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###### Department of Health and Human Services

###### Centers for Medicare and Medicaid Services

# AGENCY:

Centers for Medicare and Medicaid Services (CMS), HHS. 

# ACTION:

Notice of hearing. 

# SUMMARY:

This notice announces an administrative hearing to be held on October 27, 2005, at 9 a.m. in Conference Room 820, 1301 Young Street, Dallas, Texas, to reconsider our decision to disapprove Oklahoma State Plan Amendment 04-06. 

*Closing Date:*                         Requests to participate in the hearing as a party must be received by the presiding officer by October 6, 2005.                     

# FOR FURTHER INFORMATION CONTACT:

Kathleen Scully-Hayes, Presiding Officer, CMS, Lord Baltimore Drive, Mail Stop LB-23-20, Baltimore, Maryland 21244, Telephone: (410) 786-2055. 

# SUPPLEMENTARY INFORMATION:

This notice announces an administrative hearing to reconsider CMS' decision to disapprove Oklahoma State Plan Amendment (SPA) 04-06, which was submitted on September 23, 2004. Under SPA 04-06, Oklahoma sought to increase the per diem rate for residential behavioral management services provided to children residing in therapeutic foster care homes. By letter dated June 20, 2005, CMS disapproved the SPA because it does not comport with the requirements set forth in title XIX of the Social Security Act (the Act) as discussed below: 

At issue in this reconsideration is whether the State's payment methodology complies with section 1902(a)(4) of the Act, which requires that the State plan must provide for such methods of administration as are found by the Secretary to be necessary for the proper and efficient administration of the plan. The regulations at 42 CFR 430.10 and 430.12 require that the State plan and amendments contain all information necessary for the CMS to determine whether the plan can be approved to serve as a basis for Federal financial participation in the State program. The State's payment methodology is not explained in sufficient detail for CMS to determine whether the proposed increase is consistent with proper and efficient administration of the plan, as required by section 1902(a)(4). 

                    Also at issue is whether an increase in the State's per diem rate is consistent with section 1902(a)(30)(A) of the Act, which requires that States have methods and procedures to ensure that payments are consistent with efficiency, economy, and quality of care. The State's per diem rate represents a bundled payment methodology wherein the State pays a single rate for one or more of a group of different services furnished to an eligible individual during a fixed period of time. The payment is the same regardless of the number of services furnished, the specific costs, or otherwise available rates. The State has not provided sufficient information to determine whether the bundled rate for behavioral management services, and the proposed increase, accurately reflect true costs or reasonable fees for the services included in the bundle, and whether the proposed increase in Medicaid payment is due to permissible                           ( print page 55402)                        increases in costs of Medicaid services specifically.                 

In summary, the State lacks a clear and auditable methodology for setting the payment rate and justifying the proposed payment increase consistent with the requirement of sections 1902(a)(4) and 1902(a)(30)(A). 

For the reasons cited above, and after consulting with the Secretary of Health and Human Services, as required by Federal regulations at 42 CFR 430.15(c)(2), CMS disapproved Oklahoma SPA 04-06. 

Section 1116 of the Act and Federal regulations at 42 CFR part 430, establish Department procedures that provide an administrative hearing for reconsideration of a disapproval of a State plan or plan amendment. CMS is required to publish a copy of the notice to a State Medicaid agency that informs the agency of the time and place of the hearing, and the issues to be considered. If we subsequently notify the agency of additional issues that will be considered at the hearing, we will also publish that notice. 

                    Any individual or group that wants to participate in the hearing as a party must petition the presiding officer within 15 days after publication of this notice, in accordance with the requirements contained at 42 CFR 430.76(b)(2). Any interested person or organization that wants to participate as                     *amicus curiae*                     must petition the presiding officer before the hearing begins in accordance with the requirements contained at 42 CFR 430.76(c). If the hearing is later rescheduled, the presiding officer will notify all participants.                 

The notice to Oklahoma announcing an administrative hearing to reconsider the disapproval of its SPA reads as follows:

Mr. Howard J. Pallotta,

General Counsel, 

Oklahoma Health Care Authority,

Lincoln Plaza, 4545 N. Lincoln Boulevard, Suite 124, Oklahoma City, OK 73105.

Dear Mr. Pallotta: I am responding to your request for reconsideration of the decision to disapprove Oklahoma State plan amendment (SPA) 04-06, which was submitted on September 23, 2004, and disapproved on June 20, 2005. 

Under SPA 04-06, Oklahoma sought to increase the per diem rate for residential behavioral management services provided to children residing in therapeutic foster care homes. The Centers for Medicare & Medicaid Services (CMS) disapproved the SPA because it does not comport with the requirements set forth in title XIX of the Act. 

At issue in this reconsideration is whether the State's payment methodology complies with section 1902(a)(4) of the Act, which requires that the State plan must provide for such methods of administration as are found by the Secretary to be necessary for the proper and efficient administration of the plan. The regulations at sections 42 CFR 430.10 and 430.12 require that the State plan and amendments contain all information necessary for CMS to determine whether the plan can be approved to serve as a basis for Federal financial participation in the State program. The State's payment methodology is not explained in sufficient detail for CMS to determine whether the proposed increase is consistent with proper and efficient administration of the plan, as required by section 1902(a)(4). 

Also at issue is whether an increase in the State's per diem rate is consistent with section 1902(a)(30)(A) of the Act, which requires that States have methods and procedures to assure that payments are consistent with efficiency, economy, and quality of care. The State's per diem rate represents a bundled payment methodology wherein the State pays a single rate for one or more of a group of different services furnished to an eligible individual during a fixed period of time. The payment is the same regardless of the number of services furnished, or the specific costs, or otherwise available rates. The State has not provided sufficient information to determine whether the bundled rate for behavioral management services, and the proposed increase, accurately reflect true costs or reasonable fees for the services included in the bundle and whether the proposed increase in Medicaid payment is due to permissible increases in costs of Medicaid services specifically. 

In summary, the State lacks a clear and auditable methodology for setting the payment rate and justifying the proposed payment increase consistent with the requirement of sections 1902(a)(4) and 1902(a)(30)(A). 

For the reasons cited above, and after consulting with the Secretary of Health and Human Services, as required by Federal regulations at 42 CFR section 430.15(c)(2), CMS disapproved Oklahoma SPA 04-06. 

I am scheduling a hearing to be held on October 27, 2005, at 9 a.m. at 1301 Young Street, Conference Room 820, Dallas, Texas, to reconsider the decision to disapprove SPA 04-06. If this date is not acceptable, we would be glad to set another date that is mutually agreeable to the parties. The hearing will be governed by the procedures prescribed at 42 CFR part 430. 

I am designating Ms. Kathleen Scully-Hayes as the presiding officer. If these arrangements present any problems, please contact the presiding officer. In order to facilitate any communication which may be necessary between the parties to the hearing, please notify the presiding officer to indicate acceptability of the hearing date that has been scheduled and provide names of the individuals who will represent the State at the hearing. The presiding officer may be reached at (410) 786-2055. 

Sincerely,

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

Section 1116 of the Social Security Act (42 U.S.C. section 1316); 42 CFR section 430.18. 

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

Dated: September 15, 2005. 

Mark B. McClellan, 

Administrator, Centers for Medicare & Medicaid Services. 

[FR Doc. 05-18843 Filed 9-20-05; 8:45 am] 

BILLING CODE 4120-01-P