requested by CMS, 

to replicate the State’s result. 

§ 440.345 EPSDT services requirement. 

(a) The State must assure access to 

early and periodic screening, diagnostic 

and treatment (EPSDT) services through 

benchmark or benchmark-equivalent 

plan benefits or as additional benefits 

provided by the State for any child 

under 21 years of age eligible under the 

State plan in a category under section 

1902(a)(10)(A) of the Act. 

(1) Sufficiency. Any additional 

EPSDT benefits not provided by the 

benchmark or benchmark-equivalent 

plan must be sufficient so that, in 

combination with the benchmark or 

benchmark-equivalent benefits plan, 

these individuals have access to the full 

EPSDT benefit. 

(2) State Plan requirement. The State 

must include a description of how the 

additional benefits will be provided, 

how access to additional benefits will be 

coordinated and how beneficiaries and 

providers will be informed of these 

processes in order to ensure that these 

individuals have access to the full 

EPSDT benefit. 

(b) [Reserved] 

§ 440.350 Employer-sponsored insurance 

health plans. 

(a) A State may provide benchmark or 

benchmark-equivalent coverage by 

obtaining employer sponsored health 

plans (either alone or with additional 

services covered separately under 

Medicaid) for individuals with access to 

private health insurance. 

(b) The State must assure that 

employer sponsored plans meet the 

requirements of benchmark or 

benchmark-equivalent coverage, 

including the economy and efficiency 

requirements at § 440.370. 

(c) A State may provide benchmark or 

benchmark-equivalent coverage through 

a combination of employer sponsored 

health plans and additional benefit 

coverage provided by the State that 

wraps around the employer sponsored 

health plan which, in the aggregate, 

results in benchmark or benchmarkequivalent level of coverage for those 

individuals. 

§ 440.355 Payment of premiums. 

Payment of premiums by the State, 

net of beneficiary contributions, to 

obtain benchmark or benchmarkequivalent benefit coverage on behalf of 

beneficiaries under this section will be 

treated as medical assistance under 

section 1905(a) of the Act. 

§ 440.360 State plan requirement for 

providing additional services. 

In addition to the requirements of 

§ 440.345 the State may elect to provide 

additional coverage to individuals 

enrolled in benchmark or benchmarkequivalent plans. The State plan must 

describe the populations covered and 

the payment methodology for these 

services. Additional services must be in 

categories that are within the scope of 

the benchmark coverage, or are 

described in section 1905(a) of the Act. 

§ 440.365 Coverage of rural health clinic 

and federally qualified health center (FQHC) 

services. 

If a State provides benchmark or 

benchmark-equivalent coverage to 

individuals, it must assure that the 

individual has access, through that 


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23104 Federal Register / Vol. 75, No. 83 / Friday, April 30, 2010 / Rules and Regulations 

coverage or otherwise, to rural health 

clinic services and FQHC services as 

defined in subparagraphs (B) and (C) of 

section 1905(a)(2) of the Act. Payment 

for these services must be made in 

accordance with the payment provisions 

of section 1902(bb) of the Act. 

§ 440.370 Economy and efficiency. 

Benchmark and benchmarkequivalent coverage and any additional 

benefits must be provided in accordance 

with Federal upper payment limits, 

procurement requirements and other 

economy and efficiency principles that 

would otherwise be applicable to the 

services or delivery system through 

which the coverage and benefits are 

obtained. 

§ 440.375 Comparability. 

States have the option to amend their 

State plan to provide benchmark or 

benchmark-equivalent coverage to 

individuals without regard to 

comparability. 

§ 440.380 Statewideness. 

States have the option to amend their 

State plan to provide benchmark or 

benchmark-equivalent coverage to 

individuals without regard to 

statewideness. 

§ 440.385 Delivery of benchmark and 

benchmark-equivalent coverage through 

managed care entities. 

In implementing benchmark or 

benchmark-equivalent benefit packages, 

States must comply with the managed 

care provisions at section 1932 of the 

Act and part 438 of this chapter, if 

benchmark and benchmark-equivalent 

benefits are provided through a 

managed care entity. 

§ 440.390 Assurance of transportation. 

If a benchmark or benchmarkequivalent plan does not include 

transportation to and from medically 

necessary covered Medicaid services, 

the State must nevertheless assure that 

emergency and non-emergency 

transportation is covered for 

beneficiaries enrolled in the benchmark 

or benchmark-equivalent plan, as 

required under § 431.53 of this chapter. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: January 21, 2010. 

Charlene Frizzera, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 2, 2010. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–9734 Filed 4–29–10; 8:45 am] 

BILLING CODE 4120–01–P 


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