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[Federal Register Volume 79, Number 39 (Thursday, February 27, 2014)]
[Notices]
[Pages 11110-11112]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-04290]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

Notice of Opportunity for Hearing on Compliance of Florida State 
Plan Provisions Concerning Payment for Outpatient Hospital Services 
With Title XIX (Medicaid) of the Social Security Act

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

ACTION: Notice of Opportunity for a Hearing; Compliance of Florida 
Medicaid State Plan Outpatient Hospital Benefit.

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SUMMARY: This notice announces the opportunity for an administrative 
hearing to be held by April 28, 2014 at the CMS Atlanta Regional 
Office, 61 Forsyth Street SW., Suite 4T20, Atlanta, GA 30303-8909, to 
consider whether Florida provisions concerning payments for outpatient 
hospital services comply with the requirements of the Social Security 
Act as discussed in the [date of publication] letter sent to the state 
and published herein.
    Closing Date: Requests to participate in the hearing as a party 
must be received by the presiding officer by March 31, 2014.

FOR FURTHER INFORMATION CONTACT: Benjamin R. Cohen, Hearing Officer, 
Centers for Medicare & Medicaid Services, 2520 Lord Baltimore Drive, 
Suite L, Baltimore, MD 21244, (301) 869-3169.

SUPPLEMENTARY INFORMATION: This notice announces the opportunity for an 
administrative hearing concerning the finding of the Administrator of 
the Centers for Medicare & Medicaid Services (CMS) that the state of 
Florida is not operating their outpatient hospital services in 
compliance with their approved state plan, or in compliance with the 
provisions of the Social Security Act (the Act), and the proposed 
withholding of Federal reimbursement of a portion of Florida's 
administrative dollars proportionate to outpatient hospital services. 
In particular, CMS has found that Florida has continued to implement a 
limit on the number of times a Medicaid beneficiary may visit an 
emergency department, even though CMS disapproved an amendment to add 
this limit to the Florida state plan. Consequently, Federal payments 
for a portion of the Federal funding of administrative costs will be 
withheld, subject for the opportunity for a hearing described below. 
This notice is being provided pursuant to the requirements of section 
1904 of the Act, as implemented at 42 CFR 430.35 and 42 CFR 430, 
Subpart D.
    Under section 1902(a)(10)(A) of the Act, a state plan must provide 
for making medical assistance available to eligible individuals, 
including for most eligible individuals the medical assistance 
specified in section 1905(a)(2) of the Act. This provision includes in 
the definition of medical assistance ``outpatient hospital services.'' 
Section 1902(a)(17) of the Act requires the state plan to include 
reasonable standards for determining the extent of medical assistance, 
and under section 1902(a)(19) of the Act, the state plan must assure 
that eligibility for care and services are provided in the best 
interest of the recipients. As the implementing regulations at 42 CFR 
440.230(b) require, a state plan must ``specify the amount, duration, 
and scope of each service that it provides,'' and ``each service must 
be sufficient in amount, duration, and scope to reasonably achieve its 
purpose.'' While states may place ``appropriate limits on a service 
based on such criteria as medical necessity or utilization control 
procedures'' under CFR 440.230(d), 42 CFR 440.230(c) specifies that a 
state may not arbitrarily deny or reduce the amount, duration, or scope 
of required services, including physicians' services, solely because of 
the diagnosis, type of illness, or condition.
    The proposed limitation on certain outpatient hospital services 
appeared to be based on the diagnosis, illness, or condition because it 
is limited to outpatient services furnished at a hospital emergency 
room, which are designed to address acute and immediate conditions. 
Thus, the limitation appeared to violate the requirements of 42 CFR 
440.230(c). Even if that were not the case, the state did not 
demonstrate that the limitation is consistent with provision of a 
sufficient amount, duration, and scope to reasonably achieve the 
purpose of the benefit, which in this case would be providing 
reasonable coverage that meets the needs of most beneficiaries who need 
the outpatient hospital services, consistent with 42 CFR 440.230(b).
    In disapproving SPA 12-015, CMS staff suggested to the state some

[[Page 11111]]

alternate methods to address inappropriate utilization of hospital 
emergency rooms, including the development of payment rates for 
hospital emergency rooms that are lower if the individual does not 
require care for an acute and immediate condition, or the use of the 
alternative cost sharing authority available to states under section 
1916(d) of the Act, permitting higher beneficiary cost sharing for 
elective non-emergency use of the emergency room. CMS offered to work 
with the state on these options and technical assistance.
    The state requested reconsideration of the denial of the state plan 
amendment.
    During the course of the reconsideration proceedings, CMS became 
aware of Florida's continued implementation of the limitation on 
emergency department visits.
    The notice to Florida containing the details concerning the 
compliance issue, the proposed withholding, opportunity for a hearing, 
and possibility of postponing and ultimately avoiding withholding by 
coming into compliance, reads as follows:

Justin M. Senior
Deputy Secretary for Medicaid
Florida Agency for Health Care Administration
2727 Mahan Drive, MS 8
Tallahassee, Florida 32308

Dear Mr. Senior:

    This letter provides notice that the Centers for Medicare & 
Medicaid Services (CMS) has found that Florida is not providing all 
Medicaid beneficiaries with outpatient hospital benefits required under 
title XIX of the Social Security Act (the Act) and that until this 
deficiency is corrected (by making outpatient hospital services 
available to all beneficiaries entitled to such services), a portion of 
the Federal funding of the administrative costs associated with the 
operation of the Florida Medicaid program will be withheld, subject to 
the opportunity for Florida to request a hearing on this finding. The 
details of the finding, proposed withholding, opportunity for a 
hearing, and possibility of postponing and ultimately avoiding 
withholding by coming into compliance, are described in detail below.
    Specifically, CMS has found that Florida is not providing 
beneficiaries with medical assistance for outpatient hospital services 
in accordance with the approved Florida State Plan, specifically by 
imposing numeric limits (six visits annually) on coverage of outpatient 
hospital visits furnished in hospital emergency departments. The 
approved state plan does not contain any numeric limitation on coverage 
of outpatient hospital services or services of a hospital emergency 
department. It is our understanding that Florida is nevertheless 
imposing a numeric limitation on such coverage.
    This issue is related to the disapproval of a proposed state plan 
amendment that would have placed numeric limitations on outpatient 
hospital visits furnished in a hospital emergency department. Florida 
submitted the proposed amendment to the coverage provisions of the 
Medicaid state plan on September 14, 2012, to impose a limit of 6 
visits per year to emergency departments. The proposed state plan 
amendment would have been effective on August 1, 2012. CMS disapproved 
the amendment on December 13, 2012, indicating that the limitation on 
outpatient services was not consistent with the requirements of section 
1902 of the Social Security Act and implementing regulations because 
the limitation: 1) would not be consistent with the mandatory nature of 
the outpatient hospital services benefit under section 1902(a)(10)(A); 
2) would not be a reasonable standard consistent with section 
1902(a)(17) of the Act because it would arbitrarily deny coverage of 
outpatient hospital services, a mandatory benefit, based on the 
(emergency) condition of the patient; and 3) would not be consistent 
with the best interests of beneficiaries as required by section 
1902(a)(19).
    In disapproving the amendment, CMS suggested to the state some 
alternate methods to address inappropriate utilization of hospital 
emergency rooms, including the development of payment rates for 
hospital emergency rooms that are lower if the individual does not 
require care for an acute and immediate condition, or the use of the 
alternative cost sharing authority available to states under section 
1916(d) of the Act, permitting higher beneficiary cost sharing for 
elective non-emergency use of the emergency room. CMS offered to work 
with the state on these options and technical assistance.
    Florida requested reconsideration of the CMS disapproval of the 
amendment in February 2013. In the CMS response, CMS noted that the 
disapproval was also supported because the proposed coverage 
limitations has an exception to the limitation on emergency room visits 
for ``aliens'' that would violate the ``comparability'' requirements of 
section 1902(a)(10)(B) of the Act because it would provide that aliens 
would receive a greater amount, duration and scope of emergency 
outpatient hospital benefits than other individuals described in 
section 1902(a)(10)(A) of the Act.
    During the course of the reconsideration process, CMS learned that 
Florida had implemented the six visit limit on hospital emergency 
department visits and was still applying the limit after the proposed 
amendment was disapproved. This means that Florida is not operating its 
program in accordance with the approved state plan. It should also be 
mentioned that Florida's submission of its quarterly expenditure 
reports through the CMS-64, includes a certification that the state is 
operating under the authority of its approved Medicaid state plan.
    In light of our obligation to ensure that beneficiaries receive 
services to which they are entitled under the approved state plan, I am 
taking this compliance action to withhold a portion of the Federal 
Financial Participation (FFP) in state expenditures for administrative 
costs necessary to administer the Florida Medicaid program, subject to 
the opportunity for a hearing described below, until such time as I am 
satisfied that the state is complying with the Federal requirements 
described above. The withholding will initially be 10 percent of the 
Federal share of the state's quarterly claim for administrative 
expenditures allocable to outpatient hospital services, using an 
allocation method based on the proportion of total State Medicaid 
expenditures that were for outpatient hospital expenditures, as 
reported on Form CMS-64. The withholding percentage will increase by 5 
percentage points (i.e. 15%, 20%, etc.) for every quarter in which the 
state remains out of compliance, up to a maximum withholding percentage 
of 100 percent (of administrative expenditures allocable to outpatient 
hospital services). The withholding will end when Florida implements a 
corrective action plan to bring its Medicaid program into compliance 
with Federal requirements.
    The state has 30 days from the date of this letter to request a 
hearing. As specified in the accompanying Federal Register notice, we 
are providing an opportunity for an administrative hearing to ensure 
that you have an opportunity for a hearing prior to this determination 
becoming final. However, it is up to the state whether to go forward 
with this hearing. If a request for a hearing is timely submitted, the 
hearing will be convened by the Hearing Officer designated below no 
later than 60 days after the date of the Federal Register notice, or a 
later date by agreement of the parties and the Hearing Officer, at the 
CMS Regional Office in Atlanta, Georgia, in accordance with the 
procedures set forth in Federal

[[Page 11112]]

regulations at 42 CFR Part 430, Subpart D. The overall issue in any 
such appeal will be whether the Florida outpatient hospital benefit is 
consistent with Federal requirements. Any request for such a hearing 
should sent to the designated Hearing Officer. The Hearing Officer also 
should be notified if you request a hearing but cannot meet the 
timeframe expressed in this notice. Your Hearing Officer is:

Benjamin R. Cohen, Hearing Officer
Centers for Medicare & Medicaid Services
2520 Lord Baltimore Drive, Suite L
Baltimore, MD 21244

    If the state requests a hearing but nevertheless plans to come into 
compliance with the approved state plan, please submit within 30 days 
of the date of this letter an explanation of how the state plans to 
come into compliance with Federal requirements and the timeframe for 
doing so. If that explanation is satisfactory, we may consider 
postponing the timing of the scheduled hearing (which would also delay 
the imposition of the withholding of funds). Our goal is to ensure 
compliance. We are available to provide further information or 
assistance on the steps necessary to bring the state into compliance 
with its approved state plan.
    Should you not request a hearing within 30 days, a notice of 
withholding will be sent to you and the withholding of Federal funds 
will begin as described above.
    If you have any questions or wish to discuss this determination 
further, please contact:

Jackie Glaze
Associate Regional Administrator
Division of Medicaid and Children's Health Operations
CMS Atlanta Regional Office
61 Forsyth Street SW., Suite 4T20
Atlanta, GA 30303-8909

Sincerely,

Marilynn Tavenner,
Administrator.

(Catalog of Federal Domestic Assistance Program No. 13.714, Medicaid 
Assistance Program.)

    Dated: February 20, 2014.
Marilynn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2014-04290 Filed 2-26-14; 8:45 am]
BILLING CODE 4120-01-P
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